Wednesday, December 22, 2010

Single trader holds 90% of LME copper, WSJ says Report comes as copper prices hit record, other commodities surge

(MarketWatch) — A single trader holds up to 90% of the copper in London Metal Exchange warehouses, the Wall Street Journal reported late Tuesday.

The news came after copper prices hit a record and other commodities surged. Read about metal gains here.

The London Metal Exchange reported Tuesday that the trader holds 80% to 90% of the copper in its stockpiles, which is equal to about half of all the exchange-registered supply of the metal in the world, the Journal said. The position is worth about $3 billion, it added.

Last month, the LME reported that a single holder owned more than 50% of the exchange’s copper. People familiar with the matter at the time said J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 41.16, +0.16, +0.39%) was the holder, the WSJ reported.

Single traders also own large holdings of other metals. One trader holds as much as 90% of the exchange’s aluminum stocks. In the nickel, zinc and aluminum alloy markets, single traders own between 50% to 80% of those metals and one firm has 40% to 50% of the LME’s tin stockpiles, according to the Journal. (more)

Cotton Rises to Record for Second Straight Day on Global Fiber Shortfall

Cotton futures jumped to a record for the second straight day on speculation that global supplies will fail to keep pace with rising demand in China, the world’s largest user.

China’s custom agency said today that imports in November surged 31 percent from October. Shandong, the country’s second- biggest producing province, said on Dec. 17 that output dropped 22 percent this year from 2010. In India, the world’s No. 2 grower, production will be less than forecast, an industry group said yesterday.

“The crops are disappointing,” said Robin Rosenberg, a futures strategist at PFGBest, a brokerage in Chicago. “Prices will go even higher.”

Cotton for March delivery advanced by the exchange limit of 5 cents, or 3.2 percent, to close at an all-time high of $1.5912 a pound at 2:30 p.m. on ICE Futures U.S. in New York. The price has more than doubled this year, heading for the biggest annual gain since 1973. (more)

Jay Taylor: Turning Hard Times Into Good times

click here for audio

Another Tech Bubble?

( -- On any given day at Grey Dog, a small restaurant in downtown New York, you'll find clusters of engineers and entrepreneurs crowded around tiny wooden tables discussing their startups' latest creations.

The high ratio of techies to tables isn't surprising. DogPatch Labs -- an office space that houses more than 10 companies backed by venture capital firm Polaris Ventures -- is right around the corner. One street south, a variety of startups rent desks at TechSpace. A number of Union Square Ventures-backed companies work in the area. And TechStars, a mentoring-and-seed-cash program that just selected finalists for its first crop of New York startups, is right around the corner.

Within a few densely packed urban blocks, dozens of tech startups are cranking out code. And investors want in. Early.

Which has tech veterans a bit nervous.

The murmuring started months ago, with early-stage investors moaning about soaring valuations and venture funds shifting their cash toward Internet upstarts. Then a widely circulated dispatch from New York venture capital doyen Fred Wilson yanked the conversation out into the open.

"I think the competition for 'hot' deals is making people crazy and I am seeing many more unnatural acts from investors happening," he wrote last month in an ominous blog post titled "storm clouds." (more)

Ghost town, Inner Mongolia: Inside China's empty cities

They're building it, but will they come? Why China's real estate boom looks so troubling from the outside.

Are China's banking and real estate sectors in a bubble, destined for collapse and an equity wipeout of the first order? Or is the country's government proving to be a far more measured and steadier hand at the till than their discredited Western counterparts? It's an argument of the never-the-twain-shall-meet sort, which is all the more ironic considering the Kipling was speaking of the differences between East and West when he coined the term.

Last week, the naysayers were handed quite a piece of convincing evidence in the form of a research report from Hong Kong-based outfit Forensic Asia entitled China: Ghost Cities. Gillem Tulloch, the analyst who wrote it, did some shoe-leather (of the virtual web surfing sort) research to compile a list of seven ghost cities in China that should strike fear into the heart of anyone with exposure to the country's financial sector.

