Kick Back: The biggest stories you might have missed on Stockhead this week
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Friday. That went quick.
It was a week dominated by everyone not holding crypto absolutely screaming joy on Twitter at the chance everyone holding crypto will get financially destroyed. Social media got back to doing what it does best – platforming humans being s..tty to each other. We haven’t seen that since the big orange guy packed his bags for Mar-a-Lago.
Not that there was a lot else to talk about, at least on home soil. Our Energy Minister hates EVs; that was enlightening.
Qantas revealed that it has lost more than $16 billion in revenue since the COVID-19 pandemic began but it didn’t really matter because its CEO just cut wage rises for another two years and made a heap of international crews redundant, despite expecting to “average 107% and 120% respectively of their pre-COVID domestic capacity in FY22“.
Oh, yeah – it’s also going to cut front-end commissions paid to travel agents on international tickets from 5% to 1%. So not a great week for travel stocks.
Small caps overall did well though. They finished the week in the green, finally breaking a four-week losing streak.
Win! Here’s a few reasons why.
In research this week, UBS noted that Chinese Premier Li Keqiang has again “stressed the need to control surging commodity prices”.
Poke China hard enough and eventually it will move on commodity prices. Because it can. And it’s almost inevitable; it’s just a matter of how they’ll go about it this time.
One way, according to UBS, which first gingerly notes it has “no visibility into the specific actions that China may take”, is to restrict steel exports out of China.
This creates a local supply glut, prices come down, and demand for iron cools.
You’ll have to click here for the other way, but the whole narrative of “when will iron ore prices come down” is really just an oh-so-Aussie reaction to “times so good something must be about to go wrong”.
Maybe China will gear up scrap production and flood the market with secondhand steel?
Nope. Or, if they do, Magnetite Mines (ASX:MGT) director Mark Eames says, it will only be “part of the steel story”. That’s because scrap steel is generally 30 years old and China wasn’t using a lot of steel 30 years ago.
Then there’s a 2.4 billion tonne reserve at the Simandou project in the West African nation of Guinea – but China will have to share that with Singapore and France.
Huh. Maybe we should just keep taking that extra US$34-37 billion a year (if iron ore prices stay above US$200 a tonne) and stop giving them ideas.
Right now, it all begs a difficult question for China to consider… is this really what winning a trade war looks like?
As if you needed another reason to not share your ‘hood with Hollywood exiles, ex-hippie boomers, British backpackers and sharks.
Sorry Byron, it really makes no difference how “idyllic” you are, because nothing cancels “full of pillocks”. But if you insist on ignoring the fact there are literally hundreds of equally idyllic seaside towns around Australia, and are still determined to live in Byron Bay, the median house price is now more expensive than that of greater Sydney.
Around $1.4 million. It’s up nearly 22% for the year ended April 30.
But that’s regional real estate for you. There’s an old maxim that most people return to live within 20 miles of where they grew up, or some such rubbish like that.
If you grew up in the country, best to get in now, becase CoreLogic is yelling it from the rooftops – regional house prices rose 13pc over the year, more than double that of the major metro markets.
And definitely more than 10 weeks wages…
I miss 1965, when you get could a 1/4 acre inner city block for 10 weeks pay on the minimum wage. pic.twitter.com/pya9vz2ElZ
— Chris Stephens (@ChrisStephens84) May 20, 2021
Depressed? Maybe CoreLogic’s head of research Tim Lawless has something for you here, in these “mounting signs the housing market has moved through a peak rate of growth”.
Australian Energy Minister Angus Taylor made it clear what he thinks of an emissions-free future.
“I’m not driving an electric car,” he told 3AW.
Taylor told Mitchell that he drove a five-cylinder, 3.2 litre, Ford Everest – “something that can handle the hard roads and the distances”.
TheDriven did the math and it turns out our Energy Minister emits roughly the equivalent of Australia’s per capita emissions, “just from driving the Ford Everest”.
Reuben Adams caught up with someone properly leading the charge – Lake Resources (ASX:LKE) managing director Steve Promnitz.
Not only is Lake’s flagship project in the top 10 global lithium brine resources worldwide, it’s in one of the largest tenement packages in Argentina’s Lithium Triangle.
And it uses an innovative method that produces cheap, high quality, environmentally friendly lithium.
What more do you need to know? Well, everything else in this excellent Q+A about why LKE’s future looks bright, and clean.
