Why 2011 Could be the Year of the Oil Comeback

November 3rd, 2010

Why 2011 Could be the Year of the Oil Comeback

Like every investor, I try to read voraciously to get an edge. I'm always on the lookout for investment angles that haven't gotten much press but could eventually turn into a market-moving event. So my ears perked up last week when I saw that hedge fund traders have recently been aggressively buying energy futures, betting that we'll soon see oil move up to $100 a barrel. In subsequent days, it's become easier to see the signs of $100 oil popping up on people's radars.

For example, on Monday, Saudi oil minister Ali Naimi suggested that oil prices could move up to $90 without hurting global economic growth, up from a previous perceived ceiling of $80. That's led some to speculate that OPEC will try to maintain production at current levels even as signs are emerging that oil demand has begun to pick up.

Economic growth in emerging markets like Brazil and China remains robust, which led to a 1.4 million barrel jump in the third quarter, according to the International Energy Agency (IEA) and a 980,000 barrel uptick in Western Europe and the United States. Any further uptick in global demand could push oil demand back up to — or above — supply levels.

Analysts at Merrill Lynch see $100 oil by early 2011 for a more prosaic reason: They believe that the U.S. Federal Reserve's plan for quantitative easing (QE2) will weaken the dollar and raise the price of commodities, particularly gold, silver and oil. [Read: "How The Fed Will Affect Your Portfolio This Week"] The recent move in the dollar is a possible harbinger of things to come, according to Merrill: “We believe that oil is only starting to reflect a weak U.S. dollar against G10, leaving room for oil price rises as emerging market currencies strengthen against the U.S. dollar.”

Make no mistake, $100 oil is not nearly as lethal to the economy as $140 oil was a few years ago, but it still creates serious headwinds and tailwinds in a range of industries. Here a just a few impacts:

  • Airliners see a sharp drop in profits next year as rising jet fuel costs cannot be offset by commensurately higher fares. Carriers have already pushed through steady price increases in the past 18 months, but are pushing the limits of demand elasticity. Notably, while many carriers were nicely hedged against rising fuel prices a few years ago, they have largely bypassed hedging activities in this cycle. If they are to act, they should do so soon.

    Commodities, ETF, Uncategorized

Can October’s Best-Performing Commodities Continue Their Run?

November 3rd, 2010

Can October's Best-Performing Commodities Continue Their Run?

There seems to be no end to the commodities bull-run. The Reuters-Jefferies CRB index, which tracks 19 heavily-traded commodities, posted a nice gain of +4.8% in October. Keep in mind that came after a sizzling +8.5% pop in September.

All in all, the gains were broad-based in October, with arabica coffee up +11% and corn increasing by +17%. But the standouts were sugar and corn, which both posted +20%-plus gains.

The main fundamental drivers remain intact. Because of adverse weather conditions, there have been lower-yielding crops. At the same time, the lackluster U.S. dollar has been a boost to commodity prices, as they are denominated in dollars.

Investors are also eagerly awaiting the U.S. Federal Reserve's moves on quantitative easing (QE2), which will pump billions of more dollars in the global economy. [Read: "How The Fed Will Affect Your Portfolio This Week"] This could mean even more pressure on the dollar.

But perhaps the most important fundamental driver is growing demand. The fact is that China, India, Brazil and other developing economies continue to consume huge amounts of commodities.

So what should investors do? Despite the big moves, it looks like there is still room to make profits. So let's take a look at three of the best-performing commodities in October. I'll also detail how investors can play these commodities directly with exchange-traded funds (ETFs)…

1. Sugar: The key to this commodity is India, which is the biggest importer and the second largest producer of sugar. Because of the price moves, the country is considering limitations on exports so as to rebuild inventories. The result will inevitably be higher prices.

Because of adverse weather, India had a terrible sugar crop. In fact, even Brazil — the world's biggest producer of sugar — had a production drop of about a third in the past year. At the same time, demand may be increasing from China.

In light of these supply-demand dynamics — which should continue for some time — it looks like prices should go higher. A way to capitalize on this is with the iPath DJ-UBS Sugar Subindex Total Return ETN (NYSE: SGG), which tracks sugar futures.

2. Cotton: In October, cotton reached the highest price since the U.S. Civil War. Just like sugar, this commodity is also experiencing supply disruptions because of bad weather. There have been unusual storms in Texas as well as a cold spell in China and a drought in Russia.

Because of supply concerns, there has been a rush to buy up cotton. After all, the world's largest exporter, the United States, has already sold much of its crop. The upshot should be continued price increases.

To invest in cotton, you can look at the iPath Cotton (NYSE: BAL) ETF.

3. Copper: This is a key commodity for industrialization and growth, as evidenced by its main use: construction.
No doubt, China has been a driver for demand as it continues its aggressive infrastructure efforts. As seen by the latest economic reports, it looks like the growth story is still strong. China's purchasing managers' index rose to a six-month high in October.

But there are even signs that the U.S. is undergoing a manufacturing rebound. True, it may not be in line with its historical levels — but even a small move can make a big difference with copper demand.

On the supply side, copper is certainly tight. After the 2008-2009 global recession, there was a major drop in production and it is going to take some time to get capacity back up.

As should be no surprise, you can invest in copper directly through the iPath Dow Jones UBS Copper Total Return ETN (NYSE: JJC).

Action to Take –> As is the case with any bull market, almost everything goes up — and commodities are no different. Looking out for the next six months, it's a good bet that cotton, sugar and copper will continue their momentum, possibly with double-digit moves in price increases. Thus, one approach is to buy equal amounts of ETFs across these commodities.

But which one will perform the best? My take is that it will be copper. The reason is because a global recovery has not been fully discounted into the markets yet. Also, there could be supply disruptions, with one possibility being a strike in a major copper exporting country such as Chile.


