Tuesday, August 31, 2010

Barrick (NYSE:ABX), Newmont (NYSE:NEM), Goldcorp (NYSE:GG) Up on Rising Gold Prices

The gold price today moved up quickly in the morning, and has remained level as the trading day goes on, with major gold miners Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) moving up with them, as investors continue to seek safety in the midst of economic weakness and uncertainty.

Spot gold was up $11.20, bringing the price to $1,247.60 an ounce as of 2:39 PM EDT. Gold prices are starting to move downward slightly now, although remaining flat after the huge jump in the morning.

Barrick Gold was at $46.95, gaining $0.61, or 1.32 percent at 2:40 PM EDT. Goldcorp reached $44.40, an increase of $0.67, or 1.53 percent, as of 2:41 PM EDT. Newmont Mining was up the most of the three, reaching $61.27, up $1.35, or 2.25 percent.

Out of control government spending which has done little, if anything, for the economy, and continued bad news from most parts of the economy have investors scrambling to gold to protect their capital, while at the same time enjoying decent returns.

BHP (NYSE:BHP) Pressuring Potash (NYSE:POT) by Contacting Customers

BHP Billiton (NYSE:BHP) is increasing the pressure on Potash Corp. (NYSE:POT) by contacting a large number of their customers, which seems to be getting under the skin of some at the giant fertilizer company.

In a letter dated August 30, Potash head of sales Stephen Dowdle, who sent the letter to customers, said, "Since the purpose of BHP Billiton's call clearly was not to solicit your potash order from BHP Billiton's Jansen project ... we consider this contact to be inappropriate." He also said in the letter that the contact by BHP was "highly unethical."

The reference to the Jansen Project is a potash resource recently acquired by BHP in Saskatchewan, which production has been started yet, or even cleared by directors. In other words, Dowdle was saying there could be no reason for BHP to be contacting them for business purposes.

Dowdle concluded, "We can only assume that BHP Billiton's purpose is to sow seeds of doubt and confusion about the future of Potash Corp by raising questions about our ability to do business across the nutrient spectrum as well as the future location and makeup of our sales organization."

The letter was included in a regulatory filing by Potash, although it spoke in general and not specific terms about what BHP was saying to their customers.

This is no doubt a move by BHP to put into the minds of their customers that they would be better off with them owning Potash than Potash continuing on as they are.

Monsanto (NYSE:MON) Lowers Earnings' Estimate for Year, Cutting Jobs

As the end of their fiscal years comes today, Monsanto (NYSE:MON) has started to manage expectations by lowering their earnings estimates, saying they see things coming in on the low, and not the high end of their projections.

The company will also take a one-time restructuring charge for its latest quarter of $150 million. Monsanto also said they're going to cut up to 700 more jobs as well.

Profits for the year were estimated at a range of $2.40 to $2.60, and are expected to finish the year at $2.40 to $2.45 a share.

In somewhat of a contradiction, the company said they had a "solid" fourth quarter, and gave no reason for the lower numbers.

But it's no secret the major reasons are their faltering "Roundup" herbicide business, and the need to lower prices of new seed products in order to compete; something they haven't had to do much in the past.

The cuts weren't small either, coming in at 75 percent for their Roundup Ready 2 seeds and the 67 percent for their Smartstax seeds.

DuPont (NYSE:DD) has positioned themselves as a low-cost alternative, putting the question in the mind of farmers if they need the extra traits offered by Monsanto, which cost more.

The combination of these two things has been the major factors in lower earnings for Monsanto.

Potash (NYSE:POT) Downgraded by Gleacher (Nasdaq:GLCH)

Potash Corp. (NYSE:POT) was downgraded by Gleacher & Co. (Nasdaq:GLCH) from "Buy" to "Neutral," saying there's not much more room to move upward, as most of the bid by BHP Billiton is already built into the share price.

"We are downgrading POT to Neutral as we believe significant upside from current levels is limited. The share price is at $146.73, 13% higher than the BHP bid of $130 as investors anticipate a higher bid from BHP (NYSE:BHP) (likely) or the emergence of a white knight (less likely)...We are adjusting our fair value to $160 per share, which represents a 10% premium to our estimated replacement value of $146," said Gleacher.

Potash is down slightly today, standing at $146.70, losing $0.14, or 0.10 percent, as of 1:16 PM EDT.

BP (NYSE:BP) Oil Spill Generates Regulatory Changes for Inspectors

Inspectors for the Bureau of Ocean Energy Management were hit with some changes today after they took a hit from the BP (NYSE:BP) spill, which gave the appearance of unethical behavior on the part of some, which could have lowered inspection standards.

The new rules put in place will bar inspectors from performing inspections on any project where a close friend or relative works. The rules are effective immediately.

So as not to be confused, the Bureau of Ocean Energy Management is the new name for the Minerals Management Service.

The problem with these new rules in the Gulf region is the industry is such a big part of the communities, it's hard to find a project where someone doesn't know somebody, or a relative isn't working for them.

Concerns are this could result in might make it hard to find qualified inspectors under the new rules, which could significantly slow down the approval process.

Another new rule is inspectors will not be allowed to perform inspections on projects of a former employer until at least two years after leaving the firm.

This is a response to the perception the inspectors were too close to the oil industry in general.

BP's (NYSE:BP) Advertising Budget is None of Government's Business

When the Congressional Committee on Energy and Commerce sent BP (NYSE:BP) a letter demanding they tell them how much they have spent on advertising since the oil spill in the Gulf of Mexico, they far exceeded their authority, and it isn't any of their business.

One number has been thrown out by the Telegraph, a British newspaper, saying they're spending at least $1 million a week on advertising at this time.

The BP advertising isn't promotional, but assurances they're going to stick it through and clean up the mess. People want to know about the impact on their lives, not where to buy BP products at this time.

It's irrelevant how much BP is spending, as they've already set aside billions for claims and cleanup efforts, and how they go about restoring confidence or their brand, and what they commit to paying for it isn't the business of any government entity.

If the government continues this overreach, they'll start to be considered the villains, as they'll be rightly perceived as bullies and exceeding their legal mandate, rather than being a help to the situation.

Missouri DNR Director Heading Up BP (NYSE:BP) Fund

Missouri Department of Natural Resources director Mark Templeton has stepped down from his position to take over the role of heading up the $20 billion BP (NYSE:BP) fund.

A statement from Missouri Governor Jay Nixon said he will be the executive director of the "Office of Independent Trustees of the Deepwater Horizon Oil Spill Trust."

The decision to hire Templeton was made by the trustees of the fund, and not BP, according to BP spokeswoman Jessie Baker.

This isn't to be confused with the role of Kenneth Feinberg, who is administrating the claims portion of the compensation fund, not the fund itself.

Cameco (NYSE:CCJ), Denison (AMEX:DNN), USEC (NYSE:USU) to Soar with Rising Uranium Demand

There are few industries that can be so easily seen as profitable in the long term, but uranium is one of them and companies like Cameco (NYSE:CCJ), Denison (AMEX:DNN) and USEC (NYSE:USU) are sure to soar over the long term as nuclear power is expected to surge over the next decade, with huge demand and diminishing supply.

Add to that Russia's decision to no longer downblend its weapons grade uranium, starting in 2012, and that will create up to a 20 million pound shortage in a global supply situation that is shrinking.

In about a 10-year period, shortage could reach as high as 100 million pounds, guaranteeing a huge increase in price as demand far outstrips supply.

For the short term, the story is different, as supply is ample, while some companies have dropped orders that had been counted on.

Over the next two or three years expectations are uranium shortages will already begin, and expand from there.

One other short term element to watch, is how China views the situation. In the past if they feel prices will skyrocket for a commodity, they have bought huge amounts and stockpiled it.

With energy being one of their major challenges, they could begin to do this in advance of price increases in order to secure their needed supply for the future; or at least for many years ahead.

If they go that route, prices could go up sooner than expected. If not, the patient, long-term investor will ultimately get a huge pay out from this sector.

It's only a matter of when, not if.

Goldman (NYSE:GS) Lowers Longer Term EPS Estimates for NRG Energy (NYSE:NRG)

While Goldman Sachs (NYSE:GS) increased the short term earnings estimate of NRG Energy (NYSE:NRG), over the next several years they've lowered earnings per share estimates from 2012 through 2014.

For the 2010-2011 year, EPS were increased from $2.12 to $2.14, to $2.45 to $2.99.

In 2012, EPS are estimated to be from $2.62 to $2.51; 2013, $2.34 to $2.25; and 2014, $1.86 to $1.69.

An increase in depreciation expenses also had the giant financial institution lower its long-term outlook for the Northeast segment, while lowering operating income to $47 million a year.

NRG Energy's latest quarterly results showed them with earnings of $693 million. They also raised their guidance for the full year from $2.2 billion to $2.45-2.55 billion.

Jefferies & Co. Increases Fluor's (NYSE:FLR) Price Target

Jefferies & Co. were so impressed with a meeting they had with Fluor Corporation (NYSE:FLR) recently they increased their price target to $60 a share, and has a "Buy" rating on the stock.

Jefferies said in a note to clients, "Fluor should benefit from its vast global network of clients, resources, sizable backlog, and diversified model. With a proven management team and a strong balance sheet, Fluor should deliver growth from current levels.

"Fluor is prospecting several road and rail opportunities globally, many of which are in the U.S. Fluor remains the only one in its peer group assigned an A credit rating. Management expects to improve its ratings and remains committed to balance sheet strength."

Flour closed Monday at $44.89, down $0.86, or 1.88 percent.

Uranium One (TSE:UUU) Plus Russia Equals Success

Although there has been some trepidation over Uranium One (TSE:UUU) selling control of the company to Russia's state-owned Rosatom, when you take a look at the probably outcomes and positive, it's a good move for the uranium miner.

In the last quarter Uranium One revealed solid production numbers, and with the Russians controlling the company, should do better going forward.

The primary uranium asset held by Uranium One is in Kazakhstan; a very volatile and unpredictable country and region.

With the high quality of the uranium ore and the low costs of mining already in place, Uranium One is already a player in the field. That's not what Russia brings, as the company already has that.

What Russia brings is a guaranteed market in place, along with the better ability to influence people in the area, if things go bad for some reason.

That means a more predictable and stable situation that now exists in the geopolitical sense, which brings more confidence and sustainable revenue and earnings from the projects there.

