column Proactiveinvestors column RSS feed en Wed, 10 Feb 2016 15:06:59 +0000 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Oil price, Tullow Oil, Circle Oil, Sound Energy & Far Limited Oil price
As I mentioned on Monday, this week sees the publication of the short term outlook forecasts from all the major agencies. The IEA thumped the market yesterday by pouring cold water on most bullish scenarios such as non-Opec cooperation, a weak dollar and lower than anticipated Iranian production. They suggested that Opec were ‘unlikely’ to cut a deal with other producers and that prices were likely to fall as global supplies increase. In its STEO, the EIA said that demand in 2016 would be trimmed from an increase of 160/- b/d to 110/- b/d thus increasing stocks. The EIA for what it’s worth are forecasting Brent and WTI prices of $38 and $50 in 2016 and 2017 respectively. US production was 9.4m b/d in 2015 and is expected to be 8.7 and 8.5m b/d for 2016 and 2017.
I have in recent months pointed out that the Opec policy of going for market share and driving out high cost production has resulted in an indiscriminate annihilation of some producers, not necessarily outwith Opec itself. Indeed the moves by countries such as Venezuela have rather proved this point. I have also suggested that it hasn’t been US shale that has blinked, rather the cutbacks in capex by the oil majors that has taken the sum of as much as $400m off projects scheduled for the next few years. IP week brings with it a number of opportunities for speakers to make slightly more longer term observations some of which I would certainly concur. On this basis I would point out the comments by Eni who have said that ‘global upstream capex has been reduced to dangerous levels’ and also an interesting suggestion from the IEA. They have said that despite the global slowdown, oil demand grew by 20% in 2015 and forecast a rise of 15% in 2016, indicating that we are storing up a substantial problem for the future as demand will continue to grow and production will fall sharply…

Tullow Oil
Tullow results this morning which shouldn’t really come as much of a surprise but the conference call seems interminable and is going on in my ear as I write. I have become more positive on Tullow recently as despite the significant debt burden I feel that the company was one of the first to get to grips with its business across the board. With production last year of 73,400 b/d and guidance of 73-80/- b/d which includes ups and downs for Jubilee and TEN and further cuts in Opex, the outlook, even at this oil price remains solid. TEN will come onstream in 3Q 2016 giving substantial flexibility on capex as well as booking more reserves and cash flow. Negotiations with the banks in March will be routine but an opportunity for the banks to look at the company’s debt capacity, given the profile of the price decks and upcoming production. The capex cuts are significant, after TEN the number which has been very high lately falls dramatically, guidance today by the company is that it may be as low as $300m next year.
Tullow has tidied up its assets and has reasonable headroom for the foreseeable future. Much less exploration and therefore less opportunity for development spend gives them flexibility but they have still got a reasonable portfolio if and when the market picks up. I am minded to believe that albeit from an almost impossible position the company has indeed made itself ‘fit for the future in a low price environment’ and would therefore, at least for the time being, give it the benefit of the doubt.

Circle Oil
On Monday lunchtime Circle popped out an operational update of a rather mixed nature but it has at least for the time being reassured shareholders that all is not lost. A new GSA for Sebou in Morocco with Porcher at reasonable prices, has been signed and Porcher will pay for a pipeline extension. Less good news in Tunisia where the farm-out is still awaited and Egypt also has its problems, some infill drilling but EGPC payments are ‘uncertain’. Slightly more concerning are the comments about the finances, discussions with the IFC to ‘rightsize’ the balance sheet are ongoing but the company still say that the financial position and cash flow are under ‘significant pressure’. I get the impression that the financing process is slow rather than impossible so the market will watch with interest how it comes along.

Sound Energy
More news yesterday from Sound who are able to announce some early production numbers from Nervesa now first gas is flowing. At present they are producing 1.0 mmscf/d in the daytime and 0.7 mmscf/d in the nighttime if that makes any sense! The company expect to ramp up to 1.8 mmscf/d in due course which will provide very agreeable cash flow. With so much news out recently and particularly in Morocco much is happening at Sound and the future is most exciting.

Far Limited
I had the opportunity yesterday to catch up with Cath Norman and Gordon Ramsay of Far Limited, appropriately after their recent announcement. That stated that they had increased 2C contingent resources in Senegal by 42% to 468m barrels and that is not including the current appraisal programme. The programme should almost certainly deliver more good news as SNE-2 had a successful flow test that was choked back and might have been more, indeed the thin sands above the reservoir may be crucial to confirming deliverability. The JV is currently preparing for a DST of SNE-3 which bodes well for the process and a good flow rate here would be further good news. Even better is that at present, the drilling programme is 28 days ahead of schedule and one couldnt rule out that at $1m a day there may be an opportunity for an effective ‘free’ 4th well. After that it remains to wait for the declaration of commerciality which can’t be far away.
Far is funded for all this and whilst one wouldnt want to jump the gun there is enough optimism in the already released figures to make a confident prediction that Senegal will deliver what IHS/CERA described as a ‘world class discovery’ and is likely the biggest oil find in recent years. Whilst some are playing Senegal through Cairn I have always been tempted to use Far as the vehicle, if you compare the existing finds and the estimated upside potential, it dwarfs the market cap of around A$250m, this is as close to a no-brainer as it is possible to get and is a lock away in my view even in current market conditions.

The price performance of Chesapeake on Monday, down 50% at one stage, was rather at odds with the company’s comment that it was not planning to go bankrupt. Given that it may not be in their gift it was probably a fair statement but some form of radical change at the company is inevitable. I am waiting for the ‘C’ word and in my mind that is capitulation but it may as well be Chesapeake…

And finally…
Those fans who remember the FA Cup final where Lazarus like HubCap Stealers rose from the dead to snatch the trophy, will have had a modest amount of revenge as the Hammers dumped the Scousers out of this years cup last night in the last minute of extra time.
In the cricket, despite posting a record score, England were humbled as De Kock and Amla made batting look very easy. It is tempting to say that every game in modern one day cricket looks like a new record but England in the field looked very average.

Wed, 10 Feb 2016 11:46:00 +0000
Credit Suisse upgrades London’s largest gold stock Wed, 10 Feb 2016 10:25:00 +0000 Today's Market View including: Solgold Economic News
US – An index measuring the rate of Americans quitting their jobs hit the highest level since Apr/08.
• An increase in the “quits rate” is considered as an improvement in the labour market as people are more confident in their ability to find another job.
• 3.1m Americans quit their job in Dec last year, the most in in nearly a decade, and up on the number in Dec/07, the first month of the recession.
• Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Tuesday JOLTS Job Openings Dec 5,607k  5,413k 5,346k
Wednesday Budget Statement Jan   US$47.5bn -US$
Thursday Weekly Jobless Claims     280k 285k
Friday Reatail sales/Core Jan  0.1%mom/0.0%mom -0.1%mom/-0.1%mom
  UoM Consumer Confidence Feb   92.3 92.0
Source: Bloomberg   

Japan – Producer prices contracted for the 10th month in a row amid falling cost pressures.
• PPI contracted 0.9%mom in Jan, down from a revised 0.4%mom in Dec and a 0.7%mom decline forecast.
• YoY prices were down 3.1%yoy.

UK – Industrial production finished the year on a weak note posting the first yoy decline in 28 months in Dec/15.
• Industrial production: -1.1%mom/-0.4%yoy in Dec/15 v -0.8%mom in Nov/15 and -0.1%mom forecast.

France – Industrial production posted a second consecutive monthly decline in Dec versus an increase forecast by markets.
• Industrial production: -1.6%mom/-0.7%yoy v -0.9%mom/3.0%yoy in Nov and 0.3%mom/1.7%yoy forecast.

DRC – The government decided to leave the mining code unchanged following opposition from mining companies, Mines Minister said.
• “The mining code which is currently in place will stay in place. Those who are thinking of investing can do so based on this code.”
• Previously, the government considered a revision to the existing code enacted in 2002.
• Authorities planned to raise profit tax to 35% (from 30%), increase the government’s free share in equity projects to 10% (from 5%) and take royalties up to 3.5% (from 2%).

Zambia – The government informed mining companies of power limitations in 2016 on the back of “the ongoing energy deficit”.
• The country is planning to supply only 70% of power requirements in Q1/16, 80% in Q2/16 and 90% in Q3/16.
• The government has also hiked power tariffs for industrial users to 10.35USc/kWh last month.

US$1.1265/eur vs 1.1193/eur yesterday. Yen 114.88/$ vs 115.26/$. SAr 15.881/$ vs 16.143/$. $1.449/gbp vs 1.445/gbp
0.711/aud vs 0.705/aud. CNY 6.574/$ vs 6.574/$.

Commodity News
Precious metals:
Gold US$1,183/oz vs US$1,191/oz yesterday
• AgloGold Ashanti asked the government of Ghana to reinstall troops at the Obuasi mine following an attack by illegal miners on its operations last week.
• The military are reported to have left mine premises on Feb 2 after several attacks took place at the site on Jan 30/31.
• However, days later hundreds of illegal miners broke into the mine which led to a death of an employee.
• The Company fired workers and put the mine on limited operations last year on the back of rising costs and falling bullion prices.
Platinum US$923/oz vs US$926/oz yesterday
Palladium US$512/oz vs US$513/oz yesterday
Silver US$15.12/oz vs US$15.35/oz yesterday

Base metals:
Copper US$ 4,463/t vs US$4,633/t yesterday
• Copper production in the DRC fell 3%yoy to 995.8kt in 2015 driven by a disrupted supply of power and low commodity prices.
• The Chamber of Mines named “inadequate and highly non-transparent management” at the state-owned power supply company SNEL as the “single biggest factor inhibiting the dev3elopment of the mining industry”.
• The Chamber of Commerce estimated the deficit in power generation capacity expanded to 950MW in 2015, nearly double the 542MW recorded in 2014.
Freeport-McMoRan received the government permit to reinstate copper concentrate exports.
• The Company secured a permission to ship c.1mt of copper concentrate in the next six months through to Aug 8.
Aluminium US$ 1,479/t vs US$1,510/t yesterday
Nickel US$ 8,045/t vs US$8,270/t yesterday
Zinc US$ 1,687/t vs US$1,757/t yesterday
Lead US$ 1,815/t vs US$1,840/t yesterday
Tin US$ 15,625/t vs US$15,830/t yesterday

Oil US$31.0/bbl vs US$33.2/bbl yesterday
Natural Gas US$2.103/mmbtu vs US$2.100/mmbtu yesterday
Uranium US$34.15/lb vs US$34.15/lb yesterday

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$43.8/t vs US$44.0/t (prices will be little changed this week due to Chinese Lunar New Year holiday)
Thermal coal (1st year forward cif ARA) US$37.0/t vs US$38.0/t yesterday

Tungsten - APT European prices stood at $160-175/mtu last week
Ferrochrome – Benchmark prices collapsed to 92c/lb in December for Q1/16, down 11.5% from 104c/lb in Q4/15.

Company News
Solgold* (LON:SOLG) 1.9p, Mkt Cap 15.6m – Local road to provide quick access to the Alpala base camp
• The Company released yesterday an interview with Jason Ward, an exploration manager, and the president of local Carmen community regarding a new road connecting Santa Cecilia with Carmen villages.
• The government-sponsored road will be passing through the Alpala base camp with construction having been started last year.
• Easy access to the base camp will cut delivery costs and expedite shipment of supplies to the site helping the exploration team with works at the Cascabel project.

Wed, 10 Feb 2016 10:24:00 +0000
SP Angel Morning Oil & Gas - 88 Energy, Exillon Energy and Magnolia Petroleum Headlines
• 88 Energy (LON:88E , ASX:88E – 0.46p/A$0.01) – HRZ Results Positive, But More Needed: Today’s core results are significant positive for the Company, which when taken into context of the other results to date, the vindicate the Company’s investment to date. Although further work will be required before commerciality can be declared, the importance of these hurdles being cleared should not be underestimated. As such investors should be happy with the progress to date as well as the outlook for the remainder of the appraisal programme.
Exillon Energy (LON:EXI – 70p) – Production Report: We believe that this announcement in and of itself does not mean a significant amount and we will wait until the results are known so that we can put them into the context of the Company’s operating approach.
• In Brief
o Magnolia Petroleum (LON:MAGP – 0.21p) – Q4 2015 Operations Update

News Items
88 Energy (LON:88E , ASX:88E – 0.46p/A$0.01) – HRZ Results Positive, But More Needed
Today’s news of the matrix permeability and thermal maturity of the shale is good news for the Company, although we stress in all these matters it is the ability of the target shale to yield hydrocarbons in commercial quantities that is the ultimate arbitrator of how successful, or not, a particular play is.
While the present of “permeability superhighways” can make it difficult to conduct an effective back, as a matrix able to take more than the volume of water being used to frac can lead to beaching of the frac sand (and therefore result in an incompetent frac), these issues if known about in advance can be addressed.
Today’s core results are significant positive for the Company, which when taken into context of the other results to date, the vindicate the Company’s investment to date. Although further work will be required before commerciality can be declared, the importance of these hurdles being cleared should not be underestimated. As such investors should be happy with the progress to date as well as the outlook for the remainder of the appraisal programme.
Exillon Energy (LON:EXI  – 70p) – Production Report
At the last report we highlighted the issue of decline, and that unless all-weather platforms had been constructed in the prior winter, the marshy land that typified much of the drilling locations in this part of the world prevents the mobilisation of drilling equipment in the spring summer and autumn months.
As a consequence, we do not expect any significant improvement in the levels until such times as the Company has drilled an adequate “platform bank” and interconnecting all-weather roads to enable it to execute an efficient drilling programme.
We would, however, like to get a greater understanding ahead of the winter programme will be approached is going to be – whether it’s going to be solely focused on the construction of a sufficient number of platforms and interconnecting all-weather roads to allow it to drill and complete throughout the remainder of the year, or as has been the case in the past, it is constructing enough platforms and interconnecting roads for it to be able to complete its targeted drilling programme for the winter.
We believe that this announcement in and of itself does not mean a significant amount and we will wait until the results are known so that we can put them into the context of the Company’s operating approach.
In Brief
Magnolia Petroleum (LON:MAGP – 0.21p) – Q4 2015 Operations Update: Today’s update from the Company appears positive, and the focus on costs in this oil price environment will certainly take the Company a long way. What today’s announcement doesn’t do, however, is detail the production – which to our mind is the precursor to the all-important cash flow. As such, and as useful as today’s announcement has been for the Company to remind the market that it is focusing on costs, we do not believe that today’s announcement advances the Company significantly from where it was before; the all-important cash flow statement will be where we focus our attention

Wed, 10 Feb 2016 09:35:00 +0000
Banking on plenty more volatility FTSE 100 Index called to open +30pts at 5665, in a shallow rising trend from yesterday’s revisit of January 3yr lows 5600. The bounce back from bear market territory will give hope to the bottom-picking bulls. The bears, however, will point to this merely as a new channel below an old channel and still in indisputable downtrends for February, for 2016 and for the last 14 months. Watch levels: Bullish 5710, Bearish 5590.
The positive opening call comes after a break-even US session and despite weakness in Asia where both Japan’s Nikkei and the Aussie ASX dropped into bear market, down 20% from their last peaks with financials and commodity-linked names under pressure from fears of global recession and another banking sector crisis.
While market volatility maintained the equity market rout, notably in financials as fears over the banking sector grow, a stronger JPY from safehaven interest (has the Gold reversal peaked?) hindered Japanese names, while renewed Oil price weakness added to the fray ahead of US stockpile data.
US indices still volatile with futures doing well this morning, while the longer term downtrend is yet to be threatened. Fears were stoked ever higher yesterday by the banking sector while Iranian chat about oil production cuts buoyed crude prices from lows, but not by much and certainly not enough to help general market sentiment.
The job of reassuring markets was moved up the chain to White House economic adviser Furman, who took over from the Fed to talk about the government’s readiness to step in with a fiscal policy toolbox to ‘ease another economic downturn.’ Note Yellen testifying later today. Expect the tone to be dovish. This all adding to ECB chat about a ‘cloudy’ economic outlook’ in the region where everyone thought the opportunities would lie in 2016. There’s still time for that though...  
In focus today, the main event will be Fed chair Yellen’s testimony to US Congress with markets looking for updates on potential US monetary policy direction given the 2016’s financial market volatility and extension of negative rates to Japan. Data-wise, UK Industrial and Manufacturing Production is seen delivering a mixed picture with muted contraction and growth respectively in December. Thereafter, US Oil stockpiles could move the oil price should inventories remain high or indeed drop.
Crude prices recovered by $1 overnight after Iran talked about production cuts, which apparently counts as a rally. Note though that gains have since been capped around $31 for Brent and $28 for WTI with, again, no fresh fundamental drivers to speak of. Keep an eye out for more attempts by producer nations to manipulate the oil price with their words - it’ll provide trading opportunities.
Gold is flat, an indicator of where much of the recent buying may have originated from (China - it’s currently on holiday). $1200 the key level to watch for the foreseeable, while there’s potential for a greater pullback on lower volume before the inevitable resumption of the uptrend - again, the fundamental drivers have not changed. As mentioned above, Yellen is likely to talk dovish later today, which will likely weaken the USD.

Wed, 10 Feb 2016 08:41:00 +0000
Beaufort Securities Breakfast Alert: Horizonte Minerals & Redrow The Markets

Market opening: The FTSE-100 is expected to start this morning's session around 18-points higher.

New York: Wall Street ended marginally lower in a volatile trading session yesterday. A rally in material and healthcare stocks offset a sharp slide in oil prices. Investors are awaiting the Fed Chief Janet Yellen’s testimony this week to observe the bank’s next move. The S&P 500 fell 0.1%, with the energy sector declining the most.

Asia: Equities are trading lower amid rising concerns over slowdown in the global economy. The yen continued to strengthen against the dollar, resulting in losses for export-driven stocks in Japan. Furthermore, banking stocks in Japan continued to fall, as investors remained concerned over the negative interest rate environment. The Nikkei 225 shed 2.3%, while the Hang Seng remained closed due to the Lunar New Year holiday.

Continental Europe: Markets ended in the red, pulled down by the continuous slump in banking shares. Additionally, weak commodity prices led to losses for basic resource stocks. France’s CAC 40 and Germany’s DAX dropped 1.7% and 1.1%, respectively.

Crude Oil: Yesterday, Brent and WTI oil prices decreased 7.8% and 5.9%, respectively. The spread between the two varieties stood at US$2.4 per barrel.

UK small caps: The FTSE AIM All-Share index closed 1.42% lower yesterday at 671.22.

Today's news

UK’s trade deficit widens in fourth quarter
As per data from the Office for National Statistics, the UK’s trade deficit widened to £10.4bn in Q4 2015 from £8.6bn in Q3 2015, marking the largest trade gap since the beginning of 2015. The overall deficit in 2015 increased £0.3bn to £34.7bn. Moreover, Chancellor George Osborne warned that the UK’s economy is facing a series of challenges in 2016, including slowdown in emerging economies, falling oil prices and tumbling stock markets.

Horizonte Minerals (LON:HZM, 1.65p) - Speculative Buy
Yesterday, Horizonte Minerals (Horizonte) informed that it had been awarded four new concession areas next to its Araguaia nickel project in Brazil. The two southern concessions cover an area of 15,674 hectares and are located adjacent to the Jacutinga and Pequizeiro deposits of the Araguaia project. The two northern concessions cover an area of 4,325 hectares and are located south of the Glencore project area, which comprises the advanced Serra Do Tapa nickel laterite deposit. An application for 5,998 hectares has also been filed with the Mines Department for three additional concessions to the south of the GAP project area.

Our view: We are encouraged by Horizonte’s strategy of expanding its land position within a highly prospective area. The region is known for its rich nickel laterite deposits. With the award of these four new concession areas, Horizonte now has a Total of 16 active concessions Totalling 110,172.28 hectares in the Araguaia Nickel Belt. Of late, the company has been scouting for new target areas which may have nickel deposits in proximity to its existing resources. Additionally, Horizonte has a number of concession applications submitted to the Mines Department. Meanwhile, the company is working on improving the economics and delivering the pre-feasibility study of the Glencore project in the second half of 2016. Despite the current malaise in the resource sector, we are encouraged with Horizonte’s strategy of expanding its land position and continued development on its Araguaia nickel laterite project. Therefore, we maintain our Speculative Buy rating on the stock.

Redrow (LON:RDW, 404.0p) - Buy
Yesterday, Redrow declared its interim results for the half year ended 31st December 2015. Revenues advanced 8% to £603m in H1 2016, while operating profit rose 16% to £110m. Pre-tax profit increased 14% to £104m, resulting in an EPS of 22.9p vis-à-vis 19.9p in H1 2015. Return on capital employed remained unchanged at 21%. Net debt at the end of the period stood at £183m (June 2015: £154m), implying a gearing of 20% (June 2015: 18%). Total legal completions increased 18% to 2,178 (2015: 1,850), and the average number of outlets rose to 121 (2015: 101). The company has a current land bank of 21,435 plots (December 2014: 16,950). Private order book grew 51% to £655m (December 2014: £435m). Redrow announced an interim dividend of 4p in H1 2016, twice as compared to that in H1 2015, to be paid on 31st March 2016. The company also intends to pay a final dividend of 6p (2015: 4p), making 10p for the year, 67% higher than the last year.

Our view: Redrow performed robustly in H1 2016, with strong revenues and higher margins. Improvement in revenues from the homes segment offset lower commercial and land sales. The company has ended the first half with a record order book. Redrow benefitted from strong demand in the UK’s housing market and government policies (including the launch of ‘Help to Buy’ scheme and introduction of 20% discount as per the ‘Starter Homes’ scheme) aimed to attract first-time buyers to the market. The company’s strong performance has paved way for increase in dividends payable to shareholders. Redrow took a number of steps to strengthen its workforce—it currently has 304 apprentices, graduates and trainees in the business compared to 104 three years earlier. Overall, the outlook for the company is positive, based on a large order book and improving macroeconomic conditions. Therefore, we maintain a Buy rating on the stock.

Wed, 10 Feb 2016 08:34:00 +0000
Northland Capital Partners View on the City - Frontier Developments Frontier Developments (LON:FDEV): Interims
Market Cap: £74m; Current Price: 217p

Interims: Strong Elite performance
Recognised revenue +50% to £10.9m in H1 (Nov) with 1.2m Elite Dangerous units sold in the period (1.4m by the end of December). Self-published revenue increased 179% to £10.7m. External Publishing revenue (work-for-hire) fell to nil from £3.1m. Future revenue relating to ‘early access’ versions and pre-orders within deferred income was £2.8m. Unit sales in the run up to Xmas was better than expected with a Black Friday promotion pulling a certain amount of revenue into H1.
Cash decreased £2.0m to £8.6m reflecting the investment phase with capitalised development spend of £4.3m (+72%) and expensed spend of £0.6m. Cash received on pre-orders was £2.1m while trade and other receivables increased £2.3m with a shift in the mix of revenue through third party platforms, where cash is received 30 to 60 days after period end. The shift to third party platforms also impacted GM 71% versus 94%. Reported PBT was £0.4m, representing a £2.3m positive swing.
Frontier announced the paid-for second season of expansions of Elite (Horizons) in August. Updates within a season are free of charge, however each season is charged separately. This will provide scope for ongoing revenues. It is working on further expansions for release in Spring, Summer and Autumn.
Planet Coaster: Frontier expects to ship the first early access builds of Planet Coast, its second franchise, in March with the first launch in Q4. Frontier has a track record in the genre having worked on the RollerCoaster Tycoon franchise, including RollerCoaster Tycoon 3.

NORTHLAND CAPITAL PARTNERS VIEW: Frontier continues its transition to a model of self-publishing multiple self-developed computer game franchises. Elite has performed well since launch and the prospect of the expansions should provide incremental revenue from the installed base. Planet Coaster represents the next big franchise launch for Frontier and it can point to a strong track record of development around the Tycoon series. That said, the market remains very congested and Frontier is competing with some very large publishers that can devote considerable marketing resources. We continue to favour Keywords Studios (KWS.L), a service provider to the sector, as the means of gaining exposure to a large and growth market.

Wed, 10 Feb 2016 08:30:00 +0000
In the papers: JP Morgan Chase, Coca-Cola & Walt Disney Company The Times
Oil ‘will struggle to hit $50 again’: Oil prices may not recover to more than $50 a barrel and could be set for further steep falls before they approach even that level as Iran and Iraq crank up their production, a leading energy expert has warned.
Kumba Iron finds itself in a hole: Anglo American’s Kumba Iron Ore division reported a 90% drop in annual profit because of slumping prices of steel’s key ingredient.
Healthy eating fad gives supermarkets new year boost: Britain’s grocers had something to smile about after the food market appeared to be slowly returning to growth, despite a disappointing Christmas.
Bills row engulfs concrete maker: One of Britain’s largest concrete makers has angrily denied claims that it mistreats its suppliers by taking up to three months to settle its bills.
Ceiling looms for London’s rental market: The rapid rise in the cost of renting in Greater London is showing signs of slowing, suggesting that the capital has reached “an affordability ceiling”, according to research by HomeLet.
Regional REIT assets leap past £500 million: Regional REIT has bought a British property portfolio that takes its assets to more than £500 million for the first time.
Ascential float nets Guardian group £30 million: The publisher of The Guardian newspaper has made almost £30 million after Ascential, the events and business magazine company it jointly owned with Apax, was floated at a value of £800 million.

