Nickel briefly dropped below $5 during the pre-dawn hours, but pushed higher through most of the day, closing at $5.4817/lb., up nearly 24 cents. Zinc zigged and zagged to little ultimate effect, ending at $0.4876/lb., down less than a half-cent. Aluminum lost ground, shedding more than a penny, to $0.907/lb., while lead was strong, adding almost 2½ cents, to $0.6864/lb.

In a mixed day for the industrial metals, copper finished up its worst month in thirty years, losing 36% in…

Thus ended a record-setting month, with crude’s front-month contract plunging by 32.6%, the biggest monthly decline recorded on the Nymex since trading began in 1983.

“The oil market had the biggest change of heart since the tin man in the Wizard of Oz,” said Phil Flynn of Alaron Trading.

And Charles Perry, president of Perry Management, could only comment that, “I think we are all hoping for a more stable market in November, particularly after the election is over.”

Looking ahead, “Demand-side concerns are going to keep oil under pressure and we should find out soon just…

Platinum bottomed near $770 in late Hong Kong trading, but moved gradually higher through most of the rest of the day, ending at $819/oz., down $7. For the week, platinum gained 3%.

Silver also hit its low late in Hong Kong, and it too pushed steadily higher, making it back into positive territory to close at $9.86/oz., up 13 cents. For the week, silver tacked on 5.2%. (Click here for charts)

While silver…

Quotable
“Historically, economists have evaluated the economy’s overall leverage in terms of nonfinancial debt. The theory for this is that the financial sector takes on debt in order to make loans for the nonfinancial sector; thus, to include financial debt would result in double counting. The logic of that approach is not valid in the current situation. The leverage in the financial system, including the financial intermediaries and government sponsored entities like Fannie and Freddie, is clearly excessive and the source of much distress in the economy. When viewed on this more comprehensive basis, total leverage of the U.S. economy surged to an all time peak for the past 92 years that records have been kept. Total U.S. debt in the second quarter jumped to 357% of GDP, up from an average of 195% from 1916 to the present. In less than five years, the total debt to GDP ratio jumped more than 50%.


 
“As the chart indicates, 300% was the 1933 high of the total debt to GDP ratio. The current peak, however, was reached due to a surge in debt, while the 1933 peak reflected a dramatic fall of nominal GDP, the denominator of the ratio. The new record level of debt in the second quarter reflected the worsening situation among corporations, both financial and nonfinancial. Clearly the magnitude of the debt problem is unprecedented and years, not months or quarters, will be required to bring debt into some reasonable relationship with economic activity. As long as this situation persists, the U.S. faces a difficult economic environment. This is due to the fact that over the past four decades every additional dollar of debt created 86 cents worth of GDP, and with debt shrinking, GDP will struggle to generate positive growth.”

Hoisington Management Third Quarter Review&Outlook

FX Trading – Risk aversion ebbs this morning…Comdol time?

Gold is sharply higher this morning…up $20 bucks.  Stocks globally are doing well and premarket SPU is bidding a bit higher.  Oil is trying to turn higher. 

Ebb in risk aversion means a flow of risk appetite by definition.  And risk appetite may mean it’s time for commodities, which have been body slammed, to make a decent correction; maybe of the multi-week variety.  Thus, maybe it’s time to own some Comdols again i.e. commodity dollars, fist three letters of each word,  for those not yet super-fx-trader slang literate. 

The chart above is a 240-min chart of oil, gold, and Aussie.  All have broken above their nasty down trends of late on this near-term basis.

Regards,
Jack & JR

Quotable
“Historically, economists have evaluated the economy’s overall leverage in terms of nonfinancial debt. The theory for this is that the financial sector takes on debt in order to make loans for the nonfinancial sector; thus, to include financial debt would result in double counting. The logic of that approach is not valid in the current situation. The leverage in the financial system, including the financial intermediaries and government sponsored entities like Fannie and Freddie, is clearly excessive and the source of much distress in the economy. When viewed on this more comprehensive basis, total leverage of the U.S. economy surged to an all time peak for the past 92 years that records have been kept. Total U.S. debt in the second quarter jumped to 357% of GDP, up from an average of 195% from 1916 to the present. In less than five years, the total debt to GDP ratio jumped more than 50%.


 
“As the chart indicates, 300% was the 1933 high of the total debt to GDP ratio. The current peak, however, was reached due to a surge in debt, while the 1933 peak reflected a dramatic fall of nominal GDP, the denominator of the ratio. The new record level of debt in the second quarter reflected the worsening situation among corporations, both financial and nonfinancial. Clearly the magnitude of the debt problem is unprecedented and years, not months or quarters, will be required to bring debt into some reasonable relationship with economic activity. As long as this situation persists, the U.S. faces a difficult economic environment. This is due to the fact that over the past four decades every additional dollar of debt created 86 cents worth of GDP, and with debt shrinking, GDP will struggle to generate positive growth.”

Hoisington Management Third Quarter Review&Outlook

FX Trading – Risk aversion ebbs this morning…Comdol time?

Gold is sharply higher this morning…up $20 bucks.  Stocks globally are doing well and premarket SPU is bidding a bit higher.  Oil is trying to turn higher. 

Ebb in risk aversion means a flow of risk appetite by definition.  And risk appetite may mean it’s time for commodities, which have been body slammed, to make a decent correction; maybe of the multi-week variety.  Thus, maybe it’s time to own some Comdols again i.e. commodity dollars, fist three letters of each word,  for those not yet super-fx-trader slang literate. 

The chart above is a 240-min chart of oil, gold, and Aussie.  All have broken above their nasty down trends of late on this near-term basis.

Regards,
Jack & JR

Boo!

We begin today with a Halloween hypothetical: If you’re a mainstream economist or financial journalist, what’s the scariest possible scenario that could arise from an economic crisis?

Answer: That the ephemeral specter of the American consumer, whose purchases now make up over 70% of economic activity in I.O.U.S.A., would stop spending.

Uh-ho. In the third quarter of 2008, consumers reigned…

• American Express Co. (AXP) said yesterday (Thursday) that it plans to cut 7,000 jobs, or 10% of its global work force, in an effort to reduce costs by $1.8 billion in next year, The Associated Press reported. The company will also suspend management-level salary increases next year and institute a hiring freeze. American Express has reported four straight quarters of profit declines.

• Oil prices fell more than 2% yesterday (Thursday), after economic data showed a 0.3% decline in gross domestic product (GDP). Light, sweet crude fell $1.54 at settle $65.96 a barrel, after trading as high as $70.60…

• American Express Co. (AXP) said yesterday (Thursday) that it plans to cut 7,000 jobs, or 10% of its global work force, in an effort to reduce costs by $1.8 billion in next year, The Associated Press reported. The company will also suspend management-level salary increases next year and institute a hiring freeze. American Express has reported four straight quarters of profit declines.

• Oil prices fell more than 2% yesterday (Thursday), after economic data showed a 0.3% decline in gross domestic product (GDP). Light, sweet crude fell $1.54 at settle $65.96 a barrel, after trading as high as $70.60…

Although not quite in the pantheon of Intel, Apple and Seagate, Sun has been braving its own path in technology since its founding in 1982. The paradox is that a company which professed a radical departure in business computing has itself been too slow to adapt to rapid change, and now finds itself as takeover prey.

With assets far exceeding its current valuation, investors stand to make modest gains if the company decides to break itself up, or if it finally succumbs to the takeover rumors circulating for years.

The alarm sounded louder than ever when…

Silver’s peak occurred an hour or so later. The boyz weren’t going to allow a runaway gold price after the Fed’s interest rate decision. To give you an idea of how hard they’ve been sitting on the gold market, consider this…in the last 36 hours (as of midnight last night)…the US dollar was down almost four full cents, the US Fed Funds rate was cut by a third…and gold was only up $30-40.…

Zinc was strong, ending just off its intraday high at $0.5375/lb., up nearly 5 cents. Aluminum hit 97 cents before beating a sharp retreat back to $0.9479/lb., up three-quarters of a penny, while lead shot up to $0.6728/lb., up 3¼ cents.

Copper led the industrial metals on a tear yesterday, shooting up the most in two years, as traders became consumed with optimism generated by the…

“The move in oil prices reflect an overly optimist[ic] view that rate cuts will spur increased economic demand for oil,” wrote Mark T. Williams, of Boston University, a former Fed examiner. “Unfortunately, if the looming global recession happens, further rate cuts will be needed to prop up the economy and oil.”