In the short term this also makes Uranium One among the few uranium miners who could be profitable. Most others are in a good position, but will generate revenue and profits in the long term more than the short term.

Uranium One is positioned to do both, assuming shareholders vote for the change in control, which is very likely.

Bank of America (NYSE:BAC) Lowers Kinross (NYSE:KGC) Price Target

Bank of America (NYSE:BAC) dropped its price target on Kinross Gold (NYSE:KGC), while maintaining its "Buy" rating on the gold miner.

The price target was lowered to $24, as concerns over the short-term impact of their merger with Red Back Mining (TSE:RBI) weigh on the stock.

BAC did reiterate its "Buy" rating, saying after the pains and costs of bringing the two companies together are over, they still see gold as the chief factor for the company, and they remain bullish on the upward price movement of gold over the long term.

Kinross was at $30.16 on Monday, dropping $0.49, or 1.60 percent.

Nordea Bank Sees $100 Oil

A report from Nordea Bank AB said they see oil reaching $100 a barrel by 2012, based on their belief there will be an economic recovery and growth in 2011.

Estimates for the company have oil prices averaging $79 a barrel in the fourth quarter of 2010, increasing to $85.75 in 2011, and to average $102.50 in 2012.

Nordea analyst Thina Saltvedt, said in the report, "In the short term, there is a risk that prices may fall below the underlying trend as fears of a new recession in the U.S. may intensify and weigh on risk appetite. In the medium term, oil prices may surprise on the upside if the rebound in the world economy and the demand for oil is stronger and the increase is more rapid than expected."

Nordea also feels the extra oil capacity of OPEC will drop near the end of 2011, and at that time they believe economic growth will be starting to take off, driving oil prices up.

At that time they also think major oil fields will have pressure upon them to develop even quicker in response to increased demand.

Citigroup (NYSE:C) Maintains "Buy" on Cliffs Natural Resources (NYSE:CLF)

Citigroup (NYSE:C) reiterated a "Buy" on Cliffs Natural Resources (NYSE:CLF), while raising the earnings estimates of the company for 2010 and 2011.

Citigroup analyst Brian Yu said, "CLF continues to trade at a heavily discounted multiple of 5.9x on our 2011 estimate due to iron ore volatility, contracts in arbitration, and recent acquisitions. We see value and opportunity in the potential unwinding of compressed multiples."

Earning were raised because iron ore prices are expected to rise over the next couple of years.

Earnings per share for 2010 are $8.60 a share, while for 2011 they are estimated at $10.15 a share by Citigroup.

The financial institution also maintained its price target of $87 on Cliffs.

Cliffs was at $59.03 a share, dropping $1.19, or 1.98 percent.

BP (NYSE:BP) Sued by Fish Market Restaurant - Why?

It's not unusual to hear of another BP (NYSE:BP) lawsuit being filed, and one of the latest is the Fish Market Restaurant in Birmingham, Alabama.

What's important about this story isn't over who the suing, but rather the "why" of the suing.

By why, I mean - why bother?

With the BP compensation fund administered by Kenneth Feinberg ready to pay out for legitimate claims, and the business being close to the oil spill, why hire a lawyer to sue when you can get your money right away?

This is why there was an alleged controversy concerning the fund once BP handed the claims process over to Feinberg; the lawyers knew they were going to lose a lot of money because of it, and consequently began a media strategy to discredit it.

It's obvious, because the fund wasn't so-called controversial until Feinberg took over, then suddenly there were questions about its parameters and legitimacy.

Lawyers have evidently been busy talking people into being fearful about the fund in order to get their 30 percent of the cut.

Wait till years from now when claimants are still waiting for their money, and when they get it, lose about 30 percent to lawyers' fees.

How does that help them in any way?

Why not go through the claims process to see what you're offered. It's only claims which are permanently settles which disallow the suing of BP. So what is there to lose?

Those individuals and businesses with legitimate claims would be far better to go through the claims process than litigation, as how could these lawyers promise they'll get more money once they take out their fees?

Even if the lawyers win them 20 percent more than the claims fund offers, once the fees are deducted, they lose 10 percent of what they would have gotten, plus the time it takes the lawsuit to be completed.

Feinberg has even said he will probably reward claimants more than they probably would get through litigation, and lawyers working for him offer their services for free (to the claimants).

Bottom line: go through the claims process and get your money as soon as you can. There's nothing in it for the vast majority of people and businesses suing BP for the reasons stated above.

Citigroup (NYSE:C) Financial Website in Content Deal with TheStreet (Nasdaq:TSCM)

A financial website with the backing of Citigroup (NYSE:C), Morningstar Inc. (Nasdaq:MORN) and Microsoft Corp. (Nasdaq:MSFT), has entered into a content deal with TheStreet.com (Nasdaq:TSCM).

Named 'Bundle,' the financial website focusing on the management of money, will be supplied with content from TheStreet. Bundle will also open up its content to TheStreet, while also providing consumer behavior data.

Investors and partners already using Bundle's website will gain access to TheStreet's content, which also entails the MSN Money site.

Also as part of a deal the two companies will enter into cross-promotional campaigns from time to time.

This is similar to the deals made by TheStreet with Nightly Business Report and Newsweek not too long ago.

Monday, August 30, 2010

Monsanto (NYSE:MON), DuPont (NYSE:DD) Seed Battle is On!

A battle is heating up between Monsanto (NYSE:MON) and DuPont (NYSE:DD) concerning genetically modified seed, and it not only involves prices, which have been fallen, but the number of traits the seeds offer to farmers.

DuPont has been positioning itself on the lower end, as farmers have been complaining for some time about the high price of Monsanto's seed, as prices had been depressed for a couple of years on their agricultural products.

Farmers weren't as concerned when crop prices had surged, but when profits started to fall, pricing on seed became a big factor.

DuPont challenged Monsanto with their seed with more traits, by going directly to the farmers and asking the question of whether they needed "Triple Stacks," referring to competing seeds from Monsanto.

The question planted doubt in the mind of farmers, and they responded by buying up the lower-tech corn of DuPont via their Pioneer unit, which are less expensive and only carry two genetic traits or less.

Realizing they couldn't compete on traits, DuPont went the pricing direction, which Monsanto handed them by increasing prices on new seeds to a level which opened the door to other options, which benefited DuPont.

After the newest seed products offered by Monsanto fell well short of estimates sales, they had to drastically cut their Roundup Ready 2 seeds by 75 percent, and the Smartstax seeds by 67 percent in order to get farmers to try them out.

Short term, DuPont has won this battle, but as food prices rice again, then farmers may not be as hesitant to pay better prices for Monsanto seeds, and may start considering the traits offered by Monsanto rather than the lower prices of DuPont.

Canaccord Genuity Maintains 'Buy' Rating on Agrium (NYSE:AGU)

Canaccord Genuity said it's maintaining its "Buy' rating on Agrium Inc. (NYSE:AGU), while raising it price target on the fertilizer company from $80 to $85.

"We continue to recommend Agrium due to the near-term upside related to the upcoming fall application season in the US, the increasingly positive fundamentals in the nitrogen sector, and the potential expansion in margins from AWB," said the Canaccord analyst.

AWB is the top fertilizer exporter in Australia, and is second in their domestic market.

Agrium has recently expressed interest in acquiring assets of Potash (NYSE:POT) if they're offered for sale if BHP Billiton (NYSE:BHP) takes them over.

BP (NYSE:BP) CEO Says Cap will be Permanent

For the first time since the oil spill in the Gulf of Mexico, BP (NYSE:BP) has publicly stated they won't attempt to extract any more oil from the Macondo oil well, and the capping of the well will be permanent.

Speaking at the Southern Governors’ Association’s 2010 Annual Meeting, incoming BP CEO Bob Dudley said the oil giant has no intention or plans in place to use the Macondo well again.

Dudley said, “The well will be capped, and nobody will ever want to go near that well again, and there are no plans to develop that Macondo structure field.”

Up till this time, when asked if they planned on tapping into the large amount of oil left in the well, officials from the company hadn't committed either way, implying the final decision hadn't been made yet.

With Dudley publicly committing to a permanent solution, that ends the speculation and conjecture over the uncertainty of the situation.

BP (NYSE:BP) Puts Gulf Operations on Hold Because of Weather

BP (NYSE:BP) announced its attempt to replace the blowout preventer by removing the sealing cap has been put on hold, as concerns over bad weather has halted the process.

On the company's website they said the high seas is the major factor, and until those conditions subside, they won't proceed with the operations. They will wait till the Gulf waves reach "acceptable levels" before continuing.

A couple of things are important with removing the blowout preventer. The first is to do it in a way where no damage is done to it because it's the key piece of evidence in finding out what caused the accident on the Deepwater Horizon oil rig.

And second, to put a new blowout preventer on the rig in order to prevent the "bottom kill" - which will be the final step in permanently plugging the well - from wrecking the cement plug which was put in place in August.

Agrium (NYSE:AGU) Interested in Potash (NSYE:POT) Assets

If BHP Billiton Ltd. (NYSE:BHP) acquires Potash Corp. of Saskatchewan Inc. (NSYE:POT), Agrium (NYSE:AGU) has let it be known that they would be interested in buying up some of the assets of the fertilizer company once the takeover was completed.

Agrium Chief Executive Officer Mike Wilson said in an interview, “If those assets come out at a value that makes sense for Agrium, of course we would look at them. The company is interested in agricultural assets and businesses in any part of the world.

Units that could possibly be put up for sale would be those producing nitrogen and phosphates. Wilson said he would even be interested in some of their potash if it was put up for sale.

Wilson sees the overall outlook for nitrogen, phosphate and potash fertilizers as very good. Phosphate could come under pressure in 2011 because of increased supply. Wilson sees demand over the next year and a half absorbing that and new supply will be needed at that time.

Agrium is in midst of attempting to acquire Australian largest wheat exporter AWB Ltd., as they're waiting for approvals to go forward.

BP (NYSE:BP) Points to Own Engineers for Misreading Data

An internal investigation by BP (NYSE:BP) has reportedly found their own engineers had misread data which resulted in the deaths of 11 workers and the huge amount of oil spilled into the Gulf of Mexico, which now is largely gone.

Bloomberg cited an unnamed source in reporting the story, saying the data that was misread was part of the problem which led to the explosion on the Deepwater Horizon oil rig, which was the catalyst for the accident and everything that followed.

Based on the faulty data, oil workers on the rig started to replace drilling fluid with seawater in the well. The seawater was too light to keep natural gas from entering into the well, which led to the initial explosion.

