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Durable Goods Orders Drop – Analyst Blog

Dirk Van Dijk — Wed, 25 Nov 2009 19:31:17 +0000

Durable Goods Orders Drop

In October, new durable goods orders fell by 0.6%, partially reversing a 2.0% rise in September, which in turn was a partial reversal of a 2.7% decline in August. Year to date, new durable goods orders are 23.0% below the level for the first ten months of last year.

If we exclude the extremely volatile Transportation sector, new durable goods orders fell 1.3% after rising 1.8% last month. Transportation equipment includes jetliners, and one new order for a 787 from Boeing (BA) can easily swamp lots of new durable goods orders for smaller ticket items. It was mostly the Boeing order book that partially saved the day for total new durable goods orders, as orders for non-defense aircraft surged by 50.8% in the month. Last month they were up a modest 1.1%, but in August they plunged 44.0%.

Clearly if you want to make heads or tails out of this data, it is a good idea to exclude the Transportation sector. The first graph (from http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/durord.htm) shows total new orders for durable goods on a year-over-year basis. While we are still deep in negative territory, it looks like we have turned the corner (note that the graphs do not include this month’s data, however; October 2008 was an awful month for new orders, so when updated the graphs should show further improvement).

However, most of the decline stems from fewer new durable goods orders from the Pentagon, another area that can be very volatile from month to month. Excluding defense, new durable goods orders actually rose by 0.4% in October after rising 1.8% in September and falling 2.7% in August. Regardless of what you include or exclude, though, on a longer-term year-to-date basis, the numbers are still very ugly, and show that we have a lot of ground to make up.

Excluding Transportation, year-to-date orders are down 20.4%, and excluding defense, orders are down 24.4%. Defense is in fact the only area to see an increase in durable goods orders on a year-to-date basis, with total defense capital goods orders up 1.0% and defense aircraft orders up 8.8%. Non-defense aircraft orders, on the other hand, are down 59.4% on a year-to-date basis, even including the huge surge this month.

In a positive sign for the economy, new durable goods orders for non-defense capital goods -- a very good proxy for business investment spending on equipment and software -- rose by 1.2% in October following a 3.2% increase in September. On a year-to-date basis, though, they are down 27.6%. Still it shows that business investment might be starting to come back.

However, that number does include the non-defense aircraft, since planes are the main capital good of an airline. If aircraft are excluded to get to what is known as "core capital goods," orders fell by 2.9% in October, reversing a 2.6% increase in September, and down 21.0% on a year-to-date basis. The second graph, (also from http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/durord.htm) shows the history of core capital goods spending. As with total orders, it looks like we have turned the corner, but have a lot of ground to make up.

One area that has seen solid increases in durable goods orders for each of the last three months is primary metals, which are sort of at the base of the food chain, and might be signaling better times ahead. In the short term it is good news for firms like Alcoa (AA), U.S. Steel (X) and Freeport McMoRan (FCX). This month they rose by 3.6%, following increases of 2.6% and 1.2% in September and August, respectively.

That area, though, has an especially large amount of ground to make up, as even with the increases in durable goods orders for each of the last three months, orders are still down 39.6% on a year-to-date basis. Three months in a row of solid gains makes it look like the rebound is a trend, and not a short-term aberration, though.

On the other hand, Computer orders, which had held up reasonably well on a year-to-date basis -- down "just" 15.1% year to date -- have started to turn south, dropping in two of the last three months. In October they dropped by 7.2%, following a 0.3% increase last month and a 3.1% decline in August. Thus, the high tech rebound might be less robust than many have been hoping for.

All in all, I would rate this durable goods orders report as a negative -- not a disaster, but not nearly as positive as the other economic reports that we got today.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market beating Zacks Strategic Investor service.
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Stock Market News for November 17, 2009 – Market News

Zacks Market Commentaries — Tue, 17 Nov 2009 14:36:33 +0000

U.S. stocks surged to their 13-month highs Monday as a weaker dollar and a rebound in U.S. retail sales reinforced hopes that an economic recovery is indeed underway. Stocks also got a boost after Fed chairman Ben Bernanke reiterated Fed’s intention to keep interest rates low for an extended period.

Gold advanced 2% to fresh record highs; and the price of silver jumped 5.9%. The initial gains in the equity prices followed strength in Asian markets yesterday. Strength in Asia was partly helped by reports that said Japanese economy grew at its fastest pace in over two years, up 1.2% during the third quarter. To add to the bullish mood in the region, leaders of the Asia Pacific Economic Cooperation promised to keep the stimulus measures in place.

On Monday, the 30-stock Dow Jones industrial average rose 136.49 points, or 1.33%, to 10,406.96. The broad Standard & Poor's 500-stock index was up 15.82 points, or 1.45%, at 1,109.30. The tech-heavy Nasdaq composite index gained 29.97 points, or 1.38%, to 2,197.85. On the New York Stock Exchange, 25 stocks were higher in price for every six that declined.

Bernanke warned of threatening headwinds from rising unemployment and tight credit but added comments supporting the government’s stimulus measures. Yields on US Treasuries declined, with the yield on the 2-years touching its lowest since last January. At session's end, Meredith Whitney questioned the fundamentals of the current stock market rally, and said she expected a double-dip recession next year.

Analysts, meanwhile, raised their ratings on number of firms. Goldman Sachs (NYSE:GS) raised its rating on Nordstrom (NYSE:JWN) from "neutral" to "buy," saying the firm would be a "key beneficiary of a recovery in high-end consumer" demand. Goldman's analysts also started their coverage on Dell (NASDAQ:DELL) with a "buy" rating, saying the company would benefit from the PC upgrade cycle. JP Morgan's (NYSE:JPM) added US Steel (NYSE:X) and AK Steel (NYSE:AKS) to its focus list.

A number of key retailer results are slated for today's release, looked to for guidance on current consumer demand. Among companies reporting today are: Home Depot (NYSE:HD), Target (NYSE:TGT), TJ Maxx (NYSE:TJX), Saks (NYSE:SKS), Autodesk (NASDAQ:ADSK), and Salesforce.com (NYSE:CRM).

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The Rise of the Rest

Trading School — Thu, 29 Oct 2009 10:46:12 +0000

One great thing about my position here as Director of Marketing is my extensive contact list. I say that because I have access to thousands of excellent traders, investors, and economists at my finger tips! So when things around the world catch my attention, I can quickly find someone who can give me the skinny [...]

Losses Narrow for US Steel – Analyst Blog

Zacks Market Commentaries — Tue, 27 Oct 2009 21:16:16 +0000

Weak volumes and prices drive losses

United States Steel Corporation (X) recorded its third sequential loss -- $3.03 billion or $2.11 per share in the third quarter of 2009 in contrast to a net income of $9.19 billion or $7.79 per share in the third quarter of 2008. However, losses narrowed sequentially and were lower than the Zacks Consensus Estimate of a loss of $2.91.

On a year-over-year basis, revenues were down 61% to $2.82 billion, driven by a 35% year-over-year decline in total steel shipments to 4.2 million tons. However, shipments increased 41% quarter on quarter. The company saw lower year-over-year volumes and prices across all major segments on the back of a slump in the economy.

Additionally, increasing competition from China and weak demand in major markets, especially Europe, which resulted in lower capacity utilization have impacted results. Two of the company’s major business segments reported losses. However, the losses were smaller sequentially at its European operations and North American Flat-rolled business.

Flat-rolled

During the quarter, Flat-rolled shipments declined 40% year over year to 2.7 billion tons, and average prices fell 33% to $605 per ton. The segment reported operating loss of $370 million in contrast to an operating income of $846 million in the same quarter of the previous year. Operating losses in the quarter included costs associated with idled facilities.

