IMF Head Proposes New World Currency

by Gold Alert

Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), proposed a new global currency that would challenge the reserve status of the U.S. dollar and guard against future financial instability.

The IMF head stated at a speech in Washington, D.C. that ”Global imbalances are back, with issues that worried us before the crisis – large and volatile capital flows, exchange rate pressures, rapidly growing excess reserves – on the front burner once again.  Left unresolved, these problems could even sow the seeds of the next crisis.”

“When we worry about the deficiencies of the international monetary system, we are mostly worrying about volatility.” There is “a sense that money sometimes flows around the globe in too-volatile a fashion and that countries need a more stable, more predictable external environment in order to prosper.”

Strauss-Kahn went on to say that he sees a larger role for the IMF’s Special Drawing Rights (SDRs), which is presently comprised of the dollar, sterling, euro and yen.  However, he noted that it would take a significant amount of international cooperation for that to be effective.

SDRs were originally implemented in 1969 in support of the Bretton Woods fixed exchange rate system. Once U.S. President Richard Nixon closed the gold window and effectively ended the fixed exchange rate system in 1971, the role of SDRs declined.  However, in 2009 at the London G20 meeting, policymakers from across the globe agreed to increase the SDRs to $250 billion.  This decision fueled speculation that their use could return in the years ahead.

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Shift north helps Brazil cut coffee harvest swings

by Agrimoney.com

It is not just the cycle of "on" and "off" years of coffee production that Brazil may be getting to grips with, but the risk of hefty bean losses to subzero temperatures too.

Global warming may have played a part in the waning danger that frost has posed to Brazil's coffee crops, the world's biggest, in the last decade, sector expert Carlos Brando said.

However, a shift north by farmers to warmer climes has worked in staving off the threat too, with Brazil now going some 15 years without major freeze damage.

"The major crop losses shown in the mid-1970s and 1990s are less likely to occur," Mr Brando, at Brazil-based P&A Marketing, said.

Brazil's production of arabica beans plunged by 60% to 9,000 bags in the frost-hit 1976-77 season, sending New York futures above 330 cents a pound.

Zero-crop harvesting

The migration in coffee plantations has further raised prospects of a less volatile outlook for Brazilian coffee output, which even without weather setbacks has historically alternated between high and low production years.

Besides the greater use of washing in processing beans - a practice which sees trees stripped earlier of cherries so increasing the recovery period - the cycle is also being reduced by the greater use of irrigation.

Watering helps trees "to recover faster and better from the stress of bearing a large crop", Mr Brando said.

The spread of so-called "zero-crop" harvesting, in which trees are pruned to produce beans only in the "off" year when prices are usually higher, has also dampened the cycle.

Deficit ahead 

Brazil faces an "off" season in 2011-12, although official forecasters have predicted a crop of 41.9m-44.7m bags, higher than that in many "on" years.

Nonetheless, information group CoffeeNetwork on Friday forecast that world coffee production would, at 131m bags, fall 4m bags behind consumption.
Arabica beans, the main variety produced in Brazil, would account for 3m bags of this deficit, CoffeeNetwork forecast.

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Monetary Inflation and Supply Concerns Drive Commodities More So Than Demand

by Jordan Roy-Byrne

The mainstream press loves to talk about emerging market demand as a cause of inflation, rising prices and the bull market in commodities. Did emerging markets suddenly begin demanding food, energy and metals in 2001? What about five and ten years earlier? Its a rhetorical question. The conventional wisdom is wrong.

Inflation is driven by low interest rates and lax credit conditions. Severe inflation is driven by the inability to finance or grow out of debt.

Commodity bull markets are primarily driven by monetary factors. Secondarily, a lack of production eventually leads to much higher prices. Commodity industries are cyclical in the long-term. They go from periods of oversupply to periods of underproduction which then creates a lack of supply and a need for higher prices to stimulate new production. The big moves in individual commodities or sectors are driven not from demand but from a lack of supply.

There are numerous examples.

Let’s start with the rare earths. China accounts for 95% of the world’s supply and its projected that within a few years China will not be able to supply its own demand. This is why China is cutting export quotas and may form its own OPEC-like group to control the rare earths market. Sure, their demand is strong but the real problem is there is basically no production outside of China.

Molycorp owns the only rare earths mine in the US (Mountain Pass in California) and it hasn’t been in production for years.

Does this industry have too much demand or too little production? Again, its a rhetorical question.

Consider uranium. Most know the story. Its an industry that has lived off of stockpiles for a long-term. That is going to end in 2013 with the end of the Russia/HEU agreement and so more production will be desperately needed in the coming years. Look at the picture below. Reactor requirements (demand) has risen consistently for decades. Obviously, its the supply/production picture which moves the market.

Precious Metals are actually the outlier. It is investment demand that moves the market. Some analysts like to mention global growth and more buying of jewelry but that has little impact on the major bull and bear cycles.

The most absurd theory is that food prices are rising because of rising demand. Did millions more Chinese suddenly begin eating now relative to five or ten years ago? Take a look at this graph from AgoraFinancial.

Growth in population, meat consumption and grain consumption is reliably steady. Food prices don’t rise because there is more demand. That is asinine. Food prices rise primarily because of supply and inventory factors along with monetary factors.

Monetary inflation creates artificial demand which triggers higher prices. Our monetary inflation is exported to China. China takes the incoming US Dollars and prints Yuan to maintain the currency peg. That causes inflation. China then spends money domestically and also abroad, triggering inflation in other nations. Furthermore, inflation raises the cost of production and bringing that supply to the market.

In the big picture, inflation is a major driving force for the commodity sector as a whole. In regards to specific commodities, the real commodities gurus like Jim Rogers and Rick Rule always look first at supply factors because they know that is the number one driving force behind the biggest runs. Presently, the uranium market is in a very large deficit and a surge in production is required over the next five to ten years. Growing demand is just icing on the cake.

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The Inflation Tipping Point (Part Four of Four)

by John Butler,

[Continuing from Part Three...]

The Fed, already deep into a dilemma largely of its own making, is about to find itself facing an even more unpalatable choice before long: Accommodate the surge in demand for real goods with a continuing easy money policy or, alternatively, slam on the brakes sufficiently to force an end to the incipient behavioral changes behind the growing stagflation, thereby running the risk of causing another acute round in the ongoing financial crisis.

So what is the Fed going to do? Take responsibility? Well that would be rather out of character given that the Fed so far has steadfastly denied any blame whatsoever for the credit (or asset) bubble that it created with a prolonged period of excessively easy monetary conditions in 2003-07. More likely, the Fed will simply hope that somehow inflation will rise moderately to a level which helps to reduce the real debt burden on the economy and then stabilize. But if an inflation tipping point is soon reached and consumer price inflation ratchets sharply higher this year, no doubt the Fed will deny that such inflation is in any way a monetary phenomenon, notwithstanding the analysis above and Milton Friedman’s famous dictum to the contrary.

