Arcelor Mittal (MT) is the Luxembourg-based behemoth that is the world's largest steel producer, boasting nearly three times the production capacity of the next largest producer. It has led the consolidation of the world steel industry over the past few years and has leading global market shares in automotive, construction, household appliances and packaging products.

Unlike many smaller players in the steel industry, MT is largely self sufficient with its own iron ore production. The company currently fulfills 50% of its own raw material, and it plans to further its vertical integration to reach the 75% threshold by 2010. Arcelor Mittal also plans to replicate its European distribution network, which completely dominates the continent's markets, and create a supply chain network in North America that will blow its smaller peers out of the water. And while both of these strengths in MT's business model are significant, they are really only complements to its manufacturing power.

With operations in more than 60 countries and steel mills on four continents, MT has become the largest steel producer in the world by both volume and sales. Its mills -- including 64 integrated, mini-mill and integrated mini-mill steel-making facilities -- produce about 138 million tons of long and flat steel annually. The company also operates iron mines, coal mines and coke plants that support its steel making operations in locations around the world. And initiatives to expand and gain new access to iron ore sources in Liberia, Ukraine and Senegal are slated to help the company reach its goal of a 75% self-sufficiency level in the next two years.

On top of having a firm grasp on the steel industry, Arcelor Mittal has benefited over the past couple years from the growing demand for steel in emerging nation -- steel prices have risen steadily, as have the shares of small and large producers, alike. Credit Suisse analysts believe that steel prices are heading even higher, citing the fact that global inventory has remained low while demand has outpaced supply in each of the past six years. And since MT's sales growth has been following steel prices up, healthy earnings growth is projected across all of the company's international operations for 2008.

Stocks were all over the map last week, as a terrible jobs report clashed with a new effort by the Federal Reserve to provide liquidity to banks. The moves provided ammunition for both bulls and bears.

The market got off to a poor start last Friday as a result of news that companies had slashed payrolls way, way more than most economists had expected. Jobs are the absolute foundation of the economy, and make everything else happen. When payrolls are rising and wages are higher, consumers buy stuff and corporate earnings swell. When payrolls are falling and wages are stagnant or falling, consumers stop buying stuff and companies suffer. It's really that simple.

That is why the jobs report is considered the king of economic reports and is so heavily scrutinized by federal officials, economists and investors. So what do we see in this one?
Well, I looked it up and down and had a really hard time finding anything positive. It looks very similar to reports that were put out near the start of prior recessions.

The loss in February of 63,000 jobs followed the loss of 22,000 jobs in January. Those increments sound small in an economy with tens of millions of jobs, but it's the change in direction that is important. It's also important to observe that as part of today's report, December's gain was revised downward by 41,000.

Capital goods jobs were the hardest hit, which is a shame because that's part of the real meat of the economy. Construction companies shed 39,000 jobs and manufacturing concerns shed 52,000 jobs. Retailers dumped 34,000 jobs, finance companies dumped 12,000 jobs and professional services companies (e.g. accountants, lawyers and consultants) dumped 20,000 jobs. The job losses were very uniform throughout those sectors, so it wasn't just a few companies with problems. It's endemic.

Lately when stocks have traded unevenly, natural gas has kept up its pace in the plus column, even by surging over $9 last week. And I wouldn't be surprised to see prices go above $10 by the time the move is over, potentially lifting funds such as U.S. Natural Gas Fund (UNG).

What's behind the sprint in gas? It's pretty simple, really. Just the old story about supply and demand. Analysts say that the United States needs at least 10,000 megawatts of new power capacity per year to keep up with a 2% annual increase in the demand for electricity. In response, you may recall that a couple of years ago, there was a movement afoot to build a lot of new electricity plants in the United States powered by so-called "clean" coal and nuclear power. But this move hasn't worked out the way that the advocates of those two fuels had planned, as environmentalists and other special-interest groups have blocked efforts to develop these plants at every turn. It seems that coal-burning plants create a lot of carbon that must be offset in ways that are prohibitively expensive.

