Connect with us

Precious Metals

Economic Recovery Is Slowing Globally

Source: Adrian Day for Streetwise Reports   10/11/2021

In the second part of his quarterly review, Adrian Day, founder of Adrian Day Asset…

Share this article:

Published

on

This article was originally published by Streetwise Reports

Source: Adrian Day for Streetwise Reports   10/11/2021

In the second part of his quarterly review, Adrian Day, founder of Adrian Day Asset Management, discusses the macroeconomic situation in Europe, China, and emerging markets.

Note: in the first article in this series, Adrian Day discusses impending tapering by the Federal Reserve and its potential effect on U.S. markets. A third article discusses gold and precious metals.

Globally, the picture is similar to the situation in the United States, with slowing economic recoveries, rising inflation, and for the most part central banks—and governments—without dry powder to fight any slowing. Interest rates are low and negative in much of the world, while fiscal policies have little room to expand after widespread spending abandon during COVID lockdowns. Many smaller banks, particularly in  Eastern Europe and Latin America, are already raising rates, but the world’s major banks are hesitant to follow.

Europe’s growth slowing due to high energy prices

Europe had a strong economic recovery from very sluggish levels, with large government deficits. But now the recovery is dramatically slowing. Europe is heading into what analyst Larry McDonald calls an “ESG recession,” sparked by widespread “clean energy” policies (the ban on fracking in the U.K., for example, despite the discovery of large natural gas reservoirs). These policies have consequences, even if most politicians don’t look beyond the latest opinion polls while the intellectual class applauds.

“For the most part, emerging markets did their fiscal adjusting a decade ago and are now rebounding.” 

If energy prices are going up dramatically, with shortages throughout Europe (most notably in the U.K. and Germany, where gas prices have soared 421% and 170% this year respectively), it’s obviously something to do with those nasty “Ruskies.” No one thinks of the ESG restrictions on traditional energy sources, nor the massive money printing that leads to all prices going up.

Inflation is also picking up across Europe; for the Eurozone, September CPI was up 0.5% month-on- month, and it was not an anomalous month.

China slowing while emerging markets stronger

China is also slowing, though from a higher sustained rate of growth, as the real estate market is cooling,        and exports beginning to slow. The largest real estate developer, Evergrande, has now missed two scheduled debt payments and may fail; it has only kept going for a year or so by infusions of new money. An Evergrande failure will hurt Chinese real estate and may spread to the whole economy by causing cautious banks to reduce lending.

“Commodity exporters have strong current account surpluses and balance sheets, and virtually no dollar debt.”

Chinese banks—generally—are undercapitalized after years of expansion, and frequent forgiveness of interest on loans, adding amounts to principal and thus exaggerating the loan to capital ratio. In response, the People’s Bank may actually cut rates again, even though growth is still the highest of any major economy in the world.

Though Evergrande’s failure would be a major event, so far it appears that banks in Europe and North America have little exposure to Evergrande and other at-risk Chinese developers, though some in Asia do.

Emerging markets, on the other hand, have already been raising rates. For the most part, emerging markets did their fiscal adjusting a decade ago and are now rebounding. Commodity exporters have strong current account surpluses and balance sheets, and virtually no dollar debt, having learned a hard lesson in the Asia crisis of the late 1990s.

Some, however, are still struggling with COVID, while commodity prices have different effects, depending on whether the country is an exporter or importer. In Brazil, to take an example, the economy is rebounding but inflation is also increasing. The central bank has increased rates from 2% to 5.5% over the past six months to get in front of inflation, and more increases are expected.

“[T]here is a shift from the U.S. from high growth to value and global markets, particularly in emerging markets; value has outperformed growth in these markets nearly 80% of the time.” 

Overall, however, in most countries, growth is slowing at the same time that price inflation is picking up. The combination—stagflation—is the worst of both worlds for the economy, positive for gold (vide 1970s), and possibly positive for stocks depending on whether the central banks fight the “stag” with easy money or the “flation” with higher interest rates.

