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Market Update 07-06-10

Over the past week, weaker than expected employment and other economic data here in the U.S. has lead to significant pressure on U.S. markets. Emerging indices along with industrial metals, shaken by the decline in China’s June Service PMI that followed a slowdown in its manufacturing, were also weak last week, but rallied yesterday; altogether, they were markedly stronger than the U.S. indices, reflecting a stronger growth in the developing world.

Australia will keep its benchmark interest rate unchanged at 4.5 percent for the second straight month. With interest rates having been raised six times since last October and global economic recovery appearing to slow down, the Royal Bank of Australia noted justification for standing pat for now. The central bank also stated today that consumer spending and business investment were expanding, helping to alleviate some concerns of slowdown in the country. The Aussie dollar declined last week, also on slow-down concerns.Read more...

Bandaging the euro: 05-10-10

Short-Term Key: Favorable Long-Term Key: -50 (Neutral)

               We had one roller coaster of a past week on the markets, and one that illustrated the real issues in today's economic and financial environment. In particular, it confirmed our position that there are two types of problems in this world: those that can be solved with money, and those that can't.Read more...

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Market Update 12-16-09

No surprises again from the Federal Reserve today. At the conclusion of their regular meeting, the policymakers decided to hold the rates at their current levels. We are getting accustomed to the Fed saying that it’s going to keep the rates at an “exceptionally low” level for an “extended period.” So accustomed, in fact, that the market almost does not react when news of the Fed decision breaks.Read more...

Market Update 11-25-09

The minutes of the latest Federal Reserve Open Market Committee released yesterday gave us some prospective on what the Fed really thinks about long-reaching consequences of the ultra-low rates policy. “Members noted the possibility that some negative side effects might result from the maintenance of very low short-term interest rates for an extended period,” is one quote that springs off the page.
 
This “negative effect” is inflation. From a policy-making point of view, the way to fight it is via higher interest rates. However, we aren’t likely to see the higher rates in the U.S any time soon as the recovery is still very fragile.
 
Meanwhile, record-setting gold prices signal that inflation is a strong possibility. So do the prices of industrial metals, which have been rising at record pace.
Many economies across the globe aren’t in a hurry to raise rate either. Some are still cutting – the Russian central bank, for example. Beside the goal of stimulating its economy, Russia is also planning to slow down the inflow of capital into the country, which threatens the ruble’s stability. This week, Russia cut a key rate for the ninth time since April to a record low 9 percent to stem the use of the ruble to profit from the carry trade (borrowing in another currency with low rates—such as the U.S. dollar and using the proceeds to buy rubles).
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Gold: The Crowd Is Building: 11-19-09

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Profits in Kazakhstan Oil

Two top energy funds favor the same small Canadian company

 
Each issue we’ve steadily added to our Fund Finds portfolio. As of last issue, three major categories were represented—financial, tech/defense, and franchises. Just one key sector was missing: energy. Our newest find remedies that lack, making the portfolio a fully diversified collection of some of the most exciting holdings culled from some of the best-performing funds.
 
Our latest find lives up to the standard set by our prior picks. It’s called PetroKazakhstan, and it’s a small independent integrated Canadian energy company that has been operating in the Republic of Kazakhstan (formerly part of the Soviet Union) for more than six years. The company is a favored holding of two top energy funds. The State Street Research Global Resources Fund has been an outstanding performer. For instance, its class A shares, traded under the symbol SSGRX, had the second-highest total return for its category for the past five-year period and won third place for both the past one- and two-year periods.
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Why Russia Could Serve up an Ace

Resources, reforms— and cheap stocks

 
From an investment standpoint, Russia resembles its charismatic tennis star, Marat Safin, who last January once again made it to the finals of the Australian Open. That is, Russia is blessed with great natural gifts, has made tremendous strides in a short period, and has the potential to get even better—while possessed of a certain wild, woolly, and volatile quality.
 
First, its natural gifts. Russia is the world’s largest producer of hydrocarbons, and it holds some 17 percent of the world’s natural gas reserves. It also has 35 percent of the world’s reserves of nickel, used mainly in the production of stainless steel, and is one of the two major producers of the critical metal palladium.
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Be Prepared

As inflationary pressures gain force, you need to worry about deflation, too

 
Over the short term, things look pretty good. With corporate profits rising and perhaps having room to rise further and with inflation still a no-show, the economic waters appear calm. Even rich valuations aren’t much of a worry given the low-inflation context. And since history shows that stocks tend to rise until either an inflationary or deflationary event triggers a decline, the odds favor continued gains in stocks in the months ahead.
 
But that doesn’t mean you should be complacent—far from it. Three recent trends have unsettling implications for the intermediate and longer term, and investors should start preparing to deal with them now.
 
Two of the trends aren’t all-out negatives. The first, the declining dollar, as we’ve noted before, has been a boon for corporate profits. And the second, massive increases in government spending, has bolstered the economy.
Read more...

Good Sports

The best international soccer clubs can help you meet your investment goals

 
For investors who also are avid sports fans, there is something particularly appealing in the idea that you can make big money by investing in a big sports franchise. Not that every sport offers such an opportunity—you might have to forego, say, football (American-style), baseball, and basketball. So what’s left? If you’re at all up on the international sporting scene, you’ve guessed it: soccer.
 
Soccer, hands down, is the world’s biggest sport, attracting the most fanatic fans and garnering more television viewers worldwide than any other athletic pastime. While soccer clubs have struggled to gain market share in a saturated U.S. entertainment market, they have established a dominant position in the European and Asian entertainment media and represent some of the world’s most powerful brands. Many, though not all, are publicly traded, and the best positioned are using their on-field wins to become successful media companies with considerable investment appeal.
 
Not every soccer club, of course, is a smart investment.
Read more...

Making It With Metals

Rising industrial demand should push platinum and palladium higher

 
A few years back, after a long period of steady prices, platinum and its sister metal palladium had huge moves. These stemmed both from bureaucracy-induced supply bottlenecks in Russia, a major producer, and a growing recognition that the metals are indispensable in certain industrial applications. Palladium rose to more than $1000 an ounce from its prior $100-$200 level, while platinum went from around $350 an ounce to above $600. Eventually, as economic growth stalled, prices came back down. But lately, with economic growth picking up, both metals have once again been uptrended, with platinum surging past prior highs.
 
Clearly you can make a lot of money investing in these metals. You also can lose big—Ford Motors, for instance, a major user of palladium, which is essential in emission-reducing catalytic converters, blew $1 billion because of colossal timing errors in its purchases.
 
We think that demand for these metals will remain strong and that their uptrends will continue to gain force.
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