– Tom Taulli

Tom has been a stock commentator for 15 years. He has written a best-selling book, “Investing in IPOs,” and become a frequent guest on shows like CNBC and CNN. Tom has also appeared in the New York Times, BusinessWeek Online and Forbes.com. Read more…

Disclosure: Neither Tom Taulli nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Tom Taulli
Can October's Best-Performing Commodities Continue Their Run?

Read more here:
Can October’s Best-Performing Commodities Continue Their Run?

Commodities, ETF, Uncategorized

Can October’s Best-Performing Commodities Continue Their Run?

November 3rd, 2010

Can October's Best-Performing Commodities Continue Their Run?

There seems to be no end to the commodities bull-run. The Reuters-Jefferies CRB index, which tracks 19 heavily-traded commodities, posted a nice gain of +4.8% in October. Keep in mind that came after a sizzling +8.5% pop in September.

All in all, the gains were broad-based in October, with arabica coffee up +11% and corn increasing by +17%. But the standouts were sugar and corn, which both posted +20%-plus gains.

The main fundamental drivers remain intact. Because of adverse weather conditions, there have been lower-yielding crops. At the same time, the lackluster U.S. dollar has been a boost to commodity prices, as they are denominated in dollars.

Investors are also eagerly awaiting the U.S. Federal Reserve's moves on quantitative easing (QE2), which will pump billions of more dollars in the global economy. [Read: "How The Fed Will Affect Your Portfolio This Week"] This could mean even more pressure on the dollar.

But perhaps the most important fundamental driver is growing demand. The fact is that China, India, Brazil and other developing economies continue to consume huge amounts of commodities.

So what should investors do? Despite the big moves, it looks like there is still room to make profits. So let's take a look at three of the best-performing commodities in October. I'll also detail how investors can play these commodities directly with exchange-traded funds (ETFs)…

1. Sugar: The key to this commodity is India, which is the biggest importer and the second largest producer of sugar. Because of the price moves, the country is considering limitations on exports so as to rebuild inventories. The result will inevitably be higher prices.

Because of adverse weather, India had a terrible sugar crop. In fact, even Brazil — the world's biggest producer of sugar — had a production drop of about a third in the past year. At the same time, demand may be increasing from China.

In light of these supply-demand dynamics — which should continue for some time — it looks like prices should go higher. A way to capitalize on this is with the iPath DJ-UBS Sugar Subindex Total Return ETN (NYSE: SGG), which tracks sugar futures.

2. Cotton: In October, cotton reached the highest price since the U.S. Civil War. Just like sugar, this commodity is also experiencing supply disruptions because of bad weather. There have been unusual storms in Texas as well as a cold spell in China and a drought in Russia.

Because of supply concerns, there has been a rush to buy up cotton. After all, the world's largest exporter, the United States, has already sold much of its crop. The upshot should be continued price increases.

To invest in cotton, you can look at the iPath Cotton (NYSE: BAL) ETF.

3. Copper: This is a key commodity for industrialization and growth, as evidenced by its main use: construction.
No doubt, China has been a driver for demand as it continues its aggressive infrastructure efforts. As seen by the latest economic reports, it looks like the growth story is still strong. China's purchasing managers' index rose to a six-month high in October.

But there are even signs that the U.S. is undergoing a manufacturing rebound. True, it may not be in line with its historical levels — but even a small move can make a big difference with copper demand.

On the supply side, copper is certainly tight. After the 2008-2009 global recession, there was a major drop in production and it is going to take some time to get capacity back up.

As should be no surprise, you can invest in copper directly through the iPath Dow Jones UBS Copper Total Return ETN (NYSE: JJC).

Action to Take –> As is the case with any bull market, almost everything goes up — and commodities are no different. Looking out for the next six months, it's a good bet that cotton, sugar and copper will continue their momentum, possibly with double-digit moves in price increases. Thus, one approach is to buy equal amounts of ETFs across these commodities.

But which one will perform the best? My take is that it will be copper. The reason is because a global recovery has not been fully discounted into the markets yet. Also, there could be supply disruptions, with one possibility being a strike in a major copper exporting country such as Chile.


– Tom Taulli

Tom has been a stock commentator for 15 years. He has written a best-selling book, “Investing in IPOs,” and become a frequent guest on shows like CNBC and CNN. Tom has also appeared in the New York Times, BusinessWeek Online and Forbes.com. Read more…

Disclosure: Neither Tom Taulli nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Tom Taulli
Can October's Best-Performing Commodities Continue Their Run?

Read more here:
Can October’s Best-Performing Commodities Continue Their Run?

Commodities, ETF, Uncategorized

Three ETFs Influenced By Global Manufacturing Growth

November 3rd, 2010

Economies around the world continue to grow, illustrated by increases in manufacturing activity around the world giving positive support to the iShares S&P Global Industrials (EXI), the SPDR S&P International Materials Sector (IRV) and the SPDR S&P International Industrial Sector (IPN).

According to JP Morgan’s global manufacturing index, this is an aggregate of surveys by purchasing manager around the world, increased for the first time since April to a 53.7 indicating expansion.  Companies around the world are starting to build up inventories to meet increased demand and are likely to continue to do so. 

As mentioned earlier, some ETFs influenced by increased global manufacturing include:

  • iShares S&P Global Industrials (EXI), which boasts industrial conglomerate General Electric (GE) and Siemens AG as top holdings.
  • SPDR S&P International Materials Sector (IRV), which gives exposure to companies like Potash Corporation of Saskatchewan (POT) and gold mining
  • SPDR S&P International Industrial Sector (IPN), which boasts metals and mining giants BHP Biliton (BHP) and Rio Tinto (RTP) as top holdings.

