Worldwide Fertilizer Consumption

Wednesday, April 30th, 2008

April 30, 2008 - Courtesy of NYTimes.com - This is for those of you who have invested in Potash, Monsanto, Mosaic, Agrium, et al.

Click for the larger map. 

Hat Tip: Barry Ritholtz, The Big Picture.

Tags: Agriculture, Markets
Posted in Markets | No Comments »

Jeff Rubin: The Age of Scarcity (04/24/08)

Wednesday, April 30th, 2008

April 30, 2008 - CIBC World Markets Chief Strategist, Jeff Rubin, says that Oil will eventually reach $150/barrel in 2010 and over $200/barrel by 2012. He cites among the leading reasons, the advent of cheap cars from India and China, or rather Tatas and Cherys, that will enable millions of middle class Asians who couldn’t previously afford a car, to do so, Take these developments and place them agaisnt the backdrop of peak oil and a decline in oil exports from key suppliers, Saudi Arabia, Russia and Kuwait, and we are in the midst of a long term supply/demand imbalance. Here are couple of excerpts:

Whether we are already at the peak in world oil production remains to be seen, but it is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity.

Our latest review of probable supply suggests oil production will hardly grow at all, with average daily production between now and 2012 rising by barely more than a million barrels per day (see pages 4-7). Despite the recent record jump in oil prices, the outlook suggests that oil prices will continue to rise steadily over the next five years, almost doubling from current levels.

While global oil supply is not growing, global gasoline demand is, and will continue to grow as cheap cars from Tata and Chery dramatically cut barriers to car ownership in the developing world. Millions of new households will suddenly have straws to start sucking at the world’s rapidly shrinking oil reserves.

Car purchases in Russia, for example, are exploding as US sales stagnate (Chart 2), while in India the advent of the Tata Nano, a car that will sell for as little as US$2,500 will allow millions of households in the developing world to own automobiles when they otherwise could not. It is the savings necessary to buy a car, not the price of gasoline that poses the greatest obstacle to fuel demand growth in those countries. But between rapidly rising domestic incomes and rapidly falling car prices, that obstacle is becoming more and more surmountable.

To read the complete report, click here:

StrategEcon: The Age of Scarcity, CIBC World Markets, April 24, 2008

Tags: Asia, Chery, CIBC World Markets, Economy, energy, India, Jeff Rubin, Middle Class, oil, Russia, Scarcity, Tata
Posted in Agriculture, Banks, Brazil, CPI, China, Commodities, Credit Markets, Crude Oil, Economy, Emerging Markets, Financials, Geo-political, Gold, India, International Markets, Latin America, Oil & Gas, Russia, energy | No Comments »

Hard numbers: The economy is worse than you know

Wednesday, April 30th, 2008

April 30, 2008 - Kevin Phillips, author of Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, published a recent article in Harper’s Magazine, about the way in which economic statistics have been massaged over many years by many White House administrations, one after the other, in order the mask the true nature of the US economy over the years. Here are some excerpts from this excellent article:

Ever since the 1960s, Washington has gulled its citizens and creditors by debasing official statistics, the vital instruments with which the vigor and muscle of the American economy are measured. The effect has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed.

The story starts after the inauguration of John F. Kennedy in 1961, when high jobless numbers marred the image of Camelot-on-the-Potomac and the new administration appointed a committee to weigh changes. The result, implemented a few years later, was that out-of-work Americans who had stopped looking for jobs — even if this was because none could be found — were labeled “discouraged workers” and excluded from the ranks of the unemployed, where many, if not most, of them had been previously classified. By the 1969 fiscal year, Lyndon Johnson orchestrated a “unified budget” that combined Social Security with the rest of the federal outlays. This innovation allowed the surplus receipts in the former to mask the emerging deficit in the latter.

Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He asked his second Federal Reserve chairman, Arthur Burns, to develop what became an ultimately famous division between “core” inflation and headline inflation. If the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of “volatility,” categories that happened to be troublesome: at that time, food and energy. 

