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Unfortunately the market appears to be focusing more on the 1750 ton increase in LME copper stocks than the 16,569 ton drop in Chinese copper stocks as copper prices are down today.
At least Chrysler paid back the loan with interest. Not no but hell no to what would amount to a bail out of hedge funds, speculators, and house flippers who bought those subprime loan packages and have now found the market turned against them.
Sounds good to me. AEY is more of a nasdaq type stock. Interesting that apparently AEY will be keeping the same ticker when it moves. I thought that nasdaq stock tickers always had 4 or more letters in their symbol.
http://biz.yahoo.com/iw/070823/0294030.html
CFC's CEO (Mozilo) has sure not been shy about dumping his own shares this year. He has unloaded millions of shares or about 80% of his holdings. Maybe he saw the bubble bursting before the market did. At any rate it is hardly a vote of confidence in his company.
http://biz.yahoo.com/t/18/6026.html
I don't see where BOA is taking a huge risk. As a bondholder they will have first dibs on CFC's portfolio of loans if CFC does go under and they could well pick them up at maybe 30c on the dollar. Interesting chart showing the growth of CFC loans that are foreclosed on. CA and FL are particularly bad, having roughly 6 times the number of foreclosed homes available than they did in the beginning of the year.
http://countrywide-foreclosures.blogspot.com/index.html
Blue Note (BN) is another play with substantial lead production. Production is estimated at 100 mil lbs of zinc and 58 mil lbs of lead over the coming year.
Lead price is now higher than zinc. Who would have thought that would happen a year ago when zinc was 3x the price of lead?
Metals rally. It looks like it will be a good day for the metalheads as all base metals are in rally mode in early morning trade. There is a report that China has already imported more copper through July of this year than they did all of last year and demand from there is expected to remain strong as well.
Copper Climbs for Fourth Session After Chinese Demand Soars
By Millie Munshi
Aug. 22 (Bloomberg) -- Copper in New York rose for the fourth-straight session as demand surged in China, the world's largest consumer of the metal.
China's refined-copper imports in July jumped 65 percent from a year earlier, the Beijing-based customs office said today. BHP Billiton Ltd., the world's biggest mining company, said global demand for commodities remains strong, driven by China. Copper, used in pipes and wires, has risen fourfold in the past four years as demand outpaced supplies.
``Globally, demand is holding up well,'' said John Gross, publisher of the Copper Journal in Cranston, Rhode Island. ``The environment is still one that would suggest continued strength in prices and volatile trading.''
Copper futures for December delivery gained 5.75 cents, or 1.8 percent, to $3.2225 a pound on the Comex division of the New York Mercantile Exchange. The price climbed 2.4 percent in the previous three sessions. The metal has climbed 12 percent this year.
``Demand growth from China is expected to remain robust,'' BHP said in a statement. The company reported an eighth consecutive record half-yearly profit on consumption in China and higher commodity prices.
China's refined-copper imports last month climbed to 103,089 metric tons. Imports in the seven months that ended in July more than doubled to 1.03 million tons. The country has bought more copper in the last seven months than in the whole of 2006.
Len, Assuming that supply will increase much less stay constant in a recession is a stretch to me. OPEC and Russia control much of the world's oil supply. They will cut back on production long before they see oil prices drop to $40/ barrel. I doubt we will ever see prices drop below $55/ bbl in the future and the long term trend in price will continue to be up not down.
