Tuesday, January 11, 2011
Billionaire investor Kenneth Fisher said the biggest U.S. companies will lead global stocks in 2011 even as returns diminish after a 21-month bull market.
The Standard & Poor’s 500 Index has risen 88 percent from its March 2009 low as the Federal Reserve pledged to stimulate the economy and companies reported better-than-estimated earnings. The MSCI Emerging Markets Index advanced 134 percent, while the Russell 2000 Index of small companies rallied 130 percent during that period.
“America will do better than the rest of the world,” Fisher, 60, who oversees $41 billion at Woodside, California-based Fisher Investments Inc., said in a Bloomberg Television interview today on “Surveillance Midday” with Tom Keene. “People will move away from small cap and emerging markets and more toward boring things that evidence quality.”
Timken Co., a U.S. maker of bearings and alloy steel products, is a company that will do well in a “middle phase” of a bull market, Fisher said. Profits are expected to increase for a fifth quarter when it reports earnings around Feb. 2, data compiled by Bloomberg show. The stock has risen almost fivefold since March 2009. (more)
We’ve been told a lot of things since the global economic crisis first became apparent in 2007. In March of that year Federal Reserve Chairman Ben Bernanke said, “the impact on the broader economy and financial markets of the problems in the sub-prime markets seems likely to be contained.” Clearly, Mr. Bernanke’s assessment was incorrect and the sub-prime real estate issues were only part of a broader, systemic issue.
The fundamental problems within our economy became mainstream news in the latter part of 2008 when stock markets around the world were in free fall and most major financial institutions were on the cusp of insolvency. In response, our government, with the full support and confidence of Congress, took unprecedented steps to save the system by injecting, first billions, and then trillions of dollars to bailout failed companies, stabilize deflationary price collapses and stimulate the economy.
Treasury Secretary Henry Paulson eventually wrote a book about the crisis, aptly titled On the Brink. But how close to the brink were we? If Representative Brad Sherman is to be believed, we were close. So close, in fact, that according to Sherman, Congressional members were told that if the bailout was not authorized by Congress the collapse would be so severe that martial law may have to be declared - basically, tanks in the streets. The following short video is Brad Sherman discussing the situation on the House floor:
Choosing a date or short time frame has tripped up many forecasters in the past.
Nevertheless, I will attempt to outline my time frame calculations using various interdisciplinary sources.
Note that I am not saying this will happen, just that this is one possible outcome.
1) Worldwide fiat currency regime - based on "faith and credit" in governments rather than hard assets and a sound monetary system.
"Gold is the money of kings;
silver is the money of gentlemen;
barter is the money of peasants;
but debt is the money of slaves."
Money and Wealth in the New Millennium, by Norm Franz, copyright © 2001, Whitestonepress, page 154.
2) Nietzschean philosophies predominate Western Democracies - there are no consequences to actions and a rejection of absolute values.
To quote Dick Cheney "deficits don't matter".
This is also the dominant philosophy of the elite that seek to manipulate the financial system and destroy the dollar. We examined this problem in a post here:and here: (more)
In June 2009, we revisited our early prediction of the linear trend in the difference between the core CPI and the consumer price index of food. Originally, in 2007, we predicted the evolution of several consumer price indices relative to core CPI in the USA . Therefore, we have now more than 30 months to compare the prediction and actual estimates. The years of 2008 and 2009 were characterized by high volatility in the behaviour of all expenditure subcategories: energy, food, housing, etc. We are going to revise our prediction. In  we wrote:
“Figure 7 displays the difference between the core CPI and the index for food for the period after 1960. This curve differs from that in Figure 5. The first large change in the difference occurred in 1973 (not in 1979 as for energy) and lasted only 7 years. Around 1980, the difference started to grow from -7.0 to 13.0 in 1996. Between 1996 and 2003, the difference was effectively constant at the level of ~13.5 units of price index, i.e. a lengthy flat segment was observed. After 2003, the difference has been decreasing at a rate of 1.2 units per year, as Figure 8 demonstrates.
Overall, the difference between the core CPI and the food index was always lower than that between the energy index and the core CPI. The largest difference was only around 14 units. Since 2003, the food price index has been slowly catching up the core CPI. Extrapolating the current linear trend one can estimate the intercept point when the food price index will reach the core CPI. According to Figure 8, this will happen in 2014. Such behaviour differs from that observed for the energy index in terms of timing and amplitude, but the overall behaviour distinguishing periods of linear growth and bifurcation is very similar. Therefore, principal mechanisms behind the evolution of the food price index are similar to those behind the energy index. They are likely not related to the changes in supply pressure induced by good crops and draughts. These mechanisms have to be a part of economic system itself and should be related to relationships between economic agent not to production of goods and services. (more)
"It amounts to a failed opportunity to recognize that we are now at a historical inflection point at which the time has arrived for a classic post-war demobilization of the entire military establishment," David Stockman said in an exclusive interview.
"The Cold War is long over," he continued. "The wars of occupation are almost over and were complete failures -- Afghanistan and Iraq. The American empire is done. There are no real seriously armed enemies left in the world that can possibly justify an $800 billion national defense and security establishment, including Homeland Security."
