Friday, December 10, 2010

U.S. May Have `Problem' Meeting Surging Wheat Demand, FAO's Abbassian Says

The U.S., the world’s largest wheat shipper, may not have the logistical capacity to meet rising global demand after rains cut the quality of the harvest in Canada and Australia, the United Nations said.

As much as 8 million metric tons of Australia’s wheat harvest may be downgraded because of excessive rains and Canada’s output suffered from wet weather, pushing importers to seek alternative suppliers, said Abdolreza Abbassian, an economist at the UN Food & Agriculture Organization, citing government estimates.

“Right now, the only country that would have such supply to compensate for the downgrade of Australia and also Canada would be the U.S.,” Abbassian said in an interview. “The problem is that the capacity in the U.S. for terminals to absorb enough milling wheat for shipment, it’s just not there.”

Increased demand from the U.S. may lead to supply bottlenecks, delaying deliveries and intensifying competition among importers, said Park Yang Jin, business manager at Seoul- based Daehan Flour Mills Co., South Korea’s largest milling wheat importer. This would help sustain a rally in Chicago futures, he said. The U.S. accounts for 27 percent of global wheat trade.(more)

Mortgage rates jump to six-month highs Fixed-rate mortgages rise for fourth week in a row: Freddie Mac

Mortgage rates climbed this week with the average rate on the 30-year fixed-rate mortgage at its highest since the end of June, according to Freddie Mac’s weekly survey of conforming mortgages, released on Thursday.

Rates on the 30-year mortgage averaged 4.61% for the week ending Dec. 9, up from 4.46% last week. It’s the fourth week in a row that the mortgage rate rose; it averaged 4.81% a year ago.

“Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-October, which for a $200,000 conventional loan amounts to $50 more in monthly payments,” said Frank Nothaft, chief economist, Freddie Mac, in a news release.

Fifteen-year fixed-rate mortgages also rose this week, averaging 3.96%, up from last week’s 3.81%, according to the survey. The mortgage averaged 4.32% a year ago. (more)

Food Stamp Usage up 16.2% Nationally, over 20% in 13 States; Tables by State, Charts Nationally Since 1970 as % of Population

The Wall Street Journal reports Food Stamp Rolls Continue to Rise
42.9 million people collected food stamps last month, up 1.2% from the prior month and 16.2% higher than the same time a year ago, according to the U.S. Department of Agriculture.

Nationwide 14% of the population relied on food stamps as of September but in some states the percentage was much higher. In Washington, D.C., Mississippi and Tennessee – the states with the largest share of citizens receiving benefits – more than a fifth of the population in each was collecting food stamps.
Click on the above link to see a table of all 50 states.

Sample Details

  • 16.2% Year-Over-Year Change Nationally
  • 39.1% Year-Over-Year Change in Idaho
  • 28.7% Year-Over-Year Change in Nevada
  • 27.2% Year-Over-Year Change in New Jersey
  • 26.0% Year-Over-Year Change in Rhode Island
  • 25.9% Year-Over-Year Change in Utah
  • 25.8% Year-Over-Year Change in Florida
  • 21.5% of population in D.C. on Food Stamps
  • 20.4% of population in Mississippi on Food Stamps
  • 20.1% of population in Tennessee on Food Stamps

13 states had greater than 20% gains in food stamp usage. Not all of them were housing bubble states. Idaho led the way with a 39.1% year-over-year change. (more)

BNN: Top Picks

Bob McWhirter, President, Selective Asset Management, shares his top picks.

click here for video

Triple-Digit Oil Prices Back Within a Quarter

The strongest manufacturing numbers coming out of the Chinese economy in a seven-month period, coupled with plunging oil inventories in the world’s largest energy consuming economy, have sent oil prices to a 25-month high. With no let-up in China’s fuel demand, the world should be looking at triple-digit oil prices again within a quarter.

That may come as a shock to those who thought the bloated oil inventories that came in the wake of the last recession would provide a buffer against future oil price spikes. Suddenly that buffer has literally gone up in smoke.

Refined oil stocks held by China’s two largest oil companies have fallen for eight consecutive months, while diesel stocks in the country fell 14 per cent in October. And the tightening oil market won’t just be felt in China. The 140 million gallons of international oil inventories sloshing around in floating storage on the high seas is also all but gone.

With oil prices within striking distance of triple-digit levels, don’t look for any price relief at the upcoming OPEC meeting in Ecuador. Venezuelan energy and oil minister Rafael Ramirez was recently quoted as saying that $100 per barrel was a fair price for both consumers and producers. (But not for cab drivers in Caracas, who will continue to be able to purchase their fuel at $20 per gallon, the equivalent of a little over $8 per barrel). Meanwhile, King Abdullah of Saudi Arabia has already served notice that, without triple-digit prices, there is little incentive for new oil exploration in his kingdom. (more)

How to Add $450 to Your Trading Account Every Week

Dear Penny Sleuther,

It doesn’t matter whether you’re an avid day trader, a swing trader, or a novice looking to learn more about microcap stocks…

There’s a good chance that you have made one or more critical trading errors that have cost you money.

