Tag: inflation

Gold, oil & 44 Bars per Minute

Gold, oil & 44 Bars per Minute

“Girls love to spin.” — Wayne, Dance Instructor, Howard County Parks and Rec. I’m taking dance classes at the local Parks & Rec. with a stunning brunette, which is why I’m shuffling my feet around on Sunday nights at eight. The crowd is mixed; twenty-something hipster couples and old guys who have difficulty with their gig lines. The instructor is a cross between Wayne Newton and Telly Savalas: a black silk shirt, shaved head, and a nose like an organic potato. He sucks his microphone like a lollipop and spits out a steady stream of advice: “One, two, hook the toe, slide back, twirl…” Chick magnet The chicks love him, of course. And heck, I was even having a good time�— right up until Wayne Savalas swished over during the break. My H1 was in the parking lot. It’s shiny, yellow, and chews diesel like a Mongolian wrestler at a yak roast. Wayne obviously saw me pull up and feels he should enlighten me about his new Chevy Volt getting 60 miles per gallon… And why would I drive something that sucks up so much gas and destroys the environment? I told him that I was fully invested in oil explorers. And with the trouble in the Middle East launching my shares, I could drive a Semi for life… Brent Crude ETF (BNO) Yes, he said, but is this more of a trade on the Arab revolutions, or does it have more to do with the destruction of the dollar? Wayne pointed out that the dollar/euro has hit a four-month low and seems to be heading lower. Down she goes What is most concerning is that during this particular period of global uncertainty, the

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Go Inside the $56 Billion ‘Black’ Budget

Filed in Bank Gold, gld, inflation, o by on February 20, 2011 0 Comments

The Pentagon dropped its $533 billion budget this week. Some line items get a thorough public debate — like stealth jet engines and soldier health care. Others have opaque names like “RETRACT MAPLE,” and are totally hush-hush. Welcome to the Defense Department’s classified, or black, budget. It appears to be about $56 billion, the same as last year, less some inflation.

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Market Week Wrap-up

– Leading global equity indices continued floating upwards this week while the inflation drumbeat just kept getting louder. In the US, the January y/y CPI figure hit +1.6%, its highest level since last spring, and some analysts were alarmed by higher food prices creeping into CPI data sooner than expected. China’s January CPI report was lower than expected at +4.9% y/y, but markets panned the figures as heavily massaged by basket revisions. In the UK, the BoE said CPI would likely continue growing at a 4-5% clip over the short term. The World Bank released a report indicating that food prices were up 15% since October 2010 and are now only 3% away from record highs hit in 2008. Commodities moves complicated the story somewhat. While silver has pushed out to 30-year highs, there were signs that inflated soft commodity prices were beginning to unwind, with cotton and grain prices both below recent highs. Crude and gold prices have been impacted by reports that Iran is sending warships through the Suez Canal and bloody protests in Bahrain (next door to Saudi Arabia), although WTI futures were well below recent highs seen in early February. The Obama Administration unveiled its $3.73T budget proposal for 2012, including an all-time high deficit of $1.65T, reflecting the tax-cut agreement reached with Republicans in December. For 2012, the administration sees the imbalance declining to $1.1T, giving the country a record four straight years of one trillion-plus deficits. Bond prices held steady after the details were released, and Congress sharpened its knives for a budget fight. The Feb Empire Manufacturing survey hit its highest level since last June, indicating that the US manufacturing expansion seen over the last several months is continuing. On Friday there was plenty of commentary out of the G20 conference, where leaders tried mightily to achieve some concrete steps in reforming the global monetary system. Fed Chairman Bernanke took a swipe at the Chinese in his policy address to the G20, warning that nations which keep currency values low create imbalances, while the PBoC’s Zhou continued to push for a higher profile for the IMF’s Special Drawing Rights (SDRs). For the week, the DJIA rose 1.0%, the Nasdaq gained 0.9% and the S&P500 was up 1.0%. – John Deere crushed earnings and revenue targets in its Q1 report and nearly doubled its guidance for FY11 equipment sales. The firm hiked its sales guidance for its key agriculture and construction units as well, and said its Q2 revenue would blow out consensus estimates. Later in the week Caterpillar released very favorable dealer metrics for the month of January, with North America machinery sales up a whopping 58% y/y in the month. – Iron ore miner Cliffs Natural Resources reported very strong Q4 profits on a big y/y gain in iron ore pricing. The company expects global steel production to continue to grow in 2011, although it warned that spot iron ore prices are unsustainably high. Reliance Steel also blew out earnings estimates, and said pricing would remain strong at least through the first quarter of 2011. – In tech, Dell’s profit was way ahead of the consensus in its Q4 report, thanks to a big improvement in margins. The company said it believes the corporate IT…

