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Notes from Potash Conference Call

Originally published Jan. 26 at 3:22 p.m. EDT

I would continue to avoid Potash Corporation of Saskatchewan (POT) .

Here are notes from the company's conference call Thursday:
  • POT reaffirms forecast of 61-64 million tons of potash demand in 2017
  • They don't have the final data for 2016
  • POT had a record second-half Canpotex shipments in 2016; fully committed for 1Q 2017
  • Lower gross margin in the quarter was due primarily to weaker prices in all three nutrients
  • Potash: Decline in spot prices in the first half of last year and lower contract prices settled in the second half of last year
  • Nitrogen: Weaker benchmark prices and realizations due to impact of lower global energy costs and increased supply (lower natural gas costs in Trinidad were the primary driver of reduced per-ton costs)
  • Phosphate: Lower realizations primarily due to weaker fertilizer pricing
  • Sales volumes fell, primarily due to weaker demand for our feed and industrial products
  • Company says there are supportive agriculture fundamentals in most key regions (noted corn, soybeans, sugar and palm oil prices)
  • In North America, a potential pull-back in corn acreage and an increase in soybeans could be slight headwind for nitrogen and neutral for potash and phosphate
  • POT relates that there has been global potash inventory changes
  • Inventory has been drawn down at both producer and distribution level
Regarding M&A with Agrium ( AGU) : Merger regulatory review and integration planning processes expect to be complete in mid-2017.
Position: None.

The Good, the Bad and the Ugly (Early Afternoon Edition)

Originally published Jan. 24 at 3:32 p.m. EDT

"You see, in this world there's two kinds of people, my friend: Those with loaded guns and those who dig. You dig."
-- Blondie, "The Good, the Bad and the Ugly"

Here's a quick review of the day's market action at 3 p.m. (we are at daily highs with buy programs seemingly overwhelming any sellers).

The Good

  • The reflation trade is league leading -- especially materials.
  • The Russell Index is crowing today.
  • Banks, insurance and brokerages. Two percent gains are routine today.
  • Crude oil is up $0.57.
  • IBM (IBM) is a monster (up $5). And so is DuPont (DD) (up $3.60)
  • Fertilizers are an upside highlight led by my old pal, Potash Corporation of Saskachewan  (POT) . (up $1.22)
  • New highs Radian  (RDN) and Campbell Soup  (CPB) . Oaktree Financial  (OAK) continues its run of daily gains.
  • Media better, led by Comcast  (CMCSA) and Disney  (DIS) .
  • Ag equipment. Added to Caterpillar  (CAT) short.

The Bad

  • Gold off $7.
  • Despite strength in fertilizers and other commodities -- ag commodities are lower with wheat, oats and corn getting hit.
  • Biotech - broad based and speculative -- much weaker.
  • (T)FANG underperforming after a nice run.
  • Apple (AAPL) is conspicuous in its poor relative action. I have been adding.
The Ugly
  • Bond and bond equivalents (e.g., REITs)
  • Fixed income yields +6 to +7 basis points.
 
Here are a couple of value-added contributions on our site today:
 
1. Some of El Capitan's " favorite things."
2. Tom Graf doesn't like TIPS
3. Roger Arnold on our inter-connected world.
4. Market sense from Rev Shark
5. Tim Melvin looks for some possible takeovers.
 
Positions --
Long: GLD, DD small, RDN, CPB large, SDS, OAK
Short: AAPL, SPY, QQQ, IWM small, CAT small, DIS small, IYR small
Position: See above.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL and CMCSA.

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