Commodity trend funds need end to market volatility

sterday, 04:39 am
by Barani Krishnan (Reuters)

A steady economic rebound that sparks a big rally in commodities and stocks, or a deeper recession that pushes prices further down, is what trend-following commodity hedge funds need to reprise last year's heady run. Skip related content

These funds thrived through most of 2008, buying oil, metals, grains and equities as they rose and selling them as they plunged. They have not done well lately due to volatility in markets they trade in, including currencies and bonds.

But the so-called Commodity Trading Advisors, or CTAs, could have big gains again this year if global economic recovery strengthens and financial and raw materials markets start surging again.

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Betting Against the Rally to Protect Your Portfolio

By BRETT ARENDS

This rally may have further to run. But investors might want to think about taking out some portfolio insurance -- just in case.

Luckily, the insurance, in the form of put options, is getting cheaper as optimism about the market grows. There are plenty of reasons for caution. Here are nine things the bulls should chew over.

1. Almost everyone on Wall Street is now bullish. Many sentiment indices are alarmingly complacent. The State Street Investor Confidence index is back to levels seen a year ago.

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Shilling: Stocks Will Plunge 32 Percent

By Dan Weil

Economist extraordinaire Gary Shilling says that a sharp drop is in store for stocks, thanks to continued economic weakness.

“We think that you’ve got to approach things very cautiously,” he tells Yahoo! Finance.

With the recession running at least through next year, Shilling anticipates earnings of $40 for the S&P 500 Index.

“Normally at the bottom you have a 10 or 12 multiple on that,” he explains.

“With low interest rates, 15 is probably possible. That would put you at 600 on the S&P 500.”

Indeed, that’s Shilling’s target, which represents a 32 percent drop from current levels.

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Doug Kass: Vicious Correction Due

By Dan Weil

Doug Kass, president of money manager Seabreeze Partners, says that while the stock market won’t return to its March lows, a “vicious correction” is in store.

“It’s going to be bumpy and have a lot of potholes, so we’ll have to be cautious,” Kass told CNBC TV.

The long-short fund that he began Jan. 1 is now short for the first time.

“The good news is I believe that … the variant view that we’ve seen a generational low is intact,” he says.

The bad news: “I do think that stocks are ahead of fundamentals,” he says.

“I think the stock market recovery, I would call [it] the 'Miley Cyrus' recovery. It’s very popular now (however) there may be not so much talent underneath that’s reflected in prices. And perhaps it won’t be as enduring.”

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Spain plans changes to renewable energy aid rules

(Reuters) - Spain plans to change rules on state aid for renewable energy generators, an industry ministry spokesman said on Friday, arousing fears in the sector that its lucrative subsidies may shrink.

Under a new regulatory framework that has not yet been finally decided, the government could also change its targets for installed wind capacity, which are now at 20 gigawatts by 2012, rising to 40 GW in 2020, the spokesman said.

"In theory, new targets would be set on an annual basis," he said.

At current growth rates, Spain could meet the 20 gigawatts target well before the scheduled 2012.

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http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL899791820090508

China and the liquidity trap

by Paul Krugman

I liked this David Leonhardt article about the China-US economic relationship. But I do have a problem with this passage:

The most obviously worrisome part of the situation today is that the Chinese could decide that they no longer want to buy Treasury bonds. The U.S. government’s recent spending for bank bailouts and stimulus may be necessary to get the economy moving again, but it also raises the specter of eventual inflation, which would damage the value of Treasuries. If the Chinese are unnerved by this, they could instead use their cash to buy the bonds of other countries, which would cause interest rates here to jump, prolonging the recession.

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http://krugman.blogs.nytimes.com/2009/05/15/china-and-the-liquidity-trap/

Buffett’s Berkshire Boosted Wells Fargo Stake as Shares Fell

By Erik Holm

(Bloomberg) -- Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. added to holdings of lenders Wells Fargo & Co and U.S. Bancorp in the first quarter as the shares traded at their lowest prices in more than a decade.

Buffett’s firm, the largest shareholder in San Francisco- based Wells Fargo, increased its stake in the bank by about 4.3 percent in the first quarter to 302.6 million shares, Berkshire said in a regulatory filing yesterday disclosing its U.S. stock portfolio as of March 31. Omaha, Nebraska-based Berkshire increased its holding of U.S. Bancorp by about 2.2 percent.

Banks that attract deposits at low rates were undervalued in the first quarter because investors wrongly believed that the entire industry was hobbled by risky bets and reckless lending, Buffett said at Berkshire’s annual meeting earlier this month. The KBW Bank Index fell 37 percent in the first quarter.

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The World's Biggest Debtor Nations

By Paul Toscano

In today's struggling global markets, many national economies have looked to their government and foreign lenders for financial support, which translates to increased spending, borrowing and in most cases, growing national debt.

Deficit spending, government debt and private sector borrowing are the norm in most western countries, but due in part to the global financial crisis, some nations and economies are in considerably worse debt positions than others.

External debt is a measure of a nation's foreign liabilities, capital plus interest that a country must eventually pay. This number not only includes government debt, but also debt owed by the private sector and individuals.

