Wednesday, February 16, 2011

Soybean seedings to set US record, says Deere


Deere & Co entered the furore over preliminary official estimates for US spring plantings by coming out with its own forecasts – pegging sowings of soybeans even larger at a record high.
The tractor maker agreed with the US Department of Agriculture's forecast on Monday that domestic corn sowings will hit 92.0m acres this year.
However, it raised the bid on soybean acres by 1.0m acres to 79.0m acres, easily surpassing the record 77.5m acres set two years ago.
The extra area would come at the expense of wheat, for which seedings were estimated at 55.5m acres, 1.5m acres below the USDA figure, and the lowest – excluding last year's historically low total – for nearly 40 years.
Factoring in the high rate of winter wheat sowings, this figure implies a fall of 1.8m acres in spring seedings – or a rich rate of replanting with other crops of winter wheat areas struggling with a dearth of rainfall.
'Every available acre' 
Overall, Deere concurred with a USDA estimate of an extra 9.3m acres being allocated to the major four crops, including cotton.
"Obviously it's early – too early to know the ultimate outcome," Susan Karlix, manager of Deere investor communications, told analysts.
"That said, our base case calls for planted acres to increase, driven by strong global demand and historically low carryover stocks.
"Good profitability creates an incentive for farmers to plant on every available acre."
However, unlike USDA officials, Deere appeared to back ideas of cuts to sowings of more minor grains, highlighting that its consultants, Informa Economics, had estimated total plantings to major crops expanding by 7.4m acres.
Christmas wish list 
Indeed, it is the USDA's estimate of a total US sowings rising by 10m acres that has caused particular doubt among analysts, and is being blamed in part for a sell-off in crops that continued on Wednesday for a third day.
"Most in the trade are anticipating acres to be up 6m-7m acres," US Commodities said.
At Market 1, Mike Mawdsley said: "It is like plugging in your Christmas list, waking up and all the acres you want have come out."
And at Benson Quinn Commodities, Brian Henry said that while "78m acres of soybeans isn't out of the question, a 10m-acre increase in total planted acres is in question".
While some 4m acres of land has been released from conservation programmes over the last three years, only about 1m acres of that was suitable for corn or soybeans, Jerry Gidel at North America Risk Management said.
Yield question 
He also took issue with Deere's forecasts of bumper yields, with the forecast for corn pegged at 163.4 bushels per acre, 1.3 bushels per acre below its record high, and for soybeans 0.2 bushels per acre from its all-time high.
Estimates of corn yields of 163-64 bushels per acre were "ridiculous" this early in the season, when regression analysis suggested lower figures.
"An estimate of 161 bushels per acre you can defend with your life," he said.
Continue reading this article >>


by Cullen Roche

I think it’s clear that the Fed has no intention of altering monetary policy any time soon (don’t worry equity investors the Bernanke Put is more than intact!), however, some foreign central banks are certainly starting to feel the pressure.  The Economist believes we could see rate hikes in the UK sooner than many believe (this year in fact).  If the seasonal trends in energy prices continue we might even see the Fed begin shaking in their boots.  Ben Bernanke has created something he is quickly losing control of. Not only has he failed to control interest rates, but he has failed to control the madness of crowds.

I still think this environment is ripe for a commodity bubble heading into the summer and there is nothing the Fed can do to contain it.  The Bernanke Put is in and can’t be removed without risking an equity collapse.  On the other hand, if they maintain it, we create an environment that is ripe for malinvestment and speculative bubbles.  Damned if they do and damned if they don’t.  Ben Bernanke plans to do.  The Economist elaborates on their outlook:
“Our latest global forecast, published today (free registration required), sees global growth expectations little changed from last month. However, rising inflationary pressures—fuelled by soaring commodity prices—will bring about interest rate hikes sooner than we previously expected.”

Continue reading this article >>

Sentiment Diverges From the Market

by Bespoke Investment Group

There's an increasingly widespread view in the market that investors are becoming complacent and that all this bullish sentiment is a negative signal for stock prices.  With sentiment surveys from both Investors Intelligence and AAII both showing levels of bullishness above 50%, sentiment is anything but negative.  That being said, in the last several weeks we have begun to see some signs that investors are becoming less bullish as stock prices rise.

