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The Greenvale Mining Ltd (ASX: GRV) share price surged 9.52% today. This comes after the company announced the appointment of an experienced Australian mining executive as its new managing director.

The mineral exploration company’s shares closed the day’s trade at 10.5 cents per share.

Quick take on Greenvale

Based in North Fremantle, Western Australia, Greenvale is a mineral exploration company with a focus in oil shale deposits. The company owns a 99.99% interest in the Alpha shale oil deposit in central Queensland, and an 80% stake in the Iron Oxide Copper-Gold (IOCG) exploration project in the Georgina Basin.

What’s lifting the Greenvale share price

The Greenvale share price was sent surging following the company’s appointment of Mr Neil Biddle as managing director.

Mr Biddle is the founder of Pilbara Minerals Ltd (ASX: PLS) and has served on the Greenvale board since September, alongside mining executive Mr Tony Leibowitz.

He brings a significant wealth of experience to Greenvale, with over 35 years in senior management within the exploration and mining industry. Biddle will drive the development and commercialisation of the company’s Alpha Torbanite Project in Queensland

Greenvale’s Alpha Project is known to be the only remaining deposit of torbanite in Australia. The mineral is a substance between oil shale and coal, which consists of a variety of fine-grained black oil shale.

The company said that previous studies have shown that torbanite has potential to produce bitumen, light crude, and activated carbon.

According to Greenvale, over 800,000 tonnes per annum of the product is currently imported. The company highlighted that if the Alpha Project goes into production, the site will become a domestic supplier of bitumen, creating a unique position for Greenvale in the Australian market.

The company further noted Mr Biddle will supervise the pre-feasibility study for the Alpha Project which is due to be completed before mid-2021. The study will include resource drilling and bulk sampling test work, which will enable a final feasibility study, and potential investment decision.

Management commentary

Greenvale chair Mr Tony Leibowitz commented on the appointment of Mr Biddle. He said:

We believe the Alpha Torbanite Project is a project whose time has come, and I can think of no one better qualified to drive its development than Neil. Being resident in Queensland, Neil will be ideally placed to access the Project and work with our key consultants to rapidly advance Alpha towards production over the next 12 months.

He added:

Having worked closely with Neil at Pilbara Minerals, Bardoc Gold and other ventures over many years, I know that we possess the combined technical, corporate and commercial skill-sets to move this Project forward quickly and unlock value for our shareholders. Neil will also be well placed to advance our exciting Georgina IOCG Project in the Northern Territory, which is a frontier-scale exploration initiative capable of delivering Tier-1 mineral discoveries in an under-explored part of Australia.

More reading

• Why BrainChip, Pilbara Minerals, Premier Investments, & Tyro shares are dropping lower
• Here’s why the Pilbara (ASX:PLS) share price is on watch today
• Fundies reveal 3 top ASX shares to buy for 2021
• The Pilbara Minerals (ASX:PLS) share price is already up 25% in 2021
• Are ASX lithium shares staging a comeback in 2021?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Ah, diversification… that magic word in the world of investing. One of the few consistent things you will hear from most financial advisors, stock pickers and would-be market experts is the importance of ‘diversification‘ in your investment portfolio.

A Nobel prize-winning economist even called it the ‘only free lunch’ in finance. Yet, it’s not quite enough to say ‘don’t put all your eggs in one basket’ in 2021. The world has changed (insert cliche) in a dramatic fashion over the past 12 months, and ‘good diversification’ might just have changed with it. So let’s have a look at this concept, and what it means in 2021 and beyond.

The primary objective of diversification is to mitigate risk without damaging your portfolio’s potential to deliver returns. It’s a lot better to have your money spread across 10 ASX shares than one, for instance. That way, if a black swan event, or another unforeseeable catastrophe, hits one of your companies, it won’t irrevocably ruin your portfolio.

But that’s diversification in its most basic application. Many investors also like to diversify their money between different asset classes too.

