CF and SIRI

Click chart to enlarge

Above is a chart of CF. Considering the sudden drop in commodities, the fertilizer stocks are holding up pretty well. Every drop is met with buying. Now is a good time to beef up your SMN position in case we crash, but we would not sell fertilizer here. Next week the fertilizer companies report their earnings. Our general theory about earnings is that a stock's reaction to its earnings report depends more on where the stock is trading ahead of the report than on the information contained in the report itself. This explains why stocks sometimes crash after stellar earnings reports and rally on seemingly poor reports. If a stock is overbought going into earnings, it is likely to drop regardless of what they report. If a stock is oversold going into earnings, it is likely to rally regardless of what they report. The fact that the fertilizer stocks are putting in a somewhat disappointing performance ahead of their earnings means that they have room to rally when their earnings are released next Thursday.

The fertilizer trade right now is one of patience. It's a wait-n-see game. There is no clear sign to exit the trade yet, and any attempt to do so may make you miss out on a formidable post-earnings rally. That said, you better be hedged with SMN.

Ok, so now you understand our take on fertilizer, so on to something we don't understand...

Why does the SIRI merger require minority broadcasting? What do "minority channels" (whatever that is) have to do with whether or not SIRI-XM would be a monopoly? Our guess is that somewhere in the halls of the FCC is a white guy, as big a racist as Al Sharpton, making rash assumptions about what minorities listen to. To us, this is a blatant and outrageous act of racism. If he were a radio DJ, he'd be out of a job for even hinting that minorities need their own programming. Does anyone care to share a better answer?