Friday, October 29, 2010

Citigroup (NYSE:C) Sees Cliffs' (NYSE:CLF) ArcelorMittal (NYSE:MT) Negotiations as No Risk to Earnings

Citigroup Inc. (NYSE:C) commented on Cliffs Natural Resources Inc.'s (NYSE:CLF) earnings today, targeting specifically the ongoing negotiations with ArcelorMittal (NYSE:MT).

Citigroup's Brian Yu wrote in a note that Citi sees negotiations between the companies "as a timing issue rather than an earnings risk."

Cliffs significantly missed on their third quarter operating earnings per share, which came in at $2.08, far below the $2.70 Citigroup was looking for. Earnings in general were reported at $2.18 a share.

Cliffs was trading at $64.24, up $0.87, or 1.37 percent as of 1:00 PM EDT.

What Will Halliburton's (NYSE:HAL) Failure Cost Them? What Will BP (NYSE:BP) Gain?

The narrative has changed quickly concerning the BP (NYSE:BP) oil spill, as the investigation surrounding the cement job performed by Halliburton (NYSE:HAL) could drastically change the liability outlook.

So far BP has rightly been the main focus of investigations, but that couldn't have remained the case throughout the entirety of the story because of there being so many contractors and others whose equipment and actions may have led to the failure on the Deepwater Horizon oil rig.

Investigators from the oil spill commission have determined the cement used by Halliburton was unstable, and Halliburton has admitted the final formulation used wasn't completed checked for its stability.

While Halliburton continues to dispute whether the actual formula they used is the one being tested, it seems it is close enough or accurate enough to make a judgment over, as the commission, and an independent study by Chevron (NYSE:CVX) seems to have confirmed.

With failures to completely test the mixture, there is no doubt Halliburton will incur some liability in the matter. It's only a matter of how much liability, not if they'll face it. There is also the question of whether they're insured enough to cover the liabilities, or it'll cost their bottom line.

It has already pushed up the costs of doing business through the increase in cost of their credit-default swaps, and there will surely be more to come.

For BP, this could be helpful once liability is determined. Whether or not it comes from an insurer or Halliburton directly, it could ease the liability load for them, and release capital over a period of time.

The other major element in liability is the blowout preventer provided by Cameron International (NYSE:CAM), which also failed to do its job. That's being tested at this time as to why it failed.

Concerning liability, BP has probably seen the worst, and anything like this is positive news for them from a financial perspective, but also helps them some reputationally, as people realize they weren't the sole company responsible for the disaster, and in some cases, like with the cement mixture, was out of their hands.

That does bring up something all oil companies said they've learned from this, and that is they must keep a much closer watch on contractors, even those like Halliburton, who had had a pretty good reputation as far as quality work goes.

Potash,(NYSE:POT), Agrium (NYSE:AGU), Mosaic's (NYSE:MOS) Canpotex Marketing Arm Lands Five Year Indian Deal

The Canpotex monopoly and price-fixing entity of Canada, which includes Potash,(NYSE:POT), Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), have landed a five-year deal to supply 3 million tons of potash to India's Coromandel International Ltd.

Canpotex CEO Steve Dechka said, "This agreement confirms Canpotex's long-term commitment to the important Indian market, and reflects the confidence our Indian partner, CIL, has in Canpotex's ability to meet their growing potash requirements."

Terms of the deal call for a 500,000 annual supply through March 31, 2016.

Opposition to the bid from BHP (NYSE:BHP) is largely based on their commitment to produce potash at market rates rather than the price controls of the Canpotex cartel.

Farmers pay higher prices and food is also higher in price because of Canpotex and the Belarusian potash cartel.

Hopefully the Canadian government will resist politically-based opposition and allow the bid by BHP Billiton to go forward, as it would be good for the industry and markets.

Potash (NYSE:POT) CEO Sees Prices Reaching $600 a Ton

Potash Corp (NYSE:POT) CEO Bill Doyle said he sees the price of potash reaching a minimum of $600 a ton by 2013, as the increasing price of agricultural commodities may push farmers to boost production, which would in turn increase the demand for potash, and other fertilizers.

As the ongoing debacle over the BHP (NYSE:BHP) bid winds down, it's hard to trust anything Doyle says though, as his irrational and sometimes, childish, response to the bid, has caused him to be lowered in the eyes of many people and institutions.

In other words, even this assertion could be considered a ploy to affect the decision by the Canadian government on whether or not to allow the bid by BHP for Potash to go foward.

That's because Doyle has been attempting to make it look like Potash is far more valuable than the bid by BHP because of future, but unproven, projections of potash prices.

This doesn't mean there isn't a real support for potash prices moving up, just that the motives for Doyle expressing them are suspect.

Doyle concluded, "In my estimation, by 2013 you are going need prices free-on-board-mine of at least $600 to get to a level that you could get a 10% internal rate of return on a mine.

"And it's a ten year process, [so] you are going to need to move somewhere in that 2013, 2014 timeframe to have enough material available in the 2023/24 time level.

"So we certainly have the pricing power at the moment, and I see that
continuing for the next few years."

In the latest quarter of the company potash prices had average $305.60 a ton.

Wells Fargo (NYSE:WFC) Says Energen (NYSE:EGN) Valued Where it Should Be

Saying Energen Corp.'s (NYSE:EGN) valuation is in line with its performance realities, Wells Fargo (NYSE:WFC) downgraded them from "Outperform" to "Market Perform."

"We believe Energen is an attractively valued diversified energy company, the growth of which is primarily tied to its E&P business. EGN's strategy is designed to use its low leverage, liquidity, and free cash flow to opportunistically acquire and develop oil and gas assets. We think shares appeal to both energy and utility investors looking for a lower-risk way to gain exposure to commodities. In addition, EGN's modest dividend is largely supported by its gas utility," said Wells.

Energen closed Thursday at $44.65, losing $1.27, or 2.77 percent. Wells lowered their valuation range on them from $52-$54 to $51-$53.

BHP (NYSE:BHP) Gets Interim Sealing of Potash (NYSE:POT) Complaint in Lawsuit

Chicago U.S. District Judge Charles Norgle allowed a request by (NYSE:BHP) to be awarded where parts of a complaint filed by Potash Corp. Inc. (NYSE:POT) will be sealed on an interim basis.

The judge gave BHP until the close of business on November 1 to explain why the seven paragraphs being sealed should remain so. Potash was given a three-day period to respond.

BHP has claimed the paragraphs represent “highly confidential and sensitive business information.”

A prior request to seal portions of the complaint was denied by U.S. District Judge David H. Coar. It was later on that same day BHP filed an emergency motion to have parts of the complaint sealed.

The lawsuit filed by Potash against BHP claims the giant mining company made public statements which led to the value of the shares of the fertilizer company to lose value because they were misleading to the public.

BHP's (NYSE:BHP) Opposition from Saskatchewan Over Potash (NYSE:POT) Bid Getting Weirder

The obsession with some politicians from Saskatchewan in their opposition to the bid by BHP Billiton for the giant fertilizer company Potash Corp. (NYSE:POT) is getting stranger and stranger, contradictory, and hypocritical.

As Opposition New Democratic leader Dwain Lingenfelter has asked of Premier Brad Wall, how can reports the First Nations are working with Chinese investors and pension funds to put together a bid coincide with Wall's making a "Captain Canada" speech last week?

In other words, as we've mentioned in the past, there seems to be something odd happening behind the scenes in the midst of these contradictory actions.

Wall has been pressuring Saskatchewan politicians to get fully behind his opposition to the deal in order to present a unified front. But that's the point Lingenfelter, that how can there be a unified front when there are other deals being put together which are essentially doing the same thing BHP is: being a foreign company bidding for the Canadian-based potash producer.

Wall continues his mantra of the deal not being a net benefit to Saskatchewan, even though independent studies have shown that not to be the case as all.

In the short term there may be some truth to it, but over a period of time, which is what really counts, it would probably end up being more beneficial to the province and Canada as a whole.

So that still begs the question of why Wall and some are so obsessed with their opposition to the BHP bid. Are they saying they'd rather have the Chinese own Potash than BHP? Why?

Monsanto (NYSE:MON) on Finding Opportunities in Commoditized Markets

At "Fruit Attraction 2010," Monsanto (NYSE:MON) encouraged participants to think of ways of "finding opportunities in commoditized markets," the basis of the success of Monsanto throughout its existence.

Along with the benefit on the business side of differentiating themselves, Monsanto added they need to do this in light of creating value for the consumer.

Florent Rezeau of Monsanto’s Consumer Benefits team said: “In order to know the value we can bring to all involved in the produce chain, we need to understand our industry partners and their customers’ needs and challenges. We can only do that by teaming up and sharing our knowledge.”

Maren Schoormans of Monsanto’s Consumer Benefits team added: “Monsanto has hosted various consumer panels in the EU to help understand consumers’ perception of the taste and quality of our existing products and product innovations. Together with our industry partners, we can use this information to identify areas for improvement which can help contribute to success across the chain. It will also help us define marketing strategies for new, improved products, like our Ventero tomato and Cyro line melon varieties.”

BHP's (NYSE:BHP) Bid for Potash (NYSE:POT) to be Ruled on Soon by Canada

BHP Billiton (NYSE:BHP) and Potash Corp (NYSE:POT) will find out very soon whether or not the bid from BHP to take over the giant fertilizer company will be allowed to go forward by the Canadian government.

Prime Minister Stephen Harper reiterated Thursday it ruling will happen very soon. That points to the confirmation they won't attempt to extend the process by another 30 days. The ruling will thus be made on November 3.

Pressure to make the decision based on politics was set aside by Harper, who asserted it will be based on a fair evaluation of the overall deal.

The province of Saskatchewan has opposed the deal from the beginning, but some opposition to that has risen, with some starting to ask questions on why the BHP bid wouldn't be good for the country when one including the Chinese would be.

Alcoa (NYSE:AA) Making Wheels for Extraordinary Ferrari 458 Italia

Alcoa (NYSE:AA) has landed the contract to produce the wheels for the Ferrari 458 Italia via their Alcoa Auto Wheels unit in Cleveland, Ohio.

The Ohio plant employs 2,800 workers and develops products for defense, automotive, and commercial vehicles.

As usual with aluminum products, the new wheels will have a lower weight, while having a diameter of 20 inches. The 20 inch diameter is required in order for the larger carbon-ceramic brake discs accompanying the design.

The front wheels will weigh in at only 22.8 pounds and the rear wheels at 25.3 pounds, helping to reduce how much the car weighs, hopefully without sacrificing safety.

Victor Marquez, Vice President and General Manager, Alcoa Auto Wheels, said, “The weight saving possible with Alcoa’s forged aluminum wheels helps to achieve the sharp handling and steering response for which Ferrari is famous.

“As well as styling freedom, Alcoa’s forged wheels offer a quick-to-market, cost-effective weight reduction.”