In its weekly inventory report, the Energy Information Administration said that crude stocks were up a half-million barrels for the week ending October 24. Gasoline supplies surprised by unexpected falling for the first time in five weeks, down 1.5 million barrels.

Rounding out the data,…

Platinum sank to $760, below the price of gold, in the far East, but rallied from there to a mid-morning high above $820, before finally subsiding to end at $790/oz., down $35. Overnight, platinum is sharply higher.

Silver was the day’s big winner, taking off at the same time as gold and pushing as high as $10.15 before falling back below $10 around noon and trading sideways from there into a close at $9.89/oz., up 70 cents. Overnight, silver has pushed higher.…

The Dow logged its second best one-day point gain, 889 points, in its even more storied history yesterday:

Percentage wise, at 10.8%, the rally ranks sixth. The S&P and Nasdaq trundled alongside the old lady like puppies.

After finding a new “credit crisis” low on Monday, traders on Wall Street snapped back…

Zinc plummeted in the late morning and never found its way back, ending at $0.4885/lb., down nearly 2 cents. Aluminum had a very strong day, pushing to an intraday high of $0.9402/lb., up better than 4 cents, while lead raced to $0.6402/lb., up just over 7 cents.

Copper led most of the industrial metals higher yesterday as it followed equities markets up in anticipation…

Zinc plummeted in the late morning and never found its way back, ending at $0.4885/lb., down nearly 2 cents. Aluminum had a very strong day, pushing to an intraday high of $0.9402/lb., up better than 4 cents, while lead raced to $0.6402/lb., up just over 7 cents.

Copper led most of the industrial metals higher yesterday as it followed equities markets up in anticipation…

Crude fell even as OPEC was pondering a second production cut. Abdullah al-Badri, OPEC’s secretary general, said the cartel could cut production again if prices keep falling. “We will have to wait and see how the market will react [but] if this problem continues then we will have another cut,” Badri said.

“OPEC is losing the war on oil prices,” wrote Phil Flynn, of Alaron Trading. “The truth is that another emergency meeting or talk of another production cut before the first one has had a chance to take hold is a sign of…

Crude fell even as OPEC was pondering a second production cut. Abdullah al-Badri, OPEC’s secretary general, said the cartel could cut production again if prices keep falling. “We will have to wait and see how the market will react [but] if this problem continues then we will have another cut,” Badri said.

“OPEC is losing the war on oil prices,” wrote Phil Flynn, of Alaron Trading. “The truth is that another emergency meeting or talk of another production cut before the first one has had a chance to take hold is a sign of…

Platinum was rangebound through most of the New York day, but rallied strongly after the Comex closed, ending at $825/oz., up $44. Overnight, platinum has fallen off.

Silver went on a very wild ride, pushing to near $9.30 in the far East, jumping off a cliff once London opened, falling below $8.50, shooting back above $9.10 at the New York open, then getting slammed back below $8.60, and finally rising again from late morning through the Globex, to close a…

John Devaney | Hedge Fund Manager

Related to John Devaney | Booed? Apparently Not | His Response Here:

• Mark McGoldrick
• Phillip Richard
  
• George Soros
• Mario Gabelli
• Andrew Lahde
• Stanley Fink
• T. Boone Pickens
• David Einhorn
• Kenneth Griffin

You’ll recall that one of the fairest of the Bubble Era’s revelers was the idea that, over the long run, you would make money in stocks. All you had to do was ‘buy and hold.’ Who didn’t like her? She seemed so easy…so willing…so fetching and attractive.

Yesterday, the Dow lost another 203 points. Investors are down 44% so far this year. Worldwide, they’ve lost $10 trillion this month - far worse than the crash of ‘29.

The most successful economy of the 20th century was the United States of America. The second was probably Japan.…

Platinum sank as low as $740 in the European market, rose to $785 at the close of the Comex, and then eased a bit to end at $781/oz., down $13. Overnight, platinum is trending higher.

Silver had a rough day, dropping as low as $8.70 in the far East, pushed back above $9.20 on the Comex, but lost ground on the Globex, closing at $9.05/oz., down 32 cents. Overnight, silver has fallen off. (Click…

• Crude oil for December delivery declined 1.4% yesterday (Monday) with a 93-cent drop to close at $63.22 a barrel on the New York Mercantile Exchange. Oil futures are down 57% from the July 11 record of $147.27 and 31% down from a year ago, Bloomberg News reported.  “With all of the stock markets going down, there’s going to continue to be downward pressure,” said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. (MF) in New York. “There’s not a lot that can be done to stop this downward spiral right now.”

• Shares of German…

This from Fleet Street Daily:

Investors tend to fixate on the stock market as a way to make money. When stock markets are in chaos, they see no way out. I’m surprised that so few investors pay attention to the currency markets. After all, in terms of volume and value,…

More from Laura in Today’s Financial News:

Sun Healthcare Group, Inc. (NASDAQ:SUNH) runs over 180 nursing centers in the U.S. and provides rehabilitation, inpatient and medical staffing services.

On October 30, the company will announce its third quarter results and all indications are that they should be promising.

Fundamentally, I like the Sun’s P/E of 7.7 and Forward P/E of 9.63, but what I’m really looking at is the short-term potential…

At the beginning of the month, the California-based…

Nickel fell until mid-morning, before rallying back a little bit to close at $4.2018/lb., down better than 26 1/3 cents. Zinc had a pleasantly good day, rising fairly steadily to finish at $0.5101/lb., up more than 3½ cents. Aluminum also pushed higher, adding more than a penny and three-quarters, to $0.8918/lb., while lead moved up modestly, tacking on less than a penny, to $0.558/lb.

Once again copper failed to gain much traction, although it came well off its lows for the day (and a fresh 3-year low), as fear continues to…

Platinum followed the same pattern, hitting $780 at its low point, then climbed through both the rest of the COMEX and the Globex to end at $813/oz., down $30. Overnight, platinum has fallen further.

Silver had a day of sudden and very steep ups and downs, falling to $9.20 early in New York, busting back to $9.80, crashing to $9.30 in the Globex, and finally rallying yet again to close at $9.66/oz., up 17 cents. Overnight, silver…

• Microsoft Corp.’s (MSFT) quarterly profit rose 2% from a year ago, the company said yesterday (Thursday) in a statement. The world’s largest software maker earned $4.37 billion, or 48 cents per share, in the quarter ended Sept. 30. Sales rose 9% to $15.1 billion.

• Goldman Sachs Group Inc. (GS) is cutting 3,200 jobs, or 10% of its work force, as the firm struggles with the credit crisis and transitions into a holding company. The cuts add to more than 130,000 jobs eliminated in the financial industry since mid-2007, topping the 83,000 lost after the Internet bubble burst in…

This from Investment U:

Most investors have never heard of, or purchased, shares of a master limited partnership (MLP). But, with many yielding more than 10% and prices at historically low levels, these bargains are getting hard to ignore.

Few investors know that master limited partnerships are publicly traded asset pools. They have the tax benefits of a partnership plus the liquidity…

This from the Rude Awakening:

Earlier this week, I attended a privately sponsored presentation on U.S. energy policy. The main speaker was a senior faculty member from Carnegie Mellon University. This guy has been “doing electricity” for about 40 years or so. He has written reports for the National Academy of Sciences. When the people at the U.S. Department of Energy have a question about…

Silver was an entirely different animal, with a mind all its own. It took off right from the Globex open in the Far East on Tuesday. Its top was in at the Hong Kong open…which is 8:30 a.m. over there. Then, it too, was taken down…particularly at the Comex open. But then it rallied smartly, and the price had to be restrained a couple of…

Zinc declined steadily all day, barely coming off its intraday low to end at $0.502/lb., down 3¼ cents. Aluminum was off sharply, dropping nearly 3 cents, to $0.9116/lb., while lead was also hammered, shedding 3 cents to $0.6086/lb.

Copper led the industrial metals mostly lower, as fears about the Chinese economy remained…

“The dollar strength, expiration issues and usual trading activity has been pushing the market around, but it’s really going to gyrate on what OPEC announces and if the participants believe there will be any concrete follow through by them,” said Neal Ryan, of Ryan Oil & Gas Partners.

Ryan noted that “even bold announcements by [OPEC members] in the last few years have been greeted with a lot of skepticism in the market because of the lack of follow through or what I call ‘fun with numbers’ accounting they…

Platinum was rangebound with a slight down bias, ending at $893/oz., down $5. Overnight, platinum is sharply lower.