Officials at BP said they're not going to comment on the report. BP spokesman Mark Salt said, "We have not seen it ourselves. I am not going to comment on speculation."

According to BP's director of safety, Mark Bly, the report will be released sometime in the weeks ahead.

Anger Growing Over Obama's Oil Moratorium

Increased anger in the Gulf states is mounting even more, as residents
are looking answer Obama isn't willing to give, and he maintains his stubborn insistence of keeping it in place, even though thousands in the area remain out of work.

Even the idea thrown out last week he may rescind the moratorium earlier than proposed is an illusion, as he's just going to have regulations put in place which will keep people out of work, as well as extend the original moratorium period of time through into 2011.

Senator Mary Landrieu, Democrat from Louisiana, said in an interview, “This BP (NYSE:BP) oil spill and the moratorium has had the effect of pushing us closer to the recession than we were before. Now people are really getting antsy and anxious and angry, not only angry at BP for the spill but very, very angry at the federal government for imposing what we think is a very poor solution.”

Obama is catering to his environmental extremist base, as inspectors cleared the wells in the area as being fit to be used. If he can't trust his own inspectors, there's another agenda in the wings, and that is the environmentalists' pressuring him to maintain the moratorium, at least until regulations are put in place so Obama can announce he's lifting the moratorium, although the same restrictions will remain in place.

He's of course going to do this right before the elections in order to make it appear he and the Democrats are doing something right.

That won't hold this time, as everyone sees clearly what's going on, and they'll pay for allowing it to become a political issue rather than a people issue.

Goldman (NYSE:GS), Bank of America (NBSE:BAC), Morgan Stanley (NYSE:MS) Fighting for Managing Share Sale in India

Approximately 17 banks are vying for the job of managing the share sale of state-run Steel Authority of India Ltd., including Goldman Sachs(NYSE:GS), Bank of America (NBSE:BAC) and Morgan Stanley (NYSE:MS).

This is a continuation of the divestation of assets by the Indian government in order to raise capital to pay down its debt.

Presentations from the many banks will be made on August 31 and September 1, according to Steel Secretary Atul Chaturvedi.

Among the other notable banks competing for the job are Deutsche Bank AG (NYSE:DB), HSBC Holdings Plc (NYSE: HBC) and Nomura Holdings Inc. (NYSE:NMR).

Chaturvedi said he wants a minimum of five banks managing the share sale.

Short term there isn't much value for the bankers, as the fees collected are extremely small. They participate in hopes of winning more investment bank work in India.

The Indian government has a goal of raising $8.5 billion through the sale of assets for the year.

U.S. Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor, (NYSE:NUE) - All Under Pressure

The steel industry is under pressure as a surplus of steel and slowing Chinese demand puts pressure on companies like U.S. Steel (NYSE:X), AK Steel (NYSE:AKS) and Nucor (NYSE:NUE).

Credit Suisse (NYSE:CS) recently said that U.S. Steel and AK Steel are particularly vulnerable to a fall in prices.

On the China part of the issue, much depends on how they continue to go forward with the cooling off of the real estate market in urban areas. At this time about growth is about 3 percent lower than before, and that definitely cuts into steel demand.

Another bit of news that has yet to be confirmed on China is they may now direct stimulus efforts to the rural areas of the country which could make up for a lot of the slowdown in urban areas. If that's the case, it could change the dynamics, although it would take time to ramp up.

On the other hand, if steel production in China start to increase again, that could offer support, although it wouldn't be anything that would push prices up dramatically, even in the best case scenario.

Even with the expected increase of steel prices in September of up to $30 a ton (probably), in the fourth quarter expectations are scrap prices will come under pressure and drop. That is based on the belief scrap steel supply will increase during that period.

The recent increase in scrap prices should also push more steel into scrap yards, which will of course bring more supply than needed, driving steel prices back down.

This could create a domino effect in other steel products and cut into margins and earnings.

Ak Steel has been cutting capacity in a low steel demand market, and U.S. Steel has a high debt load which cuts back on their flexibility and has made it extremely difficult to be profitable, as the last six quarters have shown.

On the other hand Nucor and Steel Dynamics (Nasdaq:STLD) have been able to turn a profit in slow times, and are positioned strongly to be able to at least be profitable whatever way the market turns, which should be down in the short term.

BP (NYSE:BP) to Start Removing Well Cap Today

Today BP (NYSE:BP) begins the difficult task of removing the temporary cap used to stop the oil from entering into the Gulf of Mexico, while at the same time attempting to remove the blowout preventer which didn't work as it should have to prevent oil from spilling into the water.

Most of the determination of who will be fined or liable is centered primarily around the blowout preventer, and it continues to be the key piece of physical evidence in the case.

The trick will be to remove it while not allowing the approximate 1,000 barrels of oil trapped to release into the Gulf, while also not damaging the vital piece of evidence.

When the company performed the "top kill," they inadvertently trapped the oil in the well, making it difficult to remove the blowout preventer without some of the oil entering the Gulf.

Expectations are the process will be performed without the oil leaking into the Gulf, but BP will be on standby to collect the oil in case it does.

Government point man Thad Allen gave the go ahead to start the operation today.

NovaGold (AMEX:NG) Expanding Financing Search

After having a cash infusion of $175 million from combined investments from Paulson & Co. Inc. and Quantum Partners Ltd., it put NovaGold (AMEX:NG) (TSE:NG) in the enviable position of having a two-year cushion to work with.

But aren't resting on that by any means, as estimates for their part in the development of Galore Creek copper-silver-gold mine, which they're partnering with Teck Resources (NYSE:TCK), and on Donlin Creek, which they're partnering with Barrick Gold Corp. (NYSE:ABX), comes in at about $4 billion.

When you consider the estimated revenue for NovaGold is $2 million this year, it's incredible to look at the numbers being thrown at them.

This isn't of about where they are, but where they're going to be, and once the feasibility studies are completed, we'll have a better look. But the large amount of resources at just these two mines are staggering, and will generate a flow of revenue for years.

For example, at Galore Creek, there is an indicated resource of close to 9 billion pounds of copper and 7.3 million ounces of gold. By the time these mines begin operating, assuming they do, it will be at a time when demand will continue to be high; for sure for copper, with gold being less certain depending on when production begins.

At earliest production at Galore isn't expected to launch until 2016, and most of the time they won't meet those dates, so it could be assumed to be even later than that.

NovaGold also has significant projects in Argentina, with their San Roque project, and in Alaska with the Ambler project, which may contain one of the largest copper-zinc deposits in the world.

They have a bright future, but it will be an expensive one to develop, and that's why NovaGold Chief Executive Officer Rick Van Nieuwenhuyse has been reaching out to Asia to woo investors in the company.

In exchange for investment, NovaGold is offering a piece of the metal production, which is a huge attractant to the Asian region who will be building out infrastructure for years.

Even in this recession, metal will be in demand, and is expected to surge again whenever a real recovery begins. Now it's a race to get the needed financing to supply the hungry markets.

With the demand out there, a significant number of interested parties should emerge, and NovaGold does have some time to find the best partners.

Monsanto (NYSE:MON), Syngenta (NYSE:SYT) Embrace Genetic Wheat Breakthrough

Monsanto (NYSE:MON) and Syngenta (NYSE:SYT) are among the major companies working on the development of genetically modified wheat, and news of publication of the gene map of wheat is a major step toward improving their efforts.

While ultimately it could help in developing new wheat varieties, the International Wheat Genome Sequencing Consortium was quick to add they were still a ways from cracking the complicated genetic code of wheat, and there's still a lot of work to be done.

Kellye Eversole, executive director of the International Wheat Genome Sequencing Consortium (IWGSC), said, "This is significant progress. It is a very useful contribution towards the final goal of a genome sequence-based platform for wheat breeding. While we are nowhere near cracking the genetic code and far from having all of the information needed to understand the wheat genome, we are moving forward."

Traits in demand, as in other genetically modified seed, are drought resistance, increased yields, and enhanced response to nitrogen fertilizers.

The immediate value to companies like Monsanto and Syngenta are the probably foundation laid where they can now identify genetic differences between varieties of wheat.

Long term, the interpretation of the data as to what is means is the major challenges ahead.

With corn being the major recipient of research dollars among grains, at a rate of about 20 times the amount, the hope is the breakthrough will encourage more investment into the field.

Battle Over BP (NYSE:BP) Compensation Fund Heating Up

The BP (NYSE:BP) compensation fund being administered by Kenneth Feinberg is becoming a circus as politicians and officials attempt to pressure Feinberg to change the parameters being used to make decisions on who will be paid, and how much.

Now Florida Attorney General Bill McCollum has entered the fray, claiming Feinberg is making it harder for individuals and businesses to get paid from the damages occured from the oil spill in the Gulf.

This is predicable, as creating this fund in the first place was probably a huge mistake. Many people are starting to treat this as if it's a government fund, when it is money set aside by BP to pay for the damages. The government has nothing to do with it in any way, other than negotiating for it in the first place.

That's why Feinberg was supposedly put in charge of it so it could be an independent fund, not one manipulated by politicians government officials to use it to battle the effects of the recession, rather than the sole purpose of paying those back who were victims of the oil spill.

McColloum is attempt to pressure U.S. Attorney General Eric Holder to persuade him to change the parameters of the fund, asserting they're putting greater burdens on victims.

Feinberg was accused by the attorney general of Florida of saying claims would be determined by how close people and businesses were to the spill, which really isn't a true statement.

He said the closer people and businesses were to the oil spill, the more likely they would be accepted and paid. He always left room for exceptions.

Either way, this won't be the last government official attempting to manipulate the situation so they can tap into the fund on behalf of people or businesses who are dubious at best at qualifying for a pay out.

How Long Can Silver Wheaton (NYSE:SLW) Defy Gravity?

Since July 19 when they hit $17.96 a share, Silver Wheaton (NYSE:SLW) has pushed up strongly to close at $22.84 on Friday. Silver prices were just over $19 at 6:00 PM EDT Friday.

The question is how long can they continue upward based on silver demand and the faltering economy.

There are a couple ways of looking at it. Some feel bulls could still take advantage of the momentum Silver Wheaton is enjoying, and after a slight pullback, which could be considered a place to enter, the company has a good chance of moving up even further.

Another viewpoint is silver prices will be moving up and down for the rest of 2010, with an average of $19.20 an ounce to $20 an ounce in through the end of the year.