Sequentially, operating losses remained almost flat, reflecting improved operating efficiencies, higher shipments and lower inventory write-downs. Selling prices declined 11% from $677 per ton while volumes increased about 50%. Raw steel capability utilization for the quarter increased to 58% from 32% in the second quarter, reflecting steelmaking facility resumptions at the Granite City Works, Great Lakes Works and Hamilton Works.

US Steel Europe

On a year-over-year basis, shipments declined 8.5% to 1.3 billion tons while average prices were down 43% to $615 per ton. The segment posted modest operating income of $7 million compared with operating income of $173 million in the year ago period on lower raw material and energy costs and improved operating efficiencies. However, results of the segment improved significantly when compared sequentially due to lower improved selling prices, raw material costs, sales of emissions allowances and lower inventory write-downs.

Quarter on quarter, prices improved 22% from $602 per ton. Raw steel capability utilization for the quarter increased to 82% from 57% in the second quarter of 2009. The company restarted its third blast furnace at its subsidiary, U.S. Steel Kosice (USSK) in early September and operated both blast furnaces at U.S. Steel Serbia for most of the reported quarter.

Tubular Products

Shipments of Tubular Products were down 71% to 151 million tons and averaged realized prices were down 38% to $1,474 per ton. Operating losses amounted to $21 million compared with operating income of $420 million in the same quarter of the previous year. Results of the segment reflected the impact of lower oil and gas exploration and production activity, high inventory levels and the surge of Chinese products. However, reported losses narrowed from $88 million on a 64% rise in shipments from 92 million tons reported in the previous quarter.

Guidance

U.S. Steel expects results to improve in the fourth quarter of 2009 driven by expected increased demand for Flat-rolled products in North America, on the back of higher demand from the end user automotive industry and continued strength in tin mill markets. However, the company is expecting operating losses in the fourth quarter on lower operating rates and idled facility carrying costs for both Flat-rolled and Tubular segments.

The company also stated that demand in Flat-rolled and U.S. Steel Europe have decreased from the reported quarter due to seasonal slowdowns. In order to adjust production to meet customer order rates, the company expects to idle the 14 blast furnaces at its Gary Works for maintenance, as well as one of two furnaces at Granite City Works. As a result, fourth quarter raw steel capability utilization rates are expected to be in line with the latest quarter levels.
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Zacks Bull and Bear of the Day Highlights: Amphenol Corporation, Palm, United States Steel Corporation, Cliffs Natural Resources Inc. and ArcelorMittal – Press Releases

Zacks Market Commentaries — Tue, 13 Oct 2009 12:49:29 +0000

For Immediate Release

Chicago, IL – October 13, 2009 – Zacks Equity Research highlights Amphenol Corporation (APH) as the Bull of the Day and Palm (PALM) the Bear of the Day. In addition, Zacks Equity Research provides analysis on United States Steel Corporation (X), Cliffs Natural Resources Inc. (CLF) and ArcelorMittal (MT).

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:

Amphenol Corporation (APH) is scheduled to release its fiscal Q3 results on October 15. The company stated that though the economic environment remains uncertain, there was a stabilization of demand in most markets.

We remain optimistic about Amphenol's long-term growth prospects in the mobile devices business. Demand for mobile phones remains strong. Beyond mobile phones, the company continues to expand the use of its products into fast growing submarkets such as PDAs, laptops and desktop computers.

Based on constant currency exchange rates and some seasonal moderation, APH expects revenues between $670 million and $685 million in Q3:09. EPS is projected within 41 - 43 cents. We maintain our Outperform rating with a target price of $40.

Bear of the Day:

Although demand for Palm’s (PALM) Pre smartphone is growing, it is still selling a small fraction of Pre phones to smart-phones users and, in our opinion, most of them are already existing Palm customers.

We still expect the stock to underperform the market as RIMM and AAPL continue to expand market share, and phones based on the Android operating system enter the market.

We believe the maturing lifecycle of Centro, the slow ramp of its Windows Mobile-based product sales, and the time taken to add carriers to distribute its Treo products in the U.S. and global markets will continue to exert pressure on revenue and earnings.

US Steel Divests Interest – Analyst Blog

Zacks Market Commentaries — Mon, 12 Oct 2009 21:05:06 +0000

On Oct. 9, United States Steel Corporation’s (X) wholly owned subsidiary U.S. Steel Canada Inc., ArcelorMittal Dofasco and Cliffs Natural Resources Inc. (CLF) have agreed to sell their respective interest in the Wabush Mines joint venture to a Montreal-based steel mining company, Consolidated Thompson Iron Mines Ltd., for $120 million.

Wabush Mines owns and operates iron ore mining and pellet facilities in Newfoundland in the U.S. and Labrador and Quebec in Canada. Wabush's total rated annual production capacity is 6.4 million tons of iron ore pellets.

U.S. Steel holds 44.6%, ArcelorMittal Dofasco holds 28.6% and Cliffs Natural Resources holds 26.8% in the joint venture. Completion of the transaction is subject to a right of first refusal held by the third owner - Cliffs. ArcelorMittal (MT), the world's largest steelmaker, will receive $34.28 million for its interest. Consolidated Thompson plans to finance the transaction with existing cash and credit facilities. Other terms of the transaction were not released.

Pittsburgh, PA-based United States Steel Corporation is a leading steel manufacturer in the U.S. and the fifth largest worldwide. It produces and sells steel mill products including flat-rolled and tubular products in North America and Europe. U.S. Steel has a global annual raw steel production capacity of 31.7 million net tons (24.3 million tons in North America and 7.4 million tons in Europe).

U.S. Steel is in the midst of achieving $200 million in cost synergies from the acquisitions of Canadian flat roll producer Stelco (renamed as U.S. Steel Canada/USSC) and domestic tubular manufacturer Lone Star Technologies (currently a part of U.S. Steel Tubular Products), mostly from overhead reduction and improved raw materials sourcing. We maintain our Neutral recommendation on the stock.
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Zacks Industry Rank Analysis Highlights: D.R. Horton, KB Home, Pulte Homes, Allstate, Hartford Financial Services, Travelers, Loews, Humana, Stericycle, C.R. Baird, Celgene, Gilead Sciences, AK Steel, Nucor, Regions Financial and Zions Bancorp – Press Releases

Charles Rotblut — Thu, 17 Sep 2009 12:00:10 +0000

For Immediate Release

Chicago, IL – September 17, 2009 – Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week’s analysis include D.R. Horton (DHI), KB Home (KBH), Pulte Homes (PHM), Allstate (ALL), Hartford Financial Services (HIG), Travelers (TRV), Loews (L), Humana (HUM), Stericycle (SRCL), C.R. Baird (BCR), Celgene (CELG), Gilead Sciences (GILD), Anadarko Petroleum (APC), EOG Resources (EOG), AK Steel (AKS), Nucor (NUE), U.S. Steel (X), Fifth Third (FITB), Regions Financial (RF), Suntrust Banks (STI) and Zions Bancorp (ZION).

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

This week: Third-Quarter Earnings Forecast

Though the economy has stabilized, third-quarter results for the majority of companies will still be below year prior levels.

Per share profits for the S&P 500 are projected to fall 15.4%. The median company is forecast to report a 14% drop in per share earnings. (The difference being that the S&P 500 forecast is a weighted projection.) More than 340 companies may have experienced a year-over-year drop in profits.

On a revenue basis, things are not much better. Median company sales are forecast to have dropped 7.2%.* More than 360 companies are expected to report a year-over-year drop in earnings.

It's important to realize that during July and August 2008, the economy was in fairly good shape. Lehman did not collapse until September 2008. Furthermore, the credit crunch's grip severely tightened over the 2-month span of September and October 2008. As a result, many companies are now facing tough comparisons, meaning year-over-over declines in profits now.

It should be noted, however, that not all comparisons will be difficult. In fact, some industries are forecast to report actual earnings growth.

Industries Likely To Show Growth

Homebuilders

It may sound shocking, but homebuilders are likely to have some of the best year-over-year comparisons in terms of profitability.

