Finance Trends Letter

John Kenneth Galbraith has passed away at the age of 97. Galbraith was a prolific writer and well known economist who had a long standing association with Harvard University, where he had taught as an economics professor. From BBC News : He was not a great man for numbers or complex mathematical theories and models, but more of a social economist, whose accessible and prolific writing did much to popularise the subject. "He was arguably one of the most famous economists outside of his profession for the way he was able to communicate complex ideas in a compelling way to non-economists," says the London Business School's Dominic Swords. Although I'm not sure I would agree with many of his views (Galbraith was a self-avowed "evangelical Keynsian" ), I must say that I respect the man's questioning nature and his willingness and ability to publicly pose questions about issues that seemed to evade the attention of many. Here was a man obviously dedicated to h...

A recent article from the globeandmail.com highlights investor Jim Rogers' interest in agricultural commodities, an area which he feels might provide the next crop of opportunity (no pun intended, seriously) in the resource sector. Investor and economic commentator Marc Faber has made similar recommendations in the not too distant past. I remember Faber highlighting some of these commodity picks in some of the past Barron's Roundtables, and I have a written note of Marc recommending Ags/Softs such as Sugar, Orange Juice & Coffee in a 6/24/04 interview with Financial Sense. We've seen in recent months how the price of sugar has been propelled to higher levels, partly on the strength of the fundamental story, "sugar as energy". Will the other agricultural commodities rise on the back of increased Asian consumption or various new demand stories that will be revealed in time?

Barclays Global Investors silver ETF, iShares Silver Trust, is set to begin trading Friday on the American Stock Exchange (AMEX). The proposed ticker symbol is "SLV". The ETF shares will represent 10 ounces of silver held in vaults. For more info see Thursday's Marketwatch article . Oddly enough, I haven't heard much on the progress of a seperate silver tracking fund that was to be launched on the London Stock Exchange. ETF Securities was preparing to launch an unbacked silver ETF back in March. Now that I'm searching around for info, I've found these recent comments from ETF Securities chairman, Graham Tuckwell: Graham Tuckwell, chairman of ETF Securities, the firm that helped launch Gold Bullion Securities, said: 'We are going to be bringing a silver ETF on to the London stock market within the next month or so.' See the full article here .

For those interested, the Chicago Natural Resource/Technology Conference will take place April 29, 2006, Saturday from 7am to 6pm. The event is held at Rolling Meadows Holiday Inn. Address and phone: 3405 Algonquin Road Arlington Heights, IL. (847) 259-5000. There is no charge for admission, but you might contact organizers as space is limited. Here is the info contact that appears on my admission postcard: (317) 502-5828 richradez@yahoo.com Keynote speaker is Joseph Granville, well known technical analyst and editor of "The Granville Market Letter". Other noted metals and resource analysts/newsletter writers will speak, along with representatives from participating resource/mining companies. At past conferences I had the pleasure of hearing commentary from the likes of Bill Powers, Jim Rogers, Clyde Harrison and David Morgan up close. From what I gather, the Chicago conference seems to be one of the smaller resource events, at least judging by attendance numbers for similar ...

Dr. Marc Faber's recent article, An Anatomy of Bear Markets , takes a look at the way we define bull and bear markets and offers an insightful view as to how we might judge asset prices in real terms. In the following passage, Faber gives us a view as to how we might judge price movements in an inflationary period: "In case we should experience continuous monetary inflation, which could lift, over time, all asset prices such as stocks, real estate, and commodities, some asset classes will increase more in value than others. This means that some asset classes while rising in value could deflate against other asset classes, such as happened with the Dow against gold since year 2000." For this article, Dr. Faber draws on the work of Russell Napier, author of Anatomy of the Bear , to further his discussion about the manner in which markets/asset classes shift from overvaluation to undervaluation. I would also suggest that anyone interested in these discussions listen to Russe...

I'm going to provide a link to this weekend's Financial Sense Newshour interview with Dan Reingold, author of Confessions of a Wall Street Analyst. Reingold was a telecom analyst on Wall Street who has drawn on his career experiences and observations to paint a picture of conflicts and corruption within the financial industry. Listen especially to the section around 50 min. in when Dan and interviewer Jim Puplava discuss the pervasiveness of accounting fraud and the lack of concern over these widespread practices. It seems a sad illustration of just how far the "ends justify the means" philosophy extends in modern society.