Disclosure: No Positions

Read more here:
Three ETFs Influenced By Global Manufacturing Growth




HERE IS YOUR FOOTER

ETF, Uncategorized

Three ETFs Influenced By Global Manufacturing Growth

November 3rd, 2010

Economies around the world continue to grow, illustrated by increases in manufacturing activity around the world giving positive support to the iShares S&P Global Industrials (EXI), the SPDR S&P International Materials Sector (IRV) and the SPDR S&P International Industrial Sector (IPN).

According to JP Morgan’s global manufacturing index, this is an aggregate of surveys by purchasing manager around the world, increased for the first time since April to a 53.7 indicating expansion.  Companies around the world are starting to build up inventories to meet increased demand and are likely to continue to do so. 

As mentioned earlier, some ETFs influenced by increased global manufacturing include:

  • iShares S&P Global Industrials (EXI), which boasts industrial conglomerate General Electric (GE) and Siemens AG as top holdings.
  • SPDR S&P International Materials Sector (IRV), which gives exposure to companies like Potash Corporation of Saskatchewan (POT) and gold mining
  • SPDR S&P International Industrial Sector (IPN), which boasts metals and mining giants BHP Biliton (BHP) and Rio Tinto (RTP) as top holdings.

Disclosure: No Positions

Read more here:
Three ETFs Influenced By Global Manufacturing Growth




HERE IS YOUR FOOTER

ETF, Uncategorized

A Movie Review: The Social Network

November 2nd, 2010

We don’t go to see many movies. Unless they have a lot of nudity or violence, they bore us.

But The Social Network is not a boring movie. We went to see it because our daughter, Maria, has a small role. It is her major motion picture debut. We went to see her. But what we discovered was an unusually engaging film.

The movie tells the story of the founding of Facebook. It is a “social network,” designed by students at Harvard to make it easy for people to keep up with each other.

“You mean, it will help us get laid,” says one of the characters in the movie…or words to that effect.

Occasionally, we get an email that tells us “so and so invites you to be a friend…” Once, we tried to follow up…we went to Facebook. There, we found a page of questions. We quickly lost interest and gave up. Henceforth, when asked to be a friend, we respond in the negative.

“Dad, you’re making a big mistake,” Jules, 22, opined. “I know a lot of people who don’t even check their email anymore. They communicate exclusively through Facebook. This is a big, big thing. And it’s not going away. E-mail could disappear.”

Maybe he is right. Maybe, in the future, we will publish The Daily Reckoning only on Facebook. But we hope not. We don’t like the concept. We don’t like the company. And we don’t like its shareholders.

“Now, Dad, you’re getting ridiculous. Zuckerberg revolutionized how people communicate. There are half a billion people on Facebook. This is like the invention of the printing press. I guess you don’t like Guttenberg either. You’re just being silly. That’s the point of the movie, by the way.

“Zuckerberg and Parker aren’t exactly nice guys. But that’s the point. You don’t have to be nice to do something great. And doing something great is what is important.”

The movie shows how Mark Zuckerberg and Sean Parker squeezed out – cheated, really – Zuckerberg’s original partner, Eduardo Saverin. Eduardo seems like a decent fellow. He provided a crucial formula early on. Then, he put up the seed money. But he did not see the potential of Facebook in the megalomaniacal terms of Zuckerberg and Parker. Being “cool” was not enough for him; he wanted it to be profitable too. Instead, he approached it more modestly and more conventionally. (Even today, it is not clear how profitable Facebook is.)

In the early days, Eduardo tried to sell ad space on the system in New York, while the other two were going wild signing up customers and getting venture capital backing in California. Once they got big backing, Zuckerberg and Parker had no further use for Saverin, so they cut him out.

“Eduardo was useless,” said Jules, sounding a bit Nietzschean. “He was not adding value. He was a loser. They were right to get rid of him. Eduardo was operating according to the wrong code. An antiquated code. Zuckerberg and Parker knew better. They understood something he didn’t.”

“No. They didn’t really. They were lucky. The project could just as well have failed. Most do. If it had failed, then those two would look like what they really are – a pair of conniving jerks.

“That’s really the lesson. Eduardo did the right thing. He was the winner. The Winklevoss brothers, too.

“And if I had the choice of doing business with Eduardo or with Sean Parker, I’d do business with Eduardo. You don’t know which projects will succeed or fail. You don’t know which ideas will win. But you know you never want to do business with nasty people. Even if you make a lot of money, it’s not worth it.”

“Are you kidding? At the end of the day, Zuckerberg and Parker were billionaires. Now they can be nice if they want to be. Being nice is not everything.”

“No, now they can’t be nice. You can’t undo nastiness. You can confess. You can repent. You can beg forgiveness and give a $100 million to the New Jersey schools. Maybe you’ll be redeemed. Or maybe you’ll be a miserable billionaire all your life.”

Regards,

Bill Bonner
for The Daily Reckoning

A Movie Review: The Social Network originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
A Movie Review: The Social Network




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

A Movie Review: The Social Network

November 2nd, 2010

We don’t go to see many movies. Unless they have a lot of nudity or violence, they bore us.

But The Social Network is not a boring movie. We went to see it because our daughter, Maria, has a small role. It is her major motion picture debut. We went to see her. But what we discovered was an unusually engaging film.

The movie tells the story of the founding of Facebook. It is a “social network,” designed by students at Harvard to make it easy for people to keep up with each other.

“You mean, it will help us get laid,” says one of the characters in the movie…or words to that effect.

Occasionally, we get an email that tells us “so and so invites you to be a friend…” Once, we tried to follow up…we went to Facebook. There, we found a page of questions. We quickly lost interest and gave up. Henceforth, when asked to be a friend, we respond in the negative.

