Wednesday, December 12, 2012

Crocs, Inc. (NASDAQ: CROX)

Crocs, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, and distribution of footwear, apparel, and accessories for men, women, and children in the Americas, Europe, and Asia. The company primarily offers casual and athletic shoes, and shoe charms. It designs and sells a range of footwear and accessories that utilize its proprietary closed cell-resin, called Croslite. The company's footwear products include boots, sandals, sneakers, mules, and flats. It also provides footwear products for the healthcare, service/hospitality, and airline markets; and general foot care and diabetic needs markets, as well as offers ethylene vinyl acetate footwear, sandals, and printed apparel for the beach, action, and adventure markets; and snap-on charms. The company sells its products through the United States and international retailers and distributors, as well as directly to end-user consumers through its company-operated retail stores, outlets, kiosks, and Web stores primarily under the Crocs Work, Crocs Rx, Ocean Minded, and Jibbitz brand names.

To analyze Croc's stock for potential trading opportunities, please take a look at the 1-year chart of SMBL (Smart Balance, Inc.) below with my added notations:
1-year chart of SMBL (Smart Balance, Inc.)
From May until October CROX was trading within a large range from $14 up to $18. The $14 support (green) from July was also tested back in December. However, at the end of October CROX broke below that $14 level, which was also a new 52-week low for the stock. Now that the stock has rallied back up from its November low, the $14 level should act as resistance like it did a week or so ago.


GOLD/PLATINUM RATIO gas given a short term sell signal which may possibly be the start of a long term trend reversal.The ratio peaked at 1.431 September 1982 and bottomed at 0.436 February 2001 and has since recovered to a high of 1.145 July this year...the average for the ratio since March 1975 is 0.807 which means that the current level of 1.072 is 33 percent above the mean, reason enough to revert.
The rise from the 2001 low appears to have unfolded in five waves which may mean that the ratio is due for a correction especially as RSI has a major divergence...but the long term uptrend is still intact. The InvesTRAC long term forecast shows that the ratio may start to decline in earnest from about June 2013 with an eventual low in May 2018.

So Much For “Confidence” – NFIB Small Business Outlook Drops To Record Low

from Zero Hedge:
While Europe’s confidence-inspired rally is floating all global boats in some magical unicorn-inspired way, the reality is that on the ground in the US, things have never looked worse. The NFIB Small Business Outlook for general business conditions had its own ‘cliff’ this month and plunged to -35% – its worst level on record – as the creators-of-jobs seem a little less than inspired. Aside from this unbelievably ugly bottom-up situation, top-down is starting to be worrisome also. In a rather shockingly accurate analog, this year’s macro surprise positivity has tracked last year’s almost perfectly (which means the macro data and analyst expectations have interacted in an almost identical manner for six months). The concerning aspect is that this marked the topping process in last year’s macro data as expectations of continued recovery were dashed in a sea of reality (both coinciding with large ‘surprise’ beats of NFP). We suspect, given the NFIB data, that jobs will not be quite so plentiful (unadjusted for BLS purposes) the next time we get a glimpse.
Read More @ Zero

Tightest Corn Crop Since 1974 Prompts Predictions for Near-Record Prices

Three consecutive years of smaller U.S. corn harvests are driving inventories of the world’s most-consumed grain to a 39-year low and spurring Goldman Sachs Group Inc. to predict that prices will rise near record highs.

Global stockpiles will drop 11 percent to 117.61 million metric tons by Oct. 1, or 13.6 percent of what will be used for food, ethanol and livestock feed, the lowest ratio since 1974, the U.S. Department of Agriculture said in a report.

Prices surged 44 percent since mid-June as U.S. farmers endured their worst drought in 56 years, and heat waves and dry weather seared crops from Australia to Europe. While futures fell 14 percent since reaching a record $8.49 a bushel on Aug. 10, tightening supply before next year’s harvest will drive prices to an average of $8.25 in the next six months, 13 percent higher than Monday, Goldman said in a Dec. 5 report.

