Jtc Share Discussion Threads

[mr roper] 21/2/2018 14:07

talk that Apple is looking to sign a strategic cobalt supply deal with Glencore.

[mount teide] 21/2/2018 13:48

Thanks JT.

Interesting to see the impact (speed and scale) that rising base metal prices is already having in turning around the fortunes of the industry.

Glencore's straight talking CEO Ivan Glasenberg said recently; "what a difference a year of rising prices makes" - his results announced today certainly confirm that with pre-tax profits propelled to $6.9bn in 2017 from a loss in 2016.

Debt fell by a third as, like other major base metal producers, Glencore continues to focus like a laser on lowering borrowings and rewarding with large dividend payments, shareholders who kept the faith during the long downturn.


'Glencore rewards investors with £2bn in dividends after ‘strongest’ year




Mining group and commodity trader Glencore has hailed its “strongest” year on record and announced it would pay shareholders $2.9bn (£2.07bn) in dividends.

The company will pay out $0.20 a share in two equal payments in 2018.

It came as it reported that pre-tax profits in 2017 surged to $6.9bn from a loss of $549m the year before. Revenue jumped 25pc to $205bn on the back of higher prices for its key products, such as copper, coal, zinc and cobalt.

Glencore’s earnings before interest, tax, depreciation and amortisation – a figure closely watched by the City – jumped 44pc to $14.7bn.

It was helped by a strong performance in its “marketing” arm, which ships commodities around the globe. Earnings in this division hit $3bn, ahead of guidance, its best performance since 2008.

The miner’s debt pile fell by almost a third in 2017 to $10.67bn, the bottom end of its guidance, as it stuck religiously to a commitment to lower its borrowings. Net debt had stood as high as $37bn in 2014 after its merger with Xstrata, and threatened to collapse on top of it in 2015, when investors took fright at Glencore’s balance sheet and the share price plunged.

Ivan Glasenberg, the FTSE 100 giant’s billionaire chief executive and second largest shareholder, said that higher commodity prices and a tight control on costs had “enhanced mining margins”.

“We look to the future with confidence. We believe our unrivalled positioning in ‘Tier 1’ commodities and ‘Tier 1’ assets will continue to create compelling value for all stakeholders,” he said.

Glencore is one of the world’s biggest producers of copper and cobalt, both of which are expected to be in high demand for electric vehicles and batteries.'

[jtcod] 20/2/2018 12:48

Digital China Powering the Economy to Global Competitivenesshttps://www.mckinsey.com/global-themes/china/digital-china-powering-the-economy-to-global-competitivenessThis report has some interesting data. Not least that in 11yrs China e-commerce has gone from 1/50th of the USA in 2005 to almost double that of the USA in 2016.Payments via Mobile in China had already reached $790bn by 2016 compared with just $74bn in the USA.China is already driving some areas which will dictate how lives will change in the West over the coming couple of decades.

[jtcod] 20/2/2018 11:43

MTYour post 3 days ago on "The pricing power of cyclical markets" was one of your best I think. Thank you for your thoughts on the sector.

[mount teide] 19/2/2018 09:35

One reason base metal prices tend to rise with interest rates is that this relationship tends to point to an environment of increased global economic activity/growth. Companies anticipate an increase in economic activity and so are more willing to borrow to finance expansion.

The increased appetite for borrowing leads to higher interest rates as there is more demand for borrowed funds. This same environment of increased global economic activity likewise tends to be one where there is an increase in demand for base metals.

The 10 Year US Treasury peaked at 5.1% when the shipping/metals markets last peaked in 2007/8 and bottomed at 1.35% in H1/2016 along with the shipping/metals markets.

The 10 Year Treasury has since risen to circa 2.85% - the 25 year average is over 5% - and strongly broke out of a previously, incredibly resilient 30 year downtrend line during Q3/2017.

While base metals and producer stocks have already been in an increasingly bullish trend since H2/2016, driven primarily by strong fundamentals and rising global economic growth, modestly rising interest rates is likely to reinforce this trend.

In this environment, the metals market is likely to become particularly interested in low cost producers that have already implemented new projects and have low future CAPEX requirements, and so are poised to throw off exceptional amounts of free cash flow in the coming years as metal prices grind higher.

The most attractive producers at this stage of the metals market cycle will be high dividend paying low cost mid/large caps - as they are likely to prove a magnet going forward for the huge flows of institutional money looking to reposition in an environment of higher inflation.

