July 31, 2009 in Uncategorized
Jozi, Jozi. We were up and away yesterday, it was a good thing that we were strapped in. Resources rocked, markets surged, and I am of course happy to say that most of these moves have been earnings driven. And all out of the US. You know, we talk about why they are so important, the US that is, they might only be around one quarter of global GDP (a bit less) but of all of the investable assets globally, that is around 150 trillion Dollars a fair chunk of that is still in the US. That is set to double in the next five years. India has overtaken Japan for most billionaires in Asia. Its happening chaps. Session end the Jozi all share index closed at 24067, up 478 points.
Anglo American out with results this morning, the six months to June, expectations were for around 67 US cents per share, the company topped 90 by a penny, so it looks like a handsome beat, perhaps expectations had been pretty low balled as the story unravelled. They are playing up all the positives, cost reduction, long lines of credit available, debt looking manageable. 2.1 billion Dollars in operating profits off of revenue of 11.1 billion Dollars.
Revenue falling 38 percent, operating profit down 65 percent. Earnings per share down 68 percent. So a little better than expected, and I guess if costs have been contained, they expect to save 1 billion Dollars in the full year, commodity prices have improved, generally the landscape looks better. Perhaps a bit of a dividend would have been a good idea, but again the group has skipped that part.
I liked this from the company, in the key headline risks: Commodity prices, Liquidity and counterparty risk, Currency risk, Inflation, Safety, health and environment, Political, legal and regulatory, Supplier risk, Contractors, Reserves and resources, Exploration, Natural events and damage to assets by fire or machinery breakdown, Employees, Operational performance and project delivery, Acquisitions, Infrastructure, Community relations, Joint venture relationships and Critical accounting judgements and key sources of estimation and uncertainty.
Got that? All that “stuff” remains key headline risks. So other than about everything missed, covered in that last line, there are many risks not only to operating businesses and investing, but to life. I can imagine that Anglo is going to come under pressure for skipping the div, but at least this time investors are prepared. We wait for commentary. Oh, and Xstrata, Cynthia Carroll has said that the Xstrata approach is a distraction. What a hoot.
Two bank announcements yesterday, FirstRand and China Construction Bank signing a MOU. Not a MOU cow, but a memorandum of understanding. This is again a sign that China want to be heavily invested on the continent and are ready to use local knowledge to explore investment opportunities on the continent. I like. There will be more services offered between the two later.
AngloGold Ashanti out with results this morning. And this is about where I want to leave it, but that would be unfair to a whole host of investors (really?) out there. Okes who reckon that the stuff in the ground and not the business, deserves a different business valuation. Why it works that way is lost in history for me, but so goes it. Very quickly, the company for the half made 81 US cents per share, 47 US cents per share for the last quarter.
OK, so annualize their last quarter (generous) and you come out at 2 bucks for the next four quarters. That is less than 16 Rands. The stock trades at about 290 bucks. So, 19 times earnings on record quarterly earnings. Don’t know, but at least they look reasonable compared to their peers. Gold Fields trades on 48 times earnings, Harmony 38 times. Gotcha, not for us thanks.
Good news for platinum usage. Yesterday I found two links to stories that should be good news for the platinum producers. The first is a cash for clunkers program in the US, which after just six days has burned through the 1 billion Dollars allocated to it. Scrambling to find more money, I guess the consumer is a little stronger than they thought.
How it worked was that you handed in your old fuel inefficient vehicle, and then got back 3,500 to 4,500 bucks off a newer more efficient vehicle. With better emissions control. Over 250 thousand folks have apparently taken up the offer. No ways? But what do you expect, that might sound like a lot, but with vehicle sales around 10 million (very low by their standards) that is around an extra week been added.
And then the other perhaps more exciting news for the platinum market, the Beijing city authorities are set to ban older vehicles from the city if they do not comply with stricter emissions control laws. How it will work is that petrol and diesel vehicles not complying with National emissions standards will not be allowed to travel specific routes, and everything inside of that.
The second is more important, because it has a long lasting effect and again underscores why we like an investment inside of the platinum complex. Emissions control standards globally are set to become more stringent and not relaxed. India and China are struggling to see the merit of them joining tighter emissions controls globally, but they are doing it anyhow.
Imagine being Sergeant James Crowley. Who? Well, he is the police officer at the centre of the arrest of Professor Henry Louis Gates Jr. I doubt that there was a professor Henry Louis Gates Sr. Off the subject for a while, do you only become Sr. when there is a Jr? Possibly. Well, the good professor was arrested in his own home, trying to open his jammed door, this after returning from a trip to China.
And he took exception to this, rightfully so, he was only trying to open his jammed door, a neighbour alerted police. As Wiki put it – The incident spurred a politically charged exchange of views about race relations and law enforcement throughout the United States. Gates is black, Crowley is white. A big public debate then opened up when the president called the police stupid, Gates is a friend of Obama you see.
So, the whole situation got out of control and the Obama A Team (who are not sucker fools) decided to make a PR exercise out of it. So yesterday afternoon late, the good professor, the president and vice president of the USA and a police sergeant from Cambridge had a beer together on the White House lawns, away from the media, an attempt for everyone to say sorry to each other.
And the point to this story? It was more important what beer each party had, would you believe. The president had a Bud light, Gates prefers Red Stripe or Becks, whilst the sergeant likes Blue Moon, a Coors beer. And the advertisers for Bud have been going mad. Another reminder that Obama is the real deal.
New York, New York. Running out of space. Me, not Wall Street. Markets fell away in the last half hour, but still managed sizeable gains. Once again driven by earnings, good company results beating expectations, but there are still a few laggards out there. Q2 GDP today. Lots of folks wondering about this number, I hope that the Obama take on it was taken before the beer session and not after. At the bell on Wall Street, the Dow had added 83 points to 9154, the best July since 1939, when they first made a colour picture, thanks Bertha Coombs. The nerds of NASDAQ 16 better to 1984, it had topped 200 at the start of the session. The S&P 500 added 11 and a half to 986.
The oil price is last at 66.85 Dollars per barrel. The gold price better at 938 Dollars per fine ounce. Copper, the price that is, last at 2.59 Dollars per pound. Platinum price, last at 1185 Dollars per fine ounce. The Rand, strong, 7.77 to the US Dollar, 12.87 to the Pound Sterling and 10.97 to the Euro.
Expect a mixed bag here today. That GDP figure will determine where we end up.
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