Spain Will Tap Aid from ECB

The disingenuous and dishonest assertions by some in the Spanish government that they are thinking about not taking the bailout money from the ECB are ridiculous, as there is no doubt, regardless of the posturing of Spain, that they will keep on going as they are without aid, or take the route of getting a line of credit. Both ideas are ludicrous, and won't fly under the growing pressure from the eurozone for Spain to access the capital.

According to the Spanish government, the company is in the midst of contemplating on the economic direction it wants to go, but this is only for its population, which will resist the expected austerity measures that accompany access to ECB aid.

The idea that Spain will continue to borrow at the high rates it currently is in the bond markets doesn't pass the smell test, and the European Central Bank will surely be given permission to buy bonds in order to lower the borrowing rates of the country.

Those watching the situation don't believe Spain even has several weeks to wait, and its politicians are probably trying to wait until after the elections on this Sunday before caving and tapping into the aid.

Germany, as usual, has also attempted to position itself as against Spain being bailed out, asserting it has no need of one. Angela Merkel will attempt to make it look like she opposes it as well, but like in her past actions, will try to make it look like she valiantly fought against it, right up to the time she gives the go ahead for more bailouts to continue. Again, all of that is so the German people are made to believe she's battling on their behalf, while all the time already knowing and deciding that the bailout will happen for those countries in the eurozone that ask for it.

Investors and those affected by the decisions in the eurozone need to know that the game is completely rigged, and Draghi was telling the truth when he said he's committed to doing whatever it takes to save the euro and the eurozone. There is no question the majority of leaders in the EU agree with him, and support whatever it takes to get it done.

Standard & Poor's downgraded the credit rating of five major Spanish regions Wednesday, including Canary Islands, Andalucia, Aragon, Galicia and Madrid. That puts even more pressure on the country to take aid before investors start to sell of Spanish bonds.

Overall Spanish debt was recently lowered by Standard & Poor's to BBB-, only one step above investment grade ratings. Below that is junk status, which would make it much more expensive for the Spanish government to borrow capital. Bond investors, as mentioned, would flee from their bond holdings if that were to happen, which is a likely probability.

For now, Moody's (MCO) is also keeping its lowest rating on Spanish credit without cutting it down to junk status. It has a Baa3 rating on Spain.

Taking all that into consideration, there is no doubt Spain will get aid from the ECB. The market is simply waiting for that to happen, and when it does, gold and silver prices will get a nice bump.

Marc Faber Sees Major Stock Correction Coming

In an interview on the FuturesNow program, Marc Faber, who is author of the Doom Boom & Gloom report, said investors need to prepare for a huge drop in the market in the near future, which will provide a great buying opportunity for those who are ready for it.

Faber said, "I have a lot of cash at the moment, because on this rally since April I have been lightening up on positions."

Following on the footsteps of an accurate call in the early part of June that it was time to acquire equities, specifically those that had good dividend yields, where the Standard & Poor's 500 has jumped close to 14 percent since that time, Faber now tells investors they need to consider reversing those positions, saying he is now heavily in cash in anticipation of the downturn.

"Unfortunately I have a lot of dollars. I just want to have a lot of cash because I think that within the next six to nine months we can buy just about anything 20 percent lower than it is now," Faber noted.

Recently Faber said the U.S. economy has a 100 percent chance of going into a recession.

Moody's (NYSE:MCO) Downgrades EXCO Resources (NYSE:XCO), As Do Several Others

Moody's (NYSE:MCO) downgraded EXCO Resources (NYSE:XCO) from "Positive" to "Developing" on the proposed buyout of the company and taking it private being a distraction to management.

Other agencies joined the downgrade bonanza, with Morgan Keegan downgrading them from "Outperform" to "Market Perform," MBO Capital downgraded them from "Outperform" to "Market Perform" as well, and Scotia Capital also downgraded XCO from "Sector Outperform" to "Sector Perform."

Price targets stood at $20 from Morgan, increased from $17 to $21 by BMO, and from $20 to $20.50 by Scotia.

Standard & Poor's Rating Service put the "BB-" corporate credit rating and "B" senior unsecured debt rating on negative credit watch.

Ratings could be lowered depending on the success of the takeover and how the financing is structured, concluded Standard & Poor's.

Moody's sees the process itself as being detrimental to the company, no matter what the ultimate terms of the deal may end up being.

Alcoa (NYSE:AA) Continues Climb on China Commodity Imports

Dow movers Alcoa (NYSE:AA) and Caterpillar (NYSE:CAT) moved higher today on news commodity imports to China were higher than expects, with China's trade surplus dropping to a five-month low of $16.88 billion in September.

The Dow Jones Industrial Average and Standard & Poor's 500-stock index are both up today.

Alcoa rose to $13.38, gaining $0.18, or 1.36 percent at 1:14 PM EDT. Caterpillar increased to $80.95, gaining $1.61, or 2.03 percent.

POSCO (NYSE:PKX) Selling $700 Million of Global Bonds

South Korean steel giant POSCO (NYSE:PKX) announced it'll be selling close to $700 million in global bonds in October, according to company President Choi Jong Taehired.

POSCO has a rating of A at Standard & Poor’s and A- at Fitch Ratings, and A2 at Moody’s Investors Service (NYSE:MCO).

