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China the Credit Junkie and her Ponzi scheme
We have discussed our Credit Junkie thesis at length, but one of the more worrying things we have read is the article today suggesting Local government credit provision could be one big Ponzi scheme. A...
View ArticleKamikaze Basket: reminder of stocks at risk of Japan/Yen competition
European stocks we think most exposed to Japanese competition, include: Fiat, Peugeot, Michelin, Pirelli, St Gobain, Infineon, Maersk, H&M, Sandvik, SKF. Many also have large exposure to China as...
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Kamikaze watch, SKF (sell): Japan Ball-bearings
The second best performer in the Nikkei today was JTEKT, up 10% on huge volume after blow-out figures (below). NSK is up 6% and NTN up 5%, were both up in sympathy. What they all have in common is they...
View ArticleSKF: sell strength
It appears our call to cover Volvo shorts says more about the market generally, than any prescience on our behalf. All Skandi names are strong (beware the Skandi Pension fund-manager!). That said, we...
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Ball Bearings, JTEKT continues to rise (+6%), ditto NSK (+8%)
Ball-bearings, we assume, are commoditised products with little inherent pricing power. Continue to avoid SKF.
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Swedish Industrial Production
Whereas we are seeing second order improvements in some parts of Europe, it appears that for the Swedes things are getting a little tougher. SCANDI industrial production fell -0.8% YoY in May (est....
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Kurodisation in action: threats and opportunity
Japan’s May Exports (released overnight) came in at +10.1% YoY beating the street’s estimate of 6.4% and a substantial improvement on April’s 3.8%. This is the highest YoY increase since December 2010....
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Beware ‘Miners in Disguise’
There is a huge mining bust going on, clearly. All the junior miners are getting slaughtered and in many cases in Australia one does wonder how many of the Mining Services names are actually going...
View ArticleSKF a mea culpa, plus read across to the cycle, Latin America and EMs
Firstly, being cautious on SKF was wrong. We said the divergence between the share price and earnings had diverged and it was pricing in upgrades, there will be some upgrades on the back of these...
View ArticleFX volatility in Sweden: see a trend?
Ericsson: “Sales for comparable units, adjusted for FX, grew 7%. Reported sales were flat YoY, due to continued currency headwind,” Atlas Copco: A stronger Swedish Krona and weaker currencies in...
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Industrials priced for bad news (cont)
Further to the RRB, we would refer you to our work entitled ‘Industrials priced for bad news’ where we discuss the merits of adding to ATCOA, SAND and SKF.
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Industrials priced for a slow-down (cont). Stay long ATLAS, SAND, SKF
Linked to above, Lonking has made a new high for move. Zoomlion ditto and Komatsu and Guangxi Liugong are all trading well. All is supportive price action for our valuation based calls in Industrial...
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Ball Bearings: SKF
Asian ball-bearing names are trading very well, partly on the yen effect, but also on more optimism for construction/railway demand. We remain a buyer of SKF, which on the roll-forward trades at the...
View ArticleSKF: still some support
We knew post the Q3 call that demand would weaken further in the fourth quarter, production would be lower and inventories reduced (hurting margins). This morning management announces a step up in the...
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China is a credit junkie and what else to avoid
Confirmation of our credit junkie thesis; more drugs are having less impact. March was a record for credit flow and yet QoQ GDP growth was lower. Given only 29% of last year’s financing translated into...
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Trader: “SKF, reasons to sell”
Disappointing Q3 update, underlying QoQ NOT picking up as expected, and big question marks over Q4/Q1 now. USD is the most important currency pair SEKUSD and it is breaking down. Cost...
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The message from SKF, the most economically sensitive of all industrials
“European organic growth is back and the destocking has come to an end” The key takeaway from SKF yesterday, a global cyclical bellwether with Europe as its largest end market, was that organic growth...
View ArticleImproving signs for construction in Europe
On Wednesday Aurubis (Europe’s largest copper refiner) said they see a surge in scrap metals after years of declines. This is normally associated with increased levels of construction activity...
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European Manufacturing Activity continues to show recovery
Euro-area manufacturing output expanded faster than initially estimated in January, led by Germany and France. The Euro-area PMI rose to 54 from 52.7 in December and expectations of 53.9. The...
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Sweden cuts rates, a weaker Krona. Good for exporters, but not Elekta
A lower Krona is good news for exporters like Electrolux and Volvo. With respect to Volvo, where possible, costs are local to match sales, but Volvo will still benefit from translation here on weaker...
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