Len, Your logic is compelling, however in the september post that you referenced to, you pointed out that the US has had 3 recessions since 1970. Those were in 73-75, 80-82, and 90-91. When I look at a table that shows average annual oil prices, average annual oil prices did not drop in the first two recessions but rather they actually increased. They did drop during the 90-92 recession. It does appear that high oil prices may well have triggered all 3 of those recessions. Here are average oil prices followed by inflation adjusted oil prices. Longer term, oil prices have definitely been on an uptrend which I expect will continue into the future. (It is hard to believe that prices were only $3 per barrel in the early 70s which is still only $15/bbl on an inflation adjusted basis.-No wonder muscle cars were so popular back then)
1969 3.09 15.95
1970 3.18 15.52
1971 3.39 15.85
1972 3.39 15.36
1973 3.89 16.59
1974 6.87 26.39
1975 7.67 27.00
1976 8.19 27.26
1977 8.57 26.78
1978 9.00 26.14
1979 12.64 32.98
1980 21.59 49.63
1981 31.77 66.20
1982 28.52 55.98
1983 26.19 49.80
1984 25.88 47.18
1985 24.09 42.40
1986 12.51 21.62
1987 15.40 25.68
1988 12.58 20.14
1989 15.86 24.22
1990 20.03 29.03
1991 16.54 23.00
1992 15.99 21.59
1993 14.25 18.68
1994 13.19 16.86
1995 14.62 18.17
1996 18.46 22.40
1997 17.23 20.39
1998 10.87 12.66
1999 15.56 17.78
2000 26.72 29.54
2001 21.84 23.39
2002 22.51 23.78
2003 27.54 28.42
2004 38.93 54.93
2005 46.47 47.97
2006 58.30 58.30
Source US DOE
Here's a link to the table:
http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
Now I see what it must be like to do a big fall with a bungee cord strapped on... Weird, but Kitcometals is showing that copper and aluminum prices took huge jumps in afterhours. Probably a mistake???
http://www.kitcometals.com/charts/
Thanks for the post. Is that govt portfolio with TDAmeritrade?
I just switched to their US government portfolio figuring that was the safest. Looking through the prospectus TDA sent me I don't see a breakdown. Apparently it is a summary of all their funds.
Thanks, Cliff
FNI-This stock certainly did get beat up today along with many other metal stocks but earnings were not as bad as first glance shows. $2 mil in taxes was charged against $2.7 mil earnings before taxes. That is about a 75% tax rate. Odds are there will be a credit next quarter. Also $2 mil in stock compensation expenses were charged last quarter. That should also go away next quarter. Revenues were based on the previous quarter's production which was about 22000 tons of ore. Production is expected to be double that over the next two quarters and the grade should also be much better reducing cost/pound. Cash flow was 4.4c last quarter which gives a better picture. Annualized that is 18c which sounds much better. The big problem is that nickel prices have now dropped to about half their highs and they may well drop further. Wherever nickel heads in the future is where FNI is also heading.
Interesting cl, I never heard that before. In the USA, the use of aluminum wire was generally outlawed 30 years or so ago because it tended to overheat and become a fire hazard. I guess it was not an issue for the chinese when all they used it for was lighting a couple of light bulbs, but AC is certainly another story.
mandjb, re HSOA.. I wondered the same thing but it will be a neat trick if they can do it. Normally one would expect a corresponding decrease in probably Accts Rcvbl and the note, leaving earnings unaffected, except for perhaps some interest that was owing that may be forgiven.
HAUP is also in the crapper today. Reported 2c vs 4c and expects softness to continue for awhile. S/P is down 20%. Odd part is that they just announced a stock buyback 2 days ago. Sure did mislead me with that PR.
Tim, he means QUA.to and QADMF as the pink sheet equivalent.
digi, I decided to go ahead and take my profits on TGB yesterday afternoon. I thought it would head down today as QUA is after the huge jump in copper inventories but instead I see it has gapped up. Sure smells like a buyout offer is in the wings but on the other hand it has never seemed to pay to hold this one into earnings. Good luck
This info on the note is from HSOA's 10K. Delaying earnings for this is not a good thing and I'm surprised it is not down more today.
Note payable to Brian Marshall, interest at prime (8.25% at December 31, 2006) until November 17, 2006 and if the maturity date extends to January 31, 2007 the interest rate will be 12%. Accrued interest on the outstanding principal balance is due monthly. The seller agrees to pay the Company interest on certain accounts receivable beginning January 31, 2007 and if the accounts receivable are uncollected as of June 30, 2007, the seller will pay the Company the outstanding balance. As of November 1, 2006, the note is subordinated to the Company’s new credit facility. As of March 16, 2007 the note payable is outstanding and the certain accounts receivable are uncollected. The Company is negotiating with Mr. Marshall to extend the maturity date.
