Posts Tagged ‘emerging markets’

World In A Box

December 8th, 2014

World-in-a-BoxJohn Rubino:  Of all the problems with fiat currency, the most basic is that it empowers the dark side of human nature. We’re potentially good but infinitely corruptible, and giving an unlimited monetary printing press to a government or group of banks is guaranteed to produce a dystopia of ever-greater debt and more centralized control Read more…

Banking, Currency, Economy, Government, Today's Top News

Deere & Company (NYSE:DE) Running In South America

February 15th, 2013

john deereTim Seymour: Deere & Company (NYSE:DE) reported a solid beat ($1.65 vs. $1.40 consensus) in fiscal Q1 while raising its outlook on FY 2013. The agriculture and turf business is better than expected, and will continue to be as long as soft prices stay in this range. Read more…


Las Vegas Sands Corp. (NYSE:LVS) Reports Stellar Profits From Macau

February 1st, 2013

las vegas sandsSean Geary: Gaming company Las Vegas Sands Corp. (NYSE:LVS) reported both its quarterly and annual results Wednesday afternoon; the firm had massive profits thanks to strength from its casinos in Macau. Read more…

Economy, Entertainment, World News

Does China Plan To Establish Chinese Cities And Special Economic Zones All Over America?

January 22nd, 2013

china etfsWhat in the world is China up to?  Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been Read more…

Asia, China, Economy, Markets

Can Cemex (NYSE:CX) Return To Profitability Next Year?

December 12th, 2012

Mitchell Hall: One of the world’s largest building supplies and cement producers, Mexico’s Cemex (NYSE:CX) has been struggling to haul itself out of global financial and real estate quicksand. But a number of signs look positive for CX in the coming quarters, not least the fact that it’s up 76.35% YTD. Read more…

Earnings, Emerging Markets, Markets

Caterpillar Inc. (NYSE:CAT): Is Now The Time To Buy The Stock?

November 28th, 2012

Mitchell Hall: Caterpillar Inc. stock (NYSE:CAT) is scraping its 52-week low of $78.25, trading at $84.54 at the time of writing. This is down from its 52-week high of $116.95, and CAT has been recently downgraded by JP Morgan Chase from overweight to neutral. Read more…

Earnings, Markets

Apple Inc. (NASDAQ:AAPL): China’s Role In Upcoming Surging Apple Sales

November 16th, 2012

Mitchell Hall: The Apple Inc. (NASDAQ:AAPL) juggernaut keeps on rolling, with a surge in Apple sales for the iPhone 5 and new iPads expected this quarter and the next, according to Morgan Stanley analyst Katy Huberty. Read more…

Markets, Technology

China Energy Deal Detours (CEO, SNP, NXY, CHK)

November 1st, 2012

Jim Trippon: China’s overall government strategy of piling up additional energy and other resource assets while consolidating certain industries is ongoing. China watchers know that this has shifted into high gear in the last couple of years, with China’s major oil and gas companies Read more…

Asia, China, Energy Inc. (NASDAQ:BIDU): Catch The Google (NASDAQ:GOOG) of China Before Earnings

October 26th, 2012

Joseph Hogue: Chinese search engine giant Inc. (NASDAQ:BIDU) is scheduled to report earnings on October 29th, with expectations for a net of $1.29 per share on $1.0 billion in revenue. Read more…

Earnings, Markets, Technology

These Chinese Stocks Offer Much Opportunity To Investors (BIDU, SOHU)

October 12th, 2012

Investors are certainly aware that the Chinese economy is affected by and participating in the global slowdown, as there’s no shortage of such coverage in the financial media. What’s less well covered, but has sometimes been mentioned as a corollary or simply on its own, Read more…

Asia, China, Technology

Synergetics USA: A Growth Story Amidst An Aging Population (SURG)

September 11th, 2012

John Persinos: It’s clear to see: Ophthalmic surgical equipment is a booming business. The graying of the world’s population is fueling long-term demand for the treatment of eye disorders, while technological breakthroughs are allowing ophthalmologists Read more…


China Steelmaking May Lead To Iron Ore Rebound (VALE, MT, NUE, X)