There are 2 reasons for this. First, conditions in the housing industry were deteriorating last year, with mortgages becoming increasingly hard to get. Second, the housing market is now stabilizing, as is evidenced by the rising number of new and existing home sales.

This change will allow D.R. Horton (DHI), KB Home (KBH) and Pulte Homes (PHM) to encourage shareholders with bottom line improvements by 50% or more. The improvements are relative, however, since all 3 companies will report sizable losses for Q309.

Insurance

Several insurance companies could impress investors with double-digit growth. Though some, like Allstate (ALL) and Hartford Financial Services (HIG), have the benefit of prior-year losses, others like Travelers (TRV) and Loews (L) are experiencing true growth. (Revenues and earnings will rise for TRV and L).

The surprisingly calm hurricane season (fingers crossed that it stays this way) has helped property and causality insurers. Nearly all insurance companies have also benefited from the rebound in the financial markets. The economy is a drag, though there seem to be certain segments where premiums are rising.

Health Care

Despite all the talk about reform, profits for the entire medical sector continue to rise. The sector is less economically sensitive and less affected by swings in commodity prices. As result, several medical companies are likely growing both revenues and earnings this quarter.

Those with the strongest growth rates will include Humana (HUM), Stericycle (SRCL), C.R. Baird (BCR), Celgene (CELG) and Gilead Sciences (GILD).

Industries Likely to Report Contraction

Commodity-Related

Commodity-related companies face the toughest year-over-year comparisons. Oil peaked in July 2008 and, though the commodity bubble deflated throughout the remainder of the quarter, profits were still very, very strong. As a result, energy and metals companies are projected to report significant drops in Q309 profits.

In the Energy sector, exploration & production (E&P) companies such as Anadarko Petroleum (APC) and EOG Resources (EOG) will report the biggest declines. Among metals companies, AK Steel (AKS), Nucor (NUE) and U.S. Steel (X) could all report losses after large profits in Q308.

Banks

Though government intervention has stabilized much of the financial sector, many banks remain unprofitable. High unemployment, a sustained high level of foreclosures and a weak commercial real estate market are all problem spots for the sector. As a result, analysts are projecting Fifth Third (FITB), Regions Financial (RF), Suntrust Banks (STI) and Zions Bancorp (ZION) to post losses.

It's All About Expectations

The one positive for the third-quarter earnings season is that there is a general expectation that the numbers will be bad. Therefore, even those companies that report losses will be measured up against the consensus estimates and not the year prior results. What we could well see is a repeat of second-quarter earnings season, where brokerage analyst forecasts proved to be too pessimistic.

As always, pay attention to guidance and the level of visibility companies have about the fourth quarter and the early part of 2010. The markets will want assurance that business conditions are starting to improve, even if sales still remain at depressed levels.

*12 companies were excluded from the revenue forecasts due to a lack of broker estimates. The inclusion of these companies would have not significantly altered the median revenue forecast.

Zacks "Profit from the Pros " e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=5611.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3:1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit From the Pros by going to http://at.zacks.com/?id=5610.

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Third-Quarter Earnings Forecast – Zacks Industry Rank Analysis

Charles Rotblut — Wed, 16 Sep 2009 05:00:00 +0000

Though the economy has stabilized, third-quarter results for the majority of companies will still be below year prior levels.

On a revenue basis, things are not much better. Median company sales are forecast to have dropped 7.2%.* More than 360 companies are expected to report a year-over-year drop in earnings.

It should be noted, however, that not all comparisons will be difficult. In fact, some industries are forecast to report actual earnings growth.

Industries Likely To Show Growth

Homebuilders

It may sound shocking, but homebuilders are likely to have some of the best year-over-year comparisons in terms of profitability.

Insurance

Health Care

Those with the strongest growth rates will include Humana (HUM), Stericycle (SRCL), C.R. Baird (BCR), Celgene (CELG) and Gilead Sciences (GILD).

Industries Likely to Report Contraction

Commodity-Related

Banks

It's All About Expectations

Sector Rank as of Sep 16
Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY09 Estimates Revised Down
Consumer Staples	2.63	2.65	2.40	168	70
Conglomerates	2.73	2.73	4.67	14	3
Retail-Wholesale	2.76	2.74	1.88	506	269
Auto-Tires-Trucks	2.77	2.76	0.73	22	30
Computer and Technology	2.90	2.91	2.19	599	273
Medical	2.93	2.96	1.30	193	149
Construction	2.97	2.97	1.20	53	44
Basic Materials	2.98	3.02	1.55	118	76
Consumer Discretionary	3.00	2.97	1.05	122	116
Oils-Energy	3.00	3.01	0.87	238	274
Utilities	3.02	3.03	0.89	55	62
Industrial Products	3.05	3.03	1.36	87	64
Business Services	3.08	3.01	0.97	30	31
Finance	3.13	3.09	1.07	335	312
Aerospace	3.23	3.23	0.33	19	58
Transportation	3.23	3.23	0.70	81	115

View the Zacks Industry Rank List at http://www.zacks.com/zrank/zrank_inds.php. This interactive list allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. The table above is the Zacks Sector Rank List, which shows the trend in estimate revisions on a broader scale.

*12 companies were excluded from the revenue forecasts due to a lack of broker estimates. The inclusion of these companies would have not significantly altered the median revenue forecast.Zacks Investment Research

The Coming Takeover Boom

Chris Mayer — Tue, 01 Sep 2009 17:00:32 +0000

p class="MsoNormal"“Work eight hours and sleep eight hours and make sure that they are not the same hours.”/p p class="MsoNormal"– T. Boone Pickens/p p class="MsoNormal"Inflation can do tricky things to markets. It creates distortions. In those distortions, an intrepid investor can find some big moneymaking ideas. I think we’ve got one opening up in oil and gas, and it is not without precedent in financial markets. In fact, it’s starting to look a little like the tail end of the 1970s in some respects./p p class="MsoNormal"In the spring of 1969, the Dow Jones industrial average stood at 969. By 1982, the Dow hit 1,071. That’s thirteen years of going nowhere. (We’ve had 10 years or so of going nowhere, though the ride between the poles has been#8230;/p

U.S. Steel Restarting Facility – Analyst Blog

Zacks Market Commentaries — Mon, 31 Aug 2009 17:45:08 +0000

United States Steel Corp. (X) is restarting its blast furnace at its Hamilton, Ontario plant as steel demand edges higher after a nine-month shutdown.

Demand for U.S. Steel’s flat-rolled steel has improved after bottoming in April and May, this year and is likely to improve going forward. The largest steel producer in the U.S. expects mill-operating rates to exceed 50% in the current quarter, up from 32% in the prior period.

U.S. Steel acquired the Hamilton and Nanticoke plants in Ontario from Canadian peer Stelco Inc. for about $1.1 billion in 2007. The Hamilton operation has an annual production capacity of about 2 million tons. The facility also consists of galvanizing lines and a cold mill. However, the company does not plan to restart these for now.

U.S. Steel had closed the Hamilton blast furnace in November 2008. It suspended the remaining operations at Hamilton and the Nanticoke operation in March 2009 due to a drop in demand. Both the facilities were running below half of their capacity. The shutdown resulted in lay offs of about 1500 workers. However, the company recalled about 800 to 950 employees at the Hamilton plant in July.

A day before, workers of U.S. Steel approved Lakeside’s bid to acquire the Ontario production unit. Lakeside Steel is a steel pipe and tubing manufacturer in Welland, Ontario.

The Canadian government has alleged U.S. Steel of failing to meet commitments on production and employment. While acquiring Stelco in 2007, U.S. had agreed to produce 3.95 million tons of steel per year and employ about 3,100 workers through Nov. 1, 2007 to Oct. 31, 2010. A federal court in the U.S. will evaluate these charges today.

We maintain our Neutral recommendation on the stock.

