Elton John once sang:

“Saturday. Saturday. Saturday. Saturday. Saturday. Saturday. Saturday.”

And it’s hard to disagree with him. Almost there small cap speculators, but first — here’s what you might have missed as the days get warmer and the Covid cases get smaller. Keep it up.

 

1. Massive Brazilian iron ore project could crimp Australian supply

China is the new Poms. Now that their cricket team has gone to rubble, it’s time to ditch the English and find a love-hate relationship with someone who can properly challenge us.

So while on one hand we bicker about spying and who’s making the economy-annihilating viruses, on the other we’re saying thanks very much for the 60 per cent rise in the iron ore price since May, China, and reading all the stories with China in them.

Except this one’s got Brazil’s leading shipper Vale in it, back after its horrific dam failure last year, and greenlighting a massive new project, Serr Sul 120. It could flood the market with another 20 million tonnes of production. Boo.

 

2. Stealth alert: China’s back on its biggest commodity buying spree in years

Here’s another one you couldn’t get enough of — while you were stalking the loo paper aisle, China started stockpiling cobalt, iron ore and soya beans. 17.7 per cent more soya beans, in fact.

That sounds like a lot for a country where you’d fairly assume a lot of soy sauce goes down. But no, really — check this chart out and tell us again how China’s annual GDP growth figures must be fake:

China has increased its import volumes of key commodities: Hellenic Shipping News

It’s enough to make you…

 

3. Brainchip says its brain chip works, shares ride higher. Again.

It didn’t really move the market much, but news AI play Brainchip (ASX:BRN) has validated functionality on the hardware side of its Akida Neuromorphic platform still caused one of the bigger stirs this week.

That’s because the tl;dr version of this story is the one the market’s been waiting to hear for more than two years — in case you missed the headline, Brainchip says its brain chip works.

 

4. Hydrogen’s role in the future of renewable energy

This week in our RockTalk roundtable series, we’re talking about, uh, gas. Hydrogen actually, which is ace for renewables, but balls when it comes to transport. It is, however, definitely a big deal if we can get it right.

And just so you know it’s not all just hot air – boom – sitting in the expert hot-seat for this discussion is Dr John Roles. He’s a Research Fellow for the University of Queensland, so eyes *clap* to *clap* the *clap* front *clap* of *clap* the *clap* class *clap* please.

RockTalk: Hydrogen’s role in the future of renewable energy from Stockhead on Vimeo.

 

5. Why did East Energy Resources and Sagalio Energy rocket ~1000pc on no news?

While we’re on hot air, the ASX cops have been busy this week handing out speeding fines like Tic Tacs.

ASX energy minnows East Energy Resources (ASX:EER) and Sagalio Energy (ASX:SAN) started the trading halt party on Wednesday following massive increases to their share prices – 1,100 per cent and 975 per cent respectively. Grand Gulf Energy (ASX:GGE) (200 per cent), Resource Mining Corporation (ASX:RMI) (113 per cent), BBX Minerals (ASX:BBX) and FYI Resources (ASX:FYI) all joined them in the overnight lockup on Friday.

Here’s a Please Explain theory for the first two at least.

 

6. Why investors should back directors with ‘skin in the game’

First, here’s what comes to Angela East’s mind when “skin in the game” is mentioned:

Investors choose companies where directors have skin in the game
That’s not quite the sort of ‘skin in the game’ we’re talking about. Getty Images

Let’s just get that out of the way. For the rest of you, “skin in the game” ought to refer to directors who actually lose serious money when their companies slide.

For example, Twiggy Forrest is still the biggest investor in Fortescue (ASX:FMG), the iron ore hopeful he bankrolled back in 2003. And Elon Musk was once dipping into his rent money to keep Tesla afloat. So what ASX-listed junior explorer execs are as confident as the Forrests and Musks of the world?