So instead, utilities have returned to natural gas, a clean-burning fuel that no one seems to complain about as much. Plus, it is plentiful in North America and is more popular than other alternatives like wind, solar and ocean power. Utilities are supportive of the shift to natural gas, because natural gas plants are easier to build, emit less carbon per unit of energy and generally slip under the radar. Even environmentalists know that they need to plug in their latte machines somehow, so they like this alternative power source, too. And now the latest figures suggest something like 7,800 new megawatts of gas-powered electricity came online last year, and at least 10,000 more megawatts will be lit up in each of the next 10 years.

As demand for natural gas strengthens in the next few years, you can bet that the prices will rise. Right now, though, the cost of natural gas had fallen quite a bit since the spike to $15 per million British thermal units, or BTUs, that followed Hurricane Katrina. By the middle of last year, the price rock-bottomed at $6, and now it is climbing back up.

If you read the labels of products that you purchased the last time you swung through Home Depot, you would probably find that RPM International (RPM) is on at least one of them. The Ohio-based specialty chemicals manufacturer has diversified product lines that include high-quality specialty paints, protective coatings and roofing systems, sealants, adhesives and specialty chemicals for both industrial and consumer markets.

Its industrial products made up about two-thirds of the company's $3.3 billion in sales last year. These products have a much larger customer base than its consumer division's products, which are sold primarily in North America. Marketing efforts in 149 countries has kept the industrial division from feeling the woes in the U.S. real estate market, and demand for many of its non-residential industrial products has remained high throughout the housing bust. Some of RPM's well-known industrial brands include Dryvit insulation finishing systems, Tremco roofing systems, Alumanation roofing coatings, Stonhard commercial floor coatings, Kop-Coat industrial lumber treatments and Euco concrete admixtures.

On the other hand, the company's consumer segment manufactures and markets do-it-yourself products that focus on home improvement, automotive maintenance and leisure. These are the products that you find at your hardware store that have well-known brand names in very unglamorous applications. They are sold under labels such as Rust-Oleum and Stops-Rust, DAP caulks and sealants, Zinsser primer-sealers, Perma-White mildew-proof paint and Wolman deck coatings. And while you might assume that this is a bad time to be selling products so closely tied to housing, the division has actually posted strong sales growth on its maintenance and repair products. Most of their applications are somewhat insulated from slowing new-construction starts as people focus on fixing up their current homes rather than buying new ones.

RPM's second-quarter sales and net income reached record levels on increasing strength from its industrial segment. Overall sales grew 11.9% to $906 million from the $809 million that it reported in the same period last year, and net income increased 3.6% to a record of $54.9 million. Sales in the industrial segment rose 14.5% to $605.2 million from $528.6 million, while its consumer unit also posted healthy organic growth of 7.0%.

RPM's management said that the results "reflect the impact of new products; the diversity of RPM's end-use markets, many of which are driven by maintenance and repair spending; good expense controls and strong international growth in virtually all of the company's industrial businesses." Management also told investors to expect sales and earnings growth for the year to be in the range of 8% to 10% based on first-half performance and its business outlook for the remainder of fiscal 2008. While that's not exactly spectacular, it would be two to three times better than U.S. GDP growth.

CH Robinson Worldwide (CHRW), a transportation logistics provider, was up almost 4 % in January. CHRW is a Minnesota-based freight forwarder that offers third-party logistics solutions and supply chain management. With 214 branch offices spread across Europe, Asia and North and South America, the transportation broker connected over 25,000 shipping customers with 45,000 different carriers in 2006. And unlike many asset-based trucking companies, which have seen revenues drop with declines in freight shipping, CHRW has actually kept its revenue growing at double-digit rates as demand for its brokerage services has kept its margins strong.

About 87% of the company's net income is generated by pairing shipping demanders with carriers looking to utilize excess supply. C.H. Robinson buys cargo space from freight carriers in bulk and provides customs brokerage. CHRW focuses primarily on ground shipping. Motor freight accounts for around 90% of its profits while its intermodal, air and ocean freight businesses each account for about 2% to 4% of gross profits annually. Beyond plain brokerage services, its margins have gained strength through its supply chain management business, which helps companies create a seamless customized distribution process for each client.