Based on today's price and assuming the behavior of the share price of Silver Wheaton remains as it has been, it does give some leeway for the share price of the company to move up, confirming the possibility there is more room to increase before pulling back to support levels.

It seems the economic conditions will have to improve before industrial demand for silver grows, so there should be a ceiling in the short term if nothing changes there, although the pure investment side of silver could drive it up outside of demand, which we'll have to wait and see if it moves in unison with gold and is considered a secondary source of safety.

If that's the case, the rules of gravity will be suspended and it could be an interesting ride if it indeed does take off. There's no doubt if silver prices do take off, Silver Wheaton will be taking off with them.

Friday, August 27, 2010

Harmony Gold (NYSE:HMY) Delaying Development at Evander Mine

Harmony Gold Mining Company (NYSE:HMY) announced it is going to hold off on the development of its R6 billion shaft at its Evander mine in South Africa, citing a shortage of cash to complete the project.

“At the moment we have got no intention of proceeding with the Evander project,” said CEO Graham Briggs.

While the development of the shaft was expected to increase production, other projects are in the midst of being ramped up as well, with those evidently having a priority over R6.

Briggs said he believed it would be hard to gain approval from the board when the other units of the company are in the middle of preparing to increase production.

In the last quarter Harmony gold production increased by 40 percent to 346,714 ounces.

Lihir Gold (Nasdaq:LIHR) Posts $87 Million Profit

Lihir Gold, Limited (Nasdaq:LIHR), which is soon to be taken over by Newcrest Mining (ASX:NCM), turned around in the first half, generating net earnings of $87 million, after losing $301 million in the same period a year ago.

Once the merger between the two companies is completed, Lihir will be included as part of the fourth-largest gold company in the world, behind Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM), and Goldcorp (NYSE:GG).

Guidance for production remained the same as prior estimates, with expectations of 1 million to 1.1 million ounces of gold to be mined for the full year.

Chesapeake (NYSE:CHK), EnCana (NYSE:ECA) and Devon (NYSE:DVN) Up on Higher Demand from Warm Weather

Chesapeake Energy (NYSE:CHK), EnCana Corp. (NYSE:ECA) and Devon Energy Corp. (NYSE:DVN), along with Anadarko Petroleum Corp. (NYSE:APC) and Halliburton (NYSE:HAL), on news of the warmer summer increased demand for natural gas for the generation of electricity.

Most of the companies with exposure to the commodity are up today, but there is downward pressure coming as the supply continues to grow in spite of the demand.

The increase in share price of the companies today are based on past demand, and not on future prospects.

For example, for the week ending August 20, stockpiles of natural gas in the lower 48 states increased by 40 billion cubic feet.

There also continues to be ample supply as storage levels are 6.2 percent above their five-year average, even with the recent strong demand. And the natural gas inventories have risen over the Tcf level for only the second time in 2010.

A number of companies with significant exposure to natural gas understand the threats, even in a high-demand period of time, as the huge amount of resource and increasing number of companies entering into the field ensure downward pressure on natural gas prices for some time to come.

Some have been diversifying into oil to help them maintain revenue and earnings growth.

Bernanke Says He'll Continue to Hide Recession

When Federal Reserve Chairman Ben Bernanke confirmed what he's been saying all along concerning the ongoing recession, that if it continues, he'll be ready to do what it takes to attempt to combat it, he was essentially saying he's going to continue to mask or hide the recession that has never left.

After all, how can anyone justify spending $1 trillion with no results, and then reiterate they'll do it all over again?

Some headlines after Bernanke's speech were strange, as they even went so far as to say he "soothed" the markets. That's right. Old gentle Ben has everyone feeling good that he's going to continue to attack the country through exploiting the generations ahead who'll have to pay for his "soothing" actions; which of course they won't be able to afford.

The reason the economy is sputtering is because the original stimulus is running out of steam, and the real economic condition is simply revealing itself again.

This is why I say Bernanke is in reality saying he's going to continue to hide the recession by providing more "stimulus." Some economic commentators have went so far as to say it's not worth the effort unless another $1 trillion at least is thrown into the economy.

The major way Bernanke and others hide that there's a recession is because the money they throw into the economy is counted as gross domestic product, so they can skew the numbers how they want - in the short term - to make it appear there is real growth.

But as we're learning now, once that money goes through the system, the nakedness of the economy is revealed, and it's not a pretty picture.

We, our children, and our grandchildren will be stuck with the burden of this outrage, just so the government and Federal Reserve can appear to be doing something constructive, when they're in fact a destructive force against the free markets, saddling all of us with a debt so they can make it look like their economic theory works, when it has been the major reason for ups and down of the economic cycle in the first place. Thanks Ben.

Oh yes, the Commerce Department downwardly revised the gross domestic product annual rate from 2.4 percent for the period of April to June, to 1.6 percent.

No BP (NYSE:BP) Oil Allows Reopening of More Federal Waters

With no BP (NYSE:BP) oil being seen in about a month, and with finfish and shrimp were examined by scientists determined to have no oil or dispersants on them, more federal waters were reopened for fishing, this time about 4,281 square miles off the coast of western Louisiana, according to National Oceanic and Atmospheric Administration head Jane Lubchenco.

"We're sort of nibbling at the edges if you will, areas that have been free of oil for the longest time and were oiled the least," Lubchenco said.

After this announcement, about 20 percent of the waters in the Gulf now remain closed to fishing.

Authorities are working now to ensure the seafood from the Gulf is safe to eat, as fisherman resume their businesses.

This confirms the ability of the Gulf of Mexico to heal itself from this, with about 75 percent or more of the oil no longer in the ocean, as evaporation and microbes have removed the bulk of it.

Freeport (NYSE:FCX) Ready to Take Off?

Some analysts have been getting very bullish on some metals company, with Freeport-McMoRan Copper & Gold (NYSE:FCX) being one of the top ones.

Their growth over the last 45 days or so is cited as a major factor, but I don't take that too seriously, as that seems to be a more arbitrary period picked, as you could start at the beginning of August and you would get a loss for the last month, while if you start at the July lows, you could say they gained about 15 percent.

No matter how one tries to spin it, in regard to the most important metals market as far as copper and aluminum, is China, and they've cut back on their consumption by 3 percent from last year, and even though they'll continue to grow, the rate is being cut down significantly from their concerns over the over-heated property market in urban areas.

So that will decrease demand for these metals in the short term, and there's nowhere else in the world that will make up for the slowdown in China.

With Freeport actually doing better than the underlying metals, even if prices increase in the second half, which is expected, they may have that already built into the price.

Commodities will continue to be strong, including metals, but it seems the companies like Freeport-McMoran which provide the commodities will continue to have a bumpy ride for the next couple of years at least, as economic data continue to confirm we're still in the midst of a lingering recession.

BP (NYSE:BP) Questions Government Oil Spill Figures

The grandstanding Democrat, Rep. Edward Markey, from Massachusetts, is evidently outraged that BP (NYSE:BP) is actually questioning the very high figures put forth by the Government as to how much oil spilled into the ocean.

In an attempt to make it look like he's taking the high road, Markey said, "I continue to urge BP to accept these numbers in order to move on to the vital task of Gulf restoration, instead of endless litigation."

But why should BP simply accept the numbers? When the numbers first came out, I thought they were very high, and with billions at stake dependent upon those numbers, there's no reason in the world to simply accept them as fact and go forward.

BP attorney Douglas Curtis responded to Markey saying, "Without addressing the letter's premises, BP agrees with you that it is important to determine the amount of oil that was discharged from the MC 252 well in the Gulf of Mexico."

Government scientists claim 53,000 barrels a day escaped the well into the Gulf of Mexico, while 62,000 a day escaped leaked at the beginning of the spill. That results in the estimate of 4.9 million barrels being released into the Gulf.

Of that, about 800,000 barrels were captured by BP before the well was finally capped.

BP (NYSE:BP) Drilling Engineer Won't Testify at Hearing

Being one of the key people and decision maker on the Deepwater Horizon oil rig leading up to its explosion, BP (NYSE:BP) drilling engineer Mark Hafle said he won't be testifying before in the hearings being held.

Another BP drilling engineer who presumably isn't as important in the decision-making process, Brett Cocales, will testify before the panel.

The federal panel investigating the accident is made up of the U.S. Coast Guard and the Bureau of Ocean Energy Management, Regulations and Enforcement.

The purpose of the joint panel is to find out the reasons behind the explosion on the oil rig, and ultimately to offer recommendations on how to prevent something like that from happening again.

Americans have a constitutional right on whether to testify or not, and Hafle exercised the right, the reason he's allowed to bypass the hearings.

Barrick (NYSE:ABX) Resumes Production at Mine Where 2 Workers Died

Barrick Gold Corp. (NYSE:ABX) has ramped up production again at its Meikle Mine in Nevada, where two workers died earlier in the month.

Evidently the accident was localized and not spread across the mine, as a vertical pipe broke away from the wall and hit the cage lowering the two miners down into the shaft.

The pipe wasn't a typical pipe one thinks of, but rather one about 2 feet in diameter, which had to have had a lot of force with it when it detached from the wall.

The shaft which took the life of the miners remains closed while regulators continue investigating the accident.

Some miners went back to work last week, according to Barrick, and the rest returned by the weekend.

BP (NYSE:BP) Preparing for Board Changes

There are several changes coming to the Board of Directors of BP, with one of them being financial director Byron Grote, and two other non-directors chairman Carl-Henric Svanberg wants to add to the board.

Outgoing CEO Tony Hayward will remain on the board until the latter part of November.

The company will miss Byron Grote, who has been in the industry for over 30 years. He was added to the board of BP in 2000, and moved up to chief financial officer in 2002.

Grote, who earned a PHD in quantitative analysis at Cornell University, is considered one of the more solid members of the board, and last year had his contract extended even as he approached retirement age.

BP is looking internally to replace him.

Alcoa's (NYSE:AA) Kevin J. Anton Named 'Chief Sustainability Officer'

Alcoa (NYSE:AA) vice president Kevin J. Anton has a new title under his belt, as the aluminum producer appointed him as chief sustainability officer of the company.

Over the last year Anton headed up the Sustainability Steering Committee for Alcoa.

The responsibilities of the new position include forming a strategy which integrates the variety of sustainability projects under the company's umbrella.

