As we know, last week was an historical one for the stock market. We saw a freefall, even as the Federal Reserve and other central banks made unprecedented, coordinated interest rate cuts. The December S&P 500 index was lower last week by over 18 percent as it extends this month’s plunge. Year-to-date, the S&P is down about 38 percent. The focal point is on the global credit clog, but fear and panic are driving the markets. As fears of a big global recession spread, crude oil fell $16 last week, under $80 a barrel. Just a few months ago, it was at $147. How quickly things change.
As far as the S&P 500 futures, this morning, stocks are embracing the result of a weekend meetings among a consortium of global leaders to shore up the financial system. Plans included the guarantee loans between banks through 2009 and allow governments to buy stock in distressed financial companies. The European Central Bank, the Bank of England and the Swiss National Bank announced they would lend unlimited amounts of dollars to banks. The Federal Reserve announced that in order to provide broad access to liquidity and funding to financial institutions, it and the Bank of England, the ECB, the Bank of Japan, and the Swiss National Bank are taking further measures to improve liquidity in short-term U.S. dollar funding market.(more…)
The U.S. dollar’s rally, which started in mid-July and has continued through August, has led many commodities lower in the past few weeks. However, there is one unique commodity that hasn’t fallen with the rest, and that commodity is sugar. Read mor or watch the video below.
Released in December 2007—three years after Rogers’ book, “Hot Commodities,”—this book perhaps is the result of homework that Rogers did before he moved his family to Asia that same year in order to be in position to take advantage of what he sees as the world’s next great economy. “…just as the nineteenth century belonged to England the twentieth century to America, so the twenty-first century will be China’s turn to set the agenda and rule the roost,” he writes.
Although largely focused on Chinese companies whose stock is listed in China, Hong Kong, Singapore, Tokyo, New York and London, the book doesn’t forget commodity traders. Indeed, Rogers still believes that “Commodities also happen to be a great way to profit from China’s expansion.” This book will give commodity traders an overview of the Chinese companies that are tied to raw materials, as well as some American companies already operating in China in critical commodity-oriented businesses.
As an example of its growth, Rogers reports that the Dalian Commodity Exchange trades more soybean futures contracts than at the Chicago Board of Trade. Although true (DCE traded 47.4 million soybean contracts in 2007 vs. 31.7 million at CBOT), he fails to point out that the CBOT contract, at 5,000 bu., is 13 times larger than its Chinese counterpart, at 10 metric tons (367 bu.).
Rogers first set foot in China in the mid-1980s on the first of his two round-the-world trips by motorcycle and car, chronicled in two other books, “Investment Biker,” and “Adventure Capitalist.” As many statistics about China’s growth since then indicate, it’s no wonder Rogers compares the stage of China’s economic development in 2008 to that of the United States in 1908, when the Dow Jones Industrial Average was just 12 years old. Now, that’s a picture to keep in mind when considering the investment opportunities that may await, from “red chip” stocks to ADRs and penny stocks.
Still, investing in such an economy doesn’t come without risks, Rogers warns. The Chinese yuan, or renminbi, is not yet fully convertible, but Rogers expects pressure to float the currency eventually will lead it there. Indeed, he forecasts the yuan could rise 300%-500% against the U.S. dollar over the next 20 years. As for precipitating conflict, Rogers says: “China needs war like a hole in the head.” He believes China has enough internal strife that it does not seek to look outside its borders for trouble.
For a primer on China’s investment opportunities and climate, “A Bull in China,” is a great resource, written by someone who has seen its economic developments first-hand over the last two decades. It provides a broad overview along with brief insights into dozens of listed stocks that already are big names in the Chinese stock market—and often can be traded in New York or London.
As Rogers writes: “Whatever the risks, this much is clear: it’s more scary to have all your savings in the U.S. stock market than it is to put a portion in China…”
Blake Robben, Senior Market Strategist with Lind Plus, believes that price declines in several commodity markets have provided buying opportunities for those that have been waiting to go long. Blake recently presented a webinar analyzing the stock market and commodity markets. You can read his commentary here: Stocks Still Bearish; Commodities Bullish.
Stay on top of the markets by registering for our weekly Markets on the Move webinars, every Monday at 3:30 p.m. CT.
The Australian dollar has come off its 25-year high against the U.S. dollar following four straight gaining sessions, after its Central Bank Governor said the chances of “keeping inflation low over the medium term are good.” Market participants took that as a hint rates may not increase further from the current level of 7.25 percent. Lind Plus Senior Market Strategist Phil Streible sees the pullback as a good opportunity to establish a bullish position in the Aussie dollar, as the currency’s prospects remain strong. Read Phil’s outlook and trading strategy.
Category: Book Reviews – Susan Abbott Gidel – 11:26 am
Commodity markets are in the news every day now, from record-high gasoline prices in the United States to food riots around the world. If you want to understand how it all got started and where it all might end up, read “Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market,” by Jim Rogers.
Yes, that Jim Rogers. The one that rode a motorcyle around the world. The one that co-founded the Quantum Fund with George Soros. The one that was so bullish on commodities in 1998 (yes, 10 years ago, in the middle of the dot.com mania), that he developed his own commodities index fund.
Loading ...
Released in December 2007—three years after Rogers’ book, “
food riots around the world. If you want to understand how it all got started and where it all might end up, read “