Finance Trends Letter

Get set for our, "Features of the week" . 1. US economy: first-quarter growth estimates raised . 2. Fresh fears for US economy as corporate profits tumble again. 3. Marc Faber: credit crunch will continue and spread . 4. Banks establish central clearing facilty for OTC credit derivatives. 5. The CFTC investigates crude oil trading practices , and announces closer crutiny of commodity index funds. 6. Are index investors driving commodity prices? See also: "Index Speculators responsible for commodity prices?" , and Hard Assets Investor's interview with Bob Greer , manager of Pimco's RealReturn funds. 7. Pimco's June 2008 Investment Outlook focuses on suspicious inflation measurements and inflation-themed investments. 8. Agflation : Reuters global coverage. 9. Is the Dollar Doomed? Presentation by Dr. Benn Steil. 10. "Greenspan's incessant contradictions" . - Brady Willett. 11. New tax law for US exiles - WSJ tax report. "Now, after...

Meredith Whitney , the Oppenheimer & Co. analyst whose skeptical view of the investment banking industry has made her a star on Wall Street, says the credit crunch is far from over. Whitney recently joined Bloomberg TV to talk about the credit crisis, consumer lending, the outlook for the mortgage securitization market, and the health of the US consumer. In spite of all the highly-publicized problems that have plagued the credit markets since last July, Whitney feels that the crisis is "far from over" as many of those problems will "bleed into the consumer". She follows by saying that bank managements will be caught off guard by problems associated with consumer credit losses and will have to "reverse a tremendous amount of revenues". Problems associated with consumer credit losses will mark the second wave of this credit crisis. To quote from a recent Forbes article on Whitney's views: "The first wave of the crisis affected trading books, b...

Recent surges in commodity prices have brought attention to the increased role commodity index investors have taken in the futures markets. The upsurge in commodity index investing has led some observers to claim that commodity prices are being pushed higher due to the growing involvement of these long-focused funds, which buy and hold distant-month futures contracts in order to gain exposure to rising commodity prices. Are commodity index investors to blame for higher commodity prices, or have they simply become the new scapegoat in the attack on speculators? John Mauldin recently addressed this issue in a recent edition of his Frontline Thoughts newsletter. In a section entitled, "Those Nasty Index Speculators" , Mauldin looks at recent comments made by hedge fund manager Michael Masters on the issue of index fund involvement in the commodity markets, and offers a rebuttal to Masters' claim that index funds are a main factor driving higher commodity prices and the vi...

Hey everyone, just wanted to let you know about some recent improvements and new additions to the site. Comments and suggestions are welcome, so let me quickly describe the new features. First, I moved the site search bar and subscribe/bookmark buttons to the top portion of the blog homepage. These tools are now more visible "above the fold", having been moved up from the bottom of the righthand navigation column. I hope this will making searching for relevant posts and information more convenient for all our readers. The Google Custom search bar is a great tool for finding relevant information quickly, so we definitely don't want this feature languishing towards the bottom of the page where new visitors are less likely to see it and use it. Same thing goes for our handy "Subscribe" and "Bookmark" buttons. They're both moving right on up where everyone can see them. We want to make it easier for you to subscribe to our site feed and share this si...

Warren Buffett goes to Europe, private equity jaunts through Africa, and investors venture into Cambodia. All this and much more in our, "Features of the week" . 1. Government's "numbers racket" is about to blow up in our faces. 2. If inflation is low, then why are bond prices falling and yields rising? 3. The market is beginning to think that the Fed will raise interest rates . 4. Africa investment pioneers in private equity initiative. 5. Jim Rogers and Marc Faber advise private-equity investors in Cambodia . 6. The oil market's historic swing to contango : has peak oil "tipped"? 7. Running on empty? Fears over world oil supply move into the mainstream. 8. Gasoline near $4 shortens Memorial Day trips. 9. Backlog of unsold US homes hits record. 10. "Inside the Middle Class: Bad Times Hit the Good Life" (Pew Research). 11. FT Video: Chad Hurley on the future of YouTube and online video. 12. David Gordon on the so-called "Libe...