Core inflation could be spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. (The economic commentator Barry Ritholtz has joked that core inflation is better called “inflation ex-inflation” — i.e., inflation after the inflation has been excluded.)

In 1983, under the Reagan administration, inflation was further finagled when the Bureau of Labor Statistics (BLS) decided that housing, too, was overstating the Consumer Price Index; the BLS substituted an entirely different “Owner Equivalent Rent” measurement, based on what a homeowner might get for renting his or her house. This methodology, controversial at the time but still in place today, simply sidestepped what was happening in the real world of homeowner costs.

In addition to Phillips’ assertions here, The US Government stopped publishing money supply statistics, specifically M3, so that we would no longer be able to track the amount printed money that gets added to the country’s money supply every year since. Hmmm…?

Read this complete article here: Hard Numbers: The Economy is Worse Than You Know, Harpers Magazine, courtesy of TampaBay.com, April 25, 2008.

Tags: Bad Money, Bad Money: Reckless Finance, Barry Ritholtz, Economy, Failed Politics and the Global Crisis of American Capit, inflation, Kevin Phillips, Markets, The Big Picture
Posted in CPI, Economy, Financials, Geo-political, Gold, Markets, Monetary Policy, Politics, Strategy, inflation | 1 Comment »

A Look at Alan Greenspan’s Long Lost Thesis

Wednesday, April 30th, 2008

April 28, 2008 - Barron’s magazine has gotten their hands on Alan Greenspan’s Ph. D. thesis and provides analysis. The bottom line is that Greenspan long underestimated the potential effects of a popped housing bubble. Here are some excerpts:

There are only two known copies: the Maestro’s own and the one we viewed. As far as we can tell, Barron’s is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU’s Bobst library at Greenspan’s request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board. Glancing at the document, we momentarily felt like Indiana Jones at the dramatic moment in which he discovers the Lost Ark of the Covenant.

We were tickled to find that the work’s introduction includes a discussion of soaring housing prices and  their effect  on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: “There is no perpetual motion machine which generates an ever-rising path for the prices of homes.”

Greenspan, however, didn’t foresee a housing mania spilling into the general economy, toppling banks and brokerage houses and paralyzing key portions of the credit system. The worst he could anticipate was that a sharp “break in prices of existing homes would pull down the prices of new homes to the of construction costs or below, inducing a sharp contraction in building.” Back then, there were no home-equity lines of credit, derivatives or subprime mortgages. Mortgages were largely concentrated at savings and loans. Credit was harder to come by, too, because conventional mortgage rates were about 8.5% and headed significantly higher. Still, the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade’s housing mania.

For the complete article click here: Looking At Greenspan’s Long Lost Thesis, Barron’s, April 28, 2008.

Tags: Alan Greenspan, Economy, Fed, inflation, Markets, Monetary Policy, Ph. D., Thesis
Posted in Credit Markets, Economy, Financials, Fixed Income, Gold, Markets, Monetary Policy, Politics, Satire, Strategy, inflation | No Comments »

Jim Rogers: All My New Money Is Going To Commodities and China

Wednesday, April 30th, 2008

April 27, 2008 - A recent Bloomberg article quotes Jim Rogers as to his bent for Chinese stocks and Commodities. Specifically, Rogers is focusing his attention in China in the areas of agriculture, airlines, tourism, and education. 

“All my new money goes to commodities and China,’’ said Rogers. 

“All the panic looks like a bottom,’’ he said. “I have bought in the last four to five weeks. I’ve been buying shares in China for the first time in a long time.’’

“China has a huge agricultural problem,’’ Rogers said. The “government is doing everything it can to revive the agriculture industry.’’ 

Rogers was bullish on the Chinese yuan, saying it could eventually rise to 2 yuan per dollar.

“Don’t sell your renminbi (yuan), because it will go a lot higher in the next 20 years,’’ Rogers said.

Apparently the folks at Morgan Stanley do not agree with Rogers, saying that China is a “sell.” Rogers appears to disagree vehemently. 