The Independent
Achilles Macris: FCA fines ex-JP Morgan banker £800,000 over ‘London Whale’: The City watchdog has fined a former Executive at JP Morgan Chase nearly £800,000 for failing to be “open and co-operative” over the bank’s controversial £4.2 billion “London Whale” losses.
Facebook ordered to stop tracking users without their consent by French data regulator: Facebook must stop tracking people who don’t use the site within three months, the French data protection authority has told it.
Agent Provocateur lined up for possible sale as Boss Garry Hogarth steps down: The private equity group 3i has moved a step closer to selling its luxury lingerie business, Agent Provocateur, after it parted company with Chief Executive Garry Hogarth.

U.K. housebuilders: landed gently: After years of surging home prices, transactions in prime central London property last year fell 12%, according to data provider LonRes. On Tuesday Redrow, a U.K. housebuilder, reported sluggishness in its central London business. Real estate investment trusts have been weak.

Swedbank: crying Wolf: Michael Wolf was fired on Tuesday, partly because of a scandal involving the banks’ Executives, property deals and potential conflicts of interest. The shares fell 6% in response.

Coco bonds: a mug or two: Taking risk in return for high yields involves, as it turns out, risk. And while central banks are good at encouraging risk-for-yield trades they are, as it turns out, not good at engineering smooth exits from them.

Tuitonic: The holidays business, which also has a listing in Frankfurt, is becoming more German in tone. Industry veteran Peter Long has stepped down as joint Chief Executive leaving compadre Fritz Joussen in sole charge of a an appropriately Teutonic Executive board.

Macris cross: Greek hero Achilles sulked in his tent when piqued. Namesake Achilles Macris, a former JPMorgan Executive embroiled in the “London Whale” trading scandal, issues press releases. This has allowed him to hail a settlement with the Financial Conduct Authority as “a major climb-down” after “four years that I have spent fighting to clear my name.”

The Daily Telegraph
German finance Minister and bank Chief insist: Deutsche is ‘rock solid’: John Cryan, the Chief Executive of Deutsche Bank, has come out publicly to claim the bank is “rock solid” following a dramatic drop in the troubled German giant’s share price.
Europe’s ‘doom-loop’ returns as credit markets seize up: Credit stress in the European banking system has suddenly turned virulent and begun spreading to Italian, Spanish and Portuguese government debt, reviving fears of the sovereign “doom-loop” that ravaged the region four years ago.
Britons shun Disneyland Paris following terrorist attack: Britons cancelling trips to France since a terrorist attack in Paris last November left 130 people dead have contributed to an 8% drop in visitor numbers to Disneyland Paris.
Aircraft makers face stringent new targets on jets’ CO2 emissions: Newly agreed pollution controls mean that airliners will have to become more efficient and pump out a third less carbon dioxide, potentially presenting a headache for aircraft manufacturers.
Bond anxiety pushes L&G to reveal its portfolio: The anxiety swirling around the bond market has prompted the insurer Legal & General to take the unusual step of reporting its exposure to the debts of oil firms and other bond issuers.
Coca-Cola sales fizz despite sugar backlash: Coca-Cola, the world’s largest soft drinks company, reported better-than-expected profits in its fourth quarter, despite falling sales as a result of currency fluctuations.
Bank of England poised to act if household debt spirals: Bank of England policymakers will act “sooner rather than later” to curb credit growth, if the recent rise in household debt starts to gather pace, a top official has said.
Vodafone under investigation over customer service record: The communications watchdog is investigate how Vodafone handles customer complaints amid fears the telecoms giant could have mishandles disputes.

The Questor Column:
Avoid loss-making Sophos as private equity exits: EVER since Sophos became the U.K.’s biggest ever technology flotation in July last year it has struggled to justify its punchy valuation. Sophos writes software that protects firms against hackers and cyber criminals. The amount customers were billed increased by 17%, and revenue increased 23% during the 12 months to the end of March. However, the company still reported a full-year loss before tax of $54.3 million (£37 million). The latest update showed that growth slowed markedly at the end of last year. Customer billings increased by 10.6%, and revenue increased by 4.7% during the three months to the end of December. The company’s Founders, Jan Hruska and Peter Lammer, failed to list Sophos in 2007 and 2009, due to tough market conditions before and after the financial crisis. The pair eventually sold a 70% stake to U.S. private equity group Apax for £372 million in 2010, giving the company a total valuation of about £530 million. The stock market listing in July last year, at 225p per share, valued the company at £1 billion and allowed Apax to cut its stake to 40%. The rest of the float raised about $100 million in cash net of fees. The majority of that money was used to reduce the debt pile from $319 million to about $220 million. Apax sold a further 60 million shares, worth about £150 million at 250p per share, on the market in December to cut its stake to 22%. The shares have fallen 26% during the past three months and are well below their 225p float price. Questor is struggling to find reasons to buy shares in this overvalued and loss-making company as private equity makes for the exit. Avoid. Sophos at 176.2p -30p. Questor says “Avoid”.
Randgold Resources gold shares soar on solid results: Gold miner Randgold Resources remains one of the best defensive options as market jitters send the gold price higher, and the shares rose more than 12% on a solid set of annual results. However, the miner isn’t immune to the commodity sell-off and it is feeling the pain from lower gold prices. Pretax profits slumped by $93 million to $260 million for the year to the end of December. The 6% increase in production to 1.21 million ounces was not enough to offset the 9% fall in the price of gold last year. Randgold is well-placed to weather the storm. The company has a strong balance sheet with no debts and $213 million in cash at the end of December, up from $141 million nine months earlier. The annual dividend was increased by 10% to 66c (45p). The company has undergone a major investment phase to reduce its cost of production and can live with lower gold prices for longer than many other smaller and higher-cost producers. Looking out over the long term, Randgold is likely to be a survivor of the commodities downturn and should be able to buy discounted assets at some point in the cycle. Trading on 27 times forecast earnings, the shares are by no means cheap and investors are being asked to pay a handsome premium for exposure to gold. That said, this looks like one of the best places to get pure gold exposure through buying shares in a FTSE 100 listed company. Hold. Randgold Resources at £60.00 +700p. Questor says “Hold”.

The Guardian
Shares dive as fears mount for health of global banking: Growing anxiety about whether banks can withstand continued low interest rates and fears of a re-run of the 2008 financial crisis continued to stalk markets when shares fell to a three-year low and bank shares remained volatile.
Global woes will delay U.K. interest rate rise until 2020, say analysts: Anxiety in global markets and a weakening U.S. economy will force the Bank of England to delay U.K. interest rate rises until at least 2020, according to a leading firm of analysts.
U.K. trade deficit widens further as exports suffer: Britain’s trade deficit worsened in the final quarter of 2015 amid global market turmoil and a slowdown in emerging market growth that has hit exports.
Report calling for abolition of Network Rail increases fears of privatization: Fears the government could privatise Network Rail have been heightened after a report from an influential thinktank called for its abolition and endorsed closing lines and deregulating fares.
Music publisher agrees to pay $14 million to end Happy Birthday song lawsuit: In a settlement filed with courts on Monday, music publisher Warner/Chappell agreed to pay $14 million to end the lawsuit challenging its right to Happy Birthday To You – possibly the world’s most famous song.
Age U.K. and E.ON suspend controversial tariff for pensioners: Energy giant E.ON and charity Age U.K. are to suspend a controversial branded tariff for pensioners to new and renewing customers.
Global oil glut set to worsen, says IEA: The global oil glut is larger than previously thought and the risk of prices falling further has increased, the International Energy Agency has said.

Daily Mail
Short sellers bet £3 billion against the U.K.’s biggest names in a bid to exploit financial markets turmoil: Hedge funds have bet more than £3billion on the decline of ten of Britain’s biggest companies – including Sainsbury’s and Shell – in a bid to exploit the turmoil on financial markets.
Banks pay to lend to State in Japan as yield on 10-year bonds falls below zero: Japan has become the first major economy to see the yield on 10-year bonds fall below zero – meaning investors are paying for the privilege of lending to the government.
London-based traders caught up in probe into £1 trillion government-sponsored bond market: London-based traders have been caught up in an escalating probe into a £1 trillion government- sponsored bond market.
Body Shop goes back to its roots as it launches new ethical push: Body Shop is aiming to reclaim the title of the most ethical store on the high street.
Boss of Serious Fraud Office keeps job - days after losing Libor-rigging case: The Boss of the Serious Fraud Office has had a contract boost just days after losing the high-profile Libor-rigging case.
Sir Stelios wants £19 million more from easyJet as he threatens legal action over the firm’s dividend policy: Billionaire tycoon Sir Stelios Haji-Ioannou has threatened legal action in his battle with EasyJet over its dividend policy.

Daily Express
Petrol prices set to rise in George Osborne’s 2016 Budget: Drivers are set to see higher prices at the pump as George Osborne plans to increase fuel duty in his Budget next month, according to industry experts.
EU facing imminent recession? Germany on brink as warning issued over Deutsche Bank: Fears of a recession in the Eurozone are rising as Germany’s economy shows yet more signs of buckling under global and domestic financial pressures.
Stock market crisis: Panic as FTSE hits three-year low and investors ‘give up’ on banks: Global stock markets were flashing red again as fears over the world economy and another world recession loom ever larger amid worries central banks have run out of ammunition to tackle problems.
Holiday bookings to Turkey plunge 40% amid terror fears: Holidaymakers are avoiding Turkey for their sunny getaways as fears of a terrorist attack has seen bookings plummet 40%.

The Scottish Herald
North Sea firms slash more jobs as confidence slumps to record low: Confidence levels in the North Sea have slumped to a record low amid widespread job cutting in the area in response to the renewed fall in the crude price, a survey has found.
Clydesdale Bank gets boost from ratings agency: Newly-independent Clydesdale Bank has received a boost after a leading international agency said it is no longer considering cutting the lender’s credit rating.
Daffy’s wins Waitrose supply deal for its gin: Daffy’s gin, which is distilled and bottled at Broxburn in West Lothian, has won a deal to supply all 234 of supermarket chain Waitrose’s U.K. stores.
Insurance broker targets growth and acquisitions in Scotland after nine-figure investment: A London and Glasgow-based insurance broker that secured a nine-figure investment in December is opening its first office in Edinburgh and seeking bolt-on acquisitions across Scotland.
Axis-Shield secures £1.25 million from Barclays: Medical diagnostics business Axis-Shield has secure a £1.25 million funding line from Barclays.

The Scotsman
Cumbernauld soup firm wins £250,000 Tesco supply deal: The Scottish Soup Company is celebrating after being awarded a £250,000 deal with Tesco to supply five products to 64 of the supermarket giant’s stores north of the Border.
Boat Race Boss joins crew at RBS’s Williams & Glyn: Royal Bank of Scotland has named Rob Allen as head of commercial banking at its Williams & Glyn spin-off.
Hunter Boot names Vincent Wauters as Chief Executive: Wellington company Hunter Boot has announced the appointment of Vincent Wauters as its Chief Executive, effective from next month.
Wood Group extends North Sea contract with Chevron: Oil and gas services giant Wood Group is extending its support deal with Chevron in the North Sea.
Glasgow animation studio teams up with E4 and Netflix: A Glasgow animation studio that has worked on some of the biggest titles in the gaming world is bringing a new project to the small screen.

City A.M.
New buyer registrations for prime London homes jump as buy-to-let landlords rush to beat stamp duty hike: New buyer registrations for prime London homes soared in January as buy-to-let landlords scramble to complete their purchases before the stamp duty hike comes into effect in April.
Burberry sues U.S. retailer JC Penney accusing it of trademark infringement over coats, jackets and scarves allegedly featuring the “Burberry check” pattern: British luxury fashion brand Burberry has filed a complaint against U.S. retailer JC Penney, accusing it of trademark infringement for selling coats and jackets bearing exact copies of the “Burberry check” pattern.
Standard & Poor’s lowers ratings on four U.S. banks with large energy exposures as oil prices stay weak: Standard & Poor’s (S&P) has lowered its long-term issuer credit ratings on four U.S. regional banks with large energy exposures.
U.S. Foods shrugs off market turmoil to file for IPO: U.S. Foods, the U.S.’ second-largest food distributor, has just filed for a $100 million (£69.1 million) initial public offering (IPO) - despite two days of turbulent global trading.
Walt Disney Company share price drops despite record earnings in the first quarter driven by new Star Wars film as revenue misses expectations: The Walt Disney Company has reported its highest ever quarterly earnings of $2.9 billion (£2 billion), up from $2.2 billion in the first quarter of 2015, driven largely by the success of the latest Star Wars film.
Pandora shares lose their shine after jeweller forecasts sales slowdown in 2016: Shares in Pandora have slumped by seven% after the Danish jewellery firm warned of a slowdown in revenue growth over the coming year.
Barclays poaches new Chief operating officer Paul Compton from JP Morgan Chase: Barclays has poached Paul Compton from JP Morgan Chase to act as its new group Chief operating officer.
Grainger joint venture goes on £57 million west London buying spree: Grainger and Dutch pension fund APG have bought a large residential estate near Kew Bridge in west London for £57.3 million, as the pair continue to expand their presence in the private rental sector (PRS).

Wed, 10 Feb 2016 08:23:00 +0000
Pre-market briefing: losses in banking stocks, amid concerns over slowing global economic growth UK Market Snapshot
UK markets finished lower yesterday, with the FTSE 100 index falling to its lowest level since November 2012, amid a rout in mining, banking and oil firms. Miners, BHP Billiton, Glencore, Antofagasta and Anglo American plunged 5.9%, 8.1%, 9.4% and 11.3%, respectively. Banks, HSBC Holdings, Royal Bank of Scotland Group, Barclays and Standard Chartered lost 1.4%, 2.2%, 4.7% and 5.6%, respectively. Oil companies, BG Group, BP and Royal Dutch Shell dropped 2.5%, 2.8% and 4.0%, respectively, following losses in crude oil prices. TUI shed 1.4%, after it posted a wider net loss for the first quarter compared to the same period last year. On the upside, WPP advanced 3.4%, after its US-based competitor Omnicom Group reported better than expected earnings for the fourth quarter. The FTSE 100 declined 1.0%, to close at 5,632.2, while the FTSE 250 fell 1.2%, to settle at 15,316.9.

US Market Snapshot
US markets closed lower yesterday, as energy and technology sector stocks dropped. Chevron, Southwestern Energy, ONEOK and CONSOL Energy fell 3.6%, 10.4%, 10.9% and 11.9%, respectively, tracking a decline in crude oil prices. Alphabet, Oracle and International Business Machines slid 0.5%, 1.5% and 2.3%, respectively. Twenty-First Century Fox dropped 1.9%, after it reported a fall in its second quarter revenue and cut its full-year outlook amid lower movie sales. Bucking the trend, Martin Marietta Materials soared 9.4%, after it projected a rise in its materials shipments. Coca-Cola advanced 1.5%, as it reported better than expected revenue for the fourth quarter. CVS Health added 1.0%, after its fourth quarter result was in line with market expectations. The S&P 500 slipped 0.1%, to settle at 1,852.2. The DJIA shed 0.1%, to settle at 16,014.4, while the NASDAQ declined 0.3%, to close at 4,268.8.

Europe Market Snapshot
Other European markets closed in the red yesterday, led by losses in banking stocks, amid concerns over slowing global economic growth. Credit Suisse Group plummeted 8.4%, after stating that it might cut its negative deposit rate further. Swedbank declined 5.7%, as its Chief Executive Officer, Michael Wolf, was asked to step down from his position. Deutsche Bank fell 1.5%, reversing its earlier gains, despite its co-CEO John Cryan soothing investors concern by stating that its condition is “rock solid”. Peers, UniCredit and Eurobank Ergasia tumbled 7.9% and 12.1%, respectively. On the brighter side, Svenska Handelsbanken rose 1.6%, after it reported a considerable increase in its fourth quarter earnings and raised its dividend payout. The FTSEurofirst 300 index declined 1.6%, to close at 1,219.8. Among other European markets, the German DAX Xetra 30 slid 1.1%, to close at 8,879.4, while the French CAC-40 lost 1.7%, to settle at 3,997.5.

Asia Market Snapshot
Markets in Asia are trading weaker this morning. In Japan, Sharp has fallen 6.1%, as it is contemplating takeover offers from Foxconn and Innovation Network Corp. of Japan. Export-oriented companies, Honda Motor, Nissan Motor and Sony have declined 0.7%, 1.0% and 2.6%, respectively, amid a strong Japanese Yen. Oil firms, Inpex and JX Holdings have shed 2.2% and 3.2%, respectively. On the flipside, Yamaha Motor has gained 3.9%, after a top broker reiterated its ‘Buy’ rating on the share and expected that its fiscal 2016 earnings would go up. Markets in Hong Kong and South Korea are closed today on account of Lunar New Year Holidays. The Nikkei 225 index is trading 3.4% lower at 15,541.2.

Commodity, Currency and Fixed Income Snapshots

Crude Oil
At 0430GMT today, Brent Crude Oil one month futures contract is trading 2.14% or $0.65 higher at $30.97 per barrel, ahead of the Energy Information Administration weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 7.79% or $2.56, to settle at $30.32 per barrel, after the International Energy Agency warned in its monthly report that crude oil prices would drop further in the coming time as global oversupply worsened in January. Adding to the negative sentiment, the American Petroleum Institute reported a rise of 2.4 million barrels in the US crude inventories for the week ended 05 February 2016.

At 0430GMT today, Gold futures contract is trading 0.54% or $6.50 lower at $1192.20 per ounce. Yesterday, the contract advanced 0.07% or $0.80, to settle at $1198.70 per ounce, as a sell-off in global equity markets continued.

At 0430GMT today, the EUR is trading a tad lower against the USD at $1.1291. Market participants would look forward to the US Fed Chairwoman, Janet Yellen’s speech, scheduled to take place later in the day. Yesterday, the EUR strengthened 0.93% versus the USD, to close at $1.1294, extending its gains from previous session.
At 0430GMT today, the GBP is trading marginally higher against the USD at $1.4465, ahead of the UK industrial and manufacturing production data for December, scheduled to release in a few hours. Investors would also closely monitor the UK NIESR GDP estimate for three months ended January, due for release later today. Yesterday, the GBP strengthened 0.22% versus the USD, to close at $1.4460, after the nation’s total trade deficit narrowed in December.

Fixed Income
In the US, long term treasury prices rose and pushed yields slightly lower, amid a fall in the US stock markets. Yesterday, yield on 10-year notes fell 1 basis point to 1.74%, while yield on 2-year notes gained 3 basis points to 0.69%. Meanwhile, 30-year bond yield fell 1 basis point to 2.55%.

Key Economic News

UK trade deficit fell in December
Non-EU trade deficit in the UK fell to £2.36 billion in December, from a revised trade deficit of £3.54 billion in the prior month. Markets were expecting the nation's trade deficit to fall to £2.50 billion.

UK total trade deficit declined in December
In December, total trade deficit in the UK fell to £2.71 billion, from a revised total trade deficit of £4.03 billion in the previous month. Market expectation was for the country's total trade deficit to drop to £3.00 billion.

UK visible trade deficit fell in December
Visible trade deficit in the UK narrowed to £9.92 billion in December, following a revised visible trade deficit of £11.50 billion in the prior month. Markets were anticipating the nation's visible trade deficit to drop to £10.40 billion.

German trade surplus narrowed in December
Germany has registered the seasonally adjusted trade surplus of €18.80 billion in December, from a revised trade surplus of €20.50 billion in the previous month. Market anticipation was for a trade surplus of €20.00 billion.

German exports recorded an unexpected drop in December
On a MoM basis, the seasonally adjusted exports registered an unexpected drop of 1.60% in December, in Germany, compared to a revised rise of 0.50% in the previous month. Markets were anticipating exports to climb 0.50%.

German imports declined more than expected in December
The seasonally adjusted imports dropped 1.60% on a MoM basis in Germany, in December, compared to a revised advance of 1.30% in the previous month. Markets were expecting imports to ease 0.50%.

German current account surplus widened in December
The non-seasonally adjusted current account surplus in Germany rose to €25.60 billion in December, compared to a revised current account surplus of €24.30 billion in the prior month. Markets were expecting the country's current account surplus to expand to €26.70 billion.

German industrial production surprisingly eased in December
The seasonally adjusted industrial production unexpectedly eased 1.20% on a MoM basis in Germany, in December, compared to a revised drop of 0.10% in the prior month. Market anticipation was for industrial production to rise 0.50%.

German industrial production declined more than expected in December
On a YoY basis, the non-seasonally & working day adjusted industrial production in Germany eased 2.20% in December, higher than market expectations for a fall of 0.60%. In the previous month, industrial production had recorded a rise of 0.10%.

French budget deficit narrowed in December
Budget deficit in France narrowed to €70.50 billion in December. France had posted a budget deficit of €82.80 billion in the previous month.

Swiss unemployment rate remained unchanged in January
The seasonally adjusted unemployment rate in Switzerland remained unchanged at a level of 3.40% in January. Markets were anticipating unemployment rate to climb to a level of 3.50%.

Swiss unemployment rate rose in January
In January, the non-seasonally adjusted unemployment rate in Switzerland advanced to 3.80%, in line with market expectations. Unemployment rate had registered a reading of 3.70% in the previous month.

US Redbook index registered a drop in the last week
The seasonally adjusted Redbook index in the US slid 2.60% on a monthly basis, in the week ended 05 February 2016. The Redbook index had registered a drop of 1.50% in the prior week.

US JOLTs job openings advanced in December
JOLTs job openings advanced to 5607.00 K in December, in the US, higher than market expectations of an advance to a level of 5413.00 K. In the prior month, JOLTs job openings had recorded a revised level of 5346.00 K.

US wholesale inventories fell less than expected in December
In December, on a MoM basis, the seasonally adjusted wholesale inventories fell 0.10% in the US, less than market expectations for a drop of 0.20%. The wholesale inventories had recorded a revised drop of 0.40% in the prior month.

US small business optimism index declined in January
In January, the small business optimism index eased to 93.90 in the US, compared to market expectations of a drop to 94.50. In the previous month, the small business optimism index had recorded a reading of 95.20.

US Redbook index advanced in the last week
On an annual basis, the Redbook index rose 0.60% in the week ended 05 February 2016, in the US. In the prior week, the Redbook index had recorded a rise of 0.80%.

Japanese housing loans advanced in 4Q 2015
In Japan, housing loans rose 2.20% on an annual basis, in 4Q 2015. Housing loans had recorded a rise of 2.40% in the prior quarter.

Japanese domestic corporate goods price index fell more than expected in January
In January, on a YoY basis, the domestic corporate goods price index dropped 3.10% in Japan, higher than market expectations for a drop of 2.80%. In the prior month, the domestic corporate goods price index had recorded a revised drop of 3.50%.

Japanese domestic corporate goods price index decline more than forecast last month
In January, the domestic corporate goods price index dropped 0.90% in Japan on a MoM basis, compared to a revised fall of 0.40% in the previous month. Markets were anticipating the domestic corporate goods price index to ease 0.70%.

Japanese machine tool orders registered a drop in January
On a YoY basis, the preliminary machine tool orders in Japan registered a drop of 17.20% in January. In the prior month, machine tool orders had dropped 25.70%.

Japanese average office vacancies in Tokyo recorded a rise in January
On a monthly basis, average office vacancies in Tokyo advanced 4.01% in Japan. In the prior month, average office vacancies in Tokyo had recorded a rise of 4.03%.

Wed, 10 Feb 2016 08:17:00 +0000
Another Sign of Rough Sledding Ahead: Dividend Cuts Surpass 2008 Another Sign of Rough Sledding Ahead: Dividend Cuts Surpass 2008
This article by Luke Kawa for Bloomberg may be of interest to subscribers. Here is a section:
Bespoke suggested that spreads in the high-yield debt market could signal whether more companies will be under pressure to cut or eliminate their dividends.

"Based on the trends of the last decade, when the credit markets are willing to lend, companies have jumped at the opportunity to borrow and increase their payouts," the analysts wrote. "The flipside is what we are seeing now, and when the credit markets start to turn off the spigot, some companies find they don’t have the cashflows to support their payouts."

Eoin Treacy's view
Dividends represent an important component in total return over the long term and with interest rates so low they have been a competitive source of income for yield hungry investors over the last six years. The bond markets dwarf the equity markets in terms of the quantities of money moving around so it makes sense that widening spreads are having an effect on the balance sheets of companies as borrowing costs rise.

Breaking Through the Zero Lower Bound
Thanks to a subscriber for this report by Ruchir Agarwal and Miles Kimball for the IMF which may be of interest to subscribers. Here is a section:
We show here how the combination of (a) using electronic money as the unit of account and (b) a time-varying paper currency deposit fee can be used to eliminate the option to circumvent the negative rates by withdrawing, storing and, later, redepositing paper currency. The key idea is that a negative interest rate can be accompanied by a time-varying deposit fee that ensures the value of paper money and the value of funds in electronic accounts will move in tandem. Such a deposit fee only needs to be imposed at the central bank’s cash window—the facility through which the central bank and commercial banks interact to bring cash in to and out of circulation—and not on households, firms, or banks. Levying the paper currency deposit fee on net deposits of paper currency allows the central bank to create an exchange rate at the cash window between electronic currency and paper currency, so that in a negative interest environment, the value of paper currency can be caused to depreciate over time relative to electronic money. The objective is a policy at minimum distance from the current monetary system consistent with eliminating the zero lower bound. In particular, such a policy requires no extra regulations or quantity constraints. Instead, its impact on the economy works entirely through the price system.

Eoin Treacy's view
This is about the best, though unintentional, argument for owning gold and stocks with reliable dividend growth I’ve seen. One of the primary arguments used by fundamental analysts to disparage gold is that it does not pay a dividend and as a result cannot be valued. That’s does not seem to trouble them when it comes to suggesting that fiat currency should be intentionally debased and eroded by negative interest rates. With $7 Trillion in bonds currently in a negative yield environment, gold has a positive carry just by virtue of not paying anything.