Silver bottomed just after the New York open, but then completely diverged from gold, shooting higher into the Globex, and only coming back a little late in the day to close at $10.03/oz., up 30 cents. Overnight, silver is trending lower. (Click here for charts)

It was a day of contrasts among the precious metals, with platinum little changed, gold dropping…

The newly created Money Market Investor Funding Facility (MMIFF) will help money market funds meet redemption needs and keep from “breaking the buck” – dropping below the normal $1 in net asset value – as The Reserve Primary Fund (RFIXX) did after the collapse of Wall Street investment-banking giant Lehman Brothers Holdings Inc. (OTC: LEHMQ). Struggling money-market funds that have seen more than $500 billion in redemptions since Lehman’s demise.

“The short-term debt markets have been under considerable strain in recent…

read more

This from Taipan Daily:

The petrocrats were richly rewarded as crude oil climbed to new heights. Now a sharp decline in the price of oil threatens to tear their world apart. A time for drastic action could be at hand…

Today I want to talk about a situation that feels like a ticking time bomb - a time bomb that could go off sooner rather than later. It starts with…

• Halliburton Co. (HAL) yesterday (Monday) announced a third quarter loss of $21 million, or 2 cents per share, compared to a gain of $727 million, or 79 cents a share, for the same period in the prior year. The Houston, Tex.-based oil and energy services firm attributed the loss to financing expenses including $693 million in costs related to the redemption of convertible bonds, Bloomberg News reported.

• Toymaker Hasbro Inc. (HAS) posted a gain of $138.2 million, or 89 cents a share, for its fiscal third quarter, compared with a profit of $161.6 million, or 95…

According to Horacio, the company’s strong presence in emerging markets will also help weather the downturn in sales in US and European markets. And Pepsi’s cash flow is the envy of most companies as credit markets tighten.

But any stock buying is risky amid current market volatility. Horacio says investors should build up a long-term position with Pepsi with incremental purchases.

This from Money Morning:

PepsiCo Inc. (NYSE:PEP) shares plunged 12% in a single day last Tuesday –- their…

Nickel plunged from over $5 in the pre-dawn hours through to mid-morning, and a subsequent rally left it still with a loss of 15 1/3 cents, at $4.731/lb. Zinc fell below 50 cents early on, but showed great resilience, pushing back to close at $0.5347/lb., up nearly a penny. Aluminum had a modestly positive day, ending up two-thirds of a cent at $0.9743/lb., while lead was sharply higher for a change, adding more than 3½ cents, to $0.652/lb.

Copper led the…

“Welcome relief from the relentless selling will naturally beg the question, is it over?” wrote Michael Fitzpatrick, of MF Global. “This morning’s 6.3% drop in September housing starts will serve as the resounding answer.”

Fitzpatrick added that, “Once the [oil] market establishes an equilibrium level, it will probably remain there for some time … As we have been saying, because the market is running on emotion, where that level is will be a subjective determination and impossible to pinpoint. It must be close.”

Meanwhile, OPEC announced that it has decided to reschedule…

Platinum traded within a tight $20 range from the overseas markets straight through the Globex, closing near the low end at $857/oz., down $39. For the week, platinum shed more than 13%.

Silver was in the green until the midpoint of London trading, then it too hit a slow decline that lasted until the same mid-morning point as gold’s, and it too recovered a bit to end at $9.31/oz., down 34 cents. For the week, silver lost 8½%. (Click…

For toymakers, the 4th quarter holiday season is all-important, and by every account this year is going to result in the poorest holiday season in well over a decade.  So even though Mattel -- the maker of Barbie, Fisher-Price and American Girl toys -- saw its 3rd quarter sales rise 6% and Hasbro -- with its Star Wars, Playskool, Nerf and Scrabble brands -- beat estimates in the quarter, the outlook for both companies is strongly tempered by the struggling U.S. economy ahead of Christmas 2008.

Zacks senior analyst Sean P. Smith had issued research reports on both companies ahead of their earnings reports, and retained a note of caution for both, along with Hold ratings.  In his Mattel report, he had this to say: "Given the current economic environment... we expect that the upcoming holiday shopping season will prove to be challenging."

Read the full analyst report on MAT

Read the full analyst report on HAS

The business manufactures electrolytes used to make lithium batteries as well as specialty solvents. Novolyte will absorb the manufacturing employees.

Ferro, a Zacks #1 Rank (Strong Buy), continues to have strong fundamentals.

On Aug 5, it reported second quarter earnings that beat Wall Street estimates by 31.25%. Sales rose 17% to $650 million from $553.7 million in the year ago period.

Consensus estimates for the third quarter are steady at 31 cents per share. Full year estimates are up 5 cents to $1.38 in the last 60 days. Analysts expect 2008 year-over-year earnings per share growth of 62.65%.

Ferro is now trading at 10.5x forward earnings. Its price-to-book is 1.46. The company reports third-quarter earnings on Nov 6.

Read the July 8 analysis.

Update to Previous Value Zacks Rank Buy Stocks

The Pantry, Inc. (PTRY), a southeastern U.S. convenience store chain, saw revenues grow 20.1% in the third quarter. PTRY surprised on estimates in the last quarter by 71.43%. The Pantry is trading at 9.6x forward earnings. Read the Oct 14 analysis.

Parlux Fragrances, Inc. (PARL) saw sales surged 43% in the second quarter on the selling strength of Jessica Simpson and Paris Hilton fragrances. Branded fragrances are still a hot commodity going into the holiday season. The company has a forward P/E of 10.15. Read the Oct 15 analysis.

Medifast, Inc. (MED), which sells weight loss products and programs, is growing quickly as diet, health and fitness programs remain hot. Revenues rose 25% in the second quarter and the company recently said third quarter financials look strong. MED has a forward P/E of 9.97. Read the Oct 16 analysis.

Layne Christensen Company (LAYN), the drilling service provider, grew revenues by 23.8% in the second quarter. LAYN has surprised on earnings 3 out of the last 4 quarters on average by 19.18%. It has a forward P/E of 8.05. Read the Oct 17 analysis.

"FOE" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

The Education section of Zacks.com offers a plethora of detailed articles and helpful information on each style of investing. Extremely helpful are the guides for each style.

Because I write about Growth and Income stocks, I will focus on this style for this week's Investment Idea. However, links are provided to guides for all four investment styles at the end of the article. In an effort to leave no stone unturned, we made sure that each of the links below provide a comprehensive PDF guide and a list of individual well-detailed articles on the four different styles of investing.

What to Expect with Growth and Income

Generally, a Growth and Income play will have healthy balance sheets, consistent dividend payments, quality products and services and experienced management teams. Usually Growth and Income companies are industry leaders, displaying steady earnings growth.

Companies that continually exhibit stable earnings growth, more than anything else, are ones that should hit the radar screens of Growth & Income investors. After all, companies exhibiting all of the characteristics mentioned earlier should have no problem producing a steady stream of profit growth. Analysts will subsequently grow more optimistic about the future earnings potential of the company and adjust their estimates up accordingly.

Growth & income investors get a dual benefit from following earnings estimate revisions. First, positive estimate revisions help investors buy shares in the companies with the best chances to outperform the market. Second, positive estimate revisions provide the easiest means to monitor the health of companies, providing a rather clear signal when the time has come to abandon ship. Companies experiencing upward estimate revisions will generally enjoy positive momentum going forward. Rarely will a stock suffer a significant price decline in the face of improving fundamentals. Add it all up and it's clear that Growth and Income investors should only buy shares in companies enjoying upward earnings estimate revisions. The best way to harness this phenomenon is through the Zacks Rank.

Solid Growth and Income picks should carry a Zacks Rank of #1 (Strong Buy) or #2 (Buy). Check out the Guide to Growth and Income investing for more detailed information on this style of investing and the important role that the Zacks Rank plays in screening for Growth and Income stocks.

One of the Leaders

I have covered a wide variety of companies that fall under the Growth and Income style. Below is an example of a consistent Growth and Income play that is also currently a Zacks Rank #1 ("strong buy") name.

L-3 Communications (LLL), a Zacks #1 Rank company, has been consistently outperforming the Dow Jones ($DJI), S&P 500 (SPX) and Nasdaq (COMP) amid recent turmoil and over the long-term.

Higher Estimates

Wall Street is bullish on the aerospace and defense communications company. Analysts increased full-year 2008 earnings forecasts on L-3 communications from $7.13 to $7.19 per share in just the past week. For 2009, the consensus estimate moved up from $7.54 to $7.59 over the same time period.

