Monday, 29 July 2013

Catching up . . .

The S&P500 is up 5% over the last month and that pretty much overlaps the current reporting period. So far (up until last Friday) 262 of the S&P 500 companies had reported. Of these 65% have beaten expectation and according to Zacks.com the median "beat" was 2.5%. Readers of this blog will know that of late I've been as interested in the top line as the bottom and Q2 has seen about 52% of companies beat expectations on the top line median of 0.2%. The problem is that it's the finance space that has been outperforming the most and given the ultra low rates it shouldn't be surprising. Borrowing for next to nothing from central banks and lending it out at a good margin is not exactly a hard business. Nearly two thirds of the total market cap of the finance sector companies have reported and results are up +31.8% on +9.6% higher revenues, with beat ratios of 76.1% for earnings and 65.2% for revenues. The problem is that with the fed at least discussing tapering we have to start to look ahead to what this will do to the core S&P and the broader global indicies for investors.


The housing market remains the key both for tapering pundits and for more general economic concerns. The next S&P/Case Shiller Home Price Index release will be  on Tuesday, July 30th and the Fed will be meeting next week to discuss the implications of this and the rest of the months data. I'd be a little surprised if they actually start tapering in September and would look toward October for an actual move. Having said that any change in language will be enough for markets to give up recent gains. Bernanke hates volatility and could always add further smoothing via some very gradual targets in his statements.

Case Shiller
The Europeans (ex-UK) are a fair way behind the US in terms of property recovery. London prime residential is an exception and in fact has outperformed NYC in terms of price performance. Private equity investment in offices, hotels and shops in Europe hit €3.2bn during the six months to July, 56% up on 2012, according to research from Jones Lang LaSalle, a property consultancy. It was the usual players who led the way Blackstone, TPG and KKR. The UK accounted for almost two-thirds of of these deals during those six months, helped by a string of loan sales by state-backed bank Lloyds and a series of high-profile asset trades including the Commerzbank portfolio that I've written about previously. If the UK continues at this pace investors would continue to look at "hard" UK assets to outperform the rest of the continent for some time.

If you prefer to get back into European hard assets watch for the first sale by the Spanish "bad bank" Sareb of one of it's assets. The "bank" has established a shortlist of investors for a portfolio composed of between 700-1,000 mostly costal residential property in the regions of Andalucia and Valencia. Sareb itself has €90bn of real estate assets to divest and is targeting a total of 6 transactions all before year's end. This is yet another golden opportunity for investors to get some price clarity on distressed properties in the mediterranean. Unlike northern Europe we've been bereft of a discovery process in the southern region. Importantly the Spanish will be providing a tax kicker known in by its' Spanish initials as a FAB. The structure will only be taxed at 1% and is likely to involve Sareb retaining a stake in the vehicle to get some benefit of any resulting upside. Therefore make sure to adjust your spreadsheets to allow for the tax differential when solving for cap rates.

The weather here in Sydney has settled down to a benign spring type condition. Morning remain cool but most days get into the upper teens (celsius) allowing for comfortable cycling. I managed to get out on the north side over the weekend for a gentlemen's cafe ride that allowed me to see the city from a different angle. I particularly enjoyed getting up to Northhead for a spectacular view of the city in early morning light.



I've been testing my new Moon Sport X500 headlight and have come to the conclusion that for safe riding it's hard to beat.


The 5 modes include my favoured battery saving "flashing" are verging the blinding end of the visibility scale. If a car driver can't see you coming then he or she probably shouldn't be on the road. My one quibble is with the mount which comes with a quick release lever. It's very bulky and awkward to fit on standard road bike bars. I also don't like the fact that there isn't a flexible mounting option for my ergonomic Most-Pinarello Talon carbon bars as this shape (see also Cinelli and FSA) is becoming more popular with high-end riders. 

In terms of winter riding kit I've been using the Rapha winter tights and a couple of their long sleeve jersey. Best of all I'm really liking their Classic Wind Jacket in orange which I picked up after scoring a rare Rapha discount coupon (-15%). 



It's a great piece of kit, easy to see and shaped perfectly. There's a single small (shall we call it) "change pocket" in the front, but if you're like me you rarely go fishing for bits and pieces in my utility pockets when riding in the city (say less than 60k's) and isn't a problem. 

Ciao!



