Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
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) .
- 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
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 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 - Get Report) 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 - Get Report) and Campbell Soup (CPB - Get Report) . Oaktree Financial (OAK - Get Report) continues its run of daily gains.
- Media better, led by Comcast (CMCSA - Get Report) and Disney (DIS - Get Report) .
- Ag equipment. Added to Caterpillar (CAT - Get Report) short.
- 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 - Get Report) is conspicuous in its poor relative action. I have been adding.
- Bond and bond equivalents (e.g., REITs)
- Fixed income yields +6 to +7 basis points.
Long: GLD, DD small, RDN, CPB large, SDS, OAK