Russia's RTS Index futures - liquid tradable instrument.

This is a discussion on Russia's RTS Index futures - liquid tradable instrument. within the Indices forums, part of the Markets category; Let us dissect yesterday's news reel asunder for a second: 1) Jobs. We mentioned a gazillion times last year (see ...

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Old Jan 6, 2011, 12:19pm   #76
 
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Why I am bullish on 2011?

china white started this thread Let us dissect yesterday's news reel asunder for a second:

1) Jobs. We mentioned a gazillion times last year (see e.g. Bloomberg link {NSN L7LFFK3PWT1C <GO>} from 23 August 2010) that we were in the worst jobs situation since Ronald and Maggie, meaning essentially that we were still scraping off the bottoms of the recession. We also emphasized that only a VISIBLY improving jobs situation can justify Mr. Market Hopeful's latest rally. Well - we just received a VERY VISIBLE endorsement that it is improving. U.S. companies boosted payrolls last month by the most since at least Dec 2000 back till which historical data was made available for ADP National Employment Report - see chart attached. Unless my vision is somehow deluded, we just printed the highest reading for that index in the past 10 years!

2) ARM and CSR. As an ex-trader who traded ARM all way down after the demise of NASDAQ, I am of course overjoyed to see it print the highest price since Feb 2001. Jokes aside, both chip-makers supplying iPhone and Nokia's Oyj respectively propelled next to 8% up yesterday. In ARM's case it means investors have appetite for a stock trading at 150 P/E!!! Atheros deal is cool, but the real McCoy is that investing in "gadget"-makers (running on ARM's and CSR's chips) is seen to be a sure play as both corporates and individuals, domestically and worldwide alike, are seen HAVING money and WILLING to spend it on "gadgets" well above the essential level of a bread basket.

3) Atheros deal. Qualcomm, the world's largest maker of mobile-phone chips, agreed to buy Atheros for about $3.2 billion in cash, broadening its lineup of Wi-Fi networking technology. Just another M&A deal going to show that corporates' coffers are galore with monies - willingly spent on M&A.


Schroder's Richard Buxton's benchmark target of 7,000 for 2011 may bloody well be an undershoot

Point I want to make here is that we are not talking of NASDAQ flying to 5K from 4K in 1999 - even 4K was a debauchery. We are taking off from a very low base, as - in many ways - we are just trying to get our head above the bottom of the worst recession since Hoover and Al Capone. Afraid of bubble ready to burst? Be more afraid of the air inside of the bubble just starting to get heated!

Good trading to you!
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adp_highest_reading_in_10_years.gif  
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Old Jan 14, 2011, 8:57am   #77
 
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Jobs situation - ripe to turn around from deep bottom? Morning comment - 14.01.20

china white started this thread Good morning! And Happy Orthodox New Year to all those who, alongside Russian and Serbian Orthodox Churches, celebrate the New Year today by old-style Julian calendar!

Markets were bombastic recently, with FTSE and DAX seeming to have resolved “psychological” figures of 6K and 7K to the upside, CAC ready to storm 4K, and MICEX posting its biggest gain since July 6! Jingle bells all round But let us take a look where we are really.

In the attached charts I am enclosing – courtesy of St Louis Fed and Bureau of Labor Statistics:
  1. Change in the Unemployment Rate in the current and previous major recessions;
  2. Civilian Employment-Population Ratio since late 1940-ies;
  3. Change in Employment-Population Ratio in the current and previous major recessions;
  4. Ratio of nonfarm payrolls to the nonfarm payrolls at the start of recession – also for current and previous recessions.

Wherever you look – complete and utter SHAMBLES in jobs situation. Double dip? You cannot dip again to where you have not got out from – the bottom of the worst and most prolonged recession since WWII. Most disturbing thing is that NONE of the above indicators have improved since Summer 2010 – despite all the efforts by central bankers and abundance of money ready to be spent in the market. More to that, recent drop in unemployment (to 9.4%) had very little to do with newly created jobs. Instead, it was primarily due to 260,000 workers dropping out of the labour force. As a result, the labour force has shrunk by 246,000 from the pre-crisis 2007 level (The U.S. labor force average growth rate is supposed to be around 0.8% per year from 2000 to 2050, courtesy of Joel Kotkin, a scholar on urban development). Furthermore, not only the number of discouraged workers over job prospects hit a record high (since 1994, the earliest year the data is available) of just over 1.3 million --more than the number of jobs added in 2010--but the labor participation rate also plunged to a 25-year low of 64.3%!!

To add more pain, the average number of weeks people remain unemployed also has risen to 34.2 weeks in December 2010 vs. 33.9 weeks in November, with 6.4 million jobless people classified as long-term unemployed, i.e. without a job for 27+ weeks. All these suggest there is a large number of frustrated workers who left the labour pool but unaccounted for in the unemployment rate calculation. That means the all inclusive jobless rate could easily be 11% or more, instead of the 9.4%!


Not just gloom and doom. LASTING gloom and doom, lasting more than any other previous recession.