The chart below compares the S&P 500 to the Investors Intelligence weekly survey of advisor bullish sentiment.  For most of 2010, the two moved step for step with each other.  When the S&P 500 rose, bullish sentiment increased, and when the market declined, advisors turned less bullish.  Curiously though, towards the end of 2010, bullish sentiment stopped rising even as the S&P 500 kept on chugging along.  Since peaking at 58.8 on 12/22, bullish sentiment has declined by 6.6 points (11.22%).  At the same time the S&P 500 has risen by nearly 6%.  The big question now is, are investors correctly anticipating a correction, or will they be sucked (or as bears would say suckered) back in at higher prices?

Milk prices face 'rather dramatic' rise, says Dean


Milk prices face a "rather dramatic" rally in the first few months of the year, America's biggest dairy group has said, even as values at a benchmark auction hit their highest level since it was launched in 2008.
Dean Foods, which in November forecast that milk prices would fall in the first half of 2011, said that weather setbacks which had held back production growth in Australia and New Zealand, at a time of buoyant demand, had transformed the outlook.
"We now expect dairy commodity prices to climb throughout the first half, before flatting out or declining slightly in the third and fourth quarters," Gregg Engles, the Dean chairman and chief executive, said.
"We expect a rather dramatic move up in dairy prices during the first quarter and early second quarter," he added, terming the rally an "unexpected spike".
Prices rise again 
The comments followed a 3.8% rise to 1,339 in a dairy index compiled by Fonterra, the world's biggest milk exporter, after its latest globalDairyTrade internet auction – surpassing the event's opening reading, in July 2008, which had been its highest.
Whole milk powder saw the biggest increase, up 7.9% since the last session two weeks ago, and taking its price rise over the last year to one-third.
The latest uplift - which took to four months the period since the globalDairyTrade index last fell - followed talk that demand for dairy products was to be boosted by orders from Algeria and India, on top of strong and persistent demand from China.
'Clearly a drag' 
Dean Foods added that the "spiking commodities", and a declining trend sales of fluid milk, left the outlook for early 2011 looking "particularly difficult".
"The… commodity outlook will clearly present a drag on first and second quarter earnings, and will push earnings out of the first half and into the back half, compared to our thinking last fall," Mr Engles said.
However, investors took support from a forecast that the US fluid milk industry was stabilising, albeit at depressed levels of profitability, with Dean Foods' own sector participant, the Fresh Dairy Direct-Morningstar division, see operating income fall 20% to $114m in the October-to-December quarter.
Besides a 3.2% decline in volumes, the business suffered a 30% jump in its benchmark milk price, the Class 1 Mover.
Furthermore, Dean's underlying earnings for the quarter, equivalent to $0.15 a share, beat Wall Street expectations by 1 cent a share.
Dean Food stock jumped 6.2% to $10.40 in morning trade in New York

Another Look at Rally Intensity

By Barry Ritholtz

Over the past few weeks, we have taken several looks at the duration and intensity of this rally (see this, this and this).
The following chart, from Ron Griess of the Chart Store really puts this into context:

S&P Composite 102 Week Rolling Returns

Continue reading this article >>

Survivor Trading System - Trades of 15 February

I trades di Survivor System del 15 Febrraio. I risultati real-time di Survivor e di alcuni altri nostri trading systems sono a disposizione al seguente link:

Trades of Survivor System on 15 February. Real-time results of Survivor and our some other trading systemsare available at the following link:

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.

Ninja Trading System– Recent Closed Trades

I trades di Ninja System del 15 Febrraio. I risultati real-time di Ninja e di alcuni altri nostri trading systems sono a disposizione al seguente link:

Trades of Ninja System on 11 February. Real-time results of Ninja and our some other trading systemsare available at the following link:

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.