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Gary Shilling's Latest Thoughts

by Mark, TraderMark

Very few people forecast this mess in either magnitude or timing although many now claim they did. Even some of the most prominent "permabears" while correct on many of the outcomes, did not get the investing themes correct (i.e. Peter Schiff)... Gary Shilling is about as close to anyone I can find who not only got the economics right but also made a remarkable set of calls. For example many of us bears thought the dollar would be whipped into submission since in 99 out of 100 cases the country that spawns a world financial crisis does not have all the Earth's money flood into its currency - Shilling got that right, saying to go long the dollar and US bonds (really the only place to hide in 2nd half 2008 as ALL historic correlations broke down). While he was wrong on betting against commodities in 1st half 2008 he made it up in spades in the 2nd half.

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http://www.forexhound.com/article/Stocks/Stocks/Gary_Shillings_Latest_Thoughts/132672

Cutmore: Marc Faber on Armageddon

By Geoff Cutmore, CNBC Anchor

Prepare for War, the Death of capitalism and Bankruptcy of the US Government (not necessarily in that order)


A vintage performance from the author of "The Gloom, Boom & Doom Report". This morning – living up to his reputation for bearishness - Marc Faber forecast a litany of unpleasant events ahead.

His key message is: buy real assets. He thinks it will take years for the global economy to recover, but when it does the effect of governments' printing money will ultimately reignite inflation.

"If you're in any field, you should own a farm because one day you will be grateful that you are able to grow your own agricultural produce."

Recovery will be slow because government meddling in the markets will postpone it. He argues that the final low for markets and for growth will only come when the debt and losses have been cleaned out of the system.

Unless the system is cleaned out of losses, "the way communism collapsed, capitalism will collapse."

"The best way to deal with any economic problem is to let the market work it through."

The Fed is destabilizing, it's creating "enormous volatility".

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Will capitalism fall like communism? Another Dr. Doom says yes

by Melly Alazraki

Before you go shoot your arrows at Nouriel Roubini, hold your horses. This is yet another Dr. Doom, Marc Faber, the author of "The Gloom, Boom & Doom Report." And before you decide he's anti capitalist or anything of the sort, hear him out.

Faber says that a sustainable recovery will occur only when the corporate system is cleansed of losses, and he hopes this happens by free market forces rather than government intervention. If this does not happen, and as it stands now he believes governments are trying to protect their poor investments and thus prevent this from happening, then he thinks capitalism risks collapsing "the way communism collapsed."

He spoke aon CNBC Europe's Squawk Box as part of a panel. The U.S. and its actions were a major part of the discussion, in which Charles Ortel, Managing Director of Newport Value Partners, said the U.S. is waging a war on capitalism. And he gave examples of the government is turning CEOs and companies against their fiduciary duty to shareholders. Ken Lewis being told to lie about the Merrill Lynch transaction was one.

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http://www.dailyfinance.com/2009/05/15/will-capitalism-collapse-like-communism-another-dr-doom-says-y/

The global downturn is not over yet, despite some green shoots

There is still a long way to go before the global downturn is behind us, despite signs that we may be emerging from the economic crisis

By Adrian Michaels and Edmund Conway

Suddenly everything is looking rosy. The UK stock market is up 25 per cent since March. The S&P 500 in the US is doing even better, up 30 per cent. House prices are no longer falling at breakneck pace; first-time buyers are finally returning to the market, snapping up cheap properties. Against all odds, businesses and consumers are starting to regain their appetite for spending.

And that's just in the UK. Looking abroad, places where housing foreclosures were at their worst in the US have seen a turn for the better. In Sacramento, California, and Fort Myers, Florida, sales volumes are up 45 per cent on last year. In Las Vegas, the figure is 35 per cent. Embattled and troubled the eurozone may be, but the number of new companies created in France in March had increased by 10.4 per cent – a record increase, despite the country being officially declared in recession yesterday. Even some luxury is back. A plush property development in Beijing sold out in 48 hours last weekend. The 138 properties cost between $750,000 and $2 million (£495,000-£1.3 million).

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http://www.telegraph.co.uk/finance/financetopics/recession/5330721/The-global-downturn-is-not-over-yet-despite-some-green-shoots.html

China Economic Scan Weekly Economic Review

By Callum Thomas, China Economic Scan

In the past week a number of key indicators of economic activity came out, painting a positive picture for economic growth in China, but CPI and PPI stats showed prices continued to fall. Among those data released were output, retail sales, food exports, and urban fixed-asset investment.

China's consumer price index (CPI), fell 1.5% year on year in April 2009, according to the National Bureau of Statistics (NBS). Food prices (comprising a 3rd of CPI) dropped 1.3%, dragged down by a 28.6% decline in pork prices as demand plummeted on pig flu fears. Non-food prices fell 1.5%. The index was down 0.2% since March, and the YTD fell 0.8% from the same period last year.

China's producer price index (PPI), a major measure of inflation at the wholesale level, also fell 6.6% in April year on year, according to the NBS. The decline compared with a 6.0% year on year drop in March and 4.6% in Q1 2009. Prices of production materials fell 8.1% in April year on year, the NBS said, and PPI for January-April fell 5.1% over the same period last year.

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http://www.forexhound.com/article/Fundamentals/Weekly_Reports/China_Economic_Scan_Weekly_Economic_Review/132577

Morgan Stanley forecasts 2009 China GDP growth of 7% to 8%

(China Knowledge) - Morgan Stanley raised its forecast for China's 2009 Gross Domestic Production (GDP) growth to between 7% and 8%, higher than the previous 5.5%, sources reported, citing Morgan Stanley Asia Chairman Stephen Roach as saying.