Halliburton’s (NYSE:HAL) Shares Hammered After BP (NYSE:BP) Cement Report

There is no way to get around the potentially devastating report from the National Commission on the BP Deepwater Horizon Oil Spill, where Halliburton (NYSE:HAL) had the conclusion drawn that the cement they recommended using was unstable.

An independent investigation from Chevron (NYSE:CVX) performed on behalf of the commission reached the same conclusion, as well as did an internal investigation from BP.

Credit-default swaps almost immediately rose in price for Halliburton right after the news, and their stock got hammered, and will continue to be under pressure because of the unknown liabilities associated with the findings.

Whatever it is, in the short term Halliburton is in trouble, and that isn't going to change anytime soon.

The share price of Halliburton plunged to $31.68 at close, losing $2.74, or 7.96 percent, and continued to drop after hours.

Thursday, October 28, 2010

JPMorgan (NYSE:JPM) and HSBC (NYSE:HBC) Sued Again Over Alleged Manipulation of Silver Prices

The ongoing allegations against HSBC Holdings Plc (NYSE:HBC) and JPMorgan Chase & Co. (NYSE:JPM) were boosted, as another lawsuit was filed against the two companies in reference to accusations they manipulated silver futures and options prices for financial gain.

What vehicle was allegedly used to attain the price manipulation was what is called "spoof" orders.

How they work is a financial institution submits "a large order which is not executed but influences prices and is then withdrawn before it reasonably can be executed."

The first complaint against the two banks, filed by investor, Peter Laskaris, said this, "These price changes directly result, at least in one substantial part, from defendants' reduction in their concentration and other reductions of their unlawful activities in the silver markets since the government investigation."

The second suit was filed on Wednesday, October 27, basically making the same allegations of the original lawsuit.

Filed on behalf of Brian Beatty, claims the two banks attempted to game the system by taking huge short positions in silver futures contracts in order to hold prices down.

Silver prices have allegedly soared by 50 percent since the banks lowered their trading in silver futures when it became public concerning what they were doing.

Bank of America (NYSE:BAC) Sees $1 Trillion QE, Goldman (NYSE:GS) - $2 Trillion

What's a trillion here or there for the Federal Reserve, which is drunk on printing money, and depending on who's right - such as Bank of America (NYSE:BAC), which sees them printing $1 trillion, and Goldman Sachs, which sees them printing $2 trillion - the fallout will even crush American more during the long term, as the company teeters on the precipice of insolvency.

Goldman and Bank of America see the Fed buying up government debt incrementally in order to keep the huge amount from being digested immediately by ordinary Americans. Both expect a $500 billion plan to be initiated immediately after the meetings held on November 2 and November 3.

This will push up the price of gold and other commodities, which will cause inflation to rise, as far as commodities used for industrial purposes. Some agricultural commodities will continue to rise as well, or at least maintain support at fairly high levels.

BP (NYSE:BP) Losing Competitive Advantage to Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (NYSE:RDS-A) in Gulf Drilling

BP (NYSE:BP) rivals Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (NYSE:RDS-A) are using the misfortune of BP to quickly gain a wider competitive advantage in Gulf drilling as the troubled energy company has to focus on other battles and shoring up their reputation.

No government entity or official would likely grant BP a drilling permit in the Gulf of Mexico at this time, while the other companies are applying for permits to drill in the region.

Interestingly, Anadarko (NYSE:APC) has been given a free pass, as they've indicated they're ready to resume drilling in the Gulf even though they are 25 percent owners in the failed Macondo oil well, and their liability and responsibility in the matter is yet to be determined.

This is about resources, and since BP is by far the only company involved able to pay for damages, the others have in general ignored, although they may have to pay BP back before it's all through, although it's expected to be far below anything BP will have to pay.

BP will fall behind their rivals in the Gulf because of the Gulf oil spill, and their competitors will be smart to take advantage of the current conditions to extend their lead over them, which it looks like they're doing.

First Solar (Nasdaq:FSLR), Suntech (NYSE:STP), Energy Conversion (Nasdaq:ENER), Evergreen (Nasdaq:ESLR) Predicted to Underperform

First Solar (Nasdaq:FSLR), Suntech (NYSE:STP), Energy Conversion Devices (Nasdaq:ENER), and Evergreen Solar (Nasdaq:ESLR) do not impress Wedbush too much, as they analyze numerous companies in the solar sector, of which the above-mentioned are the worst in their view.

The honeymoon may be over for most in the solar segment, as subsidies are lowered or eliminated, and feed-in-tariff in 2010 and 2011 affect the margins of some companies, especially First Solar, which could get it hard by the changes.

Most companies that have proven sales are working hard to lower costs in the emerging solar environment, as the weak global conditions continue to put pressure on this high-cost energy sector.

It probably won't be that long into the future before the inevitable consolidation begins, as scale will be needed to drive down costs and price if the solar industry wants to survive in the new natural gas energy world, which has turned the energy sector on its head.

Canadian Solar (Nasdaq:CSIQ), Yingli (NYSE:YGE), Solarfun (Nasdaq:SOLF), Ascent Solar (Nasdaq:ASTI), SunPower's (Nasdaq:SPWRA) Expectations Lower Goin

With European markets plunging concerning solar demand, solar companies Canadian Solar (Nasdaq:CSIQ), Yingli Green Energy (NYSE:YGE), Solarfun (Nasdaq:SOLF), Ascent Solar (Nasdaq:ASTI) and SunPower (Nasdaq:SPWRA) probably won't be able to come close to their third-quarter results anytime soon.

Wedbush sees the North American solar market and china, which are slowly increasing in solar demand, not able to make up for Europe shortfalls.

All the companies listed above are rated as "Neutral" by Wedbush because of that, although each company has other factors in the rating decision.

Most of the solar companies have challenges because of the push to cut costs as government subsidies are lowered, which means they'll have to compete increasingly based on market conditions in the future.

Eliminating or lowering of government subsidies also means the threat of commoditization in the industry, which is why lowering costs is so important to them.

Solar companies could have a rough ride ahead, with some of it depending on how long the weak economic global conditions continue.

Trina Solar (NYSE:TSL) Has Strong Competitive Position, Low Cost Structure

While acknowledging the solar sector has a good third quarter, Wedbush doesn't see that continuing, and among the major competitors, only rates Trina Solar (NYSE:TSL) as an "Outperform."

Wedbush said that "given the company’s low cost structure and competitive position," they remain positive on the company.

When reporting on November 15, Trina should report quarterly sales of $419.2 million GAAP EPS of 88c, concluded Wedbush.

Trina closed Wednesday at $27.60, gaining $0.13, or 0.47 percent. Wedbush has a price target of $34 on them.

AK Steel (NYSE:AKS) Worst Pick Says UBS (NYSE:UBS)

UBS (NYSE:UBS) sees Thyssen's new mill as an overall drag on AK Steel (NYSE:AKS), which will hurt their more profitable businesses. Consequently, UBS said they're maintaining a "Neutral" rating on the company.

"We cut our Q4e EPS to a $0.64 loss to incorporate guidance of an $80/t EBIT loss on 10% fewer tons, and no planned repeat of a Q3 $8M+ FX gain. Seasonally weak Q4 volumes distort profits somewhat, but we see still challenging conditions into 2011. As such, we cut our 2011e to $0.30 from $0.42 and vs consensus $1.08," said UBS.

"AK is our least favorite pick...We have longer-term structural concerns over
pressure from Thyssen’s new mill, from both its high quality focus in AK’s auto niche business and just-started stainless steel capacity that can hurt AK's higher-profit businesses."

AK closed Wednesday at $12.40, losing $0.44, or 3.43 percent. UBS has a price target of $13 on them, lowering them from $14.

Hexcel (NYSE:HXL) Wind Growth Slowing Down

Alternative energy companies will remain under pressure, and that will be true of Hexcel (NYSE:HXL) as it pertains to their wind power segment, as the abundance of natural gas is expected to slow down demand and capital expenditure on companies producing wind products.

UBS (NYSE:UBS) said they're maintaining a "Neutral" on the company as recovery in the sector will take a long time. We don't see growth in that area for some time. After all, how long will it take for natural gas resources to slow down? It could be decades before they do, and probably into well over a 100 years. Not great news for the wind, solar and nuclear industries, among others.

"We have lowered our 2011 EPS estimate to $0.95 from $1.00 to account for a slower recovery in wind and also the headwind from a weaker dollar attributable to HXL’s significant Europe production. Our 2012-14 EPS estimates have also moved lower to account for a slower wind recovery. Vestas

today came out and forecast roughly 15% growth in shipments in 2011, below our prior forecast for wind. We remain cautious on HXL given the potential for wind growth to disappoint and A350 to slide to the right combined with its premium valuation."

Hexcel closed down Wednesday at $17.80, losing $0.29, or 1.60 percent. UBS has a price target of $18 on them.

Citigroup (NYSE:C) Responds to DuPont's (NYSE:DD) Performance

Citigroup (NYse:C), in general, likes the direction DuPont Co. (NYSE:DD) is taking, along with their performance, and while maintaining a "Hold" rating on them, increased their price target.

"Excluding pharma, PTOI rose 33%, while pharma income exceeded our expectations. Although Ag results were below our estimates, DD announced its North America corn share rose 3% to 35% & its share in soy rose 5% to 31%. DD reported continued electronics strength as sales rose 30% Y/Y on 24% higher volumes," said Citi.

DuPont closed Wednesday at $46.96, losing $0.26, or 0.55 percent. Citigroup has a price target of $50 on them, raising it from $44.

No BP (NYSE:BP) Oil in Gulf Seafood

Officials from Gulf states continue to hammer home truth about the effects of oil from the BP (NYSE:BP) spill, and that is that every test done on seafood from the Guld has revealed there's absolutely no oil tainting the test subjects.

Those with agendas are attempting to cloud and confuse the matter by contending they continue to find oil strewn around the Gulf of Mexico, implying the food chain has to be infected and tainted by oil. But when officials go to the alleged areas with huge swaths of oil, they find no proof that there was any in the area.

This is of course attributed to weather patterns and other fictitious assertions in order to keep the lies alive.

The agenda is fisherman and others allegedly harmed by the oil spill are seeking to be compensated for damages, and the more they can prove they were damaged the more money they'll be paid.

No matter. There is absolutely no proof any Gulf seafood is contaminated or tainted, and it can be eaten with full confidence.

BP has committed $20 million to continue comprehensive testing and marketing to get the word out on the safe food that can be consumed from the Gulf.

Wednesday, October 27, 2010

BHP (NYSE:BHP) Should Hold Strong on Mining Tax

Opposition to the draconian mining tax in Australia helped bring down the administration of Kevin Rudd, especially with BHP Billiton (NYSE:BHP) and CEO Marius Kloppers, and the general public, opposing it.

Hopefully will also bring down socialist Julia Gillard, who is attempting to keep the outrageous tax in place, albeit at lower levels than originally proposed.