US land price 'surge' provokes fears among bankers


Growth in interest by investors has fuelled a doubling in the rate of land price growth in the US agricultural heartland, provoking "concern" among bankers, who have tightened loan criteria.
The price of non-irrigated farmland in the Kansas and surrounding states "surged" by 12.9% in the year to the October-to-December period, the US Federal Reserve said.
The pace was twice that the quarter before, and the fastest since the July-to-September period of 2008, the peak of the last rally in farm prices.
Other land types set two year highs in price growth too, of 9.2% for ranchland and 14.8% for irrigated fields.
"District farmland values surged at the end of the year," the Fed's Kansas City bank said, attributing the increase to "robust" demand both from farmers, flush with profits from high crop prices, and investors.
Bankers' 'concern' 
Indeed, many of the 250 banks contacted in drawing up the data "noted an uptick in investor purchases compared to last year", the Fed said.
"More bankers reported farmland was bought for investment purposes, such as receiving farm rental income and earning capital gains," with interest from oil and gas prospectors rising in Oklahoma and Wyoming.
However, the worsening prospects of covering land costs through rental income, which rose at less than half the pace of the rise in values, had begun to alarm some lenders, the Fed added.
"Some bankers expressed concern that current rental income may not sustain lofty land values, and they were looking closely at loan-to-value ratios.
"With farmland value gains outpacing the increase in cash rents, some bankers were concerned that land values may not maintain their current pace."
Farm 'bubble'? 
The report comes amid increased questioning of the sustainability of the rally in prices of crops themselves, evident in a sell-off in Chicago grains on Tuesday, and some talk, most notably on soft commodity markets.
On Wednesday, for instance, Phillip Futures analyst Ker Chung Yang said that a "that potential correction could be on the cards" for rubber futures, which have already gained some 25% this year in Tokyo, setting a succession of record highs.
On Tuesday, rural economics expert Ernest Goss raised the prospect of a "bubble" in agriculture, inflated by the easy monetary policy exercised by the Federal Reserve and its chairman, Ben Bernanke.
"The Fed and Bernanke must take credit, or blame, for skyrocketing farm prices, farm income and farm land values," Professor Goss said.
However, while asking whether agriculture represented "the next bubble to burst "or "just the beginning of rapidly rising prices for non-food items", he hedged his answer.
"I argue that it is a little of both," Professor Goss sai
Continue reading this article >>

Can the U.S. Sidestep Growing Global Inflation?


Inflation in Britain hits 4%, double the official government target. China reports prices accelerating at 4.9% in January. And Spain says its inflation measure shot up 3% last month. With prices on the march around the globe, can America hope to remain resistant?

A significant part of the inflation scourge now sweeping countries as far away as Brazil, India and the U.K. is a combination of food prices shooting up after droughts in Russia and China and severe flooding in Australia. That was compounded by energy costs moving substantially higher as crude oil topped $100 a barrel last month.

"As far as global food and energy prices are concerned, they will hit us just as much as anyone else," says Polina Vlasenko, a research analyst at the American Institute for Economic Research in Great Barrington, Mass. "But there are also idiosyncratic things in places like China and Russia that won't spill over into U.S. prices."

European Services Inflation Is Spreadable

Vlasenko says some inflation may be imported from cheap-labor markets like India and China, but she's much more concerned about inflation in places like Britain and continental Europe, where spiraling prices are so much rarer.

"Those economies are much more like ours than the Chinese economy," Vlasenko says. "We're not shipping textiles back and forth to Europe, but we are trading in other things including services, and that linkage would be much more direct."

While consumers do snap up Chinese goods like shoes and T-shirts at Walmart, Americans don't spend that much of their collective income on manufactured goods. Rather, they spend a much bigger fraction on intangible services, things like insurance and investments. The same is true for Europe.

"If whatever is causing Europe's inflation is spilling into prices for services, then the same is likely to happen for us," Vlasenko says.

British Peculiarities

Stephen Stanley, chief economist for Pierpont Securities in Westport, Conn., says the global demand for commodities is affecting prices everywhere. "It's certainly not the case that the U.K. is the only one dealing with inflation. Certainly, the eurozone has had some pretty high headline inflation readings." The European Central Bank has publicly signaled its concern about the inflation problem.
He added that Britain does have some peculiarities, namely the fact the pound remains independent of the euro and has declined sharply in recent months, which causes the price of imports to Britain from continental Europe to rise. In addition, the government of Prime Minister David Cameron has imposed a series of sales tax increases that has shown up in inflation data as higher prices.

