cycle

Investors must tread carefully

Simon Doyle

On the back of the worst March quarter since 2008, indicators show the end of the current cycle is in sight. Trump’s jostle with China is more of a concern than his ‘war of Tweets’ with North Korea, and coupled with the inability of investors to rely on central bank... Show More

equities inflation volatility cycle

Resource stocks haven't run their race yet

Naheed Rahman

Over the past quarter, much of the small-cap index outperformance over large caps has been due to the excellent returns of small resource companies. Given their cyclical nature, is that a reason to look elsewhere? The following note makes it clear that we think not. Show More

Where in the mining cycle are we today?

Hugh Dive

Unlike industrial companies such as Amcor or Transurban, profits for mining companies are inherently cyclical. The earnings from mining companies are subject to booms and busts, largely outside the control of their management teams. This occurs as ultimately any company producing a commodity is a “price taker” not a “price... Show More

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Improved Metal Price Cyclical Postioning

John Robertson

The cyclical positioning of metal prices has improved over the past month while remaining consistent with a below average cyclical trough (as illustrated in the updated chart). Show More

resources mining metal prices cycle

More Global Growth Downgrades Ahead

John Robertson

The International Monetary Fund has flagged that it will be publishing revised global growth forecasts on 19 July to take account of the impact of the UK referendum decision to quit the European Union. Another growth downgrade would come as the latest in a lengthy series of negative revisions to... Show More

resources mining growth prices cycle IMF

Uncertainty is Being Blamed for Predictable Outcomes

John Robertson

Metal prices are constantly referred to as being volatile . ‘Volatility’ is frequently used as a substitute for ‘uncomfortably low’ in market descriptions. Volatility should diminish through the trough of the cycle. Consistent with that expectation and contrary to common usage, metal price volatility is nearly as low as it... Show More

resources strategy volatility cycle Uncertainty

Searching for Cycle Bottom

John Robertson

Despite a 20% rise this month, the small resources share price index – the best pricing indicator for the bulk of Australia’s listed resources companies – remains near the level at which it was trading 15 years ago. The seemingly strong return is indicative of leverage near the bottom of... Show More

resources market index cycle

Resource Sector Strategy – Weekly Investment Report

John Robertson

Cyclical positioning remains poor. New World Bank forecasts have highlighted the absence of the growth acceleration needed to move the cycle forward. US dollar strength has added downward price pressures in the metal markets. A currency reversal will be needed for an improvement in cyclical conditions. Lower sector volatility has... Show More

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Poor Capital Use by Australia's Miners

John Robertson

Australian pre-tax mining profits were 42% lower in the March quarter than a year earlier, according to data published by the Australian Bureau of Statistics. Profit over the four quarters ended March 2015 of $32.9 billion was less than half the cyclically peak profit of $78.3 billion over the year... Show More

resources profits cycle

Freeport McMoRan Defines Its Cyclical Trough

John Robertson

Our bottom of the cycle theme is playing out globally. In a late 1990s style market (the model for current resource sector equity market conditions), net outcomes will remain flat but trading opportunities around the mean will persist. Freeport McMoRan, the world’s largest listed copper producer, is two thirds below... Show More

resources copper cycle FMC:US

Resource Sector Strategy – Weekly Investment Report

John Robertson

The gap measuring the difference between historical and actual metal prices at the same point in the cycle was as wide as ever at the end of May. Falling sector volatility has helped stabilise headline index values. Within the sector, there is mounting evidence of individual stocks trading toward the... Show More

resources mining strategy portfolio cycle

Kasbah Resources: Up or Down?

John Robertson

With little direction from macroeconomic forces four years after a cyclical peak, many stocks within the resources sector have been responding to events with largely predictable trading patterns. Kasbah Resources is aiming to develop a tin mine in Morocco as it approaches the second anniversary of a price downtrend which... Show More

resources tin cycle KAS:AX

Resource Sector Strategy – Weekly Investment Report

John Robertson

The commentary this week is about sources of slowing global growth and the likelihood of a more prolonged cyclical adjustment. This was not by design but just the bias in the data flow. Scarcer sources of momentum improvement are showing up in weakening metal usage statistics. Strong price gains among... Show More

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Resource Sector Strategy – Weekly Investment Report

John Robertson

This week’s PortfolioDirect investment report highlights once again how resource sector equity prices remain confined to a cyclical trough with very few examples of companies being able to display enough strength to establish sustainably higher price platforms. Meanwhile, the flow of economic indicators is pointing to more downward pressure on... Show More

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Resource Sector Strategy – Weekly Investment Report

John Robertson

This week’s PortfolioDirect investment report highlights the first sign in many months of an improved cyclical position for the resources sector although the gap between current positioning and earlier cycles shown in our model of cycle timing remains wide and a drag on sentiment. Some respite from a rising US... Show More

resources strategy portfolio cycle ratings

Signs of Cyclical Improvements

John Robertson

Non ferrous metal prices showed their strongest gains in over 10 months during the last days of April. The chart shows the price trajectory of the principal daily traded nonferrous metal prices - aluminium, copper, lead, nickel, tin and zinc - during the current cycle (in red) which has been... Show More

metal prices cycle nonferrous

Resource Sector Strategy – Weekly Investment Report

John Robertson

This week’s PortfolioDirect investment report highlights the strong share price leverage near the bottom of a commodity price cycle. The bottom of the cycle is usually also characterised by many anticipated cyclical recoveries for the one that eventually occurs. One of the dilemmas posed for investors by these conditions is... Show More

resources strategy portfolio cycle ratings

Historically low government bond yields in the major capital markets should be a boon for resources companies looking to finance new mines but the...

John Robertson

Historically low government bond yields in the major capital markets should be a boon for resources companies looking to finance new mines but the macroeconomic benefit has failed to trickle down to companies. Yields on corporate bonds with ratings lower than CCC (i.e. the end of the market inhabited by... Show More

resources valuation cycle