Today we complete our series on retirement planning with a look at the final segments in Financial Sense Newshour's recent "Planning for Retirement" broadcasts. Part 1 of our post series gave an overview of the current global Boomer retirement wave, and an intro to the first part of FSN's "Retirement" programs. Part 2 focused on the the second part of the FSN broadcasts, and the lessons given on sound retirement budgeting and management of expectations. Now in Part 3, we'll look at the final segments in FSN's "Planning for Retirement" special and wrap up all the program links and transcripts in one easy to reach place. Plus, we'll add a little bit of wisdom to our discussion of retirement, courtesy of The Financial Philosopher . Everything you hear and read in these programs, transcripts, and posts is derived from the personal experience and wisdom of the authors and program hosts. My knowledge in this area of personal finance is ...

In Part 1 of our "Planning for Retirement" post series, we started with a brief overview of the Baby Boomber retirement schedule and the problems and changes that could arise out of this huge demographic shift. We also looked to the retirement wisdom imparted by investment manager and Financial Sense Newshour host Jim Puplava, and his co-host John Loeffler, in their recent FSN radio broadcast, "Planning for Retirement - Part 1" . Today we'll continue with part two of the FSN radio broadcasts . In this segment, Jim and John continue their discussion of mass Boomer retirement, while emphasizing the need for sound budgeting and planning. An important part of retirement planning would come under the heading of "expectations management." According to Puplava, many retirees are already starting to see some shocks from the falling values of their homes and investment portfolios. As a result of this, some current and future retirees may feel the urge to take ...

Back in April, the Financial Sense Newshour produced a series of program segments devoted to the issue of retirement planning. Today we're going to look at the first installment of FSN's retirement special, and guide you to the archived broadcast link and a written transcript of this program. But first, a quick overview. Why is retirement such an important topic? Retirement is currently a very big issue not only in America, but in other developed nations as well. These countries face a demographic overhang of "baby boomers" facing retirement, and there is no shortage of news stories and articles covering this trend. How will these nations deal with the structural changes taking place as a result of this mass retirement? Are individuals in North America, Europe, and Japan ready for this shift? Are Americans better prepared or less prepared for retirement than their counterparts in other nations? A recent Financial Post article entitled, "Ill-prepared spendthrift...

Yes, it's time for our, "Features of the week" ! Enjoy. 1. Oil sets record near $128 ; pump price at high too. 2. Saudis decline Bush's request for more oil . Hint : Maybe its because they don't have any spare capacity? 3. Cheap oil may be history as $100 becomes the norm. 4. Myanmar cyclone leaves 500,000 children in need of help. 5. Bloomberg video: "Feast to Famine: The Facts Behind the Food Crisis" . 6. Global stock markets: performance and valuation scorecard (Prieur du Plessis - Investment Postcards). 7. Major asset class 1,3,5,10 and 15 year returns (Richard Shaw - QVM Group). 8. "Why all roads lead to inflation" - Bill Fleckenstein. 9. Peter Schiff on the, "Ticking Credit Card Time Bomb" . 10. Calculated Risk looks at non-borrowed reserves and the Fed's balance sheet . 11. BusinessWeek profiles Phil Falcone of Harbinger Capital. 12. ABX index looks to regain some of its old spark. 13. As food costs rise , farmers c...

I wasn't planning to post anything today, until I saw Bear Mountain Bull's take on the April CPI report . Quote: "In what is probably the sickest joke that our government plays on its people on a monthly basis, the April CPI report was released this morning, reporting an increase of only 0.1% in “core” inflation. Never mind the largest increase in food inflation in 18 years. " You might want to go on over there and have a quick look at the BMB gang's reaction to this latest marvel of government trickery and statistical illusion . Be sure to check out Barry Ritholtz's post, "US Inflation Miracle Continues" , as well. Search through his previous posts on "inflation, ex-inflation" while you're there. Also, if you haven't read Kevin Phillips' recent Harper's Magazine article on the government's reporting of economic statistics, now would be a great time to read it and get a little added perspective on the matter.

