The FSB is contemplating designating commodity trading firms like Cargill and Glencore (GLCNF.PK) as systemically important. No, not that FSB: The Financial Stability Board, a group of global regulators established in the wake of the financial crisis.

The reason for this is, apparently, that these firms are engaged in shadow banking. The linked Reuters story mentions two types of activity.

First, commodity trading firms extend trade credit and working capital to their customers. Second, some use securitization to raise funding.

The FSB is rightly concerned about shadow banking, but the kinds of activities that commodity trading firms engage in is quite different from some of the activities implicated in the crisis.

Some forms of securitization contributed significantly to the crisis. Most of the most dangerous forms involved significant maturity transformation, and direct ties to big banks. Structured Investment Vehicles (SIVs) that funded portfolios of mortgage securities with short-maturity

MOFCOM is a "super-ministry" in China with a broad mandate. MOFCOM regulates in-bound mergers and acquisitions in China. It also approves Chinese overseas investments above a certain size. Yet, in the case of Glencore and Xstrata, it was MOFCOM's anti-monopoly role that took center stage. Why was China remotely interested in whether or not two European firms merge? It's all about copper.

The figure below highlights China's domestic production of copper as well as its consumption of copper.

Sources: USGS, UN Comtrade, SLIA Analysis, UN Population Division, BHP

The bottom line is that China

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Oil sells off again. For the first time in nine months, the price of a barrel of Brent crude oil fell below the $100 level in London trading earlier today. The number of investors holding net long positions now stands at a one-year low. Later this week, data on oil stockpiles in the U.S. could pressure the market even further.

Italian prosecutors move in Banca Monte case. Italian judges order more than €1.8B ($2.4B) of assets seized as part of a probe into the dealings of Banca Monte dei Paschi. The funds seized included commissions earned by the Milan branch of Nomura International. Prosecutors say they will continue their investigation over the risky derivatives trade carried out by previous management at the Italian bank.

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Glencore-Xstrata deal cleared for takeoff. China's Ministry of Commerce is expected to announce this week that it has

Q4 2012 Earnings Call

March 5, 2013 4:30 AM ET

Executives

Paul Smith – IR

Ivan Glasenberg – CEO

Steve Kalmin – CFO

Aristotelis Mistakidis – Director, Zinc/Copper/Lead Commodity

Chris Mahoney – Director, Agricultural Products

Tor Peterson – Director, Coal/Coke Commodity

Analysts

Liam Fitzpatrick – Credit Suisse

Jason Fairclough – Bank of America Merrill Lynch

Heath Jansen – Citi

Sylvain Brunet – Exane BNP Paribas

Presentation

Paul Smith

Hi, welcome to Glencore International Fourth Quarter Conference Call. (Inaudible). We probably got about between an hour and 90 minutes. With me today, we’ve got Ivan Glasenberg, CEO; Steve Kalmin, CFO; Aristotelis Mistakidis, who runs Copper, with Daniel Maté; also Chris Mahoney, Agriculture; and then, last but not the least, Tor Peterson.

With that, Ivan, over to you.

Ivan Glasenberg

Thanks a lot for coming today. Looking at the results, you will have a look at how the

The history of the global mining industry in every form is shaped by the economics and market opportunity of restricting underground mining.

The effect this has on:

1. The market, over decades, is that it increases the global costs along with associated prices and profits on all metals uniformly. Therefore, it is not noticeable unless you are aware of the evolution intention over a long time span.

2. The evolution of mining machinery, systems and procedures has been tightly restricted if you understand the motivations behind them. Mining Machinery Manufactures [MMMs] understand this market dynamic and shape their businesses around it. In doing so, the MMMs have tended to prevent step changes in the methods used for underground mining as an entire system. They do this because a restricted global underground mining industry produces 10 times as many surface mining machinery sales as what could be sold underground. The MMMs

It is difficult for retail investors to sift the wheat from the chaff in the junior miner sector. In this interview with The Gold Report, Rick Winters reveals how RMB Resources, a resource merchant bank, figures out what projects to invest in and those to pass over and talks about some of the companies that made the cut.

The Gold Report: Rick, RMB Resources invests in resource companies throughout the world. Why is RMB flocking to resource companies when most investors seem to be running in the opposite direction?

Rick Winters: RMB Resources is the resource merchant banking division of the FirstRand Group, one of South Africa's major financial institutions. We've been in the business of providing finance to the junior resource sector for 18 years. We look at junior resource opportunities everywhere in the world outside South Africa.

As resource investors, we're always in the game,

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VW plans to invest almost $65B over next three years. While its main rivals slash costs in Europe, Volkswagen (VLKAF.PK) plans to invest €50.2B ($64.7B) in its automotive business from 2013-2015 despite the difficult economic conditions around the world. VW will spend €39.2B on property, plant and equipment, of which 60% will be in Germany, where GM (GM) is trying to drastically cut back. Aside from the €50.2B, VW's Chinese joint ventures will invest €9.8B in new production facilities and products.