The Fed’s denials will by no means stop there. They will also deny that this inflation is harmful, using a range of arguments such as “Price increases are indicative of firming economic activity,” or “Recent spikes in volatile food and energy prices are isolated to those markets and not indicative of rising core inflationary pressures.” No doubt the Fed will take comfort that real wages are likely to remain stagnant or even decline, implying that their preferred, arbitrary measure of “core” inflation remains low. But for people who work for a living, the combination of rising food and energy prices on the one hand and stable or declining real wages on the other will not be cause for comfort, rather the opposite.

We mentioned briefly above that the current surge in global commodity prices is now comparable to the first half of 2008. It is easily forgotten that the global economy grew extremely rapidly in 2006 and 2007, thus entering 2008 on the verge of overheating. It is easy to attribute the sharp slowdown in economic activity in 2008 and early 2009 to the US-centered global credit crisis but history demonstrates that sharply rising commodity prices–a classic indicator of economic overheating–have preceded all major modern recessions, including those of 1973-75, 1980-82, 1991-93 and of course 2008-09. So to dismiss the role played by soaring commodity prices in the most recent case would seem inappropriate.

Given recent developments, this should give investors cause for concern. As one overheating economy after another raises interest rates–China, India, Brazil, Russia, Indonesia and South Korea belong to this group–the risk of a general, global economic slowdown increases and with it the possibility that equity and commodity prices are heading for a major correction. Indeed, the US and European equity markets are beginning to look like the outliers in a global trend toward lower equity market valuations. The Chinese stock market has been in a gentle downtrend since November and, for those who enjoy technical analysis, has formed a bearish, so-called “reverse head-and-shoulders” pattern. The Indian and Brazilian stock markets also peaked in November and declined sharply in January. Is this telling us something significant?

We believe it is. As these regions now comprise the more dynamic part of the global economy, their softening stock markets might well be leading indicators of looming downtrends in developed-market equities. And it would be entirely consistent for commodity prices, in particularly those for cyclical, industrial commodities, to follow along. Defensive investors should take note.

As we write frequently in the Amphora Report, in a world of general fiat currency inflation and devaluation, commodities provide an alternative, superior store of value. While many investors consider gold and silver ideal in this regard, there is no reason why other commodities cannot also serve an important role, in particular to provide additional diversification benefits.

Agricultural commodity prices, for example, have risen strongly over the past year but have remained largely uncorrelated to gold and silver. Yet while industrial commodities have risen particularly strongly of late, these are also the most exposed to a sharp correction. At this point in time, heeding the growing signs of slowing emerging market economies, we would be underweight industrial commodities.

Thinking farther ahead, we remain confident that, in the event of a general, global economic slowdown, policymakers in heavily-indebted developed economies will continue to follow generally inflationary policies in order to support growth, notwithstanding the evidence, both historical and contemporary, that such policies are at best ineffective and, at worst, counterproductive. We lean toward the latter view. Yes, a correction in equity and commodity markets may be coming, but so is another subsequent wave of freshly printed fiat money. Just where it is going to go, and how long it will take to get there, is anyone’s guess. But we know from where such “money” is ultimately being covertly taken (stolen): The earnings and savings of working people the world over. While it is the responsibility of investors to grow wealth when conditions are favorable–and at least protect it when not–we should all remember that inflation is not merely a monetary phenomenon but, much more importantly, an immoral one.

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Housing Is a Buy

by The Daily Reckoning

In a recent Daily Reckoning column, “Buy a House…Then Buy Another” I told you about John Paulson, the billionaire hedge fund manager who switched from betting against housing to now telling people they should buy a house…or even two houses.

Bill Ackman, the successful hedge fund manager behind Pershing Square Capital Management, is another case in point. He, too, saw the housing bubble before it popped. He made a now famous argument as to why the stock of MBIA, which guaranteed the slop coming out of the mortgage factories during the bubble, was going to crumble. And it did, netting Ackman more than $1 billion. MBIA was, at the time, one of the five biggest financial institutions in the US.

But now, like Paulson, Ackman is bullish on US housing. He recently made a compelling case focused on five key areas. Let’s take another look at the case for housing and add more meat to the bones.

First, housing is cheaper now than it’s been in a generation. The median income is now 78% above what it takes to qualify for a fixed-rate loan on 80% of the median purchase price. Mix that with housing prices that are 30% off their peak nationally and low mortgage rates and you get a cocktail of affordable housing.

The second key part to the argument is to look at the number of forced sellers. As a buyer, it is more favorable to you if you buy from people who have to sell. Makes sense right?

In housing, about 30% of sellers are in foreclosure or approaching it. These are national figures, so in some markets, there are more forced sellers than others. “Buyers benefit when conventional sellers compete with distressed sales,” Ackman says. “Las Vegas is an extreme example, where distressed and nondistressed sale prices have nearly converged.”

Ultimately, this process is good for the home market. As Ackman points out, “Overpriced and overleveraged homes will be transitioned to new, stable owners at more reasonable prices and on more favorable financing terms.” From such stable bases, new bull markets are born.

Third, we look again at financing terms and costs. Blue chip companies don’t get the deal you get when you buy a home. You can borrow at about 5% fixed for up to 30 years, putting down only 20% (3% for FHA loans). You have no prepayment penalties – so you can, if rates fall, refinance. But if rates rise, you can sit tight. And you can deduct the interest from your taxes. It is a sweetheart deal.

Rates, by the way, haven’t been this low since the Freddie Mac survey began.

This also makes for a great inflation hedge. Housing, as an asset class, performed extremely well during the inflationary 1970s. Today’s borrowers have similar upside. Ackman demonstrates how even small price increases multiply the equity in your house, assuming conventional 80% financing and a 10-year holding period:

People who are skeptical of housing think prices won’t rise anytime soon. But as this exercise shows, you don’t need much of an increase. Even a 1% annual increase over a 10-year period gives you 2.7 times your money. Anything better and your upside soars!

So far, the case for housing is familiar and easy to grasp. Now we get to the fourth and fifth pieces of the argument, which clinch the case, in my view: the long-term supply and demand for housing. Let’s start with supply.

What can we say about the supply of houses in the US? There is a lot of it right now, which is what weighs down pricing. This is what creates the opportunity for buyers. But there is more. “Builders have sharply reduced their construction capacity, increasing lead times when the market does recover,” Ackman says. “It can take three-seven years to get land permitted in many of the more desirable markets.”

This means that we can’t turn on a switch and get a lot more houses. As with mining, it is important to consider how long it will take to bring new supply to the market. As investors, we want new supply to come slowly.

The number of housing starts is lower than at any time in at least the past 50 years. New construction is about half the long-term average. Again, good news for investors in housing, since this means that new supply is growing very slowly.

Now let’s turn to demand. Demand for new housing is depressed. Home ownership rates are back down to pre-bubble levels. But housing demand – based simply on demographic trends – should rise inexorably for years to come.