How do investors diversify?

Over in the United States, it used to be very common for financial advisors to recommend what’s known as the ’60/40 portfolio’. That represents a model portfolio consisting of a 60% allocation to shares, and a 40% allocation to fixed-interest investments, usually government bonds.

The idea is that the high potential of volatility (together with the possibility of higher returns) of shares are tempered with the stability of the bonds. Thus, you have a growth-orientated portfolio that won’t be as prone to volatility as a simple index exchange-traded fund (ETF) of shares.

That used to work reasonably well. But in 2021, the story is different. Government bonds are directly tied to interest rates. If rates fall, the bonds increase in value, and vice versa. But the problem is today, interest rates across the advanced economies of the world are all essentially at zero.

That means that bonds are arguably offering little to no potential future upside (unless rates go negative) today, together with very low running yields. This situation has possibly all-but rendered bonds impotent as an asset class offering a real rate of return.

As such, we have seen a rise in interest in asset classes that aren’t normally too popular with most investors. Why do you think we saw the gold price break its all-time high in 2020? Or witnessed bitcoin explode in value over the past few months in particular? It could be because investors are hunting for an alternative to having all of their capital in the share market right now.

So what’s the answer for how to diversify in 2021 and beyond?

Diversification in 2021

Well, there’s no harm in seeking to diversify your money across many different asset classes. That principle still arguably stands.

But it might be prudent to assess the intrinsic and holistic value of the assets you are using all the same. If you think bitcoin, or some other cryptocurrency, has a real intrinsic value today, then you wouldn’t be the only one.

We’ve recently covered how some ASX fund managers are exploring this avenue. There’s always gold as well. Although gold is not everyone’s favourite investment, it still remains one of (if not the) the oldest means to store wealth. There’s always that great Aussie past time of property too. Many investors love the simple fact that everyone is always going to need a place to live.

Additionally, many great investors are completely comfortable just with a well-balanced and diversified portfolio of ASX shares as well – with perhaps some international shares thrown in for a bit of spice. There’s no real ‘right or wrong’ answer to this question, it just depends on how comfortable you are with where your money is placed.

More reading

• Why the ARB Corp (ASX:ARB) share price popped today
• Chimeric Therapeutics (ASX:CHM) share price jumps 88% following its IPO
• ASX 200 drops 0.8%
• Why the OceanaGold (ASX:OGC) share price will be on watch on Tuesday
• Telstra furious about freebies to Optus, TPG

Motley Fool contributor Sebastian Bowen owns bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The ARB Corporation Limited (ASX: ARB) share price rose by almost 5% today, with ARB shares closing the day’s trade at $32.58 per share.

The company is Australia’s largest manufacturer and distributor of 4×4 accessories. ARB’s product range contains an assortment of different vehicle accessories including bull bars, canopies, roof racks and driving lights.

What’s been moving the ARB Corp share price?

Following the release of the company’s unaudited half year sales results on 12 January, the ARB Corp share price has been bouncing up and down. 

Some analysts believe ARB is on the right track, with seven granting a ‘buy’ rating, according to Nabtrade data.

The ARB Corp share price has boomed over 63% higher during the past 6-month period.

ARB Corp’s recent performance

In last week’s update, the company advised that it achieved unaudited sales revenue of $284 million for the half year ended 31 December 2020. This represents growth of 21.6% on the prior corresponding period.

ARB Corp also reported it expects its profit before tax for the first half to be within the range of $70 million to $72 million.

ARB also advised it maintains a positive short-term outlook based on a strong customer order book and record sales in December 2020.

The company expects to release half year 31 December 2020 results on Tuesday 16 February 2021. However, the company goes on to assert that its first half performance “should not be used as an indicator for the second half of the financial year, for which no guidance can be provided, as it remains far too uncertain to predict in the current economic climate.”