Len, Despite a big drop over the last year, national housing starts and permits are running at about the same rate that they were in the mid-1990s. It seems to me that housing starts had been running at an inflated rate over the last few years due to easy credit and they have now returned to a rate that can be sustained in the long term. Also housing costs are much higher than they were in the mid 90s even after adjusting for inflation so there are still lots of $$$ working its way into the economy through the housing market. The slowdown in the housing market sure hasn't hurt the price of copper and most other base metals that are heavily used in the housing and construction industries that I can see as metal inventories continue to tighten and metal prices remain firm.
Sure, the housing speculators are being burned as prices are currently dropping but that may actually help the stock market as new investment dollars are put into that rather than into real estate. I am certainly not ready to go all cash as I am not at all convinced that we will have a recession and neither is the market which is why it has been so volatile lately. Time will tell.
BTW, Here's a link to historical housing starts and permits:
http://www.nahb.org/generic.aspx?genericContentID=45409
Ari, After reading your comments, I'm guessing that you are all cash? I also see that you predicted the market would drop 10% on Monday. Missed that one by a bit, didn't you?
http://investorshub.advfn.com/boards/read_msg.asp?message_id=21807841
I agree there are problems out there. I have taken some profits and gone to about 25% cash in the last month after being fully invested for most of the last year. But the housing market has had huge cycles over the decades (I well know as I have been a homebuilder myself for over 25 years). The current housing market is in the process of undoing speculative excesses and financing that was way too easy too obtain. There will be casualties particularly in the building and lending industries but I think it is a mistake to assume that our general economy much less the world economy is also going to tank as well. The market is also unsure which is why it is so volatile of late.
The sky is not falling at least not yet. We've seen many articles posted here about how bad things are in the macroeconomicworld and our microcaps have taken an especially big hit of late. Here's an article I saw posted over at Stockhouse that helps to keep things in perspective. Unfortunately, it does not say who the author is:
How Speculators Exploit Market Fears
Thursday, August 2, 2007
Here's a fact: The speculators and hedge fund managers who run today's stock market need market volatility in order to make money.
They can't make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell -- or, as they say, "sell short."
Money Lust Satisfied
That's what's been happening the past couple of weeks. But it's not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.
Supposedly, the market is "correcting" because of worries about the housing slowdown, and also because of fears that the debt markets that support mergers and acquisitions is drying up.
These are interesting theories, and people who don't know a lot about the stock market or the economy might find them beguiling. What follows are a few truths that show how shallow these "reasons" for the stock market moves are.
Housing a Theory
Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.
In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That's not trivial, but it's also not the stuff of which recessions are made.
The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.
Corporate profits set new records every day. Whatever's happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in -- and for no other reason.
A Minor Major Mess
Subprime is a mess. But it's a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That's 4 percent of mortgages.
Of these, maybe half, or 2 percent, will go into foreclosure. There will be roughly 50 percent recovery on sale of these. This is a loss of 1 percent in the mortgage market -- a sum the lenders have already made many times over because of the hefty fees on those deals. In the context of the size of the U.S. financial sector, it's nothing.
And why should a crisis in subprime drive down stocks in Mexico and Thailand? Again, because the speculators seek to create panic to make money by selling short, and they sell short everything.
There's simply no connection between subprime and developed or developing nations' stocks. This by itself shows the thin context of the selling wave late last month.
Money's Still Cheap
What about the supposed drying up of loans for mergers and acquisitions by private equity firms? Well, here's a good, simple test of just how valid that explanation is for stock market moves: The majority of private equity takeovers are financed with junk debt.
If there really were a major shortage of funds for these deals, the interest rate on the junk would skyrocket. Instead, while the rate has risen by about 150 basis points in the past month, the spread between junk and investment grade is now about 290 basis points, according to leading junk analyst Martin Fridson.
This is a lot lower than the year-end average of the spread from 2002 to 2006, and far below the almost 800 basis point spread during a true interest-rate crunch like the one after the tech meltdown in 2000-2002.
So that's phony, too. Interest rates have risen, but not anything like what they've done in real crises. And besides, the Dow fell by about 550 points the week before last, yet not one of the Dow stocks is involved as either acquiror or acquiree in a private equity deal.