Roach also warned that China's economic growth would fall back to a level between 5.5% and 7% in 2010 due to the export slump caused by the global economic recession.

China will find it difficult to maintain a GDP of 8% next year as it depends on the external economic environment rather than the internal economic environment, said Roach, adding that China may experience a W-shaped recovery instead of a V-shaped recovery.

Roach suggested that China should expand domestic demand according to the 11th Five-Year Plan, double the size of the country's social security fund to US$160 billion and strengthen the pension reform.

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http://www.chinaknowledge.com/Newswires/News_Detail.aspx?type=1&NewsID=23604

Estados Unidos Os primeiros a sair da crise

Tudo começou nos EUA e tudo indica que seja aí que vai terminar. A crise financeira que se abateu sobre os mercados mundiais e mergulhou as economias numa recessão profunda deverá ser superada em primeiro lugar no...

Por Patrícia Abreu

Uma saída antecipada da crise deverá criar boas oportunidades de investimento nos EUA a médio prazo. Ainda assim, os gestores alertam: é preciso cautela.

Tudo começou nos EUA e tudo indica que seja aí que vai terminar. A crise financeira que se abateu sobre os mercados mundiais e mergulhou as economias numa recessão profunda deverá ser superada em primeiro lugar no país onde emergiu. Os gestores estão confiantes e acreditam que há boas oportunidades de investimento nas acções americanas a médio prazo. Mas, alertam, os riscos permanecem altos, o que exige cautela e selectividade.

Os fortes estímulos das autoridades no país e a estabilização de alguns indicadores económicos são os principais factores que sustentam o optimismo na região. Já do lado do risco, os gestores sublinham a saúde das instituições financeiras, o mercado imobiliário e o problema do desemprego. Ainda assim, realçam que as quedas recorde colocaram as acções a transaccionar a múltiplos historicamente baixos.

"Penso que é uma excelente altura para estar a investir nos EUA. O mercado accionista tem estado a construir uma base nos últimos meses, a partir da qual vai atingir novos máximos", adiantou ao Negócios John Carey, responsável pelo investimento nos EUA da Pioneer Investments. Já o Santander Gestão de Activos destaca que o investimento deve seguir uma lógica de médio e longo prazo, bem como uma estratégia de diversificação geográfica de exposição a acções.

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O que dizem os gestores de fundos

Cautela e selectividade são as palavras que dominam o discurso do Santander Gestão de Activos quando se fala do investimento em acções norte-americanas. Para a casa de investimento, qualquer decisão para...

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http://www.jornaldenegocios.pt/index.php?template=SHOWNEWS&id=367624

China’s Stock Bubble Passes Stiglitz Acid Test: William Pesek

Commentary by William Pesek

(Bloomberg) -- China’s stock-market boom is as clear a bubble as you will find, the conventional wisdom says.

When might it burst? Nobody knows if it will.

The Shanghai Composite Index has surged 45 percent this year. Just because China has deep pockets in this time of global crisis doesn’t mean its economic health supports this rally. Resources of China’s magnitude are a nice thing to have at the moment. And while probably too late to buy into the market, investors who are already there won’t be disappointed.

In a sense, buyers are betting on China’s socialist tendencies rather than its success in fostering free markets. Cash-rich China has simply built a better bubble. Rather than boding well for China’s long-term outlook, this rally serves as a reminder of risks facing the world’s third-biggest economy.

The strength of China’s fiscal position got a headline- grabbing endorsement this week from Nobel Prize-winning economist Joseph Stiglitz. At a May 13 forum in Beijing, Stiglitz said China “has taken very rapid action to address the crisis” and may emerge as “a winner.”

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Roubini vs. Zhou on the U.S. Dollar and the Chinese Yuan

By Andrew Batson

Originally posted on China Journal.

New York University economist Nouriel Roubini, in an op-ed piece Thursday, tackles one of the topics of the moment: the U.S. dollar’s status as the world’s undisputed reserve currency (the greenback is unique in that it is widely used outside U.S. borders as a currency for trade, and is the default currency for many of the world’s investors).

It’s interesting that Roubini – highly regarded these days because of his prescient warnings about the U.S. financial system– repeats many of the same arguments that China’s central bank governor, Zhou Xiaochuan, made in his proposal to end the dollar’s reserve status. But Roubini casts them in a somewhat different light.

“Having commodities priced in dollars has also meant that a fall in the dollar’s value doesn’t lead to a rise in the price of imports,” Roubini says. Yet the converse is also true, as Zhou pointed out in his essay: since the dollar is a reserve currency, it is harder for the U.S. to devalue its currency to support exports and help its economy recover.

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http://blogs.wsj.com/economics/2009/05/14/roubini-vs-zhou-on-the-us-dollar-and-the-chinese-yuan/

Global Agenda: More housing blues

By PINCHAS LANDAU

The original source of the global economic crisis was the housing bust in the US. It is now over three years since this began, since most of the key parameters of the residential housing sector peaked between late 2005 and the second quarter of 2006. The effects of that reversal began to be felt in the financial markets in early 2007 and with full force from July of that year. The rest, as they say, is history - although it is worth remembering that as late as early 2008, there were still many people who were convinced, and tried to convince others, that the "subprime crisis" was a problem limited to some borrowers, in some areas, and only in the US.