In addition, produce sourcing and delivery makes up about 9% of CHRW's consolidated revenues. This is the business that got the firm started in 1905, and it has continued to grow its operations steadily while brokerage services have taken over as the star earnings driver. After acquiring the FoodSource group entities in 2005, CHRW had increased its sourcing capabilities and gained a renewed focus in transporting the fresh produce it buys. Its branded produce, labeled The Fresh 1, is sold to large multi-store grocery retailers, restaurant chains, produce wholesalers and foodservice distributors.

The remaining 4% of revenues come from the company's T-Chek Systems subsidiary, which provides information services for trucking companies. Larger carriers and truck stop chains pay to access the proprietary information system for management information, sales and fuel cost data, fund transfers, and invoicing of fuel, cash advances and other fees. Fuel cards correlate with T-Chek's expansive network to connect truckers and their managers with C.H. Robinson's routing services and provide an integrated business operation on the road.

Today I want to tell you about Fastenal (FAST), the largest distributor of construction fasteners in the United States. Bear with me if you've followed the housing bust and know that homebuilding companies' shares have lost half their value over the past year, because Fastenal's shares have marched to a different beat. It's been one of the few hardware suppliers that gained strength as housing and construction industry stocks got beat down over the past year.

The Minnesota-based construction supply retailer got its start in fasteners in 1967, but has grown to become a dominant force in the $9 billion industrial and construction supply industries. Its product offerings have grown to include tools, cutting tools, hydraulic and pneumatic products, material handling products, janitorial supplies, electrical supplies, welding supplies, safety supplies and raw metal. Though fasteners of all shapes and sizes make up more than half of its total sales, Fastenal's other product lines complement its 300,000 varieties of specialty screws, anchors, nuts and bolts and help draw retail customers to its sprawling portfolio of hardware supply stores.

With over 1,800 stores in 50 states and a total of 2,100 across the globe, Fastenal has maintained ambitious plans for growth. Over the last decade it has posted a nice 14% growth rate, and the company is now slowing projections for new store growth to 8% annually. But this is only because the company is now focusing on strengthening its sales force, which, according to Morningstar analysts, will increase sales more effectively while requiring less capital reinvestment. Fastenal's stores already dominate rural market positions and can be found in more than twice as many locations as its nearest competitor. And plans to increase the footprint of stores in larger metro areas together with expansions slated for international markets, which currently account for 7% of total revenue, should keep sales growth on par with the stellar results that the company has posted over the last decade.

In 2008 look for the hardware giant to add another 160 new stores to its portfolio, about the same as last year, and remember that the shift to a slower new store growth rate will be compensated with a stronger sales force and solid margin improvement.

Action over the past couple weeks following the Fed's rate cut is beginning to make the sovereign wealth funds in Abu Dhabi and Singapore look prescient for buying into the likes of Citigroup (C) and UBS (UBS) earlier this month at lower prices that were not too far from their 2002 bottoms.

Yes, I did say 2002. Not April or August of last year -- but their levels at the bottom of the millennial bear market, the area from which they went on to triple over the next five years.

Though Citigroup's recent fourth-quarter results are ugly enough to send most investors for the hills, there are some positive things happening at the bank. Let me give you the good, before the bad and the ugly, and explain why analysts believe that Citi might well be a bargain at its current levels. In 2006 it was ranked as the most profitable bank in the world, with its $22.13 billion net barely beating the U.K.'s HSBC. Adjusted for purchasing-power parity, that amount equates to more money than the gross domestic product of 115 countries.

And despite the bank's massive size, international consumer activities were at record profits as new branches were able to consistently increase their deposits. Net interest income increased by 3.6% globally and non-interest income was up by 8.6%, with the gains shared close to equally between domestic and global operations. Domestic credit card revenues have also shown strength, posting a 1.8% organic increase in open accounts. The gain is unusual and should be looked at differently than the seasonal increases that also look healthy.

