General Markets Talk
- Thread starter Jimmy_the_Gent
- Start date
- Tagged users None
Yesterday, I utilised a Bear Put Spread on the S&P 500, because I thought the initial rise was illusory with commodities going strong.
Good thing I did.
I have also shorted the Nasdaq after reading this:
I sold BYON and YETI. The former was plummeting, the latter was a bad investment.
RE BTC, I expect too see a slump to 55K or thereabouts before heading to 100K.
EDIT: Have decided to remove both the bear put spread and the short for the time being.
Consult the two charts below:
Both suggest at least a dead-cat bounce.
Good thing I did.
I have also shorted the Nasdaq after reading this:
I sold BYON and YETI. The former was plummeting, the latter was a bad investment.
RE BTC, I expect too see a slump to 55K or thereabouts before heading to 100K.
EDIT: Have decided to remove both the bear put spread and the short for the time being.
Consult the two charts below:
Both suggest at least a dead-cat bounce.
Last edited:
Bought a little SHL today and TRE last week.
Wouldn't mind like a 5-10% market correction here and then deploy some funds.
Wouldn't mind like a 5-10% market correction here and then deploy some funds.
Been to as high as $16 now..
Mates with an old timer that I think got on board around $1.
Don't think he bought many but still maybe like $30k up iirc.
Hold off on shorts for now. Maybe do a call spread expiring 17 May if you're so inclined, before selling on Friday (a longer date out reduces volatility).
I think it's a good time to sell 20+ year Treasury Puts, given that the 10 Year Yield's at the top of its range. You can do that on IG. Expiring date should be up to June (would bring you into summer.)
Last edited:
Nope, shorts and bear put spreads are back on. Have also sold the TLT puts.
Have also decided to short RMD (the US version) and SMH (semiconductors).
(Follow him on Twitter, and subscribe to his Substack if you have the capital to make his ideas work.)
Have also decided to short RMD (the US version) and SMH (semiconductors).
(Follow him on Twitter, and subscribe to his Substack if you have the capital to make his ideas work.)
Last edited:
If I turn out to be wrong, I'll close the short. (It did plummet just after I posted that LOL.)
The US500 just plummeted, FWIW. Will have a negative impact on semiconductors, but we're approaching the point where you buy the dip (bottom may be 4700-4900).
A few things whilst still not cheap starting to look more reasonable, might transfer some money into the trading account on Monday and have a look next week if the weakness continues.
If the Iran/Israel situation escalates over the weekend there'll be plenty of buying opportunity next week. Just wait for it to stabalise a bit and market will back here quickly for an (hopefully) easy win or 2
Yeah, I'm buying the dip.
Maybe one day premature?
Looks like a short-term bottom, at least?
EDIT: Yep. Closed RMD short for a loss. Maybe crashes after earnings, but I won't take the chance.
Last edited:
Why Goldman Sachs would buy IGO and sell Mineral Resources
Major broker Goldman Sachs has released a research report outlining reasons why it thinks IGO is a buy and Minera Resources is a sell.
2 HOURS AGO
PRINT WIRE
Carl Capolingua
Livewire Markets
FOLLOW
In its latest research update on the ASX lithium sector, Goldman Sachs has considered the impact recent supply volume reductions and deferrals might have on Australia’s two largest lithium producers IGO (ASX: IGO) and Mineral Resources (ASX: MIN).
You’re no doubt aware that lithium minerals prices cratered through 2023, potentially bottoming out in February this year. Interestingly, notes Goldman Sachs, the bulk of the production tweaks from producers in response to the roughly 80% drop in prices has so far come from the lower end of the global lithium cost curve.
Lithium prices cratered in 2023, above, the price of lithium carbonate
The broker suggests that this indicates there are “other considerations for lithium supply such as the downstream integration of larger players.” You don’t get players much larger than IGO, MIN, and their partners in their major projects, US chemicals giant Albemarle and Chinese lithium giant Tianqi Lithium Corporation.
Albemarle is the common denominator across the IGO and MIN equations because it owns 49% of the Greenbushes Lithium Operation with the remaining 51% jointly owned by IGO and Tianqi Lithium Corporation. It also owns an equal 50% interest with MIN in the Wodgina lithium mine. Both are in these projects to feed their growing downstream processing capabilities.
Albemarle is the lynchpin of IGO vs MIN fortunes
Albemarle’s management of its medium- and long-term downstream processing profile could be the limiting factor for the fortunes of both IGO and MIN. Goldman Sachs believes events may conspire to push Albemarle to favour expansion of volumes at Greenbushes over Wodgina, potentially derisking IGO as an investment proposition and increasing the risks for MIN.
Never miss an update
Get the latest insights from me in your inbox when they’re published.