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Buffett cuts stake in Constellation Energy

by Ryan Sharrow Staff
Baltimore Business Journal

Billionaire investor Warren E. Buffett has trimmed his stake in Constellation Energy Group Inc., according to a filing with the Securities and Exchange Commission Thursday.

The filing shows that Buffett’s Iowa-based MidAmerican Energy Holdings Co. owns a 6.26 percent of the Baltimore energy giant. That’s down from a 7.25 percent stake listed in a February filing.

It’s not the first time in the past several months Buffett cut his stake.

MidAmerican, a subsidiary of Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B), acquired a 10 percent stake in Constellation in December following Constellation’s move to terminate MidAmerican’s $4.7 billion deal to buy the company.

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http://www.bizjournals.com/baltimore/stories/2009/05/11/daily41.html?ana=from_rss

Advice from the oracle

By MARSHA MERCER
Media General News Service

WASHINGTON, D.C. — Billionaire investor Warren Buffett had some sage advice for Washington the other day.

During a three-hour talk fest Monday on CNBC, the world’s second-richest man said he’d never seen the American public more fearful or confused about the economy. For that to change, he said, the government needs to do a much better job explaining what it’s doing to fix the problem.

“We’ve had muddled messages,“ Buffett said. The public does not know “what’s going on, and their reaction then is to absolutely pull back.“

Foes of the president rejoiced in an I-told-you-so moment. Muddled messages! Yes!

Republicans gleefully circulated the Buffett quote as confirmation from the second wealthiest man on the planet — a big Obama supporter — that the new president isn’t getting the job done.

They say Obama’s decision to push ahead with health care and education reforms indicates he isn’t paying enough attention to the economy. They blamed this scattershot approach for the muddled message.

Not so fast. Obama does not deserve all the blame, even if he did sign into law thousands of special spending “earmarks” after vowing to reform the way Washington works.

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http://www.staffordcountysun.com/scs/news/local/article/advice_from_the_oracle/35662/

Krugman: short-term economy looks good

One of the world's leading economists Paul Krugman says he is modestly optimistic about the short-term economic recovery. He was speaking Thursday at a symposium in Taipei.

Krugman also revised his earlier prediction of the chance of experiencing another Great Depression from 20% down to just 5%.

The 2008 Nobel Prize winner in economics said, though, that he is not so sure about the future.

"Just again to emphasize -- we are not out of the woods yet. In a way, the world heaved a sigh of relief as the economic numbers began coming in a little bit less bad. The extraordinary speed with which people were prepared to declare that emergency's over. Because various indices of rate of change are showing that …the rate of change in the negative direction is not as great as it was . It has been a bit alarming. We've passed the point where a wholesale collapse seemed like the most likely outcome. That's not going to happen. But now complacency is a great danger."

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U.S.A. faces turbulent financial future with dire political consequences

by: Michael Lynch

Implications

Nouriel Roubini, professor of economics at New York University, reported on May 14 in the New York Times that the Chinese renmimbi could replace the U.S. dollar as a reserve currency. In the 19th Century, the British Empire was dominant and the pound sterling was the world’s reserve currency. But the United Kingdom became a debtor nation during the second World War and the U.S.A. became dominant. The dollar took over as the reserve currency. Professor Roubini suggests that we are now entering the Asian Century with a dominant China and its currency. The dollar will not quickly vanish but it is challenged by the renmimbi. For America, financing budget and trade deficits cheaply would vanish. In the past, empires that held the reserve currency were creditors, not debtors. Today the U.S. has fallen into the category of a debtor nation, relying on foreign creditors who have become uneasy. The downfall of the dollar is a matter of time unless U.S. financial policy is changed.

Analysis

Sitting side by side in my office bookshelf are: The German Inflation of 1923 edited by Fritz K. Ringer and Fiat Money Inflation in France by Andrew Dickson White. Looking inside the covers, I see that I acquired both of them in 1975.

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http://www.glgroup.com/News/U.S.A.-faces-turbulent-financial-future-with-dire-political-consequences-39051.html

Shifts in the Wind Industry Uncover Opportunities

By Daniel Holland| 05-13-09| 06:00 AM

The emergence of wind as a potential fuel source has created an array of ways for investors to participate in the industry. While wind energy is still far from being economic, government intervention has helped it to compete against more-conventional sources of power.
The battle lines are beginning to form in the United States, with major turbine manufacturers turning their attention to the wide open space in the Midwest known as the wind corridor. As industry leader Vestas is shutting down European plants and laying off workers, it is building plants in the U.S. to compete directly with General Electric (GE), which holds a dominant position on its home turf.
Siemens (SI)has also announced plans to build a factory in Kansas in order to locate itself where growth appears to be the most promising. This repositioning of manufacturing of assets is heavily based on reducing the cost of getting the turbine parts to the wind farm location as transportation costs are a major component of the installed cost.

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http://news.morningstar.com/articlenet/article.aspx?id=291318

How Low Can Global Economies Go?

Dubai Holding has released the conclusions to a report about the global business outlook that it commissioned from the Economist Intelligence Unit based on a survey of 418 senior global executives.
It concludes ‘capitalism is entering a new era of lower risk tolerance, higher regulation and slower growth’. In other words, the debt-driven investment boom is over, government interference in business will grow and economies will not recover quickly from the recent slump in global trade.

Reaching a bottom

However, there is a tacit assumption here that the decline in economic activity has fallen to a market bottom. But do we really have any reason to make this assumption, apart from wishing it to happen? Just how low will economies go before the bounce back starts?