Concerning Alcoa's commitment to sustainability and appointment of Anton, chairman and CEO Klaus Kleinfeld said, "The environmental benefits of aluminum, such as light weighting and recyclability of our 'miracle metal,' present tremendous opportunities for the aluminum industry. Alcoa is in a unique position to take a proactive sustainability approach and turn it into a competitive advantage. No one is more qualified than Kevin Anton to ensure that Alcoa capitalizes on those opportunities."

Anton started with the company as vice president of Alcoa World Alumina and Chemicals in 1998, and moved up through a number of positions to where he is today.

He will continue on in his role of vice president and also as a member of the executive council of the company.

BHP (NYSE:BHP) Starting its Wooing of Potash (NYSE:POT) Shareholders

Marius Kloppers, CEO of BHP Billiton (NYSE:BHP) is traveling to North America to work on convincing shareholders of Potash (NYSE:POT) that a deal between the two companies would be beneficial to both companies.

Working on keeping the bidding price within a reasonable range and managing the expectations of Potash shareholders, more than likely Kloppers will focus on the value of the $130 a share he already offered while he's in the region.

He wants to dampen the idea that there is going to be a further raising of the bid in order to acquire the fertilizer company.

Even so, Kloppers has implied there will eventually be a higher offer once regulatory hurdles are taken care of, which are expected to take as long as two months.

A higher bid could bring other challenges as well, as a bid of $47 billion would require BHP to get shareholder approval, based on stock market rules in the UK. That's because any acquisition over 25 percent of the market capitalization of a company in the UK much then get shareholder approval, which the $47 billion would be.

With the size of BHP, there has been a lot of pressure from shareholders for BHP to grow, and with few acquisitions out there which would have a significant and immediate impact on their bottom line, Kloppers will work hard to get the deal done.

Other BHP shareholders are concerned over the risks associated with the deal, including the amount of debt and if the continuing recession could damper the expected demand for potash in the near term.

Conoco (NYSE:COP) Appealing Highway 12 Ruling in Utah

The odd decision of an Idaho judge to not allow Conoco (NYSE:COP) to move several large loads along Highway 12 from Lewiston to Montana, has led to the company appealing the ruling to the Idaho Supreme Court.

2nd District Judge John Bradbury rescinded the permits to move the four loads, leaving the oil giant in a difficult circumstance.

Conoco is challenging the decision by the judge that the Idaho Transportation Department "acted in an an arbitrary and capricious manner in its application of state regulations."

This judge also said the Department needed a “reasonable determination of necessity” before of approving of large loads.

If these large loads didn't fit that criteria, then what would?

The permits which were rescinded were for traveling at night and required the trucks to pull over every 15 minutes to allow traffic to pass. When you consider how little traffic that would be, it seems even odder that this judge made this decision. Sounds activist to me.

Allegedly the moving of the loads could possibly delay access to hospitals in case of emergencies, and the traffic interruptions violated the rules of the state.

Both of these possibilities at night are rare, and largely immaterial, and were obviously made by people who simply don't want the loads to be carried on the roads for any reason.

Conoco said in its notice of appeal, that those suing over the shipments have no standing, as “their alleged injuries are speculative, hypothetical, abstract, and are not causally related to the four shipments that are at issue.”

This was probably a salvo against other companies like Exxon Mobil (NYSE:XOM), which wants to move about 200 other large loads around the same route.

BP (NYSE:BP) Libya Drilling May Not Produce Much

The hope of a lucrative find in Libyan waters seems to be diminishing for companies drilling offshore, including BP (NYSE:BP), which is prepared to begin exploration in the region this year.

By the end of 2010, BP says they're planning on drilling five deep-water wells in the Gulf of Sirte. The fields in the Gulf haven't been explored as a lot of other areas have.

Talking to the Financial Times, Wood Mackenzie analyst Ross Cassidy said prospects for oil in Libya could be hyped.

"We are coming up to the end of a 5-year period where there has not been a lot of notable exploration success to point to," said Cassidy. "Results have been poor when you compare with what was expected and hoped for."

The waters being drilled in off of Libya are close to 600 feed deeper than the Macondo well in the Gulf.

The St. Joe Co. (NYSE:JOE) Files Lawsuit Against M-I SWACO

Saying their behavior was "reckless" relating to the BP (NYSE:BP) oil spill, the St. Joe Company (NYSE:JOE) has filed a lawsuit against M-I SWACO.

M-1 SWACO's connection to the Deepwater Horizon oil rig was it was the drilling fluid contrator for it.

Lead counsel for St. Joe, William A. Brewer III, a partner at Bickel & Brewer, said, “We believe that M-I SWACO’s reckless behavior in connection with its management of the drilling fluid program at the Deepwater Horizon played a significant role in this epic disaster.”

According to the complaint, “M-I SWACO is liable for the grossly negligent and reckless way in which it managed and conducted the use of drilling fluids to maintain well control, and its intentional disregard for its obligation to take appropriate action in the face of multiple violations of law on the Deepwater Horizon.”

The lawsuit was filed Thursday in the Superior Court in the State of Delaware.

Thursday, August 26, 2010

Berkshire (NYSE:BRK-A), Buffet, Acquiring Rest of Wesco Financial (NYSE:WSC) Shares

Wesco Financial (NYSE:WSC) Shares soared on the news Warren Buffett, via Berkshire Hathaway (NYSE:BRK-A), would be acquiring the remaining shares in the company they don't own, according to an SEC filing.

The remaining amount of the shares not owned by Berkshire were 19.9 percent.

Terms of the deal proposed by Berkshire t Wesco were for an "+exchange for Berkshire Class B shares and/or cash valued at the book value per share of Wesco as of a time reasonably contemporaneous with the closing of such a transaction."

Berkshire is attempting to structure the deal in such a way as to not make it a taxable event for Wesco shareholders.

The deal will only go forward if the Board of Directors of both companies give their approval, along with a majority vote by remaining Wesco shares if a meeting is called for that purpose.

If the deal isn't approved, Wesco will continue to operate as a 80.1%-owned subsidiary of Berkshire.

Newmont (NYSE:NEM) Claims Indonesian Company Lied Regarding Divestiture

Newmont Mining Corp (NYSE:NEM) lashed back at an Indonesian company, saying 'PT Pukuafu Indah' (PTPI) lied in reference to Newmont divesting of a company in Indonesia which operates one of their mines.

Blake Rhodes, Newmont's vice president and deputy general counsel, said this in a press release, "Certain of PTPI's public assertions - including that PTPI paid Newmont for some or all of the divestiture shares - are patently false as Newmont did not receive any such payments."

The company in question is PT Newmont Nusa Tenggara (PTNNT), which is a joint venture between Japan's Sumitomo Corp and Newmont.

What it battle is over is the right to acquire shares which Newmont had divested of in PTNNT. Under Indonesian law the requirement is to sell it to another Indonesian company.

"PTPI has long wished to have a right to acquire the divestiture shares," Rhodes added. "The Indonesian government, however, has an explicit right of first refusal under the Contract of Work. PTPI's claims are contrary to the government's priority rights."

Newmont is in the middle of selling it last 7 percent stake in PTNNT at this time.

Kinross (NYSE:KGC) Completes Sale of Harry Winston (NYSE:HWD) Stake

Kinross (NYSE:KGC) its Diavik diamond mine joint-venture stake back to Harry Winston (NYSE:HWD) for $220 million, returning Winston's stake in the venture to 40 percent.

To shore up its balance sheet at the height of the recession, Harry Winston sold the 9 percent indirect interest to Kinross.

Diavik is the largest diamond mine in Canada, producing over 50 million carats of rough diamonds since beginning operations seven years ago.

The diamond miner paid $50 million in cash, 7.1 million in common shares, and a note in the amount of $70 million.

At around 3:00 PM EDT, Kinross was at $16.01, gaining $0.38, or 2.43 percent. Harry Winston rose to $10.28, gaining $0.49, or 5.01 percent, both in New York.

Citigroup (NYSE:C), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) Managing 'Coal India' IPO

Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) will be among the financial institutions managing the initial public offering of Coal India, which is expected to raise up to $3 billion. The IPO is scheduled for October 18.

Assuming the approximate 632 million shares being offered are sold, it the $3 billion raised would be the largest IPO by a company in India.

The government of India has plans in place to sell stakes in close to 60 companies run by the state in order to tackle high deficits in the country. The divesting will be spread over the next several years.

In their fiscal 2011 year, they hope to raise up to $8.6 billion.

Also participating in the management of the IPO are Kotak Mahindra Capital, Enam Securities and Deutsche Bank (NYSE:DB).

Alcoa (NYSE:AA) Releases Final Results for Maximum Tender Amount

Alcoa Inc. (NYSE:AA) today released the final results for its Maximum Tender Offer, described as "its tender offer to purchase for cash up to the Maximum Tender Amount of its outstanding 6.00% Notes due 2012 and its 5.375% Notes due 2013."

Their press release said this:

"As of 5:00 p.m., ET, on August 23, 2010, the expiration date for the Maximum Tender Offer, the aggregate principal amount of 2012 Notes tendered and not withdrawn was $194,854,000, representing 37.71% of the $516,709,000 aggregate principal amount of the 2012 Notes outstanding, and the aggregate principal amount of 2013 Notes tendered and not withdrawn was $197,159,000, representing 32.86% of the $600,000,000 aggregate principal amount of the 2013 Notes outstanding.

"The “Maximum Tender Amount” is $484,234,165 in cash, or $750 million less the aggregate purchase price of Alcoa’s 6.50% Notes due 2011 accepted for purchase pursuant to the Any and All Tender Offer, which was its tender offer for any and all of its 2011 Notes that expired on August 2, 2010."

Those holding the 2012 Notes and 2013 Notes tendered and accepted for acquisition will get a return of $1,062.50 per $1,000 principal amount of Notes accepted for purchase.

Monsanto (NYSE:MON) Acquires 19.9 Percent of Intergrain

Biotech company Monsanto (NYSE:MON) has acquired a 19.9 percent stake in Intergrain, a company which breeds grains in Australia.

Monsanto' Peter O'Keefe said the company will without a doubt buy up more of Intergrain in the future.

"As a commercial organization, that's certainly part of our business model," said O'Keefe.

"When you enter a space, we want to have a good solid market share," he added.

Even so, Intergrain said they plan on continuing on as an independent provider of new grain varieties to the Australian market. That will probably only last until Monsanto becomes a bigger owner.

