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Lucapa announces discovery of largest pink diamond in 300 years

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Lucapa Diamond Company has announced the discovery of what is believed to be the largest pink diamond in 300 years, Associated Press reported on July 27. Named the 'Lulo Rose', the 170-carat gemstone was found in the Lulo alluvial diamond mine in the central African country of Angola, according to a statement on the company’s website.

“Only one in 10,000 diamonds is coloured pink. So you're certainly looking at a very rare article when you find a very large pink diamond,” Lucapa chief executive Stephen Wetherall told the Associated Press. It is expected to fetch a high value when auctioned, but Wetherall suggested its colour could give it an even higher premium.

Lulo is a 3,000km2 concession in Angola’s Lunda Norte diamond heartland, approximately 630km east of the Angolan capital of Luanda. Over the past decade, exploration by Lucapa and its partners Endiama (Angola’s national diamond company) and Rosas & Petalas has been successful in proving up one of the world’s most prolific alluvial diamond fields at Lulo, along with >100 kimberlite pipes, says Lucapa’s website. 



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Rio Tinto Says Simandou Deal Close After Wrangles Over Railway

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Simandou offers a potentially huge new source of supply for Rio, the world’s largest iron ore producer, while China sees the project as key to easing its steel industry’s dependence on Australian output. The world’s top steel-producing nation recently embarked on one of the biggest shake-ups of the global iron ore market in more than a decade by setting up a new state-owned group, designed to be a hub for huge overseas mine investments and buying the steelmaking material from international suppliers.



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Gold Gains as Investors Weigh Growth Concerns; Palladium Jumps

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“We are finally starting to see some weakness in the US dollar index, as gold bounces off an oversold level, recovering above $1,700 for now,” said John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia. “We now expect this initial flight to the US dollar to start rotating back into gold as investors search for a true and reliable hedge against inflation.”



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'The US Is Not Prepared': Hot Temperatures Stress Rail Systems

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"The US is not prepared,” said Paul Chinowsky, a professor of civil engineering at the University of Colorado Boulder. “While the rail system is incrementally being improved, there is significant work to do and what is being done is not being done fast enough.”

In Concord, California last month, triple-digit temperatures were the culprit behind a curve that emerged in a rail line that ultimately derailed a train, according to the Bay Area Rapid Transit Authority. And in Portland, Oregon, last year, temperatures that reached over 100°F wreaked havoc on the city’s public transport, MAX Light Rail, melting the overhead cables that power its trains. City officials had to suspend all train services for almost two days.



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Canopy Growth Leads Pot Stocks Up Amid Decriminalization Hearing

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Canopy Growth jumps as much as 16% to a three-week high ahead of a US Senate committee meeting to explore decriminalizing marijuana next Tuesday.

The Subcommittee on Criminal Justice and Counterterrorism scheduled a hearing to “examine decriminalizing cannabis at the Federal level, focusing on necessary steps to address past harms,” set for July 26

Shares of cannabis companies jumped, including; Tilray Brands Inc. up as much as +8.8%, Cresco Labs +9.2%. Aurora Cannabis Inc. +8.2%, Curaleaf +4.5%, Green Thumb Industries Inc. +6.2%, Sundial Growers Inc. +7.2%

The ETFMG Alternative Harvest ETF rose as much as 5% to its highest point in three weeks

Pot stocks have rallied on news that Senate Democrats plan to introduce a bill to decriminalize marijuana, known as the Cannabis Administration and Opportunity Act, as early as this week



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Gold: Dividing up our forecast

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Historically, gold prices have often come under pressure in the early stages of a slowdown as central bank policy is still tightening or is tight and real interest rates are rising. Of course, this dynamic reverses when policy rates are cut. We expect a further lift to real interest rates this year, particularly as inflationary risk fades in 2H22. As such, additional liquidation of exchange-traded funds can be expected. We advise protecting the downside to longer-term holdings in the yellow metal into year-end. However, we see opportunities to be more positive though 2023 as the Federal Reserve pivots to an easier stance and the US dollar weakens.  



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China Readies $1.1 Trillion to Support Xi's Infrastructure Push

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However, there’s a chance that despite the fiscal largess, overall infrastructure investment growth could still disappoint. First, while Beijing is letting local governments issue more bonds, it’s still telling them to reduce so-called “hidden” debt -- off-balance sheet borrowing from banks by state-owned companies, which has financed a large chunk of China’s infrastructure over the last decade.

Second, fiscal funds need to be supplemented by lending from commercial banks and private investors -- both of which may be reluctant to lend in a risky environment. Finally, local governments in recent years struggled to find infrastructure projects that could generate returns large enough to repay the special bonds. Some economists estimate local governments left 2 trillion yuan of funds unspent last year. 

While Beijing is telling local authorities to speed up spending, it remains to be seen if attitudes will shift.

“Funds are less of a constraint for infrastructure investment this year, while the bottlenecks lie mainly with project pipelines and government incentives,” Goldman Sachs Group Inc. economists including Xinquan Chen wrote in a note last week. In a sign that the fiscal push is yet to rev up construction, sales of excavators in China have been sinking since April last year. In January-June, the sales plunged 53%.



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Email of the day on beneficiaries from a recession:

Your daily talks, now focusing on the probability of a recession, are as always full of interest. I never miss them, or if I have to, I at least read the Comments of the Day.

I've been struggling to decide on some "investments" that could profit from the recession scenario, and which could remain there for the medium term, without my having to watch them every day for sudden reversals. Any suggestions? Shorting a commodity ETF?  Shorting the US banking sector? I'm sure you have other ideas.



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Anger in Shanghai as Covid Return Spurs Fear of New Lockdown

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Tension is spreading through Shanghai as residents watch the Covid-19 caseload tick higher, fueling fears they’re headed back into lockdown little more than five weeks after exiting a bruising two-month ordeal.

The city reported 59 new infections for Monday, the fourth day in a row case numbers have held above 50. The sharp rise from single digits about a week ago follows the detection of the more contagious BA.5 sub-strain of the omicron variant, which has triggered two additional rounds of mass testing between Tuesday and Thursday this week across nine of the financial hub’s 16 districts, as well as other areas where cases have been found. 

China’s strict Covid Zero approach is once again being tested as outbreaks flare across the country amid the arrival of a sub-variant that has fueled rising caseloads elsewhere. Already, close to 30 million people nationwide are under some form of movement restrictions to quell transmission, but authorities have so far steered clear of strict lockdowns in key economic regions.



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China Stocks Drop Most in a Month on Covid Flareups, Tech Fines

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Chinese stocks had their worst day in about a month as a Covid resurgence, combined with fresh fines for the country’s tech giants, sent investors running for the door.

The Hang Seng China Enterprises Index, a gauge tracking mainland firms listed in Hong Kong, slumped 3.1%, its biggest loss since mid-June. Tech heavyweights, property developers and electric-vehicle makers were among the biggest drags. 

A slew of bad news hit the Chinese market over the weekend and Monday morning, including regulatory fines on past transactions done by Alibaba Group Holding Ltd. and Tencent Holdings Ltd., a rejection by China Evergrande Group’s bondholders on a proposal to extend debt payment, and a warning by a prominent investor’s wife that a key lithium maker’s stock is overvalued. 

The selloff is a reminder that the nation’s Covid Zero policy and lingering uncertainty toward tech crackdowns remain key risks for investors betting on a sustained rebound in Chinese shares. The Hang Seng China gauge has recorded just one positive session in the last eight after rallying nearly 30% from a March low.  



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