While Tuesday's inflation report from Beijing was less than some economists had expected, most analysts still believe the Chinese government will have to continue increasing interest rates to keep prices in check. It has already raised rates three times in the last five months.

Stanley says inflation in the U.S. is also likely headed higher from last year's very low levels, with the consumer price index up 0.5 percentage points last month alone.

Why Exclude Food and Energy?

"Going forward, I think inflation is going to accelerate. But I don't think we are looking at the sort of numbers that the U.K. recorded anytime soon," Stanley says.

He noted that the Federal Reserve, which sets interest rate policy based on its readings of unemployment and inflation, prefers to track prices according to "core CPI," which doesn't include food or energy.

But as Vlasenko observes: "If we're trying to ascertain if it's getting more expensive to buy the necessities of life, we should include food and energy."

Perhaps if those numbers were considered, America might be more alarmed about price rises in the future . Such concerns have prompted investors to speculate heavily in inflation hedges, such as gold and silver bullion in recent months. After all, if inflation really starts to spiral upward, it could also kill the recent stock market boom.

Continue reading this article >>

How Inflation Coul Be 66% Higher Than the Fed Reports


Global food prices are at an all-time high , U.S. gasoline prices are at the costliest level ever for this time of the year and yet inflation, in the words of Federal Reserve Chairman Ben Bernanke, remains "quite low."

By official reckoning, that's certainly the case. On Thursday we'll get the latest monthly inflation figures in the form of the consumer price index, which, to the Fed chief's chagrin, is running too close to disinflationary levels. Economists, on average, expect January prices to increase at just a 0.3% rate . So-called core inflation, which excludes volatile food and energy prices, is forecast to rise just 0.1%.

As Bernanke testified before Congress last week, economists exclude food and energy prices because that core inflation rate "can be a better predictor of where overall inflation is headed." By that measure, inflation was only 0.7% in 2010, compared with around 2.5% in 2007, the year before the recession began, the Fed chief explained.

Too bad those numbers don't jibe with with most folks' experience at the gas pump or checkout counter. As economist Ed Yardeni, president of Yardeni Research, told clients Tuesday: "I share the growing concern among the Fed's critics that the official measures of consumer price inflation may be understating actual inflation and that excluding food and energy from these measures is OK as long as you don't eat or drive."

Alternative measures for inflation show a far more alarming picture of price increases than the official data suggest. One of the more intriguing approaches is The Billion Prices Project at the Massachusetts Institute of Technology, which collects daily price changes on about 5 million items sold by approximately 300 online retailers in more than 70 countries.

For U.S. price data, MIT tracks 550,000 products from 53 retailers. By this measure, annual inflation is currently running at a rate of 2.5% -- or 66% greater than the official CPI figure. See the chart above.

Core inflation may have run at just 0.7% in 2010, as Bernanke says, which is the lowest reading on record gong back to 1960. Even if you add back in those pesky food and energy prices, the number rises to 1.2% -- still no big deal. But by the Billion Prices Project's reading, inflation in 2010 more than doubled to 2.5%. "The Billion Prices Project @ MIT is finding plenty of evidence that consumer prices are rising faster than the official price data," Yardeni notes.

Whatever the latest data show Thursday, there's a big difference between inflation as a guide for monetary policy and its real-world impact on conusmers' pocketbooks.

5 Arguments for a Much Higher Oil Price

by James Shell

In the intertest of balance, since after all, in every trade there are two parties with exactly opposite visions of the future, I though I'd go through a few counter-arguments that support the idea that the oil price will go higher at some point in the near future. Keep in mind that a lot of these ideas are not mutually exclusive with my previous post arguing that oil prices should be lower, but might be a matter of timing.... The time horizon on some of these situations might be somewhat longer...

1. Ongoing demand growth in Asia
The argument goes something like this: The economy in China is starting to be driven by internal consumption, i.e. emergence of a local consumer class over there, and therefore a continued soft economy in the US will not slow down Chinese and therefore global demand growth for oil.

