Saturday, October 24, 2009

Farm Futures' "The Buzz" for October 22nd

The Buzz, Oct. 22, 2009 from Farm Futures on Vimeo.

Farm Futures' "The Buzz" for October 14th

The Buzz, Oct. 14, 2009 from Farm Futures on Vimeo.

Global Trade Anemic

from WSJ:

LONDON -- Global trade flows slipped in August after rising for the two previous months, an indication that the economic recovery is more fragile and anemic than previous data have hinted.
The Netherlands Bureau for Economic Policy Analysis said trade volumes fell 2% from July, according to an algorithm based on customs data from 23 developed countries and 60 emerging markets, accounting for 95% of global trade.
The report is closely watched because it comes out before those compiled by the World Trade Organization and other institutions.
Global trade flows plummeted in the final months of last year as demand slowed and banks financed fewer cross-border transactions. Volumes were down 13% in August compared with the previous year.
The trade crisis has hit exporting powerhouses such as Japan and Germany particularly hard, sparked minor waves of protectionism almost everywhere, and inspired world leaders to make more funds available for trade finance.
The International Monetary Fund says world trade will fall 11.9% overall in 2009, the biggest drop since the Great Depression. The IMF sees a modest 2.5% increase in 2010.
Flows steadied during the second quarter of 2009, inspiring hopes of a recovery. The Organization for Economic Cooperation and Development said Friday that exports from the Group of Seven leading industrial nations rose 0.8% from the first quarter, although imports continued to fall, by 2.5%.
The Netherlands Bureau for Economic Policy Analysis, also known by its Dutch acronym CPB, calculated that trade was up 3.7% in July over June, prompting many observers to conclude that a true recovery was under way.
Many analysts, however, say the trend has bottomed out but that it is too early to predict where it will end in the next few months.

Grains Rise Steadily

from WSJ:

Chicago Board of Trade grain and soybean futures ended sharply higher on the week as wet weather doused producers' hopes of harvesting corn and soybeans and planting wheat.
After late selling on Friday following the price run-ups, nearby December corn closed up 25.75 cents on the week at $3.9775 per bushel, while November soybeans climbed 28.5 cents on the week to $10.06. December wheat soared 49 cents last week to $5.4775.
The U.S. harvests are off to their slowest start since the government began keeping records in 1985, due to persistently cool, wet conditions. Worries that the prolonged harvest will damage corn and soybeans helped ignite rallies at the CBOT, with strong support seen from speculative buying.
The markets could easily extend gains if the lousy weather continues, said Dale Durchholz, analyst for AgriVisor, a farm marketing service in Bloomington, Ill. Private forecaster T-Storm Weather said a powerful storm system next week would likely prevent substantial harvesting from taking place until November.
"If we come in Monday and these forecasts for seven to 10 days out are still a problem, we can see this thing leap sharply higher," Mr. Durchholz said.
Wheat has benefited from investor money flowing into the markets and from worries about delayed plantings of soft red winter wheat, the type used to make pastries and snack foods. Producers in the Midwest and South often plant SRW wheat after soybeans but can't put it in the ground until the soybeans come out.
There is uncertainty about how many acres of wheat will be planted because the delay may prompt producers to consider other crops, Mr. Durchholz said. Late-planted wheat can produce lower yields.
Uncertainty will persist in the corn and soybean markets until harvest makes significant strides and traders get a handle on how big the crops are, said Sid Love, analyst for Kansas-based Kropf & Love Consulting. The crops were projected to be massive before they ran into harvest troubles.
"We're trading on an uncertainty," Mr. Love said. "We don't know what the crop is."
The U.S. Department of Agriculture will issue an update on harvest progress Monday but won't issue fresh production estimates until Nov. 10.

Friday, October 23, 2009

The Depression No One Ever Heard Of

Pravda: America Is Destroying Itself

from Pravada:
As my readers know, I am a fan of economics and of history, as well as politics, a combination that forms some very interesting cycles to research, discuss and argue on. None is so interesting than the death of great nations, for here there is always the self destruction that comes before the final breakups and invasions. As they say: Rome did not fall to the barbarians, all they did was kick in the rotting gates.