Foolish takeaway

With origins dating back to 1975, ARB started in the Melbourne garage of founder Anthony Ronald Brown, hence the name ARB. Today, ARB has an international footprint with an export network that extends to more than 100 countries.

In a year where COVID-19 came barrelling through, the ARB share price has delivered a return of over 59% in the past 12 months. 

More reading

• ASX 200 rises 0.1%
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• ASX 200 up 0.4%: Altium disappoints, ARB impresses, Mesoblast charges higher
• Why ARB, Mesoblast, Pushpay, & Super Retail shares are racing higher
• Why the ARB (ASX:ARB) share price is charging 6% higher today

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Chimeric Therapeutics (ASX: CHM) share price had a very strong start to life as a listed company on Monday.

The drug development company’s shares jumped a whopping 88% at one stage to a high of 37.5 cents.

The Chimeric Therapeutics share price eventually closed the day at 29.5 cents, which is 47.5% higher than its Initial Public Offering (IPO) price of 20 cents.

The Chimeric Therapeutics IPO.

Chimeric Therapeutics’ shares landed on the ASX boards today following the completion of an IPO that raised $35 million from investors.

The offer comprised of 175 million shares to raise $35 million at an offer price of $0.20 per share, giving the company a market capitalisation of $66.1 million upon listing.

Management advised that the IPO was met with excellent support from both new and existing institutional, professional, and retail investors within Australia and overseas.

The proceeds from the IPO will be used to fund the phase 1 clinical trial of the CLTX-CAR T at the City of Hope Cancer Centre in Los Angeles and to further develop an oncology focused pipeline of novel cell therapies.

In addition, some of the proceeds will be used to invest in personnel, corporate, and working capital, as well as license fees to City of Hope.

What are Chimeric and CLTX-CAR T?

Chimeric is a clinical stage cell therapy company focused on the development of novel cell therapies for oncology. It is developing CLTX-CAR T, which uses a peptide derived from scorpion toxin, to direct T cells to target glioblastoma (brain cancer).

It has noted potent anti-tumour activity against glioblastoma established in preclinical models.

In light of this, a phase 1 trial of CLTX-CAR T therapy is now underway at the City of Hope cancer centre, where the first patient was dosed in late 2020.

Chimeric’s Executive Chairman, Paul Hopper, commented: “The team at Chimeric has been overwhelmed with the support for the IPO and what we believe is a highly promising technology in an attractive area of immuno-oncology. The IPO allows us to further develop the CLTX-CAR T therapy and extend it to patients with an unmet need, including those suffering from GBM as well as other solid tumors.”

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• ASX 200 drops 0.8%
• RBA warns that low rates don’t come without cost
• ASX dividends: Are miners the new bank shares?
• ASX 200 down 0.5%: JB Hi-Fi guidance impresses, Super Retail update, Ramsay surges
• Why the Premier Investments (ASX:PMV) share price is under pressure

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) went 0.8% lower today to 6,663 points.

Here are some of the highlights from the ASX:

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi announced its FY21 half-year update. The retailer said that its sales went up by 23.7% to $4.94 billion, earnings before interest and tax (EBIT) went up 75.9% to $462.7 million and net profit after tax (NPAT) rose by 86.2% to $317.7 million.

Management said that sales momentum was strong throughout the half, with continued elevated customer demand for consumer electronics and home appliances products. This, combined with high growth of online sales and a strong Black Friday sales period, more than offset the impact of the government mandated temporary store closures during the half. Online sales went up 161.7% to $678.8 million, which represented 13.7% of total sales.

The ASX 200 share said that gross margins were well managed with strong improvements in gross margins in key categories, particularly in The Good Guys, but was offset by the sales mix in JB Hi-Fi Australia and JB Hi-Fi New Zealand.

JB Hi-Fi also said that disciplined cost control combined with strong sales growth drove significant operating leverage. It didn’t receive any government wage subsidies and continued to pay landlords and team members throughout the half, including the periods where stores were temporarily closed.