However we may be at a unique juncture in current economy situation. When you toss a yo-yo towards the floor, its position – however low it might be – is not that relevant, what is important is its MOMENTUM, that is whether the yo-yo keeps on falling down, stalls or reverses back up. And recent ASTONISHING ADP National Employment Report (see our previous comment on Bloomberg under {NSN LELC2A3PWT1D <GO>}, see also chart attached) – which clearly reversed from negative to positive readings, posting the highest POSITIVE number since at least December 2000!) - is a compelling reason to believe the yo-yo is ready to bounce back from its low.


Are you thinking what I am thinking? If this is indeed the case, we are in for a VISIBLE TURN-AROUND in jobs situation in 2011, and that will drive equity markets crazy. Junctures of such reversal variety happen once in a blue moon – and the FEAR to miss this unique train, with cash galore in the market acting as petrol spilt on fire, will send the equities shuttle to the Moon!

Good trading to you!
Attached Thumbnails
chart1_unempl_rate.gif   chart2_civilian_emp_population_ratio.gif   chart3_empl_population_ratio.gif  

chart4_nonfarm_payroll_ratio.gif   adp_highest_reading_in_10_years.gif  
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Old Jan 17, 2011, 10:44am   #78
 
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Rosneft, TNK-BP and CHEP - quick comment.

china white started this thread Good morning! It is hardly a secret that about 20% of strategic assets of BP Plc is stashed with TNK-BP, and now we have another MEGA manifestation of global importance of Russia to BP. BP’s drive to extract billions of barrels of petroleum from above the Arctic Circle (which may hold as much as 100 billion barrels of oil and gas) is a clear counter to Petrobras & Friends who will definitely go far beyond Carioca in their shelf exploration. To fend that off BP is willing to go far, as far as going to bed with a state-owned producer. BP is willing to do that despite potentially hurting its reputation in the US – it is quite clear that this acquisition will almost certainly complicate the politics of levying and collecting damages from BP.

Given the US aspect of the deal, I will stay away from putting a positive tag on BP share price. HOWEVER, for RosNeft and TNK-BP this deal puts a hard wooden floor for future price action. Buying their shares is a virtually risk-free deal.

On a separate note, our trading idea in CHEP from 29 December 2010 (see below) is playing down to the T. $ 3.50 (roughly RUR 105) is a natural target there going into the IPO.


--------------------------------------------------------------------------------

Sent: Wednesday, December 29, 2010 5:52 PM
Subject: Idea 3 to kick-off 2011 in style - BUY Chelyabinsk Pipe Works CHEP into IPO of CTPZ
Importance: High

Idea 3 to kick-off 2011 in style – BUY Chelyabinsk Pipe Works CHEP into IPO of CTPZ:

I mentioned on 3 December (see below and notes attached) that fundamentally our target price for CHEP is $ 3.0 or roughly 93 RUR – but given the political importance of the forthcoming IPO of CTPZ which will put the production of both conventional and large diameter pipes under one roof – investors will HAVE to have the new stock in their portfolios and that will drive the share price to the sky going into the IPO. CHEP’s share price on 3 December was 60 RUR, it is 82 RUR today.

I re-iterate my STRONG BUY view on CHEP anywhere below 90 RUR, seeing 100-120 RUR price range going into the IPO in 2011.
Attached Files
File Type: pdf CHEP_tkbc_02_12_2010_eng.pdf (135.7 KB, 392 views)
File Type: pdf CHEP_tkbc_14_10_10_eng.pdf (151.8 KB, 811 views)
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Old Mar 4, 2011, 4:49pm   #79
 
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TransContainer and MRSK. Initiation of Coverage.

china white started this thread 1. We initiate coverage of TransContainer:

We recommend to BUY the stocks and GDRs with 12M target price at $120 and $12.0 respectively, which means 24% and 22% upside potential from the current market level. The company placed its shares on the market in November 2010, and the stocks performed well since that time posting 21% (22.5% for GDRs) growth. We expect investor’s interest to the transportation stocks will remain high in the coming years. Currently company’s GDRs are traded with EV/EBITDA 2011E 7.1 and P/E 2011E 16.5 that is 32% discount and 1% premium to its EM peers. Solid growth profile, strong market drivers and support from the state determine favorable prospects of the company and will increase demand for the shares in the future. The main risks related to this investment idea come from a side of market growth and possible changes in tariff regulation. Corporate events in the transportation segment will boost investors’ interest to the traded stocks



2. We initiate coverage of Russian companies in the distribution network sector with a positive outlook on its prospects:

We expect a significant improvement in the fundamental attractiveness of the sector as a result of a large-scale transition to RAB-regulation. Our recommendation for large companies included in MRSK Holding – BUY. Preferred shares of the MRSK Holding itself appear to us to be a general, diversified instrument for investing in the distribution network sector, and we recommend BUYing them as a way to even out the risk of the separate regional companies.

Valuation. We valued all MRSK Holding companies using DCF based on approved RAB regulation and long-term tariff indexation parameters taken from MRSK Holding statements. We valued MRSK Holding shares using DCF models for the separate MRSK, as well as using the total asset valuation method.

Our favourites – MRSK of Center (MRKC), MOESK (MSRS) and MRSK of South (MRKY) shares which, in our opinion, provide both fundamental attractiveness and liquidity.
Attached Files
File Type: pdf TransContainer_tkbc_03_03_11_eng.pdf (1.25 MB, 956 views)
File Type: pdf MRSK_Initiation of Coverage_03_03_2011_eng.pdf (995.9 KB, 643 views)
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