Chinese stocks fall on regulatory crackdowns

In China, the continuing regulatory net has been cast broadly (tech, ride sharing, private education), and certainly broader than national security concerns (the original rational). The market is down 16% in the last seven months, and they are threatened from both sides in an increasing war of words with the U.S.

In addition to the Chinese crackdown, there are fears of U.S. restrictions on listings, with the SEC insisting Chinese companies open their books to U.S. auditors.

Many ADRs do not represent actual ownership in the companies but are more like tracking stocks, and these so-called Variable Interest Equities (VIE) are particularly in the crosshairs. However, most of the bad news is already reflected in stock prices, though extreme care and selectivity is required.

In sum, major markets around the world are expensive and the risk of a near-term pullback has increased. At the same time, there is a shift from the U.S. from high growth to value and global markets, particularly in emerging markets; value has outperformed growth in these markets nearly 80% of the time. We are cautious but always looking for good companies at reasonable valuations.

Adrian Day, London-born and a graduate of the London School of Economics, is the founder of Adrian Day Asset Management. His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Statements and opinions expressed are the opinions of author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Adrian Day Asset Management Disclosure:
Adrian Day Asset Management (“ADAM”) is an SEC-registered investment adviser located in San Juan, Puerto Rico. ADAM and its representatives are in compliance with the current filing requirements imposed upon SEC-registered investment advisers by those states in which ADAM maintains clients. ADAM may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. (Note: Global Strategic Management, our legal name, is registered, or qualified to accept clients from all states and territories, including the District of Columbia.) A direct communication by ADAM with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of ADAM, please contact the SEC or the state securities regulators for those states in which ADAM maintains a notice filing. A copy of ADAM’s current written disclosure statement discussing ADAM’s business operations, services, and fees is available from ADAM upon written request. (Note, all clients receive this document prior to opening and account and are offered it annually.) ADAM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Past performance may not be indicative of future results. Therefore, there can be no assurance (and no current or prospective client should assume) that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by ADAM) made reference to directly or indirectly by ADAM will (i) be suitable or profitable for a client or prospective client’s investment portfolio or (ii) equal the corresponding indicated historical performance level(s). Different types of investments involve varying degrees of risk. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, or the impact of taxes. (Note, any performance number provided for Adrian Day Asset Management accounts is after the deduction of all transaction costs and fees.) The material contained herein is provided for informational purposes only and does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell any option or any other security or other financial instruments. Certain content provided herein may contain a discussion of, and/or provide access to, ADAM’s positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from ADAM, or from any other investment professional. ADAM is neither an attorney nor an accountant, and no portion of the content provided herein should be interpreted as legal, accounting, or tax advice. Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if ADAM is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of ADAM by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.












Author: Author

Share this article:

Articles

Peppermint delivers key milestones in the last quarter, including the launch of micro-loan platform bizmoPay

Special Report: Peppermint has had another significant quarter, delivering on all key metrics which was highlighted by the launching of … Read More
The…

Share this article:

Peppermint has had another significant quarter, delivering on all key metrics which was highlighted by the launching of bizmoPay.

Fintech company Peppermint Innovation (ASX:PIL) has had a very productive quarter, with the highlight being the delivery of its alternative non-bank micro-enterprise loan offering, bizmoPay.

In July, the company achieved a significant milestone after being awarded a financial lending licence for bizmoPay by the Philippines Securities Exchange Commission (SEC).

Following that approval, PIL immediately commenced a three-month pilot program for a select number of bizmoto agents to test out the bizmoPay platform.

The aim was to identify and optimise any friction points or blockages to ensure efficient  system operations before it started offering the loan program to more than 56,000 registered bizmoto agents.

The pilot program has rapidly expanded in the last two weeks of September to more than 150 bizmoto agents.

“Having initiated a select 10-agent pilot program to identify friction points in our bizmoPay system, we rapidly expanded the size of the pilot due to the level of interest shown by other bizmoto agents,” commented Peppermint CEO, Chris Kain.