Rewarding Shareholders with Income

The company recently declared a quarterly dividend of 30 cents per share, noting that it is payable on December 15 to shareholders of record at the close of business on November 17.

LLL is scheduled to release results for the third quarter on October 23.

Read our Sep 25, 2008 analysis.

Additional Resources

Zacks Guide to Aggressive Growth

Zacks Guide to Growth and Income

Zacks Guide to Momentum

Zacks Guide to Value
"LLL" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Higher Estimates

Wall Street is bullish on the aerospace and defense communications company. Analysts increased full-year 2008 earnings forecasts on L-3 communications from $7.13 to $7.19 per share in just the past week. For 2009, the consensus estimate moved up from $7.54 to $7.59 over the same time period.

Rewarding Shareholders with Income

The company recently declared a quarterly dividend of 30 cents per share, noting that it is payable on December 15 to shareholders of record at the close of business on November 17.

LLL is scheduled to release results for the third quarter on October 23.

Read our Sep 25, 2008 analysis.

Last Week's Growth and Income Zacks Rank Buy Stocks

Casey & General Stores (CASY) has been trading ahead of the broader market amid recent turmoil and over the long-term. While grocers and food retailers have been slowing down, convenience stores like CASY have been outperforming. CASY has been consistently outperforming the Dow Jones ($DJI), S&P 500 (SPX) and the Nasdaq (COMP). The company offers a dividend yield of 1.2%, while the majority of its industry peers pay no dividend at all. Read the full analysis on CASY.

Family Dollar Stores, Inc. (FDO) is outperforming the market on a record fourth quarter. Analysts are upbeat on earnings forecasts for the year ending August 2009. The company is faring well amid the market mayhem. It continues to outpace the Dow Jones ($DJI), S&P 500 (SPX) and the Nasdaq (COMP). Read the full analysis on FDO.

Comfort Systems USA, Inc. (FIX) has performed well against the broader market. Earnings for this Growth and Income pick are expected to grow by 14% over the next 3 – 5 years, which is in line with the industry average. Read the full analysis on FIX.

Lubrizol Corp. (LZ) sports attractive fundamentals. The company's return on equity (ROE) of 15% more than doubles the industry average of 7%. Its dividend yield of 3.9% soars past the industry average of 0.5%. Read the full analysis on LZ.
"LLL" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

The deal allows Martek to continue its international expansion into Mexico, Europe, and China. Martek's proprietary DHA and ARA blend is used in approximately 95% of infant formulas sold in the U.S.

On Sep 4 Martek announced third-quarter earnings that included earnings per share of 28 cents. This market the fourth surprise in the past 4 quarters, as analysts were only expecting 24 cents. Revenues rose 14% year-over-year to $88.4 million.

Martek also raised full-year guidance during the announcement. The company expects earnings per share to be between $1.06 and $1.09, 65% higher that 2007.

The company was featured earlier this year as a Zacks Rank Buy.

Read the March 11th analysis.

Last Week's Aggressive Growth Zacks Rank Buy Stocks

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) continues to aggressively expand its footprint across the U.S. The beauty retailer and salon is also coming of off its third earnings surprise and is priced at a reasonable PEG ratio of 0.58. Read Full Article.

Perrigo Company (PRGO) has acquired 2 more laboratories this quarter in a focused effort on growth in existing markets. The company is also coming off of a record quarterly earnings report. Read Full Article.

Revlon, Inc. (REV) is paying down debt and focusing on its core business. The company has also seen an increase in sales despite a tough economy. Read Full Article.

Zhongpin Inc. (HOGS) just raised earnings guidance and it trading at a bargain PEG ratio of just 0.26. The company hopes to build off of a second quarter as one of its newest plants is already contributing to revenue. Read Full Article.
"MATK" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Nickel plunged at the NY open, falling well below the $5 mark, and even a late day rally left it still short of that level, at $4.8844/lb., down almost 25 cents. Zinc was off from the pre-dawn hours to mid-morning, then pushed slightly higher to close at $0.5253/lb., down 4½ cents. Aluminum bucked the trend by moving slowly higher through the day, ending at $0.9675/lb., up better than a penny and a half, while lead took…

In its weekly inventory report, the Energy Information Administration said that crude supplies rose 5.6 million barrels for the week ended October 10, bringing the total gain to 18 million barrels over the past three weeks.

Gasoline supplies climbed 7 million barrels, for a 3-week gain of 15.1 million barrels, while distillates dropped another half million barrels, and are now down 10.2 million barrels in seven weeks.

Demand for all petroleum products over the past four weeks averaged 18.6 million barrels per day, down 8.9% from the same time a year…

Platinum declined from the overseas markets until near the noon hour, dropping below $850, but then rallied back to end at $896/oz., down $72. Overnight, platinum has fallen off.

Silver held up until early New York trading, then was smacked down, hard, dropping about a dollar in the next two hours and, though it recovered off its lows, was unable to make it back to the…

• Google Inc. (GOOG) said yesterday (Thursday) that profit climbed 26% to $1.35 billion, or $4.24 per share in the third quarter, up from $1.07 billion, or $3.38 per share, at the same time last year. Revenue soared 31% to $5.54 billion.

• Initial claims for unemployment insurance last week fell 16,000 to a seasonally adjusted level of 461,000 the Labor Department reported yesterday (Thursday). However, the four-week average, which is less volatile, increased slightly to 483,250 – a seven-year high. The number of people continuing to receive jobless benefits rose 40,000 to 3.7 million.

• Peabody Energy…

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Company Description

Peabody Energy Corp. engages in the exploration and production of coal worldwide. The company owns interest in 31 coal operations in the United States, Australia and Venezuela. Peabody has a market cap of $7.7 billion.

Amazing Third-Quarter Results

Peabody pleased its shareholders by stepping up and reporting amazing third-quarter results just yesterday, Oct 16. Revenue increased to $1.9 billion from $1.2 billion last year. Net income sky-rocketed to $369 million from $32.3 million last year. This produced earnings of $1.36 per share, blowing past analyst estimates of 87 cents.

Consistent Earnings

Peabody has been able to produce consistent and reliable income over the last four quarters, having surprised and beaten analyst estimates over the last four quarters by an average of 40%.

Guidance Raised

After the great quarter, Peabody raised its full-year earnings guidance to between $3 and $3.25 per share, up from the previous range between $2.50 and $3.

Analyst Estimates

The analyst community is bullish on Peabody's longer-term prospects, with the next-year estimate pegged at $6.18 per share, a 114% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock is trading at a discount to the overall market, carrying a forward P/E multiple of 9.4X.

The Chart

Shares of BTU have taken a beating this year, but this downward pressure belies the companies strong fundamental composition. Peabody just posted an awesome quarter, and at these levels, this stock looks like a bargain. Take a look at the chart.

"BTU" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Company Description

Layne Christensen, a Zacks #1 Rank (strong buy), provides drilling services in four markets: water resources, mineral exploration, geoconstruction and energy services and production.

Its customers include a large cross section of industries from municipalities, industrial companies, miners, oil and gas companies and consulting firms. The company operates in the U.S., Canada, Mexico, Australia, Africa and South America.

Layne has several different revenue streams, including Layne Energy, an exploration and production company with over 400 wells in the Mid-Continent Cherokee Basin.

Its Water Resource Division provides water related services including hydrological studies, well design, drilling and pump installation. The segment constructs water treatment facilities and sells products that treat contaminants such as nitrates, arsenic, and radon in groundwater.

The Mineral Exploration Division provides aboveground and underground drilling activities for miners.

The GeoConstruction Division specializes in ground modification and specialized structural support to the heavy civil construction sector. This division works on major construction projects such as dams, tunnels, and shafts. It works to improve weak and unstable soils and groundwater control during excavation.

Second Quarter 2009 Revenues Jump 23.8%

On Aug 28, Layne Christensen reported second-quarter fiscal 2009 earnings that blew by Wall Street estimates by 25.81%. Net income rose 58% to $15.09 million, or 78 cents per share, from $9.57 million, or 60 cents. Analysts expected 62 cents.

Revenues grew 23.8% to a record $269.6 million from $217.8 million in the year ago period. All 4 divisions saw double digit revenue growth. Revenues in the Water Resources Division rose 22%. The backlog for the water infrastructure division also jumped to $477.6 million as of July 31, 2008 compared to $364.2 million at the end of the second quarter of 2007.