This 38 per cent:

Director Company Stake
Tiger Brown Astron Corporation 0.7688
Xiaojing Wang Australia United Mining 0.5591
Ding Poj Bor Asaplus Resources 0.2904
Raphael Geminder Pact Group 0.4426
Ching-Tiem Huang Soon Mining 0.3961
Bruce Gray Tigers Realm Coal 0.3942
Greg & Douglas Solomon Tasman Resources 0.19
Randal Lloyd Swick Cougar Metals 0.3837
Charles Bass Eagle Mountain Mining 0.3524
Andrew Forrest Fortescue 0.3625
Graham Chrisp Centrex Metals 0.3513
Lindsay Dudfield Jindalee Resources 0.3364
David Deitz Gullewa 0.2154
Tee Sin Lip CI Resources 0.2977
Anthony Billis Tribune Resources 0.3257
John Terpu Great Southern Mining 0.3063

 

Here’s why it’s really important that ‘someone in the company is very concerned about the level of cash in the company‘. Indeed.

 

7. Aussie cannabis industry set for painful shakeup – report

Let’s keep this brief so pot investors can get back to their edibles. It is Friday afternoon, after all. A report by North Sydney-based cannabis data supplier FreshLeaf Analytics found 37 companies fighting for a share of less than 100,000 medical cannabis prescriptions.

How does that compare to the opioid market? If you really want to know, highlight the missing text below — we’ve hidden it to save chilled-out investors unnecessary anguish:

In the opioid market, there are 23 companies competing for 15 million scripts per year.

If you chose to ignore that, here’s the news your confirmation bias demands — the National Drug Strategy Household Survey found around 690,000 Australians had used cannabis for medicinal purposes over the last 12 months. But only 27,000 of them got it legally.

 

8. Charted: Why fund managers have their eye on these ASX small caps

There’s something weird going on in the ASX small caps space. Spheria Asset Management portfolio manager Marcus Burns says a “massive increase in liquidity provided by the central bank in Australia” has helped its M1 grow by $350bn year on year.

Simply put, the M1 supply is the amount of cash in the economy. In Australia, with long-term interest rates touching 0.5 per cent, that’s created “a huge amount of speculative activity in the small cap space”.

That means retail investors particularly are chasing momemtum and themes, chucking everything out of whack, so there is actually a situation where stocks that have negative operating cash flow have outperformed those with positive operating cash flow.

Phew. Basically, there’s a run on ASX small and microcaps. Roll the tape.

Here are the ones fund managers have got their eye on right now.

 

9. Bitcoin v Gold: Can the cryptocurrency steal the safe haven crown?

We’d like to think that the inheritance years are going to provide some moral wrangling for Millennials who are so determined not to cash in on their nan and pop’s “greed”.

But there’s a $60 trillion bet that says they won’t. That’s how much their inheritance is shaping up to be, so what modern wokeness are they going to spend it on?

Gold? Propadee? Bitcoin?

It’s not Bitcoin, is it? Please tell us it’s not Bitcoin. Oh god, it’s Bitcoin.

“I believe that the precious metal will lose its crown as the most sought-after reserve asset to Bitcoin within a generation,” confirms Nigel Green, chief exec of financial advisory and fintech deVere Group.

Fortunately, there are people like Gavin Wendt, MineLife founding director and senior resource analyst, trying to convince them that gold’s been pretty good for 5000 years.

 

10. The Secret Broker: But more, much more than this, I did it my way

Time to tune out again, young peeps, because The Secret Broker has a ye olde tale about the time Rodney Adler and Ray Williams went to jail and Warren Buffett didn’t.

Same industry – insurance – bipolar result. Here’s how one lot ended up losing $5bn but got much better at handling soap, while the Sage of Omaha got $80bn or so richer, by making cash generating investments.

Such as the $250m tech investment in Snowflake this week that doubled his money overnight. Not bad for an old bloke who doesn’t see any value in tech.

BONUS ITEM: No, this is a Kick Back:


Have a great weekend. Stay Covid-safe, whatever the score.