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Steelworkers Support Lakeside Bid – Analyst Blog

Zacks Market Commentaries — Fri, 28 Aug 2009 18:17:14 +0000

The workers of the largest steel producer in the U.S., United States Steel Corporation (X), are supporting a bid made by Lakeside Steel, a steel pipe and tubing manufacturer in Welland, Ontario to take over U.S. Steel's Ontario production assets. U.S. Steel had acquired the Ontario assets when it bought Stelco Inc. for about $1.1 billion in 2007.

On August 5, 2009, Lakeside had filed for an intervener status in the federal government's action against U.S. Steel. U.S. Steel had violated commitments for production and employment when it had temporarily shut down most of the Ontario operations in March this year due to weak steel demand. The company’s facilities are operating at barely half their capacity.

U.S. Steel’s production of 5 million tons in July 2009 was the highest monthly output this year, but it was 41.6% lower than July 2008. The company has laid off most of the workers at the site and has locked out the remaining unionized workers at Nanticoke this month after failing to reach a new labor deal.

Lakeside claimed that if it acquires U.S. Steel, it would comply with all its commitments on production and employment. The company hopes Canada's Federal Court will force Pittsburgh-based U.S. Steel to sell the Ontario assets.

Lakeside and the United Steel’s workers will submit their case at a Canadian Federal Court hearing in Toronto on August 31, 2009.
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Stock Market News for August 27, 2009 – Market News

Zacks Market Commentaries — Thu, 27 Aug 2009 14:37:12 +0000

U.S. stocks edged up slightly higher, after swinging back and forth in a narrow range, as investors preferred to remain on the sidelines. After yesterday’s better-than-expected reports on housing and consumer confidence, investors looked for fresh signs to help restart a rally that has catapulted major indexes to multi-month highs.

Yesterday, fifteen of the thirty DJIA components closed higher; 245 of the S&P500 closed up and 42 of the NASDAQ100 finished on higher ground. Trading was subdued with NYSE volume of 1.05 billion well below last year's average of 1.49 billion. The DJIA gained 4 points to close virtually flat at 9543; the NASDAQ and S&P500 each recorded gains of 0.01%. Declining issues beat those that advanced eight to seven. Treasuries were mixed after the government successfully auctioned $39 billion in five-year notes. The Treasury is scheduled to auction $28 billion of 7-year notes today.

Five of the S&P500 sectors recorded gains. The consumer services sector, which advanced 1.2% yesterday, edged up 0.5% on improved expectations for the consumer segment due to better-than-projected housing numbers and confidence report. Healthcare shares issues were off 0.2%.

Basic material and industrial shares each declined 0.7% on Chinese Premier Wen Jiabao's comments regarding economic difficulties in that country, particularly domestic consumption. The Chinese cabinet reportedly is assessing steps to control overcapacity in steel and cement production. US Steel (NYSE:X) and Nucor (NYSE:NUE) each dropped 2.4%.

DJIA components 3M (NYSE:MMM) fell 1.7%, Caterpillar (NYSE:CAT) was off 1.2%, and General Electric (NYSE:GE) declined 1.3%. Housing news, nevertheless, continued to signal a leveling off in the sector, with DR Horton (NYSE:DHI) up 5.7%, Beazer Homes (NYSE:BZH) up 5.0%, and Lennar (NYSE:LEN) up 4.1%. Hovnanian Enterprises (NYSE:HOV) rose 43 cents, or 9.4%, to $5

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Zacks Analyst Blog Highlights: U.S. Steel, Alcoa, Parker Hannifin, Boeing and Honeywell – Press Releases

Zacks Market Commentaries — Thu, 30 Jul 2009 13:10:38 +0000

For Immediate Release

Chicago, IL – July 30, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: U.S. Steel (X), Alcoa (AA), Parker Hannifin (PH), Boeing (BA) and Honeywell (HON).

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Here are highlights from Wednesday’s Analyst Blog:

Durable Goods Orders Down

Shipments of durable goods fell by 0.2%, which is not too bad, but that was the 11th straight monthly decline, a new record. Unfilled orders also declined by 0.9%, for the ninth month in a row -- also a duration record. Inventories of durable goods fell to $318 billion, a 0.9% decline following a 0.3% drop in May. Thus, while the longer-term picture was mixed, the coincident and near-term numbers were still quite weak.

The report does give more detail about the specific industries with rising and falling orders. The big winner for the month was primary metals, where orders jumped by 8.9% following two previous near unchanged readings. That should be good news for firms like U.S. Steel (X) and Alcoa (AA).

Orders for machinery were also strong, rising 4.4% following a 7.3% increase in June. I find this to be very surprising in light of the record low levels of capacity utilization. I’m not sure just why anyone is buying new machines in this environment. However, it would be excellent news for firms like Parker Hannifin (PH).

On the downside, the plunge in non-defense aircraft orders, while very volatile and reversing a great May, is not good for Boeing (BA) or major suppliers to it like Honeywell (HON).

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Durable Goods Orders Down – Analyst Blog

Dirk Van Dijk — Wed, 29 Jul 2009 15:52:04 +0000

New orders for durable goods fell to $159.6 billion in June, a drop of 2.5% from May’s level. The May increase was also revised to an increase of just 1.3% from its originally reported 1.8% increase.

However, the reason for the decline was a 12.8% drop to $36.5 billion in orders for transportation equipment. Orders for transportation equipment is notoriously volatile, as just a few orders for jumbo jets can really skew the numbers.

Just how volatile? Well, if we look at just non-defense aircraft orders, they were down 38.5% in June following a 60.4% jump in May, while Defense Aircraft orders were up 30.1% following a 0.3 increase in May.

Excluding transportation equipment, new orders actually rose by 1.1%. The swing in transportation orders was much bigger than expected. The consensus was for a total decline of 0.6%, an unchanged reading excluding transport (follow a rise of 0.8% in May, revised down from a 1.1% increase). So those numbers were really something of a mixed bag.

On the other hand, much of the good news came from another volatile area, defense orders. Excluding defense, orders were down 0.7%. Perhaps the most interesting of the numbers in the report is new orders for non-defense capital goods. This is a very good proxy for investment in the real economy, or the “I" in the old C + I + G – Net exports = GDP equation.

There the news was not good, with orders dropping by 3.4%, partially reversing a 9.1% gain in May, but that followed a 3.5% drop in April. However, once again it was the aircraft that suppressed the numbers -- excluding them, orders were up 1.4% following a 4.3% rise in May and a 3.5% drop in April.

Since the numbers can be volatile from month to month, it also makes sense to look at how cumulative orders on a year-to-date basis have been. There, the picture is still one of deep economic contraction, with the pace of total new orders off 26.7%, ex-transportation off 23.4% and ex-defense down 28.4%. Year-to-date, total capital goods orders are down 28.8%, and non-defense capital goods orders are down 32.7%.

Year-over-year numbers show a similar pattern, as can be seen in the two graphs below (from http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm). They both paint a picture of things stabilizing at very low levels. However, keep in mind this recession has been going on for more than a year now, so year-over-year percentage changes are coming off numbers that were already down.

Shipments of durable goods fell by 0.2%, which is not too bad, but that was the 11th straight monthly decline, a new record. Unfilled orders also declined by 0.9%, for the ninth month in a row -- also a duration record. Inventories of durable goods fell to $318 billion, a 0.9% decline following a 0.3% drop in May. Thus, while the longer-term picture was mixed, the coincident and near-term numbers were still quite weak.

The report does give more detail about the specific industries with rising and falling orders. The big winner for the month was primary metals, where orders jumped by 8.9% following two previous near unchanged readings. That should be good news for firms like U.S. Steel (X) and Alcoa (AA).

Orders for machinery were also strong, rising 4.4% following a 7.3% increase in June. I find this to be very surprising in light of the record low levels of capacity utilization. I’m not sure just why anyone is buying new machines in this environment. However, it would be excellent news for firms like Parker Hannifin (PH).