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http://seekingalpha.com/article/137401-how-low-can-global-economies-go

Stiglitz Says China May Emerge a Winner From Crisis

By Eugene Tang

(Bloomberg) -- China may emerge as “a winner” from the global financial crisis because of its high savings rate and strong policy response, Nobel Prize-winning economist Joseph Stiglitz said.
“China’s government has taken very rapid action to address the crisis,” Stiglitz said at a forum in Beijing today. High savings rates may help Asian economies “weather the financial crisis,” he said.
The Shanghai Composite Index has climbed 46 percent this year on optimism that surging lending and a 4 trillion yuan ($586 billion) stimulus package will drive a rebound in the world’s third-biggest economy. Weaker industrial-output growth in April, reported today, highlighted the central bank’s view that the recovery is not yet solid.

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http://www.bloomberg.com/apps/news?pid=20601080&sid=aSy6OpCm_ST4&refer=asia

Buyers beware: Should you be tempted by the share price rally?

By Rosanna Spero

Confidence seems to have returned to the stock market, with the FTSE 100 up almost 1,000 points from its March low of 3,512.
Two prominent investment gurus, Fidelity's Anthony Bolton and Odey Asset Management's Crispin Odey, claim we have moved into a bull market - where prices rise over a prolonged period of time.
But are they right and should private investors be committing money to the stock market? While some believe this is the start of a long bull run, others think it is a fool's rally in a bear market and prices could fall again sharply.

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http://www.dailymail.co.uk/money/article-1180921/Buyers-beware-Should-tempted-share-price-rally.html

Macro Hedge Funds Buy Commodities, Sell Treasurys

NEW YORK (Dow Jones)--Retail investors, worried about inflation, have turned to commodities as a hedge. For some hedge funds, the strategy comes with an extra layer.
A number of hedge funds pursuing a strategy known as "global macro" have taken to buying commodities and going short Treasury bonds at the same time.
Hedge fund advisory firm Hennessee Group LLC tracks 20 macro firms with assets totaling about $80 billion. About three quarters of them are making the commodity-Treasurys trade, said Charles Gradante, Hennessee's co-founder.
The idea is that with benchmark U.S. interest rates near zero and the Federal Reserve essentially...

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http://online.wsj.com/article/BT-CO-20090511-718057.html

Worst of the recession may be over for Britain, says OECD

by Gráinne Gilmore, Economics Correspondent

Hopes are mounting that the worst of the recession is over for Britain, after influential organisations and investors said that there were clear signs of economic recovery.
The Organisation for Economic Co-operation and Development said yesterday there were indications that the country was experiencing a “pause in the economic slowdown”.
The multibillionaire investor George Soros echoed the positive forecast, saying that a meltdown of the world’s financial system had been averted. Jean-Claude Trichet, the President of the European Central Bank, said that some countries had already moved beyond the worst of their recessions.

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http://www.timesonline.co.uk/tol/news/uk/article6269927.ece

Stock-Market Fears Are Subsiding

By STEVEN M. SEARS

Stress-test results lead to trading opportunities amid a growing comfort for owning stocks.

ON MONDAY, OPTIONS traders seem to be mulling the investment implications of the Federal Reserve's much-ballyhooed stress test of banks and other financial institutions.
Many traders are debating if last week's strength in the financial-stock sector following the release of the Federal Reserve's stress test is the start of a meaningful advance or a one-time pop caused by swirling market forces, including the collision of short-sellers, preferred stock strategies, and retail investors attracted by inexpensive stock prices.

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http://online.barrons.com/article/SB124205444178106975.html

Trust In Jim Rogers (RJA, RJZ, RJN, RJI, GSG,)

By Aaron Levitt

Just as Bill Gross is seen as the "Bond King," Jim Rogers is looked upon by the commodity community as the hard asset guru. As one half of the famous Quantum Fund, along with George Soros, Rogers made a name and a fortune for himself. Helping to popularize physical goods investing for the average Joe, his words, like Warren Buffett's, are usually taken to heart. So when he speaks, people listen.

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http://community.investopedia.com/news/IA/2009/I-like-Jim-Rogers-But-Im-Just-Not-Buying-His-Funds-RJA-RJZ-RJN-RJI-GSG-DBC0511.aspx

How to Value Stocks? Ignore Economic News

By BRETT ARENDS

Investors trade on the belief that share values are closely related to the economy. They shouldn't.

The stock market jumped 6% last week on growing hopes of an imminent economic recovery. It has risen 39% from the March lows on similar hopes. Of course, it had previously fallen nearly 60% on fears of a slump.
All these moves have one thing in common: Millions of investors have acted on the belief that share values are closely related to what will happen in the economy in the next few months and years. But are they right?
Not according to Ben Inker, director of asset allocation at contrarian fund company Grantham Mayo Van Otterloo & Co. In a recent and fascinating note ("Valuing Equities in an Economic Crisis, or How I Learned to Stop Worrying about the Economy and Love the Stock Market"), Mr. Inker persuasively argues that the next moves in the economy shouldn't actually matter too much to investors at all.

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http://online.wsj.com/article/SB124204099547806403.html

4 Reasons Why Commodity ETFs Are Gaining Assets

While a global economic crisis diverted interest away from the commodity markets and related ETFs, new signs are emerging that investors are on the hunt for more adventurous trading strategies when it comes to the sector.
The upswing that was expected within the commodity sector has been tempered in recent months; however, the interest is still ripe for investment, and strategy has simply shifted. According to Sue Thomas for Reuters on The Guardian, the proof of investor interest is in the flows of new money into commodities in the first quarter, which had been estimated at record levels. What’s going on?