Similar to the region is resides in and ongoing geopolitical concerns, POSCO has had a rocky ride over the last year, moving up and down in wide swings, although it seems to have recovered nicely from May lows, and has been consistently moving upward in share price.

On October 1 of 2009, they stood at $100 a share even.

Friday they closed at $116.63, gaining $2.65, or 2.32 percent. They have a market cap of just under $36 billion.

Ireland Bonds Downgraded by Standard & Poor's

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

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

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

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

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

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

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

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

Moody's (NYSE:MCO) Slashes BP (NYSE:BP) Debt Ratings

Moody's (NYSE:MCO) follows other ratings agencies in downgrading the debt of BP (NYSE:BP), cutting several of its credit ratings today.

The long-term debt rating of BP was cut from A2 to Aa2, their BP North America unsecured issuer rating dropped from Aa3 to Baa1, and for their BP Finance PLC unit, their senior unsecured issuer rating was slashed from Aa3 to A3.

Fitch Ratings and Standard & Poors recently downgraded the debt of BP as well.

The reasons for the cuts were solely on the uncertainty related to the Deepwater Horizon explosion which released the oil into the Gulf of Mexico.

BP's American Depository Receipts or ADR has fallen by 47.7 percent since the accident on April 20.

BP (NYSE:BP) Downgraded by Standard & Poor's

Unsurprisingly, after Fitch Ratings hammered BP (NYSE:BP) by lowering its rating by six notches from AA to BBB, Standard & Poor's has quickly followed by lowering their BP rating from 'AA-/A-1+' to 'A/A-1.'

"The downgrade reflects our opinion of the challenges and uncertainties that BP continues to face in the aftermath of the explosion on the Deepwater Horizon rig in the Gulf of Mexico on April 20, 2010, and the subsea Macondo well blowout," said Standard & Poor's credit analyst Simon Redmond. "These challenges and uncertainties include the difficulties BP is experiencing in containing the spill as well as the ultimate extent of the pollution, the consequences for BP of ongoing official investigations, and the implications of these investigations for the magnitude and timing of further cash payments by BP."

After the so-called escrow account where BP will pay in $20 billion over the next four years, net debt for the giant oil company increased to $45.2 billion, up from the prior $25.2 billion at the end of March.

Ongoing uncertainties related to the Gulf oil spill have Standard & Poor's also saying more downward rating adjustments could be implemented in the near future.

Dow in Worst May in 70 Years

The Dow Jones Industrial Average is sure to glad May is almost over, as its performance in the Month before summer was the worst in 70 years.

You have to go back to 1940 to find a worst performance for the month.

In its final trading day of May, the Dow fell 122.36 points to 10,136.63, a 1.2 percent decline. The Dow finished down 7.9 percent for the month.

The Standard & Poor’s 500 Index dropped another 1.2 percent on Friday to 1,089.41, as financial shares took a hit after the downgrade of Spain by Fitch Ratings.

Teck Resources (NYSE:TCK) Upgraded by Standard & Poor's Ratings Services

The long term corporate credit rating of Teck Resources (TSE:TCK-B) got a boost as Standard & Poor's Ratings Services increased their investment grade rating from BB+ to BBB.

S&P analyst Maude Tremblay gave this as the reason: "We base our upgrade on our view that, following the recent debt reduction initiatives, Teck has improved its financial risk profile to a level commensurate with an investment-grade rating and that its better-than-average cost profile will enable it to maintain intermediate credit metrics in the medium term, using our credit neutral price assumptions for base metals."

This will help Tech Resources in costs, as it should lowering borrowing rates, which will help them as long as they maintain the rating.

Commodity News around the Web

Weekend commodity news roundup

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Markets drop with oil on broad quarter-end selloff

Commodities ended broadly lower on Friday, extending losses from the previous session, after a drop in oil prices and profit-taking by funds preparing to close first quarter trade.

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Brazil's Real Falls on Commodities Drop, Concern Over Surplus

Brazil's real weakened for a second day on concern declining commodity prices and a narrowing trade surplus will lessen demand for the currency.

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Canada dollar sags on commodities, bonds mixed

The Canadian dollar ended lower against the U.S. dollar on Friday as commodity prices fell and worries persisted about the health of the U.S. economy and the potential for spillover effects on Canada.

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NYSE buys $55m interest in India exchange

NYSE Euronext Inc., the American-European corporation that operates numerous securities exchanges worldwide, has signed an agreement to purchase a 5-percent interest in the independent Multi Commodity Exchange of India Ltd. for $55 million.

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Sempra Energy ratings not affected by final approval for commodities jv - S&P

Standard & Poor's Ratings Services said its ratings and outlook on Sempra Energy (NYSE:SRE) are not affected, after the company received final regulatory approval to form the commodities-marketing joint venture, RBS Sempra Commodities.

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Commodities Bubble Burst? Big Clue Comes Monday

Investors wondering whether the agricultural commodities bubble has burst will get some important clues in Monday's annual crop plantings report, considered a bellwether for the direction of farming activity for the year.

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How Expensive is the Food for Food?

I want to share my opinion in answer to a few questions I've received about the increased margin requirements imposed by the Chicago Mercantile Exchange (CME) for crops of agriculture futures.

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