On the downside, the plunge in non-defense aircraft orders, while very volatile and reversing a great May, is not good for Boeing (BA) or major suppliers to it like Honeywell (HON).

Overall I would rate the report as a minor negative. We are in a pattern of three steps forward, two steps back in the economic numbers (at least it looks like that -- not two steps forward, three steps back). This report was, overall, one of the steps backward.

The economy is out of the intensive care unit, but the patient is still quite sick and it will be a long convalescence where it is not feeling too good. The patient is still very vulnerable to secondary infections and other complications, but the prognosis is improving.

Zacks Investment Research

Company News for July 28, 2009 – Corporate Summary

Zacks Market Commentaries — Tue, 28 Jul 2009 14:20:31 +0000

• Amgen (NASDAQ:AMGN) reported better-than-estimated earnings of $1.29 a share, 13 cents above estimates, after yesterday's market close, as the company benefited from its arthritis drug and tax benefits. The firm raised its full-year earnings outlook to $4.80-$4.95 per share from $4.55-$4.75 per share and consensus estimates of $4.57

• This morning’s report indicate Amgen (NASDAQ:AMGN) and GlaxoSmithKline (NYSE:GSK) have agreed to jointly market an osteoporosis treatment, that could generate $2 billion in annual sales within ten years if given regulatory approval

• Barclays (NYSE:BCS) cut Boeing (NYSE:BA) shares to "equal weight" from "overweight", on delays and undetermined cost overruns in its Dreamliner program. Price targets were cut from $60 to $46

• Goldman Sachs (NYSE:GS) raised its rating on the US steel sector to "buy" from "neutral," noting a faster-than-expected recovery in world markets and a leaner US supply chain. Analysts upgraded US Steel (NYSE:X) in advance of today's earnings release to "buy" from "neutral" with a $52 price target

• Reports said IBM (NYSE:IBM) plans to acquire SPSS (NASDAQ:SPSS) in an all-cash deal valued at $50 per share

• Under Armour (NYSE:UA) reported second quarter earnings of 2 cents per share, one cent above estimates, on a 5.1% revenue advance to $164.7 million, topping Street estimates of $159.1 million. The firm said it sees 2009 earnings of 80-82 cents a share, versus estimates of 79 cents, with revenues of about $810 million, up from estimates of $804.85

• JP Morgan (NYSE:JPM) upgraded shares of Air Products and Chemicals (NYSE:APD) to "overweight" from "neutral"

Zacks Investment Research

Stock Market News for July 28, 2009 – Market News

Zacks Market Commentaries — Tue, 28 Jul 2009 14:17:54 +0000

It was a day of mixed economic and earnings reports Monday but markets held on to gains and edged up slightly as shares seesawed through the session. Although sentiments got a boost after data showed a surprise rise in new home sales, trading remained subdued as some weaker earnings reports and lowered guidance kept investors on the sidelines.

The Dow Jones industrial average rose 15.27 points, or 0.2%, to 9,108.51 and the broader Standard & Poor’s 500-stock index edged up 2.92 points, or 0.3%, at 982.18. The Nasdaq rose 0.1% or 1.93 points, at 1,967.89. Treasuries declined as the government began a record auction of $115 billion in notes. Yield on the benchmark 10-year jumped to 3.72%. On the NYSE, 1.04 billion shares exchanged hands and advancing issues outpaced decliners by a two-to-one margin.

Lowered guidance from Aetna (NYSE:AET) and Honeywell (NYSE:HON) were digested by investors as offsetting those concerns were comments from Corning (NYSE:GLW) regarding its top and bottom line results as well as production resumptions. Helping the sentiment further was an unexpected 11% jump in new home sales, the highest since December 2000. Homebuilders rallied following the jump in new home sales. Centex (NYSE:CTX) soared 9.1%, Pulte Homes (NYSE:PHM) jumped 8.6%, and Lennar (NYSE:LEN) rose 6.8%.

Further influencing the sentiments on the Street was the overhang of the record $200 billion in government notes to be auctioned this week, even as the largest holder of US Treasuries, China, engages in policy talks with the US. Yesterday's auction of $6 billion in inflation-protected securities brought a higher-than-expected yield of 2.387%, with the highest-ever bid-to-cover ratio of 2.27.

According to Thomson Reuters, 77% of the one-third of the S&P500 firms having reported topped estimates, up from a 61% average. However, according to Nomura, the number of better-than-estimated revenue posts merely equals that of the negative top-line surprises.

Financials rose 1.5% and were the leading gainers among the S&P 500 industry groups. The index closed at its highest level since November 4. Financials got a boost after the jump in housing numbers. On the DJIA, Bank of America (NYSE:BAC) shares led the gainers with a 4.6% advance. Morgan Stanley (NYSE:MS) analysts said BofA is a "top pick" among banks, due to its improved capital levels and a cheap valuation. Also Stifel Financial reiterated its "buy" rating on the shares. Nevertheless, Bank of America (NYSE:BAC) CEO Lewis warned of credit problems likely in the second half. According to Deutsche Bank (NYSE:DB), "We have witnessed stabilization of the world's banking industry and financial markets. Increased liquidity and lower volatility in financial markets are both supportive for our business," even as the company credit losses increased compared to a year ago, and the firm declined 2009 guidance.

Today's economic calendar cover weekly store sales, the Redbook report, S&P Case-Shiller home prices for May, and the day's key economic post - July consumer confidence. San Francisco Fed President Yellen is slated for a 10:00 AM ET speech. Key companies reporting their earnings include Dreamworks (NYSE:DWA), Smith International (NYSE:SII), US Steel (NYSE:X), and Viacom (NASDAQ:VIA).

Zacks Investment Research

Options Transactions Signaling Steel Resurgence

Investment U — Wed, 20 May 2009 17:05:03 +0000

Options Transactions Signaling Steel Resurgence Joe Kunkle, Investment U Research Team Late last year, steel stocks saw some of the sharpest sell-offs in the market. The Steel Market Vectors Fund (NYSE: SLX) fell from $114 to $20, and most steel producing companies hit five-year lows. The interesting thing is that we’re seeing signals in steel stocks [...]

Zacks Analyst Blog Highlights: United States Steel Corporation, MIPS Technologies, Inc., Chevron Corp., Montpelier Re Holdings Ltd and Taiwan Semiconductor Manufacturing Co. – Press Releases

Zacks Market Commentaries — Tue, 14 Apr 2009 14:07:16 +0000

For Immediate Release

Chicago, IL - April 14, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: United States Steel Corporation (X), MIPS Technologies, Inc. (MIPS), Chevron Corp. (CVX), Montpelier Re Holdings Ltd ( MRH) and Taiwan Semiconductor Manufacturing Co. (TSM).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Monday's Analyst Blog:

U.S. Steel Bending to Pressure

United States Steel Corporation (X) is a leading steel manufacturer in the U.S. Rising supply from China, low demand from the automotive and residential sectors and rising labor costs are affecting the company's operations. In order to consolidate operations, the company has closed several facilities and plans more shutdowns in the near term.

Going forward, U.S. Steel's tubular business will be unsustainable, given the sharp deterioration in energy prices and drilling activity, coupled with the continued onslaught of imports. These lead us to rate the stock a Hold.

MIPS Tech Attractively Priced

MIPS Technologies, Inc. (MIPS) develops embedded processors and intellectual property for use in performance-oriented markets, such as digital entertainment, wired and wireless communications (including broadband access), office automation, security and automotive markets. The firm continues to drive bottom-line margins higher in a very difficult environment.

The valuation on MIPS has become very compelling as the stock has shed 74% from its 52-week high and the new acquisition has the potential to drive margin expansion. We would be buyers of the stock at these levels. We feel the valuation is compelling given the recent pullback in the shares.

Chevron's Mixed Guidance

After the market close on Thursday, Chevron Corp. (CVX) released its first-quarter interim update, covering the first two months of the quarter. On the whole, the update is mixed, with excellent operational performance and production growth offset by weak commodity-price realizations.

