UBS Investment Research (UBS) downgraded two top agriculture companies Mosaic Co (MOS) and Potash Corp (POT) to Neutral from Buy on Friday. This comes after the Department of Agriculture says profits for U.S. farmers will plunge more than expected this year, dropping 38 percent from 2008 as the recession erodes demand for crops, livestock and dairy products.

These downgrades put pressure on the Market Vectors Agribusiness ETF (MOO) which holds top stakes in the two companies. The ETF (MOO) primarily invests in equity securities of U.S. and foreign companies primarily engaged in the business of agriculture. The ETF has enjoyed nice gains since its November 08 low.

You might think so, judging by the spate of articles, on Seeking Alpha and elsewhere, that advocate investment portfolios heavy on inflation defense at one end, deflation defense at the other, and emerging nations and basic commodities filling in between. We own many of these, as well, but I don’t understand analysts who have given up so easily on the US who now ask us to jump on some other bandwagon which I believe has less staying power – just because it’s an easier sell right now.

The engine that continues to eclipse all others in this world is still the combination of American entrepreneurs and American consumers.

American construction machinery bellwether Caterpillar (CAT) has had a tough year. Its stock price is languishing in the high 30s down from a 52 week high of 85.96 and it has drastically reduced its full time and part time workforce. Given the state of the global economy and the slack demand for construction projects this comes as no surprise.

This week I wanted to return to Asian stocks, Japan in particular. Now that the precipitous decline in global manufacturing and trade is easing, I thought it would be appropriate to sift through the wreckage of the Tokyo stock market to see which companies have held up the best.

The main index for Japan is the Nikkei 225, which saw a more significant drop late last year but has seen a more significant rebound as compared to the U.S. market. The Nikkei approached the 40,000 level at the height of the bubble years in the 1980s but in the past has traded at levels similar to the Dow Jones Industrial Average. The Nikkei bottomed just below 7,000 in late October 2008, while the DJIA traded below 6,500 for two days in early March. The comparison of the two for the last year is below.

By Brad Zigler

Real-time Monetary Inflation (per annum): 7.7%

"Good as gold" is a phrase that's meant to assure the listener of an item's intrinsic worth. Lately, you wouldn't have used that idiom to describe agribusiness. No, you'd have to say that agribusiness is actually better than gold.

By Michael Kanellos

Got heat? Komatsu (KMTUY.PK) will give you power.

The Japanese industrial giant will begin to take orders for a new, highly-efficient thermoelectric module that it says will take the heat from the inside of factories and under the hood of diesel vehicles and turn it into power. In the future, the company also hopes to develop materials that can exploit the heat contained in exhaust gases from bulldozers and construction equipment to create electricity.

• • •

Telecommunications

• Japan's telecommunications ministry would urge mobile carriers to disclose their leasing fees for mobile virtual network operators in a bid to increase the number of new entrants to the market and boost competition. Hefty initial costs of building base stations have deterred many would-be entrants from Japan's cellphone market, dominated by NTT DoCoMo Inc. (DCM), second-biggest KDDI Corp, and No. 3 Softbank Corp (SFTBF.PK), which bought Vodafone's (VOD) local unit in 2006. The ministry hopes the move will make it easier to negotiate leasing terms and motivate those who want to join the market as virtual operators.
• NTT DoCoMo plans to buy a 30 percent stake in Aktel, Bangladesh's No. 3 cellphone carrier, for about US$386 million. NTT DoCoMo has been looking to gain footholds in fast-growing Asian markets as it looks for new growth drivers outside the mature and highly competitive Japanese market. Bangladesh has one of the world fastest growing cellular markets, with a mobile penetration rate of around 26 percent and about 40 million users. Aktel is 70 percent owned by Telekom Malaysia International and 30 percent owned by Bangladeshi firm AK Khan & Co.
• In an effort to gain new subscribers in the upcoming summer bonus season, NTT DoCoMo and KDDI will revise their handset pricing schemes, the Nikkei business daily reports. Last November, both firms raised handset prices and lowered rates on calling plans, but these changes proved ineffective in slowing the momentum of rival Softbank Mobile. DoCoMo will offer all but the most popular of its 950i series phones for about 45,000 yen (US$436), down from around 50,000 yen (US$484), to customers who choose a discount calling plan and also buy the phone in a single payment. The company will also discount 705i series handsets by several thousand yen each.

Technology

• Fujitsu (FJTSY.PK) announced that the Fujitsu BroadOne WX300 macrocell base station has received the prestigious System Design Award at WiMAX World EMEA. The annual recognize leaders in the development and deployment of WiMAX technologies and are presented by a judging panel of experts from the WiMAX community. The base station is among the smallest, most power-efficient in the industry and ideal for operators looking for a quick in-service solution with easy installation and maintenance. Fujitsu designed the base station with many features to meet the global requirements for mobile WiMAX networks.

