European crisis will bend but not break Tata Steel

October 6, 2015

The Indian steelmaker’s net debt of $9 bln is three times its market value. Its European business, acquired in 2007, is suffering from cheap Chinese imports. Yet last year’s timely refinancing and support from its parent means Tata Steel can avoid the fate of British rival SSI.

Aussie leader gets a bust, a boom, and a problem

September 15, 2015

Mining has slumped while housing has surged. The biggest challenge for new Prime Minister Malcolm Turnbull is a slowdown in GDP that is depressing everything from taxes to profits. He needs to embrace higher public deficits – even if that’s tough for a conservative.

Glencore model is battered but not broken

September 14, 2015

Ivan Glasenberg’s mining creation has been wrong-footed by commodity prices, China, and shareholder worries about debt. The pressures may undermine Glencore’s premium valuation and its penchant for doing big deals. Its mix of trading and mining, however, is logical and robust.

Glencore’s giant cash call puts squeeze on rivals

September 7, 2015

The Swiss trader’s $10 bln debt reduction plan eases balance sheet jitters by cutting net borrowings by a third. Investors get stability at the expense of their dividend. But the move offers a grim view of commodity prices that undercuts the investment case for the whole sector.

Why oil investors are so behind the curve

September 2, 2015

Investors used to assume that the cost of pulling oil out of the ground was relatively static – or changed slowly. Reality is slipperier. Rethinking the way the “cost curve” works may help explain recent gyrations in oil and other commodity markets.

Miners’ dividends are a fragile commodity

August 25, 2015

BHP Billiton has raised its payout even as prices fall. That helps win investor support for its aggressive iron ore production strategy. Yet across the sector, funding generous payouts will become tough unless supply and demand rebalance. There is little to suggest they will.

China’s ailing stocks are now contagious

August 24, 2015

Mainland shares are tumbling again. Unlike in July, this sell-off is hurting currencies, commodities, and other Asian bourses. Two things have changed. There’s now the threat of devaluation. And bungled interventions cast doubt on China’s ability to manage markets.

Oil price slide complicates life for central banks

August 4, 2015

Brent is back down at $50 a barrel. Bond prices show this is eroding investor confidence that inflation will pick up. Central banks usually ignore the temporary impact of commodity price swings, but can’t afford to be complacent with inflation and policy rates already so low.

Petrodollar drought is new risk for markets

January 6, 2015

Low oil prices are not only a blight for energy producers. They could hurt global financial markets too. After years of surplus petro-earnings gushing into a range of assets, notably fixed income, the flows are at risk of reversing. The sharp equity market fall may be a first sign.

Gold bulls have precious little to cling to

November 6, 2014

The asset was first to swoon when investors awoke to the end of U.S. money-printing. Coin sales, a recovering Indian rupee and declining supply offer some hope. But even after a near-40 pct fall, the price hasn’t adjusted to the end of speculative fervour. Sub-$1,000/oz looms.