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Gallup: The Unemployment Rate is 10%

Gallup:  The Unemployment Rate is 10%

Jobs…jobs…jobs… I’m beginning to sound like a broken record but it’s true: This economy is going nowhere unless we start creating some jobs. As for the recent drop in the unemployment rate to 9.0%, I’m not buying it since it comes from Uncle Sam. The real figure is likely closer to what Gallup is reporting today… From by Dennis Jacobe entitled: Gallup Finds U.S. Unemployment Up to 10% in Mid-February “Unemployment, as measured by Gallup without seasonal adjustment, hit 10.0% in mid-February — up from 9.8% at the end of January. Underemployment, in which Gallup combines part-time workers wanting full-time work with the U.S. unemployment rate, surged in mid-February to 19.6% — mostly as a result of the sharp increase in those working part time but wanting full-time work. Underemployment now stands at basically the same place as it did a year ago (19.8%). The unemployment rate in mid-February is 0.8 percentage points lower than it was at this time a year ago, compared with a 1.1-point improvement at the end of January. This suggests that jobs are less available now than they were in January. More troubling, however, is the surge in underemployment. On this broader basis, current job conditions are barely improved from what they were at this time last year. Essentially, what has happened over the past year is that some people who were unemployed got part-time jobs but are still looking for full-time work. This is not much to show for a year in which many macro-economic indicators showed improvement. This is likely why Gallup’s self-reported spending

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Food Processor Archer Daniels Midland to Profit from Inflation

Filed in commodities, inflation, o, South African Gold, Spot Gold by on February 16, 2011 0 Comments
Food Processor Archer Daniels Midland to Profit from Inflation

Filed under: Archer-Daniels-Midland (ADM) , Commodities Raw commodities like grains, sugar and cotton are skyrocketing in price. These raw foods are then processed for consumption. Archer Daniels Midland ( ADM ) is one of the world largest food processors. It processes corn into corn oil syrups, sweeteners, citric and lactic acid and ethanol. Soybeans are crushed into soybean oil and meal, Wheat is processed into flour and pasta. Cocoa is turned into chocolate and confections. It provides animal feed for farmers and meal for brewers. It has one of the largest distribution networks in the world. Continue reading Food Processor Archer Daniels Midland to Profit from Inflation Food Processor Archer Daniels Midland to Profit from Inflation originally appeared on BloggingStocks on Wed, 16 Feb 2011 15:30:00 EST. Please see our terms for use of feeds . Permalink | Email this | Comments

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Three Garbage Stocks

Three Garbage Stocks

The market goes up everyday… This two-year chart represents the thirty varsity players on the U.S. economic court. You might look at this 100% gain in two years and think that this bull market is overdue for a correction. But don’t worry. Uncle Ben, our fair Chairman over at the United States Federal Reserve, has it all in hand. This is not the time to fret over debt, inflation, taxes, or unemployment… Don’t fight the Fed This market is simple. The Fed is pumping liquidity into the market at an unprecedented rate. There is an old Wall Street platitude that says “Don’t Fight the Fed.” It means you buy stocks when interest rates are dropping and sell when they are going up. The current Fed fund rate is at 0.25%. It can’t get much lower, and no one expects them to hike rates in the near future. What are you waiting for… zero percent? People heed the Bernanke It looks like folks just like you and me are putting the hard times behind them… The adjusted retail numbers for December showed $380.9 billion in sales, an increase of 0.6 percent from the previous month, and 7.9 percent above December 2009. Total sales for 2010 were up 6.6 percent. For the fourth quarter, they were up 7.8 percent. Car sales jumped 14.7 percent over last year. For non-store retailers like Amazon, sales jumped 15 percent. The unofficial numbers for January show a 4.1 percent gain from a year ago. This is great stuff. Amazon investors liked it so much that the company now trades at twice the price it did during the dot-com bubble in 1999. Amazing. ~~SIGNUP_WD~~ The screen It’s a good idea to screen for stocks at least once a week. I generally screen for low P/E, small market capitalization, and good dividend. From there, I go through the list and look for red flags and growth potential. I like the companies that are under $250 million in market value, with high future growth and fat margins. I also look at debt ratios. I call these “garbage stocks” because they ain’t for widows and orphans, but they tend to run under the right circumstances. Today, three companies in the retail sector popped up on my screen. All three shared my garbage stock credentials. And they have something else in common: They cater to the petite bourgeois. They are Books-A-Million (NASDAQ: BAMM), Collectors Universe (NASDAQ: CLCT), and CPI Corp. (NYSE: CPY). The merchant of Wal-Mart All of these companies sell products to the middle class, but none of their products are necessities… Books-A-Million runs 223 discount bookstores in the Southeastern United States. Collectors Universe provides third-party authentication, grading, and related services for rare collectibles like coins, trading cards, and sports memorabilia. CPI runs Wal-Mart Portrait Studios and PictureMe Portrait Studios. BAMM has a market cap of $92 million and a trailing P/E of 6.62. The company had a negative revenue growth of 5.5% year over year, but it does pay a fat 5.2% dividend. (They could also be a beneficiary of Barnes and Noble going bankrupt.) CLCT has a market cap of $109.34 million, a P/E of 6.6, gross margins of 60%, quarterly revenue growth of 8%, and a dividend yield of 9%. CPY has a market cap of $152 million, a P/E of 8.06, 8% margins, a flat quarterly revenue growth, and a 5.10% dividend yield. …