The JB Hi-Fi share price went up by close to 4% today.

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price fell 1.6% today despite revealing large profit growth in the first half of FY21.

For the 26-week period ending 26 December 2020, the company said that it achieved a record result with group sales growth of 23% and like-for-like sales growth of 24%. Online sales went up 87% to $327 million.

The Super Retail gross margin improved by 270 basis points, which supported higher EBIT margins across all four core brands.

Super Retail reported that its provisional segment underlying EBIT was $253 million to $256 million – this would equate to growth of 119% to 122%. It also said that provisional normalised net profit is going to be in a range of $174 million to $177 million, which would be growth of 135% to 139%.

Statutory net profit is expected to be in a range of $170 million to $173 million, which would be growth of 196% to 201%.

Anthony Heraghty, the CEO and managing director of Super Retail, said: “Strong cashflow generation leaves us well placed in the second half to reinvest in our brands to maintain our customer value proposition, expand and reward our customer base, consolidate our market-leading positions and grow our market share. As inventory levels are restored during the second half, following a period of unprecedented consumer demand, we expect the level of promotional activity to increase.”

Woodside Petroleum Limited (ASX: WPL)

The Woodside share price fell 0.4% despite the company giving the market a positive update.

It said that it had agreed to amend the binding long-term sale and purchase agreement to increase the supply of LNG from Woodside’s global portfolio to Uniper.

The quantity of Woodside LNG to be supplied under the amended agreement has doubled. Initial supply commencing in 2021 is now for a volume of up to 1 million tonnes per annum (mtpa), increasing to 2 mtpa from 2026. Most of the LNG supply after 2025 will come from the Scarborough gas resource.

Woodside CEO Peter Coleman said: “Scarborough is a globally competitive, capital efficient LNG development which supports the decarbonisation ambitions of our customers.

“This agreement with Uniper highlights the strong market demand we are seeing for Scarborough LNG as customers consider their energy requirements from the second half of this decade. We have now secured long-term customers for over 40% of our expected Scarborough equity production.”

More reading

• RBA warns that low rates don’t come without cost
• ASX dividends: Are miners the new bank shares?
• JB Hi-Fi (ASX:JBH) share price soaring on record sales
• Why Data#3, JB Hi-Fi, Ramsay, & Zip shares are charging higher
• ASX 200 down 0.5%: JB Hi-Fi guidance impresses, Super Retail update, Ramsay surges

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The OceanaGold Corp (ASX: OGC) share price will be one to watch tomorrow following the after-hours release of its fourth quarter and full year update.

What did OceanaGold announce?

According to the release, the company expects to report fourth quarter consolidated gold production of 99,155 ounces for the three months ended 31 December.

This will bring its full year gold production to a total of 301,675 ounces, which is down 36% on the FY 2019 due to the shutdown of its Didipio operation in the Philippines following protests.

OceanaGold achieved this with an all-in sustaining cost (AISC) of US$1,075 per ounce for the quarter and US$1,276 per ounce for the full year. The latter was up from US$980 per ounce in FY 2019.

However, the company benefited from the appreciation in the gold price in 2020. Its average gold sold price came in at US1,648 per ounce for the quarter and US$1,573 per ounce for the year. This compares to FY 2019’s average gold sold price of US$1,360 per ounce.

At the end of the period, the company had liquidity of US$229 million. This includes US$179 million of cash on hand and $50 million in undrawn credit facilities.

OceanaGold’s President and CEO, Michael Holmes, commented: “We delivered a strong fourth quarter of production, consistent with our core value to deliver on our commitments. Despite the ongoing risks associated with the COVID-19 global pandemic in the United States, Haile achieved its full year production guidance with 137,413 gold ounces produced including 48,988 ounces in the fourth quarter.”

“The risks associated with the management of COVID-19 remain, and we are focussed on keeping our workforce safe while delivering on our commitments. We expect the continued mining of high-grade zones at Haile through the first half of 2021,” he added.