The Mineral Exploration Division grew 28.4% mainly due to high gold and base metal prices. The Energy Division gained 28.6% from increased production and higher gas pricing.

While it was an outstanding quarter and continued the company's streak of 18 consecutive quarters with year-over-year quarterly improvements, Layne is aware the future may look different.

"Overall, the economy has been getting increasingly difficult and presents a continuing challenge for the Company going forward," said Andrew Schmitt, President and CEO.

Consensus Estimates Rise for Third Quarter 2009 and the Full Year

Covering analysts responded to the second quarter earnings surprise by raising estimates for the third quarter and the full year. Third-quarter estimates are up a penny to 68 cents in the last 30 days. Full year 2009 estimates are up 4 cents to $2.61 per share.

Value Fundamentals

Layne Christensen's stock has been pummeled in the market sell-off and is now cheap. It trades with a forward P/E of 8.05. Its price-to-book is only 0.94. It has a 5-year average return on equity (ROE) of 10.43%.

"LAYN" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Light, sweet crude for November delivery fell $4.47, or 5.68%, to settle at $74.16 a barrel on the New York Mercantile Exchange.

The price has now tumbled nearly 50% since peaking at a record-high of $147.27 on July 11. Gas prices have followed suit dropping 25% since breaching $4 a gallon in July. A gallon of regular gas fell by about 4 cents a gallon overnight to a new national average of $3.125, auto club AAA reported.

The credit crisis has emaciated countries around the world,…

The plan is similar to plans unveiled earlier by Great Britain and the Eurozone.

Paulson said he regrets having to do this, but it’s “what we must do to restore confidence to our financial system.” He assured the public that recipients will be watched closely, to make sure they deploy the new capital, and don’t hoard it.

But a skeptical Nouriel Roubini, economist at New York University, said that the financial system…

Platinum was up sharply in the far East, then traded tightly rangebound through the day, rolling between $1020 and $1040 and ending at $1032/oz., up $45. Overnight, platinum has fallen off.

Silver was also rangebound, between $10.70 and $11.10, but fared better than gold as it closed in the upper part of the range at $10.96/oz., up 29 cents. Overnight, silver has edged lower. (Click here for charts)

It was a generally up day for the precious metals, as equities retreated after Monday’s…

That reflects the general preference for Obama held in Europe; it’s worth noting that the bank’s not offering an equivalent deposit product biased the other way, which by all the rules of hedging it should be (opening branches in Arizona and Wasilla, Alaska, where demand might be expected to be greatest, for example).

You don’t need to go to Portugal to bet on the election. At Iowa Electronic Markets, or IEM, Obama is currently trading at 85 cents asked, so if you bet $85, you stand to be repaid $100 if Obama wins. You can get much better odds on McCain; you only need to bet $16 to win $100 if he wins.

Aside from the amusement value, there’s actually a very real hedging question here. Most of the differences between Obama and McCain come down to questions of policy preference that are difficult to express in a monetary form. Thus, the two candidates’ policies on the Middle East have quite different implications, and though you may have strong views on which candidate you prefer, it is impossible to put a monetary number on those preferences. Even on policies such as healthcare, the details are so complex – and the application to your own circumstances involves such indeterminable unknowns as your future health – that a net monetary number is impossible to calculate.

There is one exception, and that is in the tax field. For those of moderate incomes, there is probably not much to choose from between the two: Obama may bring slightly higher taxes, but the additional government services he promises to institute may provide benefits to offset them.

For high-income people, however, there is a clear difference: Obama promises to repeal the Bush tax cuts (which lowered the top tax rate 4.6%) on incomes over $250,000, and to institute Social Security contributions (at 6.2%, or possibly less) on those top incomes. Therefore, for someone with a steady taxable income of $500,000, an Obama presidency can be expected to cost about 10% of his or her income above $250,000, or $25,000 per annum. Over a four-year presidential term – the time that elapses before we get to choose again – that total cost will reach $100,000.

There are several ways to hedge this:

• You can bet in the Iowa Electronic Markets. If you bet $85,000 at 85, you will have $100,000 to pay your taxes if Obama wins, and nothing if he loses. On a net basis, you will be $85,000 poorer after the election, so you may regret not having done this earlier, when Obama contracts were trading at around 50.

• You can place a deposit with Banco Best. As I penned this, there were 21 days remaining before the election; at that point, the difference between the two returns works out to 6% x21/360 or 0.35% on your money. Your deposit would thus have to be $28,571,428.57 to make $100,000 of difference between the two outcomes. Given the wobbliness of most banks currently, you may feel that’s a lot to risk (and Banco Best says its limit is 10 million euros, about $14 million).

• You can buy Obama-friendly shares like green energy and short McCain-friendly shares like defense. If you assume that an Obama win will increase the return on Obama-friendly shares by 5% annually compared to McCain-friendly shares, then over the four-year term their returns will differ by 20%. That means that an investment of $500,000 should cover you.

Alternatively you can shrug your shoulders and realize that political events, like the weather, are mostly too difficult to hedge against.

Source: Election 2008: Taking a Financial Flyer on the Race for the U.S. Presidency

Editors Note: “Election 2008" is an ongoing Money Morning series that examines the investor implications of the presidential election campaign.

The housing market has been tumbling for some time now, but the squeeze in credit is now making matters a whole lot worse. There are two clear indicators of this: 1) They're cutting dividends; 2) They're selling off homes at "fire sale" prices.

The government isn't stepping in to save these guys. Andrew says now is a good time to short the SPDR S&P Homebuilders ETF (AMEX:XHB)

More from Andrew:

The housing market has been going down for a couple of years. But the monthly numbers keep getting worse.

August housing starts dropped to a seasonally adjusted annual rate of 895,000. That's the lowest it's been since back in early 1991, and 6.6 percent of all loans are at least a month past due. And sales of pre-owned homes fell by 2.2 percent in August. OUCH.

Most homebuilders haven’t been profitable since 2006. But it wasn’t until recently that they flashed two clear signs of desperation.

• They’re cutting dividends. Lennar (NYSE:LEN), the biggest homebuilder in the U.S., cut dividends by 75 percent last week. More dividend cuts will come from the sector.
• They’re selling their property at fire-sale prices. That makes them even more desperate than banks. Banks refused to sell their toxic debt at huge discount prices. That’s a big reason why the government had to step in and offer to buy this stuff at higher prices than what they could get from the private sector. Horton, for example, recently sold a San Diego property for 25 cents on the dollar.

Yes they’re getting tax-refund checks from Uncle Sam for the losses they take on these sales. Still, healthy, or even semi-healthy companies don’t sell their property for pennies on the dollar unless they’re in dire straits.Even homebuilders themselves see tough times ahead. Here’s what Lennar said:

“While we expected the housing market to remain constrained throughout the third quarter, the weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards.”

I believe that housing will remain “constrained” much longer than through the third quarter.  I think the third quarter of next year is more like it, especially with foreclosures increasing and driving down prices.

In a middle-class neighborhood in South Florida, not far from IDE’s Delray Beach office, you can buy pre-owned homes in foreclosure for less than $85,000. Why would anyone buy more expensive new homes when they could just buy a foreclosed one at a steep discount?

And the credit freeze that occurred right after Lehman fell is killing home builders. One of these days credit is going to thaw, and I hope it’s sooner rather than later. But banks won’t go back to their free-wheeling lending days, and in the meantime it’s extremely difficult to get home loans.

Morningstar says, "It's likely that these home builders are going to enter an even more difficult period in terms of cash generation."

O'Donnell /Atkins, a real-estate advisory firm in California, says, "There's going to be a rash of builders shedding assets.”

Prudential Realty in California, says, "The downside is they are never going to see the kind of margins when lots were doubling and tripling in value in the time it took to build a house."

Banks are hogging the headlines but home builders are in big trouble. The 20 percent they’ve dropped so far this year is nothing (the blue line above is the Spyders home builders ETF – XHB). It’s only half of the banks’ drop.

Like every other sector, home builders are having a terrible October. Unlike other sectors, there’s nothing to save these companies from doubling and perhaps tripling those losses.

Most likely, a falling market has taken a big chunk of change from you. Here’s a way to get it back. All you have to do is short these companies or the home builders ETF.

Source: Next Shoe to Drop

The housing market has been tumbling for some time now, but the squeeze in credit is now making matters a whole lot worse. There are two clear indicators of this: 1) They're cutting dividends; 2) They're selling off homes at "fire sale" prices.