BP (NYSE:BP) Tony Hayward Says No to Testifying

While everyone agrees it was a mistake to release the man convicted of bombing Pan Am Flight 103 over Lockerbie, Scotland, the pursuit of BP (NYSE:BP) by desperate Democrats attempting to find any issue to hang their hats on, is getting tiring and despicable.

BP CEO Tony Hayward, who will be stepping down soon, has rightly refused to testify before U.S. Senators on the matter.

British and Scottish leaders have already cleared BP in the matter, and said there was no specific request by BP to have bomber Abdel Baset al-Megrahi in exchange for oil contracts.

Hayward said, "BP has nothing to add to these clear, unequivocal statements."

It has been public knowledge for years that BP and the British government supported a prisoner exchange in relationship to oil exploration contracts, but that had nothing to do directly with al-Megrahi, as far as having a specific request made for his release. It was a general deal, according to the British.

BP (NYSE:BP) Didn't Make Claims Decision, Feinberg Says

Rumors circulating that BP (NYSE:BP) was behind the decision to force those accepting final settlements from the compensation fund were cut down by fund administrator Kenneth Feinberg, who said he made that decision and not the oil giant.

This centers around those who agree to the decision by Feinberg and his team about getting paid a one-time payment for the entirety of what is owed them from BP.

If it is accepted, those receiving the claims money will have to waive the right to sue BP in the future.

Feinberg has yet to make a decision on whether or not to extend that to other companies like Halliburton (NYSE:HAL), Transocean (NYSE:RIG) and Cameron International (NYSE:CAM), who were also connected to the accident to one degree or another.

Those receive emergency funds for short-term periods will still be eligible to sue BP if they choose to.

BP (NYSE:BP) Hiding Something with Relief Wells?

In another instance which seems to point to BP (NYSE:BP) always having something else in mind besides using the relief wells for the "bottom kill," which would be a guaranteed permanent sealing of the oil well.

When asked about this by federal investigators looking into the causes of the explosion on the Deepwater Horizon oil rig, BP Senior Vice President Kent Wells skirted around the issue and didn't commit to anything.

Wells said, there are "multiple options" to stop the flow of oil and the relief wells are "the ultimate backup if everything else fails."

Some think this represents a behind the scenes battle between government point man Thad Allen and BP, but if you've followed this story, Allen had been speaking in similar terms not that long ago.

I think all parties involved want to be able to extract the remaining gas and oil in the well to help pay for the liabilities incurred by the spill.

It seems they're hoping as the process advances that people will be more open to having that be the case, as it makes sense to do that and not waste the resource because of the bad circumstances surrounding it.

BP (NYSE:BP) Drops Arctic Drilling Plans

Most oil companies have been circling around the next oil frontier, the Arctic, and BP (NYSE:BP) had been lining up with them to secure an exploration license in Greenland.

A spokesman for BP said in this round of bidding they won't be participating.

There were no reasons given, but the assumption has to be the company will lay low for awhile until it gets further into compensating victims of the oil spill in the Gulf of Mexico, and the cleanup effort.

Competitor Cairn Energy, based in Scotland, revealed recently it had discovered gas off the coast of Greenland, and believes there are more
hydrocarbon resources in the area.

Greenland said they'll unveil the names of the successful bidders sometime in the next couple of weeks.

HSBC (NYSE:HBC) Downgrades Trina Solar (NYSE:TSL)

Although some of the solar companies have given optimistic guidance after their recent quarterly reports, specifically in reference to growth, companies like Trina Solar (NYSE:TSL), and others, show there is a strong weakness in margins, and that will continue to weight down the solar sector, and consequently, HSBC (NYSE:HBC) downgraded them from "Overweight" to "Neutral."

The price target was also lowered from $31 to $27.

Even with the downgrade and lowering of the price target, it does give room for some growth for Trina.

It seems this is a response to the aggressive expansion guidance in light of pressured margins, which of course could crush earnings in the industry.

Almost all the major solar competitors said the same thing, seeming to indicate they're worried and concerned about the economic conditions, but are ignoring them and pushing forward, based on demand, according to the companies.

The result will almost assuredly be consolidation, as these companies aren't in position to expand in a low margin atmosphere, and some of them will be weakened going forward, preparing the way for some to be taken over.

Coal Producers Peabody Energy (NYSE:BTU), Massey (NYSE:MEE), Alpha (NYSE:ANR), Consol (NYSE:CNX), Plunge on Recession Concerns

Coal firms Peabody Energy (NYSE:BTU), Alpha Natural Resources Inc. (NYSE:ANR), Massey Energy Co. (NYSE:MEE) and Consol Energy Inc. (NYSE:CNX) all plummeted in Wednesday's trading, as economic data continue to confirm we remain in a recession, with little hope of exiting it anytime soon.

Consol Energy could come under even more pressure, not only because of their coal exposure, but their natural gas exposure, which would be under pressure because of enormous supply, whether there was a recession or not.

With stimulus money leaving the economy, its naked state has again been exposed, and it is as weak as ever, putting pressure on providers of energy and raw materials.

Following on the footsteps of the horrid figures for house sales yesterday, new data showed the sales of new homes also plunged, down 12 percent, from June. That would put sales at the lowest level since statistics have been kept - 276,000 annually.

There is no doubt the slowdown will continue, and companies and investors should respond to that accordingly.

After all, if about $1 trillion in stimulus can do absolutely nothing to change the economy, adding another $1 trillion won't either, and it would be foolish and criminal to place that over the heads of the American people, as some are calling for the Federal Reserve and government to do.

While Arch Coal (NYSE:ACI) also fell in price, and exception was Patriot coal (NYSE:PCX), who managed to end Wednesday's trading session at $10.60, gaining $0.21, or 2.02 percent.

The only news there was Patriot's president and chief operating officer, Paul H. Vining, was stepping down.

Obama May Lift Gulf Oil Moratorium Before Elections

In what would be an obvious political move, reports are coming out that Obama may lift the oil ban before its November 30 expiration, with October being the probable date.

The controversial and unpopular moratorium was imposed by the Obama administration for Gulf waters over 500 feet deep after the BP (NYSE:BP) oil spill, even though safety checks from inspectors cleared the remaining oil rigs being operationally safe.

Obama and the Democrats know this is a major issue for a number of regions of the country, and in an economic atmosphere of increasing unemployment, they would get hammered on it; although they still will for forcing on the struggling Gulf states.

While it's being asserted pressure from the states is pushing Obama to end the moratorium early, that's really not the case. What seems to be happening is whether the moratorium is in place or not, delays in drilling could last into the middle of 2011, which makes the idea of a moratorium irrelevant.

If stories are true, the moratorium will be officially lifted, but oil drilling won't be allowed for some time. In other words, it sounds like an outright lie, and there will be an unofficial moratorium in place while leading up to the elections.

While this may seem like it'll placate the governments of the Gulf states, it won't, as they'll see through this and let their people know what's really going on.

How it evidently will work, is new regulations will be put in place that do the same thing as the oil moratorium, and then Obama will lift it to make it look like he and his administration, along with the Democrats, are compromising on the issue, when if fact they're even making it worse than it was.

Should We Invest in BP (NYSE:BP) Now?

After a long downward spiral, BP (NYSE:BP) rebounded a little bit on Wednesday, finishing at $35.25, a gain of $0.33, or 0.95 percent. For some that may look like a possible signal to load up on the stock again, but until a lot more clarity comes concerning the costs associated with the oil spill, BP will remain a crap shoot; for long-term and short-term traders.

The problem is, every time some new clarity comes, several more uncertain elements come to the forefront the dash the positive.

For example, the condition and cause of the blowout preventer and why it didn't perform as it should have. That leaves the possibility of some companies like Cameron International (NYSE:CAM), which built the preventer, open to some liability, but also possibly not.

Now there's the continuing salvage operation which must be performed in a manner which will result in the blowout preventer being in the condition it was when it sunk with the oil rig: Deepwater Horizon.

If something happens when retrieving it, the consequences could change the dynamics of liability going forward.

This type of uncertainty, which will dramatically affect the performance of BP in the years ahead, weigh on everyone, and until they're resolved, it's simply guesswork as to how much BP will end up paying and for how long.

Another factor is whether or not BP will be designated as "grossly negligent" by investigators, which could make a difference in fines of $4.9 billion, at the bottom, to as high as $17.6 billion in the worst case scenario.

One other aspect of that would be the release of their partners in the well, Anadarko Petroleum Corp. (NYSE:APC) and Mitsui (Nasdaq:MITSY) (via majority-owned MOEX Offshore), from liability, which would put billions more on BP to pay out, or save them money if they aren't designated as such.

This is why temporary successes don't do much to move the stock, as uncertainty always creates paralysis or a negative reaction to circumstances, and BP is far from having that settled for some time.

Wednesday, August 25, 2010

Jim Rogers: “We never got out of the first recession”

In a telephone interview with Bloomberg, investor and author Jim Roger stated concerning the economic conditions, that “We never got out of the first recession," something we agree with heartily.

As we mention frequently, the GDP of the United States includes the stimulus spending in its results, and so makes things look better than they really are, masking the true state of the economy.

That's why most economic commentators continue to say we're in danger of a double-dip recession.

Stimulus money is leaving the economic system, simply revealing to us the state the economy has always been in.

Also in the interview, Rogers stated this concerning interest rates: “Everyone should be raising interest rates, they are too low worldwide. If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”

“We never got out of the first recession,” Rogers added. “If the U.S. and Europe continue to slow down, that’s going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can’t bail us out.”

Concerning commodities, Rogers is still very bullish, and said even if they grow at a rate of 5 to 6 percent annually, they'll still surpass their all-time high, sometime in the next decade.

Rogers said he remains long on commodities.

Morgan Stanley (NYSE:MS): Some Governments Will Default

As governments around the world refuse to cut back on their size and continue to embrace their socialists policies, the risk increases for governments to default on their debt, and according to Morgan Stanley (NYSE:MS), it's no longer if, it's going to be who and when.

It is amazing to see this unfold and be ignored by governments, as the inability to extract more money from the productive and redistribute it to the unproductive is bringing these countries down, and they fanatically hang onto their failed philosophies and economic voodoo based on socialist schemes which can no longer be supported.

Arnaud Mares, an executive director at Morgan Stanley, said this, “Governments will impose a loss on some of their stakeholders. The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.”

Mares added, the sovereign debt crisis isn't just relegated to Europe, as it's a global phenomenon, “and it is not over.”