Crowd Money now in Mandarin

Eoin Treacy's view
It feels like a long time since the Shanghai University of Finance & Economics Pres bought the Mandarin rights to Crowd Money and I had almost given up on seeing a Mandarin version of the book. However I am pleased to inform you that it is now available on Amazon China. I know some of our Asian subscribers have been waiting on the Mandarin version coming out so I’m happy to relay the news. Mrs. Treacy is also looking forward to seeing the Mandarin version and I will wait on her seal of approval before attesting to the quality of the translation.

Email of the day on units of scale for commodities
Where can I find the "units" that the charts are presented in? e.g. -- LME copper Spot is (fairly obviously) US$/short ton (2000 lbs) -- I think. But what about "Coking Coal China 2nd Grade Spot" -- the numbers range from 2000 down to 800 ... clearly not US$/tonne??

Eoin Treacy's view
Thank you for this question. We do not generally put the units for commodities in the title because this needs to be done manually. However your point is well taken and relevant. The units for Chinese coking coal are Renminbi per tonne and I have updated the title accordingly. We’ll also adjust others where the units might not be obvious.

Wed, 10 Feb 2016 08:14:00 +0000
Volatility in Gold Prices: An Educational Series After a 12-year run, some question whether gold has lost its luster (if you’ll pardon the pun) as an effective portfolio hedge following three years of consistent declines. Many have called into question gold’s investment appeal: either the decade’s long bull run in gold has reached its conclusion, or the last three years’ price declines have generated an unprecedented opportunity to rebuild a portfolio with a base in precious metals. But these conclusions are often the results of emotional decision making. Sprott Senior Portfolio Manager Trey Reik has removed the emotion, examining a host of technical indicators in his latest report.  Trey’s report is a thorough one, and there have been several requests for the “spark notes” version.  There’s a lot to digest, so we’ve put together a 6-part series to help break down some of Trey’s major themes.
The results of his research are surprising.

Trey’s report examines currency fluctuations, national debt levels, demand for U.S. Treasuries, recessionary threats, the seizing up of the credit markets, high valuations of the U.S. equities markets, and CFTC trading trends to paint a comprehensive picture of the current investing environment. While no single factor may draw investors back to gold this year, taken as a whole, Trey anticipates a confluence of technical events may be prompting price volatility, and potentially a recovery. View his full report here. Sprott Institutional Strategy Report - Gold
Gold is not the only asset class which could be more volatile in 2016. Recent headlines continue to be dominated by falling oil prices, the Fed’s interest rate policy, Trump’s hair, and Hillary’s emails. Many asset classes were duly ignored, leading to sleepy performance late last year: the S&P 500 Index declined 1.75%, the DXY dollar index declined 1.54%, the 10-year Treasury yields rose 6 basis points to 2.27%, the so-called-fear gauge, the Vix, largely remained below 20, and gold stayed flat.
But this could be changing.

Taken together, Trey concludes that effective beat-down of gold prices over the last three years have created not only a price floor, but also series of potential catalysts for greater demand. And while we cannot say gold is set for another 12 years of gains, we do see price volatility on the horizon.
Trey reminds us of three key reasons why gold remains relevant as a productive portfolio tool.
1. Rebalancing the U.S. Financial System. After years of intervention, the Fed is trying to normalize U.S. financial markets, but this is not an easy path, particularly as global economies become increasingly intertwined. Many question the durability of the current state of the U.S. markets, as they appear unable to support a higher federal funds rate or a more productive 10-Year Treasury yield. The Fed is seemingly unable or unwilling to extricate itself from the financial markets, and gold remains one of few internationally-recognized stores of value.
2. Recessionary Fears. The developed world is grappling with high debt balances accrued in an attempt to mitigate the impacts of the global financial crisis (GFC). While debt has been carried relatively well during periods of economic improvement, a market correction could be in the offing, and gold is often considered a flight to safety in down environments.
3. U.S. Dollar. Currently, market sentiment for the U.S. dollar is nearly unanimously bullish, but for many investors, the trade has been played through. The result is that others are looking elsewhere for further gains, and the Japanese Yen, the Euro, and the Pound have all been dragged upward by the spillover demand. But these currencies are still subject to high national debt levels and recessionary threats, so where else can investors seeking capital preservation flock? We believe gold is one such asset.

Tue, 09 Feb 2016 15:25:00 +0000
Brokers - Reckitt Benckiser, Melrose and Randgold Tue, 09 Feb 2016 12:01:00 +0000 Today's Market View including: Anglo American & Horizonte US – In a general risk off mode, US equities have been sold off with demand for safe haven assets like government bonds and gold seen rising.
• Prices for financial institutions’ stocks were particularly badly hit.
Deutsche Bank, Credit Suisse and Commerzbank tested fresh share price lows while Morgan Stanley closed down 7%, Goldman Sachs 4.6% and Bank of America 5.2%.
• Investors are also drawing protection from default on senior debt of major lenders with a popular credit default swap index recording an almost US$6bn of trading yesterday, the highest volume since summer of 2015.
• Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Tuesday JOLTS Job Openings Dec   5,413k 5,431k
Wednesday Budget Statement Jan   US$42.5bn -US$
Thursday Weekly Jobless Claims     280k 285k
Friday Reatail sales/Core Jan  0.1%mom/0.0%mom -0.1%mom/-0.1%mom
  UoM Consumer Confidence Feb   92.5 92.0
Source: Bloomberg   

Japan – The Nikkei 225 lost 5.5% yesterday following European and US markets with yen breaching the ¥115 level and 10-year bond yields going into a negative territory.
• The yen briefly touched ¥114.21, a 15-month high, before settling above ¥115.
• In equity markets, financial companies like Nomura (-10.8%) and Shinsei Bank (-9.7%) were among the worst performers.

Germany – Industrial production disappointed extending a contraction by another month in Dec.
• Industrial output: -1.2%mom v -0.1%mom in Nov and a 0.4%mom increase forecast.
• The decline is reported to have been led by weaker energy and construction sectors.
• In a separate announcement, trade flow has dropped in Dec with both exports and imports posting a 1.6%mom decline.
• Declines were sharper than forecast which in turn highlights risks to major Eurozone economy from slowing global growth.

India – Reported Indian GDP growth of 7.3% in the final quarter of 2015.
• This now puts India on a faster growth trajectory to China.
• India is benefitting from low oil prices being a net importer.
• JP Morgan economist estimate the fall in the oil price has added 1% to GDP growth.
• There is some scepticism that real growth is being overstated following the method of calculating GDP growth which was revised a year ago.

Australia – Business conditions eased in Jan (5, down from a revised 6) with business confidence holding steady (2, unchanged from a downwards revised reading in Dec).

US$1.1193/eur vs 1.1178/eur yesterday. Yen 115.26/$ vs 116.84/$. SAr 16.143/$ vs 16.016/$. $1.445/gbp vs 1.451/gbp
0.705/aud vs 0.709/aud. CNY 6.574/$ vs 6.574/$

Commodity News
Precious metals:
Gold US$1,191/oz vs US$1,174/oz yesterday
Platinum US$926/oz vs US$907/oz yesterday
Palladium US$513/oz vs US$499/oz yesterday
Silver US$15.35/oz vs US$15.00/oz yesterday

Base metals:
Copper US$ 4,633/t vs US$4,610/t yesterday
Aluminium US$ 1,510/t vs US$1,507/t yesterday
Nickel US$ 8,270/t vs US$8,110/t yesterday
Zinc US$ 1,757/t vs US$1,695/t yesterday
Lead US$ 1,840/t vs US$1,786/t yesterday
Tin US$ 15,830/t vs US$15,545/t yesterday

Oil US$33.2/bbl vs US$33.7/bbl yesterday
Natural Gas US$2.100/mmbtu vs US$2.114/mmbtu yesterday
Uranium US$34.15/lb vs US$34.40/lb yesterday

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$44.0/t (prices will be little changed this week due to Chinese Lunar New Year holiday)
Thermal coal (1st year forward cif ARA) US$38.0/t vs US$37.7/t yesterday

Tungsten - APT European prices stood at $160-175/mtu last week
Ferrochrome – Benchmark prices collapsed to 92c/lb in December for Q1/16, down 11.5% from 104c/lb in Q4/15.

Company News

Anglo American (LON:AAL) 367 pence, Mkt Cap £4.7bn – Full year results for Kumba
• Revenues were R36.1bn down 24% from R47.6m last year.
Total sales for Kumba were up 6% to 47.8 Mt with export sales up 8%.
• Capesize freight rates averaged US$8/t down 45%.
• This was mainly due to a fall in realised iron ore prices of 42% to US$53/t offset by higher sales volume.
• A weaker currency was also helpful offsetting a fall in revenues by R4.46 bn.
• Over the year the company produced 44.8 Mt of lumps and 29 Mt of fines down 7%.
• Production from the Sishen mine was down 12% at 31.4 Mt due to the difficulty in providing the DMS plant with the correct quality of feedstock.
• The mine plan at Sishen has been optimised to adjust to lower iron ore prices with a significant fall in waste stripping.
• The re-configuration of the Sishen Mine has led to a R 6bn write down pre-tax.
• Kolomela mine performed well with production up 4% to 12.1 Mt with an improvement in efficiencies and throughput.
• Operating expenses now 2% lower with lower labour and overhead cost savings, lower fuel price offset by higher non-cash costs such as depreciation and rehabilitation costs.
• On mine cash costs are down by R1.1bn.
• Breakeven target of US$41/t versus US$45/t in H1 2015.
• Operating margin stood at 24% compared to 41% at the end of FY 2014.
• US$10/t reduction in controllable costs planned for 2016.
• Debt reduced by 42% as a result of lower cost, capex down 20% and the suspension of the dividend.
• Net debt stood at R 4.6 bn at the end of Dec 2015.
• The company are targeting export sales of around 40 Mt in 2016.
Anglo American is expecting a contribution of US$238m for FY 2015 down 66% from last year following adjustments to the Kumba earnings.
Conclusion: Kumba has been working hard to control costs and conserve cash against the sharp fall in iron ore prices. It looks as if their breakeven is not too far from current iron ore prices. The fall off in freight prices to US$8/t shows how weak the shipping market is – this looks like to remain weak this year but could turn around if prospects for trade and global growth improve.

Horizonte (LON:HZM) 1.65 pence, Mkt Cap £11.1m – Increases land holdings at Araguaia Nickel Project
• The company has been awarded new concession areas near its Araguaia Nickel project.
• Two new southern concessions and two new northern concessions have been awarded.
• The southern concessions Total 15,674 hectares and northern concessions Total 4,325 hectares.
• The company is said to be working to integrate their existing resources with the nearby Glencore project and updating project economics.
• An updated feasibility is expected in H2 2016.
Conclusion: We look forward to hearing results of the feasibility.

Tue, 09 Feb 2016 09:55:00 +0000
Pre Market: crude oil prices slid again UK Market Snapshot
UK markets closed sharply lower yesterday, amid worries about slowdown in global economic growth and as crude oil prices slid again. BG Group, Royal Dutch Shell, BP and Tullow Oil shed 0.5%, 0.9%, 1.9% and 6.0%, respectively. HSBC Holdings fell 4.2%, after news emerged that it would make a decision this week whether to shift its headquarters outside the UK or not. Rolls-Royce Holdings declined 2.7%, on the back of reports that it would announce a cut in its dividend. Imagination Technologies Group slid 1.9%, trimming its earlier plunge, after stating that it would incur a loss for the full year. On the brighter side, Randgold Resources soared 13.2%, after it raised its dividend payout following a record production in 2015. Peer, Fresnillo climbed 7.8%, as gold prices rallied. The FTSE 100 declined 2.7%, to close at 5,689.4, while the FTSE 250 fell 3.2%, to settle at 15,498.0.

US Market Snapshot
US markets ended lower yesterday, with the S&P 500 index recording its lowest close since April 2014 and the Nasdaq Composite approaching a bear market territory, following a rout in financial and technology stocks. Goldman Sachs Group, Citigroup, Bank of America, Comerica and Morgan Stanley dropped 4.6%, 5.1%, 5.3%, 6.6% and 6.9%, respectively., Facebook and fell 2.8%, 4.2% and 7.6%, respectively. BioCryst Pharmaceuticals sank 71.0%, after it reported disappointing results from its clinical trials for a drug meant to treat rare genetic disorder. Chesapeake Energy tanked 33.3%, amid concerns over its draining cash reserves. On the contrary, Apollo Education Group surged 24.0%, as it would be converted into a private firm after getting acquired by a group of investors for $1.1 billion. The S&P 500 fell 1.4%, to settle at 1,853.4. The DJIA shed 1.1%, to settle at 16,027.1, while the NASDAQ declined 1.8%, to close at 4,283.8.

Europe Market Snapshot
Other European markets closed in the red yesterday, led by a sell-off in banking shares, amid concerns over health of the global economy. Greek lenders, Alpha Bank and Eurobank Ergasias sank 17.7% and 29.2%, respectively. Commerzbank tumbled 7.4%, after a broker downgraded its rating on the lender to the equivalent of a sell. Energy sector stocks, Subsea 7, Seadrill and Saipem tanked 5.8%, 14.5% and 25.3%, respectively. Assa Abloy plunged 9.8%, after it reported a drop in its sales from China in the fourth quarter. Novozymes dropped 4.3%, as it decided to split into three divisions. On the upside, Casino Guichard-Perrachon gained 2.7%, after it sold its stake in Big C Supercenter for €3.1 billion. The FTSEurofirst 300 index declined 3.4%, to close at 1,239.7. Among other European markets, the German DAX Xetra 30 dropped 3.3%, to close at 8,979.4, while the French CAC-40 fell 3.2%, to settle at 4,066.3.

Asia Market Snapshot
Markets in Asia are trading sharply lower this morning, following a rout in global stock markets. In Japan, banks, Mizuho Financial Group, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group have plunged 5.9%, 7.8% and 8.3%, respectively, amid profit concerns due to the BoJ’s negative interest rates policy. Auto exporters, Toyota Motor, Nissan Motor and Mazda Motor have fallen 4.4%, 6.7% and 8.3%, respectively, amid a stronger Japanese Yen. Oil firms, Inpex and Japan Petroleum Exploration have dropped 5.4% each, on lower crude oil prices. Markets in Hong Kong and South Korea are closed today for the Lunar New Year. The Nikkei 225 index is trading 5.0% lower at 16,150.2.


Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.36% or $0.12 higher at $33.00 per barrel. Yesterday, the contract declined 3.46% or $1.18, to settle at $32.88 per barrel, amid persistent fears over global oil supply glut.
At 0430GMT today, Gold futures contract is trading 0.37% or $4.40 lower at $1193.50 per ounce. Yesterday, the contract advanced 3.46% or $40.10, to settle at $1197.90 per ounce, as a turmoil in the global stock markets triggered demand for the safe-haven yellow metal.
At 0430GMT today, the EUR is trading 0.18% higher against the USD at $1.1211, ahead of the German industrial production and trade balance data, both for December, scheduled to be released in a few hours. Yesterday, the EUR strengthened 0.33% versus the USD, to close at $1.1190, reversing its previous session losses.
At 0430GMT today, the GBP is trading marginally lower against the USD at $1.4424, ahead of UK’s total trade balance figures for December, slated for release in a few hours. Yesterday, the GBP weakened 0.5% versus the USD, to close at $1.4428, continuing with its weakness.
Fixed Income
In the US, long term treasury prices rose and pushed yields sharply lower, as investors turned to risk-free government bonds amid a rout in the global equity markets. Yesterday, yield on 10-year notes plunged 11 basis points to 1.75%, while yield on 2-year notes tumbled 8 basis points to 0.66%. Meanwhile, 30-year bond yield tanked 12 basis points to 2.56%.

Key Economic News

UK retail sales across all sectors advanced more than expected in January
Retail sales across all sectors in the UK advanced 2.60% in January on a YoY basis, higher than market expectations for a rise of 0.30%. In the previous month, retail sales across all sectors had advanced 0.10%.

Euro-zone investor confidence index dropped in February
In February, the investor confidence index recorded a drop to 6.00 in the Euro-zone, compared to market expectations of a fall to 7.40. In the previous month, the investor confidence index had recorded a reading of 9.60.

French business sentiment index advanced surprisingly in January
The business sentiment index climbed unexpectedly to 101.00 in January, in France, compared to a revised reading of 100.00 in the prior month. Markets were expecting the business sentiment index to ease to a level of 99.00.

Spanish calendar adjusted industrial output advanced less than expected in December
On an annual basis, the calendar adjusted industrial output in Spain advanced 3.70% in December, lower than market expectations for an advance of 4.10%. The calendar adjusted industrial output had advanced by a revised 4.30% in the previous month.

Canadian building permits advanced more than expected in December
Building permits in Canada registered a rise of 11.30% in December on a MoM basis, higher than market expectations for a rise of 6.20%. Building permits had dropped by a revised 19.90% in the prior month.

Japanese money supply M2+CD advanced more than expected in January
In January, money supply M2+CD recorded a rise of 3.20% on an annual basis in Japan, more than market expectations for an advance of 3.10%. In the prior month, money supply M2+CD had registered a revised rise of 3.10%.

Japanese Eco Watchers Survey for current situation dropped in January
Eco Watchers Survey for the current situation dropped to 46.60 in Japan, in January, compared to market expectations of a drop to a level of 48.40. In the previous month, Eco Watchers Survey for the current situation had recorded a reading of 48.70.

Japanese M3 money supply rose as expected in January
In January, on an annual basis, M3 money supply in Japan advanced 2.50%, at par with market expectations. M3 money supply had registered a similar rise in the prior month.

Japanese Eco Watchers Survey for future outlook climbed in January
Compared to a reading of 48.20 in the previous month Eco Watchers Survey for the future outlook advanced to 49.50 in January, in Japan. Markets were expecting Eco Watchers Survey for the future outlook to climb to a level of 48.40.

Japanese corporate bankruptcies registered a drop in January
Corporate bankruptcies dropped 6.38% on a YoY basis, in January, in Japan. Corporate bankruptcies had recorded a rise of 1.89% in the prior month.

Tue, 09 Feb 2016 09:52:00 +0000
In the papers: Crowdcube, NHS, Goldman Sachs.. The Times
Crowdcube ‘uses neat trick to fool investors’: Britain’s leading equity crowdfunder has denied claims that it misled ordinary investors by “drip-feeding” money from other sources on to the platform to create the artificial impression that there was “demand for investment”.
Stamp duty delivers a sharp capital reduction for Osborne: Revenues generated from stamp duty in London fell by £105 million in the first nine months of last year, as George Osborne’s reform of the tax led to a slowdown in transactions for the most expensive homes in the capital.
Thiam shares pain of Credit Suisse cuts in ‘act of solidarity’: The Boss of Credit Suisse has offered to take a cut in his bonus as the lender prepares to trim thousands of jobs in an attempt to cut costs and improve performance.
City watchdog failed to properly monitor share deals by its staff: The City watchdog has admitted that it must tighten its rules over trading by staff in shares of the banks and brokers it regulates after an internal inquiry found that sensitive information was being stored in places where any employee could find it.
Bondholders appeal to Supreme Court over Lloyds asset buyback: The Supreme Court is to hear an urgent appeal on behalf of thousands of Lloyds bank retail bondholders against its attempts to buy back their assets at a reduced price, in a scheme that was due to start .
Giant field off Shetland starts pumping gas: The largest new British deep water oil and gas project for many years has gone into production after gas began flowing through an underwater pipeline to the mainland from a new plant on the Shetland Islands.
Cycling kit manufacturer reflects on record profits: The company, based in Livingston, West Lothian, which also provides kit to the Movistar cycling team, has set a record of its own: profits have risen by nearly 50% to £1.5 million.

The Independent
General Sir Richard Shirreff and Peter Hain join forces as consultants: General Sir Richard Shirreff and Peter Hain have joined forces to form a management consultancy, which will be launched.
David Cameron urged to follow French example and ban U.K. supermarkets from wasting food: Pressure is mounting on the U.K. Government to introduce legislation to ban supermarkets from sending unsold food to landfill.
Shoreditch property development worth £750 million launches on the site of Shakespeare’s theatre: A new multi-million-pound development has launched of the site of former William Shakespeare’s Curtain Theatre in Shoreditch.
NHS: Rules preventing tax-avoiding companies from securing health care contracts scrapped: Health service rules that prevent tax-avoiding private companies from securing NHS contracts are being scrapped - for fear they “discriminate” against firms with Google-style arrangements.

Credit Suisse: solidarity: In what the bank called an “act of solidarity,” Credit Suisse’s new Boss, Tidjane Thiam, has asked for a big cut to his 2015 bonus. Whether the solidarity was for his colleagues (who could use a little) or his shareholders (who could use a lot more) is unclear.

Sir Philip should beef up governance code to get women into top jobs: To whit, the government’s appointment of Sir Philip Hampton, GlaxoSmithKline Chairman and general corporate grandee, to address the paucity of managing females in U.K. companies.

Hedgies short of luxury: If it’s a tech start-up — in which every 1% stake, under an east London bylaw, must cost at least £10 million — you can only spout about millennials and pray for an IPO. If it’s a pack of artisanal sausages — in which each 100% organic offal tube, under a west London bylaw, must cost £2 — you can only serve them up and pray no one spouts at all.

The Daily Telegraph
Fears over new financial crisis come back to haunt global markets as trading turmoil hits: Global stocks were gripped by a fresh bout of panic selling on Monday, raising fears over the health of the world’s banking system for the first time since the financial crisis.
Goldman Sachs sees near-zero risk of U.K. recession despite market tantrum: Britain is extremely unlikely to face an economic recession over the next two years and is on safer ground than any other major country in the developed world, according to a new crisis-study by Goldman Sachs.
Google Boss Sundar Pichai handed shares worth $199 million: Google’s Chief Executive has been handed shares worth $199 million (£138 million), making him the highest paid Boss in the U.S.
Growth star India overtakes China as world’s fastest growing major economy: India has overtaken China as the fastest growing major economy in the world, expanding by 7.3% and cementing its position as one of the sole bright spots in a flailing global economy.
BAE gets £201 million for fresh design work on new nuclear submarines: A replacement for Britain’s ageing Vanguard-class nuclear missile submarines has come a step closer after the Ministry of Defence awarded £201 million to BAE Systems to develop the so-called “Successor” vessels.
Energy supply crunch looms as Staffordshire coal plant to close: The U.K. is to lose another coal-fired plant from its dwindling power capacity after French firm Engie said it will shut the 1GW Rugeley power station in Staffordshire.
Franco-German central bankers call for creation of Eurozone treasury: Two of Europe’s most powerful central bankers have called on the Eurozone to form its own treasury and push forward with a quantum leap in integration to secure the single currency’s future.
Mortgage rates hit nine-year low: Interest rates on mortgages have hit record lows, but borrowers are being slapped with higher fees as banks look to protect their profit margins, data from suggests.
Oil trader Vitol says market may never see $100 a barrel again: Global commodities trader Vitol has said the oil market will struggle to break above the $50 per barrel mark and may never reach the $100 price last seen in 2014.

The Questor Column:
Sell G4S as turnaround falters: G4S the security services provider is proving just how difficult it is to turn around the fortunes of a company that has embarked on a multi-year global expansion plan fuelled by debt. The business is built on a fairly simple model. The company provides security staff for a range of sites such as sports events, corporate and public sector buildings, and industrial facilities. The near 620,000 strong army of staff is paid fairly low wages, at or around the minimum wage. The problem at G4S is that the company decided to use steady cash generation to expand far too quickly by using ever-increasing amounts of debt. G4S is now attempting to deal with the legacy of that expansion. The most recently reported net debt (the total amount of debts less cash) was £1.68 billion at the end of June, while net assets were £765 million. Emerging markets such as Brazil, India and South Africa contribute about a third of total revenue. Revenue growth from these countries in the first-half was 5.7%, but this was not adjusted for currency devaluation. The Brazilian real and South African rand have dropped by 25% against the pound since the start of 2015, while the Indian rupee is flat. G4S does have some factors in its favour. Revenue outlook is helped by a £5 billion contract pipeline and expected organic revenue growth of between 5% and 8% a year. The company could also raise cash by exiting some of the youth offender contracts in the U.K. that have brought the most recent wave of problems. However, Questor believes the dividend will remain at risk until debt levels are meaningfully reduced. G4S at 197.5p -11.9p. Questor says “Sell”.

The Guardian
Fears over weak growth prompt global stock markets to fall: Stock markets around the globe have plunged into the red, amid fears that weaker growth will leave banks exposed to a fresh economic slowdown.
Apple under pressure as lawyers pledge action over ‘Error 53’ codes: Apple has come under pressure to scrap its controversial policy of permanently disabling repaired iPhone 6s when software is upgraded, following a global consumer backlash and claims the company could be acting illegally.
IFS warns market turmoil could leave black hole in George Osborne’s plans: Britain’s leading experts on the public finances are warning that the turmoil on global stock markets threatens to leave a £2 billion black hole in George Osborne’s deficit-reduction plans that could force the Chancellor to raise taxes or make fresh cuts in spending to hit his budget targets.
New runway will be built at Heathrow or Gatwick by 2030, MPs told: A new runway will be built at Heathrow or Gatwick by 2030 and the work being done now is vital to make sure the decision is legally watertight, the transport secretary has told sceptical MPs.
Scrap high-denomination banknotes, urges ex-bank Boss: Governments should consider scrapping high denomination banknotes to combat financial crime and tax evasion, including paying tradespeople in cash, a former bank Boss has said.