Selling Chinese shares in 2008 “is a big mistake,’’ said Rogers, adding that he had also bought stocks in Singapore, Taiwan and Hong Kong. “I have never sold any Chinese shares.’’ 

The complete article is available by clicking below:

Investor Jim Rogers Buys Chinese Shares as Markets Hit Bottom, April 27, 2008, Bloomberg

Tags: Agriculture, China, Commodities, Jim Rogers, Markets, RMB, Yuan
Posted in Agriculture, BRIC, China, Commodities, Crude Oil, Emerging Markets, Gold, Infrastructure, Markets, inflation | No Comments »

Inflation Abounds

Tuesday, April 29th, 2008

April 29, 2008 - Courtesy Barry Ritholtz, The Big Picture - The Federal Reserve is now in day 1 of their two day meeting. The statement we get tomorrow, and the minutes we will read next month are likely to be intriguing.

Why? The longstanding official myth that inflation is modest, and contained is starting to be recognized for the fraud that it is.

Examples abound: The Times of London: Food-price inflation has already pushed up a typical family’s weekly shopping bill by 15 per cent in a year (Era of cheap food ends as prices surge). Yet here in the US, the BLS has food prices up only 4.5% year over year (that’s with the dollar down ~2% vs. the pound)

The price of rice has increased dramatically in recent weeks due to crop failure overseas and resulting hoarding… Rice has doubled in price in six months. (Bay Area Shoppers Asked To Limit Rice Purchases

During the first week of April…leisure fares from traditional carriers on 280 major routes rose 13

percent from the previous year…We’ve got an industry that’s in trouble,” said Vaughn Cordle, chief

executive and chief analyst at AirlineForecasts in Washington. “If oil prices stay anywhere near $100,

$120 for the year … we’ll have a massive restructuring of the airline industry.” (Summer travel headaches loom as airlines’ woes deepen).

All these obvious price increases are begining to undermine confidence int he Federal Reserve. We see article like this one in the San Diego Union-Tribune:The Fed’s inflation gauge isn’t realistic, critics say and this one in Harpers: “Numbers Racket: Why the Economy is Worse than We know.”

Sources:Era of cheap food ends as prices surge

Steve Hawkes, Greg Hurst and Valerie Elliott, Times Online, April 23, 2008

http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article3799327.ece

Moms’ new battle: The food price bulge, Parija B. Kavilanz,

CNNMoney.com, April 21, 2008: 10:33 AM EDT http://money.cnn.com/2008/04/21/news/economy/moms_foodshopping/index.htm

The Fed’s inflation gauge isn’t realistic, critics say Dean Calbreath, San Diego UNION-TRIBUNE, April 17, 2008, http://www.signonsandiego.com/news/business/20080417-9999-1n17inflate.html

Tags: Barry Ritholtz, Fed, Federal Reserve, inflation, inflation abounds, Markets
Posted in Credit Markets, Economy, Markets, Monetary Policy, inflation | No Comments »

Peter Bernstein: Doesn’t Like What He Sees

Saturday, April 26th, 2008

April 26, 2008 - Wall Street Journal recently interviewed Peter Bernstein, Founder of Peter L. Bernstein Inc. In the interview Bernstein shares some candid thoughts about the state of the market. Here are some excerpts:

…When you think about how all of this will work out in the long run, we are going to have an extremely risk-averse economy for a long time. The lesson has painfully been learned. That’s part of the problem going forward. You don’t have a high-growth exit from this, as you’ve had from other kinds of crises…

…One of the things that gave people a sense that they could afford to take risks was the sense that the central bankers more or less know what they are doing. But I don’t think we are going to feel that way going forward…

…We have to go back to a moment when people have the courage to borrow and lenders have the courage to lend. Until credit is going up instead of down, you can’t have growth. Housing has got to be a very important part of that; it always has been. You have to reach a point where somebody says, “This house is cheap, I am going to buy it,” or where some businessman says, “This is a great opportunity for us to expand our business. Everything is available to us.”