Didipio update.

OceanaGold appears optimistic that its troubled Didipio operation could be back up and running as normal in the near future.

It advised that it has had multiple meetings with national government officials in December to finalise the terms of the FTAA renewal. This renewal is expected to be endorsed to the Office of the President for approval.

It added that it will continue to engage with government officials and work with stakeholders for a safe restart of operations at Didipio. However, it warned that the timeline for the renewal remains uncertain and achieving steady state production will be dependent on the timing of the renewal and workforce recruitment efforts.

More reading

• Telstra furious about freebies to Optus, TPG
• Netflix just lost nearly 1 billion hours worth of content
• Why is the Silex (ASX:SLX) share price sliding 8% today on positive news?
• RBA warns that low rates don’t come without cost
• Risk vs uncertainty: why one is a lot worse

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Telstra Corporation Ltd (ASX: TLS) has reacted angrily to a suggestion from the federal government that Optus and TPG Telecom Ltd (ASX: TPG) be set aside spectrum while it misses out.

Spectrum is a range of wireless frequency that can be used for many technologies, including broadcast radio and mobile phone networks. 

Communications minister Paul Fletcher revealed the plan in a letter he wrote to the Australian Competition and Consumer Commission (ACCC) late last year, as first reported by iTnews.

“I believe there are grounds to guarantee 2×5 MHz of spectrum for Optus and TPG Telecom in the 900 MHz band,” the letter reads.

The spectrum in question will be auctioned to allow telecommunications companies to keep 3G mobile services running. Regional and rural areas in Australia rely on this for complete cellular phone coverage.

Fletcher’s proposal did not guarantee any spectrum for Telstra, but did ask for ACCC’s opinion on whether that’s okay.

Telstra responded strongly to the plan, saying it was firmly against any scheme to guarantee spectrum for its competitors.

“This would be an unprecedented and extremely aggressive regulatory intervention, fundamentally distorting the market and utterly inconsistent with the proposition market forces should determine the highest-value use for spectrum,” the company stated in a submission to the ACCC.

TPG and Optus say the plan merely evens the playing field

Understandably, TPG and Optus loved the minister’s plan. They see it as levelling the playing field to counter Telstra’s historical advantage.

Singapore Telecommunications Limited-owned Optus, through its submission, stated the current holdings of low-band spectrum were “not balanced”.

“There is a risk that absent allocation limits, low-band spectrum could be concentrated in the hands of a single player. Such an outcome would not be good for competition or the interests of Australian consumers and businesses.”

TPG has even suggested it should receive the guaranteed spectrum at the “starting price” of the auction.

“Prior to the merger that formed TPG (in May 2020), the distribution of sub-1 GHz spectrum was skewed heavily in favour of Telstra across most of Australia,” the telco stated in its submission.

“The concentration in sub-1 GHz holdings has been a key factor behind Telstra’s enduring dominance of the mobile services market.”

If TPG and Optus are provided a discount to the free-market auction price, Telstra has argued it should also receive a proportional cut to any of its bids.

Telstra shares were down 0.8% at the time of writing on Monday afternoon. TPG had also fallen, by 0.28%.

More reading

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• Broker lists the best ASX stocks to own for an up to 30% gain in 2021
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• ASX 200 Weekly Wrap: ASX drops despite promises of more US stimulus
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Netflix Inc (NASDAQ: NFLX) lost some valuable content rights on 1 January this year. Fans of The Office can no longer watch the series on the service. They’ll have to subscribe to Comcast Corporation‘s (NASDAQ: CMCSA) Peacock in order to catch Michael Scott’s antics. 

That’s a big loss for Netflix. US subscribers streamed 57.1 billion minutes of the sitcom last year, according to Nielsen. That’s by far the most popular of any show on streaming platforms.