We're not talking ghost towns of the old West type, the ones that time passed by and left as mere intersections with a saloon and a hardware store. We're talking massive cities that the Chinese government is in the process of building in the hopes that people will come. But the people have not come. Yet the billions are in the process of being spent. (more)

Bank of America Corporation BAC Technical Analysis

The following is Bank of America Corp. (NYSE:BAC) Technical analysis for December 21, 2010

Bank of America Corporation BAC Resistance, pivot & Support Levels - 12/21/2010

Resistance levels: $12.95, $12.90, $12.85

Pivot point: $12.76

Support levels:$12.71, $12.62, $12.57

Bank of America is closed over all moving average which is very bullish now.If stock break over $12.90 stock could see new leg for over $13.Now will new resistance level $13.69 which is 200 day moving average. If Bank of America would break below $11, we could see $10 in coming days. This would probably cause the stock market to correction come near future.But this low risk banks stock.This is my one top pick for 2011.

10 best stocks for 2011

Despite a gain of more than 10% in the S&P 500 over the past three months, there's still a real buying opportunity in growth stocks: Our 10 best for 2011 are expected to bolster their profits an average of 61% next year -- vs. 14% for the S&P -- and yet they trade at an average 12 times next year's earnings, vs. 13 times for the S&P.

Our selections this year are slanted toward commodities. Exposure to oil, chemicals, and fertilizer should provide protection against a falling dollar or an outbreak of a 1970s-style rise in inflation, which we think is a bigger threat than a double-dip recession. (We've also made some contrarian selections, including one housing-related stock.)

Market cap: $30.2 billion
2009 Revenue: $10 billion
P/E ratio: 15.4
Dividend yield: 0.3%
Ticker: MOS

As corn goes, so go the makers of fertilizer. That's good news for Mosaic, whose stock has had an 89% correlation with corn prices (if 100% means mirroring them exactly) during the past five years, according to SIG Susquehanna agriculture analyst Don Carson. The price of corn has jumped 25% over the last 12 months, and inventories are at their lowest since 1995. The reason: Heavy rains and scorching heat caused the2010 harvest to decline 4% from 2009 -- even as demand rose, with ethanol now consuming 41% of the U.S. corn crop and growing wealth in developing countries leading to increased food consumption.

Mosaic is up only 11% for the year, which means it has some catching up to do. And with analysts expecting a 48% earnings rise in 2011, the stock (which trades at 15.4 times those estimated profits) seems primed to flourish. (more)

Saxo Bank’s Outrageous Predictions for 2011

Every year, Saxo Bank creates a list of black swan events, inspired by the teachings of Nassim Taleb. This years predictions, strangely, don’t seem all that highly unlikely:
  10. RUSSIA’S RTS INDEX REACHES 2500 (more)

Government: Unintended Consequences

Stocks end at highest levels in more than two years

( -- U.S. stocks rose modestly Tuesday but managed to close at their highest levels in more than two years as investors set their sights on 2011.

The Dow Jones industrial average (INDU) rose 55 points, or 0.5%, led by gains in shares of American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500). The blue chip index finished at 11,533, its highest level since August 29, 2008.

The S&P 500 (SPX) added 8 points, or 0.6%, with Adobe (ADBE) and Jabil Circuit (JBL, Fortune 500) among the biggest winners. The broader index closed at its highest level since September 19, 2008.

The tech-heavy Nasdaq (COMP) gained 18 points, or 0.7%, to reach its highest level since December 28, 2007.

Stocks are up about 5% this month, with the S&P 500 and the Nasdaq posting gains for 13 of the month's 15 trading session so far. All three major indexes are poised for double-digit gains for the year.

But as investors close out their books leading up to the holidays, the rest of the year is likely to be pretty quiet. (more)