Kain said the pilot program was so in demand that by October 12, PIL had issued 359 loans across its three different loan products – Platinum Plus, Platinum and Silver.

During the quarter, PIL also recorded cash receipts of $472,000, which was an 83% increase on the previous quarter.

The company is well funded, with a strong cash position in the bank of $2.7m at quarter end.

 

BizmoPay

The granting of a financial lending licence by the Philippines SEC allows bizmoPay to offer alternative non-bank micro-enterprise loans to qualified bizmoto agents, registered bizmoto network members, and enterprise platform partners.

bizmoPay services fully complement the commercialisation of Peppermint’s proprietary technology platform which targets four key business sectors – mobile payments, ecommerce, delivery and logistics and mobile financial services.

Based on data analysis from the first 45 days of the bizmoPay pilot program, loan recipients on average increased their transactional volume by approximately eight times across the bizmoto ecosystem of services.

“We’re starting to get a picture of an overall positive impact on the agents’ ability to conduct transactions across the platform, which is exactly what we wanted to do,” Kain told Stockhead.

And of course, the more transactions across the platform, the greater revenue that the company earns.

The bizmoPay pilot program started with only the Platinum Plus and Platinum loan products, with the shorter term and lower value Silver bizmoPay loan product commencing trials in the last week of September.

As such, no meaningful data were able to be collected for the Silver bizmoPay loan type.

The program yielded significantly different results in terms of transactional volumes and values across the first 45 days.

On average across the board, the total number of bizmoPay loan recipients completed 13 transactions during the first 45 days of the bizmoPay pilot program, and processed $1.05 per day in transactional value.

“That volume of transactions would represent an additional $22 million per annum in revenue if extrapolated across our 56,000 registered bizmoto agents,” said Kain.

“We’re also on schedule to deploy the next phase of our commercial roll-out for bizmoPay next month, whereby recipients will be able to apply for their micro-enterprise loans via their mobile app.”

Several agents significantly outperformed the average transactional volume during the first 45-day pilot period, including 20 agents who performed more than 50 transactions.

At the higher end, five agents completed more than 100 transactions, while one agent undertook more than 250 transactions.

Peppermint expects to expand bizmoPay’s agents to more than 56,000 users when the pilot is completed, with a target of $30m in micro loans over the next three years.

The graph below is an extrapolation of what the different average performance of each loan type would yield if applied across selected numbers of the registered bizmoto agent base over the same initial 45 day period of the bizmoPay pilot program:

Kain expects this simple and easy to use feature will be incredibly popular with many of its bizmoto agents.

The non-bank lending space in the Philippines is currently undergoing massive changes, especially in the mobile app space where users have exploded as more people access non-bank loan finance through their mobiles.

To capitalise on this momentum, Kain said the next level of regulatory licensing that Peppermint would be chasing is an Electronic Money Issuer (EMI) licence.

With an EMI  licence in place, he believes that Peppermint could turbocharge its capabilities in the digital transaction space.

“An EMI licence will allow us to facilitate any e-money transaction and service open-loop e-wallet accounts, providing all Filipinos – not just bizmoto agents – with a convenient and secure way to receive digital money and access digital services,” Kain said.

“Every Filipino will have the chance to receive a bizmoPay loan, paid to their bizmoto e-wallet to access the bizmoto ecosystem and agent services. We believe this will stimulate significant transaction volumes over the bizmoto platform.”

In February, the company told the market that its phase 2 objective was the launch of bizmoPay.

“We’ve done that and ticked that box, so now we’re moving to phase 3, an EMI licence which is Peppermint’s next objective in delivering financial inclusion to the Filipino people.”

 

Other significant milestones

In March, PIL signed an API agreement with the Bank of the Philippine Islands, which saw PIL’s proprietary bizmoto platform integrated into the bank’s operating systems.

The integration will begin during Q4 2021, with the product expected to go live later in 2021 or early 2022.