“Dad, you’re making a big mistake,” Jules, 22, opined. “I know a lot of people who don’t even check their email anymore. They communicate exclusively through Facebook. This is a big, big thing. And it’s not going away. E-mail could disappear.”

Maybe he is right. Maybe, in the future, we will publish The Daily Reckoning only on Facebook. But we hope not. We don’t like the concept. We don’t like the company. And we don’t like its shareholders.

“Now, Dad, you’re getting ridiculous. Zuckerberg revolutionized how people communicate. There are half a billion people on Facebook. This is like the invention of the printing press. I guess you don’t like Guttenberg either. You’re just being silly. That’s the point of the movie, by the way.

“Zuckerberg and Parker aren’t exactly nice guys. But that’s the point. You don’t have to be nice to do something great. And doing something great is what is important.”

The movie shows how Mark Zuckerberg and Sean Parker squeezed out – cheated, really – Zuckerberg’s original partner, Eduardo Saverin. Eduardo seems like a decent fellow. He provided a crucial formula early on. Then, he put up the seed money. But he did not see the potential of Facebook in the megalomaniacal terms of Zuckerberg and Parker. Being “cool” was not enough for him; he wanted it to be profitable too. Instead, he approached it more modestly and more conventionally. (Even today, it is not clear how profitable Facebook is.)

In the early days, Eduardo tried to sell ad space on the system in New York, while the other two were going wild signing up customers and getting venture capital backing in California. Once they got big backing, Zuckerberg and Parker had no further use for Saverin, so they cut him out.

“Eduardo was useless,” said Jules, sounding a bit Nietzschean. “He was not adding value. He was a loser. They were right to get rid of him. Eduardo was operating according to the wrong code. An antiquated code. Zuckerberg and Parker knew better. They understood something he didn’t.”

“No. They didn’t really. They were lucky. The project could just as well have failed. Most do. If it had failed, then those two would look like what they really are – a pair of conniving jerks.

“That’s really the lesson. Eduardo did the right thing. He was the winner. The Winklevoss brothers, too.

“And if I had the choice of doing business with Eduardo or with Sean Parker, I’d do business with Eduardo. You don’t know which projects will succeed or fail. You don’t know which ideas will win. But you know you never want to do business with nasty people. Even if you make a lot of money, it’s not worth it.”

“Are you kidding? At the end of the day, Zuckerberg and Parker were billionaires. Now they can be nice if they want to be. Being nice is not everything.”

“No, now they can’t be nice. You can’t undo nastiness. You can confess. You can repent. You can beg forgiveness and give a $100 million to the New Jersey schools. Maybe you’ll be redeemed. Or maybe you’ll be a miserable billionaire all your life.”

Regards,

Bill Bonner
for The Daily Reckoning

A Movie Review: The Social Network originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
A Movie Review: The Social Network




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Investing in Gold Will Save Your Butt

November 2nd, 2010

When I got back to the office, the place was abuzz, all stemming from how my boss wanted to “see me” as soon as I got back from wherever the hell I was. I knew what it was about. It was about old man Sanderson and the stupid Sanderson account.

The problem was that I had just seen the Britebart.tv video of the megalomaniacal and totally incompetent Harry Reid, Congressional Representative from Nevada and doofus extraordinaire, saying, “But for me, we’d be in a worldwide depression.”

So, inspired, I told Sanderson to stick his problems, and that, “But for me, you would be sued into bankruptcy after using our defective parts, ya moron!”

So I grudgingly went up to her office, and the first thing I see is her stupid secretary, who hates my guts because I once told her to buy gold, silver and oil against the terrible inflation that will result from the traitorous neo-Keynesian econometric nitwits at the Federal Reserve creating so much excess money, especially when the corrupt federal government was monstrously deficit-spending us into bankruptcy.

So, a few days later, I saw her in the hallway, and being a friendly, collegial type of guy, I casually asked her if she had bought any gold, silver or oil so that she could Save Her Butt (SHB) when the devastating inflation and economic collapse hits, which has happened to every lowlife, dirtbag deficit-spending government who tried this stupid crap Every Freaking Time (EFT) in the last 4,500 years.

She admitted that she hadn’t, so I said to her, in a delicate way, like a kindly uncle gently instructing a wayward and ignorant child, “Then you’re a moron! Instead of gold, silver and oil saving your butt, which, by the way, looks big in those pants, it is going to get chewed up by ruinous inflation and economic collapse!”

Well, I figured that she would say, “Thanks for the important information!” since she has beneficially learned – at absolutely no cost to her! – that she is a moron, plus she now knows that those pants make her butt look big. A two-fer!

She did not, as I supposed, thank me. Instead, she’s hated me ever since, and every time I get summoned to my boss’s office, I always ask her stupid secretary, “Have you bought any gold, silver or oil to save that big butt of yours from the raging inflation in prices that will be caused by the Federal Reserve creating so much money?” and she says, “No,” and I say, “Then you’re a moron!” and she replies, “No, YOU’RE the moron!” and I will cleverly reply, “No, YOU’RE the moron!” and she’s yelling back at me, “No, YOU’RE the moron!” which is about when my boss usually comes out of her office and tells us to immediately stop acting like children.

I say, “It’s her that is acting like a child with a big butt! I tell her to buy gold, silver and oil, which is the only intelligent, time-tested, guaranteed thing to do when the loathsome Federal Reserve is creating so much money, but she never does! So she’s the childish idiot, not me!”

Well, my boss, with an angry look on her face, hisses at me through clenched teeth to “get into my office this instant!”

Well, it turns out that she had found out that somebody (meaning me) had screwed up the big order from old man Sanderson, and now the Sanderson account was in danger, and he was really angry.