Wednesday, 17 July 2013

Bits from a changing world . . .


One of the features of the reporting season in the US so far has been weakness in the North American consumer banking divisions of those financial institutions that have reported. At Citi, whose numbers are generally positive on the back of asset sales from its' "bad bank" division, North America consumer banking revenues were down 1 per cent at $5.1bn, net income in the division fell 4 per cent to $1.1bn. There was a similar story at J P Morgan and Wells Fargo.

In the pure investment banking sector Goldmans as usual have led the way reporting numbers above expectation. Net income for the period was $3.70 a share, up from $1.78, a year earlier and beating the $2.89 estimate. There were a couple of stories from within those numbers. They tripled profits from debt investments for example and increased profits from fixed income from 12%. The stock dropped nearly 2% after the numbers and this was partly because of the tax rate dropping from 32% to 27%, thus bringing into question the quality of the returns. The CFO admitted that the drop in tax rate was a one off. Crucially, especially if you're investing in companies such as Morgan Stanley compensation at GS increased 27% to $3.7 billion or 43% of revenue for the quarter, down from 44 percent a year earlier. The ratio was 38% for all of 2012. That suggests to me that the "foot on throat" cost cutting is ending. Finally RoE was 10.5% in the quarter, up from 5.4 percent in the year-earlier period and they repurchased $1.6 billion of shares during the quarter. All of this tells me that the stock looks fine while rates are low, but like so much else in the banking world once the Fed starts to taper then 10.5% RoE will look less enticing to shareholders and to management. I'll tip that GS significantly increases it's risk taking (watch their trading revenue numbers in the following quarters) in order to account for the switch away from bonds and into equities.

There's a back to the future feel in banking these days primarily because of the regulatory uncertainty gripping governments and boardrooms. Barclays poached JPM's head of finance to help them re-orientate the business. Barclays can probably see managing asset sales as being a primary driver for the coming couple of years in Europe. Take for example their arrangement of the Commerzbank sale of the is' Eurohypo UK property portfolio. Readers of these blog will know that I've been following this one closely and have advised investors to take a look at whats available since the sale was first put in the market. Wells Fargo with Lone Star have pulled the trigger at a less than bargain price of book value minus 3%. I reckon thats a great sale even though from all accounts the loans and property in the book have been performing extremely well, probably reflecting the prime nature of the core holdings in the portfolio. At this price you have to wonder whether Commerzbank would have kept the portfolio but for pressure from Berlin (who owns 17% of the bank) to de-leverage the balance sheet making a sale of that holding easier and at a better price.

I've been surprised at how long it's taking to make asset sales in this environment. Clearly banks because of the "unlimited" nature of the ECB liquidity advances have been able to hold on until they could squeeze prices back to holding vales. You can't argue with their execution, but possibly it didn't serve the system as well as it could have because it essentially transferred the risk to governments and created an asset bubble. Look at Citigroup and the way that the current CEO ran the "bad bank" assets expertly and delivered increasing capital adequacy ratios. You can't argue with that, but you might argue that the result from a regulatory point of view is an emboldened group of "still too big to fail" banks that may come back to haunt tax payers in years to come. As an investor you need to continue to monitor these asset sales and make comparisons between them and your own portfolios in order to properly assess your value. Right now I'd feel pretty good about central London property and in the longer term the GBP. You were warned.

There's been talk about the leverage in Asia post the crisis. Various credit agencies are looking closely at Singapore and starting to warn that because of their relationship to the USD that things may not be so rosy as they seem. Yesterday we heard Singapore non-oil exports fell 8.8% in June (v 5.8% exp.). This is probably a reflection of USD strength and a slowdown in demand for higher end electronics. Investors sitting on profits in core Asia might consider switching out of positions at this stage knowing that eventually economies will have to fight the Fed taper and China slowing.

And finally to the China story. I'm baffled by the mixed signals we're getting out of Beijing. The slip by the finance minister on Friday that the country is now aiming for growth of 7% being the latest example. We know that we're already at 7.5% which remains the official target for the year and so further drops now look likely, but what are we seeing. The Iron Ore price remains above USD 120, which seems totally out of line with the GDP growth rate and what the AUD is telling us. I can only surmise that the 120 level in iron ore is illusionary.