“It will take more than one year of good weather and high yields to dig the world out of this supply hole,” said Peter Meyer, a senior director of agriculture commodities at PIRA Energy Group in New York. “While corn prices may not spike, they will remain well supported until the extreme moisture deficits in the U.S. are rectified.”

Grain Rally

Corn rose 13 percent to $7.30 on the Chicago Board of Trade this year as the Standard & Poor’s GSCI Agriculture Index of eight commodities gained 8.5 percent. The MSCI All-Country World Index of equities advanced 12 percent, and a Bank of America Corp. index shows Treasurys returned 2.6 percent.

Production in the U.S., which accounted for 32 percent of world supply this year, fell 13 percent to 272.4 million tons, the smallest harvest since 2006, the USDA said Nov. 9. That’s 18 percent less than the record 332.5 million tons in 2009 after dry weather in 2010 and heat waves last year.

Global consumption will exceed supply for the second time in three years, even as a faltering economy erodes demand by 2.5 percent to 853.8 million tons in the season ending Oct. 1, according to the USDA. While that would be the first drop since 1995, the decline in production will be even steeper, retreating 4.6 percent to 839.7 million tons, the agency said.

Prices will reach $7.85 in six months because inventories are “precariously low,” Hussein Allidina, the head of commodity research at Morgan Stanley in New York, wrote in a Dec. 5 report.

‘Corn Overvalued’

Futures are headed for a record annual average this year, and that should spur farmers to sow more crops. Informa Economics Ltd., a Memphis, Tennessee-based research company, predicted Nov. 2 that global production will jump 14 percent to a record 950.7 million tons next year.

If the weather returns to normal, futures for December 2013, after the U.S. harvest, may be as much 37 percent overvalued, Chris Gadd, an analyst at Macquarie Group Ltd. in London, said in a report Dec. 6. Gadd predicted the contract may drop as low as $4, from $6.3675 Monday.

“We are just one crop away from a substantial increase in supplies,” Douglas Carper, the principal of Omaha, Nebraska- based DEC Capital Inc., a commodity trading adviser and consultant to hedge funds. “If we have a widespread moisture event over the heart of the Corn Belt between now and April, there would be an epiphany that would sweep over folks.”

Dry Weather

More than 56 percent of the nine-state Midwest region where most of the crop is grown had moderate to exceptional drought by Dec. 4, compared with 15 percent a year earlier, according to the U.S. Drought Monitor. That reduced the level of the Mississippi River, delaying barges carrying grain to Gulf of Mexico ports and export markets.

Hedge funds and other speculators boosted their net-long positions, or bets on higher prices, for three weeks and are the most bullish on corn since Oct. 23, U.S. Commodity Futures Trading Commission data show.

Global inventories may not get the expected boost in February from Argentina and Brazil, the biggest exporters after the U.S. Flooding led farmers in Argentina to plant 10 percent fewer acres than expected, which means output may total 22.5 million tons, below the USDA’s estimate of 28 million, said Michael Cordonnier, the publisher of the Soybean & Corn Advisor in Hinsdale, Illinois. In Brazil, dry weather may cut output to 70 million tons from 73 million a year ago, he said.

Demand Outlook

Demand for corn to feed livestock and make ethanol may not be slowing as much as the USDA expects. Hog farmers kept buying corn even as prices topped $8 because they were hedging some of their costs, Larry Pope, the chief executive officer of Smithfield Foods Inc., the largest pork producer, said on a Dec. 6 conference call with analysts. Hog herds expanded about 4 percent in the three months ended Oct. 28, he said.

U.S. red-meat production jumped 7.2 percent to 4.579 billion pounds in October, and pork output gained 8.7 percent to 2.21 billion pounds, the highest ever for the month, government data show. Supplies of young chickens rose 7.5 percent and turkey 9.9 percent, the USDA said in a Nov. 26 report.

