U.S. & Euro Regulators Move to Curb Commodity Speculators
U.S. and European Union (EU) regulators are vowing to step up scrutiny on the size and volume of commodity market bets as debate continues to rage about whether excessive speculation is driving up prices on energy, metals and agricultural products.
In an unprecedented rush, investors have pushed a total of $121.2 billion into commodities since the beginning of 2009, according to Barclays Capital. Hedge funds, pension funds and mutual funds in the United States have boosted their positions on oil, silver, corn and wheat to record highs in 2010.
In some commodities, the number of futures contracts outstanding now far outpaces the numbers traded in mid-2008, when commodity market prices shattered records. As a result, regulators in the United States and Europe are considering proposals on how to prevent the so-called speculators from manipulating the markets.
Four Ways to Sidestep Ireland's Woes and Profit from the EU's Economic Muscle
The $100 billion-plus bailout of Ireland, which followed the $100 billion-plus bailout of Greece, seems at first to validate the standard U.S. view of Europe – that it's a bunch of backward, socialist countries that will be washed away by the tide of history.
According to this view, one European country after another will succumb to the "Greek disease," until the continent ultimately runs out of bailout money.
The conventional wisdom is that U.S. investors should just avoid the European Union (EU) in its entirety.
But U.S. investors who embrace this view – and ignore the economic muscle that exists in key European market economies – will end up leaving an awful lot of money on the table.
Debt Crisis Rattles Irish Government as EU Scrambles to Prevent Contagion From Spreading
Ireland's debt crisis has destabilized its government and is fueling speculation that the $118 billion (85 billion euros) bailout may not be enough to keep it from spreading to other Eurozone countries including Portugal, Spain and Italy.
Nervous financial markets yesterday (Tuesday) continued to suggest global investors lack confidence that some governments will be able to manage their debt and cast doubt on the European Union's (EU) ability to contain the crisis.
London Timesthe bond markets are comparable to "hearse chasers" who would soon "take Portugal and Spain to task."
EU leaders tried to calm the markets and issued assuring statements that Ireland's bailout will halt contagion in the euro region, but investors focused on Portugal, which hasn't cut government spending and for years has been mired in sluggish economic growth.
United Nations Warns of Food Price Hikes, Painting a Picture Similar to 2008's "Silent Tsunami"
The United Nations' Food and Agricultural Organization (FAO) yesterday (Wednesday) warned that food prices could rise through 2011 unless production of major crops rises significantly, outlining a situation reminiscent of 2008's "silent tsunami" food crisis.
The FAO announced in its twice-yearly Food Outlook report that global food import costs will jump 15% in 2010 to $1.026 trillion – dangerously close to the 2008 crisis level of $1.031 trillion. The world food import outlook was revised up from a June estimate of $921 billion.
Increasing global demand is boosting the food bill, and price climbs in grain and sugar – which recently passed its 30-year peak – have signaled even higher prices ahead.
Chile: The One Emerging Market That Investors Can't Afford to Ignore in 2011
When I review each of the world's emerging markets in order to decide which ones to buy in 2011, I start with two questions:
- Is the market cheap?
- And has it under-performed over the past year?
If the answer is "yes" for both those questions, that market is much more likely to get my vote.
But with every rule, there are also exceptions. As we will see.
China's Continued Failure to Rebalance Growth Threatens Global Economic Stability
China announced yesterday (Wednesday) that its trade surplus grew 60.7% in October from the month before as efforts to rebalance its economic growth this year have failed. Furthermore, recent policy tightening measures mean domestic demand is unlikely to pick up in the near future.
"The rebalancing of China's economy has an awfully long way to go – in fact it's hardly even got started," Mark Williams, an economist at Capital Economics Ltd. who previously worked at the U.K. Treasury as an adviser to China, told Bloomberg. "In normal circumstances, the world might be willing to wait, but not when the likes of the U.S. are struggling with very high unemployment."
In a sign China's export-driven growth has not shifted to an increase in domestic consumption, China's trade surplus hit $27.15 billion last month, up from $16.9 billion in September. Exports rose 22.9% in October from the year before and imports climbed 25.3%. The trade surplus was slightly higher than expectations of $26.4 billion, according to a poll reported by Dow Jones Newswires.
Energy Investing Strategies: Three Ways to Profit From the Rebound in Natural Gas Prices
I love autumn. The leaves start to turn color, and the first hint of winter is invigorating. It is also a great time to peruse each of the financial markets for the shorter-term, seasonal trades that are always lurking – if you know where to look, that is.
One place that's worth looking at right now is the global currency markets, where a major war is currently being waged. As part of the so-called "race to the bottom," the U.S. dollar is down 14% since June. This drop in the greenback has come at a time when a major bull market in commodities has broken out everywhere in the world.
Gold, silver, wheat and corn have all recently achieved multi-year highs. Cotton just hit its highest price in 140 years.
There has been an exception, however – a headline commodity that's been left behind. Indeed, this particular commodity has been in decline for six months, dropping almost daily. But that's about to change.
As we move deep into fall, the leaves on the trees will change color, die, and then fall to the ground. But the commodity in question will return to the land of the living, and will head for high ground – generating windfall profits for those with the courage to make their move right now.
I'm talking about natural gas.
When Investing in Latin America, Politics Point the Way to Profits
And it has underscored an important lesson for investors: In Latin America, the political climate is really the No. 1 factor in determining where to invest for the long run.
In short, when looking to invest in Latin America, let politics be your guide to profits.
Six Ways to Profit as Consumerism Supplants Exports and China Throttles Up GDP Growth
BEIJING, People's Republic of China – There's something inherently satisfying about waking up on a clear, crisp fall day in this bustling capital city, and seeing this headline atop the lead story in this morning's China Daily newspaper:
"World Bank Sees Change in Growth Pattern"
In essence, the World Bank has finally acknowledged what we've been telling you for several years – that China's accelerating domestic growth is already reducing its once-almost-total reliance on exports.
This is an important validation of our investment strategies and of China's newest economic policies. Investors who see and understand these developments can expect to enjoy some significant long-term successes.
Sorry Wall Street – Asia is the New King of the Global IPO Market
The United States – and Wall Street – is surrendering its mantle as the global center for intial public stock offerings (IPOs).
In fact, unprecedented demand for IPOs in Asia has reduced the U.S. share of the global IPO market to an all-time low.
With another $10 billion in IPO deals expected to be completed by the end of this year, the total amount raised worldwide for all of 2010 will approach $145 billion.
With $76 billion raised – including $22.1 billion from Agricultural Bank of China Ltd., alone – China topped the field by raising the most money of any single country.
No U.S. company raised more than $700 million.
This says a lot about the respective outlooks for the two countries' economies. And it also tells us a great deal about how we should be investing our money.
Let me explain.