It was interesting to see that emerging markets (mainly China) short selling research house Muddy Waters Research released it's first report on a US company. I've never heard of American Tower, but the operator of cell-phone antenna has seen it's stock almost triple since 2008. American Tower is the second-biggest U.S. REIT by market value and MWR is as usal raising concerns about some of the accounting policy the company employs. The example they give is the revaluation of cell towers they own in Brazil. The company restated book value by positive $250m dollars recently on the back of no asset sales by itself. This is what I mean when I warn investors about looking at book values. In the case on the Commerzbank UK sale we have some real data both on total value and if you drill down on the rents and associated performance of leases in terms of arrears etc. Maybe American Tower has something similar for these Brazilian properties, but if it doesn't they'll be a raft of short sellers trawling through each holding one by one. Be very cynical about perceived market value and actual market value as an investor.

Le Tour is entering its' final stage and I'm off to the new Rapha Shop (they call it a Cycling Club) here in Sydney tonight to watch the double climb of Alp d'Huez. It was nice to get an invitation after dropping in their to pick up a new long sleeve jersey and another pair of their classic bibs. I'm looking forweard to climb now not so much as a race, but rather for the scenery as Chris Froome will basically have to fall off and break a leg to lose the tour from here on in. The coup d'grace he delivered on Mt Ventoux the other day sealed it in my mind and without something extraordinary from Contador we'll be seeing Froomes emaciated body on the podium in Paris.



I'm not sure the Tour is 100% clean, but humans can do amazing things when tested. I just hope this all ends well and we don't have to revalue the books after the fact. Maybe American Tower can put a cell phone station at Alp d'Huez and revalue it as priceless . . . because it is.

Ciao!







Wednesday, 10 July 2013

Cycling is the new cricket / baseball . . . Navigating statistics

Very few people outside the anglo-saxon world or for that matter outside the Commonwealth would understand the significance of the international sporting competition between England and Australia that begins today at Trent Bridge in Nottingham UK. Of late the contest has lost something for me as living in Switzerland several years left me somewhat detached from my roots.



The joy of cricket and to some extent games such as baseball is the time taken and the accumulation of statistics that can be applied to occupy the observers mind, which in the case of a cricket test match is 5 days. Cricket at the test match level is not always about the action on the field. Sometimes it's about the ease of viewing and the associated recall of similar scenes over many years. The Tour de France's 21 stages are are similar viewing experience. It only occurred to me during the 2011 TdF while stretched out on the couch of our apartment in Geneva that I was doing the same things that I used to do while watching the cricket, namely sipping a drink, discussing the terrain (or pitch in the case of cricket) and occasionally looking up some stats or history of what I was looking at. The hours pass away easily and although cycling doesn't have the formal breaks of cricket (lunch and tea) it does have a similar rhythm of intense moments of attack and long periods of stalemates. The ebb and flow of a stage in the mountains is to my mind similar to a day at a test match and over the period of the entire race or match is more alike than different. When the Australian's and the English jog out onto the field at Trent Bridge the middle aged men in their straw panama hats that litter the stands pen in hand marking out scores on the cards you can buy at the ground are the same men now seen half way up a great mountain climb watching the seconds tick by between riders, the only difference between the two observers is the likelihood that the middle aged man in lycra probably rode to the spot on the Col and will probably ride home healthier and distinctly less buoyed by an alcoholic beverage. Either way it is a day well spent.



George Orwell wrote in 1984: “Sanity is not statistical.” And in the world of that novel the realisation that truth is not just the sum of Big Brothers lies is key to appreciating the predicament of the hero. Economics has a similar level usually expressed in sentiment indices that look to give statistical force to what in fact is nothing more than the surveyed's intentions or feels as to the current business environment  Confidence can be lost as quickly as won and currently many countries are in a confidence wilderness, like a cyclist on a climb not knowing that the finish is just a few metres higher around the corner. Until confidence returns the market volatility will increase and we will continue to oscillate between hope and despair.

Yesterday the UK Factory output in May fell 0.8% from April v. an expected 0.4% rise. The market largely ignored the number, though it sold off the Pound and provide the monetary doves will some modicum of comfort that the BoE would maintain the current lose policy. The IMF also helped the doves by cutting its global growth forecasts by 0.2 percentage points for both 2013 and 2014, to 3.1% for 2013 and 3.8% respectively. Readers of this blog would know that I have long seen the IMF as well behind the game in term of it's growth forecasts. The stock market was largely positive, but as I mentioned yesterday there's always "ying" to the "yang" and Copper being the ultimate judge of global economic growth sold off again. Equity investors whether in the service or manufacturing sector would do well to watch copper closely over the coming months.

