POSCO (PKX) saw a 22.3% decline in third-quarter revenues to KRW6,851 billion from KRW8,813 billion in the corresponding quarter last year. Operating income declined 48.7% year over year, while net profit was down 6.3%.   The decline in the company’s profit was primarily driven by lower production and a drop in selling prices. The company’s global crude steel production for the quarter was down 8.5%, compared to the year-ago quarter.   Starting from the second half of 2008, global economies have been experiencing a significant slowdown and steel prices have dropped sharply. All the major mills are cutting production in an effort to stabilize prices and market.   The business environment has deteriorated so sharply that POSCO was forced to cut production in December 2008, for the first time in its history. The company is expected to cut production by approximately 2 million tons in 2009.   Back ...

Earlier this week, ArcelorMittal (MT) signed a definitive agreement to divest its minority interest in Wabush Mines, Canada, for $34.28 million. ArcelorMittal’s 28.6% stake in the Wabush Mines joint venture is being sold to Consolidated Thompson Iron Mines Ltd. Consolidated Thompson plans to finance the transaction with existing cash and credit facilities. Other terms of the transaction were not released.  ArcelorMittal's stake in Wabush Mines is no longer a core part of the company's mining strategy. The mine represented 31 million tons of iron ore reserve and 1.2 million tons of iron ore produced for ArcelorMittal in 2008.  After the disposal, ArcelorMittal continues to have significant mining operations and resources in Canada including ArcelorMittal Mines Canada, formerly Quebec Cartier Mining. Canada also remains an important jurisdiction for ArcelorMittal's future growth strategy in both mining and steelmaking.  ArcelorMittal expects a surge in steel demand in the ...

Chinese Metals Boosted by Stimulus

Tony Daltorio, The Investment U Research Team

At least one government stimulus package seems to be working right now. But, it’s not the United States. If only our stimulus program was as successful as the “cash for clunkers.” Unfortunately, we’re closer to clunker with the rest of economic stimulus.

The stimulus package we’re talking about is in the country that many pundits love to hate – China. So far this year, China’s economy has accounted for virtually all of the world’s economic growth. Including China, global growth is 1.6 percent. Without it, growth was flat to slightly down.

Here are just a couple examples of China’s successful stimulus:

China’s auto market is now growing at 50% per year and has surpassed the United States as the world’s ...

With the market very near critical support levels, critical earnings reports on the docket, and inflation and employment data set for release, it was more prudent last week to keep the powder dry. But the market surprised to the upside, as key companies reported better than expectations.

Participation in fixed income issuance and trading, gave investment banks buoyancy.  But JP Morgan Chase & Co. (NYSE: JPM) actuallyconfirmed two of the three fears that I outlined last Monday:  A bleak commercial real estate outlook – which will have little consequence for the bank given its limited exposure in this area – and a spike in credit card delinquencies.

The third fear I had, the rise in residential foreclosures, was confirmed by a report from RealtyTrac that said foreclosure filings in the United States jumped to a record 1.9 million in the first half of 2009.

Of course, there

...

Turkey and EU countries have signed a transit deal for Nabucco, but analysts are still wondering where the gas to fill the pipeline will come from.  In response to the many doubters, European Commission President Jose Manuel Barroso has said, 'I believe this pipeline is inevitable, not impossible'.  Turkey has announced its hopes that Russia and Qatar will export gas through Nabucco and, despite opposition from the US, argued that Iran should be involved.  According to the FT, Iraq has offered to supply enough gas to fill half the capacity of the proposed pipeline.  The $11 billion project may make a saving on construction as steel prices drop.  The Washington Post describes how Nabucco could potentially offset fears of 'midwinter blackmail' again on the part of Russia.  Economic Development Minister Elvira Nabiullina has said that ...

Brazilian steelmakers, Gerdau S.A. (GGB) and Companhia Siderurgica Nacional (SID) have signed a memorandum of understanding with state-run oil giant Petroleo Brasileiro SA (PBR or Petrobras), to build ports in the state of Rio de Janeiro. The construction is expected to begin in 2014 with a total investment of approx US$500 million.

The steel industry in the US is in distress, but it is on the road to recovery in Brazil. An increase in export price and new domestic projects are helping Brazilian steel industry. Moreover, government’s plan to cut labor costs in the country will in a way boost industrial productivity and growth.

Domestic steel prices are falling, which is likely to facilitate the Real Estate industry. Thus, Gafisa (GFA), one of the largest builders and incorporators of Brazil, will stand to benefit in the medium- to long-term.

In June, General Motors Brazil car sales reached 55.629 vehicles,

...

For Immediate Release

Chicago, IL - June 25, 2009 - Zacks Equity Research highlights Kroger (KR) as the Bull of the Day and Gerdau S.A. (GGB) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon (XOM), Transocean (RIG) and Ingersoll Rand (IR).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

Kroger (KR) reported better-than-expected first quarter earnings per share, beating our estimate by $0.04 per share. We are increasing our EPS estimates for this year and next to reflect the first quarter upside.

For fiscal year 2009, Kroger expects identical-store sales of 3% to 4% and earnings per share of $2.00 to $2.05. That said, we still believe that the company may

...

We are keeping our Sell recommendation on Gerdau S.A. (GGB) based on poor first quarter results and the worldwide crises. The company successfully renegotiated part of its debt and banks accepted to relieve some covenants.

The company's strategy to grow through acquisitions based on debt created huge leverage and financial debt is expected to increase in the short-term. The huge decline in steel prices and the international economic slowdown creates a more challenging business environment for the steel industry.

The company's strategy to grow through acquisitions based on debt is contributing to the negative news. Moreover, huge exposure to the U.S. market during a recession is a major concern.Zacks Investment Research

The markets were very volatile today, with a late rally sending the indexes near where they opened.  The Dow Jones was the only major index down, closing at 8763.06 down 0.02%.  The NASDAQ and S&P were both up closing at 1860.13 and 942.43 respectively, up 0.96% and 0.35%.  The 10-year saw prices fall as the yield ended at 3.862%.  Crude oil reached over $70 for the first time in seven months settling at $70.01, with August gold up on a declining US dollar, settling at $954.70. 

The big news of the day came from financials, as it was announced that the Treasury Department will allow ten financial institutions to repay TARP funds, which will allow the banks not to follow the government’s rules on executive compensation and dividends.  JP Morgan [JPM: 35.26, -0.13 (-0.37%)], Goldman Sachs [GS: 149.31, +0.96 (+0.65%)], Morgan Stanley [MS: 30.98, -0.41 (-1.31%)], American Express [

...

For Immediate Release

Chicago, IL - May 14, 2009 - Zacks Equity Research picks Transocean Ltd. (RIG) as Bull of the Day and Gerdau S.A. (GGB) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on Goldman Sachs (GS), JP Morgan Chase (JPM) and US Bancorp (USB).

Full analysis of all these stocks is available at: http://at.zacks.com/?id=2678

Bull of the Day

Transocean Ltd. (RIG) reported strong first-quarter 2009 results driven by solid contribution from the high-specification floaters and significant cost control measures. Transocean continues to generate significant cash flows supported by a $36 billion backlog, which is of a very high credit quality.

The company is deploying its ample cash flows to strengthen its balance sheet and invest in its newbuild program.

Our Buy recommendation remains unchanged, though we have lowered our estimates to reflect a relatively softer outlook for the mid-water

...