Mining giants BHP Billiton and Rio Tinto (NYSE:RIO) have been the leaders in opposition to the outrageous tax, which will only encourage the expansion of government programs and spending instead of freedom and free markets.

The Australian states also need to be reined in, who have also set up to confiscate as much of the profits from the miners as they can get their hands on. Together it's producing a devastating impact on the industry.

A deal with the government before Gillard ousted Rudd is being attempted to be cast aside, something BHP and Kloppers especially vehemently oppose.

The best thing that could happen would be to eliminate the tax altogether, and drop the majority of the tax imposed by the states of Australia for no other purpose than to enlarge out-of-control government spending.

Austerity and limited government is the way forward, and governments around the world better get on board with it.

Goldman (NYSE:GS) Says Federal Reserve Needs QE of $4 Trillion to Meet Inflation Goal

Every time you turn around it seems, Goldman Sachs (NYSE:GS) has added another $500 billion, or trillion, to what is needed for the Federal Reserve to meet its goal of increasing inflation via quantitative easing.

The latest figure is the Fed will need to print $4 trillion to reach their goal of 2 percent or more.

Recent research by Goldman has said a minimum of $2 trillion would be needed to move inflation, but that probably wouldn't be enough, and $4 trillion is the more likely target.

In the midst of the rebellion by American people against outrageous spending and stimulus, it's extremely doubtful that the Fed would have the courage to print another $4 trillion. Even $1 trillion would probably be considered outrageous, and it would be.

One reason this won't work is even if the money is printed, the banks aren't lending to businesses, and most businesses aren't seeking loans because of the realities of the weak economy.

Throwing more money at the problem won't change that scenario one bit.

Hints the Fed may print money at intervals to give the appearance of being more wise with their dispensing of money won't fool many people for long, as it's not too difficult to add up billions over several quarter to reach the trillion and more that will ultimately be spent.

Citigroup (NYSE:C) Sees Russian Inflation on Expanding Money Supply

Similar to what the U.S. is about to experience when the misguided Federal Reserve institutes another round of quantitative easing, Citigroup (NYSE:C) said the rapid growth of the money supply in Russia will result in increased inflationary pressure through 2011 in the country.

Citigroup economists based in Russia, Elina Ribakova and Natalia Novikova, wrote in a research note that they see inflation growing to 9.2 percent through the end of 2010, and at 7.6 percent for 2011, based on an increase in the Russian money supply of 30 percent for September.

They economists said, “Growing producer costs and the acceleration of money supply growth will add to inflationary pressures from the end of 2010 and into 2011. However, we expect the central bank will remain under pressure not to increase rates in order to support a greater issuance of government bonds.

“We are concerned that, without a significant appreciation, pressure on the ruble and a weak interest rate transmission mechanism, inflation will remain elevated in 2011."

The money supply in Russia has increased at an annual rate of over 30 percent each month for seven months in a row, culminating with an increase of 31.2 percent in September, according to data from Bank Rossii.

Alcoa (NYSE:AA) Down on Mixed Economic Data

Ongoing release of mixed economic data has companies like Alcoa (NYSE:AA) being left with little or no direction, although investors and shareholders are starting to see and believe there will be a long stretch of economic weakness infecting the sector, even with estimated price and demand increases for aluminum.

The latest government data show business investment is expected to slow down, while the anticipated resumption of quantitative easing, which is strongly opposed in many quarters, will be incremental rather than all at one time, probably to lessen the opposition to the practice, which would grab hold of huge numbers and blast them if done all at once.

Also pushing down the share price of Alcoa is the strengthening of the U.S. dollar, which also put downward pressure on metal prices in general.

The aluminum giant dropped to $12.62, losing $0.25, or 1.94 percent as of 12:39 PM EDT.

Monsanto (NYSE:MON) Shares Boosted on Takeover Rumors

The on-again, off-again rumors and speculation surrounding the possible takeover of agriculture giant Monsanto (NYSE:MON) are making their rounds again today, and the share price of the company shot up in response, although they've pulled back a little as the trading day has went on.

Maybe the highly reported bid by BHP (NYSE:BHP) for Potash (NYSE:POT) has stirred up the rumor pot again concerning Monsanto.

Of course plunging from their annual peak of a little over $87 a share has something to do with it as well, as they're probably considered a bargain at this time, as the probability of corn prices remaining higher is real, and that could cause the share price of Monsanto to rebound.

If a company was interested, they wouldn't want to wait for that to happen where they would then have to pay a strong premium for the company.

Monsanto will always be controversial because of its products, but they're especially weak and beaten down now, probably the reason of a potential takeover rears its head on a consistent basis.

BP (NYSE:BP) Oil Spill Small Compared to Possible Shetland Scenario

Drilling near Shetland Islands in British waters could result in a bigger catastrophe than the BP (NYSE:BP) oil spill if an accident were to happen, according to Chevron (NYSE:CVX), who has a license to drill in the region.

According to a worst-case scenario, about 77,000 barrels a day could be released from the well if it ruptured. That's close to 25 percent more than that which escaped from the Macondo Well in the Gulf of Mexico.

Originally Chevron stated the worst that would happen would 35,000 barrels a day escaping into the North Sea.

Managing director of Chevron UK, Richard Cohagan, said the reason for the increased estimate is the high-pressure connected with the area.

"Deepwater Horizon has given us a new perspective on how bad things could be. When we looked at the core pressures and what seismic has shown us might be the producing interval, we calculated what the largest spill rate could be, said Cohagan.

"We actually came up with a very large spill rate in that condition of 77,000 barrels - actually more than BP's Macondo."

Oil companies have all been going over their operations after the Gulf oil spill.

Canaccord Genuity Starts Coverage on Echelon (Nasdaq:ELON)

Echelon Corporation (Nasdaq:ELON) is now being covered by Canaccord Genuity, with Canaccord saying they like the innovative history of the company.

"With a long history of innovation in building automation markets and a pioneering role on European Smart Grid projects, Echelon is uniquely positioned to capitalize on the convergence between energy management and control networking technologies," said Canaccord.

"While we find the strategy compelling, we look for signs of additional
traction as commercial real estate markets re-engage and domestic utilities begin to evaluate the NES platform in order to support a more favorable risk/reward at current levels."

Echelon closed Monday at $8.37, dropping $0.25, or 2.90 percent. Canaccord placed a target price of $10 on the company.

Agrium (NYSE:AGU), CF (NYSE:CF), The Way to Play Corn says Soleil

With corn, and by extension - nitrogen fertilizer, rising in price, the best way to play the sector is through Agrium (NYSE:AGU) and CF Industries, says Soleil Securities.

Soleil initiated coverage on Agrium with a "Buy" rating, saying they have an attractive valuation.

"In addition to CF Industries (Buy), we view Agrium as a way to play corn through nitrogen fertilizer...Ag-flation is back. The macro environment is favorable due to low interest rates and a weak dollar. Crop prices are up an average of 50% since June 30 on production-negative and therefore price-positive USDA grain reports ... Even after a 70% move since June 30 compared to a 12% gain in the S&P 500, the shares are now selling just at 12.7x our above-consensus EPS estimate of $6.83 per share."

Agrium Closed Monday at $88.53, gaining $1.31, or 1.50 percent. Soleil has a price target of $100 on them.

JA Solar Holdings (Nasdaq:JASO) May Deliver 440 MW in Fourth Quarter

With JA Solar Holdings (Nasdaq:JASO) reporting delivery of 410 MW for the third quarter, Auriga says they their assumption of 44 MW shipment in the fourth quarter remains in play.

"JA Solar announced Q3 shipments of 410 MW prior to the market opening on Tuesday morning. Our previous model reflected prior guidance of 375 MW, thus we are increasing our estimate for the current quarter. Our model already assumed 440 MW of shipments in Q4; therefore, we see no reason to change our out-quarter estimates. In 2011, our model assumes over 1.8GW of shipments, which substantially exceeds the current run-rate established in Q3; there are no changes to our 2011 model," said Auriga.

"We continue to believe that gross margin will be the likely surprise in the quarter, as the consensus estimates are looking for just 21.2%. Cell pricing has been particularly strong in Q3, and we are modeling a 3% sequential increase to $1.34/W. That said, wafer prices have also been increasing, which will increase input costs and, in turn, will serve as an offset in COGS. We believe gross margin could reach 23% in Q3, and our new $0.38 EPS estimate remains above the consensus. Investors should expect to see a meaningful increase in gross margin dollars, although the gross margin percentage could show a small sequential decline."

Auriga is a little too optimistic concerning the overall solar industry in our opinion, as almost everything depend on the subsidized German market, which is scaling back subsidies, although will artificially grow in the short term.

JA Solar closed Monday at $8.64, gaining $0.19, or 2.25 percent. Auriga as a price target of $8 on them.

Bank of America (NYSE:BAC) Changes Ratings on CMS (NYSE:CMS) and NV Energy (NYSE:NVE)

Bank of America (NYSE:BAC) changed its ratings on NV Energy (NYSE:NVE) and CMS Energy (NYSE:CMS), upgrading one and downgrading the other.

In the case of CMS Energy (NYSE:CMS), they were downgraded from "Buy" to "Neutral." After remaining level for months, CMS caught fire in the early part of July, but seem poised for a pullback.

NV Energy has been on a more steady climb, and were upgraded by Bank of America from "Underperform" to "Buy," as it looks like it's their turn to start a more serious climb in price.

NV closed Monday at $13.50, gaining $0.51, or 3.93 percent. CMS ended the trading session at $18.33, dropping $0.39, or 2.08 percent.

First Solar (Nasdaq:FSLR) An Investment, Not a Trading Stock

Communicating why it maintains a "Buy" rating on First Solar, Inc. (Nasdaq:FSLR), Auriga likes the strategy for the long term the management is enacting.

"Within our solar coverage, we continue to regard First Solar as an investment rather than a trading stock. Management has demonstrated the wherewithal to invest throughout the annual PV cycle while the project business brings stability to the business model in terms of both module placement and profitability. As the growth of the project business accelerates, the timing of revenue recognition will be difficult to model, thus investors, not traders, need to value the stock over longer investment horizons. Our profitability estimates continue to be above the Street consensus through 2011, and our initial EPS estimate on 2012 approaches $11/share," said Auriga.

Although possibly being too optimistic, Auriga sees earnings per share for 2010 having an upside, 2011 being too bearish for earnings per share, and expansion capacity driving the earnings per share to $11 in 2012.

Sounds more like a cheerleader in some ways rather than analysis.

First Solar closed at $148.15 Monday, gaining $1.00, or 0.68 percent. Auriga has a price target of $175 on them.

US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal (NYSE: MT) Post Disappointing Earnings

The steel industry remains under tremendous pressure, as US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal (NYSE: MT) all reported poor results for their most recent quarter, with US Steel and AK Steel both posting losses.

Weak economies around the world are the major contributors to the terrible performance of the steel industry, as even countries with growth prospects like China are cutting back in areas to protect their economies from further erosion, especially the construction sector in China.