Daily Mail
Barclays and Standard Chartered bank shares suspended as regulators check for suspicious behaviour during FTSE rout: Shares in Barclays and Standard Chartered were suspended during a day of carnage on the financial markets.
Boss of troubled smartphone parts maker Imagination Technologies quits after 18 years: The Boss of troubled smartphone parts maker Imagination Technologies has quit after nearly two decades in the job, as the firm struggles to keep pace with the changing market.
Norway fund raps VW for giving too much power to the Porsche family and putting minority shareholders at a disadvantage: Volkswagen has come under fire from the world’s biggest sovereign wealth fund as it struggles to deal with the diesel-emissions scandal.
John Lewis teams up with fashion retailer Finery with concessions planned for six flagship stores: John Lewis is to add a new name to its wardrobe, with online fashion retailer Finery setting up shop in its stores.
World’s largest concrete maker Aggregate fights back over claims it ‘takes 93 days to pay its bills’: The world’s largest concrete maker is at the centre of a row over claims it took more than 90 days to settle some of its bills.
Daily Express
France and Germany in new desperate plot to save Eurozone amid German stocks meltdown: Desperate policymakers in Europe are devising plans to stop the union from crumbling, amid rising fears over Germany’s economy and the backbone of the single currency.
Retail leader urges new business rates in response to the living wage: Retail Chiefs have urged the Government to introduce radical business rates reform to help protect shops and communities from the “unintended consequences” of the living wage.
China sends markets into spiral: FTSE 100 loses £40 billion as markets dive into the red: Britain’s top stock market dived into the red on Monday as panic over China and the world economy again tore through trading floors.
npower reveals bill cut: Now only one energy giant has failed to drop prices: Energy giant npower is finally cutting customers’ standard energy bills, but has sparked outrage by delaying the reduction until after Easter.

The Scottish Herald
Glasgow-based Clydesdale Bank in good shape for independent future after listing on stock exchange says Boss: The Chief Executive of Clydesdale Bank, David Duffy, has celebrated the lender regaining its independence after almost 100 years and said it is in good shape to deal with the challenges it may face.
Hotel sector veteran Maurice Taylor upbeat as profits surge at Chardon Trading: Scottish hotel investment company Chardon Trading, built up by sector veteran Maurice Taylor, achieved strong rises in turnover and operating profits in its last financial year.
Welch warns of technology valuation “bulge”:  Entrepreneur Mike Welch has warned the current “bulge” in technology company valuations may be unsustainable as it is being fuelled by too much private equity money.
Expert warns: many SMEs fighting for survival in North Sea services market: Many of the small and medium sized enterprises that help oil and gas companies run their North Sea operations will face a struggle for survival this year as the crude price plunge takes a heavy toll on the area EY has warned.
Property firm posts sharp decline in profits: Rettie & Co, the property sales and lettings business, saw pretax profits decline 60% to £275,000 in 2015 amid poor confidence in the property market.
Angels invest almost £4 million in growing Scottish firms: Four Scottish growth companies have secured £3.9 million of investment from Scottish business angel syndicate Archangels and Scottish Enterprise’s investment arm, the Scottish Investment Bank.

The Scotsman
High Street sees January bounce as retail sales climb: The high street rebounded strongly at the start of 2016 after an uneven festive period for many retailers, a new report out revealed.
Gilson Gray swoops on Warners’ conveyancing team: Law firm Gilson Gray has hit the expansion trail again by swooping on an Edinburgh rival’s residential property team.
3D displays firm Holoxica secures €1.3 million cash injection: Holoxica, the University of Edinburgh spin-out company that is pioneering 3D display technology, has secured €1.28 million (£988 million) of European funding.
Tool rental firm Speedy Hire nails down takeover: Speedy Hire has agreed to buy rival OHP as the tool rental firm seeks to expand its presence in the rail market.
Telephone fraudsters steal £18 million from Scottish business: A Scottish blue-chip company was scammed out of £18 million after fraudsters posed as its Boss on the phone.

City A.M.
Nearly 5% of Britain’s shops have been empty for more than three years: Nearly 5% of Britain’s town and city centre shops have remained empty for more than three years, new research shows, in a stark reminder of the challenges still facing the high street.
Firms must state Brexit risk audit regulator warns, as earnings season approaches: Companies are being warned to include the cost of the U.K. quitting the European Union in their financial statements by the accounting regulator the Financial Reporting Council (FRC).
Deutsche Bank seeks to quell investor fears as it assures it can make debt repayments due in April: Deutsche Bank moved to calm investors this evening, after it said it will have no problem making bond payments due in April.
Gold price breaks $1200 as markets fall and investors fret over the health of the global economy: Stock market woes and fears over an ailing global economy have given a boost the price of gold, pushing it over the $1,200 line for the first time since June 2015.
Elegant Hotels buys its sixth Barbados resort for £12.5 million: Elegant Hotels has added another luxury Barbados resort to its portfolio after agreeing to buy Waves Hotel and Spa on the island’s west coast for $18 million (£12.5 million).
Yelp shares suspended in the U.S. as results released early and the CFO quits: Shares of review site Yelp have been suspended in the U.S. following the firms fourth quarter earnings being leaked.
Emerging Payments Association says small non-bank payment providers should have access to the same systems as the big banks: Payments companies are urging regulators to overhaul the way payments are delivered by enabling alternative payments providers to better compete with larger lenders.
Chesapeake Energy: Share price of world’s second-largest natural gas producer halted as it says there are no plans to pursue bankruptcy: Shares in Chesapeake Energy, the world’s second-largest natural gas producer, were halted in early trading in New York, after more than half their value was wiped off - but the company said it had no plans to pursue bankruptcy proceedings.


Tue, 09 Feb 2016 09:49:00 +0000
Beaufort Securities Breakfast Alert :Advanced Oncotherapy, Alecto Minerals, Armadale Capital, Cyan Holdings.. The Markets
Market opening: The FTSE-100 is expected to start this morning's session around 5-points lower.

New York: Wall Street ended in the red after a volatile trading session in European markets. Investors remained concerned over a slowdown in the global economy and the continuing slump in oil prices. The S&P 500 fell 1.4%, with the materials sector leading the decliners.

Asia: Equities are trading lower, following a huge sell-off in global markets. The yen strengthened against the dollar, resulting in losses for export-driven stocks in Japan. Moreover, the yield on 10-year Japanese bond fell below zero for the first time. The Nikkei 225 shed 5.4%, while the Hang Seng remained closed due to the Lunar New Year holiday.

Continental Europe: Markets ended lower amid investor concerns over the performance of the region’s top banks. Furthermore, the continuing decline in commodity prices exerted pressure on basic resource stocks. Germany’s DAX and France’s CAC 40 dropped 3.3% and 3.2%, respectively.

Crude Oil: Yesterday, WTI and Brent oil prices decreased 3.9% and 3.5%, respectively. The spread between the two varieties stood at US$3.2 per barrel.

UK small caps: The FTSE AIM All-Share index closed 1.30% lower yesterday at 680.90.

Today's news
UK retail sales up in January 2016: BRC
According to the British Retail Consortium (BRC), retail spending in the UK grew 3.3% y-o-y in January 2016, compared with a 1.0% increase in December, the highest rise in four months. On a like-for-like basis, sales jumped 2.6% in January after a 0.1% gain in December. The rise in sales was led by an increase in furniture and home appliance sales. Furthermore, discounts during the New Year season boosted clothing and footwear sales.

Company News

Advanced Oncotherapy (LON:AVO, 7.12p) - Speculative Buy
Advanced Oncotherapy, the developer of next-generation proton therapy systems for cancer treatment, yesterday made two important announcements. One being the realignment of roles and responsibilities of the Executive team, the other being a prospectively far reaching industrialisation agreement with Thales, the giant and highly prestigious French multinational technology design and manufacturing group. The agreement with Thales provides Advanced Oncotherapy with the support needed to move from the first LIGHT system, currently being developed for use at the Company's flagship Harley Street site, to full commercial roll-out and a fully industrialised machine series production. Thales is a well-established manufacturer of high RF energy equipment including klystrons, electron tubes, amplifiers and X-ray detectors, as well as synchrotrons, accelerators and advanced medical imaging equipment. They will offer Advanced Oncotherapy access to Thales's unique execution and engineering skills to manage the transition from prototype to a series production manufacturing line, as well as cost reduction capabilities. As part of the agreement, Thales will undertake the initial engineering studies and test facilities commissioning required to construct the custom-designed series production line. The cost of these activities will be funded by Advanced Oncotherapy and recovered through the retention of 100% gross margin on the initial LIGHT machines produced. In addition, in the future Thales intends to organise the series production so as to drive down costs, whilst operating under an appropriate quality framework. Regarding the directorate, Michael Sinclair, currently Executive Chairman, will become Chief Executive Officer and Executive Chairman; Sanjeev Pandya, currently Chief Executive Officer, will become Executive Vice President for Global Business Development and will remain on the Board of the Company. Nicolas Serandour, currently Chief Financial Officer, will become Chief Operating and Financial Officer.

Our view: Yesterday’s agreement with Thales tells investors two things: (i) That the signing of an agreement with such a highly prestigious global operator, that generally might not be expected to even open the door to small pre-prototype technology developers, underlines both parties’ confidence that the LIGHT system will be successfully developed during 2016 before moving to commercial production the following year and, (ii) That management is taking the forward initiative regarding the successful exploitation of its highly protected IP. As has been explained in numerous research documents, Beaufort’s commercial scenario for LIGHT is that the cost, safely, operational and size advantages its brings to the world of proton therapy, will effectively render ‘first generation’ systems all but obsolete; its development will also very significantly expand the international market for such systems from some US$2.5bn annually right now, to a figure potentially ten-times as large as LIGHT becomes the obvious successor to the similarly-priced but now relatively antiquated X-ray radiation systems that have a global installed base in excess of 20,000 units. In this respect, LIGHT uniquely faces a giant and accelerated global opportunity. To service this successfully, it will require the near-term facilitation of huge manufacturing and marketing support, which would require several years to independently create at significant expense. As Beaufort considers AVO to primarily be a medical technology designer of excellence, which will inevitably need to control its own small scale (relative to its potential international opportunity) manufacturing through which it would be able to develop and evolve successive generations of the LIGHT system, the volume manufacturing, distribution and servicing of its devices would be best done by external independent parties. The obvious choice for such a role being, of course, the existing ‘first generation’ manufactures who already have the right assembly, testing and support facilities in place. They would, of course, be required to pay royalties for the right to produce (possibly between US$2m and US$4m for a typical 3-bay LIGHT system), which would generate very significant income for the Group as output ramps up in coming years. The fact that AVO management has seen fit to put such a manufacturing agreement in place with Thales is, almost certainly, to create its own production and development facility; it is also a convenient way to remind the various ‘First Generation’ producers (Mitsubishi, IBA, Varian, etc.) that AVO could, if necessary, go it alone and so any licensing arrangements agreements that might be reached will not be up for negotiation. This places AVO is an exceptionally strong position and highlights the exceptional value of its technology. This will become increasingly clear as AVO moves toward demonstrating its first full scale prototype during H2’2016. With this in mind, the ‘moving around of the senior management chairs’ simply marks the shift in the business from focusing on the development of the first LIGHT system, to the ongoing commercial roll-out of its game-changing technology. Beaufort remains a very enthusiastic supporter of Advanced Oncotherapy and repeats its Speculative Buy recommendation on the shares.

Beaufort Securities acts as corporate broker to Advanced Oncotherapy plc
Alecto Minerals (LON:ALO, 0.08p) - Speculative Buy
Yesterday, Alecto Minerals announced that its wholly-owned subsidiary Caracal Gold Mali SARL had signed an agreement with Randgold Resources to form a joint venture (JV). The JV would conduct exploration and development work at the company's 137-sq-km Kossanto West gold project in western Mali that covers the Kobokoto Est and Koussikoto exploration permits. According to the agreement, Randgold would fund all costs up to the completion of a pre-feasibility study (PFS) on the project. Randgold and Alecto would hold 65% and 35% participating interests in the permits, respectively. After the completion of the PFS, all costs will be split between the JV firms in the ratio of their participating interests. The permits will be held by Caracal until the JV forms a new company (NewCo) for the development of a mine. All relevant permits would be transferred to NewCo. JV partners are likely to hold 90%, in the ratio of their participating interests in the JV, followed by the Malian government (10%).

Our view: The JV with Randgold is an important landmark in Alecto's growth story. Randgold is a key developer of world-class gold projects in West Africa. The JV would engage in exploration at the company's vast and prosperous gold project in Mali. Randgold would provide financial aid and expertise to rapidly move forward the development of the project. Meanwhile, the company remains focused on obtaining production from the Zambian gold project, Matala. Overall, Alecto is well placed with a diverse set of projects and resources to attain long-term growth. Therefore, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Alecto Minerals plc
Armadale Capital (LON:ACP, 3.38p) - Speculative Buy
Yesterday, Armadale Capital (Armadale) released the preliminary results of the feasibility study for Phase 1 of the Mpokoto Gold Project in the Katanga Province of the Democratic Republic of Congo. The study was focused on the shallower oxide portion of the resource. The key highlights of the study include total revenues of US$138.6m, with average annual revenues of US$30.8m at a gold price of US$1,250/oz (ounce) and average annual pre-tax net operating profit of US$11.14m. Open pit mining for Phase 1 has been planned for a period of four years to produce an average 24,900 oz of gold per annum. Capital costs totalled US$25.15m, with operating costs of US$792/oz. Pre-tax net present value (NPV) for Phase 1 stood at US$19.05m based on a discount rate of 5% and a gold price of US$1,250/oz and internal rate of return (IRR) of 44%. Moreover, expanded scoping study has shown that Phase 2 has an additional NPV of around US$20m. The study also revealed substantial upside potential from unweathered ore at 30m depth that is Phase 2 of the project.

Our view: The results of the preliminary study at the Mpokoto gold project have been encouraging and validate its commercial value. Mpokoto has a total mineral resource of 678,000oz gold (Au) from 14.58 million tonnes (Mt) @ 1.45g/t Au at a cut-off grade of 0.5g/t. Project economics demonstrated from the study have been robust, with a high NPV, a low cost, and a good IRR. Furthermore, additional scoping study proved the enormous potential of the second phase of the project. The company has now shifted its focus to finalizing the funding for the project from its partner, A-MCS, with whom Armadale has already commenced talks.. The company will start construction once it has finalized this funding programme. Armadale plans to look for further options to optimize the project and increase the overall resource base. Considering the above developments, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Armadale Capital PLC
Cyan Holdings (LON:CYAN, 0.14p) - Speculative Buy
Cyan, the integrated system and software design company delivering mesh based flexible wireless solutions for utility metering and lighting control, this morning announced receipt of an initial purchase order from telecommunications contractor Micromodje for a 2,000-unit smart metering implementation, which will be fitted into street cameras in the Islamic Republic of Iran. This initial purchase order is worth £67,000 with an upfront payment of £50,000. The order from Micromodje is for the supply of Cyan's CyLec Advanced Metering Infrastructure solution, which includes RF modules, data concentrator units, head-end software licenses, software installation services and an annual software maintenance agreement. The order was placed only a couple of weeks after international sanctions were lifted on Iran on 16 January and is believed to be one of the first orders secured by a UK business, with support from the specialist UK Trade and Investment team. The first units were delivered at the start of last week and were successfully deployed in a two-day period for a proof of concept in Iran. The Cyan HES has been installed on a Micromodje server and the Cyan end to end solution is providing meter readings every 30 minutes as well as the ability to connect/disconnect supply. The solution has been demonstrated to Micromodje's Iranian customer. The proof of concept had to be ready for a demonstration to government officials as part of the Victory Day of the Iranian Revolution celebrations on 11 February in Tehran.

Our view: Micromodje is a system integrator with a wealth of experience in delivering solutions for government contracts and has recently been expanding its core capabilities to include the emergent Internet of Things connectivity markets. It will act as a distribution agent of Cyan's smart metering hardware and software in Iran, whilst providing a complete turn-key service for the fulfilment of the deployments. Timing is excellent, given the lifting of economic sanctions on 16th January. The combined Cyan team from India and the UK exceeded the customer's expectations by deploying the proof of concept pilot in only two days and this order from Micromodje shows its confidence in the Group's enabling technology. Micromodje and Cyan have now commenced discussions on a larger purchase order for smart electricity metering solutions to be deployed within Iran, leaving Cyan management optimistic for longer-term opportunities in the delivery of smart metering technology, enhancing the quality of service for energy utilities and other customers across Iran. The potential for Cyan has being highlighted by a published Iran Government estimate detailing a requirement for as many as 33 million smart electricity meters. Beaufort retains its Speculative Buy recommendation on Cyan Holdings.

Beaufort Securities acts as corporate broker to Cyan Holdings plc
DDD Group (LON:DDD, 1.62p) - Speculative Buy
DDD yesterday announce that it has entered into an agreement with Arisawa Manufacturing Company Ltd. for an US$800,000 Secured Loan ("Loan"), pursuant to the existing authorities granted to the Board of Directors. The Loan is secured by the Company's US 2D to 3D conversion patent number 6,477,267 and its international counterparts. The net proceeds (approximately US$795,000) to be used to finance business development and licensing activities for the Group's new TriDef SmartCam and UPix products and additional intellectual property licensing activities. The Loan has an annual interest rate of 10%, payable at the end of each calendar quarter. It is repayable on or before 30th June 2016 or as otherwise mutually agreed between the Company and Arisawa. Arisawa is currently a holder of 15.7% of the existing issued ordinary share capital of the Group. The transaction is a related party transaction for the purpose of AIM Rule 13.

Our view: The affiliate licensing program for DDD's new TriDef SmartCam products continues to deliver promising results, while end user reaction is very encouraging with strong growth in downloads and an increasing awareness amongst larger prospective licensees and partners. The Group's release of its UPix social photography app in the Google Play store is also anticipated for later this month, which should further demonstrate the applicability of its newest solutions to large growth markets. With momentum behind the new 2D products, DDD is also planning to place more emphasis on its wholly owned GenMe Inc. subsidiary to accelerate the commercialization of the new products. The additional capital raised in this round will strengthen resources as it strives towards operating cash break-even. Inevitably in such circumstances, timing can never be precise and reasonably high cash burn will likely continue to place a near-term strain on the balance sheet as the Group rolls out and refines 2D applications, appoints licensees and undertakes end-user marketing. But given the market size for gamecasting/video conferencing that is forecast to deliver growth from hundreds of millions of existing end-users, potential shareholder rewards remain very large indeed. Beaufort retains its Speculative Buy recommendation on DDD Group.

Beaufort Securities acts as corporate broker to DDD Group plc
Kibo Mining (LON:KIBO, 4.12p) - Speculative Buy
Yesterday, Kibo Mining (Kibo) announced the completion of the first phase of the Mbeya coal-to-power project (MCPP), an integrated bankable feasibility study (IBFS). The highlights of the study include the successful integration of three primary MCPP feasibility study work streams and the completion of meetings with all key government stakeholders. Shangoni Management Services has formally been appointed environmental consultant.

Our view: The completion of the first phase of the IBFS is an encouraging development for Kibo. The company is making good progress on all key work streams, including its mining definitive feasibility study (MDFS), its power definitive feasibility study (PDFS), its environmental impact assessment (EIA) and IBFS. The successful completion of each study will expedite the completion of the MCPP. Meanwhile, the company is about to finalize a power purchase agreement for the MCPP with Tanzania Electric Supply Company (TANESCO). Recently, Rukwa Coal Limited, a wholly-owned subsidiary of Kibo, received three new prospecting licences in southern Tanzania, which contains the 109Mt Mbeya coal mineral resource. This will allow Kibo to test for a possible extension to the current resource and/or the discovery of additional satellite deposits. We expect the MCPP project to gather further momentum as the feasibility study is presently advancing at a great pace and is approaching completion. Given the above positive developments, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Kibo Mining plc
Mariana Resources (LON:MARL, 1.85p) - Speculative Buy
Mariana Resources Ltd reports that exceptionally high grade; near-surface gold-copper mineralisation continues to be intersected in drilling along extensions to the Hot Maden Mineral Resource. Importantly, the latest results include the best gold-copper intersection to date with none of the eight holes reported representing resource infill drilling. The Company reported exceptional gold-copper mineralisation intersected in near-surface Resource Extension Drilling at the Hot Maden Project. Key intercepts include: HTD-34: 71.0m @ 32.7 g/t Au + 1.9% Cu from 55m downhole. Including 22.0m @ 83.9 g/t Au + 1.8% Cu from 89m downhole. HTD-35: 63.6m @ 14.5 g/t Au + 3.4% Cu from 46.8m downhole. Including 21.0m @ 38.9 g/t Au + 5.1% Cu from 85m downhole. The Resource Extension Drilling at Hot Maden is ongoing with one diamond drill rig and the rate of drilling is now expected to be accelerated shortly with the addition of a second rig. Systematic metallurgical test work on the Hot Maden gold-copper mineralisation is now underway, with the initial focus being on crushing / grinding studies, gold-copper recoveries, and flow sheet definition. Completion of a maiden Preliminary Economic Assessment (PEA)* for the Hot Maden Project remains on track for late Q3 2016 / early Q4 2016. * A "PEA" is a study other than a pre-feasibility study or feasibility study which includes an economic analysis of the potential viability of mineral resources - Canadian Securities Administrators (CSA).

Our view: The drill hole, HTD-34, represents Mariana’s best hole to date and, together with HTD-35, the drilling continues to deliver ounces outside of the reported mineral resource estimate. The high grade intercepts have delivered significant mineralisation 100m closer to surface from discovery Hole HTD-05. Drilling to date is successfully delineating the limits of the resource to the east and west whilst leaving the potential open at depth as well as north and south. Importantly, extension and exploration drilling planned for February is expected to ramp up with a second drill rig scheduled to commence drilling soon. This is much anticipated as it will hopefully extend the strike of the resource zone to the south and north. In addition, the Company report that the PEA is on track for completion later this year with studies firmly underway. We look forward positively to February's planned activity, and retain our Speculative Buy stance.

Stratmin Global Resources (LON:STGR, 2.88p) - Speculative Buy
Yesterday, Stratmin Global Resources (Stratmin) informed that on 1st February 2016, Consolidated Resources agreed to provide an unsecured loan facility of up to A$200,000 to Graphmada Mauritius, the company’s 93.5% subsidiary. So far, £24,212 has been drawn down. The funds availed under the facility are free of interest rate. Consolidated Resources has expressed interest in about 11.10% of the issued share capital of Stratmin. David Premraj would represent Consolidated Resources on the board of Stratmin.

Our view: The receipt of an unsecured loan facility from Consolidated Resources enables Stratmin to seamlessly continue expanding its operations in Loharano. This facility follows the company’s completion of its first funding tranche of £0.5m from ASX-listed Bass Metals. The funding provided by Bass Metals in the past few months led to improvements at Loharano operations. In addition, Stratmin has ordered a new power supply solution for the plant and a new diesel generator. The company also plans to seek further funding from Bass Metals this year. We look forward to more progressive developments from the Loharano operations during the year. Therefore, we maintain our Speculative Buy rating on the stock.

Tue, 09 Feb 2016 09:44:00 +0000
Feb stress continues FTSE 100 Index called to open -25pts at 5665, with futures having fallen back from late recovery highs of 5730 around the US close to make a few more tests of yesterday’s 5657 lows. For now the level is holding up, which is good news for adventurous bottom-picking bulls, however, we remind them of the steep and accelerated February downtrend which requires significant work before being reversed and that the declines of yesterday put the index back in a bear market, -20% from last May’s highs. Watch levels: Bullish 5710, Bearish 5650.
The negative opening call comes as the global equity rout that hit Europe and the US extended to Japan where stocks slid their most in 6 months (-5.5%). The key banking sector is being singled out for stress from a dangerous cocktail of slowing economic growth, more widespread use of negative interest rates, financial market turbulence, a protracted commodity market depression (notably oil) and rising bad loans (from commodity exposure) which could affect their ability to repay debt.
The growing fears of another banking sector crisis saw safehavens like gold, silver and fixed income bonds favoured along with the Japanese Yen (JPY) whose continued strength despite the BoJ taking interest rates negative only a week ago remains a hindrance to Nikkei exporter names. An oil price almost 10% off its recent recovery highs is also keeping the sheen off commodity sector sentiment, adding to weak financials and hurting the Aussie ASX (-2.8%).
US markets again closed in the red Monday with banks underperforming amid much talk of Credit Default Swaps (CDS) - à la Big Short - while safe havens Gold and the Japanese Yen found favour among the risk averse, which appears to make up a large contingent of the market this week. Bourses did, however, manage to close off their lowest levels thanks to a late rally in the energy sector, with the ever present bargain hunters pouncing on what they perceived to be oversold stocks. Has the pendulum indeed swung too far? or not far enough? Note the S&P hit 22-month lows.
CNBC’s Jim Cramer decided ‘not far enough’ after perusing his back-of-an-envelope checklist yesterday: No clarity from the Fed, no resolution to political uncertainties, no end to the collapse of China (or, should I say, the very slight slowing of its economic growth), no bottom in sight for commodities, no sign of oil price stability. The list goes on, but it gets boring.
In focus today will be the US Business Optimism and JOLTS Job Openings as key data points before Fed Chair Janet Yellen’s testimony on Weds and Thurs. Note weak German trade data this morning which may add to fears of Eurozone growth problems and a global slowing economy.
Crude prices remain unstable (well done Jim) after the slight gains of yesterday failed to break 4 days of downtrend. WTI in particular looks to be headed sub-$30 again today amid a  continued lack of cohesion within OPEC.
Gold is set for its longest winning streak in four years, having breached $1200 yesterday and languishing currently in the lower half of its recent range with Chinese markets shut for lunar New Year holidays. Note a weaker USD and Cramer’s checklist remaining devoid of ticked boxes could set the scene for further gains into the latter half of the week.

