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China Suspends All Nuclear Projects

In light of the crisis in Japan, following Germany’s move to shut down 7 nuke plants, China has decided to suspend 28 nuclear power plants projects.

The 28 projects in China represents 40% of total worldwide projects.

Note: not good for uranium stocks

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Crack Spreads Moving Higher

Following yesterday’s 6% decline, crack spreads are back on the upside this morning, up more than 1.4% to $22.69.

UPDATE: Crack spreads are now up more than 2% and refinery stocks have responded with most up more than 2%.

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Stocks Down, Bonds Up

Classic flight to quality trade underway, as money flees risk for long dated government bonds.

The dollar is strong too.

TLT is up almost 2% in early trade.

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Radioactive Contamination Not Covered by Insurance

The tab will be entirely on the Japanese government.

Via BNP Paribas analyst Rafael Villarreal

When insurers say a risk is uninsurable, it means the government will end up picking up the tab. Since the 1950s, to protect their solvency from the potential effect of having to pay full policy limits under every contract, insurers have excluded radioactive contamination from those classes where it was deemed uninsurable. The radioactive contamination of third party property is not insurable by conventional means, nor are attacks with nuclear weapons … The governments provide compensation (e.g. Chernobyl). The amounts involved have exceeded many times over the capacity of the nuclear insurance industry, which confirms that the decision to exclude it was the right one.

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Stocks Gapping Up and Down This Morning

Gapping up

ONP +36.5%, IMOS +14.0%, APT +13.4% (light volume), PANL +7.4%, VRA +6.8%, RAME +6.1% (light volume), AIR +4.7% (ticking higher), UHS +2.2%.

Uranium related names are modestly rebounding: URG +5.7%, URRE +3.8%, UEC +1.9%, DNN +1.3%, CCJ +1.3%.

Select oil/gas related names showing strength: LEI +11.5%, ROYL +6.6%, TIV +6.5%, LNG +2.1%, CHK +1.8%, WLT +1.2%.

A few coal names are also ticking higher: PCX +1.6%, BTU +1.5%, ACI +1.0%.

Other news:  RMBS +7.9% (announces it has renewed its patent license agreement with Toshiba Corporation), HIT +3.6% and SNE +0.4% (modestly rebounding), ERIC +2.6% (issues statement on situation in Japan; not expected to have material impact on 1Q11 sales), BTU +1.3% (Cramer makes positive comments on MadMoney).

Analyst comments: BBT +1.2% (upgraded to Buy from Hold at Deutsche Bank)

Gapping down

In reaction to disappointing earnings/guidance: ORCC -26.9% (also announced last night that it has terminated its evaluation of potential business combinations, downgraded to Neutral from Buy at Janney Montgomery Scott), PSUN -7.2%, CHL -2%.

Select financial related names showing weakness:  HBC -3.6%, BCS -3%, STD -2.8%, UBS -1.4%, DB -1.1%.

Other news: HQS -4.4% (to postpone fourth quarter and fiscal year 2010 earnings release date), AMLN -3.4% (Amylin Pharma and Takeda voluntarily suspend clinical activities in Obesity Trial), ENER -3.4% (ticking lower; weakness attributed to tier 1 firm downgrade), SIHI -2.3% (announces $11 mln registered direct offering at $2.30 per share ), CCL -1.6% (still checking for anything specific).

Analyst comments:  IBM -1.7% (downgraded to Market Perform from Outperform at Bernstein), RIG -1.3% (initiated with Sell at Guggenheim), AAPL -0.7% (downgraded to Market Perform from Market Outperform at JMP Securities), TEF -0.7% (downgraded to Underperform from Neutral at Exane BNP Paribas).

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Eurozone Inflation Stays Persistently High

Inflation for food and commodities rose to 2.4%.  Some analysts expect this rate of inflation to prompt ECB to move interest rates higher, while others say Japan may prevent a hike…..

Full Article

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