Investment News Briefs Friday, September 4, 2009

Money Morning Staff — Fri, 04 Sep 2009 14:30:08 +0000

ECB Holds Rates at 1%; Shanghai Soars; Oracle-Sun Deal Faces European Probe; Dainippon Agrees to Buy Sepracor; South Korea 2Q GDP Moves 2.6%; OECD Says Global Recession May Be Over; Vale Restarting Idled Iron Ore Mines; Cerberus: No Withdrawals for 3 Years; Gold Nears $1,000 Mark

The European Central Bank held interest rates at its record low 1.0% yesterday (Thursday), a clear sign that central bankers have different opinions than the economists who have raised growth and inflation projections, MarketWatch reported. Jean-Claude Trichet, the president of the ECB, said that though economic contraction has ended, he sees a “very gradual recovery.”

The Shanghai Composite Index closed 4.8% higher yesterday (Thursday), its best showing in three months, on speculation the government will adopt measures to boost equities, Bloomberg News reported. The gain comes four days after the index sank 6.7% on Aug. 31, closing out one of its worst months in decades and sending futures of global indices lower.

European regulators launched an antitrust probe into U.S. software titan Oracle Corp.’s (NASDAQ: ORCL) $5.6 billion acquisition of Sun Microsystems Inc. (NASDAQ: JAVA) because of market concerns over competition for databases. The European Competition Committee said its investigation is a “routine” matterand must be concluded by Jan 19, MarketWatch reported.

Japanese drugmaker Dainippon Sumitomo Pharma Co., Ltd.yesterday (Thursday) agreed to buy U.S. drugmaker Sepracor Inc. (NASDAQ: SEPR) for $2.6 billion, making for Japan’s second-biggest acquisition this year. In addition a sales force of 1,200, Dainippon gains Sepracor’s insomnia drug Lunesta and asthma drug Xopenex. “We anticipate our business will shrink if we focus only on Japan, where medical prices are under pressure,” Dainippon Sumitomo President Masayo Tada told a news conference. “Even if the U.S. carries out healthcare reform it’s not as if the market is going to halve. It will remain the world’s biggest drug market.”

South Korea’s economy grew 2.6% in the second quarter, a faster pace than originally estimated driven by consumer spending and investments in business and construction, Bloomberg reported. South Korea’s quarterly growth marks its best performance since the fourth quarter of 2003. “The revision shows private demand is actually picking up, and growth is not just driven by government support,” said Kwon Young Sun, a Hong Kong-based economist at Nomura Holdings, Inc. (NYSE ADR: NMR).

Organization for Economic Co-operation and Development (OECD) chief economist Jorgen Elmeskov told Reuters the global recession is closing faster than originally thought and may already be over. The OECD’s forecasts a 1.6% economic growth the United States in the third quarter, 0.3% in the Eurozone, and 1.1% in Japan.

Demand from Japanese and European steelmakers have prompted Brazil’s Vale SA (NYSE ADR: VALE) to restart idled mines. Shipments for the world’s largest iron ore exporter dropped 32% in the second quarter. “We’re restarting mines,” Jose Carlos Martins, Vale’s executive director ferrous, told Bloomberg. “During the crisis we reduced our production as much as 30%. Now we’re bringing things back. It will take time, but this shows our confidence that market conditions are at least reasonable.”

Cerberus Capital Management LP said it will prohibit new hedge fund investors from withdrawing money for three years. The strategy hopes to stem such outflows that followed its acquisitions of Chrysler and financial services company GMAC Inc., both which resulted in losses, Reuters reported.

Gold futures for December delivery rose $19.20, or 2% to $997.70, a six-month high, Bloomberg News reported. The dollar gained as well, up 0.10% on the U.S. Dollar Index, a six-currency gauge of the greenback’s strength. “The dollar is going to be the main driver for gold strengthening for the rest of the year,” Standard Chartered PLC metals analyst David Barclay said. Gold has gained 4.6% this month in its biggest three-day rally since March. “Gold looks poised to make a real run at the $1,000 mark,” Miguel Perez-Santalla, a Heraeus Precious Metals Management Inc. sales vice president in New York, said in a note to clients.

Source: Investment News Briefs Friday, September 4, 2009

BHP Billiton (NYSE: BHP): Stock of the Day

David Fessler — Thu, 18 Jun 2009 16:45:36 +0000

Iron Ore Rising… Is the current rally in stocks is just a bear market variety, or is it the real thing? The debate has been going on for quite some time now…

And I don’t know the answer more than anyone else.

However, It stands to reason that one of the best indicators that might give us an early tip on recovery is iron ore shipments.

Iron ore is the basic component of steel, which is used in bridges, buildings, ships, pipes, cars and trucks. Even concrete highways and bridges have steel rebar embedded in them for added strength. It’s perhaps the largest ingredient in the infrastructure of the industrialized world.

World production of raw iron ore averages about 1 billion tons per year, with China alone producing nearly half the total. Australia and Brazil produce nearly 20% apiece, and roughly 54 other countries make up the rest of the production.

One of the largest producers of raw ore is mining giant BHP Billiton (NYSE:BHP), based in Australia. Engaged in the mining of metallurgical and energy forms of coal, oil, gas, diamonds and other base metals, Billiton also operates some of the largest iron ore mines in the world.

The company has 41,000 employees working over 100 mining and extraction operations in 25 countries around the world. Last year, the company generated revenues of nearly $60 billion, and roughly 25% of that was profit.

Rising Shipments: A Positive Sign

One of the best places to gauge iron ore shipments is Port Hedland, in western Australia. The Port Hedland Port Authority keeps track of iron ore shipped from its docks, and May’s total was 13.39 million tons, up 18% from April’s 11.33 million tons. BHP’s portion of May’s total was 11.12 million tons.

To put this in perspective, last June – at the height of the China driven boom – BHP shipped 12.26 million tons out of Port Hedland.

BHP recently put together a joint production venture with rival Rio Tinto, PLC (NYSE:RTP) that is expected to save the two companies $10 billion annually.

Both miners are trading roughly midway between their 52-week highs and lows, and are two of the best ways to gauge economic recovery from the ground up (pun intended).

Source: BHP Billiton (NYSE: BHP): Stock of the Day

Contrarian Stock Market Investing News - Featuring Bargain Stocks » Iron Ore Mines

Investment News Briefs Friday, September 4, 2009

BHP Billiton (NYSE: BHP): Stock of the Day