Tue, 09 Feb 2016 09:43:00 +0000
Northland Capital Partners: RWS Holdings RWS Holdings (LON:RWS): AGM statement
Market Cap: £400m; Current Price: 189p

Positive start to the year
 Q1 trading ahead of management expectations with a good performance from the fully integrated patent translation and filing division, including inovia and an initial two month contribution from Corporate Translations Inc (CTi).
CTi, a leading translation and linguistic validation company focused on the life sciences sector, was acquired in October for a $70m cash consideration. The acquisition has strengthened RWS’s position in the life sciences’ sector and establishes a presence in the US. CTi is expected to deliver a 43% increase in revenue in FY15 (Dec) to $33m and an EBITDA of not less than $8.5m.

NORTHLAND CAPITAL PARTNERS VIEW: Positive Q1 update from RWS, the leading provider of patent translations and intellectual property services. The company has been an active consolidator in the fragmented market for the provision of IP services and the dynamics of the IP sector remain positive with continued growth in patent filings globally. Shares trading on 20.0x FY16 and 18.8x FY17 before any upgrades on the back of today’s announcement.

Tue, 09 Feb 2016 09:40:00 +0000
Let There Be Light in U.S. Markets Michael Bloomberg Considering Presidential Run: Current Discourse an Outrage and an Insult to the Voters
Here is the opening of this welcome announcement, reported by US Weekly:

As 2016 presidential hopefuls are starting to bow out of the race during the early days of the primary season, Michael Bloomberg told The Financial Times on Monday, February 8, that he is considering throwing his hat into the ring.
“I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters,” the businessman, 73, told the paper about the current state of the race. He added that the public deserves “a lot better.”
According to The New York Times, the billionaire is considering running as an independent candidate.
The former mayor of New York, who held the office from January 2002 until December 2013, also told The Financial Times that he would have to start including his name on ballots at the beginning of March. “I’m listening to what candidates are saying and what the primary voters appear to be doing,” he said.
But according to The New York Times report from January, there may not be a lot of support for Bloomberg. A poll commissioned by the media executive found that 17 percent of Democrats and 9 percent of Republicans had a favorable view of the former mayor, while half of Republicans and 26 percent of Democrats had an unfavorable view.

David Fuller's view
I certainly hope Michael Bloomberg does run, as it would be good for politics and raise the incredibly low standard among politicians, and not just in the USA. 

What Executives Say About the Possibility of a U.S. Recession
Here is the opening of this topical article from Bloomberg:

Executives across corporate America are being asked for their views on whether a recession is in the offing.
Growth in the U.S. decelerated to a 0.7 percent annualized rate in the fourth quarter as companies contended with a slower global economy. The median probability for a U.S. recession in the next 12 months jumped to 19 percent in last month’s Bloomberg survey of economists, the highest since February 2013.
As stock and oil prices slide, executives are offering their perspectives on the economy in conversations with analysts and investors. These comments were collected by Bloomberg from earnings calls, meetings and conferences the past three weeks.
John Thain, chairman and chief executive officer, CIT Group Inc.:
“Given the recent performance of the equity market and our stock price, the market seems to indicate a recession is imminent. I don’t see that. Low energy prices do not cause recessions. While the energy sector itself is weak, the U.S. economy is still growing." (Feb. 2)
Stephen Schwarzman, chairman and CEO, Blackstone Group LP:
“While it’s always possible that a market correction becomes something more significant, we, at Blackstone, do not see a recession in the U.S. We do believe that global GDP growth is slowing, and we’ve seen a slowdown within certain sectors and regions in our global portfolio as a result." (Jan. 28)

David Fuller's view
Stock markets are better indicators of investor sentiment than economic prospects.  Today, investors are frightened by uncertainty; excessively choppy market action due to high-frequency trading; forced sales by sovereign wealth funds, all of which are contributing to what will eventually be a healthy contraction in valuations.

My personal portfolio
Two long-term profits and a loss taken

Credit Market Risk Surges to Four-Year High Amid Global Selloff
This article by Aleksandra Gjorgievska and Tom Beardsworth for Bloomberg may be of interest to subscribers. Here is a section:

Exchange-traded funds that hold U.S. junk bonds slid to their lowest levels in almost seven years. BlackRock’s iShares iBoxx High Yield Corporate Bond exchange-traded fund and SPDR Barclays High Yield Bond ETF both fell to the lowest levels since 2009.

Financials and energy were the two investment-grade sectors that added the most risk in the U.S., Markit CDX North American Indexes show. In high yield, energy, communications and health care fared the worst.

Chesapeake Energy Corp., the U.S. natural gas driller that’s been cutting jobs and investor payouts to conserve dwindling cash flows, lost more than half it stock market value Monday after a report that it hired a restructuring law firm.

The company’s bonds led losses among high-yield debt on Monday. Chesapeake’s notes due March 2016 tumbled to a record to 74.5 cents, from 95 cents last week, while its bonds maturing in 2017 fell to an all-time low at 34 cents.

“Broad oil weakness has now turned into distressed energy cases, which investors view as possibilities of higher risk of restructuring or debt exchanges," Ben Emons, a money manager at Leader Capital Corporation. “Nothing has been announced of that matter but markets move quicker ahead of such possibility happening."

Eoin Treacy's view
Regardless of the answer, when someone asks whether a default is imminent one has to conclude that the situation is troubling. This is as true of Chesapeake today as it was of Greece, Portugal et al a few years ago.

Chesapeake’s 2017 6.25% Senior UnSecured bullet bond now yields 150% suggesting very few people think it will make its last coupon payment due in July.  

Alphabet becomes the world's largest listed company
This article from The Economist may be of interest to subscribers. Here is a section:

ON FEBRUARY 1st, the day that Ted Cruz defeated Donald Trump in the Republican caucus in Iowa, Google’s parent company, Alphabet, won a contest of its own, vaulting past its longtime rival, Apple, to become the most valuable listed company in the world by market capitalisation. Alphabet supporters are chuffed with the firm’s strong quarterly earnings and new corporate structure, announced last August. This was the first time Alphabet has shared more information about the performance of the firm’s “moonshot” projects, such as self-driving cars and Nest smart thermostats. In 2015, these projects (i.e., not including the core advertising business, Google) had an operating loss of around $3.6 billion—a hefty figure but less than some analysts had feared.

Alphabet is now predominantly an advertising firm, but it is selling a story about its ability to change and become more things to more people. Its believers think the firm will turn at least one of its moonshot projects into a significant earner of profits. The firm has a history of adeptly repositioning itself: it purchased Android in 2005 and YouTube in 2006, which helped it profit from the rise of smartphones and online video. It is also a leader in artificial intelligence, an important area of investment for internet firms today, with applications in everything from autonomous cars to photo-recognition, as well as in Google’s original internet-search business.

Eoin Treacy's view
A week might be a long time in politics but it’s even longer in the markets when trades can be fired off in fractions of a second. Alphabet’s market cap has fallen by close to $50 billion over the last week so that Apple is once more the world’s largest company. Amid the headlines proclaiming Google’s rapid ascent there was one statistic that seems to have been overlooked.

This man wants to upend the world of high-frequency trading
Thanks to a subscriber for this article by Anora Mahmudova for MarketWatch may be of interest. Here is a section:

“Markets have gone light years ahead while the surveillance system is outdated,” said Joe Saluzzi, co-founder of Themis Trading and a critic of high-frequency traders.

The SEC ordered the CAT’s creation in 2012, outsourcing it to a partnership of national securities exchanges and associations known as self-regulatory organizations, which are responsible for self-policing members including the NYSE, Nasdaq OMX, BATS, Chicago Board of Trade and the Financial Industry Regulatory Authority (Finra), an independent, not-for-profit organization authorized by Congress to regulate market participants.

Guidelines for the project indicated that it would be implemented in 2015. There have been more than 700 meetings to discuss parameters, costs and vendors, according to the Financial Times. As of November, there was only a shortlist of potential vendors — Finra, SunGard and Thesys, which the SEC is reviewing.

This frustrates Hunsader, who calls the task “obscenely easy” since he is already able to collect similar data through his subscription feeds, albeit without participants’ IDs. “The Consolidated Audit Trail will NEVER get built,” he tweeted recently.

Spokespeople for the partnership and, separately, the SEC declined further comment on the project.

Hunsader also laments the legal immunity afforded the exchanges, which can’t be sued if, for example, an investor believes others had access to information that gave them unfair advantages.

Granted immunity when they were created as nonprofit membership organizations because they are regulated by federal agencies, some say they should have lost it when they became for-profit corporations. Without it, Hunsader said, it would be easier to hold exchanges accountable to market participants.

He points to a class-action suit that accused the major stock exchanges of making data available to high-frequency traders before the rest of the investing public. That case was dismissed by a federal court last year, the judge saying the court lacked jurisdiction; the decision was appealed.

“If exchanges are stripped of their legal immunity, legal cases and market forces would sort out the problem,” said Hunsader.

And he says the exchanges’ fines for quote-stuffing and other forms of wrongdoing are too low. “A $75,000 fine for abusive behavior is like instituting a 10-cent speeding ticket,” he said.

Eoin Treacy's view
If exchanges have legal immunity from showing clear favouritism to their HFT clients they have absolutely no incentive to change. That helps to explain the slow pace of decision making in a sector clearly in need of reform.

Tue, 09 Feb 2016 09:37:00 +0000
Brokers: Inmarsat flies lower after downgrade from Barclays Mon, 08 Feb 2016 12:55:00 +0000 In the news with RFC Ambrian: Monument Mining In the news: Mining Indaba & Monument Mining



So, Indaba has kicked off and so far I can report no serious injuries. The weather is extremely nice: blue skies, lovely warm temperatures and that sort of thing. It has been quite windy though, which can disguise the temperatures, so you've got to be really careful not to get sunburned. I mean standing outside in the blazing sunshine while drinking an ice cold Castle lager at the Buchanan cricket match in Camps Bay, trying to network with mining executives, out-psyche rival brokers, be vaguely pleasant to PR girls and not go bright red is a hard act to balance.

Anyway, what is the mood like? Well, it's not great. We all know where we are in the cycle. One of the panels at the 121 mining investment conference didn't throw up any surprises when discussing new investment in the space: executives are in a mood of resignation to their fate. I'm not as negative as most though. We are seeing these PE style mining funds aggressively raising new money for funds 2 and 3, and they are targeting inflows in the $300-400mn range. We know of at least a dozen or so funds that have recently closed, or are soon to close, new fundraisings, so we can honestly say that more money is coming into the space than leaving it. One new conversation being held concerns early stage exploration and development. While this has been completely ignored in favour of late-stage development, some fund managers are talking about land banking. This is clearly true of gold projects right now, and not of any other commodity bar, perhaps, uranium; nevertheless Indaba is a lot more serious this year. It needed to be.



Monument Mining Ltd

MMY: CN | C$0.13 | US$30.3m

Earn-in and JV agreement on Matala Gold Project, DRC

Monument has entered an earn-in agreement with Afrimines to earn up to a 90% JV interest in its wholly owned Matala Gold Project in the DRC’s Kibaran gold belt. The Matala Project comprises 14 exploration permits over an area of 1,970km2, within which an inferred resource estimate of 213koz at 3.3g/t Au (0.5g/t cutoff) has been prepared by CSA for the Ngoy Prospect. Monument can earn the 90% stake through a series of staged payments, as follows:


Consideration US$’000

Interest Earned

Already Advanced 

50 (cash to Afrimines)


Within 6 Months

50 (cash to Afrimines)

With 12 Months

100 (cash) / 1,000 (exploration / development )

Within 36 Months

4,000 (exploration / development)



$15m (cash to Afrimines)



TBC by independent valuation


Source: Company Disclosure

As per the agreement, Monument must also issue 25 million shares to Patane, the prior owner of the 90% earn-in right on Matala (representing 7% of the enlarged share capital of the company). 20 million of these shares will be held in escrow until Monument has satisfied the conditions to earn a 50% JV interest in Matala. Afrimines will retain a carried interest on the property, with Monument assuming operatorship.

COMMENT: The earn-in agreement in a new jurisdiction, relative to the company’s portfolio of production and development interests in Malaysia and Western Australia, aligns with Monument’s strategy of geographic diversification within established mining regions. As highlighted in the announcement, the Kibaran gold belt’s prospectivity is underlined by Banro’s Twangiza and Namoya deposits, both now in commercial production for combined nameplate capacity of around 250kozpa. As of end-September 2015, Monument had cash of US$26m, with a debt free balance sheet. The staged nature of the earn-in agreement should minimize up-front capex and enable balance sheet conservation, freeing up funds for the company to continue to pursue acquisition opportunities.


Next steps at Matala include a 1,000m drilling plan to expand the resource at the Ngoy Prospect — The company plans to drill to a depth of 200m at Ngoy, testing down-dip and strike extensions to known mineralised zones, in addition to testing geophysical / geochemical anomalies. The company has also identified the Matala Prospect as a priority target, and plans to undertake a 1,000m drilling programme over the Kanana soil anomaly, where gold concentrations of >100ppb have been detected over a 3km strike length.

Kanana Soil Anomalies, Matala Prospect

Existing portfolio includes the producing Selinsing Gold Mine and Mengapur Polymetallic Project in Malaysia, and the Murchison Gold Project in Western Australia — The open-pit Selinsing mine entered production in Q3 2009, and FY 2015 production (to end-June) totalled 36.5koz at a cash cost of US$587/oz. Gold sales also totalled 36.5koz at an average realised price of US$1,228/oz, generating revenue of US$44.84m. With production costs of US$28.95m for the year, this implies an operating margin of 35%. A further reduction in operating costs was realised for the September quarter to US$468/oz. 

The Murchison Project comprises historic resources of 6.41Mt at 2.7g/t for 546koz of gold — The project was acquired in February 2014, and comprises the Burnakura and Gabanintha Tenements with neighbouring Tuckanarra being added as a strategic asset in November 2014. The Murchison assets also included a functioning 260ktpa CIL gold processing plant and mine camp. The company commenced a drill programme on the Alliance/New alliance historical open pit deposits within the Burnakura Tenement in May 2014, working towards issuing an NI-43-101-compliant resource statement. As of August 2015, compliant M&I resources stand at 98koz at 1.6g/t, with the drilling programme ongoing to increase the mineral inventory. In light of the existing plant and infrastructure, the company is targeting start-up of the heap leaching facilities at Burnakura for mid-2016.

Mengapur historic resource totals 561kt contained Cu, 1.15Moz Au, 64Moz Ag and 15Mt sulphur —Work has been done towards rehabilitation of former production plant as 1,000tpd pilot plant, targeting copper with a contained iron by-product; however plans have been put on hold due to falling commodity price environment. R&D is looking to customise the Intec process (currently being piloted for gold recovery at Selinsing), which uses a mixed halide lixiviant for the extraction of pure metal from concentrate, to produce high grade Cu for in-country sales.

Mon, 08 Feb 2016 12:55:00 +0000
Gong Xi Fa Cai FTSE 100 Index called to open +30pts at 5880 after bouncing from lows of 5820 late Friday to maintain the trend of shallow rising support from 26 Jan. This leaves the index in a 120pt narrowing range which may attract range traders until we get an update on whether the reversal from Jan lows can get a second wind with a break beyond 6000 or whether the longer-term downtrend kicks in again. Watch levels: Bullish 5890, Bearish 5850.
The positive opening call comes after an up-day for Japanese stocks thanks to JPY weakness and a breakeven session for Aussie equities as commodities regained some poise amid a quiet session in Asia Pacific on account of many markets being closed for Chinese Lunar New Year (CN, HK). This follows a weak US close on Friday as debate grew about US jobs report and whether it can allow the Fed to keep hiking.
US bourses closed in the red Friday after a generally lacklustre set of jobs data  - the main NFP print missed expectations with December’s figure revised down. Nonetheless, unemployment fell to 4.9% and wage growth was seen picking up. So did the Fed hike too soon? Whether or not that’s the case, the case for further rate hikes this year is losing strength.
This last point is important with Fed Chair Yellen set to testify in Washington on Wednesday in her first live update since holding pat in Jan following the December decision to hike. Markets will be looking for hints about a slower pace of rate rises on account of market turbulence and after recent dovish comments from committee members. This could see the USD move around again, with implications for the commodities space.
In focus today we are sure to have continued fallout from the US jobs report and its implication for Fed policy amid a quiet line-up with just Eurozone Sentix Investor Confidence and US Labour market Conditions on the macro data slate.
Crude prices are struggling beneath 4-days of falling highs, with a more stable USD hindering last week’s upwards progress. Still no sign of OPEC / non-OPEC cooperation, although we’re seeing more members stepping up to voice their concerns, most recently Iran which, despite its intention to further flood the market, is also asking for an emergency OPEC meeting.
Gold is off its Friday evening $1174 highs after breaking the key $1160 level. Fairly solid support at $1164 while the USD takes a break from declines. Another leg down for the dollar, another leg up for gold? Continued equity market volatility combined with diminishing possibility of further US rate hikes keep gold in favour into this week, but note technicals still overbought.

Mon, 08 Feb 2016 10:35:00 +0000
Today's Market View including: Randgold Resources & Pan African Resources
Economic News
US – Better than forecast earnings raised chances for another rate hike by the Fed this year contributing to an increase in the US dollar index and a drop in major equity indices on Friday.
• Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Friday Non Farm Payrolls Jan 151k 190k 262k (revised from 292k)
  Unemployment Rate Jan 4.90% 5.0% 5.0%
  Av Hourly Earnings Jan 0.5%mom/2.5%yoy 0.3%mom/2.2%yoy 0.0%mom/2.7%yoy
Tuesday JOLTS Jobe Openings Dec   5,350k 5,431k
Wednesday Budget Statement Jan   US$22.8bn  -US$
Thursday Weekly Jobless Claims     280k 285k
Friday Reatail sales/Core Jan  0.1%mom/0.0%mom  -0.1%mom/-0.1%mom
  UoM Consumer Confidence Feb   92.5 92.0
Source: Bloomberg   

Japan – Weak labour earning numbers are expected to weigh on consumption growth.
• Labour cash earnings climbed a modest 0.1%yoy in Dec compared with no change in Nov and forecasts for a 0.7%yoy increase.
• When adjusted for inflation, earnings were down 0.1%yoy in Dec marking a four year long stretch of negative growth.
• Q4/CY15 GDP numbers are due next week with estimates for a 0.6%qoq decline in consumption. This would be a second decline in consumer demand in 2015 after a contraction recorded in the Apr-Jun period.
• Current account posted the 18th consecutive monthly surplus in Dec driven by weak commodity prices and oil, in particular; although, it was the lowest reading since mid-2015.
• Current account surplus: ¥960.7bn v ¥1,144bn in Nov and ¥1,590bn forecast.

France – Business sentiment hit a nearly five-year high in Jan despite latest PMI data pointing to a stagnating manufacturing sector and only marginal growth in services industry.
• The index prepared by Banque de France climbed to 101 last month, a little higher from revised 100 in Dec.
• Estimates were for 99, unchanged from pre-revised Dec number.

Australia – Moody’s cut credit rating of Western Australia credit rating on the back of weak metal and energy prices.
• “The drop in the price of iron ore and the sluggish performance in state taxes have led to declines in revenue, and, absent corresponding expenditure measures, budget deficits are widening significantly,” Moody’s said.
• The credit rating has been brought down by one notch to Aa2 making it the lowest among Australian states and two levels lower than Aaa rated New South Wales and Victoria.
• Ongoing budget deficits are estimated to push the state’s debt burden to 140% of revenues in the 2016-17 fiscal year.

South Africa – 50% of iron ore and coal mines and 8% of platinum operations are loss making at current prices, Chamber of Mines told reporters in Cape Town.
• Significant cost pressures with operating costs up an average of 20%pa in past five years combined with soft demand growth erode miners’ profit margins.
• Rising power bills have been named as major contributor to costs’ inflation.

Argentina – The government is on a way to resolve a decade-long dispute with its creditors who refused debt restructuring after the 201 default on US$100bn worth of bonds.
• Finance Minister said on Friday that the government offered to around US$6.5bn in regards of about US$9bn of outstanding claims.
• A number of “holdout” creditors are reported to have accepted the offer.
• A resolution of the dispute may pave the way for Argentina to regain access to the international capital markets.

US$1.1178/eur vs 1.1195/eur yesterday. Yen 116.84/$ vs 116.88/$. SAr 16.016/$ vs 15.921/$. $1.451/gbp vs 1.452/gbp
0.709/aud vs 0.719/aud. CNY 6.574/$ vs 6.571/$

Commodity News
Precious metals:
Gold US$1,174/oz vs US$1,156/oz yesterday – China added c.0.5moz of gold to its holdings through Jan on the People’s bank of China numbers.
• Holdings climbed 0.9%mom to 57.2moz last month.
Platinum US$907/oz vs US$906/oz yesterday
Palladium US$499/oz vs US$517/oz yesterday
Silver US$15.00/oz vs US$14.85/oz yesterday

Base metals:
Copper US$ 4,610/t vs US$4,680/t yesterday
Aluminium US$ 1,507/t vs US$1,533/t yesterday
Nickel US$ 8,110/t vs US$8,535/t yesterday
Zinc US$ 1,695/t vs US$1,707/t yesterday
Lead US$ 1,786/t vs US$1,789/t yesterday
Tin US$ 15,545/t vs US$15,050/t yesterday

Oil US$33.7/bbl vs US$34.2/bbl yesterday
Natural Gas US$2.114/mmbtu vs US$2.060/mmbtu yesterday
Uranium US$34.40/lb vs US$34.45/lb yesterday

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$44.0/t vs US$44.4/t
Thermal coal (1st year forward cif ARA) US$37.7/t vs US$38.3/t yesterday - A third of Queensland coal mines are reported to be running at a loss, according to the Queensland Resources Council.
The report by the QRC wants mining companies to pay less royalties and laws that would limit council rates.

Tungsten - APT European prices stood at $160-175/mtu last week
Ferrochrome – Benchmark prices collapsed to 92c/lb in December for Q1/16, down 11.5% from 104c/lb in Q4/15.

Company News

Pan African Resources (LON:PAN) 11.25 pence, Mkt Cap £209m – Trading Statement for 6 months
Total production over the period was 106,290 oz up 16.3% from the same time last year.
• Production from Evander mines was up 34.4% at 45,350 oz with Barbeton mines producing 56,447 oz up 6.6%.
• PGM oz from Phoenix Platinum was down 4.6% at 4,493 oz.
• EPS for the period is expected to be 0.57 pence a significant improvement on the prior period.
Conclusion: The trading statement would suggest a much better performance at the interim stage than the same time last year.

Randgold Resources (LON:RRS) 5300 pence, Mkt Cap £4.94 bn – Strong 4th Quarter Results bringing in good performance over the year
• Gold production for the fourth quarter was 328,430 oz up 7% quarter on quarter and 8% year on year.
• Gold sales were US$354.8m up 4% quarter on quarter and US$1.394bn for the full year down 3%.
• The average gold price was down 3% for the quarter at US$1,081/oz and down 10% on a year on year.
Total cash costs at US$205m for the quarter and US$822.673m for the full year generated profits of US$149m up 18% quarter on quarter  and up 9% to US$572m year on year.
• Cash cost per oz was US$632/oz down 10% for the quarter and down 3% for the full year at US$679/oz.
• There was good performance from the Loulo-Gounko complex and Tongon offsetting weaker performance from Kibali.
• Net cash generated for the quarter was US$114.1m up 4% on the previous quarter with net cash for the year of US$397m up 25%.
• Final dividend per share of 66 US cents up 10%.
Conclusion: This is strong performance for Randgold in terms of production and costs helping to offset a lower gold price for the quarter and the full year. With cash generation remaining strong, a higher dividend has been declared. The company continues to perform well and is the default gold stock for investors looking for gold exposure in the sector.

Mon, 08 Feb 2016 10:29:00 +0000
In the papers: Bank builds $98 billion Brexit war chest to save pound The Times
Bank builds $98 billion Brexit war chest to save pound: Britain’s war chest for emergencies has risen by $25 billion over the past year to protect against market chaos if the country votes to leave the European Union.
Price rout pushes bulk of U.K. oil companies into red: The oil price rout, collapsing valuations and a growing mountain of debt left 80% of Britain’s oil companies floundering in the red by the end of last year, according to research carried out for The Times.
SFO rejects claim that it ignored tip-offs: A row has erupted between the Serious Fraud Office and one of London’s leading law firms over figures said to show that the agency ignored tip-offs because of budget cuts.
Defending yuan is costly for China: China’s foreign currency reserves have fallen to their lowest level in four years after the country’s central bank spent $100 billion last month defending the yuan.
New industry plan centres on expertise in oil and gas: An aim to make Scotland a global centre of excellence for key oil and gas services forms a key part of a new industry strategy being launched.
Stores face ‘insolvency’ as BHS tries to cut costs: BHS is threatening to put parts of its business into a form of insolvency as it tries to renegotiate the terms of leases on about 30 stores that it believes cost several times the market rate.
Feelgood shoppers boost high street: The dizzying rollercoaster ride that is the British retail industry has swung back up again, with spending on the high street in January bouncing back significantly after a disastrous Christmas.
Indebted homeowners stuck on wrong side of North-South divide: Nearly a decade after the property crash, many homeowners in the north of England are still mired in mortgage debt and could be at greater risk of default when interest rates rise, a study has shown.
The Independent
Care Quality Commission begs for help from charities it has just replaced: The body responsible for ensuring care homes are run to an adequate standard is so short of qualified consultants to help with inspections that it has had to ask the charities it replaced with a private company to help out.

