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Comment of the Day
Video commentary for January 4th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: China recovery gathers pace, tourist sector basing, tech still under pressure, bond yield compressing and gold recovering, oil and copper weak.
China Markets Start 2023 With a Bang as Policy Shift Hastens
This article from Bloomberg may be of interest to subscribers. Here is a section:
The world’s second-biggest stock market is looking like an investor darling again, as optimism about the eventual benefits of Beijing’s abrupt end to Covid curbs outweighs concerns over the short-term pain it inflicts. Adding to that is a series of policy developments signaling the return of economic pragmatism, including plans of fresh property support, discussions of ending a ban on Australian coal imports and progress toward concluding a crackdown on Jack Ma’s financial tech behemoth.
The euphoria has spread beyond equities. The offshore yuan strengthened 0.5% against the dollar, while dollar bonds of some of China’s distressed developers saw sharp gains.
“These directly remove some of the pillars of risks for China — property, geopolitical, and regulatory headwinds,” said Marvin Chen, a Bloomberg Intelligence analyst, referring to the slew of “active” policies.
Concerns over a further worsening of China’s property debt crisis receded further Wednesday after Bloomberg News reported that authorities are weighing new measures to ease the cash crunch plaguing some systemically important developers. The resumption of approvals for private equity funds to raise money for residential housing developments also lifted sentiment.
Eoin Treacy's view - It is looking increasingly likely Chinese policy has just had a major (positive) reversal. The effusive praise Qin Gang gave for the US negotiators as he stepped down as the top Chinese envoy to Washington suggests we can expect a friendlier atmosphere for the next year.
This section continues in the Subscriber's Area.
Oil's New Year Slump Deepens Below $75 as China Concerns Grow
This article for Bloomberg may be of interest. Here is a section:
Crude’s dwindling levels of open interest have left it open to sharp swings in recent months, and a failed attempt to break above its 50-day moving average this week has done little to improve the technical picture. While sanctions against Moscow over Russia’s war in Ukraine dragged its oil flows to 2022 lows late last month, that’s been of little relief to bulls so far this year.
The impact of a pre-Christmas freeze that hobbled refinery capacity in some parts of the US should also become clearer in inventory data this week, with the industry-funded American Petroleum Institute’s figures due later. In the short-term, that has lowered crude processing capacity in North America and is also weighing on prices.
“We’ve seen these big freeze-offs in the US and that has meant that the crude balance has actually weakened,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said in a Bloomberg TV interview, referring to US refinery closures due to cold weather. “There’s a few more weeks of softness I would think.”
Eoin Treacy's view - The weakness in the oil sector has little to do with Chinese demand questions. Instead, the illiquidity of the futures market is an increasingly troubling issue because it increases volatility. Open interest in front-month Brent Crude contracts is back at 2015 levels and trending lower.
This section continues in the Subscriber's Area.
Mining Stocks Rally as Gold Advances to Highest Level Since June
This note from Bloomberg may be of interest. Here is a section:
Kinross Gold and Pan American Silver are among the gold and silver miners getting the biggest boost Tuesday, as gold rose to the highest in six months.
Gold rose 1% to trade over $1,840 an ounce as the precious metal continues to gain momentum
The Bloomberg Americas Mining Index gains as much as 3.2% led by Kinross’s 7.5% rise and Pan American’s 7.4% climb, Newmont climbs 3.7% and is one of the top performer in the S&P 500 Index
Other miners rallying include: EQX CN +11%, ARIS CN +10%, SVM CN +4.3%, BTO CN +3.3%, ABX CN +3.8%, FR CN +2.8%, LUN CN +3.9%, YRI CN +3.1%
Eoin Treacy's view - The gold price rallied in tandem with bonds yesterday, despite the relative strength of the Dollar. That suggests at least a temporary reorientation of investor focus towards the view gold is a perpetual zero-coupon bond. The implication is inflation has peaked and could easily surprise on the downside and the lagged effect of central bank tightening becomes clear in Q2/Q3.
This section continues in the Subscriber's Area.
Email of the day on spread-betting companies:
Eoin, I hope you have had a good break. A very happy New Year to you and yours. I apologise, as I am sure I have asked the question previously. However, I cannot find your answer. Can you direct me to a good Spread Betting company in the UK? In anticipation, many thanks.
Eoin Treacy's view - Thank you for this question which may be of interest to the Collective. I primarily use IG Index and CMC Markets.
IG Index has by far the largest breadth of instruments. However, they also widen spreads in thin overnight trading. That means when the price is trading close to your stop at the end of trading, there is a strong likelihood it will be triggered in the overnight session.
CMC Markets on the other hand does not have as wide a selection, but it does not tinker with spreads in the overnight session.
The choice of which you use will be influenced by the type of trader you are. I customarily do not use stops until I have a profit I want to protect.
This section continues in the Subscriber's Area.
Travel Schedule - Future Minerals Forum 2023
I have accepted the Saudi Arabian government's invitiation to attend the Future Minerals Forum again this year. I am due to fly out Monday evening and will arrive in Riyadh on Tuesday evening with a stop in Frankfurt along the way. I expect to be back in Dallas Friday afternoon. I expect to keep up with the publishing schedule but the time I post articles will be affected by travel.
At present, I have meetings arranged with the CEOs of Polymetal, Alien Metals, Perseus Mining, Pyx Resources, Aurora Minerals Group, Silver X Mining, Goviex Uranium, Kuya Silver, Esper Satellite Imagery, Saudi Gold Refinery with more to come. If subscribers have any questions they would like me to ask just let me know.
Eoin's personal portfolio: stock market index positions closed at profit and shorts opened December 6th 2022
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary on a daily basis until there is a change.