Thursday, 8 October 2009

On hiatus

Back on November 15, 2009 Sphere: Related Content

Friday, 11 September 2009

Barrick and gold

Something becomes very clear: gold prices will rise. The biggest miner, Barrick, is offering shares – the biggest inCanadian history – in order to elminate all of his fixed hedges and partly its floating hedges.
This is telling us that they are serious this time about a rising gold price.
How?
The Chinese, my dear Watson….

From the FT:

Barrick Gold said on Thursday that proceeds from its pending equity offering will total around $4bn, making the stock sale the biggest in Canadian history, reports Reuters. The world’s top gold miner said underwriters exercised in full their option to purchase an additional 14.21m shares at a price of $36.95. The offering is expected to close on or about Sept 23. Barrick announced an equity sale of at least $3bn on Tuesday, to be used to eliminate all of its fixed-price gold hedges and a portion of its floating hedges.
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We want our money back

The US is starting to pare back its emergency support for banks and financial markets, Treasury secretary Tim Geithner said on Thursday, announcing that the state guarantee for the $2,500bn money market mutual fund industry will expire on schedule this month. Nearly a year after the collapse of Lehman Brothers helped tip the world into recession, Geithner said it was time to move from crisis response to recovery. He also backed a review by the FDIC bank regulator that is likely to end or restrict funding guarantees for banks.
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Thursday, 10 September 2009

Inspiration

This one comes from Dave Rosenberg and resuming perfectly the current environment:
1. This remains a hope-based rally in the equity markets (with strong technicals). What we are seeing transpire is without precedent - the magnitude of the employment slide versus the magnitude of the market advance.
2. Companies have not really been beating their earnings estimates - only the very final estimates heading into the reporting quarter.
3. Valuation is a poor timing device but even on “normalized” trailing 10-year earnings, the S&P 500 is trading near 18x, which is now above the historical average of 16x.
4. All the growth we are seeing globally this year is due to fiscal stimulus.
5. While Mr. Market may be pricing in a fine future for the U.S., but when the 3-month Treasury-bill yield is 13bps north of zero, you know that there are still substantial fundamental imbalances that need to be worked through.
Looking for some ideas?
• S&P 500 hits 11-month high after a 53% surge since March... still 34% below October '07 peak. • Semiconductor rally continues... giants Broadcom, ASML, Marvell, and others make fresh highs.
• Brazil ETF (EWZ) climbs 8.5% so far this month, retests 11-month highs.
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Cadbury

We have an unusual chart about what the market is thinking about the 16 bln USD cash and stock offer from Kraft for Cadbury. The credit default swap spread for Kraft in the 5 years is jumping. A normal reaction to new that an already indebted company plans to load his balance sheet with even more debt. This spread will only widen because Kraft will be pushed to sweeten the offer or to tolerate another bidder.


Who could that be? The CDS market gambles on Hershey rather than on Nestlé, even though Nestlé has seen as the most viable alternative bidder.
Intriguing.


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