PIL’s strategic Merchant Biller Agreement  with Cebuana Lhuillier back in April allowed its bizmoto agents to cash in money and top up their mobile wallets at any of the 2,500 Cebuana shop fronts across the country.

The API that serves as the gateway for Cebuana Lhuillier to send funds has now been developed, with a projected go-live date later this year or early Q1 2022.

Integration of the bizmoto platform with GCash as a payments facilitator is also underway, and expected to be launched in December.

Once the GCash offer is live, bizmoto agents, riders and merchants will have exposure to approximately 46 million registered GCash users throughout the Philippines.

PIL’s bizmoTinda website meanwhile, has been improved to include multi-vendor customer and multi-vendor merchant functionality, allowing  users to register as multiple vendors or multiple merchants.

The bizmoTinda allows users to sell their own items, with the convenience of having their own website.

Other milestones during the quarter include launching a blog newsroom with the aim of providing non-ASX sensitive information and news updates about the company’s activities to shareholders.

PIL also executed a direct marketing campaign around bizmoPay during the quarter, introducing the concept of a “Planet bizmoto” community among its agents.

The primary objectives of the “Planet bizmoto” community are to experience unique value, be loyal to the brand and transact frequently within the bizmoto ecosystem.

This article was developed in collaboration with Peppermint, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Peppermint delivers key milestones in the last quarter, including the launch of micro-loan platform bizmoPay appeared first on Stockhead.



Author: Special Report

Share this article:

Continue Reading

Articles

Lefroy Exploration secures major nickel frontier land package in WA

Special report: In line with its multi-commodity gold and base metals strategy, Lefroy Exploration has pegged five exploration licence applications ……

Share this article:

In line with its multi-commodity gold and base metals strategy, Lefroy Exploration has pegged five exploration licence applications over a new nickel project named Glenayle.

The Glenayle Project covers a massive contiguous 2735sqkm of the Proterozoic age Salvation Basin that is intruded by multiple dolerite sills which extend over the entire land package.

These dolerite sills are part of the Warakurna Large Igneous Province (LIP), which extends west to the Bangemall Basin and east to include the Giles layered intrusive complex. More importantly, they are considered prospective for nickel mineralisation.

Glenayle represents a first mover approach by Lefroy (ASX:LEX) into a frontier nickel-copper exploration project with its stake over the Warakurna LIP.

New wholly owned subsidiary to list on ASX in 2022

The Glenayle tenement package is held by a new wholly owned LEX subsidiary, Johnston Lakes Nickel (JLN), which Lefroy aims to list on the ASX in 2022 subject to shareholder and regulatory approvals.

JLN will also hold other nickel assets currently held by LEX at Lake Johnston and at Carnilya South in the Lefroy Gold Project.

The company expects the tenements to be granted in Q4, 2022.

While the explorer aims to expand its portfolio in search for nickel, the focus remains on exploration at Eastern Lefroy and the Burns gold-copper prospect.

A rare opportunity

LEX managing director Wade Johnson said it is not often that an opportunity like this presents itself.

“It is a monster land package,” he said.

“We have taken the first mover approach into a new area that has seen very little exploration.

“We are very keen to further develop and apply knowledge learned about nickel mineralisation in large igneous provinces that will provide exploration targeting criteria for target selection,” he said.

“Glenayle adds another wholly owned project to the LEX greenfields exploration portfolio and complements our other nickel assets at Lake Johnston and Carnilya South.”

The Glenayle project relative to the other company projects and key geological rock units in Western Australia. Pic: Supplied

Identified in desktop assessment

The Glenayle nickel project was identified after a desktop assessment to identify new areas in Western Australia considered prospective for nickel mineralisation.

Prior geological knowledge of the area from a field reconnaissance trip in 1998 by Wade Johnson and the subsequent review of the research paper by Pirajno and Hoatson (2012) supported LEX’s acquisition.

What’s next?

Lefroy has kicked off compilation and assessment of previous surface geochemistry, geophysical and drilling data from WAMEX at Glenayle.