You take the growth in households – driven by population growth – and apply a home ownership rate. Demographically, the US is still a growing country. By 2030, there will be 370 million Americans. Even using the long-term average home ownership rate means we’ll need 1.1-1.2 million new single-family homes per year.

Here is another chart that puts supply and demand together and captures how depressed things are. The chart shows housing starts. The dotted line shows you projected annual demand of about 1.2 million homes per year. So you can see the big gap as the market digs into existing supply. At some point, housing starts will rebound. This could happen as early as this year…

The prime beneficiary of any rebound would be the homebuilders. There are several interesting possibilities in homebuilder stocks, such as Lennar (NYSE:LEN) or MDC Holdings (NYSE:MDC). I don’t think we need to rush to buy any of these just yet, but they are on the radar.

There will be other beneficiaries of a housing rebound, too. There are all those depressed building supply stocks. There are the many little local banks that finance housing. Each has been an area we’ve sought to avoid, but they have become promising fishing holes.

The risks seem low. We’ve already seen the bubble collapse. A second collapse is unlikely. The market is adjusting to a more normal level. All is to say that as contrarian as it seems, housing is now a good bet for the long term.

Paulson and Ackman – two great investors – made fortunes betting against housing, but now they’ve changed their views as the market changed. Maybe we should too.

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OIL EXPOSURE THROUGH CURRENCIES

by Cullen Roche

Great chart here from Joe Weisenthal at Business Insider.  It shows the equal weighted basket of various currencies vs the dollar and overlays it with oil prices.  As you can see, there is more than one way to gain exposure to oil price gyrations. The correlation is a near perfect 1:1.

This is interesting from a risk management perspective because it gives a fairly novice trader a decent way to hedge against oil/commodity price moves without having to take a direct position in a futures contract or unreliable oil ETF.  Currencies tend to be less volatile than commodities so can serve as a way to gain exposure with reduced risk.  For instance, when the price of oil declined 70%+ in late 2008 the Canadian Dollar declined just 22%.  The Aussie Dollar fell just 30%.  In the current environment a currency pair can be a great way to place a tepid short bet against the huge surge in commodities without having to take on the risk of a super spike in a specific commodity…..Obviously, there’s lots of ways to utilize this correlation, but understanding that the correlation exists gives you a nice starting point.

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If You Really Believe In Hyperinflation, Why Don't You...

by Charles Hugh Smith

Our actions reflect the strength of our convictions and confidence in specific outcomes.

My longtime friend G.F.B. recently asked me: "If you really expect the dollar and the financial system to collapse, why not max out your credit cards and live large, knowing you'll never have to pay the money back?"

This banter of old friends is also a fair and insightful question, for it ties our actions in the real world (behavior) to our stated beliefs and convictions. Indeed, if someone is absolutely confident that the dollar will go to zero, i.e. hyperinflation, then it makes compelling sense to immediately run up $50,000 in credit card debt and buy tangible goods or unique experiences, knowing you will be able to pay it off with the wages from a month, week or even a day in the future.

Similarly, if the financial system collapses, then who's going to come after a measely $50,000 in unsecured credit card debt?

G.F.B. then questioned my criticism of a friend planning a lavish European vacation this summer with her two teens, despite the household having little savings for the kids' college expenses.

If hyperinflation is the guaranteed future, then why save for college, or anything else?

G.F.B. further posited that if someone is convinced precious metals will outshine all other assets in hyperinflation, then wouldn't they sell their house now along with any other assets, and transfer that wealth into gold and silver?

Undoubtedly a few people have sold their homes and bought gold with the proceeds; others never bought a house at all, preferring to invest their capital in tangibles and precious metals.

But the vast majority of people are not selling their homes or running up as much debt as they can now and either living large or sinking the fiat-money proceeds into gold. In effect, they aren't acting in accordance with the view that a hyperinflationary financial collapse is just around the corner, even if they express concurrence with the view that the dollar is doomed as a holder of value.

Our confidence in specific outcomes is reflected by our actions in the real world.

Many people with some net worth seem to be distributing those assets over several classes, taking prudent steps to diversify their wealth out of stocks and into assets which offer some protection against future meltdowns.

Others are pursuing a financial strategy which implicitly reflects a belief in a deflationary future: thay are paying down debt and accumulating a cash position in anticipation of tangible goods being cheaper in the future.
My old quant boss Stew Pillette often said that in broad economic matters (as opposed to financial fads and investment trends), the public was a better indictor of the future than professional Wall Street seers.

Thus we can interpret the exodus out of U.S. stock mutal funds as a reflection of a general loss of faith in Wall Street as a provider of trustworthy value.

The argument can be made that stocks will outperform in hyperinflation, as they are proxy ownership of real assets. If this is the future, then those predicting "Dow 40,000!" will be off by a few zeroes. Why not Dow 400,000 or Dow 4,000,000?

The fact that $100 billion has been extracted from U.S. stock mutual funds (and yes, a paltry few billion may be seeping back in, marking the top of this "recovery rally") suggests that ordinary investors aren't buying the Dow 40,000 scenario--their confidence in stocks as a bulwark against hyperinflation is evidently low.

Human behavior is not a simple vector influenced by a variable or two; it is far more complex than standard economic models. We can easily imagine a number of causes for a disconnect between a person's stated belief in a certain financial outcome and their inaction/hesitancy in the present.

Some are too occupied by getting the Pampers and groceries in the elevator and the kids back from the babysitter to devote time to asset allocation. Many others have few assets to allocate, and still others find more value in a family home, ranch or flat in a good school district than a vault or safe of precious metals, even if they reckon the metals will likely outshine the home on a purely investment basis.

This reflects the utility value of homes and productive assets in comparison to precious metals.

A house is also a hedge against inflation (property taxes can go to the moon, but a fixed-rate mortgage will not), but just as importantly, it has utility value as shelter, potential rental, etc.

The same can be said of solar panels, high-mileage, high-volume vehicles that will likely have ample spare parts available for a long time, productive land, oil wells, lumber mills, etc.

As I have stated here before, I am unpersuaded by the hyperinflation arguments for the simple reason that I cannot figure out how the Financial Elites (Cartel-Capital) could profit from such a mass erasure of dollar-based financial wealth.

In small countries with a few trillion dollars of wealth, the Elites could conceivably transfer their wealth out of the country, let the political class destroy the country's currency (via hyperinflation or massive devaluation), and then move their cash back into the country to scoop up the now-cheap real assets.

But U.S. Financial Elites have to conserve roughly $45 trillion wealth in the U.S., and they have already diversified into the global economy. There is no asset class where they can "park" $45 trillion while the U.S. dollar goes to zero.

At $1,300 an ounce, all the world's gold is worth about $7 trillion. So the U.S. Financial Elites could buy all the world's gold at $2,600 an ounce and still have $30 trillion in dollar-denominated assets left to protect.