It can be safely said, that the last time a great nation destroyed itself through its own hubris and economic folly was the early Soviet Union (though in the end the late Soviet Union still died by the economic hand). Now we get the opportunity to watch the Americans do the exact same thing to themselves. The most amazing thing of course, is that they are just repeating the failed mistakes of the past. One would expect their fellow travelers in suicide, the British, to have spoken up by now, but unfortunately for the British, their education system is now even more of a joke than that of the Americans.
While taking a small breather from mouthing the never ending propaganda of recovery, never mind that every real indicator is pointing to death and destruction, the American Marxists have noticed that the French and Germans are out of recession and that Russia and Italy are heading out at a good clip themselves. Of course these facts have been wrapped up into their mind boggling non stop chant of "recovery" and hope-change-zombification. What is ignored, of course, is that we and the other three great nations all cut our taxes, cut our spending, made life easy for small other words: the exact opposite of the Anglo-Sphere.
That brings us to Cap and Trade. Never in the history of humanity has a more idiotic plan been put forward and sold with bigger lies. Energy is the key stone to any and every economy, be it man power, animal power, wood or coal or nuclear. How else does one power industry that makes human life better (unless of course its making the bombs that end that human life, but that's a different topic). Never in history, with the exception of the Japanese self imposed isolation in the 1600s, did a government actively force its people away from economic activity and industry.
Even the Soviets never created such idiocy. The great famine of the late 1920s was caused by quite the opposite, as the Soviets collectivized farms to force peasants off of their land and into the big new factories. Of course this had disastrous results. So one must ask, are the powers that be in Washington and London degenerates or satanically evil? Where is the opposition? Where are the Republicans in America and Tories in England?
The unfortunate truth here is: the Republicans and Tories are the Mensheviks to the Democrat and Labour Bolsheviks. In other words, they are the slightly less radical fellow travellers who are to stupid to realize that once their usefulness is done, they will go the very camps they will help send the true opposition to. A more deserving lot was rarely born. Of course half of the useful idiots in the Bolshevik groupings will go to those very same camps.
One express idiocy of Cap and Trade in America will be the approximately additional $.19 per liter of gasoline, which is a rather very large increase in taxation, however indirectly. Of course this will not only hit the American working serfs in the pocket at fuel up, but will hit them in everything they buy and do, as America has almost no real rail to even partially off set the cost of transporting goods.
But how will this work itself out? Very simple and the chain of events has been worked out often enough.
First, the serfs will start to scream at the cost of fueling up and the cost of all their goods. The government, ever anxious not to take responsibility, will single out the petroleum factories and oil companies for gauging the people. They will make demands for them to cut prices, which of course means working for a loss. When plants start to close down or move overseas, they will be called racketeers and saboteurs. Their facilities will be nationalized so that the government can show them how to do things properly. Shortages will follow as will show trials and that's as long as the USD holds up and foreign nations are still willing to sell oil and gasoline for other than gold, silver and other hard resources.
When food goes up, and it surely will, as the diesel the farmer uses goes up as well as his fertilizers, the government will scream that the farmers are hording, thus undermining the efforts of the enlightened. There will be confiscations of all feed crops while the farmers will get production quotas to meet or have their land nationalized again. Do not believe me? Look at the people running your governments and ask yourself: would they rather take some one's land or admit that they screwed up and ruined everything? After a point, only the corporate farms will remain, food by oligarch, just a like the factory farms. There will be plenty of dissidents to work them.
This will of course spread from industry to industry and within a rather short order, you will be living the new fractional dream, that is a fraction of what you have now. But on the bright side, for once, your children, working for government/oligarch run joint ventures, will be able to compete adequately with the Chinese, to feed the demands of Europe and Latin America. But that will take at least a generation or two first along with a cultural revolution or two.
Stanislav Mishin

Wednesday, October 21, 2009

Stock Rally Turns to Rout

$82 Oil

Dollar Depreciates to New Low

No Risk Stocks

Another Dubious Dollar Day!

Tuesday, October 20, 2009

Niall Ferguson Quotes

"From the point of view of a foreign investor... there has been no stock market rally. The stock market rally is a money illusion rally because the dollar depreciation has negated all the appreciation of the S&P 500 since March."
"It's clear where we're headed. Ten years from now there will be more than one international reserve currency,"

The Declining Dollar

Despite the gloom about the Dollar, today it has risen significantly, probably on stock market and commodity weakness. 