To read the full interview, click here: WSJ: One Guy Who Has Seen It All Doesn’t Like What He Sees,  April 26, 2008, Wall Street Journal

Tags: Markets
Posted in Markets | No Comments »

Dennis Gartman: Equity Markets Are Stronger Everywhere

Saturday, April 19th, 2008

April 19, 2008 - In a recent note Dennis Gartman opines that equity markets are stronger everywhere, but that stronger upside volumes would be more re-assuring.

The more we consider the notion put forth here yesterday (following the suggestion made to us by our old friend, Mr. Mark Fisher of MBF Trading in NY at his seminar earlier this week) that we wish to buy “Necessities” and to be short of “Accessories,” the more we like it.

Consumers… as their job prospects weaken; as unemployment rises; as they begin to save more and spend less… will abjure Tiffany’s, and Coach, and Harley Davidson, and WholeFoods and will embrace Wall-Mart, and Johnson & Johnson, and Proctor and Gamble. They will abjure Moet Chandon; they will embrace Budweiser. They will toss of Panera Bread; they will instead buy Kellogs’s products.

Look then at the charts of each, and the “Necessities” are, as we like to say, moving from the lower left to the upper right, while the “Accessories” are moving from the upper left to the lower right.

Click below for the complete story

Dennis Gartman: Equities are stronger everywhere…

Tags: Canadian Stocks, Commodities, Economy, Markets
Posted in Markets | No Comments »

Murray Pollitt: The History of Gold

Saturday, April 19th, 2008

April 19, 2008 - Murray Pollitt, President of Pollitt and Co. Inc., provides an excellent account of the history of gold. If you’re wondering about the importance of gold throughout financial history, this piece is a must read. Here is an excerpt:

In normal circumstances a Central Bank can increase money supply in a nanosecond. A supermarket can increase the supply of oranges in a day or two. A mine, steel mill or oil refinery with surplus capacity can increase output in a few weeks. General Motors can increase the supply of Silverado trucks in a few months, and a farmer can increase the supply of wheat in a year. It may take two or three years to build a ship or to expand an industrial facility. But to build a greenfield oil refinery or generating plant, timing is anybody’s guess. Ten years would not surprise. Ditto for a new gold mine.

Click below for the complete story.

Gold 2008, by Murray Pollitt, P. Eng

Thanks Mr. Pollitt.

Tags: Commodities, Currency, Economy, Gold, Metals
Posted in Markets | No Comments »

New Yorker: Jonathan Franzen on China

Wednesday, April 16th, 2008

April 16, 2008 - Every week or two, New Yorker Magazine interviews well known authors and other culturally connected people. This week’s insightful interview is with bestselling author of The Corrections, Jonathan Franzen, about his experiences and observations from his recent journey to China. Franzen had a toy bird and wanted to see where it came from, where it was made. In the interview he discusses the country’s rapid growth, the newness of China vs. America and the pros and cons, the enviromental impact of industrialization, and his personal views and experiences in China. Its a great listen.

Monday, April 14, 2008, 12:00:00 AM

Jonathan Franzen talks about his journey to China.

Toy Story

080421_outloud_franzen.mp3

Franzen Bio: Jonathan Franzen was born in Western Springs, Illinois, in 1959, and grew up in Webster Groves, Missouri, a suburb of St. Louis. After graduating from Swarthmore College in 1981, he studied at the Freie Universit„t in Berlin as a Fulbright scholar and later worked in a seismology lab at Harvard University’s Department of Earth and Planetary Sciences. In addition to winning a Whiting Writers’ Award in 1988 and the American Academy’s Berlin Prize in 2000, he has been named one of “Twenty Writers for the 21st Century” by The New Yorker and one of the “Best Young American Novelists” by Granta.

Mr. Franzen is the author of The Twenty-Seventh City (FSG, 1988) and Strong Motion (FSG, 1992) and is a frequent contributor to Harper’s and The New Yorker (where portions of The Corrections have appeared). He lives in New York City.

Tags: ambition, China, Journey, toy factories
Posted in China, Markets | No Comments »

Paul Volcker: The Mother of All Crises

Tuesday, April 15th, 2008

April 15, 2008 - Courtesy of Prieur du Plessis, Investment Postcards - The video clips below are must-see material recorded during former Fed chairman Paul Volcker’s address of last week to the Economic Club of New York on the credit crises and related matters.

