•  
Wed, 26th April 2017

Anirudh Sethi Report

  •  

Archives of “according to jim” Tag

“Top Iron Ore Forecaster Says Prices Will Sink Back Below $50”

Heightened interest in all things related to iron ore

Bloomberg with this from Justin Smirk, senior economist at Westpac (placed first in predicting prices in the first quarter, according to data compiled by Bloomberg):
  • To average $62 in Q3 
  • $59 in Q4
  • And to a low in 2018 of $41
“As supply builds up and prices come off, people will begin to question the wisdom of holding on to inventories,” Smirk said in a phone interview on Friday. “The signs are now pushing in one direction: while we’ll get some volatility, the momentum is just on a downward trend now.”

Macron, Le Pen Take Lead In French Presidential Election: Live Feed

The first results are in and according to IPSOS exit polls, Macron leads with 23.7% of the vote, Le Pen is second with 21.7%, with Fillon and Mellenchon tied for third at 19.5%. However, according to official results, from the French interior ministry, Le Pen is leading with 24.3% of the vote, Macron is at 21.4%, while Fillon has 20.3%.

Meanwhile, according to French official data:

  • LE PEN GETS 24.2% IN FRENCH INTERIOR MINISTRY PRELIMINARY COUNT
  • MACRON GETS 21.4% IN FRENCH INTERIOR MINISTRY PRELIMINARY

And an update:

  • LE PEN AT 24.9%, MACRON AT 21.1%: INTERIOR MINISTRY AT 8:13PM
  • FILLON AT 20%, MELENCHON AT 18%%: INTERIOR MINISTRY AT 8:13PM
  • FRENCH INTERIOR MINISTRY 8:13PM DATA BASED ON 5.25M VOTERS

Elsewhere, Benoit Hamon, the candidate for the incumbent Parti Socialiste of Francois Hollande, has just conceded defeat after a dismal showing of around 6%. He spoke to supporters and the press in a packed out hall and made an instantaneous endorsement for Emmanuel Macron.

  • HAMON SAYS ENDORSES MACRON TO BEAT LE PEN IN SECOND ROUND: BBG

Earlier:

While we urge taking early polls with a big grain of salt, according to a Harris poll, Macron is in the lead with 24.5% of the vote, follow by Melenchon and Le Pen in second place with 20% of the vote.

  •     Macron (EM-*): 24.5%
  •     Melenchon (FI-LEFT): 20%
  •     Le Pen (FN-ENF): 20%
  •     Fillon (LR-EPP): 18%

 

India : P-NOTE INVTS HIT 4-MONTH HIGH OF RS 1.78L-CR IN MAR

Investments in domestic capital markets via participatory notes (P-notes) have surprisingly surged to 4-month high of Rs 1.78 lakh crore at the end of March despite stringent norms put in place by Sebi to curb inflow of illicit funds. P-notes are issued by registered Foreign Portfolio Investors to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They however need to go through a proper due diligence process.

According to Sebi data, total value of P-note investments in Indian markets – equity, debt and derivatives -increased to 1,78,437 crore at March-end, from Rs 1,70,191 crore at the end of February. Prior to that, the total investment value through P-notes stood at Rs 1.75 lakh crore in January-end and Rs 1.57 lakh crore in December-end. In March, investments through the route had touched the highest level since November, when the cumulative value of such investments stood at Rs 1,79,648 crore.    

China’s Tencent takes 5% stake in Tesla

Chinese investment group Tencent Holdings – which is involved in a range of ventures from social media and e-commerce to mobile games – has revealed its latest holding: a stake in US electric carmaker Tesla.

Tencent said in a regulatory filing with the US Securities and Exchange Commission on Tuesday that it holds 8,167,544 shares in Elon Musk’s Tesla, translating to a 5 per cent stake in the company. The move makes it Tesla’s fifth-largest shareholder, behind others including Mr Musk himself, according to Bloomberg data.

 Tencent, along with Chinese peers Baidu and Alibaba, is a prolific dealmaker, and one of the most highly valued emerging market stocks.

Tesla shares were up 2.5 per cent in pre-market trading following the news.

The reporting of Tencent’s stake comes after Tesla turned to Wall Street in search of a $1bn cash injection as it seeks a bigger financial cushion for the forthcoming launch of its mass-market Model 3 later this year.