The consequence of China cutting back on domestic steel consumption is companies there will attempt to make up for it by exporting steel to other nations, which will continue to put downward pressure on prices, margins and earnings.

Every important metric for the industry is under pressure, as demand has fallen, sales dropped and costs risen. Many steel companies don't see this changing anytime soon.

As the global economy goes so will go the steel industry, and that doesn't bode well in an economic climate of caution and little or no growth.

US Steel lost $0.35 a share on revenue of $4.50 billion. Last year in the same quarter US Steel lost $0.17 a share. They haven't been profitable since the latter part of 2008.

ArcelorMittal's earnings dropped by 21 percent in the second quarter, but were still able to increase profits by 48 percent over the same time last year. Most of that is attributed to China demand for steel falling.

AK Steel also posted a loss for the quarter, losing $59.2 million, based mostly on the increase in iron ore prices.

JPMorgan (NYSE:JPM) Launching Copper Exchange Traded Fund

In documents filed with the SEC, JPMorgan (NYSE:JPM) revealed they're going to launch a physical copper ETF, or exchange traded fund. There was no launch date or ticker named revealed in the filing.

Per the S-1 Registration Statement with the SEC, JPMorgan did reveal the name of the ETF will be J.P. Morgan Physical Copper Trust. Sponsoring the trust will be J.P. Morgan Commodity ETF Services.

The registered amount of shares is 6,180,000, which will include a top offering price of $80.87 a share.

JPMorgan said in the filing, "The shares are designed to mirror as
closely as possible the performance of the price of physical copper..."'

The trust will only take delivery on Physical Copper Grade A as assets. There will be no trading of copper future contracts by the trust. Physical delivery will be taken in the form of LME Copper Cathodes.

Copper will be warehoused by the Henry Bath Group, a JPMorgan wholly owned subsidiary. Countries holding the warehousing the physical copper will include Italy, Germany, the Netherlands, the United States, Malaysia, Singapore, South Korea, Spain, and the United Kingdom.

Some reports say the copper will held in the storage facilities of Henry Bath in the United States.

Tuesday, October 26, 2010

DuPont (NYSE:DD) Raises Guidance as Company Beats Estimates

DuPont (NYSE:DD) exceeded analysts' expectations according to their quarterly report, although the were far behind their performance last year in the same quarter.

Earnings for the third quarter reached $367 million, or 40 cents a share, dropping from $409 million, or 45 cents a share in 2009's third quarter. Analysts were looking for 34 cents a share on sales of $6.72 million.

Revenue did increase, growing to $7 billion, an increase of almost 15 percent.

DuPont Chair and CEO Ellen Kullman said, "I am proud of our business teams' performance this quarter, with segment pre-tax earnings up 33 percent excluding Pharmaceuticals income. DuPont's market focus and science-based innovations helped drive outstanding sales growth, with all business segments and regions contributing. This quarter's results were complemented by ongoing productivity improvements and rigorous cost management that contributed to profitable growth."

Earnings guidance going forward was raised for the full year 2010 to around $3.10 a share over the previous guidance range of $2.90 a share $3.05 a share.

Bank of America (NYSE:C), Citigroup (NYSE:C), Deutsche (NYSE:DB), Goldman (NYSE:GS) and UBS (NYSE:UBS) Bookrunners on Korea Gas Notes

Bank of America (NYSE:C), Citigroup (NYSE:C), Deutsche Bank (NYSE:DB), Goldman Sachs (NYSE:GS) and UBS (NYSE:UBS) were joint bookrunners on the sale of $500 senior unsecured notes in the 144a private placement market for Korea Gas Corp.

Here are the data:


AMT $500 MLN COUPON 4.250 PCT MATURITY 11/2/2020

Citigroup (NYSE:C): Euro Overvalued Heading into November

Citigroup's (NYSE:C) head of G10 strategy in New York, Steven Englander, said heading into November's risk events, he sees the euro as being overvalued.

Some investors who got in at $1.40 on the euro now feel like they've been burned, and are feeling a "little worn down," according to Phil Streible, senior market strategist at Lind-Waldock.

Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto said, "Quantitative easing is all priced in so you will need to see very soft U.S. data indicating the need for large amounts of QE, or prolonged QE, to send the dollar lower.

The euro dropped in New York - after trading lower on weak Asian equity markets - with investors not willing to support the common currency near $1.40 based on the volatility surrounding the Nov. 2 U.S. elections and the Nov. 2-3 Federal Reserve meetings. The euro fell to an intra-day low of $1.3831 in New York trading.

Monsanto (NYSE:MON) Sued by WV Over Alleged Non-cooperation

In an effort to find out if the claims by Monsanto (NYSE:MON) over their Roundup Ready 2 Yield soybeans are proven through test results, the state of West Virginia has sued the company because the allegedly won't cooperate.

The truth is for some reason the usual practice of including a protective order related to the confidential intellectual property information isn't being agreed to be the district attorney of West Virginia, making the lawsuit suspect at best.

In response, West Virginia is seeking an order to allow them to bar Monsanto from selling products in the state until they comply with their order.

So while Attorney General Darrell McGraw alleges he's attempting to check out the assertions of Monsanto over their soybeans, he won't allow a protective order to be included in the case. That makes no sense, and questions his integrity over the protection of intellectual property.

What reason in the world wouldn't a protective order be included unless there's an agenda of some sort. It makes little sense.

The supposed reason of the inquiry is to find out if the extra cost of seed is backed by higher yields.

Monsanto said it Roundup Ready 2 Yield soybeans yield about 38 bushels an acre more than its original soybean.

Major Shareholder Wants BHP (NYSE:BHP) to Buyback Shares

The largest shareholder in BHP Billiton (NYSE:BHP), BlackRock World Mining Fund manager Evy Hambro, has called for the diversified miner to begin a buyback of stock to return capital to shareholders.

Hambro said, "There is room in their balance sheet for them to be able to do it. I also think there is nothing wrong in taking advantage of the share price today, assuming they are allowed to do it legally, while this Potash (NYSE:POT) bid is ongoing."

BHP has already missed an opportunity be waiting so long, according to Hambro, and they need to get in underway as soon as possible if allowed to at this time.

Hambro said BHP should consider combining a buyback and divident, stretching it out over a period of years.

He concluded, "A one-off buyback, you don't get a good PE (price to earnings) multiple for that. If everyone knows you're going to buy back a certain amount of shares every year and you do it, people start to factor that into their long-term valuations."

Blackrock owns a 10 percent stake in BHP.

Hearing for BHP (NYSE:BHP) Challenge to Potash (NYSE:POT) Pill Scheduled for November 8

Assuming the deal is approved to go forward by November 3, BHP (NYSE:BHP) has been approved for a hearing on November 8 to challenge the attempt by Potash Corp. (NYSE:POT) make it expensive and difficult to gain a majority for the takeover.

The Canadian government will decide on November 3 whether or not to allow the deal to go forward, based on the parameters of the Investment Canada Act, which are based on whether it's beneficial for Canada for the deal to go ahead.

As far as the "poison pill" attempt by Potash, that would include allowing shareholders with 20 percent or over of outstanding common shares to be diluted. That makes it almost impossible to buy because of the prohibitive costs resulting from the dilution.

It works by giving other shareholders the option to acquire additional stock as huge discounts if they choose to.

Most of this is a delay tactic in an attempt to gain another suitor, but BHP said Potash has had ample time to find an alternative to their approximate $40 billion offer if there were legitimate offers out there.

BP (NYSE:BP) May Have to Shutter Gas Field because of Sanctions on Iran

Sanctions from the European Union on Iran because of their continuing nuclear program will probably result in BP (NYSE:BP) having to shut their gas field located of of Scotland because of their partnership with Tehran in the project.

The EU approved sanctions on Iran on Monday, which target the energy sector of the country, which is vital to the economy of Iran.

An EU spokesman said, "The UK authorities have informed the (European) Commission that the Iranian sanctions legislation is likely to cause the closure of this field."

The sanctions have been put in place in order to bring Iran back to the bargaining table over the enrichment of uranium, said EU leaders.

"This is an intended effect of the legislation and it shows that the UK authorities are ready to take the difficult decisions that are necessary to make the sanctions effective," added the EU spokesman.

Tehran has denied the accusation from the West that their nuclear program is being used to build an atomic bomb rather than the proposed energy program they assert it is.

The gas field to be closed is the Ruhm field.

Alcoa (NYSE:AA) Appoints New VP Finance for North American Rolled Products

Alcoa (NYSE:AA) has named Matthew Garth as the new vice president of finance for North American Rolled Products.

Replacing Garth in his former role as director of investor relations will be Roy Harvey, who was Alcoa's director of corporate treasury.

Alcoa Chief Financial Officer Chuck McLane in a statement: “Matt and Roy bring solid financial experience and talent to their roles. Matt’s strategic background and capital market experience will be a valuable addition to Rolled Products, and Roy’s unique international operational experience will be an asset in working with the financial analyst community.”

The rolled products group entails the North American Mill Products and Rigid Packaging operations unit.

Rigid Packaging has plants in Alcoa, Tennessee and Warrick, Indiana. Mill Products has plants in Davenport, Iowa and Lancaster, Pennsylvania.

BP (NYSE:BP) Denies S.Africa, Mozambique Assets for Sale

Media reports BP (NYSE:BP) was going to sale its assets in S.Africa and Mozambique were debunked by the oil giant, where they said they had no intention of taking those actions, but are rather looking at investing more in them.

BP noted their intention is to spend close to $90 million on fuel terminals, safety, and to restore its damaged reputation.

BP's Chief Operating Officer for the eastern hemisphere, Tufan Erginbilgic, confirmed it saying, "South Africa is an important market for us. There's no intention to sell any more assets; in fact, next year we will spend about $90 million."

Most of the capital expenditure will be focused on the South African market.

In other African markets like Tanzania, Zambia, Botswana, Namibia and Malawi BP does has assets for sale.

Citigroup (NYSE:C) Upgrades RRI Energy (NYSE:RRI) on Long-term Outlook

Although Citigroup's Brian Chin didn't have a lot of good to say in the near term about RRI Energy (NYSE:RRI), over the long term he does believe the company will perform better, and raised his rating on them from "Hold" to "Buy."

Chin said:

"We project forward capacity prices will move higher because of increasingly restrictive EPA policies for power plants. This will tighten power supply in the Pennsylvania/Jersey/Maryland region, causing capacity prices to rise over the next 2-3 auctions. Catalysts for our thesis: The EPA will finalize its SO2 and Hazardous Air Pollutants rules over the next 12-18 months. RRI Energy is the most levered name to this dynamic, because it has no regulated utility to dilute its earnings.

"We continue to be bearish forward natural gas prices, and RRI remains levered to natural gas prices. The annual capacity auction takes place in May 2011, and even our forecast expects capacity prices to be relatively flattish next year. Our RRI upgrade then, is clearly more of a long term call on our part."

RRI closed Monday at $3.55, gaining $0.03, or 0.85 percent. Citi has a price target of $5.50 on the company.

