Teck Cominco Third Quarter:

Teck Cominco (TCK.B-T) released third quarter earnings this afternoon which showed a substantial improvement from the year before.

The company reports earnings of $504 million or $2.4 per share verses 4405 million or $2.00 for the third quarter of 2005, for the first nine months earnings have nearly doubled from $834 million to $1.6 billion. Cash flow for the quarter came in at $629 million a 32% improvement over the $476 million in the same quarter of 2005.

Teck reported average copper prices of $3.48 a pound more than double the $1.70 a year ago. The improvement in zinc prices is even more dramatic moving from 59 cents in 2005 to $1.53 in the most current quarter. The realized price for gold was $622 verses $439 per ounce last year.

Only the prices for molybdenum and coal did not move relative to the previous year and both of these commodities had made dramatic increases in 2005 and it should not be a big surprise that they have stabilized in 2006.

The recent quarter continues a string of improvements going back for nearly 2 years as commodity prices have surged with increased global demand. The global base metal markets have been under pressure recently in the belief that the US economy is slowing.

The flaw in this scenario is that the US economy is not the main driver in global commodity demand and will have a relatively minor impact on prices. The inventory level for zinc as an example is down to 110,000 tonnes enough to meet about 4 days of demand, the inventory has been dropping steadily all year long even as the US economy shows increasing signs of a slow down.

Teck Cominco being one of the largest zinc producers in the world is very well positioned to benefit from the ongoing strong global demand for the metal.

For more information go to www.campbellreport.com

Uranium the new gold!!:

Cameco Corporation (CCO-T) has announced another delay at the Cigar Lake mine, on Sunday there was a rockfall that has caused the mine to flood. Cameco has not been able to contain the flooding due to a malfunctioning bulkhead door which did not seal allowing water in to the mine.

It is expected that the flooding will set back operation of the mine by at least a year. The company has not had time to fully assess the impact of the flooding but has indicated that it will add materially to the cost of developing the mine.

This bad news for Cameco is good news for other producers such as Denison Mines (DEN-T). The reduction of supply that will develop due to delays at Cigar Lake will drive the price of uranium even higher.

Uranium is in a classic situation where a shortage of supply and an increase in demand has been pushing the commodity price relentlessly higher over the past two years.

The shortage is expected to increase to 32 million pounds from 25 million pounds by 2008 due to the delays at Cigar Lake mine. These shortages have been met by recycling of surplus military uranium that supply is almost exhausted and will not be available for much longer.

The pressure is now on for current producers to add production to ensure that Nuclear power plants currently running will not be forced to shut down due to a lack of fuel.

The supply shortage is not going to be easily fixed and uranium prices will remain elevated for an extended period of time as a result.

For more information go to www.campbellreport.com

CN Rail earnings on Track

CN Rail (CNR-T) has released third quarter earnings that are well above analyst expectations.

The company reported earnings of $497 million or 94 cents per share up substantially from the $411 million or 74 cents per share reported a year earlier. The main factor in the improvement can be attributed to a successful program of cost cutting. The company reported an improvement of 6% in the operating ratio bringing the ratio down to a record low of 57.4%. The operating efficiencies have been achieved with the introduction of new technology that has substantially reduced the amount of waiting time at switching yards and rail sidings.

CNR is forecasting a continuation of strong revenue growth and forecasts earnings for the full year 2006 of $3.40 per share with an expected 10% increase for 2007.

The rail industry is seeing a sustained increase in demand due in large part to the shipment of metals and other basic material to Asia. This trend is likely to be in place for some time and CNR is well positioned for growth with operations in both Canada and the US continuing to operate at peek efficiency.

For more information go to www.campbellreport.com

Ivanhoe & Rio Tinto partner in Mongolian property:

Ivanhoe Mines Ltd. (IVN-T) has just announced a joint venture deal with London based Rio Tinto PLC to develop their Mongolian property. The Oyn Tolgoi gold and copper project has hit a few snags in the development process, the Mongolian government has past legislation allowing them to take a controlling interest in any development in the country.

Rio Tinto has pledged up to $1.7 billion over a number of years, the first investment totals $335 million with an additional $445 million when an investment agreement is reached with the Mongolian government. When the deal is finalized Rio Tinto will hold a 33.4% ownership position in Ivanhoe Mines.

The deal looks very good for Ivanhoe due to the infusion of cash and the access to expertise offered by the partnership. Rio Tinto is the second largest mining company in the world and will enhance the potential for Ivanhoe to complete a deal with the government of Mongolia.

The risk for both these companies is that the government is not willing to complete a deal on favourable terms and the project gets delayed to the point that nobody makes any money. I believe that risk is substantial and I would follow the Rio Tinto strategy and wait until a deal is announced before jumping in.