The better trade, as I have often suggested, is to strengthen the dollar to increase their purchasing power, drive up interest rates while keeping their cash in short-term bonds, and then buy long-term bonds when rates spike to the moon.

That way, as rates slowly decline, they have locked-in high yields for decades, and the Central State (Federal government) does the hard part by collecting higher taxes off the citizenry to pay the high bond yields to the Elites.

And to top it off, the Elites can package their ownership of high-yield long-term Treasuries as being "patriotic." Gold, in comparison, pays no yield; it is a store of value which appreciates or depreciates. It has advantages but also disadvantages, and there are prudent arguments to hold a variety of assets, shifting them to take advantage of relative overvaluation and undervaluation.

The reason I'm not maxxing out my credit cards and blowing the cash on high living is I expect dollar-denominated cash to gain in purchasing power. Maybe hyperinflation will rise up after that deflation, as many predict--it's certainly plausible.

But I have little faith in long-term prognostications, mine or anyone else's. History has shown the future is full of surprises. If it was easy to divine what will happen in the next six months, much less the next six years, we'd all be millionaires.

The public enthusiasm for gold and silver (as reflected by TV adverts proclaiming "get the best price for your gold" and various pundits pounding the table to "buy gold") suggests that they don't buy the official "inflation will be low for years to come" stance. But their refusal to crowd into the stock rally suggests they don't buy into the idea that stocks are a good inflation hedge, either. Clearly, the public has lost faith in the stock market, and it's hedging its bets on the future in other ways: gold, silver, emerging markets, TIPs, farmland, commodities, and yes, even cash.

If the public truly believed high inflation was inevitably just around the corner, it wouldn't be paying down credit cards, it would be maxxing them out, knowing they could pay them down later with much cheaper dollars.

Maybe people would max out credit cards if they could, but credit has been tightened; that is a distinct possibility. But it's also possible that the public prefers to hedge its bets rather than gamble on the impending dominance of one outcome. Maybe gold is perceived as a long-term hedge, but cash is still valued for short-term hedging or as a safety net. The reasons behind investment choices are as complex as each household and individual making the choices.

Perhaps balancing one's faith in a particular outcome with an appreciation for unforeseen contingencies is a wise path in such uncertain times.

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Munis Catch a Bid

by Bespoke Investment Group

The municipal bond market has had a rough go of it over the last three months as concern about default risk has risen.  Today, however, munis are catching a bid.  Below is a price chart of the National Municipal Bond ETF (MUB) over the last six months.  The ETF is currently trading at its highest level since early December after breaking above resistance today.

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Survivor Trading System - Trades of 10 February

I trades di Survivor System del 10 Febrraio. I risultati real-time di Survivor e di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 10 February. Real-time results of Survivor and our some other trading systemsare available at the following link: http://www.box.net/shared/5vajnzc4cp

Go Short On Soybeans - Super Commodity Trading System

Set-up di vendita ieri sera sul Soybeans da parte del nostro Super Commodity system, accompagnato da alcune divergenze negative sulla chart giornaliera. I risultati real-time di Super Commodity e di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Sell Short set-up on Soybeans last night by our Super Commodity system, accompanied by some negative divergences on the daily chart. Real-time results of Super Commodity and our some other trading systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Are Grains The Place To Invest In 2011?

by Matt Pierce

In 2008 rough rice exploded in price, nearly doubling in less than 4 months as a global panic brought it to the highest prices ever recorded on its futures contract. That same year wheat moved higher on a perceived shortage of its own, breaking all previous price records on its more than 100 year history on the Chicago Board of Trade.

Following those spikes, grains quickly declined in price through 2009. Fast forward to the summer of 2010. Russia, one of the world’s top 5 wheat exporters, experienced one of the worst droughts in recent history and even saw fires threaten crops. Wheat spiked 35% in a week – yes, in just 1 week! Then tragedy struck Australia, one of the world’s top 10 wheat producers, and floods occurred in key growing regions leading to as much as 50 percent of the crop being downgraded to feed quality – not fit for human consumption! Cotton shocked the world with a major shortage that sparked the biggest cotton rally in history – bringing futures prices far beyond any level they have ever been. All this and none of these are the REAL reason to get invested with grains.

For decades the focal point for traders in the grain markets was on the supply side. After all it is events like the ones I just mentioned that have been game-changers in grains for a long, long time. When Bush Jr. introduced corn ethanol subsidies it was the first time in a long time that a demand component became a game-changer. By the way – that was a major contributor to the biggest percentage rally in corn in more than 100 years. You see when supply is the issue traders can account for the percent drop in supply and its effect on price. However, when demand becomes the issue it lends itself to potential panic. How much demand can be a relative unknown number, especially when it doesn’t serve a country like China to show its hand while buying much needed corn for import. Demand-based panics have the potential to offer truly historic opportunities, and a rare demand based opportunity is staring the world straight in the face right now.

China, one of the largest consumers of commodities in the world, is growing at a phenomenal rate.

Here are some stats:

According to Xinhua news agency reports, the urban population of China is close to topping 700 million By 2015, China may have around 1.39 billion citizens International Energy Agency data suggests that China topped the US in energy consumption in 2009

For years population growth has been met with China’s strong internal production of grains and other key commodities. However there comes a point where the capacity for internal production may be exceeded by a strong internal demand. A good question here is how would someone know if capacity is failing to grow enough to meet population growth? For China the proof is in the overall domestic consumption of key ag commodities:

Past performance not indicative of future results. Data courtesy of USDA.

Then take a look at a snapshot of their recent imports:

Consumption is climbing. The growing middle class and urban population is adding more meat to their plates. Yet the imports have been only modestly higher in wheat. Soybean imports nearly doubled – how much more might be needed in the coming years? Arable land in China is certainly limited and the possibility of negative weather wreaking havoc with production is always around the corner. Sure, yields and modern farming techniques can potentially increase yields, but you can only fit so many plantings in limited farmlands.

India finds itself much in the same boat with escalating population growth and the potential for significant demand requirements on their farming community. Here are some stats:

Past performance is not indicative of future results.Data courtesy of USDA.

As you can see, India has experienced sudden import surges in wheat. Their crops and food production remain susceptible to weather issues, and that can spell opportunity.

Population Growth

It takes all of 10 minutes perusing the news these days to see commodity prices are inflating and that there are real concerns over rising demand. I am not telling you anything new. What I am telling you is there is growing demand that has the potential to materialize into a food crisis.

But I am not the only one that sees this opportunity. Veteran grains floor trader Matt Pierce, who CNBC goes to for grain market analysis, also sees an amazing opportunity in 2011.

“The population rise in China and India is spiraling out of control and the potential impact on corn, wheat, soybeans, cotton, rice and oats is likely to be exciting. I believe 2011 will bring about one of the most significant price moves in the history of grain futures here at the Chicago Board of Trade.”

