Saturday, August 15, 2009

Worls Financial Report, August 14, 2009

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ETFS's Japanese Expansion: 5 New Precious Metal Funds

London-based ETF Securities Ltd. continues to expand its line of commodity ETFs at a torrid pace, announcing this week that five ETFs holding precious metals will begin trading on the Tokyo Stock Exchange later this month. The new funds are:

Rapid Growth

ETF Securities is perhaps best known as the firm behind the launch of the world’s first gold ETC in 2003 and first oil ETC in 2005, but the company has been expanding quickly beyond the UK in recent months.

In July, ETFS made launched its first U.S.-listed product, the ETFS Silver Trust (SIVR). Driven by a best-in-class expense ratio (0.30% compared to 0.50% for iShares’ SLV), enhanced transparency, and the firm’s reputation for expertise in physically-backed exchange-traded products, SIVR was an immediate hit with investors, surpassing the $80 million in assets mark within a few weeks of launch and now approaching a market capitalization of $100 million. (more)

Sugar May Advance 80% on Supply Crunch, Coleman Says

Sugar may climb 80 percent to as high as 40 cents a pound on global supply shortages, said Singapore-based commodity hedge fund manager Michael Coleman.

“Sugar is caught in a perfect storm,” he said in a Bloomberg Television interview. There is “a big hole” in world supply and no obvious solution in the next six to nine months, said Coleman, 49, managing director of Aisling Analytics, which runs a $1.4 billion fund invested in energy and agriculture.

The sweetener has surged 88 percent this year, reaching a 28-year high, as India, the biggest consumer, had its driest June in 83 years and parts of Brazil, the largest grower, were drenched by rainfall four times more than normal, too wet to harvest. World demand will exceed output by as much as 5 million metric tons in the year ending September 2010, according to the International Sugar Organization. (more)

The Wall Street Journal Asia August 14-16 2009

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Business Week - August, 24 2009

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Corporate Bond Spreads Key To Continued S&P Rally

Want to know where the S&P 500 (SPY) is headed? The corporate bond market likely holds the answer.

So far this year, investment grade debt sales are on a record pace according to the article Blackstone Group to Sell Debt as Investment-Grade Spreads Widen.

Bloommberg notes that Blackstone (BX) joined Microsoft Corp. (MSFT), the world’s largest software maker, in making a debut offer this year and that investment-grade debt sales of $774 billion are on pace to reach a record.

Meanwhile yield spreads on corporate debt vs. treasuries have declined from 603 basis points on Jan. 2, to 254 basis points today according to Merrill Lynch & Co.’s U.S. Corporate Master index. (more)

Discussing the Dreaded Fibonacci Retracement

Hey look at that. The S&P 500 is back over 1,000 after stocks in New York rallied on a Federal Reserve statement that the economy was "leveling out," whatever that means. We left you in yesterday's Daily Reckoning with a promise to discuss the dreaded 'Fibonacci Retracement' on the S&P that could portend a correction.

So let's do that! And actually, it's not inherently dreadful. Our Swarm trading technician Gabriel Andre uses the Fibonacci numbers to track trends in commodities, currencies, and stocks.

In fact, he's been muttering to himself in French the last week that September may be a very good month for short sellers. He bases this on the Fibonacci numbers and the fact that futures traders are predicting a spike in the volatility index (VIX). (more)

Crude tumbles 4% as U.S. consumer sentiment falls

Oil futures tumbled to end below $68 a barrel on Friday as falling U.S. consumer sentiment dashed hopes of a swift economic recovery and put energy prices under heavy selling pressure.

Traders booked profits and bet that the current level of oil prices, which are up more than 50% this year, is not justified by fundamentals.

Light sweet crude for September delivery fell $3.01, or 4.3%, to end at $67.51 a barrel on the New York Mercantile Exchange. Earlier, the contract hit an intraday low of $67.12 a barrel on Globex.

Oil prices posted a weekly decline of $3.42, or 4.8%, from last Friday's closing level of $70.93.

"Oil is lower with the stock market today and the catalyst is the consumer sentiment [data]," said James Cordier, president of Tampa, Fla.-based Liberty Trading Group. "If consumer sentiment is waning, consumer spending is going to do the same." (more)