Monday, 16 April 2012

Fact v fiction .... what happened to Phillippe Gilbert?

My back is better, so I'm going to stop thinking about myself for the moment and ponder a more interesting question: If I was a metals producer what would I be thinking today? I'd probably spent much of the weekend reading stories about a Chinese slowdown.  Should I delay plans to expand a particular mine or should I go ahead on the basis of continuing production problems?

Well today we find out that Codelco has been buying in copper to meet its supply contracts. We knew the situation in Chile was serious back in February when yearly production figures for 2011 were finalised. Production at Escondida, the world’s largest copper mine, was down 7.9%, Los Bronces saw a 15% per cent fall and overall grades throughout the country were declining. Codelco in the meantime has been at odds with Anglo American surely distracting the state run company from turning around the situation.

My former partner and I spent many hours going through production reports of various metals and almost always concluded that long term you'd want to be an owner of the supply source. The trouble was that even with that type of conclusion we always surrendered to the macro situation as much of our tradeable universe represented certain forward expectations (whether that be futures, equities or derivatives there of) and therefore depended on a premium or discount to a theoretical price. Right now the premium to me is too high in a metal such as copper given the macro situation and I'd look to trades across the curve rather than trading solely in the spot month.

I wanted to remind readers of my concern regarding student loans. I note that this week Barron's lead piece is on the subject.

People out there better understand the situation coming into the September print of the latest information regarding the arrears in the product when it is released by the US department of education. An interesting side note to this is NZ student loans, which I am told are tradeable, but I have no figures at this time as I'd like to do more research . . .  Needless to say early indications are bearish.

As opposed to student loans I'm getting very bullish on the cycling season. I watched the highlights from the weekends big race at the gym this morning where I put in a solid hour free of back pain. I spent Sunday afternoon watching the last 80k's of the Amstel Gold. Hey what happened to Phillippe Gilbert? I honestly don't get it?

He seemed to hit a wall when the race was in his grasp. He and BMC had looked good for most of the race. I thought the biggest threat might be Liquigas' Sagan, but no way did I think Gilbert would hit a wall like that in the attached video. So far this year I think Nibali, Cancellara and Boonen have been my standout riders for sheer brilliance. I don't want to take anything away from Simon Gerrans after his Milano - San Remo, but that was tactical genius more than anything else.  I amy own a BMC and a Pinarello, but for mine the sexiest looking bike out there at the moment is a coin toss between the Cannondale of Liquigas and the Cipollini of Farnese Vini ... thoughts?

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