Citigroup (NYSE:C) Sees Schlumberger (NYSE:SLB) Margins Rising in North America

Citigroup (NYSE:C) increased it price target on Schlumberger Ltd. (NYSE:SLB), saying its margins in the North American market should increase.

"We are increasing our North [American] margins to 18.0% from 15.2% in 2011 and to 20.0% from 17.5% in 2012, raising estimates slightly," Citigroup analyst Robin Shoemaker wrote in a note.

Schlumberger closed Monday at $68.53, gaining $0.76, or 1.12 percent.

The price target was raised from $77 to $82. A "Buy" rating on the stock was maintained by Citigroup.

BP (NYSE:BP) More Committed Than Ever to U.S.

Whether you love em' or hate em' BP (NYSE:BP) isn't going anywhere, according to CEO Bob Dudley, speaking of his commitment to continue drilling in the deep waters off of the U.S. coast.

Talking to a gathering in Britain, Dudley said the company was "part of the American community," and contrary to pulling out, would be getting even more involved in the production of energy in the region.

Dudley also reminded the audience that BP was a major employer in America, providing 23,000 jobs for the country, and is the biggest oil and gas producer in the States.

"I did not become chief executive of BP in order to walk away from the US. BP will not be quitting America," said Dudley.

Correctly citing the important of offshore deep water areas as crucial to providing energy, Dudley concluded, "The deep waters are becoming an increasingly important source of energy to fuel the global economy."

With the oil industry and governments of Gulf states putting pressure on the Obama administration to resume drilling in the Gulf after the oil moratorium was lifted, BP could be back drilling and extracting oil and gas from the region in the early part of 2011.

Should BHP (NYSE:BHP) Raise its Potash (NYSE:POT) Bid?

A lot has been made of the rise in price of corn and soybeans and its affect on the bid by BHP (NYSE:BHP) for Potash Corp. (NYSE:POT), but in truth short-term fluctuations in price have little to do with valuations of a company, and if BHP raises its bid as a growing number of people believe, it shouldn't and probably won't be based on temporary crop prices.

BHP CEO Marius Kloppers has made it clear if the deal doesn't add value to shareholders, he will back away from it.

The challenge for Kloppers is he's under increased pressure to grow the company, and there simply aren't that many companies that can affect the bottom line in a way to satisfy shareholders.

So he can't pay too much for the company, but he also can't be perceived as too stingy if he does in fact lose the bid. Two prior attempts by Kloppers to make deals have failed, and he will be perceived as someone who can't get the job done or is attempting to make the wrong deals.

In the case of the recent failure to merge iron ore operations with Rio Tinto (NYSE:RIO) that was the case, so he now has to walk a fine line.

The failure of the Rio deal did have a positive effect on BHP, as it added over $5 billion to the company war chest for the Potash deal.

One caveat to the statement made about the short-term price of crops is if it is indeed considered a short term event. If it is, Potash will have to make the case for a higher bid price, if not, BHP will have to justify their price if it is thought crop prices will continue to hold or go up.

BP (NYSE:BP) CEO Bob Dudley Strikes Back

Although still expressing regret over the consequences of the BP (NYSE:BP) oil spill, CEO Bob Dudley did strike back some at the excessive media reports that made it look like the world was going to end.

Now that the extent of the damage isn't anywhere close to what was projected, Dudley blasted those who irresponsibly reported the proposed damage as fact.

Dudley said, “I watched graphic projections of oil swirling around the Gulf, around Florida, across and around Bermuda to England. These appeared authoritative and inevitable. From a terrible accident and environmental spill grew a corporate crisis that threatened the very existence of our company.”

Even today accurate reports of little devastation to the Gulf of Mexico is met with scathing criticism because it doesn't meet the narrative of those who oppose drilling for no reason other than it's drilling.

For example, many cite the damage done to wildlife in the region because of the oil spill, but one grouping of wind turbines does more damage as they shred birds and bats to bits than the entirety of the damage done to wildlife for the whole oil spill.

Somehow birds with some oil on them is worse than bird and bat body parts shredded by wind turbines.

It's good to see Dudley strike back at the hype and hysteria coming from the distorted picture created by the mainstream media.

Monday, October 25, 2010

BP (NYSE:BP) Shares on Hold Until Justice Probe Completed

There are a number of things that need to be resolved before BP's (NYSE:BP) shares will be able to be released from the current constraints on them, not the least of which is the ongoing investigation by the U.S. Justice Department.

An investigation by U.S. Attorney General Eric Holder will determine whether or not BP will be designated as being grossly negligent under the Clean Water Act. If they are, their costs would be up to $17.6 billion.

They would actually be much higher though, as their partners in the failed Macondo well, Anadarko (NYSE:APC) and Mitsui (NASDAQ:MITSY), would be exempt from paying for their part in the mishap because of the terms of the partnership if BP is considered to be grossly negligent in the matter. That could be worth several billion more at minimum to them.

Other potential consequences could be the forfeiture well operating licenses and not being allowed to bid on future government contracts.

Until this is brought to a conclusion, BP shares will continue to underperform.

At this time BP is the largest operator in the Gulf of Mexico.

BP's (NYSE:BP) CEO Bod Dudley Thanks Britain for Support During Gulf Crisis

Speaking at the annual CBI conference in Britain, BP (NYSE:BP) chief executive officer Bob Dudley thanked the British government for their strong support during the extreme attacks of some lawmakers in the United States during the Gulf disaster.

He said, "At the height of the crisis it made a big difference knowing we had such good friends at home."

Dudley added he felt the media was and continues to create a climate of fear around the Gulf oil spill, and there is still data to be gathered to find out the overall causes of the spill.

One of those is the blowout preventer awaiting to be fully investigated and examined as to why it failed.

British Prime Minister David Cameron has said a strong BP is vital to the interests of Britain and America.

Teck (NYSE:TCK) Agrees to Farm-in Deal with Rox Resources (ASX:RXL)

Teck Resources Ltd (NYSE:TCK) and Rox Resources (ASX:RXL) have come to terms on a joint venture and farm-in deal for the Myrtle zinc-lead deposit.

The Myrtle project, which Rox holds the rights to, includes an indicated and inferred resource of 43.6 million tons at a combined grade of 5.03 per cent.

Terms of the letter of intent include Teck being able to farm-in the tenements and earn 51 percent interest. On Teck's part they'll have to spend $5 million over a period of four years to attain that percentage.

Teck must also spend at least $1 million by July 21, 2012, part of which must include a drilling program, before they would be allowed to withdraw.

If Teck spends an additional $10 million over four more years, they would get another 19 percent interest, bringing the total to 70 percent.

Myrtle is close to MacArthur River, which is one of the largest zinc-lead deposits in the world.

BHP (NYSE:BHP) Says No to Extending Canada Review

In a review of the bid by BHP (NYSE:BHP) for Potash Corp. (NYSE:POT), the Canadian government is poised to make a decision on whether or not it is in the best interests of Canada to allow the deal to go forward.

When asked if they would extend the period of time for the review to be done, BHP said they weren't interested in an extension via Andrew Mackenzie, BHP Billiton Ltd.’s head of non-ferrous businesses.

So on November 3 a review will be completed and shareholders will know whether or not the companies will be allowed to merge or not.

Some top executives at Potash and Saskatchewan officials have vigorously opposed the deal, but that won't determine whether or not it will get done. Opposition has been more political than based on the merits of the bid.

BHP offered close to $40 billion to take over the fertilizer giant.

Freeport (NYSE:FCX) Ready to Build Rail Lines to Transport Copper from Tenke Project

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) may be ready to build rail lines to transport ore from its Tenke project in Democratic Republic of Congo.

The possibility is being brought about after an agreement between the giant miner and the government of the African nation came after a 3-year battle over contract terms was resolved.

Freeport’s Chief Executive Officer Richard Adkerson said production will ultimately double at Tenke as they expand the operations there.

Tenke should produce up to 290 million pounds of copper and 18 million pounds of cobalt annually, according to Adkerson.

Revisions in the contract include the conversion of $50 million in debt into equity and pay up to $30 million in installments based on certain metrics being attained.

Concerning copper reserves, royalties of $1.2 million will be paid for each 100,000 metric tons of copper reserves above 2.5 million tons, and another $5 million for surface area fees.

Teck Resources (NYSE:TCK) Investment in Horizonte About to Pay Off?

In July Teck Resources (NYSE:TCK) sold its Araguaia nickel mine in Brazil to Horizonte in return for a 50 percent stake in the company. Now Horizonte is preparing a share sale in Toronto to raise capital to fund the project.

Other financing options include offtake agreements with nickel refiners and bank financing.

The Araguaia project has an initial resource of 60 to 70 million tons, and should produce a minimum annual volume of about 25,000 tons.

Nickel demand has shot up recently, with supply not being able to meet demand for the first time in five months, according to the International Nickel Study Group. The mine should be ready to produce in about 4 years. Drilling began on October 18.

Official numbers concerning actual resources will be determined in 2011, where at that time production costs and more accurate volumes will be known.

Once Horizonte has Araguaia ready for construction, Teck has an option to acquire the remaining shares in the company.

Green Plains (Nasdaq:GPRE) Closes Acquisition of Global Ethanol

Green Plains Renewable Energy, Inc. (Nasdaq:GPRE) said they've closed their acquisition of Global Ethanol, LLC, which they purchased for $169.2 million.

After the acquisition, Green Plains will increase their capacity by 31 percent to about 657 million gallons a year.

Along with producing and distributing ethanol, Green Plains also warehouses and markets grain and petroleum products.

Green Plains closed Friday at $12.29, gaining $0.54, or 4.60 percent.

Citigroup (NYSE:C) Lowers Price Target on Nucor (NYSE:NUE)

After missing analysts' expectations, Citigroup (NYSE:C) lowered its price target on Nucor Corp. (NYSE:NUE), while maintaining a "Buy" rating on them.

Citigroup said in a note to clients, "Based on recent results, NUE's qualitative guidance and modeling losses for the company's downstream Steel Products business into 2011, we are lowering our 2010 estimate to $0.61 from $0.78, 2011 to $2.85 from $3.70 and 2012 to $3.80 from $4.30. Based on these changes we are lowering our target price to $53 from $57 but maintaining our Buy...rating.

"NUE expects market conditions to be challenging in 4Q as limited construction activity and newly introduced US steel capacity enters an already competitive market. 3Q demand patterns diverged for long and flat products as structural and bar mill products increased sales volumes sequentially while plate and sheet declined. Similar to comments from STLD earlier this week, the near-term outlook for long-products looks better than flat-rolled.

"While we have slashed our earnings outlook materially, we believe NUE shares are undervalued relative to their mid-cycle earnings potential that is closer to $4.50/sh. Near-term demand indicators remain weak for the remainder of 2010, but we see signs of a construction rebound in 2011 that should lift demand for NUE's long products and stem losses at Steel Products by 2H11."

