MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Monday, May 20, 2013
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11:27 AM Silver's (SLV -0.6%) 9% plunge in the first minutes of trading overnight is being linked to hawkish talk from Japanese Economy Minister Akira Amari who warned the yen's (FXY +0.7%) fast decline may be hurting the economy. One fails to see the connection but dollar/yen did dive along with silver and Andrew Wilkinson suggests hedge funds short the yen were forced to raise cash by bailing on stale silver longs. Comment!
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10:20 AM Stillwater Mining (SWC +1.2%) says Brian Schweitzer, the former governor of Montana, is elected chairman, replacing CEO Frank McAllister, who will continue to lead SWC until it finds a replacement. Schweitzer is one of four Clinton Group nominees voted onto the board on May 2. Comment!
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8:12 AM Shares of South African miners sink as the country's mine workers union calls for a 60% pay increase on gold and coal producers. The union says it is seeking an entry-level minimum monthly wage of 7K rand ($750) for surface workers and 8K rand for underground workers vs. respective current minimum wages of 4.7K and 5K rand. AU -3.7%, GFI -3.4%, HMY -1.9% premarket. 2 Comments
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7:07 AM Silver (SLV) plunged to its lowest level in nearly 3 years overnight before a bounce brought it to its current price of $21.60, -3.3%. As with gold, silver ETP holdings have dropped to the lowest levels this year, and speculative short positions are on the rise, according to CFTC data. Gold (GLD) took out its April lows earlier - dropping as low as $1,338. A bounce has brought the metal back to $1,351, -1%. 17 Comments
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Friday, May 17, 2013
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9:17 PM The European investigation (I, II) into oil benchmark pricing raises rarely voiced questions about the appropriate way to set prices. FT notes that Platts' reporters cover 400+ wholesale energy prices everyday and the information available to them is limited to what commodities houses and Big Oil are willing to disclose. The process is complicated by the fact that myriad factors ranging from small discrepancies in quality to the type of hull on transport tankers, make the process inherently subjective. Nevertheless, the ordeal looks quite a bit like the Libor and ISDAFIX probes: a benchmark to which trillions of dollars of assets are tied is determined by key players away from the public eye. 3 Comments
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3:22 PM Gold miners (GDX -3.2%) take another beating as gold continues to lose its allure amid disclosures of reduced bets by hedge funds, a World Gold Council report showing gold demand at a three-year low, and a surging dollar. For the miners, it's an ugly world of lower production, higher costs and falling prices. At least nine miners hit 52-week lows: NEM -3%, GG -2.7%, AUY -4.8%, HMY -6.3%, AU -2.5%, BVN -1.1%, ANV -7.4%, NG -2.7%, GSS -5.8%. 18 Comments
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11:57 AM "Do you really think risk-averse central bankers are going to try and catch the knife," asks Credit Suisse commodity research chief Ric Deverell about gold. "No" is his answer as this crowd only buys when the price is headed higher. Of reports of heavy physical buying, he's unimpressed, noting investment demand (ETFs) is the gorilla in the gold market. The metal's (GLD -1.6%) within a few dollars of taking out the 26-month low hit in April. 17 Comments
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11:23 AM While a razor-thin margin one way or the either is anticipated in next Monday's vote on Freeport McMoRan's (FCX) takeover bid for Plains Exploration (PXP), FCX shares could be poised to rise on either outcome. But all bets are off if FCX sees the bid on the verge of defeat and decides to sweeten the pot after saying it wouldn't do so. A higher offer could further pressure shares, already -16% since the deal was announced. Comment!
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11:01 AM Goldman's Tuesday bear call on agricultural commodities has implications for Deere (DE -2.7%) which gets a downgrade to Sell from Neutral. Analyst Jerry Revich says "recovering commodity inventories point to lower U.S. farm income and capex." As recently bearish Barron's notes (channeling Wells Fargo's Andrew Casey) "as goes the North American corn crop, so goes DE's stock price." For their part, GS says only a "major weather shock" could keep corn crop (CORN +0.1%) prices "near their current levels." Price target: $85 from $98. Comment!