Matt Pierce is one seriously experienced grain trader to pay attention to. A grain specialist, Matt studied farming, management, and trading sciences at the College of Agricultural Sciences at the University of Illinois. He has worked for many of the industry’s biggest grain traders and they pay for his consultation on a regular basis. Matt’s frequent appearances on CNBC and Bloomberg have made him a household name. He is near legendary status on the floor with his massive global information network that he has built up over his career. His grain service, GrainAnalyst.com is gaining traction as the place to go for real grain insight and recommendations – for hedgers and speculators alike. However, Matt wanted to give everyone, not just his subscribers, an inside track on his forecasts for this year’s grain growing season.

On February 15th Matt is releasing a very important report for grain traders. The report will provide traders, hedgers and new investors a unique insight into how to try to play this upcoming global event in the grain markets:

Which market is the most exposed to a potential shortage When he expects big price moves to occur How current events might impact plantings What the impact of the cotton price explosion may have on soybeans and other grains Why the China and India population growth may forever change the grain markets

Right now Futures Press is giving you a pre-release sale price on this report, which will sell for $99 after February 15th. If you order before the release on the 15th you will save over 50% and pay just $49! That is obviously a fantastic price tag for such in-depth analysis of what could be the next big boom. Futures Press is offering this deal so that as many people as possible get a chance to experience the talent, skill and knowledge of grain specialist Matt Pierce. As a special bonus you will also receive a follow up report that Matt will release live from the USDA Agricultural Outlook Forum in Arlington, Virginia on February 24th and 25th. This conference will mark the USDA’s first release of their forecast for planted acreage for the 2011 growing season and Matt will be presenting his findings and analysis at the conference on behalf of the CME. Report buyers will get critical news from the conference as it happens!

