Stockerati

GOOD NEWS FOR ALCOA AHEAD OF RESULTS
Aluminum prices shot above the March records amid indications of a cut-back in some supply out of China, sending shares of some basic materials names sharply higher Monday. Alcoa (AA) added 4% in early trading, as investors handicapped what impact those surging prices will have on the aluminum company’s bottom line. However, analysts said they remain skeptical that results will be simply an iteration of pricing in the commodities market. Instead, rising input costs, and the bigger investment that companies need to make to pull product out of the ground, may prove to be the defining characteristic of 2008 results. RBC cut its profit forecast for Alcoa below what the Street has been handicapping, taking its number to 59 cents a share from its prior outlook of 80 cents. Consensus has been 68 cents a share for the second quarter. It’s rare to see analysts getting so aggressive about slicing forecasts on the cusp of results. Alcoa would typically start the earnings parade on Monday, but won’t report results until after the close Tuesday.

MERCK GROWTH STALLS, ANALYST SAYS
Merck (MRK) might look like the pride of the pharmaceuticals sector, with the healthiest pipeline and the title as best-managed. Given the prospects in the big-pharma group, however, that’s as coveted a title as the proverbial ”dog with fewest fleas.” And Merck might have some difficulty reigniting its growth prospects until late this year, UBS said. The firm cut its rating on the drug maker to neutral. Shares have fallen 4% in Monday’s trading. The immediate overhangs include some hesitation about second-quarter sales of Gardasil, as well as some supply issues with other vaccine products. UBS said it won’t get enthused about the stock’s prospects until it sees some long-term growth start to emerge - something that might not develop until December of this year.

Arcelor Mittal announced today is in talks with Australia’s Macarthur Coal after buying a 15% stake in the company. Amid soaring coal prices, Arcelor paid about A$630 million ($604 million) for the 14.9% stake. Technical indicators for the stock are neutral

Earlier today, Fresenius SE (FRE3:GY) announced that it was buying APP Pharmaceuticals (APPX) for $4.6 billion, or around $23 a share. The deal represented a substantial premium — just shy of 30% — over where APP’s shares closed on Thursday, before the markets closed for the July 4 holiday.

Oil production in the US by most major producers has been flat for the past 4 years at 1.2 billion barrels a day, according to a benchmark study from Ernst & Young. However, gas production rose 7% last year, boosting ending reserves a similar percentage to 138.6 trillion cubic feet. The replacement rate for gas rose to 190% compared with 100% for oil.

LATE SUMMER IS supposed to be the best time to buy a new car, but savvy shoppers may actually find the best deals well before Labor Day. Incentives typically peak in July, according to Jesse Toprak, executive director of industry analysis at Edmunds.com. And with new car sales at their lowest level in over a decade, dealers are getting desperate to move the metal before the 2009 models hit showrooms (FWIW, Barrier Motors in Bellevue, WA recently sold a 750K sparingly used McLaren for about 369K, I’m told).

Research in Motion (RIMM), the maker of the popular Blackberry smartphone ran into some headwinds last month when it missed earnings estimated by a penny. That was enough to send the stock down 10% from a near high of $145. The market pull back further pushed the stock down all the way to $115 last week. RIMM might have missed earnings by a penny, but its earnings were far from shabby at 115% over last year. The company stated higher R&D costs and operating expenses both of which would help their business in the long run.Many people compare RIMM to Nokia (NOK) - that RIMM is too expensive relative to the market share they have in wireless handsets. However, Nokia’s handsets tend to be cheaper, with lower margins, and Nokia does not have or charge their users for a proprietary network that delivers email instantaneously.The Bold and Thunder are both new cutting edge phones that promise to take market share from the likes of Nokia, Motorola and Samsung. Both are slated for release sometime in Q3 of this year.RIMM also seems to be growing overseas, specifically, China, where it recently partnered with the world largest mobile phone provider China Mobile (CHL). I believe this pull back is an opportunity to buy. The stock has shown resilience near its 200 day moving average in the past and is currently right above it. I recommend buying RIMM at current levels.

Denari Trader writes” We had a failed break out by the Euro last week. The Aussie Dollar looks to want to try a break out. The British Pound maybe putting in a bottom. The Loonie is too nuts to play right now. The Dollar looks to gain against the Yen and the Swiss Franc is funny channel now.”