In short, money is no longer virtually free the way it was for private equity deals in the past year. But it's not expensive by historical standards, either.
Spreading the Fear
In other words, it's all the speculators trying to panic us so their sell programs will make money. And they'll make money as long as they can spread their panic. When they can't do that any longer, they'll work the long side -- and make up reasons for that, too.
In the meantime, the economy is strong. Profits are great, and interest rates are low and will stay that way. Don't sell. With all the shrieking about the market, it only fell to what it was about five weeks ago -- and we didn't think we were poor then.
So let the speculators shout "fire." As of right now, they're not blowing anything but hot air.
you'll get no argument from me about Cramer. I can only watch him on rare occasion and consider his advice to be worth only what I pay for it (nada). I wonder how his show ratings have been doing lately? falling is my guess.
Cramer goes into a huge tirade and has a virtual meltdown...Screams BearStearns CFO should have kept his mouth shut, Bernanke needs to lower rates NOW, and armegeddon has arrived. Here a link:
http://www.cnbc.com/id/15840232?video=452808336&play=1
TGB...Out of curiosity, I checked and the average closing price for TGB over the last 30 days is $4.30. Tack on a 30% premium to that and the offer would be $5.59. I don't really see QUA as a buyer though, they have their hands full with their own projects. I would bet on Teck if there is a buyer in the wings. They are looking for copper producers, having just made an offer for AUR. TCK has a $3 billion cash hoard and both TGB and TCK are based in BC, Canada area. As I recall, some of TGB's mgmt comes from TCK so they know each other. TCK said they will become a 200 million lb/year copper producer after the AUR acquisition. TGB will become a near 100 million/ year copper producer by next year on its own after their current expansion at Gibraltar, which has an estimated 14+ year mine life. And then there is Harmony, a development project for TGB with an extimated 2 billion lbs of Copper reserves and 4.5 million ounces of gold and that just needs money to get the project going- TCK has plenty of that. And then there is also the gold at Harmony.
Last, but certainly not least to investors, TCK is not a cheap-ass buyer like Lundin is. TCK offered a roughly 30% premium for AUR over it's closing price at the time the offer was announced. Potentially 30% over today's closing price makes it well worth it to sit on my shares over the weekend. It was the TCK buyout offer for AUR at a healthy premium that lit a fire under many other mining stocks. Maybe light my fire...round 2 is coming soon. I'll stay tuned.
Those are after hours trades for TGB and yes it is strange. During regular hours on the AMEX it had a strong and steady climb on huge volume. Will be interesting to see what happens today.
TGB actually closed at 5.26....Holy Moly and Holy Taseko. I am not sure what is happening but all of the volume came in the last hour and most of it by far was on the AMEX (vs Toronto). Someone felt the need to buy with both fists and obviously wasn't concerned about the price. Whoever it is, I hope they come back tomorrow for more.
Good report although as I recall Red Dog shipped zinc ore late last year due to cold weather which delayed the ice breakup. This year is probably more of a "normal" year rather than a global warming event.
KSW reported earnings of 12c vs 10c for the Q. Revs were down 4% though as some projects were delayed into the next quarter. Stock is down today in reaction but it should improve when the market begins to look forward to next Q results. From the PR:
Total revenue for the second quarter of 2007 decreased by 4% to $19,320,000, as compared to $20,132,000, for the second quarter of 2006. Revenue for the second quarter of 2007 would have been higher, but several new projects which were expected to start in the first quarter of 2007 continued to experience delays. Total revenues for the first half of 2007 increased by 4% to $37,311,000, as compared to $35,893,000 for the first half of 2006.
The Company's backlog at the end of the second quarter of 2007 was approximately $90,000,000. In addition, during the first two weeks of July 2007, the Company obtained several new projects totaling approximately $25,000,000.
AHM...The problem is that they affirmed their quarterly dividend and then withdrew it at the last possible moment (apparently many accounts had already had the divi credited to their accounts when it was withdrawn). AHM lied about the dividend....the market is left to wonder if anything else is legit. Good luck but I will watch from the sidelines.