Here are a couple of graphs from the January 18th IEA Oil Monthly Report: The first one is just a graphic that says what we all know, Asia is leading the demand growth for this year, the second graph is using IEA data for the previous few quarters and projected until the end of 2011.

As a further point, the January 2010 forecast for 4Q2010 crude oil demand called for 26.7 and 29.7 mbpd for Asia and North America respectively, and the "actuals" for the 4th quarter were 28.2 and 30.4 mbpd respectively. The IEA already forecasts a 1.5 mbpd global demand growth for 2011 and if they turn out to be equally off on their forecast this year, you're really looking at closer to 3 mbpd....

The crossover event, that is the point at which Asia demand exceeds NA demand, will probably happen at the end of 2011 or beginning of 2012, and would have happened already were it not for the efficient nation of Japan actually decreasing its energy demand over the past few years.

2. The Bernanke Effect
This theory is: When the current QE2 or QE3 or whichever we are now on comes up for review in June, the US economy will still be so weak that Bernanke will be forced to continue some form of the practice, thereby further weakening the dollar.

I would refer you to the chart I posted previously:

Which says that the dollar-denominated price of oil is actually going up faster than the gold-denominated price of oil, i.e. More dollars in the system equals a cheaper dollar, weak dollar equals a higher nominal oil price. This will be particuarly true if countries start to trade oil in currencies other than the dollar.

3. There will be increased demand for Oil as an Asset Class.

All distractions aside, there are still a lot of potential black swans floating around and shoes to drop in the financial system, including the likelihood of (2) above, and oil, like all commodities, will increasingly be sought out as a place to park wealth so as to avoid some of the chaos.

The following graph from the IEA that illlustrates this point: Increased use of commodities as an asset class by fund managers and institutions. More demand equals higher pricing. One only need look at the current grain prices as further evidence of this.

4. Questionable ability of OPEC to increase their Production
There has been a lot of conversation lately about the ongoing ability of various OPEC members to sustain a higher level of production. Here's a graph from the IEA that suggests that for awhile in 2007 and 2008, OPEC was able to maintain production at 32 mbpd, which is about 3 mbpd higher than the current level.

Per argument (1) above, there is some risk that there will be roughly that much additional demand by the end of the year in 2011 or more likely by mid 2012. The ongoing question is: what is the ability of OPEC to produce at their formerly demonstrated level, due to supposed depletion of some of their existing fields and what is their capability to bring new production online fast enough to replace it? Publicly, the OPEC ministers are not too worried about it, but there are plenty of theories to the contrary.

5. Headline Chaos
In the five days after April 27, 2010 the oil price increased by an average of a dollar per day because of the actions of a couple of offshore platform workers and their supervisor working in the Gulf of Mexico. That story is still ongoing.

The actions of a single Egyptian security guard, who overzealously shot a demonstrator on January 27, 2010 and touched off the Egyptian Revolution caused a $6 per barrel increase in the WTI price in the following days, and aggravated the short squeeze that sent the WTI/Brent spread to unprecedented levels in the days afterward.

Moral: The "headline effect" bias is toward higher pricing. The actions of some lone, underpaid, overworked person, someplace in the world can cause a pretty dramatic effect like this because of the complexity and fragility of the system as it is now functioning.

The world is chaotic. There are no guarantees on anything. Remember that on your drive home today.

The Undeniable Signs of Inflation

by Markos Kaminis

January's Import and Export Price Report showed significant price increases in both imports and exports, and unfortunately, across both overall measures and those excluding food and fuel. We posit that the chatter that has overwhelmed the financial airwaves of late, making an argument we made years ago mind you, is worth listening to once again. Inflation portends to blindside the market and its caretakers, the group of merry men who shrug off all evil until it is upon them.

