United States Steel (X)

Not a big bull on commodities in general. China has a significant amount of excess capacity in steel. Steel is an industry that is facing some difficulties. The only positive for this company is the price of iron ore, which has been very, very weak.

He would avoid steel stocks, and the steel sector in general. For the most part, companies are losing money. China has been the huge user of steel, and Chinese growth is decelerating. So is growth in India, Brazil, etc. There will be some bankruptcies in the sector over time.

A little nervous about this. The steel industry transformed itself, and basically crushed a lot of the unionized labour force, etc. in an effort to turn the industry around. The US labour market is starting to tighten, and when the labour market tightens, workers begin do have some bargaining ability. Thinks this might be a little vulnerable on contract negotiations. Also, high quality steel is coming from other places such as Japan and India.

Has zero exposure to the materials space, simply because there is overcapacity/over supply in this space. Technically it is trading at lower lows and lower highs, and well below the 50 day, 100 day and 200 day moving averages.

The XL pipeline will never be approved by Obama. Model $32.76, however they just had a negative transit. It will have more declines in the future. This is a candidate for write offs.

The steel industry is a tough business. Has gone through a great deal of consolidation, and some people are going to make the argument it is going to be like the airline business where you got down to a certain number of reasonable and responsible players. What he doesn’t like about this industry is that we are going to be an information-based society. On the big capital spend that we are all looking for, 60% of it is going to be on technology. He would tilt towards technology rather than this sector.

A volatile name given the cyclical nature of the space. Fine company and the balance sheet is fine as long as you get industrial production which globally continues to expand. The one tailwind that he likes is that China continues to restructure the steel sector as well as other base metals sectors and this company will benefit from closing down of capacity in that country. As long as the belief that industrial production and growth will rebound globally, not a bad name to own.

Building up from its base pattern from mid-2012, with a little pickup in the last while. The good news for metals and mining stocks, the season is from Nov 16 until beginning of May. When they start picking up at this time, it is very positive for the whole market overall. When you see this, you want to take a look at the RSI of S&P 500 which is looking good. This is more of a trade.

Has pulled back from its highs and has had a fairly decent little pull back recently. This is a name you could get involved with if you want to play the counter cyclical play of looking for a resumption of global economic activity. It is probably still too early for this.

This has very strong seasonality on the downside, usually around this time of year and getting into this summer. At this time of year, steel stocks have a tendency to move significantly lower. We are just entering the period of seasonal weakness now.

(Market Call Minute.) Would avoid this. Doesn’t like the steels right now. Very cyclical business. Dependent upon China’s growth which in his view is still somewhat uncertain.

Even though he is bullish on the overall economy and the auto sector, steel pricing is still getting squeezed, especially for the integrated producers. Still have some of the older problems such as pension issues and excess supply.

This one is down a lot. He has a model price of $20.56 which is a 5% upside. He would like to see the stock lower. If it broke down to around the $17 level, it would be very fascinating to him. Better value elsewhere.

Forming a base. If it can break the $24 ceiling, could be bullish but for the time being he doesn’t know how much of an upside it has. Forming consolidating rectangle.

Steel stocks have a very strong seasonality. Historically we are in the weakest period right now. They normally bottom, on average, on Oct 9 and then take off and go up very strongly. Momentum indicators are negative, trend is negative, relative strength is negative so you don’t want to go here yet however seasonality does turn very positive about 2 weeks from now. Watch for this to bottom.