She says, “What did you do to him to make him angrily cancel his account, threaten to have his lawyers sue us, and make a lot of vague death threats against you personally?”

Well, I told her that the problem was caused by The Washington Post breaking the story that the Commodity Futures Trading Commission is, as was always suspected, corrupt. The headline was “Commodity Futures Trading Commission judge says colleague biased against complainants.”

It turns out that George H. Painter is “one of two administrative law judges presiding over investor complaints at the Commodity Futures Trading Commission,” and he writes that the other CFTC judge, Judge Bruce Levine, had “a secret agreement with a former Republican chairwoman of the agency to stand in the way of investors filing complaints with the agency.”

The seamy corruption was a permanent bias against investors in disputes “as a favor to Wendy Gramm, then Chairwoman of the Commission” to “never rule in a complainant’s favor.”

Damningly, Mr. Painter wrote, “A review of his rulings will confirm that he fulfilled his vow,” and that in the last 10 years, “Levine had never ruled in favor of an investor.” Never!

The important part, for me, was when her husband, the laughable former senator from Texas, Phil Gramm, said he would “pass along a message” but added, “I doubt she’s going to want to get involved in this.”

My boss, by this time, was looking at me with this look of unbelieving incredulousness on her stupid face, her mouth actually falling open in stunned stupefaction. Then she says to me, “What has that got to do with the Sanderson account?”

So, I said, as will probably Ms. Gramm, “I don’t want to get involved in this!”

Then I got up, left her office in a huff, and went out to have a few drinks to steady my nerves, figuring that by the time I get to work tomorrow, she will have smoothed things over with Sanderson and we can all start some crapola “healing process” of forgiving and forgetting.

And her secretary? She’s still a moron who has not bought any gold, silver or oil. Just between you and me, maybe that explains her fat butt! Hahaha!

If so, then my new Mogambo Slogan Of Inspiration (MSOI) is, “Whee! Buying gold, silver and oil is an easy investment, and in doing so, I got a great-looking butt for free, too!”

The Mogambo Guru
for The Daily Reckoning

Investing in Gold Will Save Your Butt originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Investing in Gold Will Save Your Butt




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Investing in Gold Will Save Your Butt

November 2nd, 2010

When I got back to the office, the place was abuzz, all stemming from how my boss wanted to “see me” as soon as I got back from wherever the hell I was. I knew what it was about. It was about old man Sanderson and the stupid Sanderson account.

The problem was that I had just seen the Britebart.tv video of the megalomaniacal and totally incompetent Harry Reid, Congressional Representative from Nevada and doofus extraordinaire, saying, “But for me, we’d be in a worldwide depression.”

So, inspired, I told Sanderson to stick his problems, and that, “But for me, you would be sued into bankruptcy after using our defective parts, ya moron!”

So I grudgingly went up to her office, and the first thing I see is her stupid secretary, who hates my guts because I once told her to buy gold, silver and oil against the terrible inflation that will result from the traitorous neo-Keynesian econometric nitwits at the Federal Reserve creating so much excess money, especially when the corrupt federal government was monstrously deficit-spending us into bankruptcy.

So, a few days later, I saw her in the hallway, and being a friendly, collegial type of guy, I casually asked her if she had bought any gold, silver or oil so that she could Save Her Butt (SHB) when the devastating inflation and economic collapse hits, which has happened to every lowlife, dirtbag deficit-spending government who tried this stupid crap Every Freaking Time (EFT) in the last 4,500 years.

She admitted that she hadn’t, so I said to her, in a delicate way, like a kindly uncle gently instructing a wayward and ignorant child, “Then you’re a moron! Instead of gold, silver and oil saving your butt, which, by the way, looks big in those pants, it is going to get chewed up by ruinous inflation and economic collapse!”

Well, I figured that she would say, “Thanks for the important information!” since she has beneficially learned – at absolutely no cost to her! – that she is a moron, plus she now knows that those pants make her butt look big. A two-fer!

She did not, as I supposed, thank me. Instead, she’s hated me ever since, and every time I get summoned to my boss’s office, I always ask her stupid secretary, “Have you bought any gold, silver or oil to save that big butt of yours from the raging inflation in prices that will be caused by the Federal Reserve creating so much money?” and she says, “No,” and I say, “Then you’re a moron!” and she replies, “No, YOU’RE the moron!” and I will cleverly reply, “No, YOU’RE the moron!” and she’s yelling back at me, “No, YOU’RE the moron!” which is about when my boss usually comes out of her office and tells us to immediately stop acting like children.

I say, “It’s her that is acting like a child with a big butt! I tell her to buy gold, silver and oil, which is the only intelligent, time-tested, guaranteed thing to do when the loathsome Federal Reserve is creating so much money, but she never does! So she’s the childish idiot, not me!”

Well, my boss, with an angry look on her face, hisses at me through clenched teeth to “get into my office this instant!”

Well, it turns out that she had found out that somebody (meaning me) had screwed up the big order from old man Sanderson, and now the Sanderson account was in danger, and he was really angry.

She says, “What did you do to him to make him angrily cancel his account, threaten to have his lawyers sue us, and make a lot of vague death threats against you personally?”

Well, I told her that the problem was caused by The Washington Post breaking the story that the Commodity Futures Trading Commission is, as was always suspected, corrupt. The headline was “Commodity Futures Trading Commission judge says colleague biased against complainants.”

It turns out that George H. Painter is “one of two administrative law judges presiding over investor complaints at the Commodity Futures Trading Commission,” and he writes that the other CFTC judge, Judge Bruce Levine, had “a secret agreement with a former Republican chairwoman of the agency to stand in the way of investors filing complaints with the agency.”

The seamy corruption was a permanent bias against investors in disputes “as a favor to Wendy Gramm, then Chairwoman of the Commission” to “never rule in a complainant’s favor.”