Management's recent decisions to boost targeted capital ratios have also brightened the short-term horizon. Citigroup's recent capital raising activities have brought in almost $30 billion and have boosted its Tier One capital -- which is a core measure of financial strength on a regulatory basis -- to be on par with the industry's current leaders. Other than the investment by the Abu Dhabi Investment Authority, Citi has raised $15.4 billion from two private placements of convertible preferred securities and $3.25 billion from a public offering of straight preferred equity. Though it has cut its dividend by approximately 40%, it has also used the last two quarters to nearly double its loan-loss reserves, which have increased by $7.2 billion to $16.2 billion, or 2.1% of total loans outstanding.

Fourth-quarter results bring the bad and ugly into the light, as the net loss of $9.83 billion can't be justified by anything but poor risk controls during the U.S. sub-prime debacle. The $18.2 billion markdown that Citigroup took on its portfolio of sub-prime securities and the $3.6 billion in capital that it pumped into its loan-loss reserves accounted for the gash in results compared with last year's earnings. But remember that the markdown in its sub-prime portfolios implies that virtually every loan defaults and projects that the bank will only recover about 50% of the principal that it's owed. This scenario is appearing less and less likely, and the actual value of many of its sub-prime holdings has seen very little deterioration so far.

Aside from its fourth-quarter results, Punk Ziegel analyst are expecting healthy profits to bounce back by the end of the year as an unhealthy yield-curve changes its shape to boost margins and sub-prime security markdowns result in less defaults than projections allow for. The fourth-quarter loss of $1.99 per share is expected to turn around to see gains in the range of $3.38 to $3.74 a share for 2008 and $4.09 to $4.84 per share for the following two years, respectively. If you have the risk tolerance and are looking at a five-year time horizon, Citigroup may be one of the stronger financial companies to emerge from the current credit crisis.

As recessionary fears mount and strong defensive positions become ever more difficult to find, General Dynamics' (GD) rank as one of the top five military contractors makes it stand out among its big-cap peers. The Virginia-based producer of naval ships, military combat systems and Gulfstream business jets has been trading within 6% of its recent all-time highs, and it is up 10% over the past year. The company generates about two-thirds of its total revenue from the U.S. government, which might make you a little nervous in an election year where Democrats are recommending troop withdrawals from the Middle East. But even if the next president decides to move troops out of the Middle East, analysts say that defense and military spending forecasts will remain strong.

General Dynamics has received numerous contracts from the U.S. military recently. Notably, this month, the company received a $99 million order for 183 mine-resistant, ambush-protected, or MRAP, vehicles for troops overseas. And we'll continue to see orders like this roll in as ongoing global terror risks will keep the military's infrastructure growing regardless of what ensues in Iraq and Afghanistan.

The continual flow of orders from the U.S. military has added nicely to GD's revenues, and it's this well-balanced revenue base that makes it stand out from the other top defense contractors. Along with the demand for MRAP vehicles, its recent contracts include large orders for maintenance and support work or production of submarines, surface ships, military vehicles and information-technology systems. And these prime contracts are set to keep rolling in regardless of and throughout the looming potential recession, while the company's products and IT support will remain in high-demand globally. So no irony is intended when I call GD a defensive pick.

General Dynamics has been a steady performer over the years, and 2007 should come in as another good year on the books. Fourth-quarter results are expected to be posted on January 23, and analysts are expecting earnings per share to increase about 25% over last year, to $1.41 a share from $1.13 a share. I wouldn't be surprised to see results blow past the consensus though, as they did when third-quarter results were announced in November, beating the Street's earnings per share guidance by 10 cents. Over the past three years GD's average earnings growth rate has been around 19%, and it is projecting its profits to grow another 12.6% in 2008. Its returns on invested capital hover close to 16%, covering its cost of capital by more than 7%, and analysts praise management's decisions on asset allocation and project focus. Unless the world financial markets really go into breakdown mode, watch for its big revenue drivers to keep churning out growth, with the Gulfstream business jet division as well as Land Systems division on track to help the most.