While it’s a big loss for Netflix, it remains to be seen how much of The Office‘s popularity was due to Netflix and how much the series actually drew an audience to the streaming service. Peacock’s hoping it’s the latter, but the rest of Nielsen’s data suggests the show’s recent resurgence has more to do with Netflix’s strength.

What will Netflix subscribers watch?

While The Office was by far the most popular content on any of the streaming services tracked by Nielsen, the list was dominated by Netflix. See the top 10 shows by minutes streamed in the US last year (original series in bold):

Title	Platform	Minutes Streamed (millions)
The Office	Netflix	57,127
Grey’s Anatomy	Netflix	39,405
Criminal Minds	Netflix	35,414
Ozark	Netflix	30,462
NCIS	Netflix	28,134
Schitt’s Creek	Netflix	23,785
Supernatural	Netflix	20,336
Lucifer	Netflix	18,975
Shameless	Netflix	18,218
The Crown	Netflix	16,275

Data source: Nielsen. Chart by author.

Notice a pattern?

Netflix completely dominates streaming time across genres and target audiences. It has also managed to get some of its originals in the top 10 despite having fewer episodes of them than the long-running, licensed series that make up most of the list.

The company is capable of pushing users to whatever content it believes will maximise the efficiency of its content spending in the long run. Remember Tiger King? It has the best billboard in the business – the streaming platform’s home screen. “It turns out the best place to talk to [subscribers] about Netflix is on Netflix,” co-CEO Ted Sarandos said on the company’s second-quarter earnings call in July.

In addition, with so much data on its subscribers’ viewing habits, Netflix will be able to maintain engagement even after losing The Office or any other licensed series. No one piece of content makes Netflix.

Will stronger competition hurt Netflix?

While Netflix could certainly stomach losing its top content in a vacuum, the reality is The Office and other top content are going to its competitors. As mentioned, the most-streamed series of 2020 is now on Peacock. Additionally, Disney (NYSE: DIS) pulled its films from Netflix over the last few years in preparation for Disney+.

Disney is already showing off the strength of its library and its ability to attract subscribers and increase engagement. Disney+ has 87 million global subscribers as of last month.

Shows like The Mandalorian are a big reason why. In fact, The Mandalorian was the most-streamed series in Nielsen’s most recent weekly tabulation, besting The Office. And this was for a week in mid-December, so the series was still on Netflix at the time.

But Disney’s success with original series and films may be more a product of its excellent marketing and messaging around Disney+. Millions of consumers were planning to sign up for Disney+ well before the public knew about Baby Yoda. The ability to get a series like The Mandalorian in front of an audience may have been more instrumental in making it popular than the content itself.

That’s where Comcast may face a challenge. The company said Peacock had already signed up 26 million accounts as of last month. That’s a sizable audience, to be sure. But management remains quiet around how much engagement it’s seeing. Investors should look for an update when Comcast reports its fourth-quarter results later this month.

Where Netflix’s advantage lies is in its ability to spend its content budget more efficiently than competitors thanks to its large subscriber base and bounty of viewer data. Comcast paid $500 million for the streaming rights to The Office. Netflix can likely get the same level of engagement from far less spending because of its home-screen billboard. 

That gives Netflix more flexibility in its content budget and ensures it doesn’t have to overspend, while other streaming media companies spend big in hopes of attracting an audience. Ultimately, that’ll show up in Netflix’s cash flow as it retains and adds subscribers without spending more than it has to on content.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• Why Disney stock gained 22% in December
• 3 mammoth IPOs of 2020
• FAANG stocks make their case to lead the Nasdaq in 2021
• The top streaming stocks to buy in 2021

Adam Levy owns shares of Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Comcast. The Motley Fool Australia has recommended Netflix and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Netflix just lost nearly 1 billion hours worth of content appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Silex Systems Ltd (ASX: SLX) share price is sliding lower today on news the United States government has approved the restructure of GE-Hitachi Global Laser Enrichment (GLE).