Damningly, Mr. Painter wrote, “A review of his rulings will confirm that he fulfilled his vow,” and that in the last 10 years, “Levine had never ruled in favor of an investor.” Never!

The important part, for me, was when her husband, the laughable former senator from Texas, Phil Gramm, said he would “pass along a message” but added, “I doubt she’s going to want to get involved in this.”

My boss, by this time, was looking at me with this look of unbelieving incredulousness on her stupid face, her mouth actually falling open in stunned stupefaction. Then she says to me, “What has that got to do with the Sanderson account?”

So, I said, as will probably Ms. Gramm, “I don’t want to get involved in this!”

Then I got up, left her office in a huff, and went out to have a few drinks to steady my nerves, figuring that by the time I get to work tomorrow, she will have smoothed things over with Sanderson and we can all start some crapola “healing process” of forgiving and forgetting.

And her secretary? She’s still a moron who has not bought any gold, silver or oil. Just between you and me, maybe that explains her fat butt! Hahaha!

If so, then my new Mogambo Slogan Of Inspiration (MSOI) is, “Whee! Buying gold, silver and oil is an easy investment, and in doing so, I got a great-looking butt for free, too!”

The Mogambo Guru
for The Daily Reckoning

Investing in Gold Will Save Your Butt originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Investing in Gold Will Save Your Butt




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Josh Brown’s Favorite Financial Blogs

November 2nd, 2010

One year ago, Josh Brown of The Reformed Broker rolled out his personal taxonomy of the financial blogging universe in an incisive and highly acclaimed post, The Periodic Table of Finance Bloggers. VIX and More was pleased to be included in this list, even if there were no signs of volatilium anywhere on his table…

This year the noted analyst and humorist is back again with an updated version of his favorite finance bloggers in Financial Blog Wars. I am glad to say that VIX and More is once again included on the list, but as this year’s theme is Star Wars, this blog is now officially categorized as one of the Droids, whose penchant is for “Technicals, Trading, Charting, Options, and Quantitative Analysis.”

It is always gratifying to be recognized for what is essentially a labor of love, particularly when it comes in esteemed company.

I have not yet attempted to make an all-inclusive list of the various blogging awards that have been bestowed on this blog, but for the record, VIX and More has been mentioned in connection with a number all-star blogging teams in the past, including:

Related posts:

Disclosure(s): none



Read more here:
Josh Brown’s Favorite Financial Blogs

OPTIONS, Uncategorized

Josh Brown’s Favorite Financial Blogs

November 2nd, 2010

One year ago, Josh Brown of The Reformed Broker rolled out his personal taxonomy of the financial blogging universe in an incisive and highly acclaimed post, The Periodic Table of Finance Bloggers. VIX and More was pleased to be included in this list, even if there were no signs of volatilium anywhere on his table…

This year the noted analyst and humorist is back again with an updated version of his favorite finance bloggers in Financial Blog Wars. I am glad to say that VIX and More is once again included on the list, but as this year’s theme is Star Wars, this blog is now officially categorized as one of the Droids, whose penchant is for “Technicals, Trading, Charting, Options, and Quantitative Analysis.”

It is always gratifying to be recognized for what is essentially a labor of love, particularly when it comes in esteemed company.

I have not yet attempted to make an all-inclusive list of the various blogging awards that have been bestowed on this blog, but for the record, VIX and More has been mentioned in connection with a number all-star blogging teams in the past, including:

Related posts:

Disclosure(s): none



Read more here:
Josh Brown’s Favorite Financial Blogs

OPTIONS, Uncategorized

More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B

November 2nd, 2010

Perhaps the only thing more common these days than central banks increasing their gold holdings, is their ability to do it on the sly. Much like Saudi Arabia came out of nowhere to announce it more than doubled its gold reserves to 323 tonnes, Iran recently came out of the blue to announce it’s added about $15 billion worth of gold to its foreign exchange reserves.

According to Mehr News Agency:

“[Central Bank governor Mahmoud Bahmani] said that the country’s foreign currency reserve has gained several billion of dollars as a result of the rise in global gold prices. Bahmani said on October 23 that according to World Bank statistics Iran has $100 billion in foreign exchange reserves.

“Provided that the World Bank statistics are true any country with this amount of reserves would never hit a dead end, ISNA news agency quoted Bahmani as saying.

“It may be possible to exert pressure on a small country with $4-5 billion reserves, but the situation in regard to Iran is different, he said in a reference to efforts by Western countries pressure Iran financially.

“He pointed to Iran’s gold reserves and said it had multiplied several times in the past two years. Bahmani went on to say that currently gold consumption in the country is 30 tons per year and if the Central Bank doesn’t add to its gold reserves there will remain ample supplies for the next 10 years.”

Now, along with Saudi Arabia, Russia, and China, Iran is joining the club of surreptitious gold-hoarding nations. There appears to be ample evidence this club won’t stay too exclusive for very long. You can read more details on the story in Mehr News Agency’s coverage of how Iran now has no need to import gold for about a decade.

Best,

Rocky Vega,
The Daily Reckoning

More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B

November 2nd, 2010

Perhaps the only thing more common these days than central banks increasing their gold holdings, is their ability to do it on the sly. Much like Saudi Arabia came out of nowhere to announce it more than doubled its gold reserves to 323 tonnes, Iran recently came out of the blue to announce it’s added about $15 billion worth of gold to its foreign exchange reserves.

According to Mehr News Agency:

“[Central Bank governor Mahmoud Bahmani] said that the country’s foreign currency reserve has gained several billion of dollars as a result of the rise in global gold prices. Bahmani said on October 23 that according to World Bank statistics Iran has $100 billion in foreign exchange reserves.