An interesting article called, "A sea change in shipping" , discusses what could be perceived as a very plain topic: boxes. As it turns out, box containers have had a profound impact not only on the shipping industry, but the very nature of trade. The advent of box container shipping has helped transform the type of goods the world sends and receives, and the efficiency with which they come to market.

Jim Rogers is sticking to his story; the commodity bull market will continue to unfold as a long running secular move, with gold eventually reaching $1000. ``The shortest bull market for commodities lasted 15 years, the longest 23 years,'' Rogers, 63, said in an interview. So if history is any guide, ``they've got a long way to go.'' See the full Bloomberg article here .

Hu Jintao, China's president, began his visit to America by meeting with business leaders in Seattle. Mr. Hu kicked off his tour with a visit to Microsoft's headquarters, and later dined at the home of Microsoft founder Bill Gates. Yesterday's Financial Times coverage centered largely on the leader's recent stance towards intellectual property rights, and what that could mean for Microsoft. "China has made a series of announcements on IPR issues in the lead up to Mr. Hu's visit issuing a directive for computers to be pre-loaded with legitimate software and for governments not to use pirated versions." This is very good news for Microsoft as they will probably serve up one the main pre-loaded options. Lenovo has announced a deal to sell computers in China w/ Microsoft software pre-loaded. Lenovo's chairman said the policy has already had a big impact in China. 70 percent of customers are now buying comps pre-loaded with Windows XP, up from 10 percent b...

There was a bit of news yesterday regarding the worker strike at Newmont Mining's Yanacocha gold mine in Peru. Here are the Reuters and Business News Americas stories. Peru's Buenaventura also owns a large stake in the mine. June gold was up $4.50 to close at $623.30 an ounce, according to a recent CBS Marketwatch update.

Tuesday's update : June gold was up $4.50 to close at $623.30 an ounce, according to a recent CBS Marketwatch update. Gold hit 25 year highs in Asian trading on Tuesday. June gold closed at $618.80 in Monday's session on the Comex in New York. Here's a bit of what appeared in a Bloomberg story on commodities Monday: Gold for June delivery rose $18.70 to $618.80 an ounce on the Comex division of the New York Mercantile Exchange, after reaching $619.30. The 3.1 percent gain was the biggest since Sept. 14, 2001, the first day of trading after the terrorist attacks. Meanwhile, silver keeps defying expectations and has extended its move above the $12 area. May silver was up 51 cents to close at $13.365 an ounce. Platinum closed Monday at $1,120.10 an ounce, and palladium was up $12.95 to close at $362.45. Monday was definitely a standout day for the precious metals. I'm very interested to see how this recent move in palladium plays out. There's been some very good momen...

Reuters reports that the New York Stock Exchange is currently reviewing a strategic transaction , one that could include the hotly pursued London Stock Exchange. Nasdaq has recently acquired a stake in the LSE, but some have criticized the logic of the move in light of how it will affect the Nasdaq's balance sheet . Consolidation continues to move forward in the financial exchange sector. For an earlier look at the trend, please see the following post from March 15.

Interesting article from 321energy called, " Constructing a Foundation for 'Net-Zero' Buildings ". A bit of an introduction to what is possible today in the field of building design. The goal is to construct homes and buildings that "use zero net energy" and are "carbon neutral", having found some ways to offset their carbon emissions. Interesting. The "carbon neutral" jargon seems to be a point of contention from what I've found off the cuff. Here are two points of view on how mitigating emissions might work: How to become a carbon neutral organisation . Why 'Carbon Neutral' May Mean Nothing at All . In any case, I do find the efforts towards "green building" intriguing and exciting.

Oil backed ETF United States Oil Fund ( USO ) made its trading debut on the AMEX Monday, giving investors and speculators an exchange-listed proxy on crude oil futures price. The fund will track the West Texas Intermediate crude oil contracts traded on the New York Mercantile Exchange (NYMEX). See the full story at FT.com . Included in FT's coverage was mention of the Brent crude oil ETF listed on the London Stock Exchange. Apparently, this earlier oil ETF has not been as successful as some would have hoped, given recent demand for oil related investments. For a bit more background on the oil ETFs, please see this article from the Resource Investor website. Some of the coverage of this newly listed American ETF has been less than gushing. From a Google News search, I uncovered a few pieces whose titles suggest the ETF is not for most retail investors. Interesting. There was a pretty interesting commentary in today's Financial Times regarding the USO ETF and the possibilities...