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7:58 AM The head of a major South African mining union threatens to bring the country's economy "to a standstill" and demands a meeting with President Zuma, ramping up the rhetoric in a long and heated conflict between labor and the government. But a strike seems averted for at least another day, as top platinum producer Amplats (AGPPY.PK) says employees reported for today's shifts as normal. Comment!
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Thursday, May 16, 2013
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6:06 PM Standard & Poor's says that Kansas City Southern (KSU) will be replacing Dean Foods (DF) in the S&P 500, following the dairy company's spinoff of its organic and soy business as WhiteWave Foods (WWAV). The change will take effect after the close on May 23, around the time that Dean is expected to close out its remaining equity interst in WhiteWave. On the flipside, Dean Foods will take KSU's place on the S&P MidCap 400, WWAV replacing Quicksilver Resources (KWK). KSU +0.5%, DF -0.7%, WWAV -0.5%, KWK -3.5% AH. 2 Comments
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2:54 PM Aluminum demand is strong despite record-high inventories and will be further buoyed in coming years by increased usage in the automotive and aerospace industries, a top Alcoa (AA +0.6%) and other industry players tell CRU's World Aluminum congress. Alcoa says it is investing $575M in two new U.S. automotive sheet production facilities to meet North American demand that should quadruple by 2015. 4 Comments
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9:40 AM Barrick Gold (ABX -3.2%) is downgraded to Underperform from Neutral with an $18 price target (from $21.50) at Macquarie, which views ABX as a mature company with few opportunities to grow and high debt. The firm calls ABX's recent amendment to its Dominican Republic mine contract a dangerous precedent. 4 Comments
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8:20 AM Glencore Xstrata (GLCNF.PK) names former BP CEO Tony Hayward as interim chairman, WSJ reports. Hayward was BP's CEO during the 2010 Deepwater Horizon disaster; he is now CEO of Genel Energy (GEGYF.PK). The appointment comes after shareholders voted against the re-election of former chairman John Bond. Comment!
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8:06 AM Dow Chemical (DOW) says it will appeal an order by a federal judge to pay $1.2B in a price-fixing case involving urethane chemical prices. In February, a jury rendered a $400M verdict against Dow; yesterday, the judge denied Dow's request to overturn the decision, and damages were tripled under U.S. antitrust law. Shares -0.3% premarket. 1 Comment
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7:18 AM Precious metals continue to tumble, with gold at $1,374 nearing the panicky lows (about $1,350) seen during April's liquidation. Any excuse will do in a bear market, and filings released yesterday containing data anywhere from 6 weeks to 5 months old showed continuing sales of gold ETPs by names such as Soros and BlackRock. GLD -1.3%, SLV -1.3% premarket. 9 Comments
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7:03 AM A coup as Glencore Xstrata (GLCNF.PK) has Chairman John Bond stepping down from his job well earlier than expected. Formerly chairman of Xstrata, Bond had agreed to retire as head of the merged companies, but only after a replacement was found. His ouster now likely reflects continuing distaste over the £40M "golden handcuffs" package for key Xstrata managers. Shares are up marginally in London. Comment!
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Wednesday, May 15, 2013
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6:06 PM John Paulson, whose hedge fund is the single biggest owner of the SPDR Gold Trust (GLD), maintained a 21.8M-share position even as the value of its holdings fell ~$165M in the latest quarter. But all that remains of his Barrick Gold (ABX) holdings is 36K call options vs. 915K shares at the end of 2012. Other positions in miners AU, NG, AEM, IAG and ANV were unchanged or modestly changed. 7 Comments
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3:30 PM Golden Star Resources (GSS -7.8%) is downgraded to Underperform with a $0.50 target price (from $1.50) at BMO, which sees news flow bringing further production curtailments and cost cutting. GSS plans to issue a revised outlook at a later date, but the firm sees limited options at the Bogoso mine in Ghana, with refractory operations remaining unprofitable and sourcing additional oxide ore requiring significant expense. 1 Comment
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2:38 PM Monsanto (MON +1%) CEO Hugh Grant is "not overly concerned" by the USDA's decision to compile fuller environmental assessments of MON's new soybean and cotton seeds, remarks which differ with industry complaints about the "burdensome" U.S. regulatory system. But Grant has little patience for opponents of genetically modified foods; they're guilty of "elitism” and fail to consider needs of the global population. 4 Comments
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