Under The Radar News - Monday

by: SA Eli Hoffmann
  • Mongolia mining break. The Mongolian Government has reportedly drafted legislative amendments that will give foreign gold miners a substantial tax break. Ivanhoe Mines (IVN) has 70-80% of its assets in the country.
  • Carbon caps may lift nuclear stocks. If Congress passes legislation limiting carbon dioxide emissions, nuclear power companies could see profits soar to "supernormal" levels. According to WSJ, Exelon (NYSE:EXC) could see profits leap by $2B/year; FPL Group (FPL-OLD) $130M; Constellation Energy Group (NYSE:CEG) $225M; Entergy (NYSE:ETR) $600M. FirstEnergy (NYSE:FE), NRG Energy (NYSE:NRG), and Public Service Enterprise Group (NYSE:PEG) would also benefit. Of course, excessive profits could incite public backlash, leading to some form of windfall-profits tax.
  • Its cup runneth over. Citigroup analysts say a new beverage bar in the Midwest, being tested by a major global quick-service restaurant operator, is being supplied with cups mostly from Pactiv (PTV). Citi says Pactiv will be a major cups supplier to this QSR chain going forward as it rolls out nationwide -- a huge win and growth opportunity for 2009 and beyond. The potential benefit to Pactiv's top and bottom line beyond 2008 should be meaningful, it says.
  • Bell ringer. The $51.8B takeover of Bell Canada may be in trouble as financing banks look to renegotiate lending terms. Sources say negotiations began to unravel late Friday after the banks (including Citigroup (NYSE:C), Royal Bank of Scotland (NYSE:RBS) and Deutsche Bank (NYSE:DB)) sent revised terms to the consortium of buyers, including the Ontario Teachers Pension Plan, Madison Dearborn and Merrill Lynch Global Private Equity (MER).
  • Bond traders flaunt inflation. While consumers expect 5.2% inflation over the next 12 months, TIPS traders anticipate only 2.95% inflation -- a disparity of record proportions. TIPS say the commodity bubble is on the verge of bursting. "There's a lot of people who just don't believe the economy's going to stay strong enough to keep prices of things where they are," one trader says.
  • No poppycock. Popcorn sales subsidize as much as 25% of the price of a movie ticket. Now, with corn prices soaring, movie tickets may jump by up to 30%. Never mind that coconut oil is up 24%, and the paper pulp used to make popcorn tubs has jumped 40% over the past three years. "They're going to lose some of their customers. Some of them are just not going to go to the movies," economist Richard Gil says. (Movie theater stocks: Cinemark (NYSE:CNK), Regal Entertainment Group (NYSE:RGC), Carmike Cinemas (NASDAQ:CKEC).)
  • Emerging market stocks undo 2008 loss. Soaring oil and metal prices lifted emerging market equities for the sixth straight day, sending the MSCI Emerging Markets Index (NYSEARCA:FXI) to new yearly highs. "The supply constraints in commodities are here for at least several more years, so these stocks should continue to do well," says money manager Walter Hellwig.
  • So much oil, so little access. Normally, higher oil prices would eventually lead to greater supply. But not today, experts say. "The international companies are denied access to areas of abundant oil within OPEC, and it's getting costlier in other areas." Drillers had access to only 7% of known world reserves according to a recent count -- down from 85% in 1970 -- because oil-rich nations are taking control of their fields.
  • Quake causes chipset shortage. Sources at motherboard makers say prices of Intel's (NASDAQ:INTC) chipsets (G31, G33 and 945GC) are rising after last week's earthquake. Intel denies prices have risen as a result of the earthquake.
  • Retailers downscale. Retailers (ANN, GPS, CACH, TLB) are shuttering luxury brands and collections amid tepid sales. "The aspirational buyer is pulling back and not buying, or shopping at the outlet malls to a greater extent," one industry watcher says.
  • Yahoo can kiss Bebo bye bye. Yahoo's deal to sell display ads on Bebo covers only the UK, Ireland and Australia, and will probably be canned in mid-2009 by Bebo's new owner AOL (NYSE:TWX).
  • Ford flouts lawsuit. Ford (NYSE:F) is asking a judge to toss a lawsuit launched by employees who lost over $6B when Ford's stock fell between 2000 and 2006. Ford says employees had ample opportunity to manage their investments, and that its share value decline mirrored a broad drop in the U.S. auto industry. "Ford believes this lawsuit is baseless. Employees have complete control over their own investments and there is a wide choice of investment options available in addition to Ford stock," a spokeswoman said.