A note on Glencore
Coal mergers, a drop in margins, cyclicality and China... what's the deal with Glencore right now?
The A.I. rush is still going — but for how long?
And how will that affect equity markets at large as Apple and Google have slowed down considerably? I explore the broader market setup in a piece which you should not miss, linked below.
The piece includes a long analysis on the AI-theme and whether it’s a Sorosian boom/bust (i.e. Reflexive Bubble) or not. The piece is behind a paywall ($).
I warmed up writing the Reflexive Bubble piece with this free-for-all piece below that has >100,000 views on Twitter as of now.
The Setup on Glencore
2022 was a blowout year for Glencore — EBIT reported was almost 3X higher than in 2021. The post-Covid paradigm and the war in Ukraine layered on top, caused havoc in energy markets.
The market saw price spikes in oil, gas and coal — and Glencore happens to have a lot of coal. From the bottom of the March 2020 low, to the peak of November 2022 Glencore returned a 4.5X and paid some dividends along the way too. But now what?