The government isn't stepping in to save these guys. Andrew says now is a good time to short the SPDR S&P Homebuilders ETF (AMEX:XHB)

More from Andrew:

The housing market has been going down for a couple of years. But the monthly numbers keep getting worse.

August housing starts dropped to a seasonally adjusted annual rate of 895,000. That's the lowest it's been since back in early 1991, and 6.6 percent of all loans are at least a month past due. And sales of pre-owned homes fell by 2.2 percent in August. OUCH.

Most homebuilders haven’t been profitable since 2006. But it wasn’t until recently that they flashed two clear signs of desperation.

• They’re cutting dividends. Lennar (NYSE:LEN), the biggest homebuilder in the U.S., cut dividends by 75 percent last week. More dividend cuts will come from the sector.
• They’re selling their property at fire-sale prices. That makes them even more desperate than banks. Banks refused to sell their toxic debt at huge discount prices. That’s a big reason why the government had to step in and offer to buy this stuff at higher prices than what they could get from the private sector. Horton, for example, recently sold a San Diego property for 25 cents on the dollar.

Yes they’re getting tax-refund checks from Uncle Sam for the losses they take on these sales. Still, healthy, or even semi-healthy companies don’t sell their property for pennies on the dollar unless they’re in dire straits.Even homebuilders themselves see tough times ahead. Here’s what Lennar said:

“While we expected the housing market to remain constrained throughout the third quarter, the weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards.”

I believe that housing will remain “constrained” much longer than through the third quarter.  I think the third quarter of next year is more like it, especially with foreclosures increasing and driving down prices.

In a middle-class neighborhood in South Florida, not far from IDE’s Delray Beach office, you can buy pre-owned homes in foreclosure for less than $85,000. Why would anyone buy more expensive new homes when they could just buy a foreclosed one at a steep discount?

And the credit freeze that occurred right after Lehman fell is killing home builders. One of these days credit is going to thaw, and I hope it’s sooner rather than later. But banks won’t go back to their free-wheeling lending days, and in the meantime it’s extremely difficult to get home loans.

Morningstar says, "It's likely that these home builders are going to enter an even more difficult period in terms of cash generation."

O'Donnell /Atkins, a real-estate advisory firm in California, says, "There's going to be a rash of builders shedding assets.”

Prudential Realty in California, says, "The downside is they are never going to see the kind of margins when lots were doubling and tripling in value in the time it took to build a house."

Banks are hogging the headlines but home builders are in big trouble. The 20 percent they’ve dropped so far this year is nothing (the blue line above is the Spyders home builders ETF – XHB). It’s only half of the banks’ drop.

Like every other sector, home builders are having a terrible October. Unlike other sectors, there’s nothing to save these companies from doubling and perhaps tripling those losses.

Most likely, a falling market has taken a big chunk of change from you. Here’s a way to get it back. All you have to do is short these companies or the home builders ETF.

Source: Next Shoe to Drop

This from Today's Financial News:

The markets were forced to endure one round of default swap payouts last week. Now, the debt from three more companies will hit the auction blocks. Even more trouble is on the way.

On a micro level, yesterday’s 900-point rally looks like a big deal. Many short-sighted investors look at the day as an indication that the worst is behind us. But on a macro-level, the surge barely stands out. After all, yesterday’s bounce did not put us anywhere near the levels we started out at last week. We still have a long way to go and there are some pretty big hurdles to clear along the way.

One major challenge over the next few weeks is three more debt auctions. Yes, three more defaulted credit auctions.

The International Swaps and Derivatives Association has held just nine auctions since 2005. It will hold five of them in October alone. It is a sign of the times.

Last week, we saw Lehman Brother’s debt on the auction block. Selling for about nine cents on the dollar, the market had a tough time swallowing the nearly $400 billion that was suddenly needed to cover the debt’s default insurance.

Now, there are more costly auctions on the way. On October 23, Washington Mutual’s debt will be sold. Again, investors can expect the debt to sell at a drastic discount.

You can count on the equities market taking a shot on the chin that day as credit default swap (CDS) owners are forced to cash in their portfolios to write checks for tens of billions of dollars in insurance payouts.

Just as we saw a “run” on the markets last week, we will see it again as another multi-billion payout comes due.

Big problems overseas

In Iceland, the country that is arguably feeling the credit crunch the most, investors are already flinching at what could be deadly CDS payments.

When Landsbanki and Glitnir were taken over by the Icelandic government, its debt went into default. That means the folks stuck holding the default insurance will be forced to pay up. Even if the debt is auctioned at a fairly substantial rate, billions will be paid out.

Landsbanki CDS sellers are obviously hoping for a highly successful auction. If the debt sells for fifty cents on the dollar (which is highly unlikely), some of them may actually make money. After all, the banks default insurance was selling for nearly a nearly 50% premium in the last few weeks.

I would not expect too many smiles.

Look for strong selling activity on the markets across the globe on November 4 and 5, the dates Landsbanki and Glitnir will see their former debt hit the auction house. Once again, CDS sellers will be forced to liquidate their portfolios (hundreds of billions of dollars worth) in order to pay their insurance guarantees.

It will be an interesting week for the global markets.

Some investors may believe the panic selling is over. It is not. As more and more debt hits the auction block, even more investors will be forced to cash out of the markets, creating another round of harsh sell-offs.

Source: Iceland’s CDS Market Will Create More Turmoil

Nickel soared to about mid-morning and, though it eased off from there, still managed a solid positive close at $5.5618/lb., up 38¾ cents. Zinc followed nickel to a mid-morning peak, but it too backed off to end at $0.6494/lb., up more than 2 cents. Aluminum hit its high in the pre-dawn hours, before falling and then trading sideways in New York for a gain of 2 cents, to $1.0046/lb., while lead had a strong, mostly upward day, adding 4 cents, to $0.6951/lb.

Copper rallied to its biggest daily gain in two years, as traders bet on hopes that world financial cooperation will help to forestall a global recession.

“A degree of immediate relief in financial markets has led to base metals firming across the board, particularly in copper,” wrote analysts at Barclays Capital in London.

The big equities rebound helped, as well

“Copper has been mimicking the moves in the stock market,” said Michael Gross, of OptionSellers.com in Tampa, Florida. “They will probably continue to trade pretty close together for the next several sessions as people try and figure out if the government actions will have an impact on improving the economy.”

The metal was also buoyed when Chile's Escondida, the world's biggest copper mine, said on Friday that it is being forced to declare force majeure on some of its deliveries. Escondida will be unable to meet some contract obligations for copper concentrates after the shutdown of a mill used to pulverize rock.

“The Escondida news is very, very bullish,” said Dan Smith, analyst at Standard Chartered. “On its own [the mine] accounts for 8 percent of global supply.”

Meanwhile, aluminum smelters are in trouble. “Ninety-three percent of all the smelter capacity in the world is losing money with prices at around $2,200 per tonne,” says Jim Southwood, president of CRU Price Risk Management, said. “We have just reached to that level where there is significant pain for producers.”

Source: Base Metals Rally Sharply

Oil prices will continue to meander around their current level “until we get word out of OPEC about what their next move is going to be,” said Neal Ryan of Ryan Oil & Gas Partners. “Many members have tagged the $80 per barrel price as their acceptable floor and that's where we are now.”

Ryan added that, “Prices might snap back to the $90 level in the next week simply because the market was oversold sharply, but I don't see prices back into triple digits in the short term.”

However, “Longer term, the economic health today will be a bit of a wash for the price because eventually we'll begin to refocus on the supply-demand issues that ultimately will drive prices much higher,” Ryan concluded.

Source: Crude Rallies Back

Platinum had a lot of ups and downs to no ultimate effect, as it ended at $987/oz., unchanged. Overnight, platinum is sharply higher.

Silver fared better than gold for a change, opening up in Hong Kong and holding its early gains through a 25-cent rangebound day, to close at $10.67/oz., up 50 cents. Overnight, silver has pushed higher. (Click here for charts)

It was an oddly mixed day for the precious metals, with silver up, gold down, and platinum flat. Gold fanciers had to be a bit disappointed, as the usual suspects moved in its favor, with oil rising and the dollar slipping vs. the euro.

However, gold was competing with the buck for investors’ interest, as those who have been sitting on cash went stampeding back into equities.

“The price movement of gold demonstrates how quickly demand for a safe haven could fade,” said Peter Fertig, analyst at Dresdner Kleinwort. And vice versa, we might add.