The best part of the update pertained to upstream volumes, highlighting Chevron's "growthy" profile among the super-majors. The company reported that oil and natural gas production average 2.645 million oil-equivalent barrels per day -- better than our estimate and 1.8% above the first-quarter 2008 level. Compared to the fourth quarter of 2008, production would be up an impressive 4%. We remain comfortable that the company can sustain this operational momentum, which puts it on track to meet its production target for the year.

Hold Montpelier Re Pre-Earnings

Prior to the expected release of Montpelier Re Holdings Ltd's ( MRH)1Q09 results after market close on April 27, 2009, we maintain our Hold recommendation. 4Q08 operating earnings were just two pennies short of our expectations. 4Q08 results were impacted by lower levels of premium writings and investment income than expected.

However, the company has begun to benefit from its new operating platforms. The company is also witnessing positive pricing trends in the majority of its business lines, ending 22 consecutive months of price reductions. Though increased demand for reinsurance is expected in 2009 due to weaker capital adequacy positions and shrinking risk tolerances following the recent widespread investment and catastrophe losses, we suspect such benefits to be somewhat restricted due to the economic slowdown.

Taiwan Semi Fairly Priced at $10

Taiwan Semiconductor Manufacturing Co. (TSM) is the world's largest pure-play foundries. December top and bottom-line results met consensus estimates. Despite the firm being an industry leader, macro conditions and inventory issues will be tremendous headwinds in the coming quarters.

Management has developed a six step plan to combat the industry conditions. We look for spending to pick up in 2009 for 45-nanometer products, but much of this will be dependent on macro conditions. We are reiterating our Hold rating with a target price of $10.00.

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Zacks Investment Research

U.S. Steel Bending to Pressure – Analyst Blog

Zacks Market Commentaries — Mon, 13 Apr 2009 18:18:22 +0000

United States Steel Corporation (X) is a leading steel manufacturer in the U.S. Rising supply from China, low demand from the automotive and residential sectors and rising labor costs are affecting the company's operations. In order to consolidate operations, the company has closed several facilities and plans more shutdowns in the near term.

Going forward, U.S. Steel's tubular business will be unsustainable, given the sharp deterioration in energy prices and drilling activity, coupled with the continued onslaught of imports. These lead us to rate the stock a Hold.

Steel prices plummeted from record highs last year, though they have recovered modestly in recent months. In addition, U.S. Steel s tubular business will be unsustainable moving forward, given the sharp deterioration in energy prices and drilling activity, coupled with the continued onslaught of imports.
Read the full analyst report on "X"
Zacks Investment Research

Obama and Cramer Now Bullish on Stocks

Eldon Mast — Wed, 04 Mar 2009 05:10:00 +0000

pa href="http://feedads.googleadservices.com/~a/5R0IjqQAWslnfwIDim2ROCul2xA/a"img src="http://feedads.googleadservices.com/~a/5R0IjqQAWslnfwIDim2ROCul2xA/i" border="0" ismap="true"/img/a/pIn recent days it's been tit for tat between the White House and Jim Cramer the host of a href="http://en.wikipedia.org/wiki/CNBC" title="CNBC"CNBC/a's ia href="http://en.wikipedia.org/wiki/Mad_Money" title="Mad Money"Mad Money/a/ibr /br /Cramer’s claims: "Obama has caused the greatest wealth destruction I have seen by a president.”br /br /“I’m not sure what he’s pointing to, to make some of the statements,” responded the White House via the press secretary. The secretary even tried to marginalize Cramer -- pigeon-holing him to a niche audience, while Obama's audience "is the whole country."br /br /Cramer pointed to stock averages down significantly and associated "main street" savings and 401K plans suffering. Jim further pointed to the government's spending plans as the cause of such stock market depths.br /br /But then get this. Amidst all this jousting, span style="font-weight: bold; font-style: italic;"both men actually agree. Stocks are oversold./spanbr /br /President Obama: "Right now is a good time to buy stocks."br /br /And Cramer followed up by publishing a list of a href="http://www.cnbc.com/id/29490969"10 reasons why/a!br /br /1. Treasury Secretary Geithner addressed the "current crisis." Cramer claims that when Geithner speaks, "we all feel more confident", with stocks respondng positively on Tuesday to the Geithner address.br /br /2. The Fed Chairman proposed a new "Term Asset-Backed Securities Loan Facility." Private investors may indeed be enticed into that asset-backed security market, further boosting credit. Beyond government backing, Cramer thinks that is just what the market needs. (Don't miss this good news: Cramer is actually supporting a goverment program proposed by the Fed!)br /br /3. Two chip companies, Altera (ALTR) and Xilinx (XLNX) both announced "that business wasn’t as bad as people say." That gives some stock traders hope that indeed a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2008/12/dire-commentary-on-us-economy-overblown.html"the dire commentary/a that a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2008/12/remembering-1975-majority-was-wrong.html"the majority of the herd/a are claiming is overblown. Those semiconductor strength claims should help support stocks like Intel (INTC) , Microsofts (MSFT), and Cisco (CSCO).br /br /4. Copper inventories in London are falling. That alone points to increased economic activity. Cramer claims that there is a major China infrastructure project that is spurring demand for those stockpiles.br /br /5. And China’s markets are solid right now. The Chinese Shanghai Composite Index is up about 14% so far for 2009. The Baltic Freight Index is also up, this probably indicates that China is actually growing demand for natural resources.br /br /6. Cramer claims that stocks U.S. Steel (X) and General Motors (GM) are oversold. Jim: "How much further could they possibly go?"br /br /7. Cramer believes that oil markets are finally stabilizing and that alone strongly signals that indeed "we’re suffering through only a recession and not a depression."br /br /8. Houses are more affordable now than at any other time on record. Have you heard that before? Cramer sees a a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/02/friday-sunshine-foreclosures-plummet.html"housing bottom/a at least by June.br /br /9. Many companies have now raised their dividends to yields between 4% and 5%. Company leadership would not raise those yields if they planned to cancel them quickly in upcoming quarters.br /br /10. And finally Cramer has never seen people more negative than they are now. The market looks so oversold that "a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/02/bull-market-move-swift-and-steep.html"a sharp snap back/a is likely". When everyone is hopeless, Cramer said, that might just be the one time when "a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/01/what-was-warren-doing-in-1974-how-about.html"being optimistic pays off/a."br /br /So now even Jim Cramer sees a style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/02/101-reasons-plus-9-optimists.html"reasons to be positive/a. (Adding 10 more to oura style="color: rgb(51, 51, 255);" href="http://mast-economy.blogspot.com/2009/02/101-economic-postives.html" list of 101 others/a)br /br /Cramer believes from here the market goes higher. And a href="http://mast-economy.blogspot.com/2009/02/stimulus-as-good-as-it-gets.html"Obama of course agrees/a.br /br /span style="font-size:78%;"span style="font-weight: bold;"br /br /(Thanks to faithful reader John C. for alerting me to the Obama/Cramer mania. Keep those good news stories coming.)/span/spandiv class="blogger-post-footer"div/div No Gloom here. Only Good News. div/div a href="http://www.amazon.com/gp/product/1416560610?ie=UTF8tag=thegooneweco-20linkCode=as2camp=1789creative=9325creativeASIN=1416560610"The Power of Positive Thinking/a div/div a href="http://www.amazon.com/gp/product/0743243153?ie=UTF8tag=thegooneweco-20linkCode=as2camp=1789creative=390957creativeASIN=0743243153"The Road Less Traveled/a div/div/divdiv class="feedflare" a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:yIl2AUoC8zA"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=yIl2AUoC8zA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:63t7Ie-LG7Y"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=63t7Ie-LG7Y" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:dnMXMwOfBR0"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=dnMXMwOfBR0" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:F7zBnMyn0Lo"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=9YtEbNGkyS0:iSGjjisSGqI:F7zBnMyn0Lo" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:7Q72WNTAKBA"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=7Q72WNTAKBA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:V_sGLiPBpWU"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=9YtEbNGkyS0:iSGjjisSGqI:V_sGLiPBpWU" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:qj6IDK7rITs"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=qj6IDK7rITs" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:KwTdNBX3Jqk"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=9YtEbNGkyS0:iSGjjisSGqI:KwTdNBX3Jqk" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:l6gmwiTKsz0"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=l6gmwiTKsz0" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:gIN9vFwOqvQ"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?i=9YtEbNGkyS0:iSGjjisSGqI:gIN9vFwOqvQ" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?a=9YtEbNGkyS0:iSGjjisSGqI:TzevzKxY174"img src="http://feeds2.feedburner.com/~ff/TheGoodNewsEconomist?d=TzevzKxY174" border="0"/img/a /divimg src="http://feeds2.feedburner.com/~r/TheGoodNewsEconomist/~4/9YtEbNGkyS0" height="1" width="1"/