The Truth About the Financial Crisis, Part III

by Jennifer S. Taub

The Truth About the Financial Crisis,  Part I and Part II were published earlier this week.
~~~
This post is the last installment in a three-part series harvesting the recent Financial Crisis Inquiry Report (FCIC Report) to debunk the top-ten urban myths about the Financial Crisis. To read about myths 1 – 5, click here.

Myth 6:  The Financial Crisis was caused by too much government regulation.
Reality 6: No.  Deregulation and regulatory forbearance contributed to the Crisis. Stronger, not weaker oversight is now needed.

• The Report states: “[D]eregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others, supported by successive administrations and Congresses, and actively pushed by the powerful financial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe. This approach had opened up gaps in oversight of critical areas with trillions of dollars at risk, such as the shadow banking system and over-the-counter derivatives markets. In addition, the government permitted financial firms to pick their preferred regulators in what became a race to the weakest supervisor.”

For example, housing advocates began “meeting with Greenspan at least once a year starting in 1999, each time highlighting to him the growth of predatory lending practices and discussing with him the social and economic problems they were creating.” Greenspan refused to use its authority under the Home Ownership and Equity Protection Act (HOEPA), which permitted the Fed to ban bad underwriting practices at both banks and “nonbank” institutions.

“This was a missed opportunity, says FDIC Chairman Sheila Bair, who described the ‘one bullet’ that might have prevented the financial crisis: ‘I absolutely would have been over at the Fed writing rules, prescribing mortgage lending standards across the board for everybody, bank and nonbank, that you cannot make a mortgage unless you have documented income that the borrower can repay the loan.’” (emphasis added).

Instead of a such a rule, in 2005, the Fed adopted non-binding “guidance” for the mortgage industry which “directed lenders to consider a borrower’s ability to make the loan payment when rates adjusted, rather than a lower starting rate. It warned lenders that low-documentation loans should be ‘used with caution.’”  In response, the American Bankers Association was “up in arms,” complaining that the guidance “overstated the risk of non-traditional mortgages” and, not surprisingly, the industry ignored it.

• The Thomas Dissent identifies as an important “causal factor,” “ineffective regulatory regimes, especially at the state level” for nonbank mortgage lenders like New Century and Ameriquest,” including “weak disclosure standards and underwriting rules” which “made it easy for irresponsible lenders to issue mortgages that would never be repaid.” It also faulted “lenient regulatory oversight on mortgage origination” at the federally regulated bank and thrift lenders, Wachovia, Washington Mutual and Countrywide.

• The Wallison Dissent rejects the assumptions that “the crisis was caused by ‘deregulation’ or lax regulation, greed and recklessness on Wall Street predatory lending in the mortgage market, unregulated derivatives and a financial system addicted to risk-taking.”  The Wallison Dissent is a one-hit wonder. Housing policy, that is all.

Although Greenspan chose not to protect homeowners, journalist Matt Taibbi in Griftopia, found particularly “revolting” that Greenspan in 2004 openly encouraged adjustable-rate mortgages. He endorsed ARMs in a speech insisting that “American consumers might benefit if lenders provide greater mortgage product alternatives to the traditional fixed-rate mortgage.” This was just a few months before the Fed began raising interest rates. According to a hedge fund manager Taibbi quoted, “If you had had people on thirty-year fixed mortgages, you wouldn’t have had half these houses blowing up. . it was the most disingenuous comment I’ve ever heard from a government official.”

Myth 7: Nobody saw it coming.

Reality 7: No. Plenty of people saw it coming and said something.The problem wasn’t seeing, it was listening.
Financial sector insiders, consumer advocates, regulators, economists and other experts saw the warning signs. They spoke out frequently concerning the housing bubble and the predatory and lax mortgage underwriting practices that fueled it. Yet most whistleblowers were ignored or ridiculed at best and fired and blacklisted at worst.

• The Report revealed that at least 10 years before the meltdown people on the front lines, the real estate appraisers, consumer advocates and housing lawyers raised flags. One housing lawyer, Ruhi Maker, met with the Fed’s Consumer Advisory Council in October of 2004 and warned them that she envisioned an “enormous economic impact” resulting from the fraudulent mortgage loans. After  seeing many “false appraisals and false income she suspected that some investment banks – she specified Bear Stearns and Lehman Brothers – were producing such bad loans that the very survival of the firms was put into question.” Real estate appraisers beginning in 2000, expressed concerned that they were being pushed into fraudulent appraisals and were blacklisted if they did not inflate property values. Eventually, a petition signed by 11,000 such appraisers, was taken to Washington.

Internal whistleblowers had their whistles taken away. In 2003, the head of the fraud department at Ameriquest was on the job for a month when he began to report fraud. He was scolded by senior management for looking too closely at the loans, then in 2005 downgraded from ‘manager’ to ‘supervisor,’ and finally laid off in May 2006.” Similarly over at Lehman Brothers, the former chief risk officer, was pushed aside in 2007 and the head of fixed income who “warned against taking onto much risk” departed due to “philosophical differences.” At Citigroup, in 2006, the newly promoted chief underwriter in the consumer devision, Richard Bowen, realized that about 60% of the mortgages Citi was buying up and selling to investors were defective – “if the borrowers were to default on their loans, the investors could force Citi to buy them back.” He brought this to the attention of certain members of the Board of Directors and thereafter was demoted from supervising 220 to only 2 people, his bonus was reduced and he received a poor performance review.

• The Thomas Dissent concurrs in places, indicating that for some this was no surprise. For example, it concludes that: “Managers of many large and midsize financial institutions in the United States and Europe amassed enormous concentrations of highly correlated housing risk on their balance sheets. In doing so they turned a building housing crisis into a subsequent crisis of failing financial institutions. Some did this knowingly; others, unknowingly.” (emphasis added).

• The Wallison Dissent has it both ways. On the one hand, it’s clear that the housing bubble was growing. On the other hand, it claims that “number of defaults and delinquencies among these mortgages far exceeded anything that even the most sophisticated market participants expected.”

For further reading on economists who sounded the alarm but were ignored, Professor James Galbraith’s article, “Who Are These Economists, Anyway,” is very instructive.  Galbraith includes economist Dean Baker who in 2002 wrote:

“If housing prices fall back in line with the overall rate price level, as they have always done in the past, it will eliminate more than $2 trillion in paper wealth and considerably worsen the recession. The collapse of the housing bubble will also jeopardize the survival of Fannie Mae and Freddie Mac and numerous other financial institutions.”

Myth 8:  This Financial Crisis was unavoidable. And, financial crises of this magnitude, are inevitable.
Reality 8: No. The majority unequivocally states this Crisis was avoidable.

• The Report majority concluded that “this financial crisis was avoidable. . .The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public.”

• The Thomas Dissent disagrees. In a WSJ op-ed published when the Report was released, the dissenters seem to say that the Crisis was unavoidable. “[I]t is dangerous to conclude that the crisis would have been avoided if only we had regulated everything a lot more, had fewer housing subsidies, and had more responsible bankers.”

• The Wallison Dissent contends that without US government housing policy, “the great financial crises of 2008 would never have occurred.”  However, perhaps given that the housing policy was obvious to everyone, as was the bubble, he deflect blame off industry by writing that:  “No financial system . . could have survived the failure of large numbers of high risk mortgages once the bubble began to deflate.”

This myth that we cannot avoid large scale financial crises is particular corrosive, as those who are in its thrall reason that since crashes are inevitable, regulation is fruitless. However, is not the necessary conclusion. Consider the Congressional Oversight Panel report that found relative safety in the financial system for more than 30 years after the Neal Deal legislation until the regulatory fabric was unraveled.

Indeed, this myth distorts the view of economist Hyman Minksy, the person who first advanced the theory in 1992 that markets are prone to instability. The appropriate response to this recognition is not to let the system keep running up risk and collapsing, but instead to create counter-cyclical regulatory policy. For a clear discussion of this as applied to the recent Crisis, a useful resource is the energetic and insightful 2009 speech entitled, “The Shadow Banking System and Hyman Minsky’s Economic Journey,” by former PIMCO managing director, Paul McCulley.

Myth 9:   The bankers are the victims of greedy homeowners who borrowed money and did not pay it back.
