Five Things You Need to Know: Buffett, Dear Decider..., Miners Turn to AA, Mal de peidra, Barbaro
What you need to know (and what it means).
Five things you need to know to stay ahead of the pack on Wall Street:
1. Grab a plate and sit right down to the Warren "all-you-can-say" Buffett
At this past weekend's annual Berkshire Hathaway shareholder meeting, Chairman Warren Buffett pontificated on everything from the US dollar to copper, gold, silver and residential housing.
- About 24,000 people attended the annual general meeting of Berkshire Hathaway shareholders in Omaha, NE.
- Chairman Warren Buffett covered a variety of topics, noting, among other things:
- The U.S. dollar, fundamentally, must weaken over time.
- A housing slowdown is in effect across the country in residential markets, especially on the high end.
- Commodities, including copper and silver, are in a bubble, noting "What the wise man does in at the beginning, the fool does in the end."
- There are no "screaming bargains" in the U.S. so he continues to look overseas for investments, focusing on Europe and Japan.
- Buffett also noted he was eyeing a possible $15 billion acquisition - Minyanville speculates that it is perhaps a company for carrying out an undertaking of great advantage, but nobody to know what it is - but said there was only a small chance of that happening.
2. Dear Decider...
Iranian President Mahmoud Ahmadinejad has written a letter to President Bush in an attempt to ease tensions between Iran and the U.S. over the Iranian nuclear enrichment program.
- An Iranian spokesman said the letter included new means of resolving several international issues.
- The letter is the first publicly announced personal communication from an Iranian premier to a U.S. president since Washington-Tehran ties were broken after the 1979 Islamic revolution, according to Reuters.
- Government spokesman Gholamhossein Elham said the nuclear dispute was one of a number of topics broached in the letter.
- The letter will be made public once Bush receives it, a spokesman said.
- The letter was handed to the Swiss Embassy in Tehran.
- Switzerland has represented U.S. interests in Iran since the U.S. cut diplomatic ties with the Islamic Republic in 1980.
- Today the five permanent members of the UN Security Council, plus Germany, are preparing to discuss a draft resolution ordering Iran to suspend its atomic program, though a vote is not expected.
3. Miners, feeling giddy, turn to AA
- When BHP and Billiton merged in 2001, they formed the world's second-biggest mining company, behind Alcoa (AA).
- As recently as 2003, according to Australia's TheAge.com, rumors began that BHP may bid for Alcoa.
- At that time, however, the move would have been seen as a very large potential acquisition for the number two miner.
- Now, thanks to skyrocketing prices for base metal, coal and iron, both BHP and Rio Tinto have market values that dwarf Alcoa's.
- Aluminium has lagged behind other commodities in this cycle.
- According to TheAge, many believe that if BHP or RTP rivals such as Brazil's CVRD or Anglo-Swiss miner Xstrata were to make an offer for Alcoa or Alcan (AL), it could spark a major bidding war.
4. Mal de piedra
In Spain, they call it "mal de piedra," or "sickness of the rocks," the New York Times reported yesterday. We're talking about gold, of course. Meanwhile, on a related note, Bloomberg today reported that gold mining companies have outperformed the "rock" itself in four out of the last five years.
- Gold mining companies profits are rising faster than the metals' price as many companies abandoned hedges that locked in lower sales prices.
- Miners are also benefiting from limited global supplies and a lack of new developments.
- Of course, a hedge reduction is terrific in a bullion bull market, but it also means the companies are leveraged to the price of gold.
- Marc Faber has maintained that he prefers the metal to the shares because he believes it will outperform the miners long-term. Also, he worries that governments may seek gold miner profits through taxation or even outright seizure.
- The total market value of the world's 640 publicly traded gold mining companies is about $205.5 billion, four times as much as the spot gold market, according to Bloomberg data.
5. Barbaro, the next Triple Crown winner?
On Saturday, Barbaro won the 132nd Kentucky Derby, beating 19 rivals by six-and-a-half lengths.
- Barbaro, undefeated, is the sixth undefeated winner in Kentucky Derby history.
- Barbaro was also the first horse to win the Derby with five weeks off since Needles in 1956.
- The margin of victory was the largest for the Derby since eventual Triple Crown winner Assault won by eight lengths in 1947, and the fifth largest winning margin in the history of the race.
- The Preakness Stakes in Baltimore at Pimlico is the second leg of the Triple Crown and will be run in two weeks.
- Five Things Trivia:
Barbaro was named after which of the following? Answers here.
a. Ermolao Barbaro, a 15th-century Italian Renaissance scholar.
b. Gary Barbaro, a defensive back for the Kansas City Chiefs from 1976-82.
c. A hunting dog.
d. Giuseppe "Joe" Barbaro, an Australian businessman eventually sentenced to six years in jail last year for his role in an alleged amphetamine ring.
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