Three articles referencing Niall Ferguson, creator of the PBS series, the Ascent of Money, from Yahoo:

The weakening dollar is dying a slow death.
"It's clear where we're headed," says Niall Ferguson, author of The Ascent of Money. "Ten years from now there will be more than one international reserve currency," he tells Tech Ticker.
Ferguson dismisses the dollar loyalists, citing the British pound – the last international reserve currency - as his example. "These things don't last forever" but don't expect it to happen overnight. "It's a long multi-decade process," he states. Even with the dollar near a 14-month low against the Euro, he claims it's not without historical precedence for the greenback to lose "another 20%" this year.
For international investors the loss is enough to offset this year's stock market gains. Not exactly great motivation for foreigners to keep buying the almighty dollar.

The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money.
"People have predicted the end of America in the past and been wrong," Ferguson concedes. "But let's face it: If you're trying to borrow $9 trillion to save your financial system...and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?"
Given its massive deficits and overseas military adventures, America today is similar to the Spanish Empire in the 17th century and Britain's in the 20th, he says. "Excessive debt is usually a predictor of subsequent trouble."
Putting a finer point on it, Ferguson says America today is comparable to Britain circa 1900: a dominant empire underestimating the rise of a new power. In Britain's case back then it was Germany; in America's case today, it's China.
"When China's economy is equal in size to that of the U.S., which could come as early as means China becomes not only a major economic competitor - it's that already, it then becomes a diplomatic competitor and a military competitor," the history professor declares.
The most obvious sign of this is China's major naval construction program, featuring next generation submarines and up to three aircraft carriers, Ferguson says. "There's no other way of interpreting this than as a challenge to the hegemony of the U.S. in the Asia-Pacific region."
As to analysts like Stratfor's George Friedman, who downplay China's naval ambitions, Ferguson notes British experts - including Winston Churchill - were similarly complacent about Germany at the dawn of the 20th century.
"I'm not predicting World War III but we have to recognize...China is becoming more assertive, a rival not a partner," he says, adding that China's navy doesn't have to be as large as America's to pose a problem. "They don't have to have an equally large navy, just big enough to pose a strategic threat [and] cause trouble" for the U.S. Navy.

Just as U.S. policymakers are too sanguine about China's military power, Harvard Professor Niall Ferguson says Washington D.C. is too complacent about China's ability to wean itself off the dollar.
With about 1.7 trillion of dollar-denominated assets (mainly Treasuries) in its foreign currency reserves, conventional wisdom goes something like this: If China were to diversify away from the dollar or merely allow the renminbi to float, much less dump its greenbacks wholesale, they would be shooting themselves in the proverbial foot. That's both as investors and because further dollar weakness would put a damper on their biggest export market. (A weaker dollar makes foreign goods more expensive for Americans, meaning Chinese imports would become less "cheap.")
This view is "slightly naive," according to Ferguson, author of The Ascent of Money.
"The idea they don't have anywhere else to go or would shoot themselves in the foot if there were a steep decline in the dollar or appreciation of their currency reassures many people in Washington ‘we can relax'," he says. "An appreciation of the renminbi may reduce value of their international reserves but increases the value of every other asset the Chinese own," most notably the commodity assets they have been buying all over the world.
China's "current strategy is to diversify out of dollars and into commodities," Ferguson says. Furthermore, China's recent pact with Brazil to conduct trade in their local currencies is a "sign of the times."
Perhaps most importantly, China's massive stimulus program is helping to generate internal consumption in the People's Republic, meaning local manufacturers are less dependent on exports. Because of the "rapid growth" of Chinese domestic consumption, Ferguson predicts China's international trade surplus could be gone by next year.
"People in Washington rather assume because the U.S. consumer was so dominant there really isn't a substitute," Ferguson says. But China's trade surplus stood at $12.9 billion in September, down about 56% from a year earlier, according to
From 1998-2007, China engaged in a form of vendor financing, lending money to the U.S. so the U.S. would buy Chinese goods, Ferguson explains. "I think that model has basically broken. They know it and have a new one in which we play a much less important role."

Headlines Drive Stock Market Reversal

from Bloomberg:

from Yahoo Finance:

Housing Data Turns Apple Rally Into Housing Rout

Apple's earnings last night caused the stock market to rally immediately, but the rally immediately lost steam. This morning's disappointing housing data reversed the euphoria and turn it into a stock market rout instead. What a difference an hour makes!