This general theme though still in the early stages is increasingly playing out across the natural resources landscape reinforcing higher inflation and increasing the appetite for investors to own natural resource equities, especially mining shares.

Rising interest rates are hitting the base metals sector at a time when many metals like zinc, copper and lead are already undersupplied and forecast to remain in deficit well into the early years of the next decade.

Metal market fundamentals suggest the recent global equities correction has given investors a buying opportunity for a sector that is poised to be a leader in the months and years to come.


AIMHO/DYOR

[mount teide] 18/2/2018 23:37

Buying property funded with a very large mortgage when interest rates were at a 360 year low was one of the most ultra high risk investments out there - it was only a matter of when not if it came home to roost.


Forget stock market volatility - the biggest threat to your wealth is rising mortgage rates



Financial commentators were fixated with gyrations in global stock markets when, on Feb 8, Bank of England officials quietly dropped a bombshell of far greater consequence to household wealth.

In an uncharacteristically straightforward warning, the Bank’s economists pointed to the likelihood of multiple increases in Bank Rate during 2018, which could see today’s 0.5pc rate double or more within months.

The implication for borrowers was clear: expect to pay more. The implication for the value of assets that depend heavily on borrowed capital – housing, in particular – was left, in the words of one commentator, as an “elephant in the room”.

Bank Rate is only one of many influences on the cost of mortgages, of course. But “swap rates”, which reflect the cost to banks of raising the money they lend, jumped sharply on Feb 8, the day of the Bank’s monthly meeting. Two-year swap rates, which underpin the most popular mortgage terms, leapt on the day from 0.93pc to 1pc. These rates are now more than 30pc higher today than at the start of the year.

Mortgage rates usually follow closely behind “swap rates”, meaning homeowners should brace themselves for rising costs.

Jeremy Leaf, a north London estate agent, said: “An interest rate rise would just be the final straw for a lot of people.

“It’s not so much the rate itself, but the inference and the direction of travel. A lot of people could start to think: ‘Can I afford to move?’ ”

......Buy-to-let investors are likely to be particularly sharply affected by rate increases. While mortgage interest payments were once deductible as a business expense, this is being gradually phased out and interest will be completely taxable by 2020......

....Shaun Church, of the broker Private Finance, said this meant any rate rise would eat into their bottom line. “I wouldn’t be at all surprised if we started to see landlords putting their worst-performing properties on the market,” he said.'

[hottingup] 18/2/2018 12:40

This promising small-cap stock could be a millionaire maker in 2018
Paul Summers
Tue. 26/12/2017



The suggestion that a single stock could lead some investors to become millionaires next year may sound fanciful but I think this is quite possible if events work out for small-cap drug discovery and development firm ImmuPharma (LSE: IMM). Let me explain.

Blockbuster potential

Over the last three months, shares in the AIM-listed company have climbed more than 200% in value as anticipation grows over the outcome of a Phase III clinical trial for Lupuzor — its 100%-owned potential treatment for Lupus.

Approximately five million people are believed to suffer from the chronic and potentially life-threatening autoimmune disease that can be a notoriously difficult to treat. In the last 50 years, only one therapy — GlaxoSmithKline‘s Benlysta — has been approved for use, despite its questionable efficacy and serious side-effects. In 2015, the drug achieved sales of over $400m. By 2020, this figure is expected to rise to $1bn.

Positively, data from Lupozor’s Phase IIb trial indicated that ImmuPharma’s treatment — which modulates rather than blocks the immune system — was both effective and safe. Moreover, the effectiveness of Lupuzor increased even after the three-month trial’s conclusion. Investors will be hoping that the 52-week, randomised and double-blinded study currently in progress (involving patients in the US, Europe and Mauritius) yields similar results.

In its most recent update on 21 December, the company revealed that all 200 participants had now received the full 12-month dosage and that the “robust safety record” shown in earlier trials continues to be seen. According to Chairman Tim McCarthy, the company looks forward “with continued confidence” to reporting on top-line results in Q1 of next year.

In the event of a positive outcome, ImmuPharma will then seek to exploit its Fast Track designation and push for approval from the Food and Drug Administration (FDA). Once received, the company would then be free to seek out a global licensing deal for taking Lupuzor to market or — perhaps more likely — consider takeover bids by deep-pocketed pharmaceutical giants at a price befitting its blockbuster potential. Given the suggestion that it could be used in the treatment of other diseases, the price could easily be in the billions of pounds. Right now, ImmuPharma’s market cap is a little over £200m.