Tech sector: curses: Technology investors are relying on other f-words. The 2015 outperformance of Facebook, Amazon, Netflix and Google is in the past. On Friday, the tech-heavy Nasdaq Composite fell more than 3%; the tech-heavier Nasdaq Internet index had its worst day since 2011, falling 5%, and neither of those indices contains the true horror stock: LinkedIn.

The Daily Telegraph
The EU’s €110 billion problem: slow death of Schengen risks new crisis for Europe’s battered economies: The collapse of the Schengen system of open borders risks plunging Europe into fresh economic turmoil, Hungary’s foreign Minister has warned.
Sir Philip Hampton to lead campaign for more female Executives: GlaxoSmithKline’s Chairman Sir Philip Hampton has been picked as the government’s new business equality tsar, appointed to run the campaign for firms to put more women in Senior positions.
Tullow Oil to pin hopes on West Africa as profits slump: The debt-laden oil explorer is expected to report 2015 profits of $600 million, well below the previous year’s almost $1.1 billion, as the ongoing oil rout continues to erode value across oil and gas firms.
HSBC ‘to stay in London’ as board meets for final decision on HQ: HSBC’s board is expected to come to a decision on the location of its headquarters in the coming days after an unexpectedly long-running review of the future of the British-based bank, as revealed by the Telegraph last month.
Equity fund BGF reports record January with £50 million invested in one month: Business Growth Fund, the equity fund that will celebrate its fifth birthday this coming May, has reported a record month for investments, backing U.K. firms with £50 million-worth of capital in January alone.

The Guardian
EU proposals will force multinationals to disclose tax arrangements: U.S. multinationals such as Google, Facebook and Amazon will be forced to publicly disclose their earnings and tax bills in Europe, under legislation being drafted by the EU Executive.
Google Ireland staff paid much less than London colleagues: Workers at Google Ireland, the search group’s European sales hub, earn less than half the £160,000 average wage of colleagues in London despite the British sales team only providing a supporting role to their Irish counterparts.
Investors in Next critical over dividend disclosure: Next has been criticised by a group of heavyweight investors who say the company failed to act on a warning that could have prevented it from breaking company law, forcing the retail group to hold an expensive shareholder meeting this week.
Volkswagen claims Chief expects most car Owners to accept redress: Volkswagen will offer generous compensation packages for the roughly 600,000 U.S. Owners of diesel vehicles that emit an illegal amount of emissions, the head of its claims fund told a German paper.

Daily Mail
Chinese tourists expected to flood to U.K. to shop during Chinese New Year: Chinese tourists are expected to flood to the U.K. to shop during Chinese New Year.
Company behind online bidding process featured at auctions on daytime TV programmes hits 1 million monthly unique users: The company behind the online bidding process featured at auctions on popular daytime TV programmes has hit a record 1 million monthly unique users.

Daily Express
Great start to year for businesses, says Lloyds report: Business output growth in the U.K. showed a lift at the start of the year, with the manufacturing and service sectors jointly seeing the strongest expansion for six months, according to a report.
Travel giant TUI set to take another hit in results after losing £37.6 million on Tunisia attack: Thomson and First Choice Owner TUI is expected to nurse further blows to its finances in the wake of terror attacks across the globe when it reports to the market.

The Scottish Herald
Scottish economy sheds jobs at fastest pace since last July as manufacturing output falls: The Scottish private sector economy shed jobs in January at the fastest pace since July last year, as manufacturing continued to contract and services output grew only marginally, a survey has shown.
Grant Thornton Chief warns FTSE 100 audits are still not “attractive” for firms outside Big Four: The Chief Executive of Grant Thornton in the U.K. has warned the FTSE 100 audit market is not yet “attractive” to accountancy firms outside the Big Four in spite of wide ranging moves to make it more competitive.
After Google sweetheart deal, Scotland calls for tax changes: The Scottish Government has urged Westminster to simplify the U.K. tax system and abandon what it claims is “the unnecessary complexity which creates opportunities for tax avoidance through countless exemptions, reliefs, deductions and allowances.”

The Scotsman
Shared work places ‘best for start-ups to thrive’: Most Scottish business owners and Senior managers believe sharing a working environment with other firms is the best way for start-ups to thrive, according to research by workspace provider Regus.
Safe deposit box provider locks down Glasgow deal: What is being billed as “Scotland’s first independent safe deposit box service” has been launched following an investment of more than £1 million.
North Sea crisis: 150 oil rigs could be scrapped in 10 years: Almost 150 oil rigs in U.K. waters could be scrapped within the next 10 years, according to industry analysts
Surveys present contrasting picture for Scotland plc: Scotland’s private sector economy remained just inside growth territory last month but conflicting signals have emerged on the outlook for the rest of the year.

City A.M.
Chancellor George Osborne’s stamp duty reforms cost the Treasury £662 million in 2015: George Osborne’s overhaul of the stamp duty tax regime has cost the taxpayer well over half a billion pounds in lost revenue last year, new research reveals, as sales of high-end homes slowed and investors switched tactics to avoid paying huge premiums on purchases.
Manufacturing trade body EEF warns Britain risks falling behind on internet capability: Britain’s digital infrastructure will hold the country back during the fourth industrial revolution, a manufacturing trade body has warned.
Infrastructure to lift construction sector but risks are intensifying: The U.K.’s construction sector is forecast to have a strong year, but experts are warning of risks to the rosy outlook. The Construction Products Association (CPA) said it expects construction output to climb 3.6% this year and 4.1% next year.
Exasperated business Bosses want second runway at Gatwick if Heathrow expansion faces further delays: Senior business figures are demanding that the government grants Gatwick the right to build another runway, if expansion at Heathrow continues to be thwarted by political and legal obstacles.
Credit Suisse Chief Executive Tidjane Thiam to waive part of his bonus after Swiss lender reports first set of annual losses since 2008: Credit Suisse Chief Executive Tidjane Thiam has told a Swiss weekly newspaper that he will be forfeiting part of his bonus, after the bank recently reported its first annual loss since 2008.
BT finance Chief Tony Chanmugam to announce retirement: BT’s Finance Director is expected to announce his retirement within weeks and will step down later this year.

Mon, 08 Feb 2016 10:24:00 +0000
Pre Market: markets closed weaker on Friday amid a massive sell-off in technology firms UK Market Snapshot

UK markets ended lower on Friday, after the US non-farm payrolls data showed lower than expected numbers in January. Royal Mail dropped 3.1%, as the UK government is preparing to sell its final stake in the company. Mining stocks, BHP Billiton and Rio Tinto fell 0.5% and 2.2%, respectively, tracking losses in copper prices. On the contrary, Anglo American soared 10.7%, extending its rally from the previous session, after Blackrock increased its stake in the miner to 5.0%. Kingfisher and Burberry Group rose 1.2% and 2.8%, respectively, on the back of positive UK retail sales report for January. BG Group added 0.2%, as it reported a jump in its oil production for the full year but its earnings slipped sharply in the fourth quarter. The FTSE 100 declined 0.9%, to close at 5,848.1, while the FTSE 250 fell 0.5%, to settle at 16,002.3.

US Market Snapshot
US markets closed weaker on Friday, with the Nasdaq Composite index dropping to its lowest level since October 2014, amid a massive sell-off in technology firms. Tableau Software tanked 49.4%, after it reported a loss for the fourth quarter. Alphabet, Facebook, and Netflix plunged 3.6%, 5.8%, 6.4% and 7.7%, respectively. LinkedIn sank 43.6%, after it projected lower than expected revenue for the full year. News Corp plunged 9.1%, as its second quarter earnings came in lower than market expectations amid a decline in its advertising sales. Bucking the trend, Tyson Foods rallied 9.9%, after it upgraded its earnings forecast for 2016. Symantec rose 3.0%, as it announced that private-equity firm Silver Lake would invest $500.0 million in the company. The S&P 500 dropped 1.8%, to settle at 1,880.1. The DJIA fell 1.3%, to settle at 16,205.0, while the NASDAQ lost 3.2%, to close at 4,363.1.

Europe Market Snapshot
Other European markets finished in the red on Friday, amid a decline in crude oil prices and weaker than expected US jobs report. ArcelorMittal dropped 5.5%, as it announced plans to raise $3.0 billion from share sale and sell its stake worth $1.0 billion in Spain-based Gestamp. Oil firms, Total and Eni shed 0.8% and 1.7%, respectively. On the upside, Hexagon rose 4.1%, after it reported better than expected earnings for the fourth quarter and raised its dividend. Volvo added 1.7%, as it posted a significant rise in its earnings for the fourth quarter. BNP Paribas advanced 1.5%, after it increased its dividend payout and vowed to reduce costs at its investment bank to boost capital. The FTSEurofirst 300 index declined 0.8%, to close at 1,283.0. Among other European markets, the German DAX Xetra 30 fell 1.1%, to close at 9,286.2, while the French CAC-40 shed 0.7%, to settle at 4,200.7.

Asia Market Snapshot
Markets in Asia are trading lower this morning, amid thin trading volumes. In Japan, oil majors, Inpex and Japan Petroleum Exploration have slid 0.6% and 5.6%, respectively. Exporters, Nissan Motor, Sharp, Toyota Motor and Sony have fallen 0.2%, 0.6%, 2.0% and 2.7%, respectively. Banks, Mizuho Financial Group, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group have declined 0.4%, 1.1% and 1.3%, respectively. The Hang Seng and the Kospi indices are closed today for the Lunar New Year Holiday. The Nikkei 225 index is trading 0.1% lower at 16,802.3. On Friday, the Hang Seng index traded 0.6% up at 19,288.2, while the Kospi index ended 0.1% higher at 1,917.8.

Commodity, Currency and Fixed Income Snapshots

Crude Oil
At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.35% or $0.12 higher at $34.18 per barrel. On Friday, the contract declined 1.16% or $0.40, to settle at $34.06 per barrel, amid a stronger greenback and persistent concerns over growing oversupply. Meanwhile, the Baker Hughes report indicated that the US rig count plunged by 31 to 467 in the week ended 05 February 2016.
At 0430GMT today, Gold futures contract is trading 0.76% or $8.80 higher at $1166.60 per ounce. On Friday, the contract advanced marginally or $0.30, to settle at $1157.80 per ounce, amid a decline in global stock markets and a mixed report on the US jobs market.
At 0430GMT today, the EUR is trading 0.21% lower against the USD at $1.1130. On Friday, the EUR weakened 0.47% versus the USD, to close at $1.1153, after the German factory orders declined more than expected in December. The US Dollar gained against its peers after the US unemployment rate fell to its lowest level since 2008, indicating strength in the jobs market.
At 0430GMT today, the GBP is trading 0.07% higher against the USD at $1.4511. On Friday, the GBP weakened 0.58% versus the USD, to close at $1.4500, extending its losses from the previous session.
Fixed Income
In the US, long term treasury prices rose and pushed yields mostly lower, amid a huge sell-off in the US stock markets, following a weaker than expected report on the US non-farm payrolls.  On Friday, yield on 10-year notes fell 1 basis point to 1.86%, while yield on 2-year notes gained 4 basis points to 0.74%. Meanwhile, 30-year bond yield fell 2 basis points to 2.68%.

Key Economic News

German factory orders declined more than expected in December
In Germany, the seasonally adjusted factory orders dropped 0.70% in December on a MoM basis, compared to a rise of 1.50% in the prior month. Markets were expecting factory orders to drop 0.50%.

German factory orders declined more than expected in December
The non-seasonally adjusted factory orders eased 2.70% on a YoY basis in December, in Germany, more than market expectations for a drop of 1.40%. In the previous month, factory orders had advanced 2.10%.

French trade deficit dropped in December
Trade deficit in France narrowed to €3.94 billion in December, compared to market expectations of a trade deficit of €4.40 billion. France had registered a revised trade deficit of €4.53 billion in the prior month.

French current account deficit dropped in December
Current account deficit in France narrowed to €0.70 billion in December, following a revised current account deficit of €1.50 billion in the previous month.

French imports fell in December
In France, imports registered a drop to €41.99 billion in December, compared to a revised reading of €42.91 billion in the previous month.

French exports recorded a drop in December
In December, exports in France fell to a level of €38.05 billion, compared to a reading of €38.42 billion in the previous month.

Swiss foreign currency reserves advanced in January
Foreign currency reserves registered a rise to CHF 575.40 billion in January, in Switzerland. Foreign currency reserves had recorded a revised level of CHF 559.50 billion in the previous month.

US average hourly earnings of all employees advanced more than expected in January
In January, average hourly earnings of all employees registered a rise of 2.50% on a YoY basis in the US, more than market expectations for an advance of 2.20%. Average hourly earnings of all employees had risen by a revised 2.70% in the previous month.

Private payrolls in the US recorded a rise in January
Private payrolls registered a rise of 158.00 K in the US, in January, lower than market expectations of an advance of 180.00 K. Private payrolls had recorded a revised increase of 251.00 K in the previous month.

US average weekly hours of all employees climbed surprisingly in January
Average weekly hours of all employees registered an unexpected rise to 34.60 in January, in the US, compared to market expectations of an unchanged reading. Average weekly hours of all employees had recorded a reading of 34.50 in the previous month.

Manufacturing payrolls in the US registered an unexpected increase in January
In the US, manufacturing payrolls increased unexpectedly by 29.00 K in January, following a revised increase of 13.00 K in the prior month. Market expectation was for manufacturing payrolls to decline 2.00 K.

US unemployment rate registered an unexpected drop in January
Unemployment rate in the US registered an unexpected drop to 4.90% in January, compared to market expectations of a steady reading. Unemployment rate had registered a level of 5.00% in the previous month.

Non-farm payrolls in the US climbed in January
Non-farm payrolls climbed by 151.00 K in the US, in January, lower than market anticipations of an advance of 190.00 K. Non-farm payrolls had registered a revised increase of 262.00 K in the previous month.

Household employment in the US advanced in January
Household employment in the US climbed by 615.00 K in January, compared to an increase of 485.00 K in the previous month.

US underemployment rate remained unchanged in January
Underemployment rate remained unchanged at a level of 9.90% in January, in the US.

US average hourly earnings of all employees rose more than expected in January
Average hourly earnings of all employees in the US recorded a rise of 0.50% in January on a monthly basis, higher than market expectations for a rise of 0.30%. In the previous month, average hourly earnings of all employees had recorded a flat reading.

US trade deficit widened in December
The US has reported trade deficit of $43.36 billion in December, following a revised trade deficit of $42.23 billion in the prior month. Markets were anticipating the nation to post a trade deficit of $43.20 billion.

Canadian participation rate steadied in January
The participation rate remained steady at 65.90% in January, in Canada, in line with market expectations.

Number of full time employment in Canada advanced in January
The number of full time employment rose by 5.60 K in Canada, in January, compared to a revised decline of 9.60 K in the previous month.

Canadian international merchandise trade deficit narrowed in December
Canada has registered the international merchandise trade deficit of C$0.58 billion in December, following a revised international merchandise trade deficit of C$1.59 billion in the prior month. Market anticipation was for an international merchandise trade deficit of C$2.20 billion.

Part time employment in Canada declined in January
Part time employment eased by 11.30 K in Canada, in January. Part time employment had recorded a revised gain of 32.40 K in the prior month.

Canadian unemployment rate advanced surprisingly in January
In January, the unemployment rate rose unexpectedly to 7.20% in Canada, compared to a reading of 7.10% in the previous month. Market expectation was for the unemployment rate to record a steady reading.

Net number of people employed in Canada surprisingly fell in January
The net number of people employed in Canada eased unexpectedly by 5.70 K in January, compared to a revised gain of 24.10 K in the prior month. Market expectation was for the net number of people employed to rise 6.00 K.

Japanese bank lending including trusts climbed in January
Bank lending including trusts climbed 2.30% on an annual basis in Japan, in January. In the previous month, bank lending including trusts had registered a rise of 2.20%.

Japanese bank lending ex-trust advanced more than expected in January
On an annual basis in January, bank lending ex-trust climbed 2.40% in Japan, more than market expectations for an advance of 2.20%. Bank lending ex-trust had advanced 2.20% in the previous month.

Japanese coincident index declined in December
In Japan, the preliminary coincident index eased to 111.20 in December, compared to a reading of 111.90 in the previous month. Markets were anticipating the coincident index to ease to 111.00.

Japanese labour cash earnings advanced less than expected in December
Labour cash earnings registered a rise of 0.10% in Japan on a YoY basis in December, less than market expectations for a rise of 0.70%. In the previous month, labour cash earnings had registered an unchanged reading.

Japanese leading economic index declined in December
The preliminary leading economic index in Japan recorded a drop to 102.00 in December, lower than market expectations of a drop to a level of 102.70. The leading economic index had registered a reading of 103.50 in the previous month.

Japanese current account surplus dropped in December
Japan has registered the non-seasonally adjusted current account surplus of ¥960.70 billion in December, from a current account surplus of ¥1143.50 billion in the prior month. Markets were expecting the nation to record a current account surplus of ¥1051.70 billion.

Japan recorded (BOP basis) trade surplus in December
Japan has reported (BOP basis) trade surplus of ¥188.70 billion in December, from a (BOP basis) trade deficit of ¥271.50 billion in the previous month. Market anticipation was for the nation to register a (BOP basis) trade surplus of ¥305.30 billion.

Japanese adjusted (Total) current account surplus rose in December
In December, adjusted (Total) current account surplus in Japan expanded to ¥1635.40 billion, compared to market expectations of an adjusted (Total) current account surplus of ¥1590.00 billion. Japan had registered an adjusted (Total) current account surplus of ¥1423.50 billion in the prior month.

Mon, 08 Feb 2016 10:16:00 +0000
Oil price, Sound Energy, Petroceltic, Egdon.. Oil price
That was a funny old week for the oil price, whispers of meetings and Mr Venezuela doing the rounds kept the optimists just in the game but huge stock builds and an uninspiring set of US jobs data left the Fed cooling the market. With the rig count showing a fall of 48 rigs overall and 31 in oil the week should have ended with a flourish, as it is it was a tame finale. The meeting between Venezuela and the Saudis was apparently a damp squib and this week all we have to look forward to is a series of reports from the agencies which cant be expected to be supportive. Oh well, at least Laggan Tormore is now onstream with a flourish from Total and no cheers from Petrofac
Sound Energy
Onwards and upwards, the news keeps on coming from Sound and today sees the announcement of a Binding agreement to acquire a 55% stake in the Meridja permit onshore Morocco by way of an option granted by OGIF. The consideration for this is modest, a $100,000 rising to $200,000 payment to start with and on exercise of the option Sound would pay another $150,000 to OGIF and carry them and ONHYM in the first exploration well.
This is another eminently sensible move by Sound, the acreage is adjacent to their Tendrara licence so any success there would make this deal look better and increase the upside while de-risking the overall potential. The relationship with OGIF is good as is the one with ONHYM and the potential for making Morocco a successful part of the expansion of Sound’s Mediterranean expansion is franked by this deal.
Nice to see that Petroceltic can put out announcements during trading hours and today they have rolled over the debt repayments until 19th February while the strategic review continues.
Egdon (and Union Jack)announce that they have suspended the Keddington-5 well for future production testing after gas was encountered, flow testing will now be possible.
And finally…
A massive weekend of sport of which the highlights were; In the Prem it was the continued march of the Foxes with a resounding victory over the Noisy Neighbours, with both the Gooners and Spurs winning the top of the table makes interesting reading. It would have been more interesting as ‘sparkling’ Man U nearly pulled off a rare win at Chelski. With the HubCap Stealers only getting a draw against the Maccams and the Magpies and the Villa winning the bottom of the table is also looking like anything could still happen.
The Six Nations started with France just beating Italy and those of us at Murrayfield saw England win the Calcutta Cup, in Dublin a draw between Ireland and Wales didnt help either side.
With England beating South Africa again in the cricket the one day game continues to be entertaining and on a different level to what it was like only a few months ago.
And hopefully a longer report tomorrow but the 50th Superbowl went to the Broncos after a superb defensive display against the Panthers.

Mon, 08 Feb 2016 10:14:00 +0000
Tech Rout Caps Week of Reversals as Economy, Earnings Hit Stocks Tech Rout Caps Week of Reversals as Economy, Earnings Hit Stocks

Here is the opening of this topical report from Bloomberg:

Investors expecting the American economy to jolt equities out of their 2016 funk saw those hopes dashed this week as fresh signs of sluggishness sparked a selloff in technology and consumer shares with the highest valuations.
The Nasdaq 100 Index plunged 6 percent in the week, with declines on Friday sparked by a mixed labor report that sent 90 percent of the gauge’s members lower for the five days. Disappointing results from LinkedIn Corp. to Tableau SoftwareInc. fed fears that momentum shares are hitting a wall at the same time economic data showed growth slowing in the services and manufacturing industries.
The selloff in U.S. stocks pushed the S&P 500 down by 8 percent in 2016, as investors fled riskier assets amid renewed concern that China’s weakness and a rout in oil are slowing the world’s largest economy. Damage was heaviest in the Nasdaq Composite Index, where losses now stand at 13 percent this year after the gauge outperformed the Standard & Poor’s 500 Index in every year since 2011.
“We are seeing some softening in the economy and until that reverses or there is more central bank accommodation, I think the market is going to continue to be vulnerable,” Russ Koesterich, global chief investment strategist at BlackRock Inc., said by phone. “It’s going to be hard for the market to go back to the old highs in the near future.”

David Fuller's view

I think this is a cyclical or technical bear market – a stronger version of 2011 – rather than a far more serious secular bear such as 2008, in response to what we eventually learned was the worst credit crisis recession since the 1930s.
However, the current bear trend is worse than 2011 because valuations on Wall Street are higher; leverage is greater, and most importantly, sovereign wealth funds in commodity exporting countries from Norway to Saudi Arabia are forced sellers.  Previously, when commodity prices were considerably higher, leading exporters of resources had positive cash flow and were channelling more money into their sovereign wealth funds.
These factors, and also the one sector which is performing, are discussed in greater detail in the most recent Audio.     

The Rich Are Already Using Robo-Advisers, and That Scares Banks

Here is the opening from this informative article from Bloomberg:

Banks are watching wealthy clients flirt with robo-advisers, and that’s one reason the lenders are racing to release their own versions of the automated investing technology this year, according to a consultant.
Millennials and small investors aren’t the only ones using robo-advisers, a group that includes pioneers Wealthfront Inc. and Betterment LLC and services provided by mutual-fund giants, said Kendra Thompson, an Accenture Plc managing director. At Charles Schwab Corp., about 15 percent of those in automated portfolios have at least $1 million at the company.
“It’s real money moving,” Thompson said in an interview. “You’re seeing experimentation from people with much larger portfolios, where they’re taking a portion of their money and putting them in these offerings to try them out.”
Traditional brokerages including Morgan Stanley, Bank of America Corp. and Wells Fargo & Co. are under pressure to justify the fees they charge as the low-cost services gain acceptance. The banks, which collectively employ about 46,000 human advisers, will respond by developing tools based on artificial intelligence for their employees, as well as self-service channels for customers, Thompson said.
“Now that they’re starting to see the money move, it’s not taking very long for them to connect the dots and say, ‘Whatever I offer for a fee better be better than what they’re offering for almost nothing,”’ Thompson said. Technology will “make advisers look smarter, better, stronger and more on top of the ball.”

David Fuller's view

Robo-Advisers are an inevitable development and they are not just a fad that will pass with time.  Consider this – a smart computer programme can monitor every listed share on the planet, if that is the field which you or any other investor would like to survey.

Robot Drones Could Print Buildings and Disaster Shelters, Says Researcher

My thanks to a subscriber for this fascinating report from Imperial College London.  Here is the opening:
Drone swarms that can print emergency shelters for survivors of natural disasters are just around the corner, says Mirko Kovac in an interview.
Colin Smith visited Imperial College London’s flight arena, buried deep in the bowels of the Department of Aeronautics, to speak to Dr Kovac. In between carrying out tests on a prototype aerial robot for repairing oil pipelines, Dr Kovac spoke about his research and the future benefits aerial robotics could bring in construction.
Dr Kovac and his team have received more than £3.4 million in funding from the Engineering and Physical Sciences Research Council and industrial partners. His project will push forward the development of aerial construction-bots, equipped with 3D printing technology, which excrete materials that can be used to repair or build structures.
One potential application is in disaster relief, says Dr Kovac. These types of emergencies can throw up all types of physical obstacles such as landslides and floods, which prevents teams from reaching those in need in a timely way. Dr Kovac says the aerial drones he is developing could fly to a disaster zone, scan and model the landscape using Building Information Management (BIM) systems, design temporary shelters, and print them on the spot. This could give those in need a place to live until emergency services personnel can reach them.
This process, called Additive Building Manufacturing (ABM), is already being trialled in many parts of the world by the construction industry. It involves the use of large robots on a building site that extrude building materials to construct buildings, similar to a 3D printer. This process has the advantage of reducing construction times, material and transport costs and easing traffic and environmental impacts.

David Fuller's view
This is by far the most exciting era of technological innovation, and the rate of achievement is accelerating.

Mon, 08 Feb 2016 09:58:00 +0000
SP Angel Morning Oil & Gas - Genel Energy, Union Jack Oil & Petroceltic International Headlines

• Union Jack Oil* (LON:UJO – 0.12p) – Keddington-5 Extension: Today’s news of Keddington-5 is good for the Company as you have to make a discovery before it can be declared commercial, and is entirely consistent with the company's strategy of taking small non operated interests in UK onshore low risk exploration, appraisal or development stories in order to generate value for shareholders. Ahead of the results of the flow test, we are reiterating our 0.70p Target Price and BUY Recommendation.