Trading mistakes crush hard-earned gains — and they aren’t just a problem for newbies. Today, I’m going to show you three simple steps you can take to bulk up your trading account by $450 a week.

The truth is that even the most seasoned traders occasionally make mistakes, allowing the allure of easy money cloud their better judgment and sucker them in to an ill-advised trade. The examples we’ll look at today are taken from real-world stocks this week.

Even if you’re account is under the day-trading rule (less than $25,000) you have the opportunity to add $450 or more to your gains every single week by following these three tips:

1. Change Your Mental Stops

Every trader and investor knows when he has to sell. It’s when our paper losses grow to the point where we can’t handle it anymore. What I’m recommending is that you drastically change your level of “acceptable losses” by shortening the leash on your trades. (more)

Rising Interest Rates Mark Major Changes On Horizon

Since March 2009, the US Fed and other central banks have tried to reflate markets. One of the key ways was to us central bank money to purchase mortgage bonds to help keep home mortgage rates

low. This also encourages money to flow into the stock market as interest rates are not as attractive.

Now US and world interest rates are rising again. The US Ten year yield rose from 2.6 pct to 3.1 pct in two months since October. European yields are also up, and China is going to be raising interest rates again. The EU credit problems are the reason for their higher rates.

China is experiencing inflation, and will be raising interest rates.

Turning point now

The US is going to find out if the Fed can pull longer term rates down, the US Ten year Treasury is a benchmark for home mortgage rates. But if the Fed begins its QE and US interest rates are not coming down, then another new phase is beginning in the credit and financial and gold markets. (more)

Could the Clouds be Lifting on Solar Stocks?

For solar stocks, it’s been a case of sunrise and sunset for the past several years. Unfortunately, 2010 has been much more a case of sunset than sunrise with several previous winners laboring under gray skies. This includes Energy Conversion Devices (NASDAQ: ENER), industry-giant First Solar (NASDAQ: FSLR) and Suntech Power Holdings (NYSE: STP). Of course, other high-profile solar stocks have shone in 2010, with big gains for GT Solar International (NASDAQ: SOLR), JA Solar Holdings (NASDAQ: JASO) and RenaSola (NYSE: SOL).

These stocks represent the extreme losers and extreme winners in the space, but Exchange-traded funds (ETFs) pegged to the solar industry such as the Guggenheim Solar ETF (NYSE: TAN) and the Market Vectors Solar Energy ETF (NYSE: KWT) both are deep in the red this year. TAN is down -27.42% year to date (as of 12/9/10), while KWT has fallen -27.40%.

Yet if we look at the chart below of TAN, we can see that after falling to its November low, the fund actually has fought back nicely. And while TAN still trades below its 50- and 200-day moving averages, the most recent price trend in the sector shows that perhaps the clouds are starting to lift. (more)

Investors to Silver: “Let’s Get Physical” by James Turk

The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which comes with counterparty risk. This conclusion is apparent from the fact that the futures prices for gold and silver have moved into “backwardation.”

Allow me to explain…

Because gold is money, gold almost always trades in “contango,” meaning that the future prices – i.e., forward prices – are higher than the spot price. The percentage difference between gold’s spot and forward price is gold’s “interest rate.” So in this regard, gold is not different from other moneys, except gold’s interest rate is lower than those of national currencies.

But supply and demand dynamics also influence the differential between the spot price and forward prices. And this is where our story gets interesting…

If the forward price is lower than spot – a condition called backwardation – you can sell your metal in the spot market, invest the dollars you receive to earn interest, and then buy your metal back in the future at a lower price and profit the difference. But there is another important factor to consider outside the math of this formula. (more)

U.S. Home Values to Drop by $1.7 Trillion This Year, Zillow Says

U.S. home values are poised to drop by more than $1.7 trillion this year amid rising foreclosures and the expiration of homebuyer tax credits, said Zillow Inc., a closely held provider of home price data.

This year’s estimated decline, more than the $1.05 trillion drop in 2009, brings the loss since the June 2006 home-price peak to $9 trillion, the Seattle-based company said today in a statement.

“It’s definitely going to continue into 2011,” Stan Humphries, Zillow’s chief economist, said in an interview on Bloomberg Television today. “The back half of 2010 looked horrible and 2011 should look like the mirror image of that.” (more)

America worst income disparity in world