“Provided that the World Bank statistics are true any country with this amount of reserves would never hit a dead end, ISNA news agency quoted Bahmani as saying.

“It may be possible to exert pressure on a small country with $4-5 billion reserves, but the situation in regard to Iran is different, he said in a reference to efforts by Western countries pressure Iran financially.

“He pointed to Iran’s gold reserves and said it had multiplied several times in the past two years. Bahmani went on to say that currently gold consumption in the country is 30 tons per year and if the Central Bank doesn’t add to its gold reserves there will remain ample supplies for the next 10 years.”

Now, along with Saudi Arabia, Russia, and China, Iran is joining the club of surreptitious gold-hoarding nations. There appears to be ample evidence this club won’t stay too exclusive for very long. You can read more details on the story in Mehr News Agency’s coverage of how Iran now has no need to import gold for about a decade.

Best,

Rocky Vega,
The Daily Reckoning

More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

It’s a LANDSLIDE! What to do …

November 2nd, 2010

Larry Edelson

It’s all over but the shouting!

According to last-minute polling, Republicans will gain up to 60 House seats, including a very vocal Tea Party caucus.

Meanwhile, incumbents who have held the same seats for decades are being unceremoniously voted out of office. Even seats that have been in Democratic hands for generations are now in jeopardy.

Case in point: John Dingell Jr. (D-MI) has served in the U.S. House of Representatives since 1955, when he won the seat that his father held since 1933. After 77 years in the Dingell family, even that seat is now hanging by a thread.

In the Senate, Democrats will probably lose up to eight seats. They retain a majority … but by such a TINY margin … they effectively lose control to fiscal conservatives in BOTH parties!

Overall, it’s a LANDSLIDE — here’s what that means …

  • Until now, Federal stimulus money has been the number one FUEL driving the economy.
  • The people are kicking Congress OUT of the stimulus business! In fact, even as you read these words, many of the candidates being elected today are already drafting legislation to actually roll back government spending.
  • That means the ONLY way President Obama will be able to pour more stimulus into the economy is through one institution — the U.S. Federal Reserve … and via the ONLY weapon that remains available — the money printing presses.

But money printing is an extremely dangerous tactic — one that has the potential to sour U.S. bond investors worldwide … gut the dollar … and send contra-dollar assets careening higher.

Bottom line: With the conservative sweep of the midterm elections now a fait accompli, the NEXT major shoe to drop is tomorrow’s Fed announcement — the declaration that the central bank will resume money printing to stimulate the economy.

Most likely, the Fed will announce that it will print much less than the $1.7 trillion it printed last time around. If so, look for major corrections in stocks … a short-term correction in gold … and a temporary firming of the dollar.

But make no mistake: Regardless of how much the Fed says it will print tomorrow, it will come under tremendous pressure from the Obama administration to print MUCH MORE.

If the president wants to be re-elected in 2012, he must find SOME way to stimulate the economy. And the U.S. Federal Reserve is now the ONLY stimulus tool the government has left.

That’s why we’re convinced you can count on a plunging dollar, soaring precious metals and wild volatility in the stock and bond markets.

To help you prepare for this dangerous but opportunity-rich new environment, we’ve pulled out all the stops, preparing a whole series of online presentations. But the D-Day we’ve been warning about is here — for markets and for investors. And now, you are truly running out of time.

At 11:59 PM tonight, TWO crucial
deadlines will have come and gone.

DEADLINE #1: The last of our pre-election presentations, “Two New Mega-Trends; Two New Mega-Windfalls” will go offline.

But remember: Both of these opportunities end tonight.

Best wishes,

Larry

Related posts:

  1. Fed President: Bernanke Making “A PACT WITH THE DEVIL”
  2. New buys this week! Your deadline: THIS TUESDAY!

Read more here:
It’s a LANDSLIDE! What to do …

Commodities, ETF, Mutual Fund, Uncategorized

Bank Failures in Slow Motion, Part II

November 2nd, 2010

[Speech given at The Economic Recovery: Washington’s Big Lie, the Supporters Summit for the Ludwig von Mises Institute, October 8, 2010 (Cont’d from yesterday). Click here to view Part I, "Bank Failures in Slow Motion".]

“‘Deposit insurance’ is simply a fraudulent racket.”  – Murray Rothbard

Sheila Bair, the Chairman of the US Federal Deposit Insurance Corporation (FDIC), has said many times that the peak in bank failures would not occur until the latter part of this year. What’s the holdup? Why aren’t more banks being closed more quickly?

1. Maybe there’s nobody left at the FDIC who knows how to make a deal.

After all, the FDIC’s main dealmaker, Joe Jiampietro, left suddenly in August. Jiampietro came to work at the deposit insurer after working at JP Morgan Chase and UBS. He and his partner Jim Wigand sold more than $508 billion in assets including WaMu and Corus. The New York Times reported that Wigand and Jiampietro did good work for the government, “by acting like bankers, not bureaucrats.”

Wigand worked at the FDIC for a couple decades. The fresh blood was Jiampietro. He was the eyes and ears in the markets and advised on the biggest and most complex deals, meeting with bank execs, hedge-fund managers and other big investors to get their feedback on deal terms and other agency policies.

These two started hatching deals with companies like Rialto (a division of homebuilder Lennar). Rialto bought a 40 percent share of $1.2 billion in loans from failed banks for 40 cents on the dollar, with the FDIC carrying a loan for $1 billion at zero interest for seven years.

They also came up with the FDIC’s Securitization Pilot Program. Barron’s reported that the FDIC has $37 billion of bad bank assets to sell, but that the loans would only fetch 10 to 50 cents on the dollar. But US-guaranteed FDIC senior certificates enable “the FDIC to push much of the losses off its books, thanks to the US guarantee of principal and interest.” The notes are backed by loans (remember the ones worth 10 to 50 cents on the dollar) but ultimately the losses could be absorbed by Uncle Sam.