August 27th, 2012

Jim Trippon: With Chinese iron ore prices recently sagging to around $100 per metric tonne due to what has been a sluggish demand for steel, iron ore producers and steelmakers globally are finding the results pressing on their bottom line. Steelmakers such Read more…

China, Commodities

Focus Media Deal Answers China Critics (SOHU, BIDU, HOGS, SPRD, YONG, FMCN)

August 21st, 2012

Jim Trippon: With the recent announcement that China’s major electronic advertising and display company, Focus Media Holdings Ltd. (NASDAQ:FMCN), was entertaining an offer to go private, observers are asking whether or not this will be the beginning of a stampede Read more…

Emerging Markets

Three Questions About Global Natural Resources

June 9th, 2011

Frank Holmes and the co-managers of the U.S. Global Investors Global Resources Fund (PSPFX), Evan Smith and Brian Hicks, participated in a special webcast for the Peak Advisor Alliance last week. Here are some candid portions of the Q&A:

Q. How are interest rates currently affecting commodity prices?

A. The magic number for real interest rates is 2 percent. That’s when you can earn more than 2 percent on a U.S. Treasury bill after discounting for inflation. Our research has shown that commodities tend to perform well when rates fall below 2 percent.

Take gold and silver, for example. You can see from this chart that gold and silver have historically appreciated when the real interest rate dips below 2 percent. Additionally, the lower real interest rates drop, the stronger the returns tend to be for gold. On the other hand, once real interest rates rise above the 2 percent mark, you start to see negative year-over-year returns for both gold and silver.

Whether you are Republican, Democrat, Independent or Agnostic, it’s important to realize that it’s not about politics, but about policies. During the 1990s when President Clinton was in office, there was a budget surplus and investors could earn more on Treasury bills (about 3 percent) than the inflationary rate (about 2). This gave investors little incentive to embrace commodities such as gold, and prices hovered around $250 an ounce. Now under President Obama, there is a large budget deficit and we have negative real interest rates, and gold is in great demand.

Interest rates in the U.S. have been near zero since 2008 and we don’t see the Federal Reserve increasing them until at least 2012. The U.S. economy remains in intensive care: Stimulus efforts have been unable to stimulate significant job growth and unemployment remains near 10 percent. In addition, the existing home sales figures released last week reminded everyone that housing is still on life support.

Even though there has been a lot of talk about reducing deficit spending and the U.S. House of Representatives voted against raising the debt ceiling this week, we don’t see any desire from the Federal Reserve to raise interest rates. The government realizes it is extremely dangerous to pull back the reins right now.

Q. How do the financial troubles of European countries such as Greece and Portugal affect gold prices?

A. The market has definitely been more volatile as some of the financial problems started to pop up again in Europe. The re-emergence of these issues is just another example of how many developed economies around the world are overleveraged and heavily burdened by their debt.

Some of the weaker countries, particularly Greece, could end up ditching the euro as their main currency. This would obviously be a destabilizing event for the euro and would result in some short-term strength for the U.S. dollar, thus providing a headwind for commodities. However, the U.S. dollar is plagued by the same problems as the eurozone; i.e., a weak economy and higher unemployment.

Meanwhile, central bankers in emerging markets have excess reserves and are looking for ways to diversify away from these paper currencies. To protect themselves from paper currency devaluation many of them have turned to gold. Last year was the first net positive year for central banks’ buying of gold since 1985. They’ve chosen to own gold over trying to guess whether Portugal or Greece’s debt is the best investment.

This isn’t a completely new phenomenon. Russia announced that it was going to diversify roughly 5 percent of its reserves into gold back in 2005 when gold prices were at $500 an ounce. The tipping point came in 2009 when India purchased 200 tons of gold from the International Monetary Fund (IMF), which effectively set a floor under gold prices at $1,000.

Since then, we’ve seen countries such as Thailand, Bangladesh, Vietnam, Venezuela and the Philippines add to their official gold reserves. Earlier this year, Mexico purchased 100 tons of gold to boost its reserve holdings.

This trend should continue.

Q. With oil prices hovering around $100 per barrel, what is the outlook for oil prices for the next two to five years?

A. We remain bullish on crude oil for one simple, fundamental reason: Demand is greater than supply. We don’t see that changing in the foreseeable future.