Chinese Vice Premier urges faster reform. Chinese Vice Premier Li Keqiang, who is set to become premier in March, said China needs to accelerate its economic overhaul, including the opening up of the economy. However, Li warned of a "fortress area" that can stymie progress. His comments follow concern about the conservative make-up of the new Politburo Standing Committee and its willingness to reform.

Alcatel-Lucent

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FBI probing H-P claims about Autonomy. The FBI is reportedly investigating H-P's (HPQ) accusations of accounting improprieties at Autonomy prior to H-P buying the software company and for which it took an $8.8B charge in FQ4. The feds are responding to a request from the SEC after H-P brought its claims to the regulator. Don't be surprised if more government agencies jump onto the investigation bandwagon.

Japan's trade deficit soars. Japan's October trade deficit almost doubled from a year earlier to ¥549B ($6.7B), well above consensus of ¥360B. Exports dropped 6.5% to ¥5.15T, with shipments to China diving 11.6% due to the islands dispute, and those to the EU plummeting 20.1%. Still, it's not all doom: "I believe Japan's exports will recover gradually, as the U.S. and Chinese economies are picking up," says Mizuho economist Norio Miyagawa.

Eurozone finmins delay Greek aid once more. As

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Moody's downgrade of France leaves investors unperturbed. Moody's yesterday carried out its long-awaited threat to downgrade France, cutting its rating to Aa1 from Aaa and maintaining its negative outlook. "The predictability of France's resilience to future euro area shocks is diminishing in view of the risks to economic growth," Moody's said. These downgrades have long lost the ability to shock, and French 10-year OAT yields were just +4 bps to 2.115% midday in Europe.

BOJ resists political pressure for more easing. As expected, the Bank of Japan has resisted political pressure and refrained from further easing measures at its latest policy meeting. The bank maintained its key interest rate at 0-0.1%, its asset fund at ¥66T ($812B), monthly purchases of government bonds at ¥1.8T, and a credit-lending facility at ¥25T. However, the bank is expected to announce stronger measures at its next meeting in December.

In response to Bank of Canada Deputy Governor Timothy Lane's speech about the systemic importance of major global commodity trading firms (GCTFs), the FT's Javier Blas asks: "Has Glencore become 'too big to fail'?"

And I answer: Hell no.

I will write much more on this subject- much more- when a few things clear. For now, a few of my reasons:

• GCTFs- even the biggest, like Glencore (GLCNF.PK), Cargill, and Koch- just aren't that big. Glencore, the biggest, has about the same amount of assets as Kraft (KFT) and Fiat (FIATY.PK) and Hitachi (HICTF.PK) and Fubon Financial Group (FUISF.PK) (assuming you've heard of it). Are those TBTF too? The biggest GCTFs have asset values an order of magnitude smaller than the banks that have been designated SIFIs by the Financial Stability Board. Again: not that big, in systemic terms.

• GCTFs aren't highly leveraged.

• GCTFs don't engage in

Now is the moment to take a hard look at the state of supply for zinc and platinum, says Matthew O'Keefe of Mackie Research Capital Corporation. In an exclusive interview with The Gold Report, O'Keefe explains how market fundamentals are about to pop up some serious game changers in this space. International demand for zinc and the platinum group metals is booming, but the global supply is about to seriously contract. Well-financed mining corporations will celebrate, while others miss the party.

The Gold Report: What is the current state of demand in the international zinc market?

Matthew O'Keefe: As a base metal, demand for zinc mirrors economic growth. When industrial growth is slow, demand for zinc is slow. The zinc supply is currently about 13.2 million tons [Mt] per year versus demand of about 13 Mt per year. Due to the current gap between supply and

"An investor who has all the answers doesn't even understand all the questions"- John Templeton

Anyone that has followed the commodity space over the last few years is probably familiar with the type of M&A that occurs in booms. The equation is pretty simple: Deals are done at ever stretching multiples which are predicated on increasingly linear demand projections. When you arrive at that last top ticking seemingly implausible transaction the 'cycle' or 'cyclicality' which is at the core of the industry has virtually disappeared; demand as far as the eye can see and then some. The possibility of busts are barely mentioned and of course never modeled. For the skeptical observer the only thing you can do during this period is bide your time and wait for the script to flip. Because when it does you will be the one who can pounce on the type of opportunistic deals

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Chinese manufacturing sector remains in contraction. September's official PMI of 49.8 improved from last month's 49.2, but fell short of expectations for 50.1. The HSBC PMI read - which represents smaller companies less likely to benefit from state ownership/support - continues to show greater weakness, coming in at 47.9, up from August's 47.6.