Volcker, who headed up the Fed from 1979 to 1987, said the credit crisis is the “mother of all crises” and the modern financial system has “failed the test of the market-place”.

“The transient causes of extreme leveraging have been exposed by force of circumstance. The nation’s spending and consumption are being brought into line with our capacity to produce,” said Volker.

“The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers, transcending in the process certain long-embedded Central Banking principles and practices … What appears to be in substance a direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time-honored central bank mantra in time of crisis: lend freely at high rates against good collateral; test it to the point of no return.”

When asked about the possibility of a dollar crisis, Mr. Volcker retorted, “Dollar crisis … you don’t have to predict it, you’re in it … Let me remind you that the dollar after all is a fiat currency backed only by the word and policies of our government, policies exemplified by an independent Central Bank committed to maintaining price stability.”

Please click the images below for the views of arguably the greatest ever Fed chairman.

Please click on the following links for the rest of Volcker’s speech: Part 2, Part 3, Part 4 and Part 5.

Hat tip: RemiG2006

Tags: credit market, Currency, Economy, Markets
Posted in Markets | No Comments »

John Embry: Credit Creation Mechanism Appears to be Broken

Sunday, April 13th, 2008

April 13, 2008 - In his latest article, Sprott Asset Management’s, John Embry assails the central banks for messing around with the system and interfering with the market for precious metals, in order to further their own hidden agendas. here are a couple of excerpts:

Make no mistake, there is a concerted effort to suppress the gold price. The central banks are worried about the message being sent by a sharply higher gold price while their bullion bank allies are agonizing over mounting losses on their outlandish short positions. All one has to do is observe what is going on in other commodity markets (oil, platinum, palladium,.etc.) to appreciate the extent to which the gold and silver prices are being restrained.

Subsequently, he adds that it now takes five dollars of credit to create a dollar of GDP growth.

In addition as economic growth cycles mature they require more and more credit creation to creat the same amount of GDP growth. it wasn’t that long ago that it took one dollar of credit creation to create a dollar of real GDP growth. Recently, it has taken five dollars of credit creation to create a dollar of real GPD growth.

This helps to explain the explosion in the ratio of outstanding debt to real GDP in the U.S., a figure that has reached levels never remotely approached before. In fact, we have experienced the worst credit excesses in living memory in this cycle. Now that the credit-creation mechanism appears to be broken, is it any wonder that the Fed is giving every impression of panic? Without sufficient credit creation at this juncture, the economy could simply implode.

Our guess was simply that there have been substantial gold sales by central banks as a result of the need to support the dollar. When the yen reached 96.4 yen/dollar all three major central banks intervened to put a floor under the dollar, or, rather, a cap on the yen. The fall of the US dollar was aggravating the credit market’s wound.

Simply put, no one can afford to have the dollar get so cheap that it hurts. Following the central bank intervention, gold’s price plummeted while the dollar recovered by 5 or 6% against the yen.

Both ideas are equally compelling. Both ideas serve to shed light on what is going on behind the scenes.

Here is a link to read the complete article from Investor’s Digest. We assure you, its worth reading.

Credit Creation Mechanism Appears to be Broken, John Embry, April 18, 2008

Tags: Commodities, credit market, Economy, Gold, Metals
Posted in Markets | No Comments »

Jim Rogers: Bullish China and Commodities

Sunday, April 13th, 2008

In this week’s Barron’s interview (Jim Rogers, Light-Years Ahead of the Crowd: Interview With James B. Rogers, Private Investor), with Laurence Strauss of Barron’s, Jim Rogers, author of Investment Biker, notable hedge fund manager and former partner of George Soros discusses his point of view on China, commodities, and the US economy. Here are some excerpts: On China: 

Why are you so bullish on China?

