Here’s a primer on the latest firm that will crush your portfolio: Glencore

[mgray]

Like Lehman Bros. before it, Glencore is imploding and the Swiss firm may take global markets down with it, through its derivative trading. My take here

[idiit]

Asian shares hurt by sell-off in commodity stocks

See Kit Tang | @SeeKit_T
3 Hours Ago

Commodity shares were among the biggest casualties as fears of weaker Chinese demand sent prices of commodities tumbling. Further adding to the 'risk-off' sentiment was the near 30 percent slump in the London-listed shares of commodities and mining behemoth Glencore on Monday.

Read More › Should you fear a 'Glencore' moment?

http://www.cnbc.com/2015/09/28/asia-...a-economy.html

Should you fear a ‘Glencore’ moment?

Nyshka Chandran | @nyshkac
6 Hours Ago

Experts are beginning to warn of the dire financial impact across the mining and metals space if Glencore, one of the world's largest resource companies, is unable to control its skyrocketing debt load.

Hong Kong-listed shares of the Anglo–Swiss commodity giant crashed 27 percent on Tuesday, on the back of a 29 percent plunge in the company's London-listed shares in the previous session.

The fall was sparked by a widely-circulated note on Glencore released Monday by Investec that pointed to a debt base well above its peers and a lower-margin asset base. The brokerage also warned of a scenario in which earnings could collapse entirely as Glencore worked purely to repay debt, which would eliminate all shareholder value.

Read More › Glencore tanks another 29%: Who's next?

"Glencore is like Lehman Brothers, they have the most sophisticated trading desk when it comes to metals, coal, copper, iron ore. They're not just a company processing ore from the ground. If it was to unravel, that could have a global impact," Frank Holmes, CEO and chief investment officer at U.S. Global Investors, told CNBC on Tuesday.

Those debt fears weighed on Asia-Pacific commodity stocks on Tuesday, with Sydney-listed Rio Tinto and BHP Billiton tumbling 5 and 6 percent respectively within the first two hours of trade, while Singapore-listed Noble Group tanked 12 percent.


Glencore could be the name that drags the entire market down because it has an elevated leverage ratio in order to secure high returns, Holmes explained, adding that the firm also has many counterparty transactions, so there are concerns about a domino effect and the leverage of other parties.

http://www.cnbc.com/2015/09/28/glenc...or-miners.html

[Carmody]

True economic signs can be seen every time I drive by the local scrap metal lot. a very large lot. One with an electronic sign, out front.

A year ago the sign said that they would buy scrap steel for the equivalent of $220US per ton.

Today it says they will buy scrap steel for the equivalent of approximately $50US per ton.

That's a manufacturing level sign, a resources level 'sign' ....of what is going on. A true temperature test.

It is important to understand, for the casual reader, that resource based prices shift more wildly than the economy of consumption, as manufacturing has to respond to the vagaries of people and their consumption. Which means it has to peak in demand, harder and faster, and the same in it's drops.

However, no matter how one looks at it, that price drop in scrap steel - is an alarming one.

It means that the consumption at the manufacturing level, of scrap steel to be converted into recycled steel....has dropped. It has dropped to a low I don't recall ever seeing, within the scope of my personal history of this sort of market watch (which is far from exhaustive).

[Pam]

Posted by mgray (here)
Like Lehman Bros. before it, Glencore is imploding and the Swiss firm may take global markets down with it, through its derivative trading. My take here

I felt it would be derivatives that would start the ball rolling. These are such interesting times. I look back at 2007 and I didn't have a clue what was going on. It is terrifying and awe inspiring to watch the tidal wave, rolling in slow motion coming at us. I always said I wanted the truth, watch out, here it comes!!!!!

Also, a big thank you to mgray, idiit, Paul and others who have helped immensely in painting a picture of what is going on in the economies of the world.

[Bubu]

Posted by Carmody (here)
True economic signs can be seen every time I drive by the local scrap metal lot. a very large lot. One with an electronic sign, out front.

A year ago the sign said that they would buy scrap steel for the equivalent of $220US per ton.

Today it says they will buy scrap steel for the equivalent of approximately $50 per US ton.

That's a manufacturing level sign, a resources level 'sign' ....of what is going on. A true temperature test.

It is important to understand, for the casual reader, that resource based prices shift more wildly than the economy of consumption, as manufacturing has to respond to the vagaries of people and their consumption. Which means it has to peak in demand, harder and faster, and the same in it's drops.

However, no matter how one looks at it, that price drop in scrap steel - is an alarming one.

It means that the consumption at the manufacturing level, of scrap steel to be converted into recycled steel....has dropped. It has dropped to a low I don't recall ever seeing, within the scope of my personal history of this sort of market watch (which is far from exhaustive).

This is a welcome sign to me. never seen humanity truly free in my entire life. At least we are changing for better or for worse i dont know but change is certainly welcome when youre in a worse situation. Most probably for better because when youre at the bottom there is no way but up.

[ThePythonicCow]

Posted by mgray (here)
Like Lehman Bros. before it, Glencore is imploding and the Swiss firm may take global markets down with it, through its derivative trading. My take here

Thanks for the heads up, mgray.

Looks like it sucks to be Glencore this week. For some details of this implosion, here's the opening words of a CNBC article from earlier today: Should you fear a ‘Glencore’ moment?:

[ Self-edit: rest of post deleted - idiit already posted the same, many hours ago, above. -- Paul. ]