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May 5/08
A ) Top Analysts Award - and Advice for The AMP Portfolio
This weekend The Financial Post named Don Coxe this year's winner of award fro The National Post and Starmine.
His forecasts for BMO Financial Group are in The AMP Book at pages 10 / 11 - and that forecast was repeated in the weekend interview :
WRITE THIS DOWN :
Commodities Will Continue to Boom
China will continue to grow
This boom will continue as an investment theme until :
1 ) Oil futures are at $135 and
2 ) Copper futures are at $ 6.00
Second place went to CIBC for its stockpicking prowess.
CIBC World Markets ( Jeff Rubin ) oil forecasts are at page 37 of The AMP Book and have been raised this year ( as we discuss ) .
He foresees $ 150 oil in 2010 - which is two years earlier than first forecast.
B ) Good Economic Employment Numbers = Stronger Commodity Demand
and
More Important than the good employment report is the psychological boost it brings to investors being fed a daily barrage of " the end of the world is coming " media drivel.
TORONTO - The Toronto stock market chalked up a triple-digit gain for a third session Friday after employment news from the United States raised hopes that the country will escape sliding into recession.
The U.S. Labour Department reported that the economy shed 20,000 jobs during April, a lot less than the 78,000 loss that economists had expected.
"If you believe the employment numbers, we're probably in something that looks a lot worse than the soft landing of 1996, which felt pretty bumpy when it happened. But it's not nearly as bad as the recession of 2001," said John Johnston, chief strategist for the Harbour Group at RBC Dominion Securities.
"So we're either in a very unsoft landing or a very ultra-mild recession." The unemployment rate dipped to five per cent from 5.1 per cent in March
and The AMP Repeats a Thesis :
``We're seeing buying based on a knee-jerk reaction to what seems to be positive news on the economy,'' Peter Beutel, president of Cameron Hanover Inc. in New Canaan, Connecticut, said in a telephone interview. ``If it's positive news for the economy, that means more demand for energy,''
C ) Oil
Chevron announces - lower production and production delays
This is what " Peak Oil " looks like :
The Super Majors like Chevron and Exxon are producing less .
Russian , Mexican and North Sea production are in decline .
from Chevron:
The oil development, called Blind Faith, is being slowed by a problem with its mooring lines, company spokesman Jim Aleveras told investors today on a conference call. It was scheduled to begin producing oil by the end of June.
Blind Faith is Chevron's costliest Western Hemisphere project among those that are scheduled to commence production this year. The company postponed four of its biggest projects last year amid a worldwide scarcity of rigs and escalating costs that have postponed developments from Australia to Alberta.
``This is an industrywide problem that's affecting not just Chevron,'' said William Andrews, a portfolio manager at C.S. McKee & Co., which oversees $7.7 billion, including Chevron shares. ``Just about everybody else is dealing with similar issues.''
Chevron delayed two other developments in March and raised cost estimates for seven others.
First-quarter oil and gas output dropped 1.7 percent to the equivalent of 2.6 million barrels of crude a day, San Ramon, California-based Chevron said today in a statement. The company reported a 9.5 percent increase in net income, to $5.17 billion
Oilexco $ 15.50 up .03
Antrim Energy $ 3.90 up .01
Bow Valley $ 5.55 up .08 ( 1.5%)
D ) Copper Rises
LONDON (Thomson Financial) - Copper prices rose in afternoon London trade on Friday, rebounding on bargain hunting after giving up almost 4 percent during yesterday's broad based commodity sell-off.
Commodities priced in the U.S. dollar were down across the board yesterday, as the greenback's rally against the euro made prices more expensive for holders of other currencies, while reducing the appeal of hard assets as a hedge against the dollar's previous weakness.
However, copper prices have clawed back some lost ground today on a combination of bargain hunting and improving economic sentiment following lower-than-expected U.S. unemployment figures, despite dollar strength continuing.
At 2.06 p.m., London Metal Exchange copper for three-month delivery was trading at $8,282 per tonne against $8,220 per tonne at the close on Thursday. Earlier, prices dipped to the lowest level since late March, touching $8,152 per tonne.
Cross Currents - The U.S. dollar vs fundamentals of supply/ demand
Basemetals.com analyst William Adams said while the dollar's strength had hurt prices, some traders would view this as a chance to buy metals where the fundamentals remain supportive.
"In the likes of copper where the fundamentals are tight and, if anything, tightening, this sell-off may well be snapped up as a buying opportunity," Adams said.
"This is especially so when you consider that the equity and dollar rally is unfolding on the back of high hopes that the interest rate cuts and other measures the U.S. Federal Reserve has taken will bolster the U.S. economy, which in turn should be good for metal demand."
Ongoing strikes at Codelco plants in Chile have kept copper prices supported during the dollar-led rout. Codelco's Andina and Salvador mines, which had an annual output of 282,000 tonnes in 2007, have been closed by striking subcontractors since April 16, while a third mine, El Teniente, has also suffered sporadic closures.
London Numbers
LME-monitored copper stocks are down almost 90,000 tonnes from the start of the year, declining by a further 450 tonnes to 109,625 tonnes in today's report from the exchange. Falling inventories of the red metal are helping to support prices in the face of ongoing supply fears.
you have to track metal prices and storage numbers - use the links in the right hand margin.
Today Chile produces 40% of global copper supply. The state-owned copper producer Codelco alone accounts for 12% of global supply. There are 18,500 workers on fixed contract at Codelco, but more than twice that number are subcontracted. Last week those subcontractors went on strike. Margins for copper producers in Chile are currently running at an astounding 75%. Mine workers, however, are finding it increasingly difficult to afford basic food and power.