Short of that, he suggested, the United States has "reached the point of no return" with its artificial creation of wealth, and will eventually face a sharp economic decline. (more)
The average copper price will climb 22 percent this year, according to Standard Bank Plc.
The metal will average $9,200 a metric ton this year, Leon Westgate, a London-based analyst at Standard Bank, said in a report today. That compares with an average of about $7,557 in 2010. The price will rise to an average $10,000 in 2012, the bank said. Copper for delivery in three months fell 1 percent to $9,321 a ton today on the London Metal Exchange.
“Robust fundamentals and strong investor demand will remain key themes during 2011,” Westgate said. “This is likely to keep prices on an upward path overall, though we expect there to be steep corrections and pauses for consolidation along the way.”
Tin will average $28,000 a ton this year and $29,500 next year, the bank said. Nickel will average $23,200 a ton in 2011 and $22,000 next year, Standard Bank said.
U.S. corn stocks are expected to
slump to the lowest level in 15 years this year due to strong
demand, possibly stoking global food prices which hit a record
high last month, a Reuters Poll of analysts showed.
Analysts also said harsh weather cut corn output to 12.502
billion bushels from the previous year's record 13.110 billion
and below the U.S. Department of Agriculture's (USDA) forecast
in November for 12.540 billion bushels.
"If the USDA begins to lower production in the fall,
there's usually another reduction in the January report," said
Jack Scoville, an analyst for The Price Group.
The USDA will release its January crop production,
supply/demand, quarterly stocks and winter wheat acreage
reports at 7:30 a.m. CST (1330 GMT) on Wednesday. The Jan. 12
report will be the USDA's final estimate of corn production. (more)
Wall Street banks are cutting their holdings of Treasuries at the fastest pace since 2004 as the world’s biggest bond firms bet that the economy will strengthen and demand for higher-yielding assets will increase.
The 18 primary dealers that trade with the Federal Reserve reported that holdings of U.S. government debt tumbled to a net $2.34 billion on Dec. 29 from $81.3 billion on Nov. 24, the most since June 2009, according to the most recent central bank data. While the stake is the lowest since February, corporate bond and mortgage securities have risen from the lows of the year.
Dealers had stocked up on U.S. debt anticipating demand from customers who wanted to sell the securities to the central bank as part of Fed Chairman Ben S. Bernanke’s plan to buy $600 billion of Treasuries. Government bonds lost their allure as stocks rose, corporate financing conditions eased, expectations for inflation increased and the dollar strengthened.
“Slowly but surely the economy’s getting on stronger footing,” said John Fath, who helps manage $2.5 billion as a principal at investment firm BTG Pactual in New York and was the former head government-bond trader at UBS Securities LLC, a primary dealer. “There are people moving or thinking of moving out of risk-free assets. This is what Bernanke wanted.”
Berkshire Hathaway Inc., the Omaha, Nebraska-based holding company controlled by billionaire Warren Buffett, and General Electric Co.’s finance unit led companies selling a record $48.5 billion of bonds in the U.S. last week as relative yields on investment-grade debt shrank to the narrowest since May. (more)
by: Dr. Elias Akleh
Economic crises are lately sweeping the globe like a contagious virus. They started in the US, the strongest economy in the globe, and then crept onto most European countries. They degraded the value of the American Dollar, the European Euro, and all international currency that use them as money reserve. The crises had led to what is referred to as austerity measures; cutting down luxury expenses, but instead the cutting down was on the necessary expenses; budget cuts on major social services including education, health, unemployment benefits, and social security, increase of taxes and educational tuitions, loss of jobs leading to homelessness and poverty, loss of businesses, increase of retirement age, theft of retirement funds and attempts to tab into social security funds, among many other devastating measures.
These economic crises, we are told, were created by the governments’ inability to repay debts and interests taken to cover the alleged global wars against terror. The important questions I like to pose in this regard are: who are the debtors and where did they get the debt money from?
BP PLC and other oil producers were forced to shut down nearly all their output on Alaska's North Slope, after a leak led to the closure of the Trans Alaska Pipeline.
Analysts said the shutdown of the 800-mile pipeline network could trigger a jump in oil prices unless the flow of oil resumes quickly, as the region represents a significant slice of domestic U.S. oil output. Some analysts said the disruption could help drive crude-oil prices toward $100 a barrel from below $90 now.
Alyeska Pipeline Service Co., which operates the pipeline network, said the spill has had no apparent impact on the environment or wildlife. Alyeska said no oil was leaking as of Sunday evening. About 10 barrels of oil had been spilled and most of it had been cleaned up, Alyeska said.
The shutdown, however, was a "significant event," BP spokesman Steve Rinehart said. BP and other oil companies operating on the Slope, including ConocoPhillips, have periodically been forced to cut output because of major power outages or when heavy winds interrupted tanker loadings at the port of Valdez, he said. But the latest shutdown means "a big reduction" in the middle of winter "when we have temperature and weather challenges" as well, Mr. Rinehart said. The temperature at the pump station where the incident occurred is about four degrees Fahrenheit.
BP said it was too early to say what impact the shutdown would have on the company's first-quarter earnings.
Total production on the North Slope is around 630,000 barrels a day—about 9% of total domestic U.S. output. (more)