Chinese yields herald falling earnings, commodities

From Bloomberg: Yields on 10-year Chinese government bonds have been a strong indicator of earnings-per-share for emerging-market companies over the last five years, and the recent decline suggests a deteriorating outlook, Morgan Stanley strategists including Graham Secker and Jonathan Garner wrote in a note to clients Friday. “What makes the move more disconcerting is that there has


Stupid Atlas shareholders want more

Via The West: MinRes announced a $280 million, all-scrip bid for Atlas on Monday, which would give its shareholders one new MinRes share for every 571 Atlas shares they hold. The offer values Atlas about 3¢-a-share, representing a 59 per cent premium to its last traded price of 1.9¢ before the offer was announced.  Atlas’


Daily iron ore price update (China slows)

Iron ore prices for April 11, 2018: Tianjin benchmark was down $1.65 to $64.20. Paper held on overnight. Coking coal futures are breaking. Steel is soft. China is slowing. It always begins in the PPI. Some more on that from Vertical Group: FIRST… THE “HARD DATA”. Last night, China released factory inflation numbers (i.e., PPI), which slowed for


BREE still too bullish on commodities

The Office of the Chief Economist (formerly BREE) is out with its March QTR outlook. It’s up to its old tricks raising the outlook: Prices are not going remain so far above historical averages. Sorry. Iron ore is too high: As BREE itself notes, Chinese steel production has peaked and will fall from here (probably


A postcard from China’s steel sector

Via UBS: Is demand OK given some weaker signals in 1Q18?  A key question was the strength of demand given weak PMIs in Feb-18 and large inventory builds through Feb+Mar-18.  We learned that demand had been held back through these months, reflecting:  A later spring festival than usual, where many firms and


The crazy bid for Santos

Via the AFR: US private equity firm Harbour Energy has renewed its takeover tilt for Santos, lobbing a $13.5 billion cash takeover offer with a high enough price to get engagement from the board, but with foreign investment approvals still outstanding. The $6.50 a share proposal is the fourth from Harbour after two made in


AEMO: Gas shortage not fixed

Via the AFR: Victoria will experience significant gas shortages within three years unless additional supply is brought online, which could have flow-on effects for the whole National Electricity Market, according to a new report by the Australian Energy Market Operator. The report – which mirrors similar concerns about NSW’s gas supplies and prompted Prime Minister Malcolm