Semiconductor

• Japanese orders for chip-making tools remained weak in April, declining from the previous month and falling short of sales as low memory chip prices hurt demand for new equipment from semiconductor makers. The book-to-bill ratio stood at 0.76, meaning that for every 100 yen (US$1) of sales, new orders worth 76 yen (US$0.7) came in. The figure rose from 0.73 in March but usually does due to seasonal falls in sales. It was the tenth consecutive month that orders fell short of sales. The equipment usually takes one to 12 months to build and deliver. Price falls are prompting makers of microchips used in PCs, mobile phones and digital music players to hold back on orders for equipment used to process wafers, print circuitry and slice them into semiconductors.

Media, Entertainment and Gaming

• Computer game developers are discovering the advantages of scheduling simultaneous global launches of new titles. Previously game software was developed for specific regional markets and then sometime later was localized for sales in other parts of the world. But this is quickly becoming a thing of the past, and "Haze," a new first-person shooter for Sony Corp.'s (SNE) PlayStation 3 console, will debut in this manner May 22, with U.S. game developer Ubisoft Entertainment handling sales worldwide except for Japan, where Dwango Co. subsidiary Spike Co. will take charge. There is a great deal of dialogue in "Haze," and translating it into Japanese for the simultaneous global launch was no easy task. But Spike did what it had to do because otherwise, the local market could have been overtaken by the imported version.

Mobile/ Wireless

• Japanese cellphone sales firm Telepark Corp is set to merge with its nearest rival MS Communications, its latest move to expand market share. The two companies are in the final stage of negotiations and an announcement of the deal is likely this week. Telepark Corp is an affiliate of trading house Mitsui & Co Ltd while MS Communications is a joint venture owned by rivals Mitsubishi Corp and Sumitomo Corp.

Internet

• Yahoo Japan Corp. plans to buy back 1.2 million shares and spend 60 billion yen. The company announced the buyback in a statement to the Tokyo Stock Exchange.

Information Technology

• Juniper Networks (JNPR) announced the latest phase in their ongoing relationship with Net One Systems becoming a premier partner in the company’s Open IP Service Creation Program [OSCP]. This formal collaboration within the OSCP establishes Net One Systems as the premiere IPsphere solution integration partner in the program and will enable innovative new solutions for service providers based on IPsphere Forum specifications. Combining Net One Systems’ development, integration and software customization capabilities and Juniper Networks high- performance routing and Session and Resource Control [SRC] portfolio, the two companies have made substantial strides in advancing IPsphere solutions through interoperability and proof-of- concept testing.

Software

• Servigistics announced that Japan-based Komatsu (KMTUY.PK) will roll out the Servigistics Service Parts Management solution globally to achieve service chain optimization from its suppliers to dealers across all regions. Komatsu America Corp, a subsidiary of Komatsu Ltd., successfully implemented the Servigistics Service Parts Management solution in North America last year. Building on the success in North America, Komatsu will extend the Servigistics solution to its extensive network of suppliers. In the first phase, Komatsu will deploy a global inventory planning platform, share inventory planning information between MPDCs and RPDCs, and promote collaboration with suppliers.

Hardware

• NEC LCD Technologies, together with its sales and marketing channel in the Americas, NEC Electronics America, Inc., announced the successful development of a manufacturing technology that enables more flexible design of thin-film transistor [TFT] liquid crystal display [LCD] panels. NEC LCD Technologies’ new technology enables optimal arrangement of gate and source lines in the pixel array and minimizes the overlaps between gate and source driver circuitry, when the module is non-rectangular in shape.

Indeed bridges, roads, rails, pipes, filters, pumps and other such systems, which often make the difference between a third world economy and the western world, are being put to use in every corner of the developing world. Of course, to go out and buy all the stocks listed here would be an exercise in non-diversification and I strongly advise against it. The steep drop in the market last week is an opportunity to start accumulating some of these stocks. For those who like to track these, I have created a trackable portfolio of these stocks here .

Regardless of whether one subscribes to Kondratiev wave theory (i.e., the long waves in economies and prices that are ostensibly inherent in the capitalist system) “super cycle” commodity moves, it is a matter of fact that basic materials/commodities stocks have been outperforming the major benchmark indices for several years now, with the sell-off in June of last year being primarily a brief interlude. Shares of companies that produce raw materials have surged 173% and energy stocks have appreciated 118% since October 2001, when commodity prices began rising. Moreover, the two groups have had the biggest gains in Morgan Stanley Capital International's World Index since then.

One could consider Komatsu the Japanese version of Caterpillar (CAT). The stock trades on pink sheets here in the US, but that should not deter investors looking to capitalize on the multi-year expansion currently taking place in Japan. In March 2006, the company reported an annual earnings increase of 77% over 2005.

Komatsu is not an obscure operation that you've never heard of. In fact, it has been marketing its products in the US since the 1960's. In 1970, it established a North American operation and is the second-largest manufacturer and supplier of construction equipment in the world today with nearly 2000 employees just in North America.