Bonjour Mes Enfants,
With the US markets closed yesterday it was up to the Europeans to set the tone overnight..France shrugged off its downgrade and sold 1 year bonds at a yield of 0.406%..now call me old fashioned but that doesn’t seem a lot of return for a Country that according to some is finished…one of the issues with the whole ‘Zombieland’ problem is those who cry havoc(and let slip) the loudest are the hedge funds that are large holders of CDS (Credit Default Swaps).For them to profit they must get countries to default and to do that it’s good to keep the press, ‘Gloomberg’ etc stoked full of negative stories and this keep the pressure on the Sovereign debt issues..the media likes nothing better than the Armageddon stories as it sells more subscriptions…
Greece is the biggest worry rather than the downgrades as it tries to negotiate its debt haircuts..once again the hedge funds have a vested interest in ensuring Greece goes bust!!It would trigger all their insurance bets..meetings will continue on Jan18th and then again for the Jan 30 summit..another one..more summits than the Himalayas!!
I still find it irrational that the FTSE is 5700 and the Dow is 12500 whereas the miracle resource boom economy is 4100!!!!There is a trade here somewhere…..
Anyway the Equity markets in Europe were sanguine and rallied..expect our market to do the same today..once again volumes are minimal but we should try to make up yesterday’s loss.SPI only up 9 but may be a little better.
Uranium stocks on Canada had a good night last night so expect some green in that sector today with Australian Uranium Stocks a good web site to check out the field..
TLS: CEO Thodey has suggested that getting $11bn for the copper wires from the Government would be a dividend opportunity ie. some sort of capital management initiative…I continue to like TLS at 3.30 or below for the move back to 3.40..where they are back to a hold!
LEI issued a profit upgrade yesterday so expect the warm and fuzzy feeling to continue for a while longer..
Commodities were quiet last night so again low volume and no real mega push for resource stocks..stories of banks cutting staff numbers will help them and the yields are spectacular compared with their overseas counter parts..they should be bought on any weakness..NWH are still in my spotlight but not chasing above about 2.60!!
From the SMH today, the Iron Ore space continues to attract attention and FMG announced upgrades to its North Star 880 mln tonnes which is a 72% increase..
Rio, BHP tipped to report record ore output
Rio Tinto and BHP Billiton are set to report solid iron ore output growth in the December quarter as they continue to expand mining in Australia, betting any loss in China’s appetite for the steelmaking material is only temporary.
Both companies maintain that sales orders to China, the world’s top buyer, are showing no signs of weakening despite a slowdown in Chinese steel production.
“Production and earnings are expected to highlight what remains a robust sector, even though economic uncertainties continue to drive near-term sentiment,” brokerage Nomura said in a note.
Analysts expect Rio to show a rise of more than 25 per cent in iron ore output over the previous quarter when it reports December-quarter production data on Tuesday.
And BHP’s December-quarter iron ore yield could be up as much as 23 per cent when it reports on Wednesday, they said.
Coal output from Australia – the largest source of steel-making coal and also a big supplier of thermal grades for power generation – remained under par because of flooding in early 2011 that left transport lines and some collieries underwater.
Iron ore should show the biggest gains in the December quarter across both companies’ diversified portfolios.
A record 60.9 million tonnes of iron ore was shipped in the December quarter through Australia’s Port Hedland, where BHP is the biggest user. In December alone, the port’s iron ore shipments climbed 23 per cent to 21.4 million tonnes.
The no. 3 iron ore producer behind Brazil’s Vale and Rio, BHP has already tipped the market to expect a total output of 159 million tonnes in 2011/12.
Rio expects calendar 2011 output at around 240 million tonnes, which most analysts forecast it will reach, given the strong December-quarter performance from its mines in Australia. Rio also operates a much smaller iron ore business in Canada.
Nomura expects BHP to produce 48.9 million tonnes of iron ore in the December quarter, up from 39.6 million in the previous quarter. It sees Rio’s output at 64 million tonnes in the December quarter, versus 49.8 million tonnes previously.
Iron ore was steady at $US142.20 a tonne, cost and freight delivered to China, on Friday, holding near the highest level since November, according to the Steel Index.
Have a good day
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Beeks Downunder-Because not all financial news is boring! 