The steps being taken to avert a world financial crisis seem to have reassured stock markets. But in the long run, are they gold positive or negative? In its Monday Gold Report, USAGold.com writes:

“According to this morning's [G7] press release, ‘swap lines between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded. The Bank of Japan will be considering the introduction of similar measures.’

“These latest measures come on the heels of last week's announcement by the ECB that they would provide unlimited euro funds to financial institutions …” And, “The UK has already announced a £500 billion bailout of their banking sector …

“Unlimited dollars. Unlimited euros. All but unlimited sterling. We are talking about a global re-inflation on a massive scale … We've recently seen gold set new all-time highs against euro and sterling. Gold nearly set a new record high against the Swiss franc. Given ongoing strong demand for physical gold and incredibly tight supplies, one has to wonder how long the dollar gold charade can be maintained.”

A very good question indeed.

Source: Gold Sinks on Equities Rally

Nickel sank from the pre-dawn hours to the second hour of NY trading, breaking below $5 at one point, before an anemic rally took it back to $5.174/lb., down 37¾ cents. Zinc was hammered into the NY morning, but then rallied almost back to break-even, closing at $0.6282/lb., down a penny and three-quarters. Aluminum lost its momentum sagging under the $1 mark to $0.9841/lb., down 4 cents, while lead got taken to the slaughterhouse, plunging 8 2/3 cents, to $0.6545/lb.

Copper took an 11% haircut, falling to its lowest level since January 2006, and putting the finishing touches on its worst week (-20%) since the beginning of record-keeping in 1988.

The metal has now lost nearly half of its value in just 5 months, since touching a record $4.2605 a pound on May 5.

Some analysts blame the slumping world stock markets.

“Commodities are following equities,” said John Meyer of Fairfax bank. “The problems in the Western world have now spread to Asia ... the developing world will be less able to offset the recession in the West.”

But Michael K. Smith, president of T&K Futures & Options in Port St. Lucie, Florida, put it more starkly: “People are scared to death,” he said. “The fear of a global recession is really hitting copper. People are worried about demand destruction. There's plenty more downside to go.”

How much downside?

Writing that, “We believe copper remains increasingly exposed in an environment of weakening growth and falling equity markets,” Deutsche Bank analysts took a guess, saying that the price could fall to as low as $3,900 a ton, almost 20% below yesterday’s LME close of $4,790.

Source: Base Metals Savaged

Here as elsewhere, panic was the operative term. “The question of the day is, which can drop faster, oil prices or the economic outlook?” wrote James Williams, of WTRG Economics.

“Despite the announcement that OPEC would hold an emergency meeting next month -- at which they will certainly announce a reduction in quotas -- oil continues to trade on the economic outlook,” Williams added.

And for now, “of all the forces that control activity in financial markets, one of the most powerful is currently at work: perception, the focus of which is demand,” wrote Michael Fitzpatrick, of MF Global (NYSE:MF). “Fear coursing throughout the markets is producing a conclusion that the world is in, or very shortly will be in, a severe and long-lasting recession.”

Williams believes OPEC will try to defend $80, but notes that a “million barrel per day cut would probably not be sufficient to stem the fall,” because “the lesson of the last 30 years is that recessions trump production cuts.”

Source: Crude Plummets Below $80

In an all out effort to ease the credit freeze, the Federal Reserve recruited help from the ECB, Bank of England, and the Swiss central bank to flood the market with US$. These central banks will auction unlimited dollar funds with maturities of seven days, 28 days, and 84 days at a fixed interest rate. This move is unprecedented, as all previous dollar swaps were capped at a maximum amount while these auctions will be for unlimited funds.

Chuck spoke about these dollar swaps a few weeks ago, explaining that these trades partially account for the huge rally in the US$. Central banks around the world are purchasing US$ to lend out to the markets, at the request of the Federal Reserve.

Policy makers from the G-7 pledged this weekend to take "all necessary steps" to stem the markets' dramatic slide. European leaders agreed to guarantee new bank debt and use taxpayer money to keep distressed lenders afloat after the worst rout in European's stock markets in two decades. But they didn't come up with any coordinated measures, other than saying they need to attach the crisis on a unilateral basis.

Chuck had this to say about the G-7 and G-20 weekend meetings:

"The G-7, G-20 meetings didn't leave the markets much to go on... They issued a communiqué that said, "The will take the necessary steps to stem Global Financial Crisis" I would think that the markets were looking for something with a little more meat to it, don't you? I doubt the credit markets are going to magically unlock on that communiqué... And so the beat goes on... "

The Euro rose the most in three weeks against the dollar in early European trading, moving up over 3 cents from Friday's low of 1.3259. The British pound also advanced against the dollar on speculation the government's bailout plan will avert a banking collapse. In the near term, the plans give investors confidence that there won't be further banking failures. In today's world, everyone is constantly looking for where the next big financial failure will occur, so the European plan to shore up their banks has led to a pretty good rally in the Euro and Pound Sterling.

The Japanese yen, which has been the best currency year to date traded in a rather tight range right around 100 yen per dollar. Some currency research departments are now suggesting that the yen will rally all the way to 95 as investors reverse carry trades. With the global slump in equities, Japanese investors have started selling some of their more than $1.3 trillion in overseas assets to bring money home. Chuck mentioned that he has seen this before, and wanted me to share the following with readers this morning:

"It has been a very tumultuous week, and I just want to make certain that you are aware of this trading pattern that is existing these days... It is Japan circa 1995-1998, when the Japanese stimulus packages and budget junk didn't work, and the economy was circling the bowl. But... The yen was rallying to 85! It was a repatriation of the offshore investments to bring home to squirrel away and have "under the mattress" in case things get even more bleak...

Sound familiar? That's what's going on right now with the dollar... It's a "the worse things get in the U.S. buy the dollar, and if it looks like Armageddon won't happen in the U.S. sell the dollar trend... Nothing more, nothing less..."

Two of the biggest movers over the weekend were the high yielding currencies of Brazil, New Zealand, and South African rand. The Brazilian real was the biggest mover, up over 5% vs. the US$ in the past 24 hours. The rebound in stock market overseas has made investors more comfortable with moving money back into the emerging markets. But this rally could be short lived, as the reality of a global recession sinks in and investors continue to de-leverage their positions. At this point I think it is best to take advantage of rallies in the high yielders to exit and reallocate funds into more 'stable' currencies.

Two which would fit this description are the Norwegian and Swedish currencies which rose against the euro and the dollar on this weekend's news. But these gains could again prove short lived, as Norway's central bank is expected to lower interest rates later this week. Norske Bank pushed forward its regular interest-rate meeting from Oct. 29 to Oct. 15. The bank kept borrowing costs on hold last week while Sweden's Riksbank cut its main rate a half point as part of a coordinated effort by central banks, including the ECB, to revive interbank lending.

Jeff Clark says this could be the buying opportunity of a lifetime. The Fed and US Treasury are flooding financial markets with trillions of dollars. This will eventually send inflation soaring and the greenback into a nosedive. And that's when gold prices will skyrocket.

If gold returns to its 1980 inflation-adjusted level, it could mean a spot price upwards of $5,000 an ounce.

This from The Daily Reckoning:

"Gold Rockets Past $5,000 in Heavy Trading"

Jan. 21, 2012 (AP) For the fifteenth straight day, the price of gold rose on record-setting volume, reaching a milestone few believed possible just a few short years ago. Roaring inflation and a fading U.S. dollar, combined with the continuing stress and uncertainty of World War III, pushed gold past the psychological barrier of $5,000 (to gold bugs, the "Big Nickel"), to close at $5,108 per ounce. Gold is now up an astonishing 66% since December 31, matching its percentage ascent of January 1980.

"It was another peak day," proclaimed an exhausted trader on the floor of the NYSE, whose daily order flow, he said, included hardly any gold stocks as recently as a year ago. "The orders for mining stocks and the bullion ETFs are pouring in so fast and in such large volume that the computers needed help from us humans on the trading floor." Floor traders had been widely considered obsolete in 2008.

The excitement is thick and palpable in this bastion of capitalism, as each trader tries to scream louder than the next. Goaded by the fear of being left behind, gold buyers keep pouring in, and the price continues rocketing upward. "This is a once in a lifetime opportunity," shouted an ecstatic floor broker, who admitted he had been slipping in orders for his own account.

