Friday, August 6, 2010
Up the Down Staircase - Jobs Report & Thompson Creek Talks Moly
It is 6:00 AM sharp. Have a second cup of Raine's Triple-X Red Label TGIF coffee, I'm on my third. The ole Colonel just watched CNBC Business News report the much awaited U.S. Labor Department's monthly jobs statistics. As far as market news goes, this is probably the biggest dog on the porch although the Russian wheat crisis is no Chihuahua. The impacts of global wheat shortages may make bigger headline as time goes on but this morning it is all about jobs, jobs (and the lack of jobs).
The labor report and market reaction remind me of the title to a 1967 movie with Sandy Dennis, "Up the Down Staircase." In our case the "Down Staircase" is an overall loss of jobs in this country and the difficulty of moving "up" in an economy that isn't recovering as fast as most economists predicted last year. Overall, the jobless rate held steady at 9.5% in July. Economists were expecting it to edge higher to 9.6% so this is good news. Unfortunately, many believe the unemployment rate is artificially bolstered by a surge of discouraged workers leaving the work force.
Here are the report and market reaction's "downs" and a few "ups":
Nonfarm payrolls fell by 131,000 last month (economists predicted 60,000, DJ Newswire poll)
143,000 temporary workers on the 2010 census were let go
Downward revisions of June's data showed a payrolls drop of 221,000, more than the 125,000 drop previously reported
The 10-year Treasury dropped to 2.8% territory on the news
The U.S. dollar/yen dropped to near historically low sub-85s (most active currency)
The U.S. dollar index (.DXY) threatened to drop below 80
European markets fell across the board
The U.S. markets opened lower but then recovered some
71,000 private-sector jobs were added compared to 31,000 for June (this is good but not enough)
COMEX gold popped $10 breaking the $1200 ceiling at $1209.4
Surprisingly, most of the miner's were up on the open
Copper pretty much held its ground at $3.34 in early trading
The Eureka Miner's Index(EMI) moved up to a healthy 154.4 on the metals & miners reaction
So there you have it, pardner - a lot of traffic up and down on the down staircase this morning. It will probably take the weekend for investors to absorb all this or maybe we'll only be talking about the rise in wheat prices Monday.
Ending on a positive note, moly producer Thompson Creek (TC) reported a great second quarter yesterday and was rewarded with a near 5% pop in share price in a down market. Here's a link to their results:
Thompson Creek Reports Significantly Improved Financial Results For Second Quarter 2010 With Revenue Up 100% And Cash Flow From Operations Up 575% From The Same Period One Year Ago (Press release, 8/5/2010)
One of the Colonel's favorites Kevin Loughrey, Chairman and Chief Executive Officer, said:
"Thompson Creek improved its financial performance in the second quarter of 2010 as a result of strengthening molybdenum prices. The Company's average realized molybdenum sales price for the second quarter of 2010 increased by 16% from the first quarter of 2010 and nearly 80% from one year ago. The Company's operations also performed well in the second quarter and remain on track to achieve previously announced production and cost guidance for the year."
And added these thoughts on the molybdenum market,
"Molybdenum prices have edged lower recently due to slightly softer demand from steel companies and also to a lessening of the confidence of molybdenum market participants in the strength and timing of the world economic recovery. Despite this correction to pricing, we believe the fundamental supply and demand projections for molybdenum remain quite favorable and should contribute to an improving financial performance for the Company over the medium term."
Keep your chin up buckaroos.
Enough talk, let's walk the walk:
The Eureka Miner's Index(EMI) remains above par at 154.36, a move up from yesterday's 147.35 and a big improvement from the 6/7/10 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.
4-WD is ON - rough but improving roads in the marketplace; The VIX or "fear index" is below 25; metals & miners remain on shaky but much firmer timber with benchmark FCX now trading above its 200-day average of $75.3 (our new warning level, 8/05 update), 10-year Treasurys are safely below 4% preserving a low-interest rate environment
The GREEN light is turned back on for Commodity Reflation with copper trading above $3/lb
The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)
The GREEN light is turned back on for Investor Confidence as investors return to equities.
The YELLOW light is turned on our Fuel Gauge with oil above $80
A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
NYMEX/COMEX: Oil is down $0.99 in early trading to $81.02 (September contract, most active); Gold is up $10.0 to $1209.4 (December contract, most active); Silver is up $0.174 to $18.495 (September contract, most active); Copper is down $0.0120 to $3.3415(September contract, most active)
Western Molybdenum Oxide is $14.25; European Molybdenum Oxide is $15.05; LME moly 3-month seller's contract is $15.42, LME cash seller is $15.22
The DOW is down 43.82 points to 10,631.16; the S&P 500 is down 5.50 to 1120.31. The miners are hanging tough:
Barrick (ABX) $43.45 up 1.68%
Newmont (NEM) $57.56 up 1.50%
US Gold (UXG) $4.99 unchanged
General Moly (Eureka Moly, LLC) (GMO) $3.19 up 0.95%
Thompson Creek (TC) $9.83 up 4.91%
Freeport-McMoRan (FCX) $75.75 up 2.27% (a bellwether mining stock spanning copper, gold & molybdenum)
The Steels are up too, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $33.72 up 0.69% - global steel producer
POSCO (PKX) $110.60 up 1.24% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.77% to $1,416,735.31 (what's this?).
Write Colonel Possum at firstname.lastname@example.org for answers to your questions or to request e-mail updates on the market
Headline photograph by Mariana Titus (inside the Alpine Hotel)