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MV Weather Report: Agriculture Stocks Enter Nuclear Winter?


Rain or shine, we review the day's biggest stock stories.

After 2 slow days, today's news flow moved at warp speed. This morning, FedEx's (FDX) earnings report was quickly followed by news that Europe's largest potash producer would be cutting its output due to weak demand.

Did I mention that the president also laid out his plans for regulating the financial market?

The President's plan will be on the front page of every paper, but it really had no effect on the market. Under the plan, the Federal Reserve will be given more power, and a new regulator to oversee financial firms will be appointed.

The market was unimpressed with the new regulations -- but it did react to the news out of Fedex. The company said that Wall Street's projected EPS estimates for the current quarter were too high, placing them at $0.30 to $0.45 per share; Wall Street had it at $0.70. Last quarter, the theme was that EPS estimates were too low; this quarter, I think opposite will be true. This is something I would keep an eye on. Fedex closed down 1.47% on the day.

I think the biggest story of the day was that European fertilizer company K+S Group said that profits will decline more than expected. The company is cutting potash output and reduced its sales volume expectations. This news killed the high-flying agriculture stocks, including Potash (POT), Mosaic (MOS), Agruim (AGU), and Monstanto (MON).

Today on the Buzz and Banter, Professor Jeff Cooper weighed in with his thoughts on POT:

"Looking at a daily chart shows the slice down in Potash (POT) yesterday which appears relatively greater than the broad market decline.

"Do you think the news leaked out first? That doesn't happen does it? In front of options expiration where the stock goes from lollygagging at 120 to par and maybe even the 200 dma at 90 in a few days?

"Maybe it's just a whiff of deflation. Maybe it's a stench of something else. Do the regulators ever step away from the bong long enough to pursue the culprit when the cheese is cut?"

You've got to love Cooper's sense of humor. I decided to focus on Potash because I believe there's a trade in the name -- it was a rally leader, and it's now facing a crisis.

Research in Motion (RIMM) -- another rally leader -- will report earnings tomorrow night after the bell. This is another name I would pay close attention to, since the company had an even bigger run then Potash. Current estimates call for EPS of $0.94 on revenues of $3.43 billion.
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