Monday, October 19, 2009

David Einhorn Bets On Major Currency Collapse

David Einhorn is a giant. He warned of the collapse of Lehman Bros well in advance. He even shorted it heavily.

from Marketwatch:

NEW YORK (MarketWatch) -- Greenlight Capital is betting on the possibility of a major currency collapse and a surge in interest rates, the hedge-fund firm's manager David Einhorn said Monday, citing ballooning government deficits in some of the world's most developed countries.
Einhorn, who warned about Lehman Brothers' frailty before it collapsed last year, also said financial institutions that are deemed as "too big to fail," such as Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.55, -0.04, -0.87%) , should be broken up.
Greenlight has been buying physical gold this year because Einhorn is concerned that efforts to save the financial system and fuel economic recovery are undermining the value of such currencies as the U.S. dollar.
On Monday, he said Greenlight has added new trades to this investment theme, buying long-dated options on much higher interest rates in Japan and other developed regions -- effectively giving the firm the chance to make big profits from a jump in rates. The options, bought from major banks, are tied to interest rates four to five years out, Einhorn noted.
"Japan may already be past the point of no return," he said during a presentation at the Value Investing Congress in New York.
Japan's debt is equal to 190% of the country's gross domestic product and its government deficit will be 10% of GDP this year, according to Einhorn.
Japan has been able to borrow money at roughly 2% a year to finance these deficits, partly because the country has many savers willing to buy low-yielding government bonds. However, some of these savers may begin spending instead as they enter retirement, Einhorn argued.
"When the market refuses to refinance at cheap rates, problems emerge," he said, adding that this could trigger a "currency death spiral."
Interest rates have been very stable in Japan for years, so the options on higher rates that Greenlight bought were relatively cheap. Einhorn said the "asymmetry" of that trade was interesting: If rates were to jump suddenly in Japan, Greenlight stands to make "multiples" on its positions.
"There remains a possibility that I'm wrong, and I hope I am," he commented. But earlier in the speech he remarked: "Just because something hasn't happened before, that doesn't mean it won't."

Remedy to shore up system

Einhorn also compared potential problems in sovereign-debt markets to the financial crisis that engulfed markets last year.
When Lehman collapsed, investors reacted by dramatically increasing the cost of borrowing for rival Wall Street firms to the point where their business models were threatened, he Einhorn. The collapse of any major currency could have same impact of rerating the cost of financing governments in deficit.
Unlike Japan, the United States isn't past the point of no return, the fund manager stressed. However, he criticized financial-reform proposals pushed by Treasury Secretary Timothy Geithner, arguing they provide a government backstop for the largest institutions, entrenching them further.
No institution should be too big to fail, Einhorn contended. "The real solution is to break up anything that fails that test. Lehman shouldn't have existed in any size to threaten the financial system."
The same applies to Citigroup and Bear Stearns, which J.P. Mortgage Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 46.06, +0.08, +0.17%) acquired, as well as American International Group Inc. /quotes/comstock/13*!aig/quotes/nls/aig (AIG 41.37, +0.20, +0.49%) and "dozens" of other firms, he said.

New Stock Market 2009 High

Dollar Plunges to New Low

FDIC Admits "We're BROKE!"

from CNNMOney:
NEW YORK ( -- The government insurance fund designed to protect consumer bank deposits will likely stay in the red through 2012, Federal Deposit Insurance Corp. chief Sheila Bair said Wednesday.
Testifying before members of the Senate Banking Committee, the nation's top commercial bank regulator stressed that her agency was taking immediate steps to replenish the dwindling fund. But she said those efforts would not put the rescue fund in the black until a little more than two years from now at the earliest.
The fund has come under severe strain in recent months amid the recent surge in bank failures. Ninety-eight banks have failed so far this year, which has reduced the fund's value to $10 billion from $45 billion a year ago.
Last month, the agency painted an even more dire picture, estimating that the fund is currently in the red after taking into account future bank failures it anticipates will happen.
That would not be the first time the fund has had a negative balance. During the S&L crisis of the late 1980s and early 1990s, it slipped into the red.

With bank failure costs expected to reach $100 billion over the next four years, regulators have been looking at ways to raise quick cash.
"The problem we are facing is one of timing," Bair said, according to a copy of her prepared remarks.
One proposal currently under consideration would have banks prepay their deposit insurance premiums for the next three years. Under FDIC guidelines, bankers and others have until the end of October to comment on the proposal before it becomes a rule.

Gold Back to Lofty Levels

Guess where the Dollar is! About 20 ticks from a new record low!

Crude Oil Blasts Easily Through $80