Reality 9: No. There were some homeowners who participated in fraud and others who were simply unrealistic or speculating on the prospect that housing prices would continue to rise. However, the vast majority were victims either of abusive lending practices, or simply of the housing bubble and burst that resulted in their home values and their retirement savings being diminished. Moreover, even the hopeful and the speculators were no different from bank executives, including JPMorgan CEO Jamie Dimon who told the FCIC, “In mortgage underwriting, somehow we just missed, you know, that home prices don’t go up forever and that it’s not sufficient to have stated income.”
Yes, we do know, many homeowners made the same error. Of course the difference is, banks got trillions of dollars in bailouts and backstops and kept their billions in bonuses. That does not sound like victimhood. In contrast, since the burst of the housing bubble, there have been 4 million home foreclosures. In the fall of 2010, one in 11 residential mortgage loans was at least one payment past due. Unemployment hovers around 10% and the underemployment rate approximately 17%. Household net worth had declined from $66 trillion to $54.9 trillion.

• The Report includes statements by bank executives acknowledging the role of banks  in the crisis. Jamie Dimon said “I blame the management teams 100% . . no one else.” He does not blame homeowners. Bank of America, CEO, Brian Moynihan told the FCIC, “Over the course of the crisis, we, as an industry, caused a lot of damage. Never has it been clearer how poor business judgments we have made have affected Main Street.”

• The Thomas Dissent has a nuanced view concluding that “firms like Countrywide, Washington Mutual, Ameriquest, and HSBC Finance originated vast numbers of high-risk, nontraditional mortgages that were in some cases deceptive, in many cases confusing, and often beyond borrowers’ ability to repay. At the same time, many homebuyers and homeowners did not live up to their responsibilities to understand the terms of their mort- gages and to make prudent financial decisions.”

• The Wallison Dissent endorses this view even if the bankers themselves reject it. In its most jaw-dropping declaration describes investment banks. “They are better classified not as contributors to the financial crisis but as victims of the panic that ensued after the housing bubble and the PMBS market collapsed.” (emphasis added) (This quote can be found in the full dissent provided in the electronic version of the Report.)

Unfortunately, some keep telling this story. For example, an attorney who negotiates pay packages for Wall Street bankers told the Wall Street Journal this week: “To blame Wall Street for the financial meltdown is absurd.”

Myth 10: This report was a waste of time and money, in part because Dodd-Frank fixed everything and now the banking system is safe again.

Reality 10: No.  While the Report does not speak to these misconceptions, they are worth addressing. In both an absolute and relative sense, this report was worthwhile.

As for the Dodd-Frank Act, it was a small step forward. However, much was delegated to the federal agencies and with the new leadership in the House, efforts are underfoot to weaken implementation.  As anticipated, the new leadership is executing its “triple-A” agenda of appointments, appropriations, and annoyances. What little ground was made, may soon be lost.

As for relative value, Dylan Ratigan of MSNBC, recently made the comparison between the FCIC budget of $8 million and the amount that Kenneth Starr spent on the investigation of Clinton and Lewinsky. While he was slightly off in his figure, according to the GAO, the amount was just shy of $30 million, the point is made. Given the trillions of taxpayer dollars spent to bailout and backstop financial sector, given the $11 trillion in household wealth lost, investigating the reasons why so as to avoid this in the future, is a prudent investment.

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'Sense of panic' puts $2-a-pound cotton in sight

by Agrimoney.com

Analysts, warning of a "sense of panic" over export supplies, forecast cotton prices hitting a record $2 a pound, even as most of the fibre's futures complex weakened on Friday.

"It seems only a matter of time before the $2 mark is taken," Commerzbank analyst Eugen Weinberg said. "The price of cotton still only knows one direction."

At Macquarie, Kona Haque also said it was likely that New York cotton futures would reach $2 a pound for the first time.

The comments came as the benchmark March futures gained further ground, standing 0.6% higher at 188.7 cents a pound at 11.15 GMT, after earlier touching a record for a spot contract of 192.63 cents a pound.

However, later lots eased, with the December lot, the benchmark for the next 2011-12 harvest, down 1.5% at 129.50 cents a pound.

Farmer hoarding? 

The diverging fortunes of the contracts reflected "the fact that right now, concern is all about the short term", Ms Haque told Agrimoney.com.

American shipments remained strong, with latest weekly export sales coming in at a higher-than-expected 305,000 running bales, a pace that has raised expectations among some investors that US stocks may end 2010-11 below even the 50-year low of 1.9m bales currently forecast.

"There is clearly a sense of panic that this pace [of exports] cannot be kept up," she said.

However, sourcing alternative supplies had got more difficult, with floods damaging the crop in Australia, and India reportedly reluctant to raise export quotas in the face of a slowdown in deliveries from growers.

This decline has been blamed on rains damaging Indian production, although there is growing talk of farmer hoarding, in expectation of higher prices.

Meanwhile, demand remains strong from Chinese mills, which are still enjoying positive margins even after the jump in costs of their main raw material.

Correction ahead? 

The high prices are stoking expectations of a rapid rise in sowings in the US, the major exporter, for the forthcoming season.

"Many farmers sold their last crop ahead at 80 cents a pound," Ms Haque said.

"They are keen to take advantage of current prices. They will plant as many acres as they can."

However, Rabobank warned that the world needed a record cotton crop in 2011-12 "just to maintain the current tight fundamentals".

"An inadequate harvest would likely result in continued record highs," the bank said, adding that the likely scenario was for a "correction in prices" later in the year, assuming the next crop avoids weather scares.

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Why Rising Interest Rates Won't Break the Bull's Run

By DAN BURROWS

Rising interest rates don't usually mean good things for economic growth or stock prices. The yield on the benchmark 10-year Treasury note closed at a nine-month high Wednesday and, sure enough, the following day, Freddie Mac revealed the average rate on 30-year fixed-rate mortgages hit its highest level since April 2010. The 10-year then ticked up again on Thursday, closing at 3.70%.

Homebuyers and CFOs alike know that higher rates mean lower borrowing and less spending. That acts as a drag on the economy , corporate profits and, by extension, share prices.

But the yield on the 10-year still has a way to go before interest rates start to hurt the stock market, reckons Jeffrey Kleintop, chief market strategist at LPL Financial . Indeed, for the time being, rising bond yields are actually good news for the stocks.
"The yield on the 10-year Treasury note has risen by about 1.25 percentage points to 3.65% from 2.39% four months ago," Kleintop writes in his most recent report to clients. "With yields now climbing towards 4%, investors are beginning to wonder when rising interest rates may start to negatively affect stock prices."

At the current rate, the yield on the 10-year note, which serves as the benchmark for everything from credit cards to home mortgages, could reach nearly 5% by the summer, a level last seen in July 2007. But it just so happens that rising yields should mean rising stocks prices, Kleintop says -- at least in the near term.

That because, historically, whenever the yield on the 10-year Treasury was below 5%, stock prices and bond yields rose together, Kleintop notes. It's only when bond yields hit 5% that stocks start to suffer (see chart).

"The reason for the different relationship above and below 5%, and why rising yields are good news for stocks right now, has to do with economic growth and inflation," Kleintop writes. "When yields were rising from a low level, they reflected improving growth and low inflation which was a favorable environment for stocks."

By the same token, when yields were rising above 5%, economic growth was accompanied by higher inflation, which threatened future growth. That hurt the present value of future earnings , which in turn tamped down share prices.

"As economic data continues to reflect solid growth in the coming months, bonds yields and stock prices are likely to continue their climb," says Kleintop. "The tipping point of 5% is still a significant distance away."

For now, the bullish case on stocks can be found in a seemingly unlikely place: a bearish-looking bond market.

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Nokia and Microsoft join forces in smartphone war

By Tarmo Virki

(Reuters) - Nokia and Microsoft teamed up on Friday to build an iPhone killer in a desperate attempt to take on Google and Apple in the fast-growing smartphone market.

Nokia said using Microsoft's Windows Phone software in its smartphones would speed up new product launches, but shares in the world's largest cellphone maker fell sharply on uncertainty about the financial impact of new chief executive Stephen Elop's strategic u-turn."It is now a three-horse race," said Elop, who was drafted in to head Nokia from Microsoft last September.

Elop said the partnership would mean job cuts around the world, while research and development spending would also be slashed.

The deal with Nokia marks a major breakthrough for Microsoft which has struggled for years to establish itself in wireless.