One big driver is a rapidly growing demand for cars and automobiles in emerging markets. There’s also rising demand for oil due to urbanization and rising per capita incomes in emerging economies. As their economies grow and their populations become more prosperous, they want and can afford to upgrade infrastructure and other construction projects which require oil to be produced.

However, it is important to manage expectations. As the price of gasoline rises and inflation fears grow, countries such as India have been forced to lower government fuel subsidies. This will cause some demand destruction as consumers adjust to paying more at the pump, a situation not very different from what we’ve seen recently in the U.S. Though it has the potential to spread if inflation gets out of control, we think this dip in demand will only be temporary.

On the supply side, it’s getting more difficult to find new supply and even when large reserves are discovered, they lie deep beneath the ocean floor or in parts of the world where it’s dangerous to operate.

We think these trends appear to be firmly intact and are why we remain constructive on crude oil prices over the next several years.


Evan Smith and Brian Hicks,
for The Daily Reckoning

Three Questions About Global Natural Resources originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Three Questions About Global Natural Resources

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

Railway Revolution Builds China’s Consumer Culture

June 5th, 2011

Frequent readers of my “Frank Talk” blog and the weekly Investor Alert should be familiar with the story of China’s high speed rails. We’ve previously discussed how China is building the world’s largest network of high speed rails at an incredible speed.

Since opening the first high speed line between Beijing and Tianjin in 2008, the country has laid down more than 4,600 miles of new tracks. This is three times more than Japan, where the bullet train was invented, and this is just the start. Once completed near the end of this decade, the high speed rail system will connect more than 250 Chinese cities, span 18,641 miles and reach roughly 700 million people.

Currently, the high speed rail network connects about one-third of China’s cities. That figure is set to nearly double over the next two years. If current forecasts hold true, 100 percent of the China’s cities will be connected through high speed rails by 2019.

While linking megacities such as Beijing and Shanghai carries significance, connecting the urban East with rural areas of West and Central China is equally as important. This data from Morgan Stanley shows that the West and Central regions of China lag considerably in terms of GDP per capita, urbanization rate and property prices.

Many, including our investment team, believe that connecting these areas of the country could have a similar effect to what took place in the United States when Eisenhower’s interstate highway system linked cities such as Chicago and Philadelphia with their counterparts on the West Coast including Seattle and San Francisco.

The effect this massive buildout can have on commodities is evident: thousands of miles of new track, hundreds of new stations and dozens of new trains will certainly boost demand for steel. But there’s also a corollary effect that can expedite the transformation of China’s economy. More people traveling across the country means there will need to be more places for them to eat, sleep and shop.

Take hotel rooms for example. Currently, the U.S. has just fewer than 5 million hotel rooms spread across the country; China has about half that amount. However, Morgan Stanley forecasts that the two are set to switch places near 2025 as China pushes to offer more than 9 million hotel rooms by 2039. Familiar names such as Wyndham, Starwood and Hilton are planning major additions to their pipelines in China.

Morgan Stanley also says that the high speed rail expansion presents opportunities in areas such as consumer staples, car rentals and tourism. The latter is especially important because the average Chinese citizen is going to be able to explore culturally rich areas of the country that were previously too difficult or expensive to visit. A poll from CLSA’s China Reality Research last year showed that travel remained a top aspiration.

Rail passenger traffic has a strong correlation with instant noodle consumption (79 percent positive correlation) and soft drink volume (86 positive correlation), according to Morgan Stanley. This means that chains such as McDonald’s (1,300 stores in China) and KFC (4,000 stores in China), both of which are largely concentrated in the eastern third of the country, will likely follow the high speed tracks into Central and Western China.

These are all examples of how the dynamics of the Chinese consumer are forever changing. As investors, it’s important to understand these intermarket relationships and how a development in one area of an economy can dramatically affect another seemingly unrelated area of the economy. Being able to spot these trends and developments before they bubble up to the surface is how active money managers can create alpha for their shareholders.


Frank Holmes,
for The Daily Reckoning

P.S. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

Railway Revolution Builds China’s Consumer Culture originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Railway Revolution Builds China’s Consumer Culture

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

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