FOLLOW
Much of MIN’s lithium aspirations depend on its planned ramp up of Wodgina Train 4 which the company is targeting for early 2026. When delivered, it would increase Albemarle’s excess spodumene production from around 100kt to around 400kt, and above the company’s current midpoint outlook.
Goldman Sachs believes this degree of production increase is too rapid for Albemarle’s ability to process the feedstock it would create. On this point, the broker notes Albemarle’s January update in which it signalled a slower build out of downstream conversion capacity.
ALB’s downstream builds are now more prolonged...ALB attributable hydroxide processing capacity (ktpa LiOH Eq) Source: Company data, Goldman Sachs Global Investment Research
“We see this inferring ALB has no pressing need for Wodgina Train 4 volume in CY26, potentially indicating ALB may prefer a ~12-month delay to the build/ramp up”, notes Goldman Sachs. But it could get worse, because Mineral Resources is also targeting Wodgina Trains 5 & 6 to commence in FY28. Goldman Sachs notes “this timing at a knock-on risk from the timing of Train 4”.
The potential of a delay to Train 4 is not factored into market consensus numbers for Mineral Resources, suggests Goldman Sachs. The broker believes consensus earnings estimates for Mineral Resources are above their own numbers through to 2026, implying there's potential downside to the company's share price.
Goldman Sachs believes that if Albemarle is found chasing alternative sources of additional spodumene to meet its incremental feed needs in the medium term, it may instead choose to target an extension of the Greenbushes tailings retreatment plant. This would work in IGO’s favour.
On the topic of Greenbushes, Goldman Sachs suggests IGO has another major advantage over MIN. The broker thinks there’s far less risk surrounding production expansion plans at Greenbushes. This is because unlike Albemarle, the other major partner in the project Tianqi, has a far stronger desire to press ahead with planned expansions so it can meet its own processing needs.
Tianqi’s China downstream projects remain on track...Tianqi attributable/controlled chemical conversion processing capacity (ktpa LiOH Eq) Source: Company data, Goldman Sachs Global Investment Research
Goldman Sachs 2024 lithium market outlook
Goldman Sachs believes “marginal costs versus the cost curve” will remain the driving force for lithium minerals prices this year. Essentially, they expect that the supply-side, not the demand-side, is going to determine momentum in the short term. “We continue to expect volumes to be a key focus for the lithium market in 2024”, they note.
As mentioned above, Goldman Sachs considers cuts and deferrals so far have come from producers at the lower end of the cost curve, while higher cost assets have curtailed relatively less capacity. Going forward, further curtailments are increasingly less likely as many low-cost producers are “reasonably well capitalised”.
This means they’re more likely to “wear weaker or negative margins for a longer period to avoid being among the first to curtail”, says Goldman Sachs. More generally, producers may also look to maintain supply by targeting lower cost sources such as processing stockpiles.
Combined with their demand outlook, Goldman Sachs suggests the result will be “lower spodumene prices in the medium term”. The broker expects spodumene 6% to average US$800/t in the back half of this year and through 2025, before rising to around US$1,333/t by 2028. To put this into perspective, the latest assessment of Australian spodumene 6% by S&P Global Platts is US$1,080/t.
Goldman Sachs lithium minerals forecasts. Source: Goldman Sachs Global Investment Research
The final word from Goldman Sachs on ASX lithium stocks
Based upon all of the above considerations, Goldman Sachs rates IGO a BUY with a price target of $7.50, implying 4.2% upside from the last price at the time of writing. On the other hand, they rate Mineral Resources as a SELL with a price target of $48.00, implying a whopping 30% downside from the last price at the time of writing.
They reiterated their ratings and price targets for other Australian lithium stocks in their coverage:
- Pilbara Minerals (ASX: PLS): SELL; Price Target $2.80 (i.e., implies 27% downside)
- Liontown Resources (ASX: LTR): NEUTRAL; Price Target $1.35 (i.e., implies 20% upside)
- Core Lithium (ASX: CXO): SELL; Price Target $0.12 (i.e., implies 17% downside)
This article first appeared on Market Index on Wednesday 24 April 2024.
Wilsons bullish on ResMed’s earnings beat
Share postBrokers Wilsons says healthcare giant ResMed may have an “insuperable” competitive advantage over rival Phillips due to the latter’s issues around product safety.
This morning ResMed reported surging profits, margins and sales.
“ResMed’s [March quarter] result beat revenue by 2 per cent and EPS by 13 per cent. The company’s competitive position in sleep markets look insuperable now,” the broker said.
It also said investors should love the 260 basis point gross margin in the March quarter result, which translated into a 44 per cent margin gain at the earnings before income tax line.
ResMed shares are up around 9 per cent in after hours markets in New York.
Good thing I closed that, then.
Am a bit cautious on equities though because of this:
Let's see where the US 10Y winds up. I have placed a put spread on RTY expiring on June 21.
EDIT: Also China finally appears to be outperforming.
Last edited:
