Trader Talk

Nice Economic Data Surprise -- Esp. for Potash

Better-than-expected economic numbers this morning have moved futures up about 8 points; the dollar rallied and bonds dropped.

Talk about food inflation -- Potash has been the beneficiary here.

It beat by a wide margin on top and bottom line, and guides full year WAY above estimates ($9.50-$10.50 vs. prior guidance of $6.25-$7.25 and analyst estimates of $8.62).

In the middle of its earnings report, Potash took the unusual step of including a long essay on global food production. It concluded: "The most practical solution to issues of food supply and food inflation is to increase crop production."

How? Uh, guess: "The world's farmers can do this, and fertilizers will be integral to helping them achieve higher yields." Up 4 percent pre-open.

It went on to note that people in developing countries where populations are increasing "require more food and can afford a more nutritious diet that includes protein from meat sources. This requires an ever-increasing number of animals for food production and millions of additional tonnes of feed grains."

Higher grain prices are "driven by the substantial growth in demand for food."

Same story from Bunge, one of the largest agribusiness companies. It's one of the biggest oilseed processors; they also are big in fertilizers and food processing. Its earnings were nearly TWICE ESTIMATES (!) "Soybean farmers accelerated purchases because of favorable agricultural commodity prices and concerns about increasing crop input costs." It is increasing full year guidance. Up 8 percent pre open.

Black and Decker beat, but guidance for the second quarter is below estimates and it's reducing guidance for the full year.

Stanley Works is also cautious. Its earnings are a bit below expectations.  "U.S. market conditions going into 2Q continue to be indicative of a recessionary environment." It's maintaining guidance, but it also says "market conditions will need to stabilize in 2H '08."

3M beat, and reiterated guidance for the full year that is in line with expectations.

Triarc (Arby's restaurants) and Wendy's International are merging. Wendy's shareholders will get  4.25 shares of Triarc, that's about $26.77. Wendy's closed yesterday at $25.32, so it's a pretty modest premium. This will create the third-largest fast-food restaurant company, with 10,000 restaurants.

Questions?  Comments?