With continuing uncertainties connected to the weak global economy, Nucor said the fourth quarter may be the most challenging of the year.

Nucor closed Friday at $37.88, dropping $0.01, or 0.03 percent.

Citigroup (NYSE:C) Says Conditions Surrounding Santos Gas Project Approval Manageable

Approval of the natural gas project of Santos Ltd is based on certain conditions, which Citigroup (NYSE:C) shouldn't be too burdensome to the company and the project.

Some of the conditions for the $17.6 billion project include a possible increase in the water monitoring requirements and regulators keeping a closer watch over the Gladstone liquefied natural gas venture.

Citigroup said together the additional cost should come to about A$20 million, which compared to the overall capital expenditure total is relatively small.

Gas will be liquefied from the project and exported to Asian markets.

Freeport (NYSE:FCX), Lundin (TSE:LUN) Reach Agreement on Tenke

After a long period of negotiations with the Congolese government, Freeport-McMoRan Copper & Gold Inc (NYSE:FCX) and Lundin Mining (TSE:LUN) have come to an agreement with them on a Tenke contract.

While continuing to maintain majority interest in Tenke, Freeport did have to give up 1.75 of there 57.75 percent stake in Tenke, and drop it to 56 percent. Lundin Mining's stake dropped to $24.75 percent.

BMO Capital Markets said, "The impact from the lower equity in Tenke is estimated at less than 1 percent for Freeport-McMoRan and less than 2 percent for Lundin."

The value of the Tenke Fungurume copper and cobalt project is an estimated $2 billion.

Together the two companies had to pay over $70 million in fees to the Democratic Republic of Congo, who via their state-owned company Gecamines, raised their stake in Tenke to 20 percent.

While winning some important concessions, the process and resultant changes could backfire on Congo, as many watching the process are more concerned than ever about doing business in the country.

All the concessions don't even include the high income tax rate of 30 percent, a royalty rate of 2 percent, and an export fee of 1 percent.

Metalico (AMEX:MEA) Should Beat Quarterly Estimates

Canaccord Genuity said they're maintaining their "Buy/Best Idea" on scrap metal dealer Metalico (Amex:MEA) as their quarterly results report approaches.

"We reiterate our BUY/Best Idea rating on Metalico ahead of the company’s Q3 results on Friday, October 29 before the market open. We look for upside to our Q3 EPS estimate of $0.11 and anticipate management will have a bullish outlook regarding the PGM and nonferrous metals segments in Q4. Trading at less than 9x our 2011 EPS estimate, MEA has significant upside potential, in our view."

Metalico, Inc. also produces and markets a variety of lead products.

The company closed Friday at $4.73, up $0.27, or 6.05 percent. Trading volume was about double its normal 3-month average. Canaccord has a price target of $8 on them.

Are BP (NYSE:BP) Oil Report Sightings Legitimate?

With obvious agendas, a number of "unnamed" boat captains are reporting huge stretches of oil in the Gulf of Mexico, which just happen to disappear every time authorities check them out.

This could happen if there were only a few isolated instances, but when you have reports come out that the oil is continuing to rapidly disappear from the Gulf, and just about every time a few days later unofficial reports of massive stretches of oil, it sounds too much like a Hollywood movie and alleged events that are probably orchestrated stories.

There have so many exhaustive tests taken by the National Oceanic and Atmospheric Administration, that either you have to call them liars and deceivers, or somebody else is lying. You can't have it both ways.

Some attempt to justify the alleged oil sightings by saying they think certain weather changes are causing oil to be released from the bottom of the ocean and coming to the top.

But when you have these consistently checked out and nothing is there, the other excuse is the weather caused the oil to disappear; a convenient story to say the least.

That means every time an assertion of finding oil is made all that needs to be said when it's no longer there is the weather is the factor. Ridiculous to be sure.

Fisherman have partly behind the alleged sightings, and their agenda is to garner as much insurance money as they can, even though test after test of seafood has shown absolutely no tainted fish or seafood from oil or dispersants that could harm humans.

Environmentalists and universities are looking for grant money for their beleaguered departments which have been hammered by loss of funding during the recession.

So to allege an ongoing but unconfirmed huge amount of oil floating around the Gulf of Mexico is increasingly looking like an endless number of hoaxes.

Patriot Coal (NYSE:PCX) Challenged by Rising Costs, Geological Conditions

Citing probably operational inconsistency based on rising costs and geological conditions, Patriot Coal (NYSE:PCX) had their "Market Perform" rating maintained on them by FBR Capital.

"We are lowering our 2011 and 2012 estimates on Patriot Coal by an average of 4% and keeping our 4Q10 estimates unchanged after the company announced lower-than-expected 3Q10 earnings and steam coal sales outlook yesterday. However, we boosted our 2011 met coal volume slightly as the company laid out its growth pipeline and highlighted multiple levers it can pull to achieve that growth. While we like the progress made by PCX as it builds out its met production and opportunistically locks in favorable contracts, we continue to be concerned about tough geological conditions and rising costs, which create operational choppiness," said FBR.

Patriot was down $0.18 Friday, closing at $12.81, losing 1.39 percent percent. FBR has a price target of $18 on them, increasing it from $16.

BHP (NYSE:BHP) Bid for Potash (NYSE:POT) Close to Being Decided

Excluding market factors, the bid by BHP Billiton (NYSE:BHP) bid for Potash Corp. (NYSE:POT) is coming to a head, as the Canadian government is pouring over the details to decide whether to allow the deal to go ahead.

The province of Saskatchewan, which has been in emotional hysterics since the bid by BHP, has continued on with their strange behavior in their opposition to the bid, pressuring the Canadian government to stop the deal from going forward.

The government responded by saying they'll perform their "own analysis" on the bid, which they have until November 3 to make a decision on.

Saskatchewan has shamelessly asserted the deal will cost the province billions if BHP wins the bid, even though outside studies have shown that not to be the case as time goes on, although it could, in the short term, result in lower tax revenue for the region.

"Obviously there is a process involved and the test that we employ under the Investment Canada Act is the net benefit to Canada test," said industry minister Clement.

It would be surprising to see a decision made against BHP, but stranger things have happened.

Other than Saskatchewan, there doesn't seem to be widespread opposition to the takeover, other than from other Canpotex participants Mosaic (NYSE:MOS) and Agrium (NYSE:AGU), who don't what to see their monopoly broken up if BHP wins the bid and decides to produce the fertilizer at the rate the choose and not controlled production to maintain prices, and thus, margins.

BP (NYSE:BP) Signs $340 Million Offshore Dilling Deal with Angola

BP Plc (NYSE:BP) has signed a two-year deal with Angola worth $340 million.

The oil giant will pay for a deepwater oil rig with that money, according to Odfjell Drilling, a Norwegian rig owner.

Odjfell's Deepsea Stavanger rig can drill at depths of up to 3,000 metres, and is reportedly ready to begin by the first half of next year.

BP has an additional three one-year options on the rig if it chooses to exercise them.

Drilling will be in Block 18 off the coast of Angola.

Demand for Caterpillar (NYSE:CAT) Products Look Good

Handily beating earnings estimates last quarter, Caterpillar (NYSE:CAT) has garnered some solid support for growth in the near term.

While maintaining a "Neutral" on the equipment maker, UBS (NYSE:UBS) raised their price target from $74 to $85, and their earnings estimate too.

"Given an improved demand outlook and demonstrated impact of cost takeouts, we are raising our 2011E EPS to $4.00, from $3.60, and raising our 2011E and 2012E to $5.70 and $7.50, from $4.50 and $6.00, respectively," said UBS.

Caterpillar said in a statement, "2010 is shaping up to be one of the most significant year-over-year increases in sales and revenues in our history."

More significantly, Caterpillar's guidance for sales in 2011, was strong, with revenue estimated to reach $50 billion for the full year. That's about a 20.5 percent boost from guidance last year.

Credit Suisse (NYSE:CS) said if margins increase by 20 percent or more incrementally, earnings per share for Caterpillar could reach $6 a share for the year.

Caterpillar closed Friday at $78.33, losing $0.56, or 0.71 percent.

Goldman Sachs (NYSE:GS) Likes Freeport-McMoRan (NYSE:FCX) on Tight Copper Supply

Goldman Sachs (NYSE:GS) said they're raising their price target on Freeport-McMoRan Copper & Gold (NYSE:FCX) while maintaining their "Buy" rating on them based on expected tight copper supply.

"We believe that FCX stock is in the midst of re-rating as the market gains more confidence in expected supply-driven tight market conditions for copper," Goldman said.

Earnings per share for the fourth quarter was cut was cut from $2.98 to $2.78, while their fully year 2010 earnings per share estimate was lowered from $8.70 to $8.67.

Freeport closed Friday at $94.05, dropping $2.38, or 2.47 percent. Goldman raised their price target from $98 to $111 on the mining giant.

Friday, October 22, 2010

Jim Rogers Says Commodities Will be Profitable Investment for Years

In an interview with Bloomberg Television, Jim Rogers again reiterated his bullish outlook for commodities, saying Asia will continue to purchase commodities for decades.

Even if the Federal Reserve weren't to print more money (which it will), the underlying fundamentals of commodities would drive the price up. With the Fed sure to inflate, or implement another round of they're now calling quantitative easing, they're just going to make the process happen quicker in U.S. dollar terms.

As Rogers has said in the past, “If the world economy gets better, the prices of commodities will go up because there are shortages developing. We already see shortages developing. You mentioned rare earths, but there are others. If the world economy doesn’t get better, I still want to own commodities because they’re [Federal Reserve] going to print money.”

So whether it's demand or faulty economic policies, the commodity sector will continue to thrive for years to come.

Of course we need to watch for new price highs and be diligent in following the sector, but overall, commodities going to boom for some time.

As for gold, Rogers has said in the past he sees it going as high as $2,000 an ounce, although he has no idea when that may happen.

For now, he's reluctant to acquire more gold because it stands close to historical highs. He's looking to buy more on corrections.

Similar to investing on a monthly basis with stocks, another commodity bull, Marc Faber, recommends investors acquire gold in the same way, acquiring it consistently over a period of time to get a decent average price for it.

Two of Rogers' favorite commodity plays at this time are rice and silver, as they haven't yet reached new highs.

BP (NYSE:BP) Oil Spill Didn't Harm Coral Reefs

The more testing and research being done after the BP (NYSE:BP) oil spill, the hyped reports from media outlets concerning the alleged damage are being found to be false.

Not only is wildlife from the area found to have had little effect from the oil spill, but the latest news is testing of the coral reefs has also been found to have little damage as well.

This affirms the early reports that the Gulf of Mexico is somewhat of a healing machine, and can take a lot of damage and still restore itself. This is probably from the thousands of years of oil naturally seeping into the Gulf from numerous areas, which releases as much annually as the entirety of the oil from the Gulf accident.

After investigating many coral reefs, so far little if any damage has been found to have occurred.