Last Q, BMC intercepted an avg of 2.19% nickel grade. It seems a stretch to me that their avg grade will increase by nearly 50% to 3.25% over the next year. Plus they only own 25% of the mine where the high grades were recently reported. Nuts, I hope you are right as I own BMC myself but I think you may be somewhat over-optimistic in regards to next years future production and profits.
AEY...company reports earnings on August 13 on Monday morning before the market opens. I don't see how that would be bad news. Last Q, they also reported on monday morning, May 14th. I think the day's drop is more reflective of the funky market for small caps. For some reason, the AMEX index where AEY is traded is taking an especially big hit today (down 1.5% currently vs. nearly even for the DJIA).
http://finance.yahoo.com/q/bc?t=1d&s=%5EXAX&l=on&z=m&q=l&c=&c=%5EGSPC&c=...
The thing that amazes me about Crazy Cramer is that earlier that day in another interview he had said that he felt that the damage from the subprime mess would be limited mostly to that market. Apparently he did a 180 flip on the same day...both links are available on the website that echos provided. Cramer sure likes stirring up the pot. I guess he feels that he has to make up for all his poor recommendations.
Len, You sure know how to cheer a guy up after a 600+ point two day drop in the Dow. But I'm curious, what is so special about 2013??
"Whereas, I don't know how bad any major crash is going to be, I'm confident that there will be one someday - maybe as late as 2013, but probably well before - smoke or no smoke, mirrors or no mirrors.
I am amazed that even 10 portfolios were up today, with one even up 4+ % congrats to littlejohn.
I don't think I'll even look at my account balances today. That would be too depressing. I saw a comment earlier on CNBC that the Russell 2000 is now only up 1% for the year, just a week ago it had been up about 8%.
Question: I see that trading curbs have kicked in. I remember that further curbs kick in if the market continues to fall. Who knows where those levels are and what happens?
Thanks...
Blue Note is just taking a breather. Compared to others it has done quite well. I understand that some analysts are up there taking a tour of the facilities this week. If they give a good report it should take off again.
http://finance.yahoo.com/q/bc?t=3m&s=BN.V&l=on&z=m&q=l&c=tgb%2C+bwr.to%2C+hbm.to
Another great day for many canadian miners. Even those wthat haven't gone anywhere in the last 6 months have gone up for US investors due to the rising Canadian$. Here's a chart showing how much it has appreciated in the last 6 months; I wonder how long it will be before parity is hit with the US$ ?
http://finance.yahoo.com/q/bc?s=CADUSD=X&t=1y&l=on&z=m&q=l&c=
Guys, thanks for all the responses...
Len, I hate paying taxes but once I double paid the IRS what I owed (back when I had more business than I could keep up with and didn't want any hassle from them) they sent me a refund check, so they are at least honest.
Deathtotaxes..I also constantly recieve those letters from Nigeria ( I guess I'm on their sucker list too). The last one I told to #%*%# off...Maybe something was lost in the translation and they paid me off
littlejohn..Since I never authorized any transaction I can't believe they would try to bill me for an advance, especially since the advance is several times what my Visa is approved for. And the golden rule that you referred to: isn't that "He who has the money makes the rules"..., I think that was also told to me by one of Bobwins cohorts at my old bank. Btw, that was also a guy named Bob at the old Seafirst Bank in Seattle.
Nsomniak...Sheesh, I wish that you were my banker!
Bobwins..I know you're probably right. If I really wanted to scam the bank, I would not have posted about it here for the whole world to see. But one can always enjoy the moment, huh?
Now back to my value small-caps...
...Definitely OT, or maybe not..- I just signed onto my banking account online and discovered that nearly $100,000 was wired into my checking account a couple of days ago. Did christmas come early this year as I made no such transaction?? Unless I went sleepwalking and cashed in a winning lottery ticket or maybe I have an unknown rich relative who likes giving money away (bobwins or len perhaps? haha), it must be an error and a whopper of one at that. I hate to do it but I will probably call the bank if it still shows up in there tomorrow. But it does make me wonder, how common are bank errors and has anyone else encountered such a $BIG problem?