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Sysco Confirms Our Worst Fears

Filed in AMAG, BP, GOld juniors, Gold Market, HAL, inflation, lead, Lear, o, target by on February 14, 2011 0 Comments

The food inflation strategies we outlined here and here and here may have sounded a bit gloomy, but considering what’s been happening in the commodity markets (inflation, weather-related disasters, and freezing conditions in Mexico), the well-timed strategies remain in place. ———————— Now that Sysco has confirmed their prices are rocketing (which also means your food prices will head north), it’s about to get a lot worse for the millions already struggling to pay their outrageous food bills… According to reports, you’ll pay double… even triple the price for produce within weeks thanks to a freeze that wiped out crops in Mexico and the southwestern US. And, according to Zero Hedge, “Now might be a good time to hit the frozen foods (or fresh produce if you’ve got a vacuum sealer) aisle at your local grocery store and stock up on your favorite fruits and veggies, as there may be a severe supply crunch coming in the next couple weeks lasting perhaps several months.” “Why pay premium prices later when you can prepare yourself today, before the rest of the country gets wind of it,” says Zero Hedge, as inflationary risks, supply problems, weather related incidents, and a recent freeze in Mexico that’s lead to an 80% and 100% crop damage makes life a bit more unbearable for companies that Sysco, which just released the following note: ALL OF OUR GROWERS HAVE INVOKED THE ACT OF GOD CLAUSE ON OUR CONTRACTS DUE TO THE FOLLOWING RELEASE. WE WILL BE CONTACTING YOU PERSONALLY TO REVIEW HOW THIS WILL AFFECT OUR CONTRACTED ITEMS WITH YOU GOING FORWARD. THE DEVASTATING FREEZE IN MEXICO IS WORST FREEZE IN OVER 50 YEARS… THE EXTREME FREEZING TEMPERATURES HIT A VERY BROAD SECTION OF MAJOR GROWING REGIONS IN MEXICO, FROM HERMOSILLO IN THE NORTH ALL THE WAY SOUTH TO LOS MOCHIS AND EVEN SOUTH OF CULIACAN. THE EARLY REPORTS ARE STILL COMING IN BUT MOST ARE SHOWING LOSSES OF CROPS IN THE RANGE OF 80 TO 100%. EVEN SHADE HOUSE PRODUCT WAS HIT BY THE EXTREMELY COLD TEMPS. IT WILL TAKE 7-10 DAYS TO HAVE A CLEARER PICTURE FROM GROWERS AND FIELD SUPERVISORS, BUT THESE GROWING REGIONS HAVEN’T HAD COLD LIKE THIS IN OVER A HALF CENTURY. THIS TIME OF YEAR, MEXICO SUPPLIES A SIGNIFICANT PERCENT OF NORTH AMERICA’S ROW CROP VEGETABLES SUCH AS: GREEN BEANS, EGGPLANT, CUCUMBERS, SQUASH, PEPPERS, ASPARAGUS, AND ROUND AND ROMA TOMATOES. FLORIDA NORMALLY IS A MAJOR SUPPLIER FOR THESE ITEMS AS WELL BUT THEY HAVE ALREADY BEEN STRUCK WITH SEVERE FREEZE DAMAGE IN DECEMBER AND JANUARY AND UP UNTIL NOW HAVE HAD TO PURCHASE PRODUCT OUT OF MEXICO TO FILL THEIR COMMITMENTS, THAT IS NO LONGER AND OPTION. WITH THE SERIES OF WEATHER DISASTERS THAT HAS OCCURRED IN BOTH OF THESE MAJOR GROWING AREAS WE WILL EXPERIENCE IMMEDIATE VOLATILE PRICES, EXPECTED LIMITED AVAILABILITY, AND MEDIOCRE QUALITY AT BEST. THIS WILL NOT ONLY HAVE AN IMMEDIATE…

