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Five Things You Need to Know: Minutes to Come, Minutes to Go; Coming to a Front Page Near You: Uranium; Uranium; Gosh, They're So Moody's; Our Deepest Fear Realized!


What you need to know (and what it means)!


Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Minutes to Come, Minutes to Go

Should be a relatively quiet day today until Fed minutes from the March 20-21 meeting are released at 2 p.m. EST.

  • The last FOMC minutes release, February 21, was a rather wild and woolly day and a prelude to the February 22 high.
  • The keys to the report today will be either a hardened view of the Fed's supposed shift to a more "neutral bias," or a softened view suggesting, as we believe, there has been no shift to a neutral bias, only a misinterpretation of the Fed's recent statement.
  • Adding to the pie today will be a rather unusual appearance on the same day as the minutes are released by Federal Reserve Chairman Ben Bernanke.
  • Guess he wants to make double sure the Fed's minutes aren't "misinterpreted."
  • While you're waiting for the FOMC minutes, why not take a look at the Minyanville (MVTV) debut of Hoofy & Boo's News & Views, the world's first animated financial news show.
  • The feature was created and written by Kevin Depew and Justin Rohrlich and we plan to roll out a new episode every Tuesday and Thursday starting next week:

    Click to Play

2. Coming to a Front Page Near You: Uranium

About to hit the front pages of your local newspapers? Uranium. Not the Iran-enriched uranium. But record high natural uranium prices.

  • Uranium is now trading at more than $113 a pound, the highest price since the 1970s.
  • Prices are up 57% this year alone.
  • The jump this week was the biggest percentage gain since the uranium industry began reporting prices in 1968, according to The Telegraph (UK).
  • Why?
  • A number of reasons:
    1) While everyone is focused on ethanol and biofuels, there is a resurgent demand for nuclear energy. According to the International Atomic Energy Agency, 168 new nuclear reactors will be built over the next 15 years. China alone says it intends to build 40 new reactors. And India plans to add eight new reactors to the 15 already in use.
    2) Recent supply constraints are making the news. Cameco (CCJ), the world's top uranium producer, recently said a flood at one of its largest mines would delay production two years. Energy Resources of Australia, responsible for producing about 10% of the world's uranium, reported last week that one of its mines would see sharp reduced production due to heavy rains.
    3) The combination of many new nuclear reactors scheduled to come online over the next decade, current supply constraints and intensifying competition for uranium is also pushing up prices. Japan, already one of the world's biggest generators of nuclear power, is seeking uranium supplies from Russia and Kazakhstan.

3. Uranium

So, is this uranium business a legitimate investment vehicle, or the next bowling alley stock?

  • First, what is uranium? What does it look like? Well, see for yourself:
  • Uh... no.
  • We meant, what does it look like a little earlier in production:
  • That's better.
  • It's a heavy, silvery dense metal that occurs in very low concentrations (we're talking parts per million here) in rocks, soil and even seawater.
  • In fact, if prices continue to rise, it will be commercially viable to actually try and recover uranium from oceans.
  • What is uranium used for?
  • Ok, there's that.
  • But it is also used in nuclear power production, as a counterweight for aircraft controls and even in the keels of yachts.
  • Uranium prices have already increased 10-fold over the past five years.
  • Currently only about 16% of the world's electricity is generated from uranium in nuclear reactors operating in 31 countries.
  • In the U.S. about 20% of our electricity is supplied by nuclear reactors.
  • About 25% of the UK's electricity is generated from uranium.
  • Belgium, Bulgaria, Finland, France, Germany, Hungary, Japan, South Korea, Lithuania, Slovakia, Slovenia, Sweden, Switzerland and Ukraine all get 30% or more of their electricity from nuclear reactors, according to the Uranium Information Centre in Australia.
  • Alright, back to the real question: Can we invest in this trend toward uranium usage or not?
  • First, here's a link to the International Atomic Energy Agency "Analysis of Uranium Supply to 2050" report. It's a good starting point.
  • Second, the fact that few on Wall Street are following junior uranium stocks suggests the cat isn't fully out of the bag.
  • However, on the other side of the coin, because the market is so small it makes it difficult to deploy significant amounts of capital into this market.
  • Currently the best sources for uranium news and related company news is out there in the blogosphere.
  • A handful of uranium-related blogs we've been following are listed below:

4. Gosh, They're So Moody's

Moody's Investors Service cut the credit ratings of 44 banks after protests from firms including Merrill Lynch and JP Morgan over a new system for rating financial institutions, according to Bloomberg.

  • The downgrades were announced late yesterday afternoon and come just six weeks after Moody's upgraded 150 banks.
  • Eighty-five percent of investors in a Merrill survey last month said Moody's had lost credibility because of the approach.
  • A number of credit analysts said the clustering of banks in the triple-A and very high double-A categories made Moody's ratings less useful since it became more difficult to distinguish between banks' relative credit quality.
  • Why the sudden about-face? One word: Iceland.
  • The new ratings system was ridiculed by many when Iceland's three largest banks were given the same rating as the U.S. Treasury and Exxon Mobil, according to Bloomberg.

    5. Our Deepest Fear Realized!

In a stunning LA Times/Bloomberg poll conducted recently, the results show more Americans fear an economic recession than snakes.

  • The LA Times/Bloomberg poll surveyed 1,373 adults and found that 60% of those surveyed fear a recession this year.
  • Incredibly, that is far more than the 51% of Americans who say they fear snakes, according to a recent Gallup poll.
  • This raises an obvious question: Which should Americans fear more, an economic recession, or snakes?
  • For the answer we need look no further than... statistics!
  • By using statistics we can quickly ascertain which is the more rational fear: economic recession or snakes.
  • Let's look at the numbers.
  • Each year there are 7,000 venomous snakebites in the U.S.!
  • That's certainly a lot of snakebites.
  • Meanwhile, according to the National Bureau of Economic Analysis - the group of senior economists who officially measure recessions, there have been just 10 recessions since the end of World War II. Just 10!
  • Let's do the math:
    7,000 (snakebites) * 62 (the number of years since World War II) = 434,000 snakebites
  • 434,000 snakebites divided by 10 (number of U.S. recessions) = 43,400
  • Put in perspective, that means that the average American is 43,400 times more likely to be bitten by a poisonous snake than to suffer an economic recession!
  • It's the economy, stupid? Sorry, it's the snakebites, stupid!

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