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http://seekingalpha.com/article/136794-4-reasons-why-commodity-etfs-are-gaining-assets

Commentary: Is stock rally for real?

By Simon Johnson and Peter Boone
Special to CNN

(CNN) -- Euphoria returns! Who could have guessed that Bank of America stock would rally 70 percent the week it learns the Feds are demanding new capital equal to nearly half the bank's market capitalization?

The ongoing grim news -- on rising unemployment, continued (albeit slower) economic decline, and ordinary working Americans being hammered on all sides -- is being ignored by stock and commodity markets. Is America now back on track for growth?

The answer to that is almost surely no. Rising stock markets don't necessarily mean a sharp recovery is under way. Consider the case of Japan in its first lost decade of the 1990s.

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http://www.cnn.com/2009/POLITICS/05/08/johnson.economy/

Top fund manager sees shift from recession to recovery

By Mark Shepherd

Fidelity’s Bolton sees first signs of possible turnaround at Ross Goobey memorial lecture
One of Europe’s top fund managers this week hailed the first signs of a recovery in the UK economy.
Anthony Bolton, president for investments at Fidelity International, one of the world’s largest fund managers, said: ‘We are seeing the first signs that things are becoming less bad with the Green shoots, I believe, coming through.’

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http://www.propertyweek.com/story.asp?sectioncode=36&storycode=3140044&c=1

Cynthia McKinney’s conspiracy theories strike again

It appears Cynthia McKinney will take her anti-Semitic conspiracy theories wherever she can find them. Blogger Adam Holland notes that the one-time Democratic member of Congress from Georgia and 2008 Green Party nominee for president -- whose father blamed her congressional defeat in 2002 on the "J-E-W-S" is now promoting the far-right theories of Matthias Chang that a group of "Shadow Money-Lenders" is trying to destabilize the world economy and install a "one-world government":

McKinney's column (read here) which accuses George Soros and Alan Greenspan of participating in a plot to deliberately destabilize the world economy in order to install a "one-world government", uses Chang's term for this purported conspiracy: "the Shadow Money-Lenders" (not coincidentally, the title of Chang's most recent book). Typical of such conspiracy theories, Chang and McKinney connect this to an ancient plot which took shape under the hidden hand of the Rothschilds. McKinney puts a somewhat confused post-colonial third-world spin on this by citing Haiti as an example of what she says is planned for the rest of the world, the apparent link being that she happens to be in Haiti at the moment. Her leftist, "shock doctrine" approach also serves to make the essentially fascist contents of her column more palatable.

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http://blogs.jta.org/politics/article/2009/05/08/1005033/cynthia-mckinneys-conspiracy-theories-strike-again

This Week's 5 Dumbest Stock Moves

By Rick Aristotle Munarriz

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. This car is going to get totaled
General Motors (NYSE: GM) announced plans for a 1-for-100 reverse split, as it embarks on its recapitalization plan. The automaker has 610 million shares outstanding, but expects to have a whopping 62 billion shares after it prints new shares to pay off creditors, the government, and the auto workers union.

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http://www.fool.com/investing/high-growth/2009/05/08/this-weeks-5-dumbest-stock-moves.aspx

"¿Sabes por qué la bolsa sube?" Glup

La pregunta me la hicieron ayer tres personas distintas. Curiosamente, la misma pregunta he estado realizando yo a los que de verdad saben de bolsa. Mi respuesta inicial es siempre la misma: "ni idea." Y cuando pregunto a los supuestos entendederos, de buenas a primeras no responden. Sonríen y se callan unos segundos antes de empezar a racionalizar y predecir el futuro. Como últimamente -y no hay que dar las razones- hemos salido todos muy escamados de predicciones, mejor que nos tomemos esta racionalización con muchas pizcas de escepticismo.

Esta es una tesis, que puede tener variantes diversas.

Los mercados han tenido una corrección al alza dentro de una tendencia bajista a largo plazo. Un veranillo trimestral producido por las decisiones tomadas por el gobierno americano para arreglar la gran chapuza financiera. Algunas cifras económicas auguran la recuperación de cierta confianza del consumidor y que el mercado inmobiliario ha podido tocar suelo en algunos mercados. Como la Bolsa vive de las expectativas, espera que Estados Unidos salga de la recesión antes de lo esperado (¿comienzos año próximo?), los inversores necesitados de alegría y de recuperar pérdidas pasadas, se han apuntado a una racha optimista. ¿Hasta cuándo? Hasta que hayan recuperado parte de las pérdidas del último año y medio. Después, a esperar. Entramos en un periodo de montaña rusa de entradas y salidas continuadas de dinero, apto para los que no sufren del corazón.

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http://blogs.expansion.com/blogs/web/saballs.html?opcion=1&codPost=52653

Investors bet that worst of recession is over and predict new bull market

From The Times
Gary Duncan, Helen Power, Christine Buckley and Peter Jones

A wave of euphoria swept world stock markets yesterday as investors piled back into shares, betting that the worst of the global recession had passed.
Rising spirits among investors sparked a powerful rally in shares on both sides of the Atlantic. Leading experts predicted that it marked the beginning of a bull market, with share values back on course for sustained gains over coming months, and perhaps several years.
The burst of optimism came as a more bullish mood took firm hold. It was encouraged by a series of upbeat indications that the world recession may have bottomed out.
In London, and in stock markets across the developed world, shares have erased all of the losses inflicted by the economic slump since the start of the year.