The location of drill core from the only three diamond holes drilled at Glenayle is being sourced, with two of the three holes being located.

Geophysics, and in particular interpretation of gravity survey data, will play a key role in guiding exploration targeting within the project.

Development of a detailed aeromagnetic and gravity dataset is underway and will be the primary exploration tool in the interpretation of the distribution of the mafic rocks such as feeder sills, layered intrusions and dykes within the Salvation Basin.

This will then be followed by targeted stratigraphic diamond drilling in 2023.

The company will apply for funding support through the WA State Governments Exploration Incentive Scheme (EIS) for this drilling where applicable.

LEX has also commenced land access negotiations with the determined Native Title group.

 


 

 

This article was developed in collaboration with Lefroy Exploration, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Lefroy Exploration secures major nickel frontier land package in WA appeared first on Stockhead.





Author: Special Report

Share this article:

Continue Reading

Articles

Silver Mines sets the stage for maiden underground silver resource at Bowdens

Special Report: Silver Mines’ aggressive drilling campaign at its Bowdens project in New South Wales has delivered more high-grade silver … Read More
The…

Share this article:

Silver Mines’ aggressive drilling campaign at its Bowdens project in New South Wales has delivered more high-grade silver hits, further building the case for a significant underground resource.  

Silver Mines’ (ASX:SVL) Bowdens project is already the largest undeveloped silver deposit in Australia, but continued high-grade results are providing strong evidence the mine will be more than just an open pit.

Four drill rigs are going full throttle as part of the expanded 30,000m drilling program, which has produced additional high-grade hits like 3m at an impressive 679 grams per tonne (g/t) silver equivalent from 306m, 6m at 382g/t silver equivalent and 14m at 264g/t silver equivalent from 322m from the Northwest and Aegean zones.

Drilling of the Bundarra Zone returned a notable intercept of 3m at 278g/t (44g/t silver, 3.18% zinc, 1.92% lead and  0.15g/t gold, from 255m.

Meanwhile, Southern pit extensions included 9.8m at 214g/t silver equivalent including 0.31g/t gold, from 39m; and 4m at 343g/t silver equivalent, with a higher grade 1.94g/t of gold, from 88m.

The Aegean to Northwest Zone is dominated by high-grade silver vein systems comprising substantial widths, while the Bundarra Zone is dominated by wide zinc, lead and gold bearing veins with appreciable silver.

“We are very pleased with these latest results; they confirm infill and extensions to these three new deposits which lie directly beneath the open-cut development plan,” Managing Director Anthony McClure told Stockhead.

“These results will feed into our maiden underground mineral resource which will be complete in the coming months.”

Silver Mines is in the final stages of development approval for a 2-million-tonne-per-annum open pit operation that would have an initial mine life of 16.5 years producing about 66 million ounces of silver, 130,000 tonnes of zinc and 95,000 tonnes of lead.

The drilling results so far have given Silver Mines the confidence to move forward not only with an initial underground resource at Bowdens, but also to concurrently move forward with a Scoping Study for a potential underground develoment.

The study will consider a couple of alternatives including the potential for underground development to start in years 3-4 of the open pit development to supplement plant feed with high-grade material at a rate of up to 500,000 tonnes per year.

Drilling below the open pit continues to extend the Northwest High-Grade Zone closer to the Aegean Zone, cementing Silver Mines’ belief these two zones are linked.

The Northwest Zone starts about 30m below the base of the proposed open pit and so far, is up to 20m thick, extending over 450m and continuing down plunge for at least 300m. But it’s not closed off, meaning Silver Mines hasn’t yet hit the edges of this potentially very big system.

Drilling targeting resources beneath the current open pit reserve is expected to run through until at least the end of this year, while drilling to test for system extensions to the Bowdens deposit will continue into 2022.

 


 

 

This article was developed in collaboration with Silver Mines, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Silver Mines sets the stage for maiden underground silver resource at Bowdens appeared first on Stockhead.




Author: Special Report

Share this article:

Continue Reading

Trending