We at Commodity Surge have been amazed at the lack of coverage in the mainstream economic media, as after a few overtures and announcements from European leaders that the sovereign debt crisis was over, reporters ran for the doors to the next important financial story.

To even seriously think the crisis was over in Europe, let alone other nations of the world, after a few austerity moves, was naive at best. Even the selling of bonds in the market should have been taken largely with a grain of salt, as if decades of economic practices and mindsets can be changed by throwing money at the problem.

As in the United States and its stimulus spending, all it does is temporarily cover up the mess until the money runs out, and then it picks up again right away revealing the gasping economic patient who survives only because of the misguided attempt to maintain things as they are, even if they can't be afforded.

There is no answer but smaller government and people taking responsibility for their own lives through being productive. The game is up and the attempt to save socialism from complete collapse is nearing an end, as the great experiment is over, and it have totally failed.

How long government stubbornly hold to their promises will determine the depth of the carnage, as some simply can't believe their socialist theories and Keynesian practices are completely wrong.

They better start believing it, as the welfare of their people and survival as a nation are at stake.

Bank of America (NYSE:BAC) Lowers Consol Energy (NYES:CNX) Estimate, Price Target

Bank of America Corp (NYSE:BAC) cut back its earnings estimate for Consol Energy (NYES:CNX), while also lowering their price target on the company to $50.

Consol Energy, which produces natural gas and coal, was cut because of the abundant supply of natural gas which will put pressure on prices and margins.

The economy is also playing a major factor, as coal demand could slide as consumers continue to use less energy to help with their bills.

Bank of America maintained their "Buy" rating on the energy company, even with the lowered outlook.

Citigroup (NYSE:C) Maintains "Buy" on Trina Solar (NYSE:TSL)

Trina Solar (NYSE:TSL) remains in the good graces of Citigroup (NYSE:C), as the banking giant maintained its "Buy" rating on the company.

Citi also raised its price target on the company from $30 to $36.

Trina continues to be the favorite pick of Citigroup in the solar sector, citing "its strong balance sheet, more measured approach to the systems business, leading cost position, and budding track record for execution.”

Citi said they liked the gross margins of the company, which should continue to be strong, and improve in the second half of 2010, assuming prices remain stable and more cost downs.

The idea they can expand in a larger way and pay for it through operating cash flow is a positive for the company as well, as the overall solar sector has been punished with low margins at a time when demand seems to be growing.

That's the best case scenario, but increasing the outsourcing of wafers/cells, along with the real possibility of supply of poly tightens up, which could put pressure on margins.

Eldorado (NYSE:EGO), Barrick (NYSE:ABX), Goldcorp (NYSE:GG) Soar as Investors Flock to Gold

The realization we've never left the recession is starting to be realized by a growing number of investors, and gold miners like Eldorado Gold Corp. (NYSE:EGO), Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) are soaring today as gold prices continue their upward march with investors seeking safety.

Gold prices are approaching two-month highs, up to $1,240, a gain of $10.20, as of 1:15 PM EDT.

Continuing bad news concerning the economy is the major reason for the resumption in gold prices surging upward. As the stimulus money leaves the system the underlying weakness is again in the face of investors who see it did nothing but hide the economic disaster, rather than do anything to help.

And calls for more stimulus have people extremely worried as economic report after economic report, including the plunge in sales of previously-owned homes plunging, and a record low in sales of new homes, which plunged to an annual rate of 276,600, along with a 12.4 percent decline in July.

A report from the Commerce Department also revealed orders for durable goods failed to meet expectations, indicating continued weakness in the manufacturing sector.

Gold prices today show the future pattern, and gold mining companies will be the beneficiaries of this strong move as the disaster the economy really is becomes to be understood more fully by investors, who will increasingly use gold investments as a safe haven.

Agrium (NYSE:AGU) and Mosaic (NYSE:MOS) Worried Over Potash (NYSE:POT) Takeover

The cozy relationship between Agrium (NYSE:AGU), Mosaic (NYSE:MOS) and Potash (NYSE:POT) through their marketing arm Canpotex is under pressure from the bid by BHP (NYSE:BHP) for the fertilizer giant, as they declared they have no interest in continuing on with the arrangement once the existing agreements run out.

That also has Saskatchewan taking a closer look at the bid and possible fallout, as they have imposed royalties on potash produced in the region, and with BHP's decision to move volume and be less concerned about prices would have a detrimental impact on revenue in the Province.

BHP isn't the problem though, as other possible suitors have reiterated the same thing, that they aren't interested in continuing the monopoly represented in Canpotex for the benefit of Saskatchewan.

It will be good for the industry to remove this anti-competitive group and let them compete head to head like they should be doing in the first place. That will lower prices and be better for consumers and farmers in the long run.

With Potash accounting for over 50 percent of the sales volume of Canpotex, that has Agrium and Mosaic concerned, as their shareholders must be as well, as they would have to compete on the market and not be reliant on the strength of Potash for their success.

Even the Canadian federal government is looking into the effects of the acquisition of Potash, showing there's far too strong of a connection between the industry and the government, which will be good to break with the deal.

This reveals a dark side to the monopolizing of the potash market by these companies, as they've been controlling prices and not competing against each other in order to maintain margins for the sake of Saskatchewan specifically, and Canada in general. That isn't the free market operating, and it would be good to see it abandoned. Hopefully that's the outcome of all this.

BHP's CEO Won't Comment on BP (NYSE:BP) Interest

Now that BHP (NYSE:BHP) is a primary focus of the economic media, every possibility seems to be a target of inquisition, including the possibility of acquiring some assets of BP (NYSE:BP) they're shopping to raise capital to pay for mounting liabilities.

When BHP CEO Marius Kloppers was asked if they were involved with any negotiations with BP for some assets, he refused to comment, saying his primary focus now is on securing the deal for Potash (NYSE:POT).

Kloppers did say on a conference call that "beyond the acquisition of potash, our aspirations to grow the deployment of capital in the natural resources space would be undiminished," seeming to imply a lot of things are on the table.

BHP could acquire BP assets without hurting the company or increasing costs from being downgraded, as they generate a cashflow of $38.6 billion annually, with only $3.3 billion in net debt.

The company has said their goal is to maintain their A credit rating and ongoing dividend policy while they expand the business.

Proximity to BP (NYSE:BP) Oil Spill to Determine Many Claims

Although some people and businesses have been somewhat confused by the parameters surrounding the BP (NYSE:BP) compensation fund administered by Kenneth Feinberg, one this isn't confusing, and that is those who live close to the oil spill will have the best change of having their claim approved, while the further away one is from the spill, chances diminish, although it depends on the overall circumstances made in the claim.

A claim must reveal the specific damage or economic loss associated with the oil spill, which includes how close the claimant was to the spill and their "dependence upon injured natural resources."

Those who feel they were indirectly affected by the disaster will have a harder time collecting on their claims. But those who aren't rewarded can then choose to go the route of a lawsuit if they feel they have a legitimate chance to win.

The response to claims should be quick, with Feinberg stating his goal is to pay out emergency funds to those individuals who qualify within 24 hours, and to businesses within a week.

Those receiving emergency funds can still sue BP and others, while those accepting final settlements must waive the right if they want to receive it.

Claims to the Gulf Coast Claims Facility can be made through November 23.

BHP (NYSE:BHP) Takes $59 Million Charge on Moratorium

BHP Billiton Ltd. (NYSE:BHP) acknowledged today they took a $59 million charge against its yearly results from the imposition of the oil drilling moratorium by the Obama administration.

After the BP (NYSE:BP) oil spill, BHP said they had to stop drilling on their Atlantis and Shenzi projects in the Gulf during the quarter ending in June.

The overall petroleum unit of BHP generated $4.58 billion for the year for the quarter ending June 30, a gain up 12 percent year-over-year.

BHP executives said, "BHP Billiton continues to monitor and assess the impact of the six month suspension of certain permitting and drilling activities."

BP (NYSE:BP) Shocker: Says Transocean (NYSE:RIG) Changed Lock on Blowout Preventer

BP (NYSE:BP) executive vice president Harry Thierens said in a hearing today that Deepwater Horizon owner Transocean (NYSE:RIG) changed a locking mechanism on the blowout preventer which caused up to 24 hourse of delay.

The blowout preventer is what is used to prevent oil from leaking from a well if something fails. It took a minimum of twelve hours, and up to a full day to figure out what changes Transocean had made to the device and to receive drawings of those changes.

Thierens testified he had been immersed in the efforts to shutdown the oil well after the April 20 explosion.

BP is now trying to secure the failed device at the well without damaging it so a determination as to why it failed can be made, along with who is liable for the failure.

Cameron International (NYSE:CAM) provided the blowout preventer for the oil rig.

BP (NYSE:BP) Spent $6 Billion for Spill Says Claims Manager

Costs for the Gulf of Mexico oil spill by BP (NYSE:BP) have risen to about $6 billion, and it is growing on a daily basis, according to chief claims manager Geir Robinson.

Testifying before the House and Senate Insurance committees, Robinson added that $400 million has been paid out to individuals and businesses affected by the accident.

Of that, individuals and businesses residing in Louisiana have received the bulk of that, accounting for payouts totaling $152 million.

Concerned over the ability of the company to pay the increasing costs related to the oil spill, Robinson said, "It (the $20 billion fund) is neither a floor nor a ceiling. There is every indication that the full resources of BP" will be available to pay claims and other expenses related to the incident. "There is no indication we are about to go bankrupt."

It does reveal the caution the government must take in attempting to punish BP, as there is only so far they can go before BP could no longer respond.

This is why it is ridiculous for a number of people to attack the BP compensation fund and the parameters Kenneth Feinberg has built around it.

To allow claims to be paid and then the claimants to go ahead and sure BP afterwards, would be a joke, and would crush the company, with no one receiving anything.

Those who want to sue BP have the right to, they just have to bypass the claims process represented by the fund to do so. Get guaranteed money now or take a chance on getting more later; possibly years later.

Add to that the approximate 30 percent lawyers would get, and it makes little sense for claimants to go that way, unless they were a big business that could handle the shortfall while pursuing a case.

Other oil companies connected to the accident may be allowed to be sued if people receive full claims, something Feinberg is in the middle of making a decision on.

Ireland Bonds Downgraded by Standard & Poor's

It was only a matter of time before the extraordinary risk inherent in the European Union was brought to the forefront of economic news, and it happened on Tuesday when Standard & Poor's downgraded Ireland's bond ratings, following up on the same downgrade on Irish bonds made by Moody's (NYSE:MCO) in July.