Northland Capital, 18/1/2018

"Should Lupuzor successfully meet the trial endpoints, we estimate that ImmuPharma’s shares would significantly rerate to the upside. Finally, it is encouraging to see demand from patients for a follow-up study."

[the stigologist] 18/2/2018 07:39

PYC

3 big pharma deals in 3 months
In talks with 50 potential clients
SUBSTANTIAL NON-DILUTIVE FUNDING
A stock which has recently demonstrated ability to go from 1p to 32p in space of 48 hours
£4m Market Cap is crazy when it's nearest comp was taken out for $850m a few months back

[chestnuts] 17/2/2018 16:14

Mount

You couldnt make it up, in the past i have known of coulpe taking points for the other half and they have got found out and they get 6 months in prison even though they have no criminal record,and yet they let these 2 people free, surely they should be rearrested and sent to prison.

[mount teide] 17/2/2018 15:18

Only in the UK !

To the astonishment of Court Magistrates a pair of crooks went on a pre=planned shoplifting crime spree during the lunch break of their trial for shoplifting!



A pair of crooks called Smith and Jones left court during a lunch adjournment - to go on a shoplifting spree.

Magistrates were told Robert Smith, 57, and Irene Jones, 51,of the same address in Kirby, Liverpool, had turned up for a trial at Llandudno in North Wales - prepared for theft.

Diane Williams, prosecuting at Llandudno, said : 'They came here in tandem, pre-planned and had the audacity to come back through security with a case and bagful of stolen goods.

The prosecutor said the pair had a large grey case and a shopping trolley, both empty, when they arrived at court on Thursday morning.

But after leaving court at lunchtime they returned with their bags loaded with meat and dog food.

'Iceland confirmed the meat section had been depleted,' Mrs Williams said.

Smith and Jones were then arrested by police.

They both pleaded guilty to two thefts.

Bail was granted with conditions not to enter Wales or any self-service shop in England.

[mount teide] 17/2/2018 13:00

“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.” - Warren Buffet

The pricing power of cyclical markets:

The commodity cycle saw the mining industry's pricing power tap turned fully off and locked shut at the market top in 2008-2010, and this is where it stayed until the 6-8 year waterfall drop off in industrial metal pricing hit the H1/2016 capitulation bottom - a level well below the C1 cash cost of much of the mining industry and massively below the cost of developing new production(estimated at nearly double the market bottom pricing for Copper and Zinc).

In H2/2016 - as a consequence of an estimated 75% drop off in production development during the previous half decade to preserve cash, the almost complete cessation of exploration, years of widespread industrial action at the major mines in Chile, Peru and South Africa together with a material drop off in ore grades/increase in operating costs at the principal global scale mines, the 'pricing power tap' was dusted off, given a squirt of WD40 and gently cranked open.

Since, with Chinese demand remaining strong while the synchronized nature of growth in the rest of the world gathered pace, the metals industry business cycle has fallen behind the growth in demand and, seen Zinc and Copper move into deficit and warehouse stocks at/close to decade lows, the cumulative effect of which has been to turn the 'pricing power tap' close to fully open.

Any objective assessment of the current market fundamentals (now supported by the consensus view of market analysts after 18 months of most forecasting further armageddon for the sector), would suggest that despite industrial metal pricing surging off the lows in 2016/17, as a result of an unprecedented set of circumstances(demand-supply deficit/decade low stock levels) this early in the new commodity cycle, the pricing power tap is likely to remain at/close to fully open for the rest of the decade before slowly getting shut-in during the following decade as the next commodity cycle market peak is approached perhaps in circa 2023-2026.

However, to this observer with the scars of three shipping/commodity cycle scars deeply etched on his back, a number of factors suggest this commodity cycle recovery/boom phase may have a longer life expectation and greater trough/peak price range than in previous cycles - why?

The last industrial metals/shipping recession phase was longer and deeper than any previous cycle in living memory.

After a decade of low investment following the financial crisis many high population Nations are now actively involved in implementing huge capital expenditure programs to rebuild their crumbling infrastructure - India, USA - while most of the fast growing African and the emerging Nation economies are carrying out and accelerating infrastructure and industrialisation development programmes similar to China in 2000-2008.

