Your free daily email from Fuller Treacy Money
Comments of the Day
25 February 2020
Video commentary for February 24th 2020
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics covered include: Coronavirus spread accelerating outside of China, stock markets in risk off mode, carry trade currency steady, gold extends advance, gold shares break out, bond yields at record lows, bond - equity yield spread back at prior support.
Risk Parity Nirvana; Buyer's Compendium - 9 Screens Across Growth & Value
Thanks to a subscriber for this report by Mike Wilson for Morgan Stanley. Here is a section:
Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.
“The Fed has got your back and they will do whatever is necessary to support asset prices” That is the mantra of stock market investors who have been following a diversified or balanced investment strategy for the last decade. In between there have been occasions when the mantra was challenged, particularly following Jay Powell’s appointment as Fed chair. However, the pivot to easier policy and the response to the repo tightness in Q3 have reasserted belief in the mantra.
With Gold Up, Miners Face Payouts Versus Production Dilemma
This article by Justina Vasquez, Danielle Bochove and Steven Frank for Bloomberg may be of interest to subscribers. Here is a section:
Gold producers are “gushing cash,” said John Hathaway, senior portfolio manager at Sprott Asset Management, in support of the higher dividends. “They are in a position to raise their dividend,” he said. “And there will be boardroom pressure and shareholder pressure to do that.”
The industry has been blasted in the past for underspending on production, overspending on acquisitions and piling up debt. Now, though, after years of fat-trimming, miners and their investors are well-positioned to gain from the higher prices. That’s allowed companies including Barrick and Newmont to boost free-cash flow and, to varying degrees, reward shareholders.
Earlier this month, though, Mark Bristow, Barrick’s chief executive officer, sent a warning shot across the bow of the industry. Even if all current projects work out, he said, gold supply will still fall 30% globally by 2029. While sinking supply would be bullish for bullion prices, margins and revenues could be hit if companies are forced to mine lower-grade or hard-to-access deposits.
Eoin Treacy's view
All-In-Sustaining-Cost estimates were introduced following the gold crash because investors were tired of seeing every available cent poured into investments in new production. It’s easy to see why miners were anxious to invest. The gold price had been in a bear market for decades and they had not been able to source capital for exploration or new projects. Higher prices ensured the survival of the sector but it came at the expense of stock market performance.
Gilead Surges After WHO Comments on Coronavirus Drug Testing
This article by Drew Armstrong and Bailey Lipschultz for Bloomberg may be of interest to subscribers. Here is a section:
Remdesivir is the “one drug right now that we think may have efficacy,” Bruce Aylward, an assistant director-general at the World Health Organization, said at a briefing in Beijing. WHO officials and international scientists are in the country assessing the outbreak.
Eoin Treacy's view
The spread of the coronavirus accelerated internationally over the weekend with exponential growth in South Korea and Italy. Right now, there are no cures for the ailment and therefore any whiff of a successful treatment is likely to be rewarded with investor interest.
Eoin's personal portfolio: commodity long initiated February 18th 2020
Eoin Treacy's view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.