Inflation
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Five Ways to Profit as Coffee Prices Soar
If you're anything like me, you can't resist stopping in for a "cup of Joe" every morning. If so, you're probably also like me in that you're experiencing a bit of pain in the wallet right now, given the steady increase in coffee prices we've see over the last year (and especially in the last few months).
If you want physical proof that we're operating in a truly global economy these days, just look at how these three factors have creamed your coffee budget:
- Lousy weather in Latin America is threatening a big chunk of the worldwide coffee crop.
- U.S. coffee stockpiles are reportedly at a 10-year low.
- And Vietnam and Brazil - two of the world's Top 3 exporters - are scheming to hoard their stockpiles.
Expect the trend to continue.
This may be bad news for your pocketbook - but it's great news for your portfolio. Coffee prices are going to rocket another 30% from here.
And with the strategy we're about to show you, this run-up in prices will be truly good 'til the last drop.
To learn more about how to profit from the global bull run in coffee, please read on...
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How to Profit From the "Widow-Maker" Trade – Shorting U.S. Treasury Bonds
Although we're in the midst of a U.S. Treasury bond bubble so big that pundits are calling for investors to short the government paper, resist the urge to jump in with both feet.
Doing so right now is nothing more than a "widow-maker" trade that will test both your patience and your pocket book. And yet, "shorting" the U.S. Treasury bond market is an opportunity you can't afford to pass up - so long as you execute the trade correctly.
For the best Treasury bond strategy to deploy right now, please read on...
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Russia: Is it Time to Invest in One of the Coldest Countries on Earth?
Of all the unpleasant societies in which to live, Vladimir Putin's Russia is among the nastiest. Journalists and businessmen disappear, a knock on the door at 3:00am can prove fatal, and nothing gets done without endless side-payments to obscure fixers.
Still, Goldman Sachs Group Inc. (NYSE: GS) in 2001 identified Russia as one of the four great "BRIC" growth economies. And while much of its gilt has been worn off, Russia still has many supporters in the investment world. So the question is: Provided you don't have to live there, is it worth devoting a few of your investment dollars to the country?
To find out if Russia is worth the investment continue reading... -
Question of the Week: Readers See Failures in Fed's Policies During U.S. Economic Recovery
The U.S. Federal Reserve last week said it would take a small "easing" step - what Fed watchers described as a largely symbolic move designed to show the central bank is "concerned" with the nation's economic outlook. The central bank's policymaking Federal Open Market Committee (FOMC) said it would hold interest rates at record-low levels and announced it would reinvest maturing mortgage-backed securities back into the market so that its balance sheet does not shrink.
However, Analysts think the Fed will have to do more to help the economy move along, and are expecting more announcements of policy easing in coming weeks.
"I suspect that the Fed will, within time, purchase more longer-dated government securities" than is required by reinvesting the principal payments from agency debt and agency mortgage-backed securities in the Fed's portfolio, said veteran Wall Street economist Henry Kaufman to Reuters.
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Investing Strategies: How to Protect Yourself if the U.S. Economy Catches the "Japan Disease"
Grim unemployment figures, growing worries about crushing debt loads and the apparent absence of any inflation are causing many investors to ask a tough question: Is the U.S. economy catching the "Japan disease," the dreaded and dreadful malaise that has left the onetime Asian powerhouse in a stagnant state since 1990?
It's a crucial question.
And the answer will guide your investment decisions for the next 20 years.
To find out the best investments to be making right now, please read on... -
CPI Shows Inflation May Be a Bigger Problem than the Fed Thinks It Is
A hodge-podge of government reports released Friday has rekindled debate amongst economists over a question central to the future of the U.S. economic recovery: Is inflation slowly on the rise, or is deflation about to sink prices and future growth?
The consumer price index (CPI) rose for the first time in four months in July, signaling higher prices in some sectors and easing concerns that a slowdown would sink the U.S. economy into deflation. Meanwhile, the government released a string of weak economic reports that point to slower economic growth.
The consumer price gauge increased 0.3%, the most in a year, outpacing the 0.2% gain projected by the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed Friday. The so-called core rate favored by government economists, which excludes volatile food and fuel costs, met expectations, increasing 0.1%.
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The Fed's Treasury Purchase Plan is Just Further Proof That It's in the Denial About the Dollar
This week's decision by the U.S. Federal Reserve to buy Treasuries in an effort to prop up borrowing is further proof that the economy is worse off than policymakers would have us believe. But more than that, the Fed's Treasury purchase plan is just one more reason for investors to anticipate inflation and take steps to protect their money from it.
In case you missed the news, here's what happened...
The Federal Reserve on Tuesday announced that instead of allowing proceeds from maturing mortgage bonds to disappear from its balance sheet, the central bank would take the "modest" step of using them to invest in new Treasuries.
In plain English, that means that the Fed is reinvesting into U.S. Treasuries the money it would otherwise bank from maturing mortgages.
Its goal is very simple: to keep long term interest rates from rising.
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An Anemic Economic Recovery Keeps the Fed From Focusing on Inflation
With interest rates near zero and a balance sheet that's in excess of $2 trillion, U.S. Federal Reserve Chairman Ben Bernanke would be very glad to offload some of the Fed's obligations. But so far he's has been unable to do so, as an anemic economic recovery continues to monopolize his attention.
The central bank yesterday (Tuesday) announced that it would reinvest the proceeds from expiring mortgage-backed securities into longer-term U.S. Treasuries. The move should help a weakening economy by keeping mortgage rates low. And while it also may boost inflationary pressures, the central bank feels it had little choice.
"Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months," the Federal Open Market Committee said.
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Is the U.S. Economy Destined for Deflation?
With inflation low and the recovery waning, a growing chorus of analysts is beginning to suspect that U.S. policymakers aren't doing enough to head off deflation.
U.S. producer prices fell for a third straight month in June, sliding 0.5%. That follows declines of 0.1% in May and 0.3% in April. Core inflation, which excludes food and energy costs, managed only a 0.1% increase for the month, and is up just 1.1% in the past 12 months. The U.S. Federal Reserve's preferred target for inflation is 2%.
Meanwhile a high rate of unemployment continues to jeopardize the U.S. recovery, and economists fear that a significant drop in economic growth could tip the scales toward a deflationary spiral.
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South Korea Raises Interest Rates, Joining Asian Movement to Reduce Stimulus
South Korea on Friday joined a chorus of Asian countries in cooling their economies by raising its benchmark interest rate and removing monetary stimulus from its financial system.
The Bank of Korea (BOK) joined counterparts across Asia by notching its rate up by 0.25 percentage point to 2.25%, lifting its key policy rate for the first time since August 2008 - the beginning of the global financial crisis.
But the BOK stressed it is just nudging rates up from emergency levels to counter the threat of inflation and curb a rise in household credit. Asia's fourth-biggest economy joined other economies during the global financial crisis by slashing interest rates, knocking them down three times and shaving a total of 325 basis points off the benchmark rate.