Ex-Federal Savings and Loan Insurance Corporation regulator William Black says the FDIC is selling the equivalent of Treasury bonds without Congressional approval while the deposit insurer should instead be selling off its bad assets. “[This program] hides the economic substance of what’s really happening – an unlimited taxpayer bailout,” Black contends. The FDIC disagrees.

2. Maybe it’s politics.

Bill Bartmann, publisher of the Bartmann Bank Monitor Report, says the FDIC isn’t closing banks faster because of politics.

“The FDIC is waiting until November to drop the other shoe,” Bartmann claims. He says 500 banks will be closed in 2011 after the mid-term elections have been completed.

Are bank failures political? Shorebank in Chicago was kept alive for months: “Senior Obama adviser Valerie Jarrett served on a Chicago civic organization with a director of the bank, and President Obama himself has singled out the bank for praise in lending to low-income communities.” But the politically connected bank was finally seized on August 20th, when the FDIC finally found a single buyer for the failed bank – Urban Partnership, which includes “American Express Co., Bank of America Corp., Citigroup, Ford Foundation, GE Capital’s equity investments arm, JPMorgan Chase & Co., Key Community Development Corp., Morgan Stanley, Northern Trust Corp., PNC Investment Corp., Goldman Sachs Group Inc., and Wells Fargo & Co. Former First Chicago executives who joined ShoreBank in recent months will run the bank.”

3. Maybe the number of bidders for bad banks has dried up.

The juicy deals Jiampietro and Wigand were making last year are over, The Wall Street Journal reports. According to Keefe Bruyette & Woods (KBW), acquiring banks were booking 4.5 percent capital gains on deals done in 2009. That is now down to 2.5 percent.

Investors are halting efforts to bid on the failed banks, saying the economics no longer make sense. A group led by former FDIC Chairman William Isaac recently ended a push to raise $1 billion for bidding on failed banks in the US Southeast, in part because of lower returns on potential deals. Likewise, a group of former Wachovia Corp. executives hoping to launch Charlotte, N.C.-based Union National Bank, recently pulled its federal charter application because bank-failure bargains are becoming tougher to find.

“In the current environment our view is that FDIC-assisted transactions are not really attractive entry points,” the Union National spokesman added.

Meanwhile, many of the early investors who were able to grab bargain deals in the beginning of the crisis say they are done for now. Sunwest Bank in Tustin, Calif., for example, snapped up assets from three failed institutions with discounts as high as 44%. The deals doubled the bank’s assets to $658 million and increased its head count from 68 to 140. Chief Executive, Glenn Gray, said he doesn’t expect to be a bidder again anytime soon, acknowledging how the pricing has changed.

4. Or maybe the FDIC just doesn’t have the money to close banks.

The FDIC Deposit Insurance Fund has already spent over $19 billion this year, which is well above the $15.33 billion prepaid assessments that it collected from banks for all of 2010.

The situation is probably worse than the FDIC is letting on, according to ex-regulator William Black, author of The Best Way to Rob a Bank Is to Own One. “The FDIC is sitting there knowing that it has both the residential disaster and the commercial real estate disaster [and] knowing it doesn’t have remotely enough funds to pay for it.”

Black is not surprised there aren’t more failures, but he says that we should be upset there are not more bank failures. The industry has used its political muscle to get Congress to extort the financial accounting standards board to gimmick the accounting rules so that banks do not have to recognize their losses.

Recent FASB rule changes allow banks to value assets at inflated bubble values that have nothing to do with their real value. As a result, reported bank capital is greatly inflated. According to Black, even insolvent banks are reporting lots of capital. Furthermore, he contends that the FDIC is “intentionally keeping foreclosures down because it knows it does not have enough money to pay off depositors who are insured by the FDIC.”

Maybe that’s why suddenly the expected losses on some of the bank closures in the third quarter were considerably below historical norms. The FDIC estimated the expected losses as a percentage of assets for three banks that were seized on August 20th – Sonoma Valley bank, Los Padres Bank and Butte Community Bank – to be 3 percent, 1 percent and 3.5 percent respectively – a fraction of the average expected percentage loss for 2009 closures, which was 22 percent, and for 2010 closures, which was 23 percent.

Black believes that delaying the seizure and liquidation of insolvent banks will make ultimate losses grow. It’s a “Japanese-type strategy of hiding the losses,” which will result in a lost decade or two.

The FDIC is required to maintain a Deposit Insurance Fund (DIF) of 1.25 percent of insured deposits. As of June 30 of this year, the DIF held negative $15.2 billion, standing behind $5.4 trillion in insured deposits. That’s negative 0.28 percent. In its second-quarter banking profile, the FDIC noted the 10 basis-point improvement in the DIF from the first quarter, when the DIF was at negative 0.38 percent.

However ValuEngine’s Richard Suttmeier calculates that the DIF is currently $33.66 billion in the hole or negative 0.62 percent

But don’t be afraid, Chris Dodd and Barney Frank have taken care of everything. The Dodd-Frank Wall Street Reform and Consumer Protection Act not only made the increase in deposit insurance of $250,000 permanent, but it requires the FDIC “to take steps necessary to attain a 1.35 percent reserve ratio by September 30, 2020.”

So, in a decade, the FDIC will have $1.35 standing behind every $100 you have in the bank – promise – you have Chris’ and Barney’s word on it.

Regards,

Doug French
for The Daily Reckoning

Bank Failures in Slow Motion, Part II originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Bank Failures in Slow Motion, Part II




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Real Estate, Uncategorized

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