One thing that is helping us move forward is the start of the US reporting season. Yesterday Alcoa set a one for what lies ahead mainly via comments on China (in my mind). Obviously I'll be looking at what CEO's from market heavy weights suck as GE and CAT have to say, but for today we have:


The above table is from the Yahoo Finance Diary pages and investors should note that the pages provide links to various earnings conference calls that allows me and you to here in a timely manner the same calls the big bank analysts have access to. Well worth a listen.

I'm finding it hard to decide on a new smart phone. It was easier 3 or 4 years ago when Apple had the market to itself and you really just had to decide whether you wanted to pay the premium or not. It's interesting now that Apple has finally found not one, but several competitors in the space and is finding it hard to navigate around them. 


Some are now speculating that a similar situation exists now in the "wearable" gadget sector. The recent appearance of such prototypes as the google glasses and speculation of iWatches has me sitting on the sidelines waiting to see what may come next. I wonder if like the lack of confidence elsewhere is because of over stimulation of the expectation and this in turn is actually excluding many from purchasing now? If that is the case should we be more bullish in the "gadget" sector as a whole knowing that there is demand sitting on the sidelines? Or is it more likely that the western world is now so saturated at the preium level and the gains available on these new gadgets will not be enough to have a shy consumer part with their money. Investors need to understand the difference between fashion and utility. The first smartphones had utility not offered anywhere else, will google glasses or an iWatch offer a quantum leap or merely a paradigm shift?

Ciao!

Tuesday, 9 July 2013

Top line good times . . . unless you're still in China

US reporting season is now upon us and as usual it was Alcoa leading things off by beating estimates by a cent (0.07 v. 0.06) and interestingly also delivering better than expected revenues ( X v Y). For those who have followed my blog over the years, the last few years have all been about CEOs etc. squeezing their assets for what they could get as revenue have been in decline. It makes sense now that with growth back on the table that we start to see better than expected revenues revenues. Mind you, the revenues in this case were less than they were last year, but prices are lower. This is the main trend that investors need to follow over the rest of the year. Better revenues will signal better times and just another reason to be in US earnings streams. The other piece I got from the result was that Alcoa is optimistic on China when the world (including myself) is worried. The company sees demand rising by 11% this year v. 9% last year. It's not a major data point, but one that I wish I could ask the CEO about directly.

Chinese inflation was up 2.7% in June (year on year), meaning that so far this year consumer price inflation averaged 2.4 per cent. Core inflation, (i.e. ex-food and energy) remains steady at 1.7 per cent year on year in June. The Government forecast was for a 3.5% rise, so things are not rosy. Recently there's been a lot of China hard landing scenarios doing the rounds of investment banks and some have a worse case 3% GDP growth now in their analysis. Goldmans reckons if that happens the copper price could fall 60% from current levels and I'll add to that that the AUD would probably also crash to below 60 cents. I think I'd prefer Alcoa to be right, but then again there's a lot of possibilities still on the short side for investors.

Blackstone Group LP (BX) is expanding it's property bets. They spent $5bn buying 30,000 distressed homes over the last few years and are now talking about lending directly to other like minded landlords.  It is interesting to me that large landlords are finding it hard to get finance at competitive rates given the amount of cash the Fed is pumping into the system. In Japan a similar thing has happened since their own property bubble burst, but they lack the entrepreneurship being demonstrated by Blackstone in going around the banks. The financing seems to be getting done in long dated tranches 20yrs +) which gives me some comfort when I know that rates are likely to rise next year.  House price according to Bloomberg are still on average 26% below their '06 peaks.

The following table represents US economists forecasts for the remainder of the year in respect to US 10 yr Treasury yields, a key point for financing along the curve. It's still finely balanced, but edging up; so maybe best to lock in while you can and not when you have to . . .