Mr Musk – whose other ventures include solar-energy company SolarCity, which has since been acquired by Tesla, as well as SpaceX, which specialises in space travel – has said that the ambitious plan to launch the first mass-market electric vehicle later this year would put Tesla’s finances “close to the edge”.

SocGen Reveals The Best Trading Strategy Of The Year

Despite the recent modest drop in stocks, the S&P remains just shy of all time highs, and near valuations which according to Goldman are at nosebleed levels and which market participants recently admitted are the most overvalued since 2000. Furthermore, with the market seemingly finding itself painfully rangebound in a world where until recently volatility was non-existent, traders desperate for alpha, have been scrambling for a strategy that produces a steady stream of profits.

One such trade was proposed overnight by SocGen’s Andrew Lapthorne, who notes that “the only strategy to stand out this year is short-term (1 month) price reversal, which involves selling last month’s  winner and buying the losers.”

Here is his overnight note, according to which “Outperformance of reversal strategies points to a market struggling for direction” 

Equities experienced a bit of a speed bump last week when the S&P 500 fell by more than 1% for the first time since September. The language accompanying this “steep sell-off” was really quite over-the-top, but given that the S&P 500 has declined by 1% or more on just seven occasions over the past year (versus an average of 25 per year historically), perhaps there was a pent-up desire to open the bear’s dictionary, particularly with commentators now having long exhausted the thesaurus for variations on the word “complacent”.

 There is plenty to be bearish about. Equity valuations are tortuously high, with median valuations in the US and Europe near or at record highs, particularly once debt is included (i.e. on a EV/EBITDA basis). We estimate the US to be 25-30% over-valued if we compare today’s EV/EBITDA of 13 times to the 20-year average of 10 times (charts and data available on request). And earnings momentum, whilst improving in Japan and OK in Europe, is struggling in the US (1.5% has been cut from the S&P 500’s 2017 EPS so far this year, and 5% from the Russell 2000 2017 estimates), and what positive EPS momentum there is, is largely coming from Basic Materials (i.e. commodities). Expensive valuations coupled with no meaningful pick-up so far in US EPS momentum (quite the contrary for US smallcaps in fact) – and the market is struggling to make headway.

 This directional doubt is also visible across our factor indices, with this year’s lack of performance dispersion across styles a complete contrast with last year’s volatility. Indeed the only strategy to stand out this year is short-term (1 month) price reversal, which involves selling last month’s winner and buying the losers.

 

Japan government debt hits record-high 1,066tn yen ($9.4 trillion) at end of December

Japan’s government debt stood at a record 1,066.42 trillion yen ($9.4 trillion) as of Dec. 31, highlighting the difficulty of restoring the country’s fiscal health, data by the Finance Ministry showed Friday.

Per capita debt, the amount owed per person, came to around 8.40 million yen, based on the country’s total population estimated at around 126.86 million as of Jan. 1.

 The central government’s debt marked an increase of 3.85 trillion yen compared with the end of September, due to the issuance of “zaito” debt to finance projects such as the construction of a magnetically levitated high-speed train line in central Japan as well as ballooning social security costs.

By the end of the current fiscal year through March, the government’s debt is projected to grow further to 1,116.4 trillion yen.

According to the ministry, the debt total as of December consisted of a record-high 928.91 trillion yen in government bonds, 54.26 trillion yen in borrowing mainly from financial institutions and 83.25 trillion yen in financing bills or short-term government notes of up to one year.

Dow 20,000? It’s 30,000, Actually!

Start with the last point. Correct for mistakes dating from the days of paper and slide rule, and the Dow in fact passed 30000 for the first time last month, according to Birinyi Associates calculations.

The biggest mistake came from the simplistic recalculation of the average when it was expanded from 12 to 20 stocks. The official Dow record shows a drop of 24%—its worst-ever day—when the market reopened in 1914 after a four-month break because of the start of World War I. In fact, the market and the Dow rose that day, but the record was recalculated without any adjustment when the measure expanded from 12 to 20 stocks two years later. Because some of the new stocks added had lower prices, the new version of the average was pulled down. So, no, there really isn’t any reason to get worked up about the average passing 20000.