For more information go to www.campbellreport.com

Bank of Canada sees lower growth:

The Bank of Canada has held interest rates at 4.25% again this month, sighting slower US economic as the main cause for concern.

The Bank has reduced the forecast for Canadian GDP (Gross Domestic Product) growth to 2.5% down from 2.9% previously. The Bank is also expecting the core inflation rate to increase over the short term to over 2%, the target rate, and for the core inflation rate to fall back below 2% by mid 2007.

The Bank did not indicate an imminent move to lower interest rates but has reduced their forecast of economic potential in an effort to balance their view of current capacity and the potential capacity later this year and into 2007.

The main concern sighted by the bank over the past few months has been that the Canadian economy was operating at maximum capacity which could lead to an increase in inflation pressure if not contained. That concern appears to be diminishing as the economy in Ontario and Quebec starts to show signs of weakness due to slower demand from the US.

Investors should be looking at long bonds as an opportunity to capture income and capital gains as interest rates fall due to slower economic growth.

For more information go to www.campbellreport.com

Technology sector under pressure:

The technology sector has received some disappointing news from two major companies Intel and Motorola both reporting dramatically lower quarterly earnings verses a year ago.

Intel reported a 35% drop in earnings coming in at $1.3 billion or 22 cents per share verses $2.0 billion or 34 cents per share in the third quarter of 2005. The analyst’s expectation have been lowered continuously all year and were below actual performance, so Intel beats the Street, but is this really good news? I don’t think so. The price war in the chip sector has been taking a toll and it appears that the pressure may be subsiding but only time will tell. If the US economy continues to show signs of slowing you can bet that prices will continue to fall in an effort to win market share. This has all the indications of a race to the bottom. I would caution investors not to get caught up in this race as nobody wins.

The situation at Motorola was even more disappointing as revenue came in 17% higher and earnings were down 45%. The third quarter results showed earnings of $968 million or 39 cents per share compared to 41.75 billion or 69 cents per share in 2005. The previous year earnings include a gain on the Nextel investment of 39 cents per share. The cell phone market is seeing some of the same pressure as the chip market as over capacity forces prices down and shrinks margins.

For more information go to www.campbellreport.com

Markets moving to new highs so what!

The Dow Jones Industrial Average has finally moved up past the previous highs achieved in January 2000. The buzz in the media has been deafening the hype about the DOW has been building as the index approaches the “big round figure” of 12,000. These round numbers tend to attract like a magnet as soon as they are with in sticking distance so do not be surprised when this happens next week.

The reality is who cares it has taken the DOW over 6.5 years to get back to the levels last seen in 2000 and the NASDAQ is nowhere near the previous highs. It will likely be a number of years yet before those extreme levels are achieved again. The technology sector is going to have to come clean regarding the abuse and manipulation of the stock option granting process and how that abuse has been at the expense of shareholder value over the long term.

The enrichment of management has been at the direct expense of shareholders and investors should be taking theses companies to task for their greed. The massive amount of share buy backs that have taken place over the past few years just to reduce the impact of the massive option granting scheme has cost shareholders dearly as they did not receive the dividends or capital appreciation that they should have.

Then to ad insult to injury we find out that not only did the management of these companies issue themselves excessive amounts of options but if the prices went against them they just backdated and reset the strike price so that they could continue to enrich themselves. Wouldn’t it be nice to be able to buy stock by backdating you purchase price too.

These companies have treated their shareholders with contempt and shareholders should now do likewise.

For more information go to www.campbellreport.com

Hedge Funds Suffering:

The hedge fund industry appears to be showing some cracks with a few more revelations of mega losses coming to light. The industry has been growing at a very rapid pace and not all these guys can be geniuses. The original idea was to in fact be hedged but that seems to have gone by the wayside as all of theses new managers fight for returns they have in many cases gone to extreme positions.

Many hedge funds are now pure speculations on the direction and are making huge bets in a very narrow segment of the market. Amaranth Capital Partners is a good example of what can go wrong, the fund lost $6 billion, or 2/3rds of the entire fund, on a bet that natural gas would move higher. Amaranth has now had to close down as it can on longer operate.

These funds tend to have sophisticated investors many of which are institutional who are supposed to be aware of the risks, but I don’t think any of them would have expected a fund to have concentrated the portfolio in only one or two positions. This is not money management more like gambling. How do these guys justify their fees if they don not have a legitimate strategy and a discipline to follow it. Many of these hedge funds charge huge fees as much as 20% of the profits on the notion that they have a sophisticated strategy that justifies the fee.

Many managers are getting in to the hedge fund business because the potential revenue is so large which is the wrong reason to open a fund business. Do not be surprised to see a number of other spectacular blowups in this industry there have already been over 1000 hedge funds of 7000 or so that have shut down in the past two years. Unique genius is not that common.

For more information go to www.campbellreport.com