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Recovery Chronicles: Tales From the Modern Food Line

Filed in BP, frontline, Gold, GOld juniors, inflation, Lear, o, Quantitative Easing by on February 4, 2011 0 Comments
Recovery Chronicles: Tales From the Modern Food Line

Here’s one from the recovery chronicles: food stamp usage is up 14% from last year. Today, the Supplemental Nutrition Assistance Program (SNAP) serves about one in seven Americans. Of these, about half are children USDA officials say. From the Wall Street Journal by Sara Murray entitled: Some 43 Million Use Food Stamps “Nearly a year and a half into the economic recovery, some 43.6 million Americans continued to rely on food stamps in November. More than 14% of the population drew food stamps in November to purchase groceries as high unemployment and muted wage growth crimped budgets. The number of recipients was up 0.9% from October, according to the new report by the U.S. Department of Agriculture. Compared to a year ago, the number of people receiving food stamps was up 14.2%. In both Washington, D.C. and Mississippi more than a fifth of residents received food stamps — the highest recipiency rates of any state. But demand has grown stronger in the past year in a handful of other states that recorded significant increases on a per capita basis. In New Mexico, 19.4% of the population tapped into food stamps. That’s up 3.2 percentage points from the same month a year ago, the largest increase for any state. Idaho reported a similar jump: 14% of residents received food stamps, up 3.1 points from a year ago. Washington, D.C., Florida, Delaware and Texas all experienced similar year over year increases.” For comparison sakes here’s how the food stamp roles have grown

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How to Profit as Your Food Bill Explodes

I hate to say I told you so. But with food companies no longer able to absorb the margin drops, and being forced to pass higher costs to the consumer… I told you so. General Mills, Kraft and Kellogg, for examples are already hiking prices… and it’ll get a lot worse, as we said in this Wealth Daily article: If you thought your $200 weekly grocery bill was bad, just wait. It’s about to jump 20% to 30% next month, as the Fed embraces another round of quantitative easing to combat global currency manipulation and devaluation. But that very move could do more harm than good. It’s likely to create another food price bubble, similar to what we saw in 2007-2008. Three years ago, wheat prices skyrocketed even as the consumption-to-stock ratio warranted falling prices… Bread was up to $1.32 at the time — a 32% rise in less than three years… The price of eggs rocketed 50%. Overall, food prices rose more than 5% and the average family’s grocery bill rang in $80 higher. And we’re going to see it happen again, as historically high corn prices drive the cost of beef to twenty-five-year highs… The sad fact is, this situation has no chance of improvement if the Fed floods the global economy with more dollars. What the move will do is further damage the U.S. economy Apparently, we’re not paying enough for food, energy, or clothing… It doesn’t matter that 20% of Americans are unemployed or under-employed. It doesn’t matter that, since the Fed last spoke, gold and other commodities have spiked… Crude oil has already soared some 27%. Wheat is up 84%. Sugar is up 55%. Soybeans are up some 24%. And corn just rocketed another 15% in two days — the biggest move in recent history, and a move that prompted some to warn of another food crisis. The meat industry just warned of a game-changer in pricing and profitability; the cost and contraction of corn supplies could mean higher prices for…

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2012 Housing Recovery

Filed in BP, Debt, economy, Gold Market, inflation, Lear, o by on January 20, 2011 0 Comments

