Tuesday, February 23, 2010
Dollar Rebound Weighs on Metals & Miners
It is 5:55 AM, grab a cup of joe and let's see what's up across the pond. As we reported yesterday, metals and miners are enjoying a good bounce from their lows earlier this month and the trend should continue unless "sovereign debt worries return to the headlines or oil goes ballistic." Nuts.
We should be happy the latter hasn't occurred with oil falling a buck below the key $80 benchmark on a strengthening dollar and concerns about the upcoming inventory report. The reason behind the rallying dollar is the cause for concern. Unfortunately Greece is back in the headlines and the entire commodity space is under pressure. As reported by the Wall Street Journal this morning:
NEW YORK—The dollar strengthened as weaker-than-expected euro zone economic data and continued concern over Greece's economy sapped investors' willingness to buy riskier assets, leading commodities and European stocks lower. (WSJ, 2/23/2010)
There is a related article on a fall in copper prices with an unexpected drop in German business confidence. This is important because Germany will no doubt be an important player in keeping Greece from falling further down the sovereign debt mineshaft:
Copper Falls on Strengthened Dollar, Weaker German Confidence (Bloomberg News, 2/23/2010)
Fortunately Miss Moly is in good hands as she settles into her new flat at the London Metal Exchange (LME). Here is a story from London correspondent, Claudia Carpenter, on her first day of trading along with cousin Cobalt:
London Metal Exchange Expands With Molybdenum, Cobalt (Bloomberg News, 2/22/2010)
Molybdenum prices are holding up but could have some rough times today along with the other metals. The Report will soon start posting moly LME prices as the new market develops. Molybdenum and cobalt futures business transacted on the first day of trading totaled $5.7 million in value.
By the by, there is a lot of color coming at us from the west.
Enough talk, let's walk the walk:
4-WD is OFF - the VIX or "fear index" is below 25, smoother markets are expected (what is this?)
The GREEN light is our fuel gauge has returned with oil falling below $80
An ORANGE light is ON for possible adverse regulation/legislation: Miner Taxation, Cortez Hills & mercury emissions
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
Oil is down $1.02 in early trading to $79.29 (April contract, most active); Gold is down $1.8 to $1111.3 (April contract, most active); Silver is down $0.232 to $15.990 (March contract); Copper is down $0.0325 to $3.2740 (March contract); Molybdenum is steady (yesterday's price) at $17.25
The DOW is down 79.35 points to 10304.03; the S&P 500 is down 12.23 points to 1095.78. The miners are grumpy:
Barrick (ABX) $37.33 down 2.71%
Newmont (NEM) $47.87 down 1.80%
US Gold UXG) $2.60 down 2.24%
General Moly (Eureka Moly, LLC) (GMO) $2.60 down 3.35%
Thompson Creek (TC) $13.40 down 2.22%
Freeport-McMoRan (FCX) $74.76 down 1.94% (a bellwether mining stock spanning gold, copper & molybdenum)
The Steels are in a bad mood too, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $38.16 down 3.85% - global steel producer
POSCO (PKX) $118.22 down 1.72% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is down 2.20% to $1,249,741.66 (what is this?).
Headline photograph by Mariana Titus, "Little Lake"