Wednesday, August 4, 2010

Rising pork bellies prices hit all-time high,

A crispy rasher of bacon is becoming an increasingly costly indulgence in the US, where a surging appetite for pigmeat and cutbacks in farmers' swine herds have pushed the price of pork cuts to an all-time high.

On the Chicago Mercantile Exchange, the cost of pork bellies, which are used to produce bacon, has risen by more than 65% in the last 12 months and the wholesale price of pig product hit $1.35 per pound last week – its highest on record.

Analysts say farmers reducing pig herds during the recession, together with swine flu and high feed prices, took their toll. Meanwhile, demand is on the up as consumers trade down to bacon from more expensive meats, while seasonal use reaches a summer peak. (more)

BNN: Top Picks

Charles Dillingham, portfolio manager, Morguard Financial, shares his top picks.

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America’s Coming Pension Crisis That Will Make You Lose Sleep At Night

As the first of the 80 million Baby Boomers have begun to retire, it has become increasingly apparent that the United States is facing a pension crisis of unprecedented magnitude. State and local government pension plans are woefully underfunded, dozens of large corporate pension plans either have collapsed or are on the verge of collapsing, Social Security is a complete and total financial disaster and about half of all Americans essentially have nothing saved up for retirement. So yes, to say that we are facing a retirement crisis would be a tremendous understatement. There is simply no way that we can keep all of the financial promises that we have made to the Baby Boomer generation. Unfortunately, the crumbling U.S. economy simply cannot support the comfortable retirement of tens of millions of elderly Americans any longer. The truth is that we are all going to have to start fundamentally changing the way that we think about our golden years.

Once upon a time, you could count on getting a big, fat pension if you put 30 years into a job. But now pension plans everywhere are failing. State and local governments are cutting back and are raising retirement ages. A majority of Americans have even lost faith in the Social Security system, which was supposed to be the most secure of them all. (more)

World economies on verge of currency revaluations to deal with debt

Basically what the world central banks are doing is increasing their money by devaluing it (printing more than it’s worth) and giving it to banks so that they can lend it. Then, when things pick up, simply take the money back and destroy it.

The $100 bill in your pocket really becomes worth $50 when they double the amount of currency out there without anything to back it (e.g. investors with resources), and the surplus is given to the already rich, since money travels down a pyramid from the government or resource maker to the consumer who consumes as a result of his/her labour (or profit maker to the consumer through secondary falls).

The net effect of Quantitative Easing is giving cash to the rich. When the amount of currency dwindles as the government calls in purchased bonds, credit will be crunched again and we will look to investors to provide credit like they did before. (more)

Commercial real estate maturities will peak in 2012 – $350 billion in loans coming due and hundreds of additional bank failures

The commercial real estate disaster is sinking banks on a weekly basis. Talk of a V-shape recovery is now largely a moot point since we are past the point of a quick and strong recovery. The question now revolves around what we are going to face for the next few years. Commercial real estate really is a harbinger of what went wrong in the last decade. Banks and builders hungry for massive profits overestimated the demand for Starbucks and Macys locations around the country. After all, you actually need money to spend and many average Americans are struggling just to pay their monthly bills. The only way commercial real estate (CRE) was going to do well is if we had a booming population of young and wealthier professionals with more disposable income. Yet that did not happen. (more)

Jay Taylor: Turning Hard Times Into Good Times

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Stocks, US Dollar, Gold Miners


I expect, barring some kind a catastrophe, next week should be another good week for the market. The recent minor pullback has worked off the short term overbought conditions and in the process formed a small bull flag.

As long as we continue to get these minor corrective moves it will serve to keep intermediate sentiment from getting too bullish too fast, and ultimately it is sentiment that will halt this rally, especially if this does turn out to be a bear market rally (which I'm by no means convinced it is yet). As of Friday, intermediate term sentiment was still depressed and at levels that often halt corrections much less start them.

The market is only on the 4th week of this intermediate cycle. The cycle averages about 20 weeks so the next major intermediate trough won't be due until November. (more)

Seven Reasons Not to Send Your Kids to College,
Imagine a retirement where you could have an extra $1million to $3 million in the bank with basically no effort. Now imagine telling your kids that you aren't going to send them to college. And, you go on, you want them to immediately start a business or get to work as soon as they finish high school.

These are difficult things to imagine because we've been so scammed by the "career industry" that tells us we need college degrees in order to succeed in life, regardless of how much money we spend for those degrees or what we actually do with our lives during the four to eight years it takes us to get those degrees.

But in my view, the entire college degree industry is a scam, a self-perpetuating Ponzi scheme that needs to stop right now. (more)

Banks Continue to Suffer From Lackluster Revenue: Whitney

Despite relatively strong second-quarter earnings, US banks are still suffering from poor revenue growth and will continue to do so at least into next year, financial analyst Meredith Whitney told CNBC Tuesday.

"It was a quarter of real revenue shortfalls, real revenue weakness, and I think that is a persistent theme that we’re going to see throughout the next several quarters," said Whitney, a former Oppenheimer analyst who now runs her own firm, Meredith Whitney Advisory Group.

Deal volume in the debt and equity markets is down 40 percent, Whitney said.

"Wall Street didn’t make a lot of head count changes and I think what you’re’ seeing now is the revenues don’t support the expense structure." (more)

Consumer Spending and Incomes in U.S. Stagnate

Consumer spending, pending home sales and factory orders were all weaker than projected in June, showing the U.S. recovery lost momentum heading into the second half of the year as employment stagnates.

Household purchases, which account for about 70 percent of the economy, were unchanged from May, according to figures from the Commerce Department issued today in Washington. Contracts to buy existing houses unexpectedly dropped for a second month and factory bookings fell more than twice as much as economists estimated, other reports showed.

Stocks dropped, depressed by earnings at companies like Procter & Gamble Co. that showed some Americans are cutting spending on name brands as the jobless rate hovers near 10 percent. Slower growth means it will take even longer to regain the 8.4 million jobs lost during the worst economic slump since the 1930s. (more)

Wheat Soars; Rogers Sees 'Much Higher' Food Prices

The July rise in wheat prices, the fastest in 51 years, indicates that shortages in agriculture are coming, Jim Rogers, chairman of Rogers Holdings, told Tuesday.

Wheat prices in Europe hit their highest level in two years, rising almost 50 percent since late June as Russia's wheat crop was affected by drought.

"That's the straw that broke the camel's back," Rogers, who has been warning about shortages coming in the agriculture sector for a while, said in a telephone interview.

"We're going to have much, much higher prices over the next few years," Rogers, a hedge-fund pioneer who started the Quantum Fund with George Soros in the 1970s, added.

Investors finally began to realize that prices for agricultural commodities have been too low for too long because of subsidies and other factors, which made agriculture an unattractive area for workers, he explained. (more)

Chart of the Day