4. Clean Coal
By Tim Melvin
12:07 p.m. EDT The coal industry has been cleaning up its financial act. Ratings agency Fitch said this morning that the credit outlook for the coal companies was stable in spite of the headwinds the industry is facing. Demand is still soft in the weak economy as steel producers and electrical plants have cut back in the face of a weak economy. The specter of a cap-and-trade or other carbon tax still looms over the sector as well. However, the coal companies have been cutting costs aggressively, cutting capital expenditures and reducing capacity. As capacity is reduced and expansion plans are delayed, the path to growth will be acquisition. We are already seeing the start if this activity. Last month, Alpha Natural Resources ( ANR) made an offer for Foundation Coal ( FCL). I think this will continue well until next year. No positions.
5. Nikkei Odometer
By Howard Simons
12:35 p.m. EDT I see the Nikkei went back over 10,000 last night. I don't know whether they passed out "Nikkei 10K" hats back on Jan. 9, 1984, when the index first crossed that mark, but they should have. A child born on that day would be 25 today. I bring this up out of a nervous glance at our markets and out of a lingering cringe about the bad-taste-fest we had when the Dow Industrials first crossed 10,000 on March 16, 1999, and first closed over 10,000 on March 29, 1999. Perhaps there is a 10-year-old in your neighborhood born on those days. Would anyone in 1984 have bet the Nikkei would be crossing 10K from below in June 2009, or would anyone have bet the Dow Industrials would be below 8,800 today after putting in the sharpest three-month rally since the 1930s? I wrote a magazine article back in 1998 on gold, noting its long bear market. I got an e-mail from a retail commodity broker who wanted to know whether I thought gold would ever cross $500 again. My response was, "'Ever' is a long time. If you asked me in 1981 whether I thought long bond yields would 'ever' be below 6% again, I would have said yes, but I wouldn't have believed it." Will the Nikkei take out its 38,957 high made in 1989, 20 years ago again? Will the Nasdaq 'ever' cross 5,000 again in my lifetime? "Ever" is a long time, but I don't really believe it. No positions.
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