The greater part of this century has been marred by visible global conflict, yet most of us forget about the war that we fight as a species -- one that cost us 2.1 million lives last year, according to the World Health Organization. That's right, I am talking about the war against HIV and AIDS, which has been fought for over two decades now and will continue for the foreseeable future. Leading the charge on the side of humankind is pharmaceutical trailblazer Gilead Sciences (GILD). Health-care stocks are on a roll right now, and Gilead is leading the way.

Gilead creates and markets medicines that fight life-threatening diseases, such as HIV/AIDS and hepatitis B. The California-based company traditionally focused on viral ailments, but in 2006 it expanded its portfolio to include respiratory disease and cardiovascular treatment with the acquisition of Corus Pharma and Myogen. The company's stellar board is made up of folks like Paul Berg, winner of the 1980 Nobel Prize in Chemistry and current CEO John Martin, who was previously the director of antiviral chemistry at Bristol-Meyers.

Within Gilead's broad portfolio, the impetus for growth in 2008 comes from the company's extraordinary HIV franchise. A touch more than 80% of the company's $2.5 billion in revenue came from HIV products in 2006 -- a whopping $1.2 billion courtesy of their star product, Truvada, which is increasingly forming the backbone of HIV therapy around the world.

The company's newest HIV drug, Atripla, is the first and only once-daily, single tablet regimen that received approval in the U.S. in 2006, and it has since become the most popular treatment in this market. In the first year alone, Atripla raked in 8% of total revenues, showing that it can pull its own weight in the future. In December last year, the drug received marketing authorization in the European Union, Norway and Iceland. Sales of Atripla in Europe and America, along with increased global sales of the tried-and-tested Truvada, should prop up growth quite nicely this year.

An estimated 250,000 HIV-positive Americans remain undiagnosed today, which is why the Centers for Disease Control and Prevention has wisely recommended that HIV testing become a part of routine medical care. As a result, Gilead's HIV sales should benefit, considering that 80% of new patients receive either Truvada or Atripla for treatment.

The news item that kicked investors into a panic last week was an employment report out of Washington D.C. that just has to be considered recessionary. There's no two ways about it.

The reported gain of 18,000 jobs was very narrowly distributed, with key sectors of the economy posting big losses. Private sector employment was down 13,000 jobs, and goods providers were down 75,000. Most of that was in residential and commercial construction. Manufacturing jobs were also down 31,000, and retailers were down 24,000, seasonally adjusted. The only positive sectors were health care, up 28,000, and bars and restaurants, up 27,000.

One of the best independent economic analysts that I know, Phillipa Dunne, quipped that the new U.S. economic model appears to be very simple: Eat, drink and check into a hospital.

We need to note that job growth sank materially in the second half of the year. Payroll gains in the first half were up 134,000 per month. In the second half, they were up only 87,000 per month. The yearly growth rate has fallen to 1.0%, which is the worst since early 2004.

The only good news out of all this is that a declining employment rate tends to push down expectations for inflation. Makes sense, right? Joblessness tends to put a damper on employees' demand for higher wages and bonuses. If the lack of pressure on wages helps to offset the rise in raw materials costs, it gives the Federal Reserve more room to cut rates more quickly over the next six to twelve months. I do think that they will get down to 3% for the Federal Funds rates by the end of the year, which would bring down the rates that individuals and companies pay to levels that could finally spark more buying. Rates that low would also bring long-term fixed mortgages under the 6% level, which has historically been the point at which houses become affordable to more people without all the fancy teaser rates and tricks used in the mid-2000s.

Finally, I just want to point out the fact that the unemployment rate jumped from 4.7% to 5% in a single month was very curious. That is a huge jump, and the cynical side of me says that it was more manipulated than ever. The cynical view says that the government wants to make the economy in the first half the year look as bad as possible so that they can make it look stronger later in the year during the election season and take credit for it -- helping the Republican candidate win. My many years of covering politics for newspapers has led me to believe that you can never be too paranoid about the motives of politicians and appointed bureaucrats' motives when they are facing the possibility of being swept out of office, so don't count out the possibility that we're being set up for a reversal.