A rest day in the Tour de France and that also allows me some time to catch up with my own bike maintenance. I've got a couple of bikes needing a wash and lube today. I visited my local Cannondale dealer for a tune-up to the Evo after last weeks problems. I pretty much had the bike sorted, but felt spending a 100 bucks was worth it given the weather we had a couple of weeks back. Now all it needs is a chain wash and lube and it should be good to go. I'll also be washing my sister-in-law's Bianchi which has not seen soap and water for a couple of months. That's the thing with bikes, unless you have a good work stand and access to all the little brushes you never get around to doing the full job so you end up paying the LBS and you never learn about what makes your bike run best. Last week during the wet I changed over to a heavier lube as the rain was unrelenting. I used Rock n Roll's blue extreme lube and was happy with the results. I've mentioned before that the Gold version is my first choice for most riding conditions and as the Bianchi tends not to go out in the rain I'll use that.

Maybe I should start a bike cleaning service rather than continuing to look for work in the finance sector?

Ciao!

Monday, 8 July 2013

Switching into growth . . . ?

US employment is slowly but steadily growing. On Friday the non-farm payrolls report showed a net 195,000 jobs were created in June, beating forecasts by some 30,000. The result was another shift in the US yield curve to acknowledge the coming tightening of monetary policy.

 

We now know that the trend is positive in jobs and housing, therefore if you're sitting on bonds you have all the evidence you need to exit. The question of course is what do you jump into? Well equities are not as obvious as you might think. Consider that a lot of the performance of the S&P500 recently has come from the dividend paying stocks to help boost portfolio yields in this era of 0% deposit rates. The cyclical space is difficult because you need to be in the area most likely to develop from the economic recovery. The most obviously player for early movers has been Google (GOOG).


The reason why I mention Google is that it reports earnings on July 18. Currently the stock trades on about 23 times, but that might not be too bad if we see further earnings growth. On top of that there's a Google event scheduled next week announcing a new product (not the glasses). I'm more interested in the advertising numbers as it seems obvious that this is clearest health check on the switch into cyclical growth at this stage in the bull market. Investors should continue to be in USD and US generated earnings streams. 

Meanwhile where I live the ANZ Australia Internet Job Ads Fell 1.9% in June Vs May. This is the fourth month in a row and adds further weight to expectations that the RBA will cut rates again soon. The mining states are slowing the fastest as projects are put on hold in the wake of slowing Chinese demand. If as I suggested above that Google has direct leverage to US advertising spend (amongst others), then the Australian equivalent is Seek (SEK.AX). The stock trades (coincidently) on 23 times earning and generates around 60% of revenue and 80% of profits from the Australian jobs market. They have some exposure in Asia, but essentially it's all Australia. I'm prepared to believe that because of the earnings growth and the limited internet exposure offered within the Australian stock market that the company should trade at a premium, but how much is the question. If you are holding Seek surely you might prefer to at the very least take some profits and move into something better exposed to North America. Think about it . . . 


Normally I would have ranted about more falls to come in the AUD, but instead investors might want to consider the performance of the Renminbi. If the reason Australia is slowing is slowing Chinese demand for raw materials, why then has the Chinese currency performed so well? It may be too simplistic to say that the Renminbi is a controlled currency, but it's a good reason. I once postulated that the Chinese could lower the exchange rate in the face of US objections if it needed to. The Chinese should be amongst the beneficiaries to a US recovery, but remember that even their non-skilled manufacturing work force has competition from other low cost centres. A lower currency might be needed and then what would that do to the once flourishing market in so called "dim-sum" bonds?

The opening week of the Tour de France has been thrilling, but stage 9 topped everything that came before it because we saw the beginning of the end of the invincible Sky-train, but not necessarily the end of Chris Froome's chances to win the GC and with it the yellow jersey. 

video

Recently I was watching a special on the history of the TdF. What stood out to me was the individual personalities rather than the teams. I'm sure Eddy Merckx had great teams around him, but they weren't highlighted. And what about Greg Lemond? If Chris Froome loses a chunk of his team along the way a victory would in my mind rank him very highly in the history of the tour. 

Finally for some light hearted entertainment I suggest you watch the following "music video" from the team at Orica Green Edge. They may not have a genuine GC contender, but they held the yellow jersey for four days and have had a lot of fun . . . 




Ciao!






Tuesday, 2 July 2013

Ch, Ch, Changes . . .