This flies in the face of alleged reports from over-stimulated scientists that assert there is oil all over the Gulf of Mexico and on the bottom.

There may be some on the bottom, but that can easily be from the millions of gallons released naturally into the Gulf, as mentioned above. No proof that the oil on the bottom is from the BP oil spill has been offered yet.

Why this is important is non-scientific scientists and radical environmentalist and their media allies created a narrative that isn't close to being true. And they're enraged that the opportunity to advance their agendas is being crushed from the evidence that the Gulf of Mexico is a great self healer.

Drill baby, drill!

BP's (NYSE:BP) Loans Backing Liquidity to be Funded Next Week

Loans obtained by BP (NYSE:BP), worth $4.75 billion, which will be used to back the liquidity of the company, will reportedly be funded next week after the oversubscribed closing, according to bankers.

Royal Bank of Scotland (NYSE:RBS) and Societe Generale arranged a $2.25 billion loan, which was originally $2 billion. That is backed by BP crude sales from its stake in the Azeri-Chirag-Deepwater Gunashli field in Azerbaijan.

The remaining loan for $2.5 billion was arranged by BNP Paribas and Standard Chartered, and will have as collateral crude oil sales from Angola assets.

For the first two years of the five-year amortizing loans, BP will pay margins of 250 basis points (bps) over LIBOR. After that they'll increase to 300 for the third year of the loan, and for the final two years rise to 335 basis points.

The loans will mature on June 30, 2015.

Citigroup (NYSE:C) Says BP's (NYSE:BP) Third Quarter Results Irrelevant

While a number of analysts are pointing out the solid third quarter a number of oil and gas companies are expected to enjoy, with BP (NYSE:BP) missing out on it, Citigroup (NYSE:C) analysts say it's largely irrelevant as to the earnings put up by BP in the third quarter.

Citigroup said, "The path to rehabilitation post Macondo and Bob Dudley's new strategic direction are the key to performance rather than Q3 earnings."

Analysts from UBS (NYSE:UBS) thought in a similar way as Citigroup concerning BP, but added they do need to remain competitive in the midst of their ongoing transformation.

"The focus will be on the ongoing implications of the Macondo disaster but it will be very important to see that underlying operating and financial performance remains competitive," said UBS in a note to clients.

One strong area in the short term BP should benefit from is in reference to their refining margins.

The refining facilities of BP are located primarily in the United States, where margins this year soared by close to 30 percent, while margins for their competitors like Exxon (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS-A), which have larger refinery exposure in Europe, were flat at best for margins.

BP's (NYSE:BP) Vietnam Asset Sale to TNK-BP Hits Snag

The sell of BP's (NYSE:BP) assets to TNK-BP has hit a barrier, as the state-run oil and gas business of Vietnam, PetroVietnam, has evidently said they want to acquire BP's assets rather than allow them to be sold to TNK-BP, which is a joint venture between BP and a group of wealthy Russian businessman.

Talks are now underway between BP and TNK-BP and Vietnamese government officials and senior executives at PetroVietnam over the proposed blocking of the deal.

CEO of the Russian consortium holding half of TNK-BP, Stan Polovets, said this: "We believe that TNK-BP's acquisition of BP's assets in Vietnam will provide an excellent platform for a mutually beneficial partnership involving operations in both of our countries. It's in the interest of both companies and countries for this deal to go through."

Polovets is optimistic the deal will be allowed to go through.

It isn't unusual for what are called preemption clauses to be included in deals with state-owned companies like PetroVietnam, according to a BP spokesman.

First Solar's (Nasdaq:FSLR) Expansion Should Double Capacity

The demand for solar panels has First Solar (Nasdaq:FSLR) entering into an expansion phase, with new plants planned for in the U.S. and Vietnam.

First Solar spokesman Alan Bernheimer said, "We are sold out. Basically demand exceeds our manufacturing capacity to supply."

This and other recent expansions will basically double the production capacity of the company.

In 2012 First Solar should be able to produce over 2.7 gigawatts.

Each new plant should eventually employ about 600 workers each.

With their highest demand in Asia and the U.S., First Solar wants to build the facilities close to their top markets. Vietnam is a target because of their solar resources, surpassing China and India as the desired location.

It is thought the U.S. plant will be located in the American southwest, as that's where their largest domestic markets are located.

Alcoa (NYSE:AA), Rosnano Corporation Ready to Launch Joint Projects

Alcoa (NYSE:AA) and Rosnano Corporation are reportedly close to launching several new projects, with several high-potential ventures already in the pipeline, according to Rosnano CEO Anatoly Chubais.

Although Chubais wouldn't elaborate on the projects, it is known the two companies are collaborating on studying the use of nanotechnologies in oil and gas, and new ways to transmit energy, as well as new lighting systems.

Alcoa hasn't commented much on it, but there have been several strategies they seem to be employing that are outside its core business, possibly to move out of the cyclical nature of their primary aluminum business.

EVA Dimensions upgraded Alcoa from "Underweight" to "Hold."

The aluminum producer closed Thursday at $12.78, losing $0.17, or 1.31 percent.

Citigroup (NYSE:C) Changes Risk Rating on Ferrellgas to "High Risk"

Ferrellgas Partners, LP (NYSE:FGP) had its risk rating changed by Citigroup (NYSE:C), citing their high leverage and level distribution.

Citigroup said, "We are changing our risk rating for FGP to High Risk (2H) from Speculative (2S) now that the partnership has improved its distribution coverage during the last two fiscal years. However, FGP has the highest leveraged balance sheet and has yet to increase the distribution."

The propane distributor closed at $26.16 Thursday, gaining $0.21, or 0.81 percent.

Ferrelgas has steadily move up in share price over the last 12 months.

BHP (NYSE:BHP) May Divest of Assets After Potash (NYSE:POT) Deal

Commenting on what would probably happen after the successful acquisition of Potash Corp. (NYSE:POT) by BHP Billiton (NYSE:BHP), Deutsche Bank (NYSE:DB) said its very likely they'll sell off some of their non-core assets, which could bring up to $33 billion into company coffers. This assumes they are able to get the deal done.

Deutsche said in a research report, “The sale of smaller assets would simplify the group’s asset portfolio once more, and allow management to focus their energies on core divisions.”

Some assets the report listed as highly probable to be sold would be the nitrogen and phosphate units of Potash, U.S. and South African coal units, South African aluminum smelters, Nickel West, Ekati diamond operation and Richard Bay Minerals.

That would slash the debt load of BHP to under $10 billion while improving EBITDA by as much as 7 percent.

Monsanto (NYSE:MON) Sugar Beet Ban Could Lower US Sugar Production by 20 Percent

In a study by the US Department of Agriculture on the ruling by District Judge Jeffrey White on banning Monsanto's (NYSE:MON) Roundup Ready sugar beets until further testing, the conclusion is sugar production in the U.S. could drop by 20 percent in 2011.

Daniel Colacicco, a USDA economist, concluded, "The limited availability of conventional seed will severely restrict plantings of sugar beet in 2011."

White ruled the sugar beet seed of Monsanto couldn't be planted again until more extensive environmental impact studies were completed.

In 2009, genetically modified sugar beet seeds accounted for about 95 percent of the crop grown in the U.S. Estimates are about 1.6 million tons of sugar beet production will be lost in 2011 from the decision.

Some thing there will be intervention of some type to keep that from happening.

Sugar beets already in the field are allowed to be harvested this year.

Terex (NYSE:TEX) Plunges and is Downgraded: Time to Buy?

There is no way to spin the Terex (NYSE:TEX): In the short term they're a mess, as the recent quarterly results and resultant downgrade from Standpoint Research points to.

Standpoint downgraded the equipment maker from "Buy" to "Sell."

"Terex shares were nearing a two-year high before the (lack of) earnings announcement this morning. The shares are down 4% in light pre-market trading. Although the shares are trading at low multiples on earnings from 2005 (10X), 2006 (6X), 2007 (4X) and 2008 (4X), the company is not profitable at this time and it may take a couple of years before they match the $2.43 figure from 2005. We will not see them match the numbers from 2006 ($4.05), 2007 ($5.93) or 2008 ($5.64) any time soon. This was a $90 stock three years ago, but in my opinion it may take two years before we see the share price back at $30 … and we may very well break $20 to the downside before then. There are better risk-reward situations in the sector at this time. TEX has disappointed repeatedly in recent years and the announcement today was no exception. Annual revenues are now down below $5 bln … that is more than 50% off the $10 bln sales figure posted just two years ago," said Standpoint.

Terex lost $89.2 million in the quarter, dropping to $0.82 a share. Analysts had been looking for a loss of $0.15, to show how badly they missed.

There is nothing much short term to be excited about with Terex. But when measured against rivals Deere (NYSE:DE), CNH Global (NYSE:CNH) and Caterpillar (NYSE:CAT), they will trade at even a larger discount than before, offering a possible lucrative buying opportunity for the long term.

Bucyrus (Nasdaq:BUCY) Plunges After Missing Big Time

Bucyrus (Nasdaq:BUCY) missed estimates by a huge margin in its last quarter, as a major slowdown in underground mining equipment hampered the company.

Revenue for the quarter increased to $937.16 million, a major improvement over the $675.8 million generated last year in the same quarter, but far below the $1.03 billion analysts were looking for.

Earnings per share were down big also, coming in at $0.94 on earnings of $77.6 million, far off the $1.10 per share the Street projected. Last year the company did better in the same quarter with earnings of $92.1 million, or $1.21 a share.

Underground mining sales were $209.7 million, falling 3 percent on the quarter.

Some of the results were also from the acquisition of the mining equipment business of Terex (NYSE:TEX), although it didn't account for all the poor numbers.

After hours the stock was at $70.00, falling $3.51, or 4.77 percent at 7:58 PM EDT.

Stifel Nicolaus Raises Agrium (AGU) to Buy, Sets $100 Price Target

The red hot agriculture sector continues to push agriculture stocks up, and a number of upgrades have followed from several financial institutions. The latest is Stifel Nicolaus raising their rating on Agrium (NYSE:AGU) from "Hold" to "BUY."

Higher corn and soybean prices and the bid by BHP Billiton (NYSE:BHP) for Potash Corp (NYSE:POT) has been the driving force behind the surge in share prices in the sector.

Agrium closed Thursday at $87.15, gaining $0.29, or 0.33 percent.

Stifel raised their price target on the fertilizer company to $100.

Natural Gas Disrupting Everything, Including Own Industry

In one of the most interesting and possibly long-term profitable plays at this time is the natural gas sector, which is not only disrupting other energy sectors, but is in fact disrupting itself.

For example, not that long ago nuclear energy looked like it was about to make a huge comeback, and in some places that may remain true, for example China, which has numerous nuclear plants on the drawing board.

But the recent discovery of the enormous amount of natural gas reserves there are in the United States, and other parts of the world, has made nuclear yesterday's energy news, as well as wind farms, and more than likely, ultimately the high-price solar sector.