Inflation chatter is all the rage again on the financial airwaves. You will recall our important work on this subject from several years ago. If not for a near depression that depressed prices as demand was desolated, the inflation topic would probably have been the highest concern globally over the last few years. However, now that the global economy is recovering, and with China firing up all engines, inflation signs and concerns are resurfacing. Once again, the scent is first found in raw material resources, including rare earth metals, but also in the high use commodities of energy and agriculture. Those factors were at play again in driving January 2011 Import and Export Prices higher. For now, talking-head speak-easies are blowing off the possibility of feed through to finished goods, but it won't be the first train that runs them over either. Stick with The Greek, and I'll do my best to keep you out of the way of the loco.

More signs of economic recovery, and also inflation, were found in the latest import/export prices data, reported today by the Bureau of Labor Statistics for January. Import prices gained 1.5% in January, marking the fourth consecutive month of plus one percent increases. That is something that last occurred in July 2008, which to help you recall the period, was a time in which the now extinct Washington Mutual beast still roamed the earth, though in small numbers.

The drivers of import price growth are the same now as they were then, commodities, including energy. Fuel import prices increased 3.9% in January, a snail's pace compared to the 14.1% jump that characterized the previous three months. But January's pace is not to be ignored, and neither is the 12.4% increase of the past year, a period characterized by economic recovery.

Behind the gains in energy prices were a 3.4% increase in petroleum prices, which have since been dwarfed on Middle East upheaval. And look deeper, as Natural Gas prices advanced 13% through the month. It was a period in which much of the US got buried in snow. In fact, cold and snowy weather so affected fuel usage, that natural gas recently fell below its five-year average for this time of year. As reported by the EIA in its weekly update, for the period ending February 4, Natural Gas Inventory stood 45 Bcf below the five-year average. If things were to continue to trend, we might test the bottom of the historical price range, though the weather is warming significantly across the country this week. Still, the hijacking of several oil tankers in a short span of time, along with raised Middle East worries, have oil supply uncertainty adding to push natural gas prices higher with oil; it being a regionally sourced commodity that is increasingly a replacement resource for oil.

Drunken train track wandering market guides should take note of the horn in the distance, as non-fuel import prices increased by 0.8% in January. The noteworthy rise was driven by industrial supplies and materials (unfinished metals and chemicals drove this), finished goods, and foods, feeds, and beverages. Consumer goods prices moved 0.3% ahead, with the largest contributors to the increase coming from a 0.9% hike in apparel, footwear, and household goods prices, and a 4.0% rise in jewelry prices. Prices for automotive vehicles rose 0.5%, led by a 1.2% increase in parts prices. Here we see examples of price increase that affect every consumer.

Price increase is still mostly found in raw materials or unfinished goods, but in the case of rising cotton prices, it is finding its way through to textiles and clothing (apparel up 0.9%). Meanwhile, the government just approved increased ethanol usage in gasoline, which in the past led to mayhem within the whole of agriculture. While December's increase in non-fuel import prices was just 0.3%, November's also marked 0.8%, another measure that draws comparisons to 2008.

Export Prices

Export prices also increased significantly in January, rising 1.2%. The advance for the full year was 6.8%, the largest 12-month increase since that same late 2007 (Sept.) through 2008 (Sept.) period; just before the walls came completely tumbling in on the economy. As the economy improves, it also affects demand for agricultural goods. It is not that people eat more, though that is certainly the case as well (especially for the malnourished), but also that they eat more proteins and more processed foods. As families rise in class, which is occurring in China and India, they also consume more, and more proteins. This in turn pushes prices higher for proteins and for the feeds used to raise livestock, which are likewise derived from agriculture.

Meanwhile, what seems to be climate change driven drought in Russia and this year in China, restricting important supply sources, will only increase pressure on the whole of agricultural goods, and inevitably processed foods. Agricultural export prices rose 3.2% in January, adding to a dramatic 12-month advance of 22.6%. Price increase was driven by advances in soybeans, corn and wheat. While cotton declined fractionally in January, it has more than doubled over the past year. And a recent freeze in Mexico has completely wiped out some vegetable crops and will certainly drive prices higher for Americans.

