CLOSING BLT
Interesting article from Pritchard in the telegraph. Bearing in mind he is the ultimate bear/end of the world man.
China shakes off deep slump as credit soars again.
Forward-looking gauges of consumer confidence are rising at the fastest rate since 2007 in China as output picks up on almost every front.
China’s housing market is roaring back to life in the biggest cities while local governments are issuing bonds at a blistering pace, the latest signs that the world’s second largest economy is finally pulling out of a deep downturn.
Output is picking up on almost every front as the effects of credit easing begin to feed through, with the ‘expectations’ component of consumer confidence soaring to the highest level since the glory days of 2007.
Rail freight, electricity use, and even sales of diggers and earthmovers are all recovering at last from recessionary levels.
The apparent inflexion point has major implications for the world’s commodity markets and for struggling resource economies in Latin America and central Asia that depend on feeding the dragon.
Think you buy miners today, on their knees and commods still fine. We Still have ahalf a short position in BLT which we will close on the open.
The BLT trade has currently returned +9.28% and we are also long RIO:-3.6% since inception.
We feel now is the time to enter or add to this position
Trading SHORT: closing half +9.68% return
Monday • 08 June 2015 • 13:54
We initiated the bear on the basis of it being a short post the spinoff and the re-concentration of the market on its remaining commodity exposure.
Since initiation we are +9.68% absolute and 5.512% rel without a significant move lower in oil or iron ore.
While we still think this will transpire over the next quarter, we take the opportunity to take profits on half the position at the important 13 pound level.
Trading SHORT
Tuesday • 19 May 2015 • 08:01
S32 closed at 108p yesterday and is going to open up again this morning. BLT traded down 70p. So immediate value creation.
BLT now trades on more than 25x spot commod prices, with more than 70% exposure to Oil (rally in the price) and Iron Ore (in continued structural decline).
The yield will continue to be cited as a reason not to sell, until it isnt. The current div requires ongoing cash burn, or continued efficiency exercises that can’t last forever.
After a period of mining outperformance as part of the unwind; dollar weakness, commod strength etc, and the market seemingly finding it’s feet, we think the near term catalyst is out of the way, and it is a good trading short opportunity.