What's more fascinating, are those companies with heavy natural gas exposure have disrupted themselves, as those who want to increase margins, and probably survive, are spending on increasing their oil exposure.

An amazing development when you think of it. The incredible amount of natural gas reserves are pushing us back to oil again. No matter how hard some may attempt to deny that, it's the absolute truth.

Natural gas companies will have to become experts at cutting costs in that segment, as supply is enough to easily last for decades, and possibly into the far future beyond that. This is talking about known reserves, which have increased exponentially.

In the short term oil remains the key energy source, although coal is right up their with it as far as percentage of use for energy in general.

Coal accounts for about 48 percent of electricity production in the U.S., but is expected to pull back to about 44 percent by 2015. Natural gas is expected to increase from 21 percent of electricity production to 25 percent by 2015.

The only thing that could upset this fantastic scenario for low price energy is the evil of radical environmentalists, who are devastating the United States and other parts of the world through lawsuits and pressuring lawmakers to create regulations which basically destroy energy use of any kind.

The only thing these hypocrites like is wind power, which of course, unknown to most, destroy wildlife, especially birds in bats at levels which would shock most people if the story was told.

BP's (NYSE:BP) small effect on animals and sea life makes them look like guardians of the earth in comparison to wind turbines.

This is where we should all draw the line and fight back so hard as to destroy these evil organizations and people who continue to hate the human race and inexpensive energy that makes their lives easier.

BP (NYSE:BP) Oil Spill Killed No Gulf Fish Says NOAA

NOAA reported good news recently, as not only has there been no fish from the Gulf found to be contaminated, but no evidence any fished were killed from the oil spill has been found.

Fisherman confirm the fishing in the Gulf is as good as it has ever been, with more numbers of fish and larger fish. That's because during the oil spill the fishing was off limits, leaving the fish with no fishing pressure on them.

Although there are always fish kills in the ocean, none of them that have been tested have been found to be caused by Gulf oil in federal waters. The same conclusion has been drawn by those investigating state waters as well, according to NOAA spokeswoman Christine Patrick.

Testing has been done across a number of different government agencies, and all have come up with the same results for fish kills and fish not being contaminated.

Unfortunately, even with the complete clean bill of health for Gulf seafood, the public still has the perception food isn't safe from the region, when test after test proves it is safe.

Thursday, October 21, 2010

Tractor Supply (Nasdaq:TSCO) Earnings Estimate Lowered by FBR Capital

After earnings results released from Tractor Supply (Nasdaq:TSCO), FBR Capital was underwhelmed with them, maintaining their "Underperform" on the company and lowering their earnings per share.

That is interesting because of the fairly strong quarter for Tractor Supply, who recorded an increase in sales of 46 percent, exceeding expectations.

FBR said, "What seemed to prevent an upward preannouncement of the quarter was a $0.045 beneficial swing from a LIFO credit for the period, which rendered EPS generally in line with expectations. Same-store sales were up 5% for the period, compared with our 5.5% estimate. October trends to date (first month of 4Q10E) are "comping nicely" versus the cool weather trends, which helped this time last year. Implied same-store sales guidance is 2%–4% for 4Q10E.

"We adjust our 2010E EPS estimate to $2.16 from $2.20; this compares with the former (pre 3Q) Street estimate of $2.08. For 2011E, we adjust our EPS estimate to $2.33 from $2.47, which is below the current Street mean estimate of $2.36."

Tractor Supply was trading at $37.17, down $0.82, or 2.16 percent at 12:57 PM EDT. FBR has a price target of $31 on them, raising it from $30 a share.

BP (NYSE:BP) Says sub-Saharan African Oil Reserves Doubled in 20 Years

Oil reserves in sub-Saharan Africa have skyrocketed since 1989 to 2009, according to oil giant BP (NYSE:BP), rising to 127.7 billion barrels equivalent, almost 10 percent of the global total.

A growing number of countries in the region are inviting bids for exploration licenses off the Coast of West Africa, including Gabon, Liberia, Principé and Sao Tomé.

In the interior, estimates are there is as much as 71.7 billion barrels under the ground waiting to be discovered, according to U.S. Geological Survey.

It is becoming riskier to do business in Africa for the energy sector, at least for those already drilling in countries, as terms are changed as resources are discovered and extracted, as pressure to change the contracts to basically steal the profits is put on politicians in the regions by some of the local populations.

In other words, once the projects are underway officials are starting to change the terms of the original agreements to their benefit.

JPMorgan (NYSE:JPM) Managing Russian Ruble Bond Sale

Along with Troika Dialog and OAO Gazprombank, JPMorgan (NYSE:JPM) is helping to manage the largest international markets ruble bond sale in the history of Russia.

The bond issuance could reach to as high as $3 billion, and is hitting the markets at the right time, as investors seek emerging markets investments with higher yields outside of the U.S. dollar, which continues to collapse.

According to Deputy Finance Minister Dmitry Pankin, the sale could come about as early as November 2010.

The problem with the issuance is the ruble itself, which while expected to increase in value, has no benchmark for ruble Eurobonds to be issued off of, so pricing them will be a challenge.

It remains to be seen if the hunger for alternatives for the U.S. dollar will help the issuance of the ruble bonds be successful. The ruble isn't considered that attractive either, but higher yields may overcome that.

Transocean (NYSE:RIG) Slashing Pay for Injured Workers to $25 a Day

In a recent court filing, Transocean (NYSE:RIG) notified its workers injured from the BP (NYSE:BP) oil rig explosion that they would be having their pay cut to $25 a day as of December 15, although they said the offer is on the table until December 31.

Of the 126 people working on the Deepwater Horizon rig, most worked for Transocean, with 9 out of the 11 workers who perished working for the company.

According to Transocean, only 17 members of their crew working on the oil rig were injured.

Most of those asserting they were injured made between $10,000 to $15,000 monthly working for Transocean, according to an attorney representing over 20 of the alleged injured.

Attorneys for the alleged injured say the pay cut will pressure their clients to settle more quickly than they otherwise would have. But of course to keep non-working employees on the payroll at the wages mentioned above is a recipe for economic disaster, and an unrealistic expectation.

Transocean made an offer to other rig workers in September, offering them lump sum payments equal to six months' salary.

Survivors of the workers who perished in the accident continue to receive full salary and benefits, along with those severely injured.

Alcoa (NYSE:AA) Sees Aluminum Demand at 6 Percent over Next Decade

Alcoa (NYSE:AA) says they see demand for aluminum growing at a 6 percent clip over the next 10 years, and Rio Tinto (NYSE:RIO), via their Alcan unit, estimates aluminum growing at 5.3 percent over the next decade.

Rio said at the pace of their aluminum demand projections, aluminum production will have to grow by about 66 percent to meet the growing demand.

Alcan sees supply plunging by 27 million metric tons annually, as measured against demand, if new smelters aren't brought online by 2020.

For Alcoa, over the next year the believe aluminum consumption will increase by about 13 percent.

There have been mixed views on aluminum supply and demand, as some commentators and analysts have said they think aluminum supply will be ample going forward.

Much will depend, as with most things at this time, one whether or not the global economy comes out of the recession, especially the western world.

But even if the West doesn't, demand from Brazil, Russia, India and China will drive the demand side of the aluminum equation.

Another unknown is how much aluminum ETFs will factor in. As the first ones are being developed now, and a new aluminum market based on physical storage is emerging, which is unknown as to how much that will affect aluminum demand.

Caterpillar (NYSE:CAT) Beyond the Third Quarter

With almost perfect market conditions over the last 12 months, Caterpillar's (NYSE:CAT) revenue has soared by over 40 percent over last year.

The $10.5 billion in estimated revenue this quarter reflects market conditions which are close to optimal after a weak third quarter in 2009. Part of the 40 percent surge is attributable to that factor.

Sales of machinery this quarter is expected to by almost double last year according to Goldman Sachs (NYSE:GS), which account for about 66 percent of company revenue. Engine sales are also expected to jump by 24 percent over last year. Engine sales account for about 33 percent of Caterpillar's business.

A robust mining industry and emerging market growth are behind the projected strong growth of Caterpillar, but the question is - where do they go from here?

One of the things the company must do after the strong quarterly report coming up is to start managing expectations.

Costs related to compliance with emission standards are expected to cut into margins in earnings. Questions on the ability to continue pricing increases are married to that idea as well.

With investors and analysts expecting Caterpillar to continue on as they are, they may need to rein in those expectations and provide a more level outlook.

Having said that, some of this is out of their control, as what the Federal Reserve does in relationship to quantitative easing will play a big part in how they will be able to price.

If there is some easing that takes place, which is expected, commodity prices could easily soar much higher and Caterpillar should be able to duplicate, and possibly surpass this years' performance.

If some surprise emerges in this regard, they could take a hit.

I think QE is going to be implemented, and when it does, Caterpillar is pretty well positioned to profit from it.

Citigroup Raises Mosaic (NYSE:MOS) on Florida Lawsuit, BHP's (NYSE:BHP) Potash (NYSE:POT) Bid

Citigroup (NYSE:C) upgraded fertilizer company Mosaic (NYSE:MOS) from "Hold" to "BUY," citing improving conditions around a Florida lawsuit and the possibility of a higher bid by BHP (NYSE:BHP) for Potash Corp. (NYSE:POT).

The lawsuit is in relationship to a phosphate mine in Hardee County, Florida, which had a court issue a preliminary injunction against them, forbidding them to mine at this time.

Mosaic requested a stay on the order, which allow portions of the mine to be operational in 2011.

Citigroup analyst P.J. Juvekar said it's possible a ruling could be more favorable than that, and could be more long term for Mosaic. That would allow them to produce phosphate at lower prices.

The other factor is the potential acquisition of Potash Corp. by BHP Billiton, which will probably result in a higher bid by BHP for the fertilizer giant. That should result in a good boost for Mosaic when it happens.

Mosaic closed at $67.12, gaining $2.75, or 4.27 percent. Citigroup increased their price target on Mosaic from $64 to $78.

Peabody Energy (NYSE:BTU) Earnings Estimates Boosted by FBR Capital

FBR Capital reiterated their "Outperform" rating on Peabody Energy (NYSE:BTU), citing their strong performance in the third quarter. They also raised their earnings estimates for 2010-2012.

"This morning, we are increasing our 2010–2012 earnings estimates (EBITDA) on Peabody by about 2% after the company announced solid 3Q10 earnings, raised 2010 guidance, and sold additional coal at prices above expectations and in line with the forward curve. We continue to believe that Peabody is well positioned to benefit from growing seaborne demand and relatively less exposure to regulatory challenges domestically, where the company is also largely sold out for 2011. While the company's implied 4Q10 guidance may seem light, we remain focused on the key long-term catalysts for the company," said FBR.

"We are increasing our 2010 EPS/EBITDA estimates to $3.11/$1,884M, from

$2.99/$1,838M...We are also increasing our 2011 estimates to $4.00/$2,210M, from $3.83/$2,132M."

FBR has a price target of $61 on Peabody.