(West Palm Beach) A clear and direct relationship has existed between employment and house prices in the US over the past 9 years. In order for housing prices to turn up, a necessary condition would be a sustained upturn in total employment. Although the widely reported seasonally adjusted employment data seems to indicate that such […]
Archives for May 2011
May 2011 - Page 6 of 9 - Money Morning - Only the News You Can Profit From
Agricultural Commodities Markets Are Fertile Ground for Profit
Commodities have received an unprecedented amount of attention over the past year, largely because of the rising price of gasoline and dramatic moves by the precious metals.
However, gold, silver and oil haven't been the only high-flyers. Although they haven't generated nearly as many headlines, agricultural commodities markets also have seen substantial price gains over the past year.
And, given steadily growing supply-demand imbalances linked to a mushrooming global population, upward price pressure in agricultural commodities markets will almost certainly persist for years to come — meaning repeated profit opportunities for investors savvy enough to ride the trends.
Do You Agree the Commodities Bubble is Far from Over?
When commodities like silver, copper and oil slipped last week after record surges, many investors panicked and thought the commodities bubble had finally popped.
The Standard & Poor's GSCI Index that follows 24 raw materials fell 11.4% in five days, the most since December 2008. Silver plunged 30% and oil traded down to $94.63 on Friday.
Investors who had piled money in precious metals and raw materials feared their safe haven investments had reached a bull-market peak. Some said the commodities bubble had burst and the great rally was over.
The Future of the Euro: Why Europe's Key Currency is Doomed
The Eurozone project has seen better days, which is why the future of the euro isn't a bright one.
In fact, as all the latest speculation about Greece either abandoning the euro currency – or being booted out of the Eurozone outright – is demonstrating, "the market" is about to apply a level of pressure well beyond what the Eurozone and European Union (EU) were designed to handle.
The number of sovereign states in the EU that are facing difficulty selling new debt, or even a rollover of current debt, is growing.
The Eurozone and the EU are both in trouble. Clearly, the structure that exists today is flawed and will not withstand the rigors and pressures that are headed directly its way.
The ability to kick the can down the road is about to end, and with it some hard decisions will need to be made by the political and wealthy elite.
Let's take a closer look.
To see the newest Eurozone danger signal, please read on...
U.S. Government Spending is the Biggest Threat to Economic Recovery
A handful of factors threaten the strength of the U.S. economic recovery this year, like U.S. government spending and high unemployment, leading many to wonder just how well the country's economy will fare in 2011.
The U.S. Commerce Department reported last month that U.S. gross domestic product (GDP) growth slowed in 2011's first quarter to 1.8%, down from 3.1% at the end of 2010. High gasoline prices and rough winter weather combined to drag down GDP.
The news came a day after U.S. Federal Reserve Chairman Ben Bernanke held the first-ever Fed press conference and said he expects the U.S. economy to grow at a rate of 3.1% to 3.3% this year (down from the 3.4% to 3.9% previously projected).
Skype Acquisition To Bring Customers, Better Web Phone Tech to Microsoft
In a bid to energize its online communication services, Microsoft Corporation (Nasdaq: MSFT) announced yesterday (Tuesday) that it has agreed to buy Web phone company Skype Technologies SA for $8.5 billion.
Microsoft said it intends to integrate Skype's technology into several products, including its Xbox game console, its Outlook e-mail program, and its Windows mobile phones. Microsoft will also gain Skype's active user base of 170 million people.
"This could give Microsoft a much-needed kick-start" in telecommunications, Paolo Pescatore, an analyst at CCS Insight inLondon, told Bloomberg News. In voice services, "Skype has certainly set the benchmark and gained a lot of traction."
How Long Before Greece Leaves the Euro Zone?
I find it ironic that a country which defrauded its way into the Euro Zone is likely to be the first country to exit the Euro Zone. Despite a raft of hasty denials by just about everyone in Brussels, it now seems all but inevitable that Greece will bail on the Euro when they default on the €110 billion bailout they received just one year ago.
Of course, this all started on Friday when an article came out in Der Spiegel claiming that Greece was mulling an exit from the Euro due to near-daily violent protests and the apparent failure of austerity measures. An emergency meeting of European finance ministers was convened in Luxembourg in response to the report, which they all denied. Methinks they doth protest too much.
The Inflection Point: Why the U.S. Dollar is Ready to Rebound
For most of the past year, anything involving the U.S. dollar has been what traders like to refer to as a "one-way trade."
And with good reason: Over the past year, the U.S. currency has traded in only one direction – down.
Indeed, during the period in question the dollar is down 8.3% against the British pound, 11.65% against European euro and 14.2% against the Japanese yen. On a year-over-year basis, the biggest gains against the dollar have been notched by the Australian dollar (20%) and the Swiss franc (26.7%).
This freefall by the greenback is part of the reason that gold and silver soared to new records and commodity prices have zoomed during the past year (before their decline in the past week).
But here's the thing: This nosedive by the dollar is ending – with a U-turn that's going to send the U.S. currency into a zooming climb.
Traders refer to this abrupt reversal-of-fortune pattern as an "inflection point."
And those traders recognize this about-face in the U.S. dollar for exactly what it is: A windfall profit opportunity for investors who understand just how to play it.
To see why the dollar is poised for a rebound, please read on...
Coal Use in China Shines Light on Growth
International coal prices hit $124 per ton last week, the highest level in five months, as strong demand from reconstruction projects in Japan and reduced supply from flood-ravaged Australia have made coal supply tight.
The floods in Queensland, Australia cut the country's output of coal by 15%; other big coal producers such as Indonesia, South Africa and Colombia are experiencing similar production cuts due to floods of their own.
At the end of March, coal prices were 33% higher than a year ago, and earlier this month mining giant Xstrata PLC (PINK: XSRAF) inked a one-year deal with a Japanese utility at $130 per ton, effectively setting a floor under coal prices in the near-term. That's up from $98 per ton the company made in a similar deal a year ago.
Perhaps no country is more affected by this development than China.
Resurgent Greek Debt Crisis Stokes Concern, Causes S&P to Lower Rating
Concern that the Greek debt crisis is far from resolved led Standard & Poor's to lower that troubled country's debt rating even deeper into junk territory yesterday (Monday).
The S&P cut Greece to B from BB- with a warning it could downgrade further.
"In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds," S&P said in a statement.
A restructuring of the Greek debt could result in principal reductions of 50% or more, with the loss borne by the bondholders.
One year after a bailout intended to help the Greek government address its crushing debt – it owes more than 150% of its gross domestic product (GDP) – European Union (EU) leaders are worried Greece is not doing enough to fix its debt problems.