That is not the end of the story though, as prices for non-agricultural exports also advanced considerably, rising 0.9% in January. Higher prices for industrial supplies and materials, capital goods, and automotive vehicles more than offset a 0.4 percent drop in prices for consumer goods. Higher airfares also contributed to the overall increase, and those of course are impacted and related to increased fuel costs. Consumer goods prices might also benefit from dollar play (longer term), and also economies of scale gained as sales grow. Nonagricultural goods prices are up 5.3% over the last 12 months; that's pretty inflationary for dollar pegged trading partners.


Prices of goods imported from China increased 0.3% for the fourth month in a row. Chinese goods are up 1.4% over the past year. That's healthy price rise, and you will see more of this if the US government gets its way with regard to the Yuan. You might see more US jobs return too, but that is debatable, since they might simply find a new foreign home, say maybe Indonesia. Prices of goods from Japan and all our major trading partners were up, with significant increases from the EU, Mexico and Canada, due to fuel.


The pace of price increases should intensify as competition for scarce resources squeezes them. With factors at play like civil unrest, wild weather and even pirating and regulation (like with off-shore oil drilling), it seems clear to me that the inflation train is roaring our way. We think dollar dilution, and the Fed's inflated view of its ability to reverse the curse, should also burden the economy in the future, especially if US Treasuries lose their luster globally. Meanwhile, outside of recent stock market gains, wealth is down due to home value declines. Income should be down also, given high unemployment. Banks may be opening up a bit, but it should take some time, to maybe never, before free capital flow comes to be again (and good riddance). Thus, there's a tight rein around economic horsepower.

We must look towards the expansion of the developing world as the cure for what ails us. In this regard, the birth of new democracies is a good thing, but global instability and weak human nature are ugly flies in that ointment, and could ruin everything.

Continue reading this article >>

What Is Wrong With The U.S. Economy? Here Are 10 Economic Charts That Will Blow Your Mind

by The Economic Collapse

The 10 economic charts that you are about to see are completely and totally shocking.  If you know anyone that still does not believe that the United States is in the midst of a long-term economic decline, just show them these charts.  Sometimes you can quote economic statistics to people until you are blue in the face and it won't do any good, but when those same people see charts and pictures suddenly it all sinks in.  What is great about charts is that you can very easily demonstrate what has been happening to the economy over an extended period of time.  As you examine the economic charts below, pay special attention to what has been happening to the U.S. economy over the last 30 or 40 years.  The truth is that what is wrong with the U.S. economy is not a great mystery.  All of the economic problems that we are experiencing now have taken decades to develop.  Hopefully the charts in this article will help people realize just how nightmarish our economic problems have become, because until people start realizing how incredibly bad things have gotten they will never be willing to accept the dramatic solutions that are necessary to fix our financial system.

The sad fact of the matter is that we have been living in the biggest debt bubble in the history of the world over the last 40 years.  All of this debt has purchased a wonderful standard of living for the vast majority of us, but all of this debt has also destroyed the economic future of our children and our grandchildren.  Someday future generations will look back on what we have done in absolute horror.

The 10 economic charts posted below are meant to shock you.  Most Americans today need to be shocked before they will be motivated to take action.  Please share these charts with as many people as you can.  Hopefully we can wake enough people up that something will be done about all of these problems while there is still time.