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http://business.timesonline.co.uk/tol/business/markets/article6251885.ece

Charlie Munger's Thoughts on Just About Everything

By Morgan Housel

Those who have attended the Berkshire Hathaway (NYSE: BRK-A) shareholder meeting know Charlie Munger as a man who chimes in with "I have nothing to add" to at least three-quarters of questions asked to his longtime business partner, Warren Buffett.
The Wesco Financial -- where Munger is chairman -- shareholder meeting is a completely different story. Free from the overwhelming spotlight cast on Buffett, Munger spends a few hours every year sharing his thoughts and opinions on, well, just about everything.
Below is a summary of my notes from Munger's three-hour meeting in Pasadena, lightly edited for clarity.

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http://www.fool.com/investing/value/2009/05/08/charlie-mungers-thoughts-on-just-about-everything.aspx

Warren Buffett's Three Lessons in a Down Economy

By Adam Pash

Multi-billionaire and finance guru Warren Buffett knows a thing or two about making good investments, and weblog Get Rich Slowly offers three lessons from Berkshire Hathaway's annual meeting.

The lessons aren't mind-blowing advice for doubling your portfolio in a down economy, but that's never really been Buffett's style. Instead, they're a nice reminder that we're all in the same boat and that anyone can successfully invest if they stick to what they know (something we've heard before). The bullet-point version:

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http://lifehacker.com/5245913/warren-buffetts-three-lessons-in-a-down-economy

What Will the Recovery Look Like?

Time magazine takes a look at what we might expect in the coming economic recovery, with insight from top strategists such as Peter Lynch and Jean-Marie Eveillard. A sampling of the advice:

* Lynch says that waiting for a major economic recovery to occur before jumping back into the market can cost you a lot. “People think that things need to go from terrible to terrific before they can invest,” the former Fidelity star says. “But things only have to get to somewhat crummy for stocks to go up.”

* Eveillard, of First Eagle Funds, says not to expect this recovery to be like those we’ve usually seen in the past 60 or so years. “It’s a very different story today,” he says. “The landscape is different, and the recovery, when it comes, probably won’t be along the lines of what we have seen in the post-World War II period.”

* Robert Arnott of Research Affiliates thinks corporate bonds — not stocks — are the place to be in this recovery. They’re yielding about 6% compared to the S&P 500 yield of about 3.1%, Time notes.

in:
http://theguruinvestor.com/2009/05/08/what-will-the-recovery-look-like/

Understanding Warren Buffett's bear market maneuvers

By Dan Barufaldi

In times of economic decline, many investors ask themselves, "What strategies does the Oracle of Omaha employ to keep Berkshire Hathaway on target?" The answer is that the esteemed Warren Buffett, the most successful known investor of all time, rarely changes his long-term value investment strategy and regards down markets as an opportunity to buy good companies at reasonable prices. In this article, we will cover the Buffett investment philosophy and stock-selection criteria with specific emphasis on their application in a down market and a slowing economy. (For more on Warren Buffett and his current holdings, sign up for our Coattail Investor newsletter.)

in:
http://www.kivitv.com/Global/story.asp?S=10323677

10 reasons to be cheerful about the economy

Times remain tough but light is starting to pierce the gloom, write Angela Monaghan and Edmund Conway.

The weaker pound

The devaluation of the pound could help to drag Britain out of recession by increasing the country's competitiveness. It makes UK exports more attractive to foreign buyers because they are cheaper, and therefore helps to drive increased production in Britain's factories, which in turn requires more work and higher employment levels. To have any meaningful impact on UK gross domestic product, demand from its key export markets will have to rise significantly from current levels. The US is among them, so evidence that the recession there is bottoming out is good news for the UK.

in:
http://www.telegraph.co.uk/finance/financetopics/finance-predictions-2009/5297492/10-reasons-to-be-cheerful-about-the-economy.html

Can we make money in recession?

Now it is official that this recession will be long and painful. The stress tests are out and Obama Administration does not show the nerve to make bold moves like taking over most troubled banks. (read Paul Krugman’s article here: http://www.nytimes.com/2009/05/08/opinion/08krugman.html?_r=1) That means our pain will be very long. We have to live with the recession or very long jobless recovery will be there for many years.
The basic question we individuals will still need to answer is can we still make money in recession? Because ultimately we really not care much about the overall economy. What we really care about is are we able to make enough money for our stomach and for the rest of the family. First we need to take care of us and then the rest of the society.
The good news is yes we can make money in recession and we can do it in stock markets.

in:
http://caps.fool.com/blogs/viewpost.aspx?bpid=191958&t=01000382431830678788

Berkshire reports quarterly net loss of $1.53 billion

by Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) -- Berkshire Hathaway reported a quarterly net loss late Friday as the insurance-focused conglomerate run by Warren Buffett recorded losses on some of its investments and derivatives positions.
The company reported a first-quarter net loss of $1.534 billion, or $990 per class A equivalent share. That compares to net income of $940 million, or $607 per class A equivalent share, in the same period a year earlier. The net results are attributable to Berkshire shareholders.
The latest result includes investment and derivatives losses of $2,090 per class A equivalent share.

