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Egg Noodle Investing

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March 24, 2012 – Comments (3)

The profit takers moved in during the week, deciding as usual that a bird in their pants is more fun than one they can’t catch. This week the one that investor’s couldn’t catch was China.

It seems that the movers and shakers in the metals industry noted that China’s steel production seemed to be leveling off. Nobody actually knows for certain what China’s steel industry is doing, but it could be slowing.

Anytime something could be happening, investors, being the wise old pocket pool players that they are…sell. It seems that all of this steel stuff in China was reinterpreted in America as the world economy has stalled.

The reality is that China’s economy simply needs some breathing room so it can absorb its production. Tweedle Dee and Tweedle Dum, Fed Chairman Bernanke and Treasury Secretary Geithner respectively, didn’t help the markets when they offered little in response to the gathering news that China’s PMI, like Europe’s PMI, appeared to be declining.

Who knew purchasing managers had so much stroke?

Meanwhile on the political front, Mitt Romney was impressed with big lava lamps, an Etch-A-Sketch seems to be all that’s needed to get the economy back on it’s feet, Rick Santorum admits he isn’t a pretty sight, Vice-President Biden thinks he is a lubricated Irishman, Robert DeNiro tried his hand at comedy and flopped, and we learned that the First Lady apparently had a son out of wedlock that is named…Bo.

Wax

3 Comments – Post Your Own

#1) On March 24, 2012 at 2:30 PM, Mega (99.97) wrote:

"Tweedle Dee and Tweedle Dum, Fed Chairman Bernanke and Treasury Secretary Geithner respectively, didn’t help the markets when they offered little in response to the gathering news that China’s PMI, like Europe’s PMI, appeared to be declining."

Offering comments on other countries' PMI every week is definitely not their job. Nor should it be.

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#2) On March 24, 2012 at 3:47 PM, papageorgio123 (< 20) wrote:

I like CF and AGU.

Otherwise this market is scary to me.

"Agriculture fundamentals remain strong but J.P. Morgan is hedging its bets on fertilizer with a downgrade to Agrium Inc.

Meanwhile, it’s maintaining a bullish outlook on Potash Corp. of Saskatchewan Inc. and Mosaic Co., said analyst Jeffrey Zekauskas in a note Wednesday morning.

It’s Agrium’s exposure to nitrogen that has J.P. Morgan worried, he said, noting that nitrogen has a much more fragmented industry structure while the outlook for potash and phosphate remain attractive.

“We view nitrogen fertilizer prices as being at greater risk of negative change in an environment in which large parts of the global nitrogen fertilizer industry are profitable in a context in which demand may come under pressure due to economic factors,” Mr. Zekauskas said.

He noted that particularly in North America, the nitrogen business has been solidly profitable due to a wide spread between domestic natural gas prices and gas prices paid by offshore marginal producers.



But, he said, “The recent step down in global energy prices could mark a point of peak profits for North American nitrogen producers.”

In general, he noted that the industry remains on solid footing.

“Agriculture fundamentals within a general economic context seem much more firmly grounded than they were in 2008,” he said. “It is difficult to imagine the economic slowing of the latter half of 2011 becoming an event on the order of the economic contraction of 2008-2009.”

Agrium is still attractive due to its large retail presence in North America and expansion in Australia and Europe, as well as its potash production, he said. But given its emphasis on nitrogen, he prefers other fertilizer companies at this time.

While he maintained Overweight ratings for Potash Corp. and Mosaic, Mr. Zekauskas knocked his rating on Agrium down to Neutral (from Overweight) and lowered his price target to US$89.00, down from US$105.

However, he did up his 2011 earnings per share forecast for the company to US$9.50 from US$7.45.

Shares of Agrium closed at US$83.17 on Tuesday."            

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#3) On March 25, 2012 at 10:10 AM, wax (97.37) wrote:

You also have to ask yourself if JPM makes a market in Potash and Mosaic, which would explain why they downgraded AGU.

I have owned the stock since 2006 and have a cost basis of $26.97. It is a 2% portfolio position.

Wax

 

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