Out Fox The $treet

After a very cool summer in the markets, emerging market equities appear ready to emerge from the depths of massive losses for a warm winter. Inflation fears pushed investors away from the fast growing sector in droves in 2011, but now that inflation has begun easing now might be the time to return to the sector. Almost all of the emerging markets are down for the year, especially the leading BRIC markets. These inflation fears were somewhat misplaced since they were based on year over year comparisons of very volatile commodities. For example, copper prices soared to $4.6/lb in February which was a lot higher than in 2010, but only slightly higher than the peak back in 2008. Is that really inflation especially rampant inflation? Read the full article at Seeking Alpha. Disclosure: Long IBN. Please review the disclaimer page for more details. 

Looks like Copper is going to break above the 52 week high of $3.6 and likely head back to the $4 range last seen before the financial crisis. Stone Fox has been pushing copper and such stocks as FCX, LIWA, and SLT. The interesting point about copper is that China now controls nearly 40% of demand and the US is around 20%. Assuming demand in the US rebounds it'll be the first time that the 2 biggest users are strong at the same time possibly putting a squeeze on the supply. See previous articles on the issues with supply. Below is a video last night from Mad Money with Tom Collins of TangleTrade Advisors discussing the bullish technicals of copper. Very much backed up by the trade today. Disclosure: Long FCX, LIWA, SLT

Joy Global (JOYG) has one of the more detailed earnings reports especially regarding end user demand for commodities like copper and coal that we favor as being in short supply because of the booming demand in China and now apparently India. The coal import demand from these 2 countries could be just staggering in the next few years. While copper could be in short supply in 2011 has industrialized countries return to stronger demand at the same time that China uses more and more. Everything points to higher commodity prices then the peak prices in 2008. See below for the outlook from JOYG. Market Outlook Demand for mined commodities continues to be dominated by strong imports from the emerging markets, and from China and India in particular, with improving but still weak fundamentals from the industrialized countries. For the past year, China has been the major source of increased demand for commodities as it deployed a more effective stimulus program and ...

Freeport-McMoRan (FCX) is a big miner of copper and gold and a favorite of Stone Fox Capital. They are possibly one of the best run mining companies in the world. With China being the largest user of copper, it stands to reason that copper will benefit from their rapidly expanding economy. Not to mention that FCX has a large gold operation and $1,000+ gold prices is a big help. Today FCX reported earnings that easily topped analyst estimates and even soared 77% above last years results. Even more impressive is that they achieved the earnings gain with lower revenue. Its also amazing how the CEO talked so much about the weakness in the marketplace and yet they made huge profits. Imagine what it'll be like when the US economy is good enough to start building houses. Some snippets from an AP report : Freeport-McMoRan cut production and delivery costs by 40 percent over the past three months, generating gains that more than offset a quarterly decline in revenue. Sales fell 10 percent t...

After the market dipped from its highs in the first 30 minutes today, Stone Fox added Terra Industries (TRA) and Sterlite Industries India (SLT). The very positive jobs report likely sets the market up for an eventual run to the 1,200 -1,300 which is where the market was before it fell off the cliff with the Lehman Brothers blowup. TRA is a nitrogen fertilizer company trading at $30 with a .465 share offer from CF. The deal was just recently upped and values TRA at over $38. The market doesn't believe the deal will be completed, but I'll post later why the BOD of TRA almost has to accept the deal. Even if not accepted, Stone Fox wanted more investments in this industry. SLT is a copper and power generation play in India. With the big push by India to upgrade infrastructure and increase power generation, this company is in the sweet spot. They also recently raised $1.5B for investments.

Copper has surged the last few days and this signals the world economy is back to growing. Its surged from $2.46 to close around $2.74 today. Copper has long been designated as the Doctor of the commodity world as its products are used so much in the construction space for basics such has housing and autos. Copper also is so dramatically controlled by China and the emerging markets since they have a larger need for the basics such as housing. While oil is still controlled by the US and the developed world because its use is based on the amount of commerce and vehicles owned as opposes to sold. Freeport-McMoran (FCX) and Sterlite Industires (SLT) are two of the best copper plays right now. FCX is the best all around play and SLT is a great domestic play in India.