Reasons given for the downgrade were the enormous costs associated with supporting the financial system of the country.

Irish bonds were slashed one level to "AA-" from "AA." A negative outlook was also assigned. The short-term rating was maintained at "A1+."

S&P said the increasing costs will "further weaken the government's fiscal flexibility over the medium term."

The rating agency added that the overall debt of the Irish government will increase by 2012 to an enormous 113 percent of the gross domestic product of Ireland. They said that is over one-and-a-half times over the average for the other European Union countries.

It even surpasses Spain and Belgium by a significant amount, said S&P.

Depending on how the government of Ireland performs fiscally, the rating could be lowered again, especially if the time-frame is extended, of in the case of their deficit being reduced quicker, it could result in an upgrade.

More than likely we'll see things get worse for the Emerald Isle before they get better. That means there will probably be more downgrades in the future, and they won't be the only country experiencing that unwanted distinction.

Giant BP (NYSE:BP) Oil Plume Exposed for Hoax it Was

The story of the 21-mile long oil plume, which was allegedly also 65 stories high and a mile wide, keeps on getting better. We asked the question of whether or not it was a hoax on Friday, August 20, and it increasingly looks like it was.

Of course it's being spun a different way this time around, with other scientists saying a "newly discovered fast-eating species of microbes" have leveled the giant skyscraper oil plume.

The original plume was said to be invisible by the Woods Hole Oceanographic Institution in Massachusetts. We won't be listening to their nonsense any longer, as they've lost all credibility.

Even on Friday they said the oil was still out there and the ocean currents had swept it away. Now they're getting in bed with the new story saying it complements their original fairy tale.

Woods Hole Oceanographic Institution also said it didn't seem the organisms were eating the oil very quickly either, contradicting today's story.

The New York Times and Washington Post jumped on this story, and we said at that time it's one of the reasons they're declining so much, as it's the story they wanted to hear, rather than actual news.

Once the "scientists" understood the dilemma of having the size of oil plume in the ocean and no one able to find it, the next story had to be created of a new species of microbe that operate at cooler temperatures than previously known.

It's not that something like that couldn't be discovered, but having a different set of scientists create a story which both parties agree "complement" one another is suspicious at best; just as the original story was in its overreach.

Take into consideration the original story was asserted on the day of the House subcommittee hearing on the oil spill, even though Woods Hole Oceanographic Institution said they had made the discovery two months before.

Either they held back the information, created it for Democrat Ed Markey, who heads the committee, in order to pressure the leader of NOAA to capitulate in his original estimate that 75 percent of the oil had left the Gulf, which it indeed has, if not more now.

Markey savaged the NOAA lead scientist based on this faulty information and what could have been a hoax from the beginning.

The bottom line is, as originally stated, the oil has for the most part, been taken care of by the Gulf itself. That seems to trouble the fairy tale narrative some of these so-called scientists created for what appears to be a private agenda.

Read the original reports here and here.

Two Charged in BHP (NYSE:BHP), Potash (NYSE:POT) Insider Trading

Two traders have been charged by the Securities and Exchange Commission for insider trading in relationship to the BHP (NYSE:BHP) bid for Potash (NYSE:POT).

One of the men, Juan Jose Fernandez Garcia, from Spain, works for Banco Santander SA as head of research. Banco Santander is the advisor for BHP in their Potash bid.

It wasn't clear, outside of alleged insider trading, what other connection Luis Martin Caro Sanchez, the other man charged, also from Spain, played in the deal, if any.

The charges are making trades on secret information, where illegal profits of $1.1 million were made in bets Potash stock would increase.

Early in August the two traders spent $61,000 on contracts which were at a set price, and which were close to expiring. The only way the two could have made money would have been for the shares of Potash to increase in value rapidly.

The pair attempted to move their money out of the country to Spain, but failed in the attempt.

Trades were made on the Chicago Board Options Exchange, and the charges were filed by the SEC in federal district court in Illinois.

Goldman Sachs (NYSE:GS) Says More Fed Stimulus Coming

According to Chief U.S. Economist at Goldman Sachs Jan Hatzius, the Federal Reserve will attempt to stimulate the economy as it continues to show it weakness.

Unsurprisingly, sales of previously owned homes in the U.S. in July, plunged to their lowest level in fifteen years, with a record drop of 27.2 percent. That works out to 3.83 million units sold annually.

June sales were downwardly revised to a 5.26 million-unit pace.

As a result, Hatzius said, “The Fed will eventually move to additional monetary stimulus via asset purchases or other unconventional measures.”

Probably one of most incredible statements made economically, is the casual assertion on what the figure should be. Hatzius concluded, “The Fed will eventually move to additional monetary stimulus via asset purchases or other unconventional measures.” In his mind, there is “no point in doing anything less than” $1 trillion.

Just a casual reference to throwing another $1 trillion of money the government doesn't own for taxpayers to have to pay in the future?

If the prior approximate $1 trillion didn't do anything, how will throwing another $1 trillion at the problem work? It won't, but it'll bring America all the closer to economic collapse than it already is.

It's no different than giving booze to an alcoholic to solve his problem. An addict can't be freed from addiction by imbibing more alcohol.

The outrageous hiring of more government workers and paying all those government employees over double what the private market makes is criminal. After all, who do you think ultimately pays for these high wages? Those who are productive.

How does the idea of adding stimulus play out within those parameters?

We must understand that the government can create nothing as far as wealth and productivity go. So when they spend, they're either taking from existing productive workers or from the productivity of future generations, which will in no way be able to pay back the spending excesses of this administration.

There will be a stimulus for sure, as the Federal Reserve has already stated they're ready to intercede again if the economy continues to weaken.

They must do that because the reasons behind their failure will be exposed, which is stimulus doesn't work, and only robs from the people of the country doing the stimulating.

If a trillion dollars hasn't already exposed that to you, I don't know how you'll ever be convinced until the word depression replaces the word recession as far as the reality we're all experiencing.

We're still in a recession, and the reason that's so is the GDP includes stimulus spending by the government, which is like taking a loan out and using it to buy stuff which produces nothing but consumption, but nothing in the business sector which will help in a sustainable manner.

The inclusion of stimulus in the GDP hides and masks this reality, the reason we hear people say the so-called recovery is slowing, when all it is is returning to its original condition before the stimulus.

Hatzius adds more bleakness to the economic scenario, saying unemployment will increase to 10 percent in 2011, up from the 9.5 percent now.

That seems to say the stimulus will be worthless, which would be true. It's best to let the market take care of these things, as it's much more efficient and will allocate financial resources to areas which will do the most good. Stimulus money doesn't do that, as the $1 trillion already spent testifies to.

Tuesday, August 24, 2010

NextEra (NYSE:NEE) Raised by Bank of America (NYSE:BAC), Oppenheimer (NYSE:OPY)

NextEra (NYSE:NEE) received a boost from Bank of America (NYSE:BAC) and Oppenheimer (NYSE:OPY), who have raised the price target and estimates at the company.

Price target from Oppenheimer is $58, while Bank of America comes in at $60.

Earnings are expected to rise with the higher rates in Florida after the settlement last week.

NextEra was up to $54.65, gaining $0.93, or 1.73 percent, as of 3:26 PM EDT.

UBS (NYSE:UBS) Upgrades First Solar (Nasdaq:FSLR) on Sector Growth

UBS (NYSE:UBS) has upgraded First Solar (Nasdaq:FSLR) from "Neutral" to "Buy," citing increasing growth rates in the industry.

The price target of First Solar is a $150. It stands at a little over $126 a share today. Earnings were also lifted for the company, although that will be a bigger challenge than expansion.

Solar energy companies have been pushing their growth out, even though they continue to lose money, hoping scale eventually overcomes the ongoing losses.

Some solar companies have been working on acting like real companies by focusing on lowering operational costs so they can hopefully be profitable in weak or strong economic times.

Goldman (NYSE:GS) Raises Monsanto (NYSE:MON) Price Target, Estimates

Goldman Sachs (NYSE:GS) raised its price target on Monsanto (NYSE:MON), along with its earnings estimate, and have a "Buy" rating on the seed company.

In a mixed response to their products this year, Monsanto recently got a win, after having their sugar beet seeds banned until more studies are done on them.

Brazil recently approved their Roundup soybean seeds, opening up the potential for a large market.

That still has to include the approval of trading partners of Brazil, who must let them know if they'll acquire the finished product if Brazil grows it.

Assuming that happens, it will be a big boost to Monsanto and shareholders.

Rio Tinto (NYSE:RTP) Plunges on Mine Strike, Potash (NYSE:POT)

Rio Tinto Plc (NYSE:RTP) has plunged today, dropping to $48 a share, a loss of $2.84, or 5.59 percent as of 2:47 PM EDT, as it possibility of a major and prolonged strike at one of its South African mines looms over the company.

A dispute over wages at their Richards Bay Minerals mine, which is a joint venture with BHP Billiton (NYSE:BHP), could result in what is being called an "indefinite strike," signifying both sides aren't going to give in any time soon.

The strike is scheduled to begin on Friday if no progress is made.

At issue is a demand for a 10 percent raise from the union representing the miners, while the company has offered an 8 percent raise over a period of three years. The miners only want a one year deal.

Rumors Rio could be the company to come to the rescue of Potash (NYSE:POT) is also weighing down the stock, on concerns over the debt it would have to take on, or dilution in stock it would take to acquire the fertilizer giant.

There is no confirmation Rio Tinto is interested in Potash, but a growing number in the market believe they are, and coupled with the possible strike, is pushing the share price of the mining giant down.

Gerdau Ameristeel (NYSE:GNA) Shareholders Pass Gerdau S.A. (NYSE:GGB) Acquisition Resolution

Shareholders of Gerdau Ameristeel (NYSE:GNA) approved the acquisition of the remaining shares of Gerdau S.A. (NYSE:GGB) they don't already own.

Under the Canada Business Corporations Act, shareholders passes a special resolution which approved of the acquisition of common shares not already owned, directly or indirectly, by it for $11.00 in cash for each common share.

Close to 93 percent of shareholders voted to approve of the deal who held common shares, and 74 percent of minority shareholders gave their approval. A minority shareholder is defined as a party outside of Gerdau S.A. or those related to them.

The deal is expected to close in August 2010, subject to normal regulatory and court approval.