A leadership change here in Australia by the ruling ALP (socialist) has had the Aussie Dollar under a little pressure as economists come to terms with the new populist leader Kevin Rudd. It's hard to believe but Rudd has managed to steady by force of personality a party that was staring election oblivion in the face only a week ago. The cost for election parity has been the inevitable ditching of the unpopular carbon tax. In Australia the green movement managed to have the minority government implement a two stage system  for the carbon pricing. Firstly there would be a period of fixed price stability that allowed industry some certainty for three years before moving to a floating emissions trading scheme in 2015. The problem was that the government fixed the price north of $20 per ton (with increases during the fixed period), while the rest of the world adopting ETS type structures saw a collapse in the carbon price to $6 ton, meaning that Australia was effectively making itself uncompetitive. The new PM wants to move to the floating price as a way of acknowledging the lack of competitiveness and to attempt to ease the burden on the populace who have seen power prices spiralling ever upward. Leaving aside the politics of the coming changes the biggest problem lies in the potential $4 - 5bn budget whole created in moving to the market price. It seems unlikely this hole could be closed easily and therefore the pressure on the AUD will continue to build. Stay short the Aussie Dollar.

An upturn in China would help Australia, but seems unlikely. The Chinese PMI came in at 48.2 disappointing the markets, no matter that as a data group global 28 PMI's have been released so far and of them 22 are up, 5 are down and 1 is unchanged. Currently it's fair to say that only two PMI's have the ability to shift global thinking significantly and they are the US and China. The US PMI came in at 50.9 and somewhat balances out the Chinese data, but leaves me to continue thinking that the world economy remains fragile at best. The pressure on the Fed to start to curb QE will remain and with that a continuation in the deflating of the bond bubble. My favourite quote  of the day comes from James Knightley at ING Bank in London:

“Given the Fed has made tapering of QE contingent on improvements in the labour market, today’s ISM report is possibly the best outcome for risk assets in the short term – better growth, but a still lacklustre job picture.”

Cold comfort for many in this low growth world.

Maybe the Japanese are changing? Previous bubbles usually encompass several Japanese corporates overpaying for trophy assets. The one that always brings a smile to my face is Rockefeller Center in NYC, which seems to change hands every bubble at the top of the market without fail. Rumours are that Japan's Government Pension Investment Fund (GPIF) may have it's remit changed to allow it to buy property (and thus the Rockefeller Center thinking), as has happened recently with the Norwegian sovereign wealth fund. Of course any change in asset allocation will probably see them selling JGB's into BoJ's own money printing debacle leaving observers such as myself wondering how this might end? In conformation that Japan's pension funds are all thinking in the same way (sell Japan and buy something else) the Japan Pension Association (assets of $100bn) partnered with several Japanese and a Canadian fund to buy a power generation plant in Michigan. While clearly the bet relies on  expanding manufacturing in the midwest it also could be the first of many such infrastructure plays. If the Japanese pension funds are smart they can get a lot of their cash offshore into expanding economies and leave the  unit holders something to cling on to when the current round of ponzu-like BoJ action leads to the inevitable hangover of deflation, which would be consistent with a falling population and external pricing pressure on a country with little by way of natural competitive advantage in the global economy.

Change of the day though comes from a Goldman Sachs note:

"Closing our recommendation to buy BRICs Sales basket...due to revised expectations for slower China growth"

That BRICs sales basket <GSTHBRIC> targeted US companies within the Russell 1000 across ten sectors with the highest sales exposure to the BRICs countries and regions. Essentially GS is saying they know longer want to be long growth in the (formerly) most dynamic countries on the planet . . . all change.

The first three days of the Tour de France had been a change in their own way in that the Tour has never previously visited Corsica. Leaving aside the debacle of the Orica GreenEdge getting stuck at the fish only 15mins before the arrival of the peloton during stage one, the racing has been exciting, the crashes have been horrible and the crowds have been enormous. This 100th edition of the TdF is shaping up nicely for all concerned. Stage three was another mass lunge for the line.


Notice I didn't say bunch sprint, because only stage one saw a rated sprinter cross in first place. The following stages have favoured all-rounders such as Peter Sagan. Sagan got his second, second place finish last night being edged out in the photo finish by GreenEdge's Simon Gerrans who specialises in stealth tactics. Luck has changed for Orica GreenEdge.


Man of the day had to be Sky rider and TT specialist Geriant Thomas who rode the stage despite having medical staff confirm that he had a broken pelvis. Anyone who thinks cycling isn't tough please take a number and wait to be made fun of . . . 

Ciao!