But investors were unconvinced by Elop's new strategy and Nokia shares tumbled 10 percent after Nokia said 2011 and 2012 would be "transition years," fuelling fears of a negative impact on margins.

Nokia said its operating margin would be "10 percent or more" after the transition period, compared with a margin of 7.5 percent for 2010.

"Given that the people who were positive on the stock were looking for mid-teens devices margins by 2012, we can see some cuts to estimates," Richard Windsor, global technology strategist at Nomura said.

Nokia has rapidly lost share in higher-margin smartphones as Apple's iPhone, and products based on Google's Android platform, have revolutionized the market.

Although Microsoft's Windows Phone platform, which had a 2 percent market share in the last quarter, is widely recognized by industry experts as a leading edge technology, it has not yet caught the imagination of consumers.

The decision to throw its lot in with Nokia could put others off using its software, but analysts said that on balance it was Microsoft that would gain most from the deal.

"I do not see LG, Samsung, HTC carrying on with Windows Phone. They are betting everything on (Google's) Android. Nokia's obviously going to have a much deeper integration than the others," said Carolina Milanesi, handsets analyst at IT research firm Gartner.

FEAR FACTOR

Nokia, which has struggled to create a rival to Apple's iPhone phenomenon, is now watching smaller competitors like HTC Corp and Motorola hook up their smartphones to Google's Android software and lure customers around the globe.

"This is a partnership born out of both parties' fear of marginalization at the hands of Apple and Google but there is no silver bullet," said analyst Geoff Blaber from CCS Insight.

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U.S. Housing Market: Under Siege, But . . .

By Prieur du Plessis

The recent Senior Loan Officer Survey (SLOS) by the Federal Reserve Board indicates that U.S. banks are continuing to ease their lending standards on consumer loans (please note the reverse scale on the chart). Consumer confidence is also on the rise.

Sources: FRED; Federal Reserve Board; Plexus Asset Management.

Furthermore, the yield gap between 30-year home mortgage bonds and 30-year government bonds are again testing historical lows.

Sources: FRED; Plexus Asset Management.

By the looks of it the easier money and optimism will support the house market. But do they?

Well, surprise, surprise! Households continue to shun the house market as the SLOS indicates that banks are in fact experiencing a slowdown in demand for mortgage loans.

Sources: Federal Reserve Board; Plexus Asset Management.

At this stage banks are not yet relenting on their tight standards for mortgage loans, but who can blame them given the oversupply in the U.S. market? The question is whether QE2 is in fact producing the necessary results. Obviously not in so far as the housing market is concerned.

Sources: Federal Reserve Board; Plexus Asset Management.

U.S. consumers are probably also fretting about the surge in long-term interest rates and the recent jump in mortgage rates.

Sources: FRED; Plexus Asset Management.

There is some light at the end of the tunnel, though. It seems as if there is a reasonable correlation between house prices and consumer confidence. The latter turning for the better in the final quarter of last year and surging in January may turn out to be positive for the U.S. housing sector.

Sources: FRED; Standard & Poors; Plexus Asset Management.

The outlook for consumer confidence is upbeat if you believe long bond rates.

Sources: FRED; Plexus Asset Management.

Surely that means that the economy has strengthened further, you may ask? Yes, although volatile, the yield on the 10-year government note is in fact a reasonably good indicator of MZM (money zero maturity) and therefore the economy in general. The recent surge in long bond rates indicates that MZM velocity, and therefore the economy, is likely to surge in the current quarter.

Sources: FRED; Plexus Asset Management.

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Beautiful woman seeks rich man, an incredible response!

Pubblicato da elettraprodan

Una seria proposta di affari da parte di una donna bellissima, intelligente e con molta classe e l’incredibile risposta su un sito finanziario.

Donna SexySplendida 28enne cerca uomo con guadagno di almeno 500mila $.

LEI: Sono una ragazza bella (anzi, bellissima) di 28 anni. Sono intelligente e ho molta classe. Vorrei sposarmi con qualcuno che guadagni minimo mezzo milione di dollari l’anno. C’é in questo sito un uomo che guadagni ciò? Oppure mogli di uomini milionari che possono darmi suggerimenti in merito? Ho già avuto relazioni con uomini che guadagnavano 200 o 250 mila $,ma ciò non mi permette di vivere in Central Park West. Conosco una signora che fa yoga con me, che ha sposato un ricco banchiere e vive a Tribeca, non é bella quanto me, e nemmeno tanto intelligente. Quindi mi chiedo, cos’ha fatto x meritare ciò e perché io non ci riesco? Come posso raggiungere il suo livello?

LUI: Ho letto la sua e-mail con molto interesse, ho pensato profondamente al suo caso e ho fatto una diagnosi della sua situazione. Premetto che non sto rubando il suo tempo, dato che guadagno 500 mila $ l’anno. Detto ciò, considero i fatti nel seguente modo: Quello che Lei offre, visto dalla prospettiva di un uomo come quello che Lei cerca, é semplicemente un pessimo affare. E ciò per i seguenti motivi:

1. lasciando perdere i blablabla, quello che Lei suggerisce é una negoziazione molto semplice. Lei offre la sua bellezza fisica e io ci metto i miei soldi. Proposta molto chiara, questa. Ma c’é un piccolo problema. Di sicuro, la Sua bellezza diminuirà poco a poco e un giorno svanirà, mentre é molto probabile che il mio conto bancario aumenterà continuamente. Dunque, in termini economici, Lei é un attivo che soffre di deprezzamento, mentre io sono un attivo che rende dividendi.

2. Lei non solo soffre un deprezzamento ma questo é progressivo ed aumenta ogni anno! Spiego meglio: Oggi Lei ha 28 anni, é bella e continuerà così x i prossimi 5/10 anni, ma sempre un pò meno e all’improvviso, quando Lei osserverà una foto di oggi, si accorgerà che é diventata una pera raggrinzita. Questo significa, in termini di mercato, che oggi lei è ben quotata, nell’epoca ideale x essere venduta, non x essere comprata. Usando il linguaggio di Wall Street, chi la possiede oggi deve metterla in “trading position” (posizione di commercio), e non in “buy and hold” (compra e tieni stretto), che, da quanto sembra, é quello per cui Lei si offre. Quindi, sempre in termini commerciali, il matrimonio (“buy and hold”) con Lei non é un buon affare a medio/lungo termine. In compenso, affittarla per un periodo, può essere, anche socialmente, un affare ragionevole e potremmo pensarci su.

Potremmo avere una relazione per un certo periodo…..Huuummm…. Pensandoci meglio e per assicurarmi quanto intelligente, di classe e bellissima lei é, se possibile, essendo io futuro “affittuario” di tale “macchina”, richiedo ciò che é di prassi: Fare un test drive.
La prego di stabilire data e ora.

Cordialmente

Il suo investitore

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Emerging Markets Not Participating in Global Rally

by Bespoke Investment Group

Of the nearly 200 key ETFs across all asset classes that we track, more than 75% are currently trading above their 50-day moving averages.  Below we highlight the ETFs that are currently in the minority and trading more than 2% below their 50-days.  As shown in yellow, the majority of the ETFs that are struggling track indices or markets outside of the US.  Most of these are emerging market related.  India's INP is the farthest below its 50-day at -12.36%.  Natural Gas (UNG) ranks 2nd worst at -9.26%.

  

It's not the emerging markets in one region of the world that are struggling either.  ETFs that track Brazil, Latin America, China, India, and Asia Pacific are all below their 50-days.  Typically when the US market is rallying, emerging markets are rallying even more.  Bulls looking to outperform the S&P 500 have been using emerging market securities to do so for multiple years now.  Recently, however, this strategy has been a performance killer. 

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TIME TO SHORT COMMODITIES?

by Cullen Roche

That”s what strategists at Nomura are saying.  Nomura says that commodity markets are now mis-priced with risk skewed to the downside.  Despite emerging market equity weakness and tightening, inflation fears have dominated and resulted in this skew.  Nomura says it’s time for an adjustment (via Hedge Analyst):

“Nonetheless, commodity prices too have begun to look stretched relative to other growth assets. Figure 2 looks at the normalised pricing error between each of our growth-related assets and the overall measure of growth implied by the basket, both today and at the launch of QE2 in early November. A few things are clear. First, a lot of the mispricing gaps have started to close since the beginning of the New Year, as G10 rates sold-off and G4 equities caught up with positive growth surprises in the developed economies. Second, in EM equity markets have corrected quite sharply as countries have started to face challenging inflationary winds and tighter monetary policies. Commodities, however, stand out.

Despite the fact that they were already too optimistic with respect to growth in early November, they appear to be even more so in the first months of 2011, with the CRB index making new highs. Clearly, risks in commodities seem to be skewed on the downside, as they are the only asset class that has not reflected the tighter EM policy/ weaker growth backdrop at all. In an attempt to capture those risks we recommend short positions in copper, expecting commodity prices to revert to the recent path lower of commodity currencies.”

Source: Nomura, via Hedge Analyst

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