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Two Ways To Play: Steel Prices Hiked for Toyota


Strengthen your portfolio in good times and bad.

Nippon Steel Raises Prices

According to Bloomberg, Nippon Steel will raise steel prices for Toyota (TM) and Mitsubishi Heavy. The world's second-largest steel maker may raise its prices by between $240 to $290 per metric ton to offset increasing costs. For the first three months of this year, average product prices were around $770 according to the company's earning report. Last month Nippon said higher raw material costs would cut into its annual profit by over 40%. Toyota, which is close to a deal, has already said it plans to raise its prices in North America by 2.1% to offset material costs.

From the Bull Pen: The bull case is that these steel makers have no problem passing along its costs. Bulls can look to ArcelorMittal (MT) and Cleveland-Cliffs (CLF) on a pullback towards $90.

From the Bear Cave: Bears believe the picture is getting increasingly difficult for Toyota as it faces a weakened consumer, rising yen, and higher costs. One may consider entry near the $104-106 range on downside attempts.

The New "Normal" Economy

According to Bloomberg, the definition of "normal" for the U.S. economy may look a lot different in a post-subprime economy. Companies will likely continue to struggle to raise cash as investors become more risk averse. Workers may be limited to find new opportunities as well because their home values are less than their mortgage balances. The new state of the economy may be one of weaker productivity gains, slower economic growth, higher unemployment, and a weaker financial sector. Mr. Practical has mentioned this story before. Read his most recent column, Fed Chooses Wall Street Over Main Street.

From the Bull Pen: Bulls see the dollar weakening against the yen for the long term and may look to play the upside in the Japanese Yen ETF (FXY) which has found support near $95.

From the Bear Cave: Bears can play the downside using the S&P depositary receipts (SPY). Bears may choose to fade this stock into resistance levels $142.88 and $145.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng +0.48%, Nikkei +0.35%, Sensex +0.47%, Taiwan +1.06% and Shanghai -0.54%.

A quick look towards Europe finds the CAC +0.40%, DAX +0.48%, FTSE +1.08%,

As of 8:45 AM EST, S&P futures are lower -0.10 points to 1425, and Nasdaq futures are higher +2.25 points to 2037.

A Look At Commodities

Commodities are higher. Crude oil is up +1.07 to 127.36. Gold is up +9.30 to 909.20. Silver is higher +0.276 to 17.180, and copper is lower -3.45 to 381.20.

The dollar index is lower -0.046 to 72.798.

On the Radar


10:00 Leading Indicators: -0.1% cons.

Click here for the full trading radar.

Happy Monday! Have a great week!
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