1 - Government spending is expanding at an exponential rate.  As you can see from the chart below, federal spending is almost 18 times higher than it was back in 1970.  Now Barack Obama has proposed a budget that would increase U.S. government spending to 5.6 trillion dollars in 2021.  Just imagine what the following chart would look like if that happens....
2 - U.S. government debt is absolutely exploding.  The U.S. national debt is currently $14,081,561,324,681.83.  It is more than 14 times larger than it was back in 1980.  Unfortunately, the national debt continues to grow at breathtaking speed.  In fact, the Obama administration is projecting that the federal budget deficit for this year will be an all-time record 1.6 trillion dollars.  Can we afford to continue to accumulate debt at this rate?....
3 - Unless something changes right now, the outlook for U.S. government finances in future years is downright apocalyptic.  The chart posted below is from an official U.S. government report to Congress.  As you can see, it is projected that interest on our exploding national debt is absolutely going to spiral out of control if we continue on the path that we are currently on....
4 - Household debt has soared to almost unbelievable levels over the last 30 years.  The sad truth is that it is not just the U.S. government that has a massive debt problem.  U.S. households have also been accumulating debt at a staggering rate.  Total U.S. household debt did not pass the 2 trillion dollar mark until the mid-1980s, but now total U.S. household debt is well over 13 trillion dollars....
5 - The total of all debt (government, business and consumer) in the United States is now well over 50 trillion dollars.  For the past couple of years this figure has been hovering around a level that is equivalent to approximately 360 percent of GDP.  This is a debt bubble that is absolutely unprecedented in U.S. history....
6 - As tens of thousands of U.S. factories get shut down and as millions of our jobs get shipped overseas, the number of unemployed Americans continues to go up and up and up.  As you can see from the chart below, there has been a long-term trend of increasing unemployment in the United States.  In fact, there are about 3 and a half times as many unemployed workers in the United States today as there were when 1970 began.  These jobs losses are going to continue as long as we allow our corporations to pay slave labor wages to workers on the other side of the globe.  All of the major trends in global trade are very bad for the U.S. middle class.  For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990.  How long will our politicians stand by as our nation bleeds jobs?....
7 - The median duration of unemployment in the United States is in unprecedented territory.  For most of the post-World War 2 era, when the median duration of unemployment in America reached 10 weeks that was considered a national crisis.  Well, today competition for jobs is so intense that the median duration of unemployment is now well over 20 weeks....
8 - Since the Federal Reserve was created in 1913, the value of the U.S. dollar has declined by over 95 percent.  One of the reasons given for the existence of the Federal Reserve is that the Fed helps control inflation.  But that is a huge lie.  The truth is that the United States never had consistently rampant inflation until the Federal Reserve took control.  In particular, once the U.S. totally went off the gold standard in the 1970s inflation really started escalating out of control....
9 - Now the Federal Reserve says that the solution to our current economic problems is to print even more money out of thin air.  The games that the Federal Reserve is playing with our money supply are simply inexcusable.  Just look at what the Federal Reserve has done to the monetary base since the beginning of the recession....
10 - All of this new money is creating tremendous inflation.  In particular, the price of oil is now ridiculously high.  A high price for oil is very, very bad for the U.S. economy.  Our entire economic system is based on being able to use massive quantities of very cheap oil.  Unfortunately, that paradigm is starting to break down and the consequences will be very bitter.  Back in mid-2008, the price of oil hit an all-time record of $147 a barrel and subsequently the world financial system imploded a few months later.  Well, the price of oil is on the march again and that is very bad news for the U.S. economy....
Needless to say, if the economic trends documented by the charts above continue the U.S. economy will be totally wiped out.  The U.S. economy as it currently exists is unsustainable by definition.  It is only a matter of time before we slam into an economic brick wall.

We have developed an economy that cannot function without debt, and at this point it seems like almost everyone is drowning in red ink.  The federal government is massively overextended, most of our state and local governments are massively overextended, most of our major corporations are massively overextended and the majority of U.S. consumers are massively overextended.

The only way that the game can continue is for the Federal Reserve to print increasingly larger amounts of paper money out of thin air and for everyone in the economic food chain to go into increasingly larger amounts of debt.
But no debt spiral can go on forever.  At some point this entire house of cards is going to collapse.

When that happens, there is going to be economic pain that is greater than anything that this country has ever seen before.

Someday we will all desperately wish that we could go back to the "good times" of 2011.  A great economic collapse is coming, and all of us had better get ready.

Continue reading this article >>


by Cullen Roche

There has been a great deal of chatter in recent weeks about how the US money supply is suddenly exploding to the upside.  This case has been primarily built on the back of the recent uptick in M2.  We’ve previously noted that the broader money supply (m3 according to various independent sources) is still contracting on a year over year basis.

In addition, we have shown that the expansion in the money supply is nothing compared to what China has been doing.  But even when taken alone, the M2 data is nothing all that extraordinary.  In fact, it is still expanding at well below its historical levels.  While we’re seeing some tepid signs of inflation (almost entirely due to non-core) the broader data still shows a very weak case for high levels of inflation in the USA this year.

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