 

China is going to be the next great country. The 19th century was the century of the U.K. The 20th century was the century of the U.S. The 21st century is going to be the century of China. Even if I’m wrong, there are 1.5 billion people who speak Chinese every day, so it’s not as if our daughter is learning Danish. Even if she winds up working in a Chinese restaurant, she is going to be the maitre d’ — not the dish washer.

 

What else intrigues you about China?

 

China was in decline for 300 years and then around 1978 Deng Xiaoping said, “OK, let’s find something new.” He reintroduced entrepreneurship and capitalism to a country that has had a long, long history of both. In China they save and invest more than 35% of their income; in America we save less than 2%. The Chinese work from dawn to dusk. When they come to work, they don’t say, “How many holidays do I get?” They want to live like we do in America and they are willing to work hard, save and invest for the future.

 

What about investment opportunities in China?

 

Perhaps the safest investment is the renminbi, the Chinese currency. I don’t see how the renminbi should not go up against the dollar, anyway, for the next several decades. Commodities, of course, are a great way to invest in China. If you have nickel, they will take you to dinner, pay for dinner and pay you on time. They have to buy commodities. And there are some industries in China that are going to do well, no matter what happens to the world economy — water treatment, for instance. China has a horrible water problem that it is doing something about.

 

What other industries in China look interesting?

 

Agriculture. Mao Zedong [who ruled China from 1949 until his death in 1976] totally ruined agriculture. China now is spending huge amounts of money trying to rebuild agriculture. The same goes for power generation. Another growing industry is tourism; the Chinese have not been able to travel for some 300 years, for a variety of reasons. But now the government is making it much easier to get passports, and they are encouraging travel.

On Commodities:

 

Are we still in the early stages of a bull market for commodities?

 

I wouldn’t say it’s early; the commodities bull market started in early 1999. There are going to be corrections — and big ones — along the way. That’s true for every bull market.

 

But nobody has brought on any new supply of anything in the past 25 or 30 years. The last gigantic oil field was discovered in the 1960s. The number of acres devoted to wheat farming has been declining for more than 30 years. Food inventories are the lowest they’ve been in 60 years.

 

 

Our colleague Gene Epstein argued in a recent Barron’s cover story that there is a huge speculative element pushing up commodities prices.

 

But where is the oil coming from that’s going to drive down prices and keep them down? We are going to have corrections, as was the case in 2001 after 9/11. Is there speculation in commodities? Of course. Whenever you have a bull market, it draws money. If the fundamentals are right, investors make money and they want to make more. But people were buying commodities for 20 years in the 1980s and 1990s and nothing happened, because the fundamentals weren’t right yet. Now that the fundamentals are right, more money is going into commodities. It will end in a bubble and hysteria. But in 2018, or whenever this bubble finally starts to peak, if I’m lucky you will call me up and I’ll say it’s time to sell commodities.

On Emerging Markets:

 

Why have you sold most of your emerging market holdings?

 

Take Africa as an example. It’s a natural- resource-based economy, so a huge fortune is going to be made there in the next 10 years. Many countries will look a lot better because they do have lots of natural resources.

 

Having said that, right now there are probably 15,000 MBAs on airplanes flying around the world looking for emerging markets, some of which are now called frontier markets. I’ve been investing in these markets for many years and all of a sudden they have a name. That’s why I have sold all my emerging markets except China and Taiwan.

 

But I hope I’m smart enough that if and when there is a big correction, I’ll be able to buy back some of those holdings.

We’ve seen the correction in emerging markets…

Finally, a comment on the US economy as a debtor nation…

 

As recently as 1987 the U.S. was a creditor nation. We are now the largest debtor nation the world has ever seen. We owe trillions. That’s with a “t.” The real problem is that that our foreign debt is increasing at a rate of $1 trillion every 15 months. You can do the arithmetic.