• In Brief:
Genel Energy (LON:GENL – 121p) – KRG Shows Baghdad how it's Done
Trinity Exploration and Production (TRIN LN – 3.0p) – Loan Update Indicates More Pain to Come
Petroceltic International (PCI LN – 18p) – Senior Bank Facility Update
Frontier Resources International (FRI LN – 0.09p) – (HOLD – 0.26p) – If Oman Goes, So Too the Value

News Items
Union Jack Oil* (LON:UJO – 0.12p) – Keddington-5 Extension
Today's news that Keddington-5 has shown hydrocarbons is the first step towards declaring a discovery and hopefully bringing it on stream. While this has been a step out well, the local geology makes for a complicated reservoir patterns and can demonstrate intermittent or inconsistent geology, even locally between wells.
We are optimistic that this step out exploration well will ultimately flow commercial quantities of hydrocarbons, and as such today’s news increases the likelihood that this step out exploration will yield a commercial discovery. However, before adjusting our valuation, we will wait for the results of the flow test.
Today’s news of Keddington-5 is good for the Company as you have to make a discovery before it can be declared commercial, and is entirely consistent with the company's strategy of taking small non operated interests in UK onshore low risk exploration, appraisal or development stories in order to generate value for shareholders. Ahead of the results of the flow test, we are reiterating our 0.70p target price and BUY Recommendation.

News Items
• Genel Energy (LON:GENL – 121p) – KRG Shows Baghdad how it's Done: In spite of all of the issues and headwinds that the Kurdistan Regional Government ("KRG") is facing, that it is making payments to the international contractors is significant and bodes well for the operating under less turbulent times. What is also is an embarrassment for the Iraqi government who seemingly can't see that their actions and embarrassing attitude to international participation in the oil industry has been the sole reason that the country is still failing to fulfil its potential.
• Trinity Exploration and Production (TRIN LN – 3.0p) – Loan Update Indicates More Pain to Come: While the loan note’s extension itself isn't the real news here, what's really happening is that the buyer of TRIN's assets is either looking to withdraw or reduce the transaction price, which effectively means that what's left after repaying the loan will not be enough to have a business that will survive.
• Petroceltic International (LON:PCI – 18p) – Senior Bank Facility Update: as with Trinity, the banks will not jeopardise the process until such times as the outcome is clearer. The key difference for us between TRIN's position and that of Petroceltic is size and scale of assets, and a management team that understands industry and the finance markets.
• Frontier Resources International (LON:FRI – 0.09p) – (HOLD – 0.26p) – If Oman Goes, So Too the Value: We believe that the only value within the company is attached to the Omani licence area. So the question should be, if they haven’t found a farminee that will do it on acceptable terms, how is the loss of all the investment to date associated with the licence better? Should the licence not be renewed, and we believe that there is a basis for its renewal given the current environment, then we believe that the Company has no value beyond the cash and its listing, as the remainder of the acreage are too long dated and lack sufficient resolution to be deemed of value.

Mon, 08 Feb 2016 09:53:00 +0000
Beaufort Securities Breakfast Alert: Wishbone Gold Market opening: The FTSE-100 is expected to start this morning's session around 37-points higher.

New York: Wall Street ended in the red, as disappointing earnings led to losses in consumer and technology stocks. Moreover, mixed employment data raised concerns over interest rate hike by the Fed this year. The S&P 500 fell 1.9%, pulled down by the information technology sector. For the week, the markets declined 3.1%.

Asia: Equities are trading higher, offsetting losses from previous sessions. Investors digested weak economic data released in the US. The Nikkei 225 gained 1.1%, while the Hang Seng remained closed due to the Lunar New Year holiday.

Continental Europe: Markets ended lower, as weak employment data in the US raised concerns of slowdown in the country. Furthermore, disappointing corporate earnings released hurt investor sentiment. Germany’s DAX and France’s CAC 40 dropped 1.1% and 0.7%, respectively.

Crude Oil: On Friday, WTI and Brent oil prices decreased 2.6% and 1.2%, respectively. The spread between the two varieties stood at US$3.2 per barrel.

UK small caps: The FTSE AIM All-Share index closed 0.49% lower on Friday at 689.85.

Today's news

China’s foreign currency reserves fall in January
As per a report by the People’s Bank of China, the country’s foreign currency reserves declined US$99.5bn to US$3.23trln in January 2016, the lowest since 2012. The fall in reserves could lead to rapid devaluation of the country’s currency and destabilise the economy.

Wishbone Gold (LON:WSBN, 0.31p) - Speculative Buy
Wishbone Gold on Friday announced the acquisition of Precious Metals International Ltd ("PMI") and its wholly owned subsidiary, Black Sand FZE ("Black Sand") (together Black Sand and PMI are "the PMI Group") in an all share transaction. Black Sand holds a gold, precious metals and gem trading licence to operate in the United Arab Emirates. Black Sand currently has agreements in place for importing gold from Colombia and Honduras with a pipeline of other supply deals from other parts of South America. Black Sand was established by its CEO Barret Kosh in 2014 as a successor company to Multinational Commodities FZE which had an established profitable trading record. The PMI Group is 100% owned by Solent Nominees, an independent Gibraltar based nominee company which holds these shares on behalf of Mr Kosh. Solent currently holds preference shares over the PMI Group which will continue to entitle them to 30% of any annual audited profits after tax in the PMI Group. These preference shares hold no voting rights and are effectively a management incentive plan. The PMI Group made a nominal loss of £5,564 for the financial year ended 30 June 2015 and had gross assets of £454. It has not yet produced any revenue but is in the process of transferring Multinational Commodities FZE's trading relationships. Wishbone also corrected the actual number of Ordinary shares it has in issue to 759,900,364.

Our view: The terms of the acquisition are an initial payment of 240,000,000 ordinary shares in the Company with a further payment of an additional 240,000,000 Ordinary Shares once the annual profit after tax of the PMI Group exceeds $1m. This values the initial consideration for the PMI Group at £648,000, based on the Company's closing mid-market share price on 3 February 2016 of 0.27p per share. Wishbone retains its Australian exploration properties and considers that in due course it may become possible to realise synergies between the exploration and trading operations of the Company. Following the issue of the new Ordinary Shares, the Company's total issued share capital on Admission will consist of 999,990,364 Ordinary Shares. The overall effect of this move will be to re-position Wishbone from being another exploration company with promising properties, into one where it also has the support of cash flow from the trading operations in Dubai. This is important, as the bear phase in precious metals has undoubtedly opened multitude of opportunities for business creation and acquisitions whose profitability, in the right hands, might be transformed when the pricing cycle reverses once again, as it inevitably will be, assuming access to cash flow remains sufficient to keep the business plan alive. Right now, Wishbone is a management story. Beaufort retains it Speculative Buy recommendation in anticipation of more interesting times ahead.

Beaufort Securities acts as corporate broker to Wishbone Gold plc
BG Group (BG..L, 1,060.0p) - Buy
On Friday, BG Group reported its fourth quarter and annual results for FY2015. For the year, the company’s Exploration and production was up 16% to 704 kboed (thousand barrels of oil equivalent), and the delivery of LNG cargoes soared 58% to 282. However, the results were largely impacted by the lower commodity prices with the revenue and other operating income slipping 16% to US$16.4bn. The upstream EBITDA stood at US$4.17bn, down 35% and the LNG EBITDA was US$1.5bn, down 46%. The company swung to profits of US$2.3bn for the year due to disposal of non-current assets and post-tax gains on re-measurements and impairments. The company’s losses for 2014 were US$1.1bn owing to post-tax impairment charges. BG Group’s capital expenditure for FY 2015 declined 32% to US$6.2bn. During the year, BG Group added new low cash cost volumes in Brazil and Australia that helped mitigate some impact of lower commodity prices. For Q4 2014, the company’s revenues declined 2% to US$4.3bn. On 8th April 2015, the company reached an agreement with Royal Dutch Shell to sell all its issued and to be issued share capital in a recommended cash and share offer. Under the terms of the Combination, BG Group shareholders will be entitled to receive, for each BG Group share, 383 pence in cash and 0.4454 Shell B Shares. The company did not declare any final dividend for 2015.

Our view: Though BG’s revenues and earnings declined in 2015, owing to lower commodity prices, yet the company took unprecedented measures to combat it through production expansion in low cost projects, mainly in Australia and Brazil. Overall the company succeeded in reducing its spending and improving the cash flow management and performed better than its peers. The company also propped up its production despite the downturn in energy prices. Taking a long term view, we believe that the company is well placed to deliver good returns to its shareholders when the oil prices rebound. In addition, the merger with Shell, expected to be completed in February, is likely to further bolster the company’s operational performance. Thus in view of these several positives, we retain our Buy rating on the stock.

Economic News

Germany factory orders
German factory orders decreased on a seasonally adjusted 0.7% m-o-m in December 2015, after a 1.5% increase in November, the Federal Ministry of Economy and Technology said on Friday. Economists had forecasted orders to fall by 0.5% during the month.
US change in nonfarm payrolls
The US economy added 151,000 jobs in January 2016, after a revised 262,000 addition in December 2015. The markets expected nonfarm payrolls to increase by 190,000.
US unemployment rate
The unemployment rate for October fell to 4.9% in January 2016, after a reading of 5% in December 2015.
US trade balance
US trade deficit widened to US$43.4bn in December 2015 from US$42.2bn in November, the Commerce Department said on Friday. Economists had expected a trade gap of US$43.2bn.

Mon, 08 Feb 2016 09:49:00 +0000
Northland Capital Partners: accesso Technology & Mariana Resources Mariana Resources (LON:MARL) – BUY*: Drilling update
Market Cap: £13.5m; Current Price: 1.6p; Target Price: 4.8p

Highest grade Gold-Copper intercept to date
 Exceptionally high grade, near-surface gold-copper mineralisation continues to be intercepted in drilling along extensions to the Hot Maden Project, located in Turkey. The latest results from HTD34 and HTD-35 include the best gold-copper intersection to date. None of the eight holes reported represent resource infill drilling.
 Resource Extension Drilling in ongoing and will accelerate with the addition of a second gig. Systematic metallurgical testwork is now underway with initial focus on crushing/grinding studies, gold-copper recoveries and flowsheet definition. Completion of a maiden PEA remains on track for late Q3/early Q4.
 No change to forecasts, BUY rating or 4.8p price target.

NORTHLAND CAPITAL PARTNERS VIEW: The Hot Maden orebody continues to deliver exciting results. HTD-34 represents the best hole to date and, with HTD-35, continues to deliver ounces outside the reported mineral resource estimate. Drilling to date is successfully delineating the limits of the resource to the east and west whilst leaving the potential open at depth as well as north and south. This has not been appreciated by the market.

accesso Technology (LON:ACSO): Contract extension
Market Cap: £200.6m; Current Price: 912p

Contract extension with Six Flags
 Contract extension with Six Flags Entertainment, the world’s largest regional theme park operator, for the provision of LoQueue and Passport to its 18 parks until 2025. accesso will derive transactional and repeatable revenue until the end of 2025, although Six Flags’ has a one off termination right at the end of 2022.
NORTHLAND CAPITAL PARTNERS VIEW: Six Flags has been an accesso customer for more than 10 years and the extension, coupled with the agreement signed with Merlin in the Summer, provides the company with good revenue visibility going forward. The shares, now trading at an all-time high, assume considerable additional growth and very strong execution.

Mon, 08 Feb 2016 09:44:00 +0000
There may be trouble ahead for investors in Royal Bank of Scotland Sat, 06 Feb 2016 09:00:00 +0000 Construct your return with Ashtead Sat, 06 Feb 2016 07:30:00 +0000 What sort of business will Indaba delegates do? Fri, 05 Feb 2016 14:08:00 +0000 Today's Market View including: Central Rand Gold and W Resources Central Rand Gold (CRND LN) – Raising £1.22m for upgrade of plant facilities
W Resources (WRES LN) – Resource upgrade for La Parilla

Anglo American leads recovery in major miners as commodity prices gain

Anglo American shares rose >25% at one point yesterday in its biggest ever one day move.
Stories that Anglo American might fall out of the FTSE100 index may have encouraged hedge funds and other investors to short the stock.
An unexpected and sudden weakening in the US dollar on expectations for ongoing low interest rates helped Oil prices, gold and other metals to jump.
The recovery in gold and other commodity prices yesterday prompted a rally causing a likely rapid unwinding of short position and a rush to contain losses by short sellers.
The Chinese new year starts on Sunday with millions of Chinese workers heading back to their country villages for a week or more.
We suspect that Chinese hedge funds and CTAs which had been shorting commodities have been limiting positions ahead of the new year break.
Chinese traders and factories also run down metal inventory levels ahead of the break normally causing visible metal inventories to build in official warehouses
But instead of seeing official stocks rise, inventory levels have been falling for many metals (eg LME copper stocks fell nearly 2% today) indicating that the ‘destocking’ part of the commodity cycle may be at an end for many metals
Anglo American is seen as more sensitive to precious and base metals than the other majors which tend to derive more of their earnings from iron ore and other bulk commodities
Interestingly Iron ore and steel prices are rising alongside other commodities also suggesting that action being taken by the Chinese authorities to close polluting and uneconomic industries is having more positive impact on pricing and on demand for commodity imports.
Funds have been forced to sell mining shares and commodities as Sovereign Wealth Funds liquidated investments to pay for the deficits created by lower oil prices.  Sales hit BlackRock and other commodity funds hard causing these funds to sell their more liquid holdings to cover these unexpected redemptions.  We estimate sales to be in hundreds of billions of US dollars’ worth of stock.
We are seeing growing interest in mining stocks from AIM to the FTSE100 with investors looking to buy stocks at the bottom of the current commodity cycle.
Valuations are reminiscent of 2008 after Lehman Bros went down with the market staging a strong recovery over the subsequent 18 months.
Conclusion:  We expect mining stocks to lead commodity prices higher as Sovereign Wealth fund selling abates, as short positions close and as the end of the ‘destocking’ cycle for many commodity cycle gives way to lower stock levels and leads prices higher.

100 miners trapped in South Africa
We see unconfirmed reports this morning that approximately 100 people have been trapped underground at the Lily  Makonjwaan Gold Mine near Barberton in Mpumalanga Province of S Africa. The mine, which lies midway between Barberton and Kaapmulden is, we believe, located east of Pan African Mining’s Sheba operation. According to SABC, the suspected cause is a rockfall at the entrance to the mine.

Economic News

US – All attention on the jobs numbers due later today with estimates for a 190k reading, down from 292k in Dec.
Factory orders came in a little worse than forecast showing a contraction in activity in the final month of the year.

Germany – Factory orders fell sharply in Dec putting breaks on the strong growth trend enjoyed in previous months.
Orders fell 0.7%mom/2.7%yoy versus a 1.5%mom/2.1%yoy increase in Nov and a 0.5%mom/1.4%yoy fall forecast.
Latest economic data point to a slowdown in growth momentum in the largest European economy with manufacturing and services sectors activity down at 3-month lows.

UK – The BoE committee voted unanimously to keep rates at record lows for the first time since summer.
Members of the MPC who previously pushed for a 25bp increase changed the rhetoric amid a recent slowdown in workers’ pay growth and weak inflation rates.
Despite the subdued outlook for inflation, the MPC board said it believes rates will be increased at least once in the next two years.
On economic estimates, the BoE cut its GDP growth forecasts for 2016 and 2017 on the back of slowing glbal growth and strong currency putting pressure on exports.
GDP growth has been cut to 2.2% in 2016 and 2.4% in 2017, down from 2.5% and 2.7%, respectively.

Australia – The Australian dollar fell yesterday following worse than forecast retail sales numbers while the central bank cut its GDP growth forecasts and guided towards lower inflation by the end of June this year.
Retail sales: 0.0%mom in Dec v 0.4%mom in Nov and 0.4%mom forecast.
New RBA economic forecasts point to a 3.0% GDP growth for 2017 and 1.5% inflation rate by mid-2016. These compare to previous estimates for 3.5% GDP growth and 2.0% inflation rate.

Indonesia – Economic growth in 2015 beat market estimates, but still posted the weakest rate of increase since the global financial crisis/
GDP climbed 4.79%, down from 5.02% in 2014 and the weakest reading since 4.63% recorded in 2009.

Zimbabwe - Mugabe blames western sanctions for impact of drought on Zimbabwe
Thanks Bob, may we speculate that the collapse of the economy caused by violence against whites, hyperinflation, lack of investment and government corruption may have led to a situation where farmers have not invested in the necessary water storage, irrigation and fertilisers needed to maintain crop yields.

US$1.1195/eur vs 1.1120/eur yesterday.   Yen 116.88/$ vs 119.58/$.  SAr 15.921$ vs 16.176/$.   $1.452/gbp vs 1.445/gbp
0.719/aud vs 0.705/aud.  China CNY 6.571/usd vs CNY6.578/usd –
Ongoing US dollar weakness

Commodity News
Precious metals:
Gold US$1,156/oz vs US$1,146/oz yesterday –
Platinum US$906/oz vs US$890/oz yesterday –
Palladium US$517/oz vs US$5078/oz yesterday – 
Silver US$14.85/oz vs US$14.76/oz yesterday –

Base metals:
Copper US$4,680/t vs US$4,672/t yesterday –
Aluminium US$1,533/t vsUS$1,541/t yesterday –
Nickel US$8,535/t vs US$8,605/t yesterday –
Zinc US$1,707/t vs US$1,720/t yesterday –
Lead US$1,789/t vs US$1,820/t yesterday
Tin US$15,050/t vs US$15,070/t yesterday –

Oil US$34.20/bbl vs US$35.30/bbl yesterday –
Natural Gas US$2.060/mmbtu vs US$2.007/mmbtu yesterday
Uranium US$34.45/lb vs US$34.45/lb yesterday -

Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$44.40/t vs US$44.40/t yesterday –
Thermal coal (1st year forward cif ARA) US$38.30/t vs US$39.10/t on 30 December –

Tungsten - APT European prices $160-175/mtu vs $150-175/mtu last week  vs $165–175/mtu a the week earlier –
Ferrochrome – Benchmark prices collapsed to 92c/lb in December for Q1/16.

Company News

Central Rand Gold (LON:CRND) 4.375 pence, Mkt ~Cap £3.8m – Raising £1.22m for upgrade of plant facilities
Central Rand Gold is issuing 34.999m new shares at a price of 3.5p per share in order to “undertake continued surface mining operations, identify and source further plant feed material and facilitate a programme of plant upgrades and efficiency processes to further improve plant availability and recovery rates.”
The company operates in the historic Witwatersrand region of S Africa and is currently working to dewater flooded historic mining areas. “The management team remains optimistic regarding the viability of the surface mining strategy and is committed to optimise this further, however, this is considered by the Board as an interim measure whilst dewatering of the underground operations continues.”  The management states that as dewatering continues and “following a  period of rehabilitation [it] should enable Central Rand Gold’s underground mining operations to re-commence during 2017.”

W Resources (LON:WRES) 0.63p, Mkt Cap £23.3m – Resource upgrade for La Parilla
W Resources has announced the results of its updated resource estimate for the La Parilla tungsten deposit in western Spain. The estimate was prepared by the consultants, Golder Associates, and incorporates results from the 2015 drilling campaign.
The total resource, which is based on a cut-off grade of 0.04% tungsten trioxide, has increased from the 47m tonnes reported in 2013 to 51mt (+9%) with a 7% increase in grade from 0.09% to 0.096% tungsten trioxide and 0.0108% tin.
Compared to the 2013 estimate, which was all classed as “inferred”, around 70% of the updated resource at La Parilla is now classified as “indicated” under the JORC code.
The estimate includes 11mt of indicated resources at an average grade of 0.0996% and 2m tonnes of inferred resource grading 0.1099% within the “Fast Track Mining Area” where mining is likely to begin. In addition, the company highlights the La Parilla West area which is “open to the south, west and north” with an indicated resource of 1mt at 0.216% and an inferred resource of 4mt at a much higher reported  average grade of 0.998% tungsten trioxide.
The company reports that “Mine planning and engineering is advanced and we look forward to the upgraded development and production plan in Q2.”
The resource update for La Parilla follows a similar upgrade for the company’s higher grade Regua tungsten project in Portugal which was reported in October 2015. Regua is higher grade at 5.46m tonnes at an average grade of 0.28% tungsten trioxide at a cut-off grade of 0.1%.  Indicated resources  at Regua (3.76mt at 0.304%) now comprise 75% of the overall contained tungsten trioxide and have increased by 76% since the 2012 estimate of 2.14mt at 0.367%.
Conclusion: W Resources is pressing ahead at La Parilla where it already has some processing facilities in place for the treatment of tailings from previous mining activity. Hard rock mining of the in-situ deposit covered by this resource estimate is likely to  require additional processing facilities but with many of the required permits in place W Resources should be well placed to move towards accelerated production. The reference ammonium paratungstate (APT) price remains close to historic lows dating back to at least 2010, however.

Fri, 05 Feb 2016 11:11:00 +0000
Oil price, Faroe, Velocys, Sound Energy, And finally... WTI $31.72 -56c, Brent $34.46 -58c, Diff $2.74 -2c, NG $1.97 -7c
Oil price
The oil price drifted yesterday, concerns about the US economy after recent farcical statements from the Fed and of course today is Non-farm payroll day, much to watch.
Also, Saudi Aramco announced that it was cutting prices to European, Asian and Mediterranean customers which doesnt sound like a move away from market share grabbing policy…
An operational update from Faroe this morning, the company remains one of the most disciplined in the sector, holding onto its cash, cutting costs and keeping to a modest drilling programme in tax efficient Norway. Last year can be described as a disappointing one with the drill bit but production beat the guidance at 10,530 boe/d. This year guidance is down, this is due to Njord and Hyme  being suspended in the summer, more details on redevelopment and costs due shortly, currently in pre-FEED which will lead to yard selection. Capex last year was a net $15m, this year will be $12m thanks to the tax efficiency in Norway. As for Opex, last year was $23 boe but will rise to $27 boe this year due to that production fall mid year. Butch, Pil, Bue and Boomerang are all working their way through the process, Butch is likely to be up for FID in the 4th quarter. All in all Faroe remains very much one of the favoured plays in this difficult sector, its relative financial strength with cash and a mostly undrawn RBL means that should the opportunity arise it could be a consolidator with all the advantages that might bring.
The ENVIA Energy GTL JV moves on, contractor Ventech has signed its first major contract and Velocys has provided $12m of funding of which $9m is a loan at 10%. This is further good news from Velocys and I am looking forward to meeting the new CEO to get an idea of his plans.
Sound Energy
Two pieces of news from Sound in the last 48 hours, the Badile process rolls on and another suite of information is being prepared but movement is forwards at least. Much better news is that first gas has been achieved at Nervesa, commercial production is really important and when ramped up will deliver 1.8 mmscf/d and goes into the GSA with Shell.
Finally I did a CEO interview with James Parsons of Sound on TipTV yesterday, another good chat and a promising update on the portfolio and upcoming plans for the company.
And finally…
In the Prem this weekend there are two standout fixtures, undoubtedly the best is the Noisy Neighbours entertaining the Foxes whilst Man Who go to Chelski. Spurs host the Hornets, the Hammers go to the Saints, the HubCap Stealers have the Maccams at Anfield and the Gooners go to the Cherries. At the bottom its Villa v the Canaries and the Magpies take on the Baggies.
Of course it is also Superbowl weekend where the Denver Broncos take on the Carolina Panthers starting at 2330 on Sunday…
Finally of course, tomorrow sees that start of the Six Nations Championship and after the RWC is very welcome. It’s the battles of the old enemies with France taking on Italy and Ireland playing Wales but I shall be at Murrayfield where the Calcutta Cup is likely to be as close as it has been for many years after Scotland showed England a thing or two in the world cup. There is the small matter of the Scottish Oil Clubs Dinner to get over first however, tonight in Auld Reekie may get very messy….

Fri, 05 Feb 2016 09:55:00 +0000
Nomura whips up target price on Compass Fri, 05 Feb 2016 09:47:00 +0000 Newspaper Briefing: January sales spurt provides relief for retailers The Times
January sales spurt provides relief for retailers: The souring economic mood failed to dampen the spirits of consumers who flocked to the shops in January and also splurged on the biggest-ticket item for most households, new cars.
Growth and pound ‘put at risk in Brexit vote’: Financial institutions have begun insuring themselves against the pound collapsing if Britain votes to leave the EU, the Bank of England said as it warned that growth could suffer in the coming months from uncertainty about the referendum’s outcome.
Barclays to hand Qatar deal papers to the SFO: Barclays has abandoned its protracted fight with the Serious Fraud Office over sensitive documents about its 2008 Middle East fundraising and handed them over for scrutiny.
Credit Suisse posts its first loss since the financial crisis: Credit Suisse will cut 4,000 jobs and slash other costs after reporting its first full-year loss since 2008.
South32 cuts 600 jobs as it faces $1.7 billion write-down: South32, which was spun out of BHP Billiton, is cutting more than 600 jobs and preparing for a $1.7 billion write-down.
Superdrug takes razor to sexist pricing: Superdrug has agreed to review its “sexist pricing” after an investigation by The Times revealed that women were being charged more than men for similar products.
Rangers give notice on their Sports Direct deal: The dispute between Rangers and the businessman Mike Ashley took another turn when the club gave his Sports Direct company formal notice that they wished to end their merchandise deal.
Chung joins M&S after skirting with success: Alexa Chung, the model and TV presenter, has been signed up to breathe new life into the struggling Marks & Spencer fashion label after a skirt she wore became an instant hit for the chain.
The Independent
Top City law firms accused of restricting access to justice by charging up to £1,100 an hour: Top City law firms are billing up to £1,100 an hour – the highest rates ever recorded – producing “astronomical” and “unjustifiable” fees that are restricting access to justice, it has been claimed.
U.K. pubs closing at a rate of 27 a week, Camra says: The number of pubs fell by 1,444 in the U.K. in 2015 despite an overall decline in pub closures, according to the Campaign for Real Ale (Camra).
Border controls and passport checks would cost Europe up to €100 billion, report claims: The European economy could lose as much as €100 billion (£76 billion, $109 billion) within 10 years if border checks and passport controls are reintroduced, according to research by the French Government.
House prices rise nearly 10% in a year to £212,430 on average, says Halifax: House prices in the U.K. are nearly 10% higher than they were a year ago, according to Halifax.
Navinder Singh Sarao: ‘Flash crash’ trader made hundreds of thousands of pounds ‘on day of U.S. stock market crash’: A “dishonest” British financial trader made hundreds of thousands of pounds on the day of a multi-billion dollar U.S. stock market crash, a court heard.