Global GDP forecasts have seen repeated uplifts by the IMF to nearly 4% for 2018 and 2019, together with the US announcing a record programme of tax cuts, greater even than the Reagan era which produced an enormous decade long economic boost.

The rapidly growing demand for industrial metals from the materially important global electric vehicle and renewable energy sectors over the decade ahead.

The last cyclical market peak pricing in 2007(Zinc and Lead) and 2010(Copper), after inflation adjustment is 54%(Zinc), 87%(lead) and 65%(Copper) above CURRENT pricing!

As a result of low barriers to entry(anyone can buy a ship or a mine), the shipping/commodity markets have charted a remarkably reliable 15-20 year boom and bust life cycle over the last 70 years - as a consequence, in an average human lifetime investors may get 2-3 small windows of opportunity to time an investment in the sector perfectly. Once every 3 or so shipping/commodity cycles, circumstances(industry and global economics fundamentals conspire) to produce a super recovery/boom phase - with shipping, zinc, copper and the oil markets coming off near decade long falls of 98%, 66%, 56% and 76% respectively, I strongly suspect this latest cycle recovery phase may turn out to be such an event.

Ignore the enormous pricing power (up and down) of long term cyclical markets at your investment peril!

AIMHO/DYOR


CKN(Shipping), CAML(Copper/Lead/Zinc) and ARS(Copper/Lead/Zinc), following last weeks sharp general market 10%+ correction are already back making new all-time highs or are at/close to the previous all-time high.

[mount teide] 17/2/2018 12:51

Corbyn may well be a decent person but there is little doubt he is being used as a Trojan horse by the hard left aided and abetted by Union dinosaurs to take over the Labour Party and its structures.

His chances of becoming PM are minimal imo - when the silent majority come to vote at the next election and realise there is a chance however small of him and Momentum's thugs(Labour MP Angela Eagle's description of them) running the country the writing will be on the wall as far as the election is concerned.

Corbyn's better than expected showing in the 2017 election was largely because he was not considered a threat together with the very poor campaign run by May, and her disastrous decision to directly target her core vote by making the "dementia tax" the centrepiece of her election manifesto.

[jtcod] 17/2/2018 12:43

I agree with your take on him serratia. He lacks the necessary intellect like the current PM but like every seasoned politician, a strategy of promising voters (or unions) what they want to hear is not lost on him.

[fireplace22] 17/2/2018 12:40

On Trump, I personally believe that N. Korea will have a better relationship with the South and the rest of the world generally at the end of Trumps first term than it had at the end of Obama's. I think Trump is a manipulator and will get where he want's by whatever circuitous route it necessitates. I think he'll get a second term too.

[jtcod] 17/2/2018 12:39

Just the once chestnuts but I did go back to chapter 8 because I read Buffett's comment that he thought that was the one you should focus on.

[serratia] 17/2/2018 12:37

I think Corbyn is a descent person, nice to have as a neighbour but way out of his depth as a senior politician. He seems to be allowing the momentum group to consolidate power for the hard left. Will voters see past his descent person image and think about his lack of understanding re running the economy ?
A slightly derogatory comment was made about him the other week calling him a ' bed blocker '. I see what they meant, his genial image may get votes and open the way for a potential successor to take control if Labour win the next election.

[chestnuts] 17/2/2018 12:23

Just been re reading " The Inteligent Investor " and its good to freshen up the mind how often have you read it, mine is about 6 now.

[jtcod] 17/2/2018 12:23

Hope not chestnuts but after Brexit and Trump who knows?

[fireplace22] 17/2/2018 12:23

We've reasonably taken the tax burden off people at the lower income end with increased personal allowances. On the other hand I think its totally unfair to remove more than half of ones income as tax at the upper end. So where could the increase in taxation come from?

[chestnuts] 17/2/2018 12:13

JTC

Can you ever see Corbyn in power

[jtcod] 17/2/2018 11:43

Or perhaps we could just close the opportunities for off shore tax avoidance?

[hazl] 17/2/2018 11:20

Well perhaps we ought to put more money into taxes, to have a better quality of the important things in life.

Education,healthcare,railways and utilities.

[jtcod] 17/2/2018 09:40

....and can you imagine Corbyns face when he realises the nationalised NG. must raise prices to improve the network. That's without increasing wages for the workers. Still he can always print money to give to the consumer can't he.