Xstrata board recomends approval of Glencore takeover bid. The approval of the $33B offer also includes a controversial $232M retention package for Xstrata management, but shareholders will be offered the opportunity to vote for the sale with or without the bonuses - meaning the deal can go through even if the incentive payments are rejected. Investors must be kept happy since as little as 16.5% of shareholders can block the merger due to Glencore being unable to vote its 34% stake.

Spain to miss budget targets. The 2013 budget plan envisions a

Yesterday morning Agrium Inc. (AGU) announced the price range for a modified Dutch auction share purchase tender originally disclosed in an August 2 press release detailing an intent to buy back $900 million in common shares, or approximately 5.7% of the outstanding.

Usually, the details of a Dutch auction are unveiled the same day with a detailed circular submitted within a day.

My guess is the company rushed to announce this latest enticement to shareholders (the previous one being a big hike in the dividend in December) to appease Jana Partners LLC, a NYC-based hedge fund that has been highly critical of management.

I wrote about Jana Partners' aggressive assault on Agrium's board and management in this article.

I've argued for two years that Agrium has been lax in listening to shareholders and independent analysts such as myself, and that they should be increasing the dividend, buying

SUMMARY:

The IPOX Strategies focused on Developed Markets (IPOX U.S. IPOX Europe, IPOX Asia-Pacific) extended gains for another week. Behemoth Apple (AAPL) cracks two recent U.S. IPOs. Recent key Malaysian IPOs decline. Japan Airlines (9201 JP) prices IPO at the top of the indicative range.

HIGHLIGHTS:

IPOX Strategies focusing on developed markets rally big, continue to record relative gains as some beaten down IPOX heavyweights gain momentum, IPOX Emerging Markets flat:Amid relative weakness in over weighted China-linked exposure, the IPOX Global 50 (IPGL50), rose just +1.67% to +14.86% YTD, lagging benchmark MSCI World (MXWD) by +86 bps to +458 bps. YTD. However, across the IPOX universe, IPOX U.S. (IPXO, IPXT), IPOX Europe (IXTE, IPXUJPEU) and IPOX Asia-Pacific (IPTA) recorded big relative and absolute gains. For example, within the IPOX U.S. universe (IPXO, IPXT), the IPOX U.S. 100 (ETF: FPX) continued to trade as one of the best performing U.S.

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U.S. makes $12.4B profit on AIG bailout. The government and the Fed have made a minimum profit of $12.4B on the $182.3B bailout of AIG (AIG) after the Treasury raised $18B by selling 554M shares at $32.50 each, with the insurer purchasing about $5B. As the government still owns a 21.5% stake in AIG, it should make even more of a return. However, Neil Barofsky, the former special inspector general for TARP, hotly disputes the Treasury's accounting.

Deutsche Bank looks to save €4.5B a year by 2015. Deutsche Bank's (DB) co-CEOs have unveiled their plans to deliver return to shareholders in a lousy macro environment for investment banking, promising €4.5B in annual savings by 2015 - greater than the €3B floated two months ago. No report is made on whether the two will take down bank leverage. It's TBTF on steroids in Germany, where DB's

Before its May 2011 IPO on the London Stock Exchange, and a secondary float on the Hong Kong Stock Exchange, Glencore International Plc's (GLCNF.PK) business dealings were typically described as secretive. This is understandable, as the company was famously known for its lack of disclosure. The world's largest commodities trading company, with a 60% global market share in the internationally tradeable zinc market, 50% in the tradeable copper market, 9% in the tradeable grain market and 3% in the tradeable oil market, was often referred to as the Goldman Sachs of the commodities world. Elusive, but highly successful.

This closely held partnership, best-known in North America for its high-profile March 2012 takeover of Canada's biggest grain handler Viterra (VTRAF.PK), was launched in 1974 by founder Marc Rich under his own name. Not that Glencore likes to mention Rich, as he is considered rather notorious and as such is

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Government to cut AIG stake. The Treasury confirmed it's putting another $18B worth of AIG (AIG) stock on the block, as observers recently anticipated. AIG plans to buy up to $5B worth of the shares at the IPO price. Premarket: AIG -1.85% (6:30 ET).

BP in asset sale talks. BP (BP) is reportedly in negotiations to sell assets in Gulf of Mexico oil fields to Plains Exploration & Production (PXP) for $7B, which is above the latter's market cap of $5.2B. The deal would be part of BP's efforts to raise money to pay for the fallout from the 2010 oil spill; so far, the company has agreed to sell $26.5B worth of the $38B in assets that it has earmarked for sale.

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Glencore touts Xstrata offer. Glencore (GLCNF.PK) provided details of its improved $36B bid for Xstrata (XSRAY.PK, XSRAF.PK), saying