Activist investors: hard drugs: Investors in Johnson & Johnson have tried to gin up interest among activists in harassing the U.S. healthcare conglomerate into a break-up. They are quite right that J&J could use a good shaking. For now, unfortunately, it is unshakeable.

Credit Suisse: cheesed off: Consider Credit Suisse. On Thursday it reported a worse than expected SFr5.8 billion net loss for the fourth quarter. Shares dropped to their lowest level since 1992.

Bank break-ups: here we go again: John Thain’s ride into the sunset may be lucrative. It will not be smooth. Last autumn, the Chief Executive CIT Group announced plans to depart — one in a series of strategic changes at the formerly troubled finance firm.

Outnumbered: A monstrous regiment of non-Executive Directors has taken over British boardrooms. The number of Executive Directors has fallen by one-fifth in five years, according to research by recruiter Norman Broadbent and the Quoted Companies Alliance. The figure has settled at around 2.3 Executives for each FTSE 100 board. There are now three NEDs per exec. So they could easily win if it came to a punch-up.

Tail wags dog: David Bowie’s son Zowie thus goes by the name Duncan Jones. Theravance Biotherapeutics cannot hide its heritage so easily. The giveaway is a stake in a potentially valuable drug that securities laws require the San Franciscan company to disclose.

The Daily Telegraph
Dollar tumbles as Fed rescues China in the nick of time: The U.S. dollar has suffered one of the sharpest drops in 20 years as the Federal Reserve signals a retreat from monetary tightening, igniting a powerful rally for commodities and easing a ferocious squeeze on dollar debtors in China and emerging markets.
Carney downgrades U.K. growth prospects as rate rise kicked into long grass: The Bank of England has signalled that weaker U.K. growth and an “unforgiving” global environment will keep interest rates on hold for at least another year, as its most hawkish member abandoned a call for higher rates.
Pound could crash by 20% if U.K. votes for Brexit, warns Goldman Sachs: The pound could lose a fifth of its value if the U.K. votes to leave the European Union, Goldman Sachs has warned.
Electra makes £12 million on sale of art supplier Daler-Rowney: Electra has sold its stake in Daler-Rowney, the centuries-old British fine art materials supplier, for £32 million, months after it was deemed the listed company’s worst-performing asset.
Moody’s downgrades Clydesdale Bank’s deposit rating: Clydesdale Bank’s deposit rating has been cut by ratings agency Moody’s over fears the bank could represent a bigger risk now that it has been sold off by its parent National Australia Bank (NAB).
Vodafone slams Hutchinson’s price-freeze pledge: Vodafone has hit out at Hutchison’s promise to freeze mobile phone bills for millions of customers if Brussels approves the proposed merger between Three and O2.
Index Ventures raises record $1.25 billion to invest in start-ups: Index Ventures, the early-stage investment firm behind Facebook, Skype and Net-A-Porter, has raised $1.25 billion (£870 million) to fund start-ups it believes will redefine the tech landscape.
Rolls-Royce can avoid ‘death by a thousand cuts’ with £1 billion fundraising: Rolls-Royce Chief Warren East should ditch the embattled engineer’s dividend, abandon profit guidance and launch a £1 billion fundraising in a bold move to head off constant questions about the company’s future.

The Guardian
Bank of England votes 9-0 to keep interest rates on hold: The prospect of a U.K. interest rate rise has receded further after the Bank of England cut its forecasts for growth, wages and inflation. However, the Governor, Mark Carney, warned borrowers against getting too comfortable with rock-bottom rates.
Sumner Redstone resigns as Executive Chairman of Viacom: Media mogul Sumner Redstone relinquished control of his media empire on Thursday amid continuing rumours of his ill health.
Drug company Boss Martin Shkreli refuses to testify to Congress: Pharmaceutical entrepreneur Martin Shkreli threw insults at the U.S. Congress on Thursday, less than an hour after refusing to testify at a hearing investigating accusations of profiteering on life-saving drugs sold by his and other drug companies.
Tata Steel reports £68 million quarterly loss in face of cheap Chinese imports: Tata Steel has reported a quarterly loss of £68 million, more than double the figure in the previous three-month period, at its European business.

Daily Mail
Mining shares soar 25% thanks to stronger metals prices and a fall in the value of the U.S. dollar: Mining stocks charged ahead led by Anglo American which posted its biggest ever one-day percentage gain during trading.
Can former Bank of England Governor save Aston Villa? Lifelong fan Lord Mervyn King joins board of struggling Premiership side: Lord Mervyn King has joined the board of his beloved Aston Villa Football Club, which is languishing at the bottom of the Premier League.
Government preparing to sell its last stake in Royal Mail bringing to an end 500 years of state Ownership: The wheels were set in motion for the last government stake in Royal Mail to be disposed of, bringing to an end 500 years of state Ownership.

Daily Express
EU on brink of ‘terrifying crisis’ Five of Europe’s big banks are in danger, warns expert: Some of Europe’s biggest banks are on the brink for a crisis that echoes the 2008 meltdown, a finance expert warned , as fears over the global economy escalate.
Shell sees 80% drop in profits due to weak oil prices: Shell warned that continued weak oil prices would lead to more cutbacks as the company’s annual profit plunged 80% to a 13-year low.
Man behind £170 million smartphone app sold his share for a bike: One of the Founders of £170 million smartphone technology firm SwiftKey sold off his stake just two weeks into the business’ birth in return for a bicycle, it has been claimed.
Low interest rates cost savers £160 billion and spark yet another debt binge: Seven years of rock bottom interest rates have cost savers £160 billion while encouraging people to take on ever higher debts, suggests analysis.

The Scottish Herald
Glasgow hotel management specialists plan move into mainland Europe: Glasgow-based Redefine|BDL Hotels plans to expand into mainland Europe after achieving strong growth in the U.K. in 2015.
Funeral firm invests £2 million in new fleet: Anderson Maguire, the Glasgow-based funeral Director, has invested £2 million in a new fleet of hearses, limousines, vans and ambulances.
Hardware jobs go as video firm strengthens focus on software: CCTV specialist IndigoVision has laid off a small number of hardware engineers as it builds capacity in its software team.
Alliance Trust shake-up takes effect: Alliance Trust Investments has this week taken over as management company for the £3 billion Alliance Trust, the Dundee-based group has said.
Scottish rail giants to battle it out in south-west: Scottish rail giants Stagecoach and FirstGroup will battle it out as the only two companies invited to tender for a new South Western franchise.
Grant sees profits fall as costs bite: Grant Asset Management, the Edinburgh-based residential property company, saw profits fall sharply last year. The business achieved a profit turnround of more than £730,000 in 2014, posting a pretax profit of £479,641.
Regional airports enjoy record year: Scotland’s regional airport group HIAL recorded its busiest ever year in 2015, gaining more than 45,000 additional passengers.

The Scotsman
EnQuest to shed 45 oil and gas jobs in Aberdeen: North Sea explorer EnQuest is to cut up to 45 jobs in Aberdeen as the oil downturn continues to bite.
Aberdeen property investment plunges by 80%: Investment in Aberdeen’s commercial property market slumped by 80% last year, according to new research.
Digital agency Equator takes control of 999 Design: Glasgow digital design and marketing agency Equator has bought a controlling stake in rival 999 Design Group.
Age U.K. to be probed over £6 million energy firm payoffs: The Charity Commission is looking at “any action that might be necessary” following claims Age U.K. has been promoting expensive energy tariffs to the elderly in exchange for cash.
North Sea oil production could end within years, says Unite: North Sea oil production could end within years, with the loss of thousands of jobs, unless emergency measures are taken to boost the industry, it is being warned.

City A.M.
Dunedin private equity backs asset management adviser to fund expansion: Private equity company Dunedin has invested £80 million in specialist asset management adviser Alpha Financial Markets Consulting, City A.M. has learned.
Jobs market starts the new year with a bang: The jobs market found new energy at the start of the year, according to survey figures released this morning.
Lionsgate Entertainment share price falls in after-hours trading as its third quarter earnings miss expectations: Shares in Lionsgate Entertainment, the production company behind The Hunger Games, fell in post-market trading after its revenue disappointed in the third quarter.
News Corp relies on digital real estate business to bolster revenues as news division faces challenges over print advertising: Media group News Corp has reported revenue of $2.16 billion (£1.48 billion) for the three months to 31 December, down from $2.26 billion in the same period of 2014.
LinkedIn share price tanks as it misses earnings forecasts: LinkedIn shares plummeted in after-hours trading, after its outlook and earnings guidance left investors sorely disappointed, despite its membership growing to a whopping 414 million users in the fourth quarter.
Private equity firms Blackstone and Catalyst win consent for Stratford Island scheme: Plans for a major regeneration scheme at the centre of Stratford have been given the go-ahead by Newham council, paving the way for 600 new homes.
Christine Lagarde: IMF to mull strengthening the global safety net: The International Monetary Fund will begin looking into ways to make the global financial system safer as the U.S. Federal Reserve looks to raise interest rates and emerging markets continue to suffer.
Ralph Lauren shares plunge as luxury fashion group slashes forecasts, blaming mild weather: Ralph Lauren shares have plummeted by nearly 18% after the U.S. fashion brand reported a worse-than-expected decline in third quarter sales, blaming the mild winter weather and fewer tourists visiting its stores.
Swiss commodity trader Trafigura’s Chief released on bail amid fraud probe: The head of one of the world’s largest oil and metals traders, Trafigura, was released on bail after eight months in prison this week, as a probe into alleged fraudulent trading activity continues.

Fri, 05 Feb 2016 09:10:00 +0000
Pre-market: UK markets ended higher yesterday, led by rally in mining sector stocks UK Market Snapshot
UK markets ended higher yesterday, led by rally in mining sector stocks. Rio Tinto, BHP Billiton, Antofagasta, Glencore and Anglo American surged 10.3%, 10.8%, 14.6%, 16.0% and 20.0%, respectively, amid a rebound in commodity prices. Investec gained 6.3%, after a leading rating agency upgraded its long term rating on the stock. Royal Dutch Shell advanced 6.1%, despite reporting a significant decline in its earnings for the fourth quarter and 2015. On the downside, AstraZeneca plunged 6.1%, after it projected a drop in its earnings and sales for 2016. easyJet shed 1.2%, after stating that its load factor dropped in January. The FTSE 100 advanced 1.1%, to close at 5,898.8, while the FTSE 250 rose 0.6%, to settle at 16,086.7.

US Market Snapshot
US markets closed higher yesterday, amid gains in raw material and industrial sector stocks, as a weaker US Dollar increased commodity prices. Caterpillar, Alcoa and Freeport-McMoRan soared 4.3%, 10.1% and 17.9%, respectively. Bucking the trend, Ralph Lauren sank 22.2%, after cutting its revenue forecast for 2016. Kohl’s tumbled 18.8%, as it reduced its full year earnings outlook following weak sales growth in the fourth quarter. GoPro lost 8.7%, after it reported a loss for the fourth quarter. ConocoPhillips dropped 8.6%, after it posted lower than expected fourth quarter earnings and cut its quarterly dividend. Merck & Co slid 2.9%, extending its losses, after sales of its chief diabetes drugs fell short of expectations in the fourth quarter and it offered a downbeat guidance for 2016. The S&P 500 gained 0.2%, to settle at 1,915.5. The DJIA rose 0.5%, to settle at 16,416.6, while the NASDAQ advanced 0.1%, to close at 4,509.6.

Europe Market Snapshot
Other European markets ended mostly lower yesterday, amid some disappointing corporate results from the region. Credit Suisse Group tanked 10.9%, after it reported a huge net loss for the fourth quarter as it took write-down for a previously acquired US investment bank. Daimler lost 4.1%, after stating that its earnings and sales growth would be slow in 2016. Peugeot, Bayerische Motoren Werke and Renault slid 2.3%, 3.0% and 3.3%, respectively, as Euro strengthened against the US Dollar. Swisscom declined 2.9%, after it posted lower than expected net earnings for the full year. On the contrary, Statoil surged 9.1%, as it announced a cut in its investments to maintain its dividend payouts. ING Groep climbed 8.9%, after its fourth quarter earnings surpassed market expectations. The FTSEurofirst 300 index declined 0.2%, to close at 1,293.7. Among other European markets, the German DAX Xetra 30 slid 0.4%, to close at 9,393.4, while the French CAC-40 advanced marginally, to settle at 4,228.5.

Asia Market Snapshot
Markets in Asia are trading mostly higher this morning. In Japan, Toshiba has tanked 13.3%, after it raised its projected annual loss to ¥710.0 billion. Carmakers, Toyota Motor, Nissan Motor and Mazda Motor have dropped 3.0%, 3.8% and 6.1%, respectively, as Japanese Yen rallied against the US Dollar. Banks, Mitsubishi UFJ Financial Group and Mizuho Financial Group have fallen 4.6% and 5.2%, respectively. On the contrary, Gree Inc has jumped 11.8%, after it announced an association with mobile messaging app Line Corp. In Hong Kong, PetroChina and China Petroleum & Chemical have added 1.5% and 1.6%, respectively. In South Korea, Samsung Electronics and POSCO have gained 1.0% and 1.4%, respectively. The Nikkei 225 index is trading 2.2% lower at 16,671.3. The Hang Seng index is trading 0.6% up at 19,292.0, while the Kospi index is trading marginally higher at 1,917.0.

Commodity, Currency and Fixed Income Snapshots

Crude Oil
At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.2% or $0.07 lower at $34.39 per barrel. Yesterday, the contract declined 1.66% or $0.58, to settle at $34.46 per barrel, after Saudi Arabia slashed prices of its high-grade crude oil in Europe and Asia, suggesting that the nation is in no mood to cut its oil production and would protect its market share at any cost.

At 0430GMT today, Gold futures contract is trading 0.09% or $1.00 lower at $1156.50 per ounce. Yesterday, the contract advanced 1.42% or $16.20, to settle at $1157.50 per ounce, as a weaker dollar raised demand for the safe-haven metal.

At 0430GMT today, the EUR is trading 0.09% lower against the USD at $1.1195, ahead of German factory orders data for December, scheduled to release today. Yesterday, the EUR strengthened 0.87% versus the USD, to close at $1.1206. Meanwhile, the European Central Bank Chief Mario Draghi reiterated that the central bank would provide additional stimulus in the Euro region to boost inflation, if needed.
At 0430GMT today, the GBP is trading 0.15% lower against the USD at $1.4563. Market participants would closely monitor the US non-farm payrolls data along with unemployment rate figures, both for January, due later in the day, to determine the US Fed’s future course of action. Yesterday, the GBP weakened 0.1% versus the USD, to close at $1.4585, after the Bank of England kept its interest rates unchanged at its policy meeting and cut UK’s economic growth outlook.

Fixed Income
In the US, long term treasury prices rose and pushed yields mostly lower, with investors looking forward to today’s US non-farm payrolls report for January. Yesterday, yield on 10-year notes fell 1 basis point to 1.87%, while yield on 2-year notes lost 2 basis points to 0.70%. Meanwhile, 30-year bond yield remained flat at 2.70%.

Key Economic News

UK Halifax house price index rose more than expected in January

On a MoM basis, the Halifax house price index registered a rise of 1.70% in the UK, in January, more than market expectations for a rise of 0.10%.

The Halifax house price index had climbed by a revised 2.00% in the previous month.

UK Halifax house price index advanced more than expected in the November-January 2016 period

In the November-January 2016 period, the Halifax house price index climbed 9.70% in the UK on an annual basis, compared to a rise of 9.50% in the October-December 2015 period. Markets were expecting the Halifax house price index to climb 9.00%.

BoE unanimously held rates amid growth slowdown

The Bank of England’s (BoE) monetary policy committee (MPC) voted 9-0 to keep interest rates on hold at a record low of 0.5%, where they have been for almost seven years. The MPC member, Ian McCafferty, who had previously voted for an increase for six straight months, unexpectedly dropped his call in this meeting, citing a temporary weaker wages outlook. The BoE slashed its growth forecasts to 2.2% from 2.5% for 2016, but the central bank Governor stated that officials still expected the next move in interest rates to be upwards.

UK new car registrations recorded a rise in January

On a YoY basis, new car registrations in the UK rose 2.90% in January. In the previous month, new car registrations had registered a rise of 8.40%.

Swiss SECO consumer climate climbed in 4Q 2015

The SECO consumer climate climbed to -14.00 in 4Q 2015, in Switzerland, compared to market expectations of an advance to -15.00. In the previous quarter, the SECO consumer climate had registered a reading of -18.00.

Swiss UBS real estate bubble index rose in 4Q 2015

In 4Q 2015, the UBS real estate bubble index in Switzerland recorded a rise to 1.41. In the previous quarter, the UBS real estate bubble index had recorded a revised reading of 1.34.

US number of planned layoffs by US companies advanced in January

On a YoY basis, the number of planned layoffs by US companies advanced 41.60% in the US, in January. The number of planned layoffs by US companies had fallen 27.60% in the prior month.

US continuing jobless claims recorded a drop in the last week

The seasonally adjusted continuing jobless claims dropped to 2255.00 K in the US, in the week ended 23 January 2016, higher than market expectations of a fall to a level of 2240.00 K. Continuing jobless claims had recorded a revised reading of 2273.00 K in the prior week.

US non-defense capital goods shipments (ex aircraft) advanced in December

In the US, the final non-defense capital goods shipments (ex aircraft) recorded a rise of 0.20% on a monthly basis, in December. The non-defense capital goods shipments (ex aircraft) had recorded a revised drop of 1.10% in the prior month. The preliminary figures had recorded a fall of 0.20%.

US durable goods orders (ex transportation) registered a drop in December

In the US, the final durable goods orders (ex transportation) eased 1.00% in December, on a MoM basis. Durable goods orders (ex transportation) had dropped by a revised 0.50% in the previous month. The preliminary figures had recorded a drop of 1.20%.

US unit labour costs in non-farm businesses advanced more than expected in 4Q 2015

In 4Q 2015, the flash unit labour costs in non-farm businesses advanced 4.50% on a QoQ basis in the US, compared to an advance of 1.80% in the previous quarter. Market expectation was for the unit labour costs in non-farm businesses to advance 4.30%.

US durable goods orders dropped less than expected in December

US Census Bureau has indicated that, on a monthly basis in the US, the final durable goods orders fell 4.30% in December, less than market expectations for a drop of 4.50%. The preliminary figures had recorded a drop of 0.90%. In the previous month, durable goods orders had registered a revised drop of 0.50%.

US initial jobless claims advanced surprisingly in the last week

In the US, the seasonally adjusted initial jobless claims climbed unexpectedly to 285.00 K in the week ended 30 January 2016, compared to market expectations of an unchanged reading. In the previous week, initial jobless claims had registered a revised reading of 277.00 K.

US non-defense capital goods orders (ex aircraft) recorded a drop in December

The final non-defense capital goods orders (ex aircraft) slid 4.30% on a monthly basis, in December. In the prior month, the non-defense capital goods orders (ex aircraft) had fallen by a revised 1.10%. The preliminary figures had also recorded a fall of 4.30%.

US non-farm business productivity dropped more than expected in 4Q 2015

In 4Q 2015, the flash non-farm business productivity in the US recorded a drop of 3.00% on a quarterly basis, more than market expectations for a fall of 2.00%. In the previous quarter, the non-farm business productivity had risen 2.20%.

US factory orders dropped more than expected in December

In December, factory orders eased 2.90% on a MoM basis in the US, compared to a revised fall of 0.70% in the prior month. Market expectation was for factory orders to fall 2.80%.

Japanese foreign exchange reserves rose in January

In January, foreign exchange reserves in Japan registered a rise to $1248.10 billion. In the prior month, foreign exchange reserves had registered a level of $1233.20 billion.

Fri, 05 Feb 2016 09:02:00 +0000
Bond Markets Are Underestimating the Fed, Goldman and Pimco Warn Bond Markets Are Underestimating the Fed, Goldman and Pimco Warn

Here is the opening of this interesting report from Bloomberg:
Goldman Sachs Group Inc. and Pacific Investment Management Co. say bonds are poised to fall and traders aren’t prepared for how far the Federal Reserve will raise interest rates.
“Ten-year yields are likely to go up,” Jan Hatzius, chief economist for Goldman Sachs, said at a conference in Sydney. The “bond market is underestimating to a significant degree the amount of monetary normalization that we’re likely to see.” The benchmark yield will rise to about 3 percent by year-end, he said, from 1.91 percent Thursday.
Global economic growth will subdue deflation fears, and the Fed will raise rates more than traders expect, according to Pimco, which manages the world’s biggest actively run bond fund. The company has a “small underweight” position in global bonds, according to a report Wednesday by Mihir P. Worah and Geraldine Sundstrom, fund managers at the Newport Beach, California, firm.
The two bond powerhouses are voicing the consensus outlook among economists surveyed by Bloomberg, which projects yields will rise through the course of 2016. The bearish view is reemerging after being drowned out in January as tumbling oil and stock prices sent investors rushing to the haven of government debt.

David Fuller's view
The Fed would love to be in a position, finally and sensibly, to normalise monetary policy.  This would be confirmation that Janet Yellen and even more importantly, Ben Bernanke before her had made the right decisions with their radical monetary policies.
However, the Fed is not operating in a vacuum.

Browning World Climate Bulletin
My thanks to Alex Seagle for the February issue of this fascinating publication which remains of interest to many subscribers.  Here is a brief sample:
Investments‒ While Browning Media does not offer investment advice, we do recognize that there are opportuni­ties when sweeping global agreements are made. It should once again be noted that for the next 15 years the type of climate that has created more extreme storms, billion-dollar insurance losses, multi-year droughts and record breaking tempera­tures will persist. We as a culture will likely adapt, but much of that adaptation will be structured by the actions taken during conferences such as the Paris Summit.
Eventually our climate will naturally improve. Until then, we have 15 more years that will continue to fuel the belief of man’s impact on climate. As such there is close to two trillion dollars’ worth of investment capital and opportunity for any and all “environ­mentally-friendly” services, products and technologies. There are the op­portunities in developed coun­tries to become more green, utiliz­ing solar and wind energies while reducing water usage. In developing countries there should be over $100 billion per year start­ing in 2020 to help those economies grow while keeping greenhouse emissions at a minimal.

David Fuller's view
There are no climate calls in our charts but I can say that so far the Gulf Stream has been very kind to us this winter in London.  Our gardens have been blooming since mid-January with the earliest spring that I can recall.  Winter coats, hats and gloves have stayed in the closets.  We have had some rain on most days but I am not complaining because it helps to keep the air clean.
I have been occasionally frightened but mostly wryly amused by the extreme weather forecasts that I have heard during my life.  So far, Mother Nature has been a mostly benign influence, without much help from our species, although that is beginning to change.  

Privatisations? Who Do You Think You Are Kidding Mr Putin?
Here is a brief section of this interesting column by Ben Wright for the Telegraph:
This has very real implications for investors of all stripes. For years now, global sovereign wealth funds have been using their vast stashes of petrodollars to buy assets – from US bonds to London property – around the world. Sovereign wealth funds owned 9pc of all global equities and bonds in 2015, according to Capital Economics. Now they’ve switched from buying to selling. JP Morgan has predicted that sovereign wealth funds could try to offload up to $80bn (£56bn) of equities this year alone. Gulp.

David Fuller's view
“Gulp” indeed.  Stock markets have had a dreadful start to the year, and sovereign wealth funds are certainly contributors to the selling.  Low government bond yields also confirm that investors have retreated from stock markets.

Fri, 05 Feb 2016 09:00:00 +0000
Northland Capital Partners: W Resources W Resources (LON:WRES) – BUY*: La Parrilla update
Market Cap: £23m; Current Price: 0.63p; Target Price: 1.1p

16% increase in contained WO3
W Resources has completed a JORC compliant mineral resource estimate upgrade at the La Parrilla Tungsten Project, located in Spain.
The total mineral resource estimate has increased 51mt at a grade of 0.096% WO3 and 0.108% Sn. This represents a 16% increase in contained WO3 and a 7% increase in the average WO3 grade, and a 29% increase in contained Sn and a 19% increase in the average Sn grade (Table 1).
The category of the mineral resource estimate also improved with 70% of the current estimate in the indicated category compared to 0% in the previous 2013 estimate (Table 2).
High-grade mineral resource estimate over the Fast Track Mine (FTM) and La Parrilla West (LPW) areas (Table 3).
No change to forecasts, rating or price target.

Northland Capital partners view: Another positive update from W Resources with an increase in both grade and tonnage at the La Parrilla Tungsten Project, resulting in a substantial increase in the contained WO3 content. Importantly the area defined for the Fast Track Mine (FTM) is higher grade than the bulk of the resource improving early returns from the Project. Also important is that the La Parrilla West (LPW) area is higher grade and remains open, offering further upside.

Fri, 05 Feb 2016 08:44:00 +0000