Credit default swaps (CDS) have become an increasingly well-known financial instrument in recent years. Originally developed for insuring against debt default and hedging against, or speculating on, changes in credit spreads between debt instruments, CDS have grown into a $62 trillion market and are now the most widely traded credit derivatives. Barron's has put their focus on the CDS market in a recent piece entitled, "Credit-Default Swaps: Weapons of Mass Speculation" . Here are some excerpts from that article. "DON'T KNOW MUCH ABOUT derivatives called credit-default swaps, or CDS? There's no reason one should. Even today, CDS, which represent bets on the default risk of various debt issues, remain an obscure corner of the global-finance market, inhabited mostly by big banks and brokerages, hedge funds and other institutions. Denizens of the CDS market strike customized insurance deals covering all manner of debt, from corporate, sovereign and municipal b...

Caught this one over the weekend and thought you might enjoy this. CNBC had long/short investors William Ackman, of Pershing Square Capital Management, and David Einhorn, of Greenlight Capital, on Squawk Box last Friday; The Big Picture shares the video highlights with us. Topics of discussion include the panel's defense of short-selling, the advantages of long/short portfolios, Bill Ackman on valuing long-term investments, the importance of mark-to-market accounting, and more. You may remember Ackman for his famously thorough research in advancing his short positions in Ambac and MBIA. David Einhorn is often associated with his long-running battle with Allied Capital, detailed in his new book, Fooling Some of the People All of the Time . Enjoy the CNBC clips and the discussion . For more on Ackman and Einhorn's investment ideas, see our December 2007 post, "Time to buy financials?" .

Following up on our recent post of David Bowie's 1974 appearance on the Dick Cavett show , here's a little added something from the same time period: BBC's 1974 Bowie tour documentary, Cracked Actor . If you watch David's sit-down interview with Dick Cavett, you'll hear the two discussing the idea that "the lives of the rock stars are really not as strange as the lives of the fans". Watching Cracked Actor , it's interesting to see this point bared out at a certain point in the documentary. As far as Bowie's mid-70's fanbase is concerned, there really seems to be some truth to this statement! What exactly does this film document? Here's a quick summary from our YouTube host: "In 1974, David Bowie embarked on an extensive tour of America. Performing over 70 concerts and taking 6 months, Bowie and his band stepped on stage each evening to deliver a highly tuned and finely timed performance that was the Diamond Dogs show. It included some ...

Lots of energy related news in this week's "Features" , and plenty more besides... 1. Oil climbs above $126 , as commodities benefit from dollar flight. 2. Putting $120+ oil in perspective : Jim Rogers, Bill Powers, Matt Simmons. 3. (Video) T. Boone Pickens discusses wind power and energy policy during the Milken Institute Global Conference. 4. Citigroup ( NYSE:C ) plans to shed $400 billion in assets as part of Vikram Pandit's rebuilding plan. 5. Uh oh: Zimbabwe bank officials now praising our officials . 6. FT correspondent Jack Fairweather describes changing perspectives in Iraq . 7. Post-election violence in Zimbabwe escalates . 8. Tea with Greenspan down 65% , and other casualties of a weak economy. 9. "Why not let the markets set prices?" , asks Peter Schiff. 10. Mish on tax rebates and "economic stimulus nonsense". 11. Icap founder Michael Spencer launches a new Africa and Middle East investment fund . 12. Calling oil wrong : misinterpret...