US Steel (NYSE:X): Likely Trips Covenant in Q4; Reiterate Sell – UBS

Notable Calls — Wed, 18 Feb 2009 13:09:00 +0000

div style="text-align: justify;"UBS is out very negative onspan style="font-weight: bold;" US Steel (NYSE:X) /spanlowering their tgt to $23 from $25 after their 2009 EPS estimate for X drops to a $0.55 loss from breakeven EPS, now incorporating weaker tubular results, plus company guidance for pension/OPEB and capex costs. Drilling permits and rig counts suggest sharply worse tubular prices and volume, retreating from record Q4. This compares with consensus ’09 EPS at $1.43. UBS foresees H1 losses, with a turnaround in Europe after destocking potentially supporting H2.br /br /span style="font-weight: bold;"Volume recovery is key, but challenging in global recession/spanbr /The company reiterated that better volume is key to earnings recovery, highlighting the importance of economies of scale. Firm anticipates below 60% utilization in ’09 from the U.S. sheet business, as mini-mills restart to 80%, for a US average ~70%. Distributor shipments down ~40% in Q1 suggest potential downside to volumes.br /br /span style="font-weight: bold;"Debt costs likely rise,/spanbr /UBS anticipates in Q409 U.S. Steel will trip the total debt-to-EBITDA covenant on its $750M revolver of 3.25x, registering 4.5x. UBS credit analyst Jeff Cramer also believes its credit ratings could be lowered. Currently Moody’s has X as investment grade, at Baa3, while Samp;P’s BB+ rating is junk. While debt maturities look manageable near term, they anticipate funding costs will rise.br /br /Reits Sell.br /br /span style="color: rgb(255, 0, 0);"Notablecalls:/span This call is going to hurt X stock for two reasons:br /br /- UBS is calling for weaker Tubular results. Tubular has been the single bright spot supporting the whole co.br /br /- Convenants tripping? Uhoh! Don't think the market is going to like this one.br //div

Aspire Misery Index for the Week Ended January 30, 2009 (updated Friday a.m. Jan. 30)

Small Cap Pulse — Fri, 30 Jan 2009 22:57:00 +0000

Aspire Misery Index for the Week Ended, January 30, 2009 Another week chalked with downbeat earnings performance, profit warnings, and further indications of economic erosion here in the U.S., and abroad is almost behind us, and now we can start focusing on the Super Bowl. Here is a list of bullets to consider when setting expectations for stock, portfolio and indices performance (not 100% comprehensive but a pretty good gauge of this weekrsquo;s lowlights in the U.S. economy): GDP ndash; The U.S. economy contracted by 3.8% in the Q4, the most since 1982. The good news is that economists were expecting the number to come in at 5.4%. For 2008, GDP growth was 1.8%. Consumer Spending ndash; dropped by 3.5% last quarter following a 3.8% in the prior quarter. Durable Goods ndash; durable goods orders fell for the fifth straight month in December by 2.6%. Economists had expected a 2% decline. Orders fell 5.7% for the year, the second biggest decline on record. Retail Industry ndash; The National Retail Federation released a forecast for retailers in 2009 to record a 0.5% drop in revenue. Sales for the first half of 2009 are expected to decline by 2.5%, then a 1.1% decline in Q3 and a 3.6% increase in Q4. Auto Industry ndash; The National Association of Auto Dealers expects sales of at least 12.7 million vehicles in the U.S. this year. Mitsubishi extended the downtime at its Illinois factory for an extra five weeks. A irline Industry ndash; The International Air Transport Association said the industry lost $5 billion in 2008 on lower traffic.nbsp;nbsp; Mobile Phone Industry - Global mobile phone market will shrink 9% in 2009, its first decline since 2001 and with the first half set to be especially grim, Strategy Analytics said. Job Cuts ndash; Caterpillar (20,000 jobs), Sprint Nextel (8,000 jobs), Deere (700 jobs), Home Depot (7,000 jobs), GM (2,000 jobs), Wyeth (8,000 jobs ndash; on consolidation from Pfizer purchase), Brooks Automation (350 jobs, or 20% of workforce), Corning (3,500 jobs), Quiksilver (200 jobs), Weyerhauser (221 jobs), STM Microelectronics (4,500 jobs), IBM (estimated 4,000 jobs), Target (1,000 headquarters jobs),nbsp; Volvo (laying off 650 at Virginia plant), JL French Automotive Castings (300 jobs), Starbucks (7,000 more jobs), Citrix (about 462 jobs), Boeing (10,000 jobs), Jabil Circuit (3,000 jobs), AOL (700 jobs), nbsp;Wet Seal (41 jobs), Readerrsquo;s Digest (about 280 jobs), Revel (lays off 400), Pacific Sunwear (57 jobs), Analogic (140 jobs), Kodak (3,500 to 4,500 jobs), Black amp; Decker (1,200 jobs), Teradyne (14% of workforce), Bon-Ton (1,150 jobs), Cessna (2,000 jobs), AstraZeneca (another 6,000 jobs), New Jersey hospital system (cutting 180 jobs), Caterpillar (added 2,100 more jobs to its already announced 20,000 jobs), Unemployment ndash; The Conference Board said unemployment could rise to 9%. Nevadarsquo;s jobless rate reached 9.1% in December. Unemployment in Kansas rose to 4.9% in December from 4% the year prior. Coloradorsquo;s unemployment rate in December hit 6.1%. South Carolinarsquo;s unemployment rate rose to 9.5%. Indianarsquo;s unemployment rate rose to 8.2% in December. Arkansasrsquo; unemployment rate rose to 6.2% in December. Mainersquo;s unemployment rate rose to 7% in December. Montanarsquo;s unemployment rate rose to 5.4% in December. West Virginiarsquo;s jobless rate is expected to increase to between 8.7% and 9.5% by the last quarter of 2009. The Labor Department reported that weekly jobless claims rose to 588,000 while the continuing claims rose to an all-time high of almost 4.8 million. Nebraska unemployment rose to 4% in December. nbsp; Profit Warnings ndash; Caterpillar, Applied Industrial Tech, Eaton, Max Capital Group, Moog, McGraw Hill, Quanex, Lexmark, Jacobs Engineering, U.S. Steel, AK Steel, Yahoo, Total Systems, Rayonier, ATamp;T, McCormick, Tyco, Norsk Hyrdo, Cirrus Logic, Baker Hughes, Canon, Qualcomm, Textron, Oshkosh, NEC, Honda, Hitachi, Credit Ratings ndash; Fitch lowered Johnson Control ratings, Moodyrsquo;s downgraded Sealy, Samp;P cut Ryder System, Samp;P and Moodyrsquo;s cut Blythrsquo;s ratings, Samp;P cut rates on PPL Corp and PPL Electric, Samp;P cut ratings on SunTrust Banks, Samp;P cuts Hexion, Moodyrsquo;s cuts Intrsquo;l Game Technology, Samp;P cut Golden Nugget, Chapter 11 ndash; Hartmarx (Obamarsquo;s suit maker), Smurfit-Stone, Closing the Doors ndash; Weyerhauser is closing two mills in southwestern Washington, Starbucks is closing 300 stores, Venture Capital ndash; Investments in Q4 fell by 33% Y/Y to $5.4 billion.nbsp; Investment into biotech and medical device companies fell 31% Y/Y to $1.6 billion. Investment into software companies fell by 28% Y/Y to $1 billion. The only sector bucking the trend was alternative energy and clean tech, which raised $908.2 million in the Q4, up 26% over the same period last year. For the full year, VC invested $28.3 billion, down 8% Y/Y. State Budgets ndash; Nevadarsquo;s unemployment rate rose to 9.1% in December; Home Sales ndash; Existing home sales rose 6.5% in December while the median home sales price fell 15.3% Y/Y to $175,400. For 2008, homes sales were down 13% TO 4.9 million homes, the lowest level since 1997. The National Association of Realtors said southern existing home sales fell almost 7% in December on a Y/Y basis, while the median sales price fell 8% to $158,600; existing home sales in the Midwest fell almost 5% in December on a Y/Y basis and the media sale price declined to $140,800. The Commerce Department reported new homes fell 14.7% in December to the slowest pace since 1963. The median price of new homes sold in December was $206,500, a decline of 9.3% Y/Y. Home Prices - Samp;P Case/Shiller index reported that home prices in 20 U.S. cities declined by 18.2% in November on a Y/Y basis. Ken Rose, UC Berkeley Economist projected home prices to slide 6% in 2009. Leading Indicators ndash; The Conference Boardrsquo;s monthly forecast of economic activity increased 0.3% in December. Stock Dividends ndash; the AP reported that dividends are being cut at the fastest pace in at least 50 years. Colleges ndash; universities are cutting budgets, and college endowments are down 3% in the fiscal year ending June 30, 2008, and in the first five months of FY2009, endowments are down 23% (source: TIAA-CREF and NACUBO). Tourism ndash; The U.N. World Tourism Organization said global tourism could decline by up to 2% in 2009. Hawaiirsquo;s tourism industry saw a 16.5% decline in December, and 10.8% for the year. pa href="http://feeds.feedburner.com/~a/smallcappulse/feed?a=13Fjnk"img src="http://feeds.feedburner.com/~a/smallcappulse/feed?i=13Fjnk" border="0"/img/a/p