in:
http://www.marketwatch.com/news/story/berkshire-reports-quarterly-net-loss/story.aspx?guid={2EB89FCA-82CB-4DF2-8AAF-D3102CD649A5}&dist=msr_2

Unchecked deflation could thwart recovery

By Dean Calbreath Union-Tribune Staff Writer

Over the past couple of weeks, there have been growing signs that the economy may be turning the corner. Although things aren't necessarily getting better, they at least appear to be slowing their descent.
The latest piece of good news came yesterday, when for the first time in five months, new filings for unemployment dropped below the 600,000 mark. Recent data have also shown that the decline in home prices has slowed locally and nationally, businesses are selling off their inventories, and shoppers are returning to stores.
“The light at the end of the tunnel is no longer a faint speck of light, but a glowing orb of sunshine,” said Wells Fargo economist Scott Anderson.
However, economists say two major threats still loom: deflation while the recession lingers and inflation once the recovery begins. Even if the economy manages to rise from its current morass, it could be brought down again if prices continue to fall – or if they bounce back too sharply.
To some economists, the chief threat is deflation, a decline in prices and incomes that could pull the rest of the economy into a downward spiral.

in:
http://www3.signonsandiego.com/stories/2009/may/09/1n9deflate015649-unchecked-deflation-could-thwart-/

Obamanomics and the End of “Too Big To Fail”

by Ross Raffin

Before Obamanomics, there was the Glass-Steagall Act. In the wake of the Great Depression, Congressional and Executive attempts at stemming financial crisis culminated in the Glass-Steagall Act of 1930s and creation of the Federal Deposit Insurance Corporation (FDIC). One of the FDIC's main tools to fight bank failures is Resolution Authority, the ability to temporarily take over failing banks and minimize harmful effects on the financial system. The FDIC assumes deposits and liabilities of the closed bank and makes sure that a bank free-fall doesn't bring the entire economy crashing down with it. However, the FDIC was created to operate in a financial world that is vastly different from the current one. The new regulatory framework of the Obama administration updates Resolution Authority so that it can handle modern market failures. This new form of Resolution Authority is accompanied by a systemic risk regulator which can enforce higher capital requirements and create oversight for the previously underground derivative markets. As FDIC Chairman Sheila Blair told Congress in March 2009 when describing the regulatory side of Obamanomics, “we need an end to too big to fail.”

in:
http://progressive.stanford.edu/cgi-bin/article.php?article_id=341

The spring of the zombies is here

By Joseph E Stiglitz/New York

As spring comes to America, optimists are seeing “green sprouts” of recovery from the financial crisis and recession. The world is far different from what it was last spring, when the Bush administration was once again claiming to see “light at the end of the tunnel”. The metaphors and the administrations have changed, but not, it seems, the optimism.

** Joseph E Stiglitz, Professor of Economics at Columbia University, chairs a Commission of Experts, appointed by the President of the UN General Assembly, on reforms of the international monetary and financial system. A new global reserve currency system is discussed in his 2006 book, Making Globalization Work.

in:
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=289621&version=1&template_id=46&parent_id=26

Para el economista que predijo la crisis, Argentina caerá

El economista que anticipó la crisis de Estados Unidos pronosticó que la economía argentina caerá 1,9 por ciento este año por la debacle mundial. Además alertó que el Gobierno Nacional no podrá frenar la fuga de capitales ni cumplir con su ambicioso plan de obras públicas por más de 100.000 millones de pesos.

por NA

El economista que anticipó la crisis de Estados Unidos, Nouriel Roubini, pronosticó que la economía argentina caerá 1,9 por ciento este año por la debacle mundial y alertó que el Gobierno no podrá frenar la fuga de capitales ni cumplir con su ambicioso plan de obras públicas por más de 100.000 millones de pesos.

De hecho, entre octubre de 2007 y marzo de este año se fueron de la Argentina 37.000 millones de dólares, según datos oficiales.

Además, Roubini dijo que el dólar llegará a 4 pesos y que no se prevén cambios para después del 28 de junio, cuando los argentinos elijan diputados y senadores nacionales.

in:
http://www.mdzol.com/mdz/nota/126456-Para-el-economista-que-predijo-la-crisis,-Argentina-caer%C3%A1/

Weekly Guru Bargains Highlights: Apollo Group, SLM, Time Warner Cable, Amgen and Pepco Holdings

Last week's top guru bargain highlights were Apollo Group Inc (APOL), SLM Corp (SLM), Time Warner Cable Inc (TWC), Amgen Inc (AMGN) and Pepco Holdings Inc. (POM). According to GuruFocus updates, these stocks have declined the most since Gurus have bought.

Apollo Group Inc. (APOL): Down 27% Since Kenneth Fisher Bought In the Quarter Ended on 2009-03-31

Kenneth Fisher initiated holdings in Specialized Consumer Services company Apollo Group Inc. during the quarter ended 03/31/2009. He owned 2,650 shares of as of 03/31/2009. Apollo Group Inc. has been providing higher education to working adults for over 25 years. The company has a market cap of $9.08 billion; its shares were traded at around $57.07 with a P/E ratio of 16.4 and P/S ratio of 2.9. Apollo Group Inc. had an annual average earning growth of 29.1% over the past 10 years. GuruFocus rated Apollo Group Inc. the business predictability rank of 4-star.

in:
http://www.gurufocus.com/news.php?id=55585