BHP Billiton (BHP), which is featured in both our Growth and Income Portfolios, failed to consummate a marriage with Rio Tinto (RTP) last year. But a subsequently proposed joint venture between the pair, the second- and third-largest iron ore producers in the world, could be nearing reality. The partnership between the two companies, if the deal is finalized, would merge their iron ore operations in Australia and create a synergy that could save around $10 billion a year on capital and production costs. The two companies are expected to ship more than 300 million tons combined of iron ore worldwide this year.

The joint venture is not written in stone yet. The companies are looking to finalize the deal by a December 5 deadline stated by Rio, while BHP’s CEO Marius Kloppers is less concerned about the date and is looking for completion before year-end. Regardless, the joint venture makes sense for both companies. Moreover, BHP could potentially revisit plans for a takeover if negotiations fall apart now that Rio Tinto has reduced its debt and commodity prices are stronger—the main reasons BHP had abandoned initial takeover plans—so a merge between the two companies in some form appears to be in the works. Read more...

For the past few months, our bullish expectations for stocks have been paying off. And sure enough, the market rallied last week, despite the devastation caused by Katrina. So much for those who have been talking about a secular bear market.

Last week the unweighted averages, which provide the broadest measure of the market, including all the small cap stocks, hit new highs. And we don’t mean just “four-year highs” or “recovery” highs, but all-time highs. So the long-term uptrend in smaller cap stocks remains in tact. Also closing at all-time highs last week were the utility stocks.

With new highs in these two indices and continued low specialist shorting, the bears really have no case. The worst-case scenario is that the market may enter a trading range or produce modest gains. But there’s no excuse for getting out of stocks right now, barring the usual caveats of a huge oil spike or other catastrophe. We’re sticking with our long-term positions.Read more...