Its amusing silliness!

click for ginormous graphic

Source:
We’re Already at Dow 30000, You Just Don’t Know It
The blue-chip index is a poor measure of what investors are doing
James Mackintosh
Wall Street Journal, Jan. 25, 2017
www.wsj.com/articles/were-already-at-dow-30000-you-just-dont-know-it-1485362316

India : Sources ‘untraceable’ for 69 % income of political parties

As much as 69 per cent of the total income of political parties over a period of 11 years came from unknown sources, said a report released on Tuesday by an NGO working towards electoral reforms.
According to the Association for Democratic Reforms (ADR), while the total income of 48 national and regional political parties between 2004-05 and 2014-15 stood at Rs 11,367 crore, sources of as much as Rs 7,833 crore of it were untraceable.
Trilochan Sastry, Founder Member of ADR, said: “The income from known donors was Rs 1,835 crore (16 per cent) and income through other known sources, such as sale of assets, membership fees, bank interest, sale of publications and party levy, was Rs 1,698 crore (15 per cent).”
“However, the remaining income of Rs 7,833 crore, which works out to 69 per cent of the total income, does have sources to attribute,” he added.

Deutsche Bank To Scrap Bonuses For 2016: As Many As 90% Of Bankers, Traders Affected

While Deutsche Bank shareholders have certainly seen some recent relief following last year’s stock acrobatics which sent the the largest German lender crashing to all time lows last fall, the bank’s employees have far less to look forward to.

First, it was a report by the NY post, according to which Deutsche Bank may hold back on giving out bonuses to as many as 90% of bankers and traders, noting that only the top 10% of revenue generators may get a bonus for 2016, and even that would be paid out over the next five years, according to a source briefed on internal discussions.

The bank was rocked last year by concern about its capital adequacy, a 23% in its share price and rising litigation bills from Europe to the U.S. Chief Executive Officer John Cryan, 56, has eliminated jobs, suspended dividends and sold risky assets to shore up profitability and capital buffers. The bank on Tuesday reached a $7.2 billion final settlement with the U.S. Justice Department over its sales of mortgage securities before the financial crisis. It’s still seeking to end an investigation related to its Russian unit. While reports have suggested that the settlement could affect the bank’s ability to pay bonuses, it couldn’t be confirmed if the bank had used incentive compensation for the settlement.

The post added that this wouldn’t be the first time that John Cryan, Deutsche’s CEO, has cut bonuses since taking over in 2014: last year, the bank cut the bonus pool by 11 percent and delayed paying its employees until March.

Then earlier today, Bloomberg confirmed the news when it reported that Deutsche will tell senior employees as soon as this week that they probably won’t get a bonus for 2016 because of the lender’s performance last year.

Mario Draghi’s Email Was Hacked By A High-Ranking Mason

First, as Bloomberg reported, in addition to Draghi and Renzi, the extensive cyber-spying operation targeted more than 18,000 e-mail accounts, according to a court document. The aptly named operation “Eye Pyramid” (more on that shortly) revealed cyber-spying of institutions, state agencies, professionals, political figures and business people lasting for years, Italian police said in an e-mailed statement Tuesday.

Police said two people were arrested: a nuclear engineer and his sister, both living in Rome “and well-known in Roman financial circles.”

The two were Giulio Occhionero, 45, and his sister Francesca Maria Occhionero, 48, who were charged with stealing state secrets and illegal hacking. Lawyers representing the two could not be immediately reached. According to the complaint, the alleged hackers acted “with the aim of making a profit for themselves or for others.”

The suspects’ arrest warrant issued by Rome pre-trial Judge Maria Paola Tomaselli states that Draghi’s e-mail at the Bank of Italy was hacked in the summer of 2016. Draghi served as governor of the Italian central bank from 2005 to 2011. An e-mail account belonging to Renzi was also hacked, the document says.

 Among the others hacked is a list of who’s who in Italian politics: “There were tens of thousands of email accounts hacked, and among them were accounts belonging to bankers, businessmen and even several cardinals in the Vatican,” Roberto Di Legami, head of the specialised police cyber unit that conducted the investigation, told Reuters. Other hacker were Italian oil giant Eni SpA, multinational power company Enel SpA and technology company Leonardo Finmeccanica SpA, the court document shows. Political parties, law firms, politicians and ministries were also targeted.

The suspects tried to obtain confidential and sensitive data, especially on banks, at the ECB in Frankfurt and at the Bank of Italy in Rome, according to a person familiar with the investigation, speaking on the condition of not being identified by name. As Bloomberg add, “the two arrested are suspected of obtaining information on national security, serious illegal access to a computer system and illicit interception of computer communications in an investigation led by Rome prosecutors, an Italian police statement said.”