Shift in China Trade Policy Could Accelerate Western Steelmakers’ Slump

Contrarian Profits — Tue, 30 Dec 2008 14:07:34 +0000

pThe steel business faces its biggest hurdle in 60 years with some analysts predicting double digit production cuts in 2009. Now, a sudden change in China trade policy may spell even more trouble for Western steelmakers, as Beijing is currently considering measures to shore up its ailing steel industry with new export policies. /p pAccording to a href="http://www.worldsteeldynamics.com/"World Steel Dynamics/a, a U.S. steel consulting firm, steel production could fall next year by 13.9% compared with this year. This downturn comes after a long period of growth in the steel industry. In fact, output has grown every year since 1998 - soaring from 777 million metric tons a decade ago to 1.34 billion metric tons in 2007./p pThe catalyst behind the expansion has been#8230;/p

Shift in China Trade Policy Could Accelerate Western Steelmakers’ Slump

Money Morning — Mon, 29 Dec 2008 20:49:53 +0000

By Don Miller Contributing Writer Money Morning The steel business faces its biggest hurdle in 60 years with some analysts predicting double digit production cuts in 2009. Now, a sudden change... Money Morning is here to help investors profit han...

U.S. Steel Demonstrates Strength – Analyst Blog

Zacks Market Commentaries — Mon, 08 Sep 2008 10:31:23 +0000

United States Steel Corp.Â’s (X) near-term profitability is expected to be strong due to higher flat-rolled contract prices and relatively low costs due to backward integration. The company also has strong cash flow, enabling increased dividend payments, stock buybacks and accelerated pension contributions. These factors lead us to rate the stock to a Buy with a six-month target price of $150.

Spot pricing is continuing to improve and is in the middle of a spike that started in early 2008. This is due to demand growth in China and other developing countries, high operating rates, rising input costs, a weak dollar and low inventories.

But U.S. SteelÂ’s domestic flat product volumes could suffer due to low steel demand from the automotive and residential construction sectors. There is the risk of volumes declining with the slowdown in the U.S. and global economy.

On July 29, United States Steel Corporation reported second quarter 2008 results. Net income was $5.65 per diluted share, more than doubled from $2.54 per diluted share in the second quarter 2007. Finally, net sales increased by 59% to $6.7 billion.

Read the full analyst report on X

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

US Steel Sector downgraded to Neutral at Goldman Sachs

Notable Calls — Thu, 04 Sep 2008 10:58:00 +0000

Goldman Sachs is downgrading their view on US Steel Sector to Neutral from Attractive this morning:

They are transferring coverage of the steel sector to Sal Tharani from Aldo Mazzaferro. Firm is also downgrading their coverage view for the sector to Neutral from Attractive due to the re-emergence of various risks-both perceived and real, such as rising dollar, "China fear", weak economic data out of the developed and emerging markets, and softness in steel and scrap prices. They believe that negative news flow in the near term would keep multiples compressed, and wait for a better opportunity to get more constructive on the sector.

Nucor and US Steel remain Buy rated stocks. However, they are removing US Steel from Conviction Buy List and also upgrading STLD to Buy, replacing CMC, which is now rated Neutral. In the near term, the firm see smore upside in mini-mills due to a sharper drop in scrap prices than steel, which should expand their metal margins. Worthington and Gibraltar remain Sell rated stocks.

A sharp correction in steel equities, primarily driven by the macro concerns and decline in oil prices, has created selective investment opportunities. Valuations of some of these stocks reflect a doomsday scenario, which the firm believes is not what longer-term fundamentals suggest.

Goldman has lowered their steel price estimates by an average of 6% for 2H-2008 and 2009. Earnings estimates are now 1% and 7% lower than earlier estimates for 2008 and 2009, respectively. The biggest change they have made is in multiples which they are lowering to reflect near-term risk aversion by investors. Firm's target prices have been cut by an average of 18% across coverage universe.

Notablecalls: This looks like bottoming action to me. The bids wanted situation we saw yesterday will reverse itself as I feel the shorts have gotten somewhat ahead of themselves.

Early Morning Tid-bits:

Notable Calls — Wed, 03 Sep 2008 11:15:00 +0000

- CSFB is lowering Goldman (NYSE:GS) ests FQ3/FY2008 for the second time in couple of weeks.

- RBC Capital is positive on Potash (NYSE:POT) reiterating their $375 tgt telling to look for sig. potash price increases in China.

- RBC Capital is positive on Apple (NASDAQ:AAPL) saying 4MM iPod announcement coming soon.

- Oppenheimer out positive on RF Micro (NASDAQ:RFMD) saying qtr is tracking better than consensus. Reits Outperform and $7 tgt.

- Lehman (NYSE:LEH) looks interesting as KDB's $5 bln offer for 25% stake shows there may be a premium to the story after all. Especially with HSBC also looking into buying the co.

- CIBC is upgrading US Steel (NYSE:X) to Outperform.

- Citigroup is defending Dell (NASDAQ:DELL)

Notablecalls: Hope it helps - fyi

Scrap Metal Prices on the Rise

Jim Kingsland — Mon, 09 Jul 2007 15:42:16 +0000

There are a variety of media reports this weekend exploring the issue of thieves who are absconding with beer kegs and taking them to scrap metal yards where they can receive upwards of $50 for an empty keg. One report discussed how some manhole covers have even disappeared. Manhole covers fetch around $20. Thefts of [...]