At the time of writing, the nuclear energy technology developer’s shares are down 8.75% to $1.46.

The Silex share price has fallen today, despite the positive announcement. Could the share sell-down be due to investors already factoring in the outcome, which was first revealed on 8 January?

What’s driving the Silex share price today?

In today’s release, Silex advised it has formally received notice from the US Treasury Department Committee on Foreign Investment in the United States (CFIUS) to approve the transaction to restructure GLE.

The notice stated the CFIUS investigation found no national security concerns with the restructure. The latest approval now means that Silex has the go-ahead to proceed with its investment of GLE.

Silex will acquire a 51% stake, with uranium and nuclear fuel supplier Cameco to increase its interest from 24% to 49%.

As the deal draws close to being finalised, Silex, Cameco and GE-Hitachi Nuclear Energy (GEH) will shut down the membership interest purchase agreement (MIPA). Executed in December 2019, the joint agreement originally saw the purchase of GEH’s 76% interest in GLE.

It is expected that the closure of MIPA will be concluded in the next few weeks.

Words from the CEO

Silex CEO and managing director Dr Michael Goldsworthy welcomed the news, saying:

The receipt of approval from CFIUS for the GLE transaction represents a significant milestone for Silex and reflects the dedicated efforts by the Silex team, our colleagues at Cameco and GEH, along with many representatives within the US Government, and we thank everyone for their contribution.

More reading

• Why the Silex (ASX:SLX) share price is soaring 25% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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As every saver (and mortgage holder) would know, interest rates have never been lower. One of the hallmarks of the government’s response to the coronavirus recession last year was unprecedented monetary policy. Interest rates were already at ‘record lows’ before the pandemic. But as the economy ground to a halt last year, the Reserve Bank of Australia (RBA) found new meaning in that phrase. As it stands today, the official cash rate is sitting at just 0.1%, which is, for all intents and purposes, zero.

According to the RBA though, this new meaning for ‘record low’ wasn’t enough. It also implemented, for the first time in Australia’s history, a new quantitative easing (QE) program. This is what some investors call ‘printing money’. QE involves the RBA purchasing government bonds. This is intended to boost liquidity in the financial system as well as to keep real interest rates as low as possible.

A happy side effect is that it helps Australians (investors in particular) ‘feel richer’ by inflating asset prices as a result. Assets like property and yes, the S&P/ASX 200 Index (ASX: XJO) and ASX shares. If we feel richer, we tend to spend more money, which in turn helps economic growth.

Sounds great, right?

Is the RBA’s QE free money?

Well, as we all know, there is no such thing as a free lunch.

According to a report in the Australian Financial Review (AFR) today, the RBA is on the watch for some not-so-positive side effects from its recent monetary action. The report claims that “confidential analysis” by the RBA reveals that the central bank is on “high alert” for a “credit-fuelled asset bubble” caused by ultra-low borrowing costs.

The analysis notes that the RBA’s view is that high unemployment is currently the largest threat to the economy, and that low rates are currently helping prop up savings and demand, as well as depressing the Australian dollar, thus nullifying this threat.

However, the RBA analysis also warns that, “a permanent 1 percentage point cut in the overnight cash rate would increase real house prices 30 per cent after about three years… If the interest rate reduction was temporary, house prices would rise 10 per cent over three years.”

It just so happens that RBA governor Dr Philip Lowe has stated that he “doesn’t expect” interest rates will rise from their current levels for “at least” 3 years.

For the meantime, the report states that:

[The RBA views] high unemployment as the biggest risk to the economy, balance sheets and medium-term financial and macro stability, and lower interest rates can help reduce this risk… Unless there is evidence of a sharp jump in credit growth and risky lending – which it does not presently see – the RBA is relatively comfortable with rising house prices.

At the same time, the bank acknowledged that “some risks may increase due to low interest rates”.

No free lunch indeed!

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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