Meanwhile, outside the exchange, worried-looking buyers formed long lines at coin shops around the city. Already swamped with orders, the shops became financial refugee centers when a rumor ignited that Congress was considering confiscating gold, something that hasn't happened since 1933 under President Roosevelt. The rumor gained strength from last year's imposition of exchange controls. Supposedly needed for national security reasons, they gave rise to the "northern gaucho," a term used to describe Americans who risk jail time to slip dollars across the border into Canada.

More violence was reported in the coin shop lines again today. In Manhattan, one incident was so serious that a life-flight helicopter had to be called in when a women stabbed a man who reportedly had cut into the line and then tried to enter the shop without a ticket. E-tickets for coin shop entry are now required by a city ordinance, something many consider very Orwellian. Some bullion shops have gone a step further and placed armed guards at entrances, who are reportedly none too polite when frisking customers for weapons.

While most are stunned by the yellow metal's price trajectory, the rise in gold stocks has been even more dizzying. In spite of the tremendous gains they have had in the past year, the influx of new, first-time buyers has not slowed. Given the small number of real gold and silver companies, the buying pressure is, as one gold bug noted, "equivalent to pushing the flow of Niagara Falls through a garden hose."

As seemingly every investor has learned by now, gold stocks are leveraged to the price of gold. While the metal is up five-fold in the last three and a half years, many stocks are up ten- and even twenty-fold. But it is the Canadian juniors that have shown the greatest leverage; a few of the better-managed companies have given shareholders returns of 50-to-1 or better.

"Our recommended Canadian stocks are up an average of 1,000% over the past three years," said well-known speculator Doug Casey, speaking to a reporter with the good luck to find him in a hotel elevator. "However, our better performers have returned 5,000% to date. Our biggest winner closed today at $101 per share; we first recommended it at 87 cents.

"Adjusted for inflation, gold is just now reaching its 1980 top," explained Casey. "This is something we've been expecting for years."

But joy for some is regret for others - especially those who sold in 2008, when the metal lost 23%. "I panicked during the sell-off that summer," lamented an investor. "I went another direction with my money, and I can't tell you how many times I've regretted it. I sold most of my gold stocks for a big loss that year. But what I really lost was all the future profits I threw away."

Scares from a fleeting rise in the dollar and a whiff of deflation convinced much of the public to dump gold and gold shares back then. And yet, as Doug Casey commented, "That was the buying opportunity of a lifetime and the last time the train stopped at a station with a 3-digit gold number."

The buying is not expected to stop anytime soon. Time magazine just announced that its lead story in its upcoming issue will be a chronicle of the gold bull market that started in 2001, with a front-cover picture of a gold bull stampeding outside a derelict NYSE building.

With the widespread bullish sentiment for gold, it came as a surprise when someone in the elevator jokingly asked Doug Casey if he was considering selling. Mr. Casey gave no answer but got out at the next floor and explained that he needed to put something together for his subscribers.

Source: Back from the Future: Gold in 2012

Zinc was also off from the NY open onward, just coming off its intraday low to end at $0.6465/lb., down 4 1/3 cents. Aluminum held up remarkably well all day, actually gaining nearly a quarter-cent, to $1.0151/lb., while lead continued its long decline, dropping nearly 2½ cents, to $0.7087/lb.

Copper skidded to its lowest price since March of 2006, on the widespread conviction that even with the coordinated reduction in interest rates in the U.S. and Europe, there will be no jump start to either investor confidence or world economic growth.

“The market is saying this action is not enough,” in the opinion of Frank McGhee, of Integrated Brokerage Services in Chicago. “The best the central banks can do to turn the tide is turn confidence, and they haven't been able to do that. Copper will continue to get punished in view of the continued, deteriorating global economic outlook.”

Leon Westgate, an analyst at Standard Bank, concurred, saying that the “coordinated action is positive but it doesn't really impact on the immediate demand outlook for base metals … After the initial euphoria there is still concern…”

Adding to the gloom, the International Copper Study Group forecast a copper surplus of 109,000 metric tons in 2008.

That’s a difficult situation that promises to get worse. Supplies of the metal will exceed demand by 277,000 metric tons next year, the ICSG said. That’s based on a projection that mine production will gain almost 11% next year even as usage slows, increasing by only 3.4%. Meanwhile, the global nickel market will be in a 110,000 ton surplus in 2009, the ICSG predicted.

All of this makes aluminum’s steadiness a bit surprising, especially considering that inventories of the metal monitored by the LME stand at more than 1.39 million tons, the highest level since February 2004.

Source: Most base metals savaged again - But aluminum hanging in.

In its regular inventory report, the Energy Information Administration said that crude stockpiles advanced for a second week in a row, adding 8.1 million for the week ended October 3, and nearly doubling the previous week’s gain.

Gasoline supplies tacked on 7.2 million barrels, while distillates were off by 500,000 barrels. Refinery utilization continued its hurricane recovery, coming in at 80.9% of capacity, vs. 72.3% a week earlier.

Folks ain’t truckin’ like they used to. Total gasoline demand averaged nearly 8.8 million barrels a day over the past month, down 5.3% from the same time in 2007.

“Even Wal-Mart (WMT) is seeing slower sales, which means there is no traffic ... no driving,” wrote John Person, president of National Futures Advisory Service. “This trend of conservation could last for a long time.”

Source: Crude can’t hang onto $90 - EIA notes sharp drop in gasoline usage.

Platinum, which at their peaks was trading for well over twice the price of gold, edged closer to parity with the yellow metal, coming well off its Hong Kong low of $950, but still ending in the red at $1008/oz., down $7. Overnight, platinum has edged higher.

Silver punched through $12 right at the end of Hong Kong trading, approached it twice again during the first hour of the COMEX, but then fell off and traded sideways from mid-morning through the Globex, closing at $11.78/oz., up 22 cents. Overnight, silver has dropped off. (Click here for charts)

While it wasn’t a spectacular day for gold, the metal prolonged its steady, uptrend in the face of continuing economic turmoil around the world. Yesterday, it pulled silver along with it, although platinum languishes still.

The rally showed real strength, coming as it did on a day in which the dollar barely budged against the euro and crude pulled back. In fact, gold has been running counter for the past three weeks, as the buck gained 4% against the euro while gold advanced 15%.

That has the bulls stamping their feet. “Coordinated central bank aggressive interest rate cuts should lead to gold surging in value in the coming months” as “currency devaluations look increasingly likely,” said Mark O'Byrne, of Gold and Silver Investments.

“Gold's ultimate status as a safe-haven asset is showing its luster again as the financial crisis escalates,” said Peter Spina, president of GoldSeek.com. “Paper money from all walks of life is flowing into gold as uncertainty and fear rocket to new heights.”

Against that backdrop, platinum’s fall has been stunning. Although scarcer than gold, and subject to the uncertainties of South African mines, it is threatening become less precious than gold for the first time since 1996.

The ratio of the two metals' prices fell to 1.1083 yesterday, the lowest since May 8, 1997. Platinum has skidded by 14% as gold posted that 15% three-week gain.

“Greed is almost gone from all markets and most things are driven by fear,” commented Walter de Wet, of Standard Bank Group in Johannesburg. “That platinum isn't gaining tells us that the market values liquidity. Gold is much more liquid than platinum.”

Source: Gold gains, breaking $900 and holding -  Platinum falling toward parity

But in June, when we still believed the credit crisis was just going to mean a couple of years of unpleasant quarterly reports from the financial sector, The Hershey Company (NYSE:HSY) was hitting a 52-week low. The company bottomed at $32.31 as analysts (and the rest of us, too) speculated on the company’s profit margins, what with the rising cost of commodities like cocoa, sugar and soy lecithin.

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Hershey insisted it still saw a 3%-4% sales growth, which, at the time, we didn’t believe. But the company has kept on target with an 11% increase in prices, and a lot of penny-pinching in the production side. Hershey renewed the faith of its followers by holding its dividend at 30 cents in August. And HSY saw a nice pop from rumors it was in talks to sell to Swiss mega-brand Nestle (OTC:NSRGY).

The stock is on a nice dip right now, making it the perfect time to snap up shares on the cheap. But if you do buy in, watch the price carefully. If HSY falls below its most recent bottom of $36.09, sell out. Dipping below its adjusted bottom means its momentum is no longer strong enough to defy the market.

With that being said, Hershey may end up being the perfect recession investment. Chocolate is still cheaper than alcohol, and you won’t get fired for consuming an entire container of Kisses at work.

Source: Hershey (HSY): Kisses Sweeten the Recession