It was hoped that a quick resolution would be found for the strike, however this week subcontractors at Codelco's El Teniente mine - the largest underground copper mine in the world - began to throw stones at contracted workers as they tried to enter the mine. The contracted workers are now refusing to work until their safety is assured. The Andina and Salvador mines have already been closed for the last ten days, and on Friday workers at Salvador attempted to set fire to water and power stations. Trouble has not yet spread to Codelco's largest production division, which includes the Chuquicamata mine. Credit Suisse analysts suggest that if Chuquicamata is forced to shut down, copper prices could easily rally US$500-1000 per tonne on the news (current price US$8650/t). Says Credit Suisse:
"Perhaps the latest unrest at Codelco is just another passing ship in the night that will be quickly forgotten in the markets. However, if unrest does accelerate it could not happen at a worse time for consumers who appear to have run down their own inventories in Europe, the US and China
Teck Cominco ( TCK.B) $ 44.40 up .8 ( 1.83%)
HudBay ( HBM) $ 19.96 up .86 ( 4.5 %)
E ) Natural Gas
Natural gas in New York rose, following crude oil, after a government report showed the U.S. lost fewer jobs than forecast in April and U.S. stocks rallied.
Crude gained more than $3 a barrel, the first advance in four days. Payrolls shrank by 20,000 jobs and the jobless rate fell to 5 percent, the Labor Department said. Economists surveyed by Bloomberg News projected a loss of 75,000 jobs. Eight of 10 industry groups in the Standard & Poor's 500 Index climbed.
The Standard and Poor's Index - if maintained above 1410 is a positive technical indicator of a rising market.
``We're seeing buying based on a knee-jerk reaction to what seems to be positive news on the economy,'' Peter Beutel, president of Cameron Hanover Inc. in New Canaan, Connecticut, said in a telephone interview. ``If it's positive news for the economy, that means more demand for energy,''
Natural gas for June delivery gained 21.6 cents, or 2.1 percent, to settle at $10.777 per million British thermal units at 3:05 p.m. on the New York Mercantile Exchange. Gas has gained 44 percent so far this year, climbing to a 28-month intraday high of $11.36 per million Btu on April 28 as supplies fell to the lowest since May 2004. ``This market has shown tremendous resiliency,'' said Eric Wittenauer, an analyst at Wachovia Securities in St. Louis. Natural gas is ``undervalued in terms of oil on energy equivalency. It's tracking crude rather well.''
Crude oil for June delivery rose $3.80, or 3.4 percent, to settle at $116.32 a barrel in New York. Futures, which have gained 83 percent from a year ago, touched a record $119.93 a barrel on April 28.
Today's U.S. economic data suggests ``potentially better conditions than widely expected and the case could be made that it's supportive'' for higher energy prices, Wittenauer said.
F ) The ( Vancouver / May ) AMP Seminar
Planning Not Wishing for Success
Seminar Registration - please print out the Application Form in the right hand margin
( or for seminar materials ONLY )
Seminar Materials AVAILABLE NOW
What is You Plan for 2008 ?
AVAILABLE NOW - PROFIT NOW - 150 pages bound copy 9 1/2 " by 11 1/2 '
MAY 2008 Edition
"Building Your AMP Portfolio
Our Best Ideas for 2008 -09"
You have a plan for building your portfolio.
You have a book that shows a plan for 2008 and beyond.
AT A MINIUMUM - if you are investing thousands of dollars in a particular recommendation - invest $35 to develop a portfolio plan. That's common sense - and common sense is highly valued because it is uncommon. Use the order form in the top right hand margin.
OR ( for the seminar materials ) mail your cheque for $ 35 payable to J.Bass
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V2R 3G1
G ) Uranium - little more than hope and prayers - continue to AVOID
from Cannacord
Many uranium stocks are now trading for twenty cents on the dollar, if not worse and it appears anything that can go wrong, has.
Short-term uranium prices now flirt with $65 a pound, while longer-term contracts are being signed at $95. While it is expected over time demand for uranium will go up, there are so many countries and states putting moratoriums or blocks on exploration, down the road supply for uranium might settle down and if Jeff Rubin is right and better times are here for resource stocks in the second half of the year, the much beaten up uranium sector, hopefully, might participate.
H ) Yum Brands
$40.50 down .29
One of our favourite multinational names is Yum! Brands . Yum! Brands is a global restaurant chain that includes KFC, Taco Bell and Pizza Hut.
The company is saturated domestically, but growth in China is booming and will be the primary driver for the company. The KFC brand is something of a cultural phenomenon in China, and same-store sales are growing at more than 12%. Yum! Brands is expecting to have 3,000 stores in China by the end of the year, representing unit growth of 20%.
YUM's growth from rapid expansion in Asia makes earnings growth predictable and gives Wall Street good earnings visibility.
Yum! Brands has shown impressive relative strength vs. the rest of consumer discretionary sector. The stock has been a leader in this sector; a recovery of the group could see YUM benefit from liquidity rotation back into this group. YUM has the "story" and the technical backdrop to move higher and become a leadership name if a new leg to the upside develops in this market. Traders can buy YUM above $40 and place a stop loss at $36, which would represent a break of the uptrend channel.
Final Words
The behaviour of the market is unpredictable, but the behaviour of the market's participants is about as predictable as you can get. For long-term success, investors need the discipline to do two things:
1. Invest during points of pessimism
2. Exercise patience.
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