Domestic corn inventories before the 2013 harvest may fall to 546 million bushels, below last month’s USDA forecast of 647 million bushels, said Dan Cekander, the director of grain-market analysis at Newedge USA LLC in Chicago. The increase in feed demand during the three months ended Dec. 1 probably won’t appear in USDA data until the Jan. 11 report, he said.

Fuel Use

Ethanol distillers, who used 41 percent of the U.S. crop last year, boosted production by 4 percent in the week ended Nov. 30, the biggest gain in 14 months and the highest output since the end of June, Energy Department data show.

A reliance on crops to make fuel and expanding economic growth will keep grain inventories tight and contribute to a “new norm” of high food prices over the next two decades, the World Bank said in a Nov. 27 report. Risks to supply are increasing at a time when 12 percent of the world population remains chronically undernourished, the bank said.

World food prices, while down 11 percent from a record in February 2011, were the highest ever on average during the past two years and more than doubled in the past decade, according to the United Nations’ Food & Agriculture Organization in Rome.

“People and animals continue to eat,” said Sal Gilbertie, who helps manage $69 million of assets as president and chief investment officer of Teucrium Trading LLC in Santa Fe, New Mexico. “Everything in grocery stores is made from corn.”

Gold Isn’t Linked to Inflation as Much as Most Think

Gold prices rise when the dollar weakens and inflationary pressures mount, but that's not the only driver, says Barron's columnist and blogger Brendan Conway.

Gold prices are up 9 percent in 2012 thanks to the Federal Reserve's stimulus measures, which were intended to spur investing and hiring by pushing borrowing costs down and keep the economy flooded with liquidity but have weakened the dollar.

Easing measures at other major central banks have pumped up gold prices as well.

Investors have injected $8 billion into gold exchange-traded funds (ETFs) this year alone, with the four largest gold funds, which together account for about 99 percent of assets in gold ETFs, have more than $90 billion in them, Conway pointed out.

That doesn't mean the correlation will also last, if history is to serve as a lesson.

"If you think that the Federal Reserve will keep rates low far into the future, then gold is a buy," Conway wrote.

"Gold often is considered an inflation hedge, but that only pans out in a severe crisis. Gold's correlation with inflation was just 1 percent in the 25-year period of 1986 to 2011," Conway added.

Money flows quickly into ETFs when fears that inflation mount, though central bank demand is also driving the yellow metal.

"The stealth catalyst for gold may be emerging-market central banks. China is just one country that could ramp up its gold purchases as it seeks to diversify its central-bank reserve holdings, especially if the yuan is to be a global currency," Conway wrote.

"China's gold stock is estimated at less than 2 percent of its total reserves; a surge in Chinese gold imports has sparked talk of an unofficial binge."

Gold investors have noted a pickup in Chinese activity in the global gold market.

"Chinese buying has been picking up," said Dick Poon, general manager of Heraeus Metals Hong Kong Limited, according to Reuters.

"The banks want to keep some inventory and prepare for the holiday demand around the Lunar New Year."

Gold refineries close around Christmas and New Year, creating supply shortages.

"There probably won't be much supply around until mid-January," said Ronald Leung, a dealer at Lee Cheong Gold Dealers in Hong Kong, Reuters added.

Chart of the Day - El Paso Pipeline Partners (EPB)

The "Chart of the Day" is El Paso Pipeline Partners (EPB), which showed up on Monday's Barchart "All-Time High" list. Es Paso on Monday posted a new all-time high of $38.62 and closed +1.40%. TrendSpotter has been long since last Wednesday at $37.54. In recent news on the stock, Goldman on Nov 5 upgraded El Paso Pipeline to Buy from Neutral with a target of $45. El Paso Pipeline Partners, with a market cap of $8 billion, is a limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines, storage, and other midstream assets.


James Turk: Why everyone should have a precious metals portfolio