Bux Weekend Report February 1 2009

Hello everyone, I hope you’re all excited the Steeler’s won. This past week the market averages settled lower than the previous week. We had poor earnings, negative economic data, and a stall on the idea of the government buying up banks toxic assets.

Last Friday the numbers for GDP came out. For the past quarter it was thought by many to have decreased between 3% and 8%, though it turned out that there was only a 3.8% decrease. As a result, oil traded slightly higher on Friday.

With earnings, on Tuesday January 27th Nucor (NUE) posted earnings of $0.34 per share while analysts expected earnings of $0.13. Even in this tough environment Nucor was able to remain strong and beat expectations while their competitor, AK Steel, swung to a 4th quarter loss. Nucor’s business is based off of recycling scrap steel. During the conference call last week CEO Dan DiMicco was talking about how scrap prices had fallen sharply; He views this positively as a result of competitors creating steel from iron-ore, pricey one would think. Nucor seems strong going forward.

Peabody Energy reported on Tuesday as well. The company reported earnings per share of $1.10 while analysts expected earnings of only $.074. One reason the company was able to report such strong earnings was because they have long-term contracts with buyers, therefore short-term fluctuations in coal prices don’t have an enormous impact. Since steel demand has been slowing, Metallurgical coal prices (coal used to make steel) have fallen dramatically since July. This coal is where a lot of money is made because margins can be high, although Peabody makes most of its money off of coal used in power plants. Next quarter’s earnings could possibly be slightly softer due to a decrease in Metallurgical coal shipments.

This upcoming week some of the companies reporting earnings are Aflac Inc. (AFL), Mattel (MAT), Dow Chemical (DOW), and Burger King (BKC), just to name a few.

Upcoming government data will be ranging from Construction Spending on Monday to Jobless Claims on Thursday; another busy week is upon us.
That’s all for today folks. Have an enjoyable week.