And here’s all the other news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium. It’s High Voltage, and it’s rock ‘n roll.
Did you buy the dip this week?
No, not that one. Please, God no, not that one.
It’s chaos at Casa del Broker. The kids are now paying Mrs Broker in crypto and the guests are holding dry crackers wondering why things have turned frosty on the domestic front.
It’s all a bit of a mix-up. But amongst all of it is a good lesson on why the returns might not be as spectacular, but at least trading equities lets you keep your sanity for two days a week.
Imagine if you were updated on your house price every 90 seconds?
Anyway, since there’s no point sleeping in his own bed for the foreseeable future, TSB is off to a mountainside cabin with only the brother-in-law to keep him company.
We mean, warm.
Copper prices have been on an absolute tear over the past two months, pushing above the $US10,000/t barrier earlier in May to reach levels not seen in a decade.
That means it’s only a matter of time before an analyst pipes up about how “it’s not sustainable”.
Enter the fun fuzz – Wood Mackenzie senior VP of metals and mining Julian Kettle. He’s even used the words “massive demand destruction“.
But he has an interesting point, because at some stage copper will get way too full of itself and buyers will start looking for cheaper alternatives.
And there’s an obvious one – aluminium.
“While aluminium’s conductivity is some 40% below that of copper it does possess attractive properties – not least its density, which is just 30% of that of copper.
“This means that an aluminium cable is around 52% of the weight of a copper cable with the same conductivity, a property offering handling and installation benefits.”
Worth a look. But until then, here’s a couple of new copper juniors on the ASX that reckon the aluminium revolution is still some ways away.
And here’s copper explorer Encounter Resources (ASX: ENR) pumping 25 per cent on news BHP will start a $22 million farm-in to its Elliott copper project in the Northern Territory.
And here’s Korean steelmaker and battery precursor producer POSCO a 30 per cent stake in the Ravensthorpe nickel operations on WA’s south coast.
‘Ravy’ as it’s known by the locals, has had a bumpy ride. It was shut twice by FQM and previous owner BHP, and has struggled again since reopening in early 2020.
FQM bought it off BHP for US$340 million back in 2009. Previous to the POSCO deal, BMO Capital Markets had estimated Ravy had a NAV of just $US257 million on a 100 per cent basis.
They might need to go back to their books. POSCO paid US$240 for just a 30 per cent stake. That makes the deal a 233 per cent premium on BMO’s estimate.
Are global carmakers and manufacturers are scoping Australia?
Yes. Yes, they are.
Where do you start when trying to cover a week’s worth of crypto news? Ooh, hang on. First, the crypto skip button.
For those who are still here, the warnings were there when we noticed the meme coins were winning late last week. You might have spotted the signal in the headline “Is this a top signal?”
But you probably still hodled your Bitcoin, because that’s what you do. Cryptocurrency investment firm, Apollo Capital, noted it was weak on Monday, but reiterated BTC was “in the buy category”.
Still you hodleded.
We even showed you a picture of a bottom.
Wednesday – “Bitcoin slides under US$41,000 on China ‘ban’“.
What are you people even like? “SO MUCH FEAR“.
Are you listening? Ok then, how about Thursday’s…
There, finally a few people started running for the exit. Through it all, Elon be like:
So, disaster and ruination? Nope.
The haters had their day in the sun, and then prices started to head back up again.
Whatever crypto is, it’s definitely not boring.
When is a crypto story not a crypto story?
When it’s about a company that got booted off the ASX for being too into crypto, which then become a rare AUssie private unicorn within the next 12 months, and a really smart kid made millions buying a stake in it.
After Animoca Brands was delisted in March 2020, Ishan Haque took the opportunity to up his stake in the Hong Kong-based non-fungible token (NFT) company, offering to buy shares at a 60 per cent discount to Animoca’s last traded price.
“I tried to talk to every existing shareholder I could,” Haque told Stockhead. “They were all panicking.”
It still wasn’t easy. Despite the fact a lot of shareholders felt their investment was now worth zero, Haque still had to hound them on Reddit, Facebook and Hot Copper and tempt them with a 7c offer.
Primary Markets facilitated the trading and he ended up with 1 million shares for $140,000.
Animoca recently raised funds at $1.10 a share.
Haque is 21. Lately he’s been working in Brisbane as head of growth for Wes Blundy’s The Curvy Group, an online bra retailer.
That’ll do. Thanks for joining us this week, have a great weekend.