For a complete transcript of this article click this link: http://www.ronpaulforums.com/showthread.php?t=132805

Tags: Agriculture, China, Commodities, Currency, Emerging Markets, Markets, Metals, US Stocks
Posted in Markets | No Comments »

GE Revenue Growth Lights The Way for Investors

Friday, April 11th, 2008

Today’s disappointing earnings from GE not only highlighted the company’s losses due to its exposure to marked down debt, the poor performance of financial markets, and that the company was caught off guard by the Bear Stearns blow-up; it highlighted that it continues to see strong revenue growth from global market, and in particular, 38% topline growth in revenues from Emerging Markets. GE CEO, Jeff Immelt, was contrite about GE Capital’s writedowns, as well as the slowdown in the company’s Healthcare and Appliances divisions. The stong areas of growth for the company came from the Capital Goods and Infrastructure.

Immelt said the company’s financial services unit was caught off guard by the demise of investment bank giant Bear Stearns and was hampered by the poor performance of the broader financial sector. GE is the parent company of CNBC.com.

…He remains particularly confident in overseas sales. GE revenue grew 38 percent in emerging markets.

“It gives you a sense that outside the United States we’re just not seeing a slowdown yet,” he said. “I don’t think we can assume that everything grows to the sky forever and we’re not counting on that kind of robust international sales, particularly in the shorter-cycle businesses. But the global markets remain robust and the industrial businesses remain robust.”

It was interesting to see Joe Kernen, in advance of the interview, opine that it would be all bad news from Jeff Immelt. The Squawk team did a pretty good job of drilling their CEO, whom they tend to be tough on, since CNBC is owned by GE.

Here is the link to the CNBC story and the video of the interview. Its worth watching if you missed it this morning.

http://www.cnbc.com/id/24063100

Tags: de-coupling, Emerging Markets, Infrastructure, Markets
Posted in Markets | No Comments »

Commodity Snapshot

Monday, April 7th, 2008

April 7, 2008 - Courtesy of Bespoke Investment Group - Below we feature, as no one else does better, Bespoke’s commodity snapshot. It gives you an at-a-glance view of where commodities prices are in relative terms. 

Below we highlight our trading range charts of ten major commodities.  The green shading represents two standard deviations above and below the commodity’s 50-day moving average.  When the price moves above or below this trading range, the commodity is considered overbought or oversold. 

After a pullback from $110 to $100, oil is now trading at $104, which is just above the middle of its trading range.  Natural gas declined sharply on the commodity pullback a couple of weeks ago, but it has since moved higher and is almost back to new highs.  Declines in silver, platinum, wheat and copper left prices right in the middle of their trading ranges, while declines in gold and coffee put them close to oversold territory.  Corn has actually moved back to new highs and is now trading above the top of its trading range.

Tags: Agriculture, Commodities, Gold, Metals, oil
Posted in Uncategorized | No Comments »

Global P/E Ratios

Monday, April 7th, 2008

April 7, 2008 - Courtesy of Bespoke Investment Group - As shown in the table and charts below, the trailing and forward P/E ratios of the S&P 500 and Nasdaq are high compared to the valuations of other markets in other countries.  While it has historically had high valuations, the Nasdaq’s current trailing and forward P/E ranks highest among 12 other country indices, including China’s Shanghai Composite.  The S&P 500’s trailing 12-month P/E ranks 3rd, although it is in the middle of the pack when looking at forward estimates.  The lowest P/Es are currently in Europe.  Valuations in the US are higher because earnings haven’t slowed as much in foreign markets and price declines in the US have been less extreme, even though we’re the root cause of the global market selloff.

Tags: Markets
Posted in Markets | No Comments »

China Oversold?

Wednesday, April 2nd, 2008

Apr. 2, 2008 - Courtesy: Bespoke Investment Group - The Baltic Dry Index measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. Many look to the Baltic Dry Index as a leading indicator, and in recent years, its move has been fairly correlated with China’s economy and the Shanghai Composite.

As shown in the chart below, China’s equity market and the Baltic Dry Index had huge rallies from the end of 2005 to the end of 2007. They also had huge declines after they peaked late last year. Since late January, however, the Baltic Dry Index has been climbing while China’s Shanghai Composite has been falling. This divergence suggests that China’s equity markets might be getting a little overdone on the downside at least in the short term.

Tags: China
Posted in Uncategorized | No Comments »