$100 million dollars just doesn't go as far as it used to. It seems today you can't even buy a modern masterpiece for that price without bumming an extra $20 mil or so from your friends... Details from Bloomberg : "An Andy Warhol portrait of Mao Zedong may fetch an artist record of $120 million in a private sale in Hong Kong, Christie's International said. Christie's is shipping Warhol's ``Mao,'' a silkscreen-on- canvas portrait more than 14-feet (4.3 meters) tall, to Hong Kong in late May for display at the city's main convention center, to allow potential buyers to view the work, said Ken Yeh , Christie's deputy chairman in Asia. ``That is a huge price to pay for a painting,'' said Elaine Holt, a Hong Kong-based curator at Opera Gallery , which specializes in Western artworks. ``Considering how well-known Warhol is in China and how wealthy some Chinese are, I wouldn't be surprised if a mainland collector bought the pa...

"Wait, wait, wait. $200 oil? Just let me get my head together a minute man...I'm still trying to get used to the idea of $120 a barrel." The internal monologue of the average American (in dazed hippy-speak) when considering recent oil prices and the prospect of much higher prices to come? Okay, I'm speculating here. I can't see inside the average person's head, and he probably doesn't even talk like Tommy Chong . But I think we can say that your average American Joe has probably been surprised by the extent and duration of this nine-year uptrend in crude oil prices. Especially when you consider that this protracted price rise was accompanied by a constant, sustained chorus for "lower oil prices ahead!" from many of the media's talking heads. And believe me when I say that if you have a car (or two, or three, or an Elvis-sized fleet), this is one commodity market you are likely to have kept up with. Even if you don't like to read the fina...

Dmitry Medvedev became Russia's new president today, succeeding Vladimir Putin. It is expected that Putin will continue to exercise his power as Russia's Prime Minister and the leader of the United Russia Party. More on this from Bloomberg : " Dmitry Medvedev was sworn in as Russia's third president, succeeding Vladimir Putin , with promises to fight corruption and inflation in partnership with a predecessor who may try to overshadow him." "...The new president submitted Putin's nomination as prime minister to the State Duma hours after taking the oath of office. The lower house of parliament will consider the nomination tomorrow. Putin is also head of the United Russia party, which dominates parliament, possibly setting up a battle for leadership." As President of Russia, Medvedev will have to address certain economic questions, including the rise of inflation. "Medvedev, 42, a longtime Putin ally, assumes control of a country in its 10th ...

Dow Theory Letters writer Richard Russell is still bullish on the action in the US market averages. In recent weeks, Russell has become increasingly convinced that the strong action in the Dow Industrials and Transports off their January lows could signal an "all clear" for the economy and a surprise continuation of the recent upward trend in the US stock market. He elaborated his position in a recent contribution to Barron's magazine entitled, "A Rally With Serious Muscle" . Here are a few excerpts from that piece: "Dow Theory bolsters the bullish case. On Jan. 22, the Dow transports recorded a low, along with the industrials. A rally ensued, followed by a decline in which the industrials broke to a further low that was "unconfirmed" by the stronger transportation average. From there, the transports headed higher, dragging the industrials along. In April, both the industrials and the transports rallied above their February peaks. This was a Dow T...

Berkshire Hathaway's ( BRK.A ) annual shareholders' meeting has accounted for the usual glut of Warren Buffett-related news items over the weekend. Let's take a quick look at some of the highlights from the, "What Warren said" files. MarketWatch reports that Berkshire Hathaway is eyeing German family-owned businesses as possible acquisition targets. "Berkshire Hathaway Inc. is interested in acquiring family-owned businesses in Germany, Chairman Warren Buffett said Saturday. Buffett is planning to travel to Germany and three other European countries in a few weeks to try to raise Berkshire's profile in the region, he said. "We would like more family owners of Germany businesses who, when they feel some need to monetize their business, to think of Berkshire Hathaway," Buffett said. "If they care about their business we are their best call." "We're nowhere near as prominent in Europe as we should be," he said." Does G...