The National Association of Homebuilders Chief Economist David Crowe just forecast 575,000 housing starts for 2011 — a 21% jump over the 475,000 starts of 2010. (Those numbers are based on this delirious idea that the U.S. jobless rate won’t get worse than 9.4% and on job growth of 200,000 jobs a month.) The National Association of Realtors’ chief economist, Lawrence Yun, just forecast 716,000 housing starts this year on sustainable job growth, the increasing population, and continued low interest rates driving construction. That’s great news if the existing supply burned down. Bulldoze the supply, rebuild the homes, and those numbers look great. Fannie Mae believes “home prices probably will start to gain in 2011’s third quarter and rise 0.6 percent for the year, the first annual advance since 2006.” They also expect housing starts to increase 17.3% this year, hitting 710,000. I’ll be sure to heed the well-researched “guess” of Fannie Mae, that respected bastion of real estate know-how. Was there some sort of gas leak? These predictions are the stuff of delirious daydreams. And no one’s buying it— especially not the homebuilders: The NAHB said early Tuesday its confidence index, which measures builder perceptions of current single-family home sales and sales expectations for the next six months, came in flat at a reading of 16 in January, matching expectations according to consensus estimates listed on Briefing.com. Any reading below 50 indicates poor sentiment. The index has not been above 50 since April 2006. The index’s components include current sales conditions, sales expectations and traffic of prospective buyers. The first two components were unchanged in January at readings of 16 and 25, respectively, while traffic of prospective buyers edged up a single point to 12. Lennar Corporation and KB Home don’t see improvement in housing, either — not with the reality of higher unemployment and mounting foreclosures that’ll discourage buyers for months to come. Truth is, w ith a glut of properties still on the market and more Americans heading to the poor house on imbecilic inflationary actions of the Fed, adding more glut to the market and/or assuming that housing prices will appreciate is delusional, plain and simple. I’m also assuming the large backlog of foreclosures along with the backlog of non-distressed properties — held back for an improving market — will only glut the market much longer than any one realizes. Prices only stabilized a bit in 2010 because of the tax incentives and lower interests rates. Demand was simply pulled forward. The decline in housing prices that should have happened in 2010 were pushed to 2011, 2012, and beyond. To sustain home prices, you have to wait until demand meets supply. And builders know this. It’s why they’re not rushing out to build a million and a half homes this week. …

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McDonald’s Upgraded to “Outperform” at RBC Capital (MCD)

Fast food superpower McDonald’s Corporation ( MCD ) on Tuesday caught an upgrade from analysts at RBC Capital Markets on a valuation call. The firm said it upgraded MCD from “Sector Perform” to “Outperform,” noting the company is a good way to play rising inflation. RBC Capital also set an $85 price target from MCD, which implies a 15% upside to the stock’s Friday closing price of $74.06. McDonald’s shares rose 74 cents, or +1%, in premarket trading Tuesday. The Bottom Line We have been recommending shares of McDonald’s ( MCD ) since Aug.12, 2009, when the stock was trading at $56.02. The company has a 3.29% dividend yield, based on last night’s closing stock price of $74.06. McDonald’s Corporation ( MCD ) is a “Recommended” dividend stock, holding a Dividend.com DARS™ Rating of 3.6 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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The Day They Burned the Price Chopper

Filed in BP, commodities, currencies, Ford, Gold, GOld juniors, Gold Market, inflation, o, target by on January 17, 2011 0 Comments
The Day They Burned the Price Chopper

There are food riots going on around the world. People are burning stores in India, Chili, China, Egypt, and Algeria. One man was forced to stop selling fruit along a Tunisian roadside because he didn’t have a permit. When he lit himself on fire, the ensuing riots ended a multi-decade-long dictatorship. People will put up with a lot — corruption, nepotism, cruel laws, and barbaric prisons — but they tend to lose it when they can’t afford food. This is especially true when they blame the ruling class for their misery… Food riots have ended reigns in France, Russia, and British India. Today the Egyptian stock market sold off on fears the riots might spread. Food prices hit fresh highs According to the UN’s Food and Agricultural Organization (FAO), its food price index hit a new high above the previous record in 2008. Soaring sugar, cereal, and oil seed prices were the main drivers. In one month— from November to December — sugar was up 6.7%, cereals were up 6.4%, and oils were up 8%. This is on top of a relentless 80% climb in prices over the past ten years. Wheat, in particular, has been hit hard. Wildfires in Russia shut down 11% of global exports from the country. Add to this the recent floods in Australia, which also makes up 11% of global exports, and you start to have a real problem… In the United States, the limit for corn-based ethanol has been raised, which drove up the price of cereal. There were also La Nia-driven droughts in Argentina, the second biggest exporter of corn after the U.S. If we get one more natural disaster — say, the Mississippi River has another hundred-year flood — the world would be in serious trouble. Food inflation: Wheat 10-year chart The forecast for 2011 is too early to tell with any clarity, but most of what I’ve been reading is that the world’s supply and demand balance for cereals is expected to tighten, with total consumption eclipsing world production for 2010/2011. This will require a six percent dip into stockpiles. ~~SIGNUP_WD~~ Hoarding The real worry is hoarding. When countries start to shut down exports — like Russia did after its historic fires, or India, Bangladesh, and others did in 2008 — those who need to buy agricultural commodities will chase the price higher. You will see the results on your store shelves. Here is a chart that shows U.S. food stamp participation: As you can tell, it’s been a hard…

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