Thanks to Stockblogs.com for adding Finance Trends Matter to its list of market related blogs. The Stockblogs directory seems a good stop for anyone looking to uncover some new market related musings. A variety of perspectives here, from fundamental analysis and technical analysis blogs to those focused on commodities and forex. Have a look, you might find something you like.

From Reuters: "Iranian President Mahmoud Ahmadinejad said on Tuesday Iran had joined the group of countries possessing nuclear technology and was determined to achieve industrial-scale uranium enrichment . " Iran's failure to convince much of the international community that the nuclear work was focused on generation of electricity led to their February referral to the UN Security Council. According to a recent Reuter's article , even current levels of uranium enrichment achieved by Iran's program are unsettling to diplomats and onlooking Western powers. "164 centrifuges is still well short of producing enriched uranium in a significant quantity over a sustained period. But the more they do it, the more they learn the technology. So any form of enrichment is a red line for us," It would take Iran years to yield enough highly enriched uranium for one bomb with such a small cascade. But Iran has told the IAEA it will start installing 3,000 centrifuges lat...

I was reading Doug Noland's recent article, "Banking and the Business Cycle" , and I'll briefly mention the section of the article from which the title is drawn. Noland mentions an article he has seen in which a Federal Reserve Bank President (Richard W. Fisher) mentions research that suggests globalization helps to contain inflation. Noland takes issue with this view and cites the overlooked role that credit inflation has in creating asset price booms. He also notes the irony that "Global Credit Inflation" is precisely what is driving the over-investment in manufacturing capacity that helps keep down the cost of goods. "Reminiscent of the late-nineties view that extraordinary productivity gains empowered the Greenspan Fed to let the economy (and financial markets!) run hotter, today it is "globalization" that supposedly keeps "inflation" in check, thereby bestowing the Federal Reserve and global central bankers greater latitude for ...

Gold traded over $600 during Thursday's session, closing at $599.70 in New York. Since $600 gold has been getting a fair amount of news coverage, let's examine the reasons being trotted out to explain the rising gold price. A Bloomberg article points to investment fund buying as a main factor driving recent price strength. Also discussed was the "inflation risk" that makes holding gold more attractive for investors, especially in an environment of low real rates. A surprisingly credible argument for gold's strength managed to make its way into the article: ``The market perceives an inflation risk, although it hasn't shown up in some of the government statistics,'' said Michael Cuggino, portfolio manager of Permanent Portfolio Fund in San Francisco. ``Low to negative real interest rates after inflation are generally bullish for gold.'' Unfortunately, Bloomberg's report did not end on such a sensible note. Another source weighed in with the...

I was going through some interview archives at howestreet.com and I came across a pretty good interview with investor/speculator and resource pundit Rick Rule. It was originally taped at the start of 2006, but I missed it the first time around. In this audio interview , Rule gives his opinions on markets, government intervention, and the outlook for natural resources. Update : For a more recent (August 2007) interview with Rick Rule, see, "Rick Rule: The Golden Rule" .

There has been a good deal of discussion, for some time now, about the desire central banks have to "diversify" out of some of their large dollar holdings. Foreign central banks often hold dollar denominated assets as reserves, and some feel that certain banks may have far too many dollar reserves, given the US government's current financial condition. It is with this theme in mind that I include today's article from Ame Info. What I liked about this piece was its take on the timing aspect of central bank decisions. It has often been noted that in retrospect, key moves by central banks often come at the exact wrong moment in terms of market advantage. When central banks across the globe were dumping gold in the late 90s and the early part of this decade, their sales actually coincided with the ending stage of the metal's bear market. Could widespread sentiment about the death of the dollar actually signal its return to form, thereby giving central banks a "h...

Damn glad to see they posted this on 321gold. Remarks from Richard Russell's Dow Theory Letters on WWII and Russell's own experiences during that time. I read this in the daily remarks of his letter the other day, and it is now posted on 321gold for everyone to see. Check it out.

Publishing magnate T. Herman Zweibel discusses his management philosophy and his refusal to capitulate to the demands of censorship. Words of wisdom from a courageous individual: lily-livered readers are forewarned.