Tuesday, January 12, 2010

BNN: Walter Murphy

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A safe, smart bet on China

My brilliant friend Jim Gobetz manages $1.7 billion for the Wallingford Trust. He's highly respected for finding flaws in two prominent leveraged exchange-traded funds and leading many people to big profits in shorting both.
He recently made news again by being two weeks ahead of CNBC in his call on the Dubai bailout. He joins me on video today to discuss what we feel is a low-risk, longer-term way to profitably invest in China.

Jim explains that in July 2008 China repegged its currency, the yuan, to the U.S. dollar. Since then, the United States, Europe and other countries have been pressing China to unpeg the yuan and let it rise. That spells investment opportunity, and Jim has found one.
He researched an extensive field of investments intended to profit when this Chinese currency inflating does eventually occur. (more)

Chart of the Day

Dubai’s First Foreclosure May Open Floodgates in Worst Market

Dubai’s housing rout sent prices down 52 percent in the past year, prompting some homeowners to abandon their cars and mortgage payments and flee the country. Not one received a foreclosure notice.

Until now.

Barclays Plc won the sheikdom’s first foreclosure cases in court, clearing the way for lenders holding about $16 billion of Dubai home loans to take action when borrowers don’t pay. Islamic lender Tamweel PJSC, the emirate’s biggest mortgage bank, has several of its own foreclosure claims pending and estimates about 3 percent of its mortgages are in default.

“Banks will be more aggressive in pursuing legal action if they see the process is efficient,” said Dubai-based Antoine Yacoub, a banking analyst at Moody’s Investors Service Inc. “They were trying to avoid the courts and restructure most of their loans, but once they see a precedent has been set, they will be encouraged to push more cases through.” (more)

Experts: Invest in Corn, Coffee, Coal and Rice

Commodities are still a good bet for investors, experts told CNBC. Commodities such as corn, coffee, coal and rice will produce good returns in 2010.

Agriculture stocks such as coffee and big grains such as corn remain a good investment because they have not attracted attention like gold.

“I'm looking at agriculture primarily because it is the commodity sector that hasn't been overrun with investors this year,” said Mark Hansen, director of Trading at CPM Group, New York, CNBC reported.

Corn is a strong commodity performer, partly fueled from high sugar prices and a government mandate for an increase in ethanol usage, Hansen said. (more)

China car sales top U.S.

China's auto sales surged past the United States to reach record levels in 2009, industry figures showed on Monday, underscoring China's importance to the global auto industry as the world's biggest market.

The figures came as PSA Peugeot Citroen of France said markets were expected to show signs of recovery around the world in 2010, while Volkswagen AG said it aims to at least double its U.S. sales in coming years.

After a year in which Chinese automakers made key acquisitions abroad, Beijing's renewed incentives to bolster demand will likely keep it as a bright spot for car makers battered by the financial crisis. (more)

Jim Rogers - UK in Big Trouble, Obama is an Economic Illiterate

America slides deeper into depression as Wall Street revels

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism. (more)

What Is The True Unemployment Number?

The US Bureau of Labor reports an unchanged unemployment rate of 10% for December, but just how accurate is this number? When we add the pushed-aside category of unemployed people who have given up looking for work and the involuntary part-time workers to the equation we arrive at a much more realistic figure, and it’s not a pretty picture. See the following post from Expected Returns.
This is a very weak unemployment report as every important qualitative measure of unemployment showed further weakness. There is no recovery based on the data. From the Bureau of Labor Statistics: (more)

Charles Goyette The Dollar Meltdown