Month: November 2011

Websites for Israel’s government were down just two days after Anonymous threatened the country for its actions against the Gaza Flotilla.

Prudential Financial (PRU) said late yesterday that its board of directors has approved an increase in its annual dividend. The board declared an annual dividend of $1.45 per share for 2011, a 26% increase over the 2010 dividend, and the highest dividend ever paid by the company.

Yahoo! (YHOO), Microsoft (MSFT) and AOL (AOL) announced late yesterday that they have formed advertising agreements that they say will improve the process of buying and selling online display ads. The companies said the agreements will allow the ad networks operated by each company to offer each other’s premium nonreserved online display inventory to their respective customers.

There’s really only one story to discuss today and that is Italy. Italian bond yields are soaring and I mean soaring and the market reaction is not pretty. In a story of “be careful what you wish for”, Italian Premier Berlusconi is said to be stepping down next week but today’s crisis may actually reverse those wants and return him to power.

Since the announcement that he would step down after austerity measures were implemented, bond yields jumped to above 7% for the first time in the Euro-era. This is an unsustainable level and the uncertainty over the new Italian government is weighing heavily on the market.

Stocks are lower in Europe and in the US, as are commodities. Risk aversion is high right now as Italy is the third 3rd largest Euro zone economy, as well as the world’s 8th largest. It is clearly too big to fail and it is doubtful whether or not it could be saved.

As bond yields rise, it becomes harder for them to service their debt and creates market dislocations as everyone runs for the exit.

Making matters worse, there is no news on the docket that could potentially save us today, with the exception of a Bernanke speech later this morning. I wouldn’t be surprised at this point if his speech today is not the one he started out with earlier this morning.

And that is the problem with contagion; at first it was Greece and now it is Italy. As the size and scope of the indebted nations gets bigger, the larger the problem occurs. And guess who is up next?

The United States. That’s right, the good ol’ US of A. The budget super-committee is working right now to attempt to fix our problems and if this is not a wake-up call, then nothing ever will be. The only thing keeping US yields low right now is the threat of Bernanke and the Fed tanking interest rates and the Dollar much lower.

While it will be a difficult task to do that, the potential of QE3 may mean negative real interest rates which could be disastrous for the markets.

For the sake of global harmony, let’s hope that the situation in Italy comes to a close rapidly. Just don’t be surprised if Berlusconi is the one who comes out on top!

By Mike Conlon, ForexNews

Nov. 9 (Bloomberg) — Joergen Buhl Rasmussen, chief executive officer of Carlsberg A/S, discusses the company’s third-quarter profit reported today, full-year forecast and the Russian beer market. Rasmussen speaks from Copenhagen with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Adam Hewison’s Afternoon Video Update on the Financial Trade Markets

Nov. 9 (Bloomberg) — William Hess, managing director of China Capital Economics Group, talks about the outlook for Chinese inflation and growth. He speaks from Beijing with Linzie Janis on Bloomberg Television’s “First Look.” (Source: Bloomberg)

Activist musicians David Crosby and Graham Nash delivered a touch of Woodstock to Occupy Wall Street protesters at Zuccotti Park on Tuesday. They led a chant of “No More War!” during a 20-minute acoustic performance. (Nov. 8)

Italian Premier Silvio Berlusconi’s decision to leave his position and the resulting uncertainty for the country is wreaking havoc in the markets today. Italy’s 10-year bond yield surged to above 7%, which is considered unsustainable.

U.S. Strategic Rare-Earths Reserve More Likely

by Justin Dove, Investment U Research
Wednesday, November 9, 2011

The Financial Times reported last Friday that two congressional sources claim “the creation of a U.S. rare earth strategic reserve is more likely to get the go-ahead after China’s largest exporter halted production.”

Last month we covered China’s decision to halt production and further control the market for rare metals as prices were slipping due to increased supplies worldwide.

The biggest benefactors will be California’s Molycorp (NYSE: MCP) and Australia’s Lynas Corp. (OTC: LYSCF.PK). But smaller rare earth miners, such as Avalon Rare Metals (AMEX: AVL), Quest Rare Minerals (AMEX: QRM) and Rare Element Resources (AMEX: REE), may also see increased demand from the supply scare.

Over the long haul, supply for rare earths should increase and prices should fall. But with the halted production in China, which currently produces 97 percent of the world’s supply, and a strategic stock pile by the United States, there should be a spike in demand over the short term – especially in the non-Chinese producers listed above.

Molycorp expects to increase its production to an annual capacity of 40,000 metric tons by the end of 2013.

The creation of a U.S. stockpile would allow Molycorp to run “flat out production” from its expanded operations, an analyst told the Financial Times.

Molycorp Earnings Call

Investors should pay close attention to Molycorp’s earnings call on November 10. It’s an incredible short squeeze candidate with 26 percent of its float in short interest. With news that it may face increased demand in the short term, a bullish earnings report could result in a bit of a pop. If that happens many of the shorts could be forced to buy the stock, which would send it even higher.

Stay tuned on Thursday.

Good investing,

Justin Dove

Article by Investment U