Read more: http://247wallst.com/2011/02/23/the-ten-industries-most-damaged-by-inflation/
24/7 Wall St. has decided to investigate where inflation has the greatest potential to damage the economy. There is plenty of ground to cover. It is clear that the cost of agricultural commodities, metals, and oil have risen substantially over the last six months, but many of those increases have not yet reached the consumer. “If raw material costs have yet to translate into consumer inflation, it is partly because high unemployment in developed markets makes it hard to raise prices,” said Oliver Pursche, co-manager of the GMG Defensive Beta Fund, on Newsmax.com. It is unfortunate that joblessness has a prophylactic effect on consumer price levels.While inflation may lurk in some sectors of the economy, there are products and services that Americans use, like Google’s (NASDAQ: GOOG) search features and Citigroup’s retail banks, which are unlikely to be affected by inflation at all. The prices of these are not likely to rise because there are no major costs of goods to pass on.Inflation in the United States has not approached the level that it did in the mid 1970s and early 1980s when interest rates rose to 20%. Most economists believe that the Federal Reserve today has the foresight and tools to prevent a repeat of the price bubble of that period. That may be so, but the Fed cannot protect consumers from rising oil prices when they fill up their gas tanks or buy an airline ticket.24/7 Wall St. took into account two effects that inflation has on an industry. The first is what the higher cost of goods means to their expenses. The other is whether companies in the industry can pass these costs along to consumers – either individuals or other businesses.Rising prices are hurting many industries including retailers. Shoppers may reject higher prices and cut back spending to preserve their household budgets. Retailers will face margin compression if that happens. Earnings in the industry will be hurt, and in some cases this will be enough to cause layoffs.The challenge is not unlike the one that the air freight industry faces. FedEx (NYSE: FDX) and UPS (NYSE: UPS) have raised rates to offset higher fuel prices. Each company has been able to increase shipping rates without alienating customers. The impact of this decision will not be clear until the companies announce second quarter earnings.One advantage that many businesses have is that the effect of inflation on costs consumers must pay often lags. Large retailers probably have inventory which was made a number of months ago. Temporary price increases in cotton and wool may not affect earnings if the period of inflation does not last long. Go to the link above for the whole story.Hecla Mining reports record revenues in 2010
Read more: http://247wallst.com/2011/02/23/the-ten-industries-most-damaged-by-inflation/
24/7 Wall St. has decided to investigate where inflation has the greatest potential to damage the economy. There is plenty of ground to cover. It is clear that the cost of agricultural commodities, metals, and oil have risen substantially over the last six months, but many of those increases have not yet reached the consumer. “If raw material costs have yet to translate into consumer inflation, it is partly because high unemployment in developed markets makes it hard to raise prices,” said Oliver Pursche, co-manager of the GMG Defensive Beta Fund, on Newsmax.com. It is unfortunate that joblessness has a prophylactic effect on consumer price levels.
SPOKANE, Wash. -- The Coeur d'Alene, Idaho, company reported income of $35 million for the year. It produced 10.6 million ounces of silver and its silver reserves increased to 142 million ounces.
The company also said it had enough money to meet its financial obligations to help clean up a century of mining pollution in Idaho's Silver Valley. The company is currently negotiating with the Environmental Protection Agency for a settlement.
The company said it has set aside $262 million toward a potential settlement with the federal government, the Coeur d'Alene tribe and the state of Idaho. The parties have agreed on financial terms, but other points remain, Hecla said.
"Determining the financial terms of any settlement of this longstanding litigation is an important step forward in finally resolving this dispute," Hecla President and CEO Phil Baker said. "We hope a final settlement can be achieved by the end of the second quarter."
On Feb 18, a federal judge gave the parties an April 15 deadline to inform the court on the status of settlement negotiations. If a settlement is reached, Hecla has agreed to pay $102 million in cash and $55.5 million in cash or stock 30 days after entry of the consent decree. The company would pay an additional $25 million in cash 30 days after the first anniversary of the decree, $15 million in cash 30 days after the second anniversary, and $65.9 million by August 2014.
The historic mining district surrounding the Bunker Hill smelter was declared a Superfund site - one of the nation's most polluted areas - in 1983 after decades of mining activities left waterways and surrounding land polluted with heavy metals. Numerous mining companies have since settled with the government to help pay for costs of cleanup. The most recent was Atlantic Richfield Co., which earlier this month agreed to pay $6.8 million.
Meanwhile, Hecla Mining continues work to expand its historic Lucky Friday Mine in the Silver Valley. The company is spending $200 million to increase silver production by about 60 percent and extend the mine life beyond 2030. The expansion should be completed by 2014, the company said.
Established in 1891, Hecla is the largest silver producer in the U.S. The company has two operating mines and exploration properties in four mining districts in the U.S. and Mexico.