MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, May 22, 2012
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3:59 PM Seabridge Gold (SA +5.6%) has remained strong all day on no apparent news, although gold stocks of all sorts have received a flurry of interest in recent sessions. Trading volume near the close is 1.35M vs. the average daily volume of 322K shares. Options on SA had traded more than 22K times by mid-afternoon. 1 Comment
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3:28 PM Don't give up on the commodity sector yet, writes Russ Koesterich. Even as recent action has all asset classes seemingly moving together, he reminds commodities typically provide excellent diversification from equities. Real interest rates remain negative, and commodities - especially gold - tend to outperform in these periods. 1 Comment
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12:45 PM Northern Dynasty (NAK -17.5%) rips the EPA's draft Bristol Bay watershed assessment on the potential effects of mineral development in southwest Alaska as "rushed and inadequate." NAK owns 50% of the Pebble Partnership, which aims to develop a copper-gold-molybdenum project in Alaska. 1 Comment
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12:38 PM China Gerui Advanced Materials (CHOP +18.2%) shares are strong after the cold-rolled steel production company reaffirms its 2012 estimates, expecting revenue of $395M-$410M vs. $404M analyst consensus and EPS of $1.32-$1.37 vs. $1.27 consensus. Q1 EPS of $0.24 beat consensus, while revenue of $73M missed. Comment!
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12:35 PM Three lunchtime reads:
1) Where are gold prices headed: flat, down or up?
2) Smack! The BRICs hit a wall of their own making
3) Fed pondering why inflation and deflation threats ebbed Comment! -
9:18 AM Anglo American (AAUKY.PK) and Chilean copper miner Codelco agree to restart settlement talks in hopes of avoiding a long legal battle over the ownership of copper mines in Chile worth as much as $22B, FT reports. The two have been at odds since last fall, when Codelco raised $6.8B to exercise an option to buy a 49% stake in Anglo's Sur mining property. Comment!
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8:44 AM Glencore (GLCNF.PK) indirectly boosts its stake in Congolese copper and cobalt company Mutanda Mining to 60% through two stake purchases for $340M. The deals move the commodities giant closer to merging its Congo mining operations into a combined entity able to produce 160K tons of copper cathode a year and 23K tons of cobalt in hydroxide by 2013. Comment!
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8:15 AM UN atomic inspectors and Iran reach agreement that will allow the IAEA to inspect suspected nuclear weapons sites, possibly opening the door to a deal to ease sanctions which could push crude oil prices down another $5/bbl or more. Iran's incentive: Its crude shipments are stalled, with ~40M bbls floating around in the Persian Gulf with nowhere to go. 4 Comments
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Monday, May 21, 2012
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4:32 PM The Iran premium in the price of a barrel of oil may have dropped to as low as $5 in the spot market, as worries about global demand trump concerns about supply disruption, Capital Economics says. There’s a “good chance” this week’s meeting between Iran and Western officials will raise the possibility that EU sanctions could be withdrawn, it says, a prospect the markets haven't considered. 2 Comments
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12:45 PM Three lunchtime reads:
1) Is insider trading part of the fabric on Wall Street?
2) Natural gas gains may evaporate in the summer heat
3) The good news in the bad news
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11:14 AM Newmont Mining (NEM +3.4%) shares could rise 50%, Barron's Robin Blumenthal believes, ahead of a potential rise in gold prices. Gold has historically outperformed gold mining stocks, but the ratio between the two is at an all-time high - an opportunity for investors, given Europe's troubles and the Fed's willingness to keep printing money to stoke the weak U.S. economy. Comment!
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10:28 AM J.J. Abodeely is "jumping into the abyss" in pursuit of downtrodden gold mining stocks. If shares are being weighed by a negative view of the gold price and concern over input costs, he thinks they should rally if either conditions is resolved favorably; he also believes evidence of further economic weakness would be met with a policy response that will benefit gold. 2 Comments
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8:22 AM General Cable (BGC) agrees to acquire Alcan Cable, the wire and cable business of Rio Tinto (RIO), for $185M in cash. BGC says it expects to use its revolving credit facility to principally fund the transaction. BGC +0.7%, RIO +1.9% premarket. 1 Comment
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7:14 AM Chinese buyers for iron ore and coking coal are attempting to defer orders and defaulting on contracts, according to reports from traders, as the country is filled to the brim with the stuff and the nation's steel mills are cutting output amidst heavy overcapacity. (see also) 7 Comments
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Friday, May 18, 2012
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3:03 PM CVR Partners (UAN -4.6%) CEO Byron Kelley lays out the case for why the massive amount of acreage devoted to corn is not going to result in as much production as expected - all of those acres being pulled in are among the least productive. Expect ending stocks to remain low, and corn prices to remain high, along with demand for the fertilizer he sells. (h/t Dividend Master) 1 Comment
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2:54 PM Forget peak oil, and think peak water. Fracking uses an average 4.5M gallons of water per well, and Cody Willard thinks it's inevitable that water will become a traded and bundled commodity like crude oil. Remember ethanol and corn prices? "The same thing is about to happen to water. And water inflation is way more insidious than food inflation because it will drive up the costs of everything we eat." 2 Comments
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11:48 AM Golden Minerals (AUMN +6.5%) says the new resource estimate for its Velardena Property in Durango, Mexico, demonstrates significantly higher grades of ~50% on a gold/silver equivalent basis than previous estimates. Comment!
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10:58 AM BHP Billiton (BHP) is raised to Outperform by RBC Capital based on recent share price weakness and support the firm believes will come from a 4%-5% dividend yield and a progressive dividend policy. But CEO Marius Kloppers must walk a tightrope, as announced capex cuts could eventually put cash inflows at risk and threaten projected returns. 3 Comments
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10:45 AM Natural gas companies are in survival mode, and gone are the days when major players would ride to the rescue with asset purchases. Price volatility "has pushed nearly all North American shale gas operators closer to the brink of failure,” Ruud Weijermars says. “The solution may be to sell assets, but who will buy them? The number of assets up for sale are striking.” 3 Comments
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