• Current Reports  

    Published on December 17th, 2014

    How low can the oil price go? And how long can it stay down? These two questions are weighing on the mind of every investor in the world these days, to the exclusion of almost everything else. Nobody can respond to the first question with any confidence—although we take a stab below—but the second is actually pretty easy to answer...
    Published on December 17th, 2014

    In October the world’s fourth largest mining company, Glencore, launched an audacious merger bid for the world’s second biggest miner, Rio Tinto. The approach was rebuffed, and United Kingdom takeover rules—both companies have London listings—forbid Glencore from making any further overtures for the following six months. Yet few in the mining business believe that is the end of the story. Glencore’s chief executive officer Ivan Glasenberg has long had his eye on Rio Tinto. Come April, industry analysts expect him to be back with a new proposal. However, any battle over Rio Tinto will be about far more than Glasenberg’s deal-making prowess. It will shape the global mining industry in the post-commodity-boom world. And the outcome will be determined in large part by Beijing, whose anti-monopoly regulators have shown themselves both willing and able to use their growing international clout to further China’s global resource strategies by forcing the sale of prize assets like copper mines to Chinese state-owned companies. That means a successful Glencore bid for Rio Tinto will almost certainly end in the dismemberment of the Anglo-Australian giant that has dominated the global mining scene for over a century, with Chinese state-owned resource companies cherry-picking many of the company’s choicest businesses...
    Published on December 17th, 2014

    In October the world’s fourth largest mining company, Glencore, launched an audacious merger bid for the world’s second biggest miner, Rio Tinto. The approach was rebuffed, and United Kingdom takeover rules—both companies have London listings—forbid Glencore from making any further overtures for the following six months. Yet few in the mining business believe that is the end of the story. Glencore’s chief executive officer Ivan Glasenberg has long had his eye on Rio Tinto. Come April, industry analysts expect him to be back with a new proposal. However, any battle over Rio Tinto will be about far more than Glasenberg’s deal-making prowess. It will shape the global mining industry in the post-commodity-boom world. And the outcome will be determined in large part by Beijing, whose anti-monopoly regulators have shown themselves both willing and able to use their growing international clout to further China’s global resource strategies by forcing the sale of prize assets like copper mines to Chinese state-owned companies. That means a successful Glencore bid for Rio Tinto will almost certainly end in the dismemberment of the Anglo-Australian giant that has dominated the global mining scene for over a century, with Chinese state-owned resource companies cherry-picking many of the company’s choicest businesses...
    Published on December 17th, 2014

    It seems that any foreign correspondent heading out to Tokyo is first told to look for the dark lining on any cloud. Take the very strong showing of Shinzo Abe’s LDP-Komeito coalition over the weekend. The votes were not even counted before the foreign press was lamenting the low turnout and the consequent limited mandate the prime minister received. Needless to say, no reporter cared to mention that the weather over the weekend was atrocious, with record snowfall in the hills (and that anyone with any sense stayed in!). Meanwhile, not withstanding a major crisis, the recent election guarantees that Abe will be Japan’s PM through to the end of 2018; a period of almost unprecedented political stability for Japan...
    Published on December 16th, 2014

    During my money management career I have come to realize that there are two basic investing environments. There are periods when the US dollar is structurally declining and there are times when it is structurally appreciating. Depending on which condition applies, then anyone running a global investment portfolio should use different decision rules. We are probably moving into a period of structural dollar appreciation, so it seems an opportune moment to review those rules...