Not A Lot Of Food In The Cupboard

The USDA says that by the end of this year’s harvest, global inventories for corn, wheat and other grains will cover only 45 days of consumption. That’s the lowest level since the government began keeping records in 1960 -- almost half a century ago.
As with any commodity, inventories of grains fluctuate. But the average since 1960 has been about 79 days’ supply. Today, it’s about 49 days. Yet the “big money” still isn’t listening. "I had 70 meetings with institutional investors and not one had seen the USDA data," says Don Coxe, portfolio strategist at BMO Financial Group in Chicago.
“The fact that Wall Street still isn’t clued in to what’s happening,” says Mayer, “shows that you can still get ahead of the game by investing in companies that should do well in this period of agflation.”
Which businesses will do well? “Fertilizer, crop protection and farm equipment. Also, the value of farmland should continue to rise. More farming also means more water and energy use -- good news for owners of the relevant commodities.”

Nicely Said..................

"There is nothing compassionate about taxes. They are the price we pay for permitting the government to dismantle the civilization created by the market economy." -Llewellyn H. Rockwell, Jr.

No Swedish Markets For You!

Too American? What the hell does that mean? Too many hot dogs?
Blow to Nasdaq-OMX merger
Financial Times, 27.06.2007
The Swedish government has emerged as a possible opponent to the proposed merger of OMX and Nasdaq with concerns that a deal could undermine the Nordic market operator’s competitiveness by making it too American and less European.

Mats Odell, minister for financial markets, is to set up a panel of experts to review the proposed deal before the government – which owns 6.6 per cent of OMX – will officially grant its approval.Nasdaq, the US market operator, has agreed to acquire OMX, which operates markets around the Nordic and Baltic regions and sells trading technology to other exchanges, for $3.7bn (€2.7bn) in cash and shares.The Swedish government’s concern highlights worries over US stock market rules that have prompted many American firms to list elsewhere, avoiding its onerous corporate governance, disclosure and supervisory regime.Sweden’s ministry for financial markets said on Tuesday it wanted to be sure US ownership of OMX would not alter “the Swedish model” and replace it with something that might undermine the Nordic market’s competitiveness.“The rules we have are more European, based on European directives. We are planing to implement more European directives. We don’t want this deal to mean that it will harder to raise risk capital,” the ministry said.It added the planned probe into the proposed Nasdaq deal would address issues such as supervision, regulation, costs, disclosure, and the possible impact on turnover and liquidity. No deadline for completion of the probe has been decided.Although the Swedish government only has 6.6 per cent of OMX, any public statement from the government that it does not approve of the deal could deal a serious blow to the proposed transaction.The government is committed to selling its stakes in a range of companies as part of its privatisation drive and must, as part of this process, ensure any deal meets with its social as well as its financial responsibilities.The government has a longstanding desire to transform Stockholm into a leading northern European financial centre to rival Frankfurt, partly by making it easy for companies to raise capital in the Swedish capital.If it concludes that the Nasdaq deal undermines Stockholm’s potential to become a financial centre, it might vote against the Nasdaq deal – impairing part of the rationale behind the transaction cited by OMX and Nasdaq.The largest single shareholder in OMX is Investor, the holding company of the Wallenberg family, with a 10.7 per cent stake, which has backed the Nasdaq deal.OMX declined to comment.

Gaddaffi? Really?

Gaddaffi Pushes African Unity in Freetown

In a fiery speech before a small, but boisterous crowd of supporters at the National Stadium, the colourful African leader said the continent is currently at a crossroads.
"The African people need unity for the African continent," he said. "It is to be or not to be." Qhadafi, currently on a road trip through West Africa, was dressed in a white suit with flowing scarves, rainbow-tinted sunglasses and a bright green decal in the shape of Africa.
He sat beside President Ahmad Tejan Kabbah and was greeted by cheers from the crowd, which had waited several hours for his arrival.
Qhadafi was introduced by the Minister of Foreign Affairs and International Cooperation, Alhaji Momodu Koroma, who called the visit "a great day for Sierra Leone." Koroma said "This is evident by the people of Sierra Leone, who appreciate Qhadafi for three reasons, one for his friendship, his leadership in Africa and his fight for the liberation of others in the world and also not only for Islam, but his effort to unite the African continent."
Qhadafi was addressed by President Kabbah, who lauded the controversial leader for his many contributions to Africa and Sierra Leone and referred to their past as a 'brotherly relationship.' "You are well known for trying to solve the problems of Africa," he said, before reciting a string of donations he said Qhadafi had made to Sierra Leone over the years.
Kabbah said Qhadafi had donated US$1 million when the country was bankrupt, as well as two shiploads of rice, tractors, trucks and other important supplies.
In 2004, the Sierra Leone Truth and Reconciliation Commission found that the Libyan leader played a large role in destabilizing the country during the 11-year civil war. Former Revolutionary United Front leaders received both funding and logistical support from Libya and many were trained in the country.
Yesterday, Qhadafi said it is time for Africans to move together to catch up to other parts of the world and work to achieve a continental union. He said Muslims and Christians should unite and urged African leaders to listen to the voices of women and youths.
"From now on, African destiny will not be decided by a small number of African rulers," he said, noting that the African people are becoming aware and enlightened.
"We don't want to beg again at the doors of Europe, we don't want to be slaves again, we want to be free.
"How come you leave Africa?" he shouted, admonishing Africans who immigrated to other parts of the world.
"Who is your mother, Africa or Europe? You stay with your mother who gives you milk. Either you live or die in Africa." Qhadafi is spending three days in Sierra Leone on his way to the African Union Summit next month in Accra, Ghana.

Soylent Green Anyone?

Half the World's Population Now in Cities

2007-06-27 - Sam Hopkins
It is perhaps the single greatest indicator of civilization's rise...and its potential downfall. The United Nations Population Fund says the magnetism of cities is drawing a million people every week into the urban centers of Africa and Asia, where populations will double over the next three decades as rural communities dwindle.
From fuel to food to sewage, the problems created by this monumental shift will force major shifts in the way both rich and poor countries are run. The knock-on effect of overcrowded slums will be emigration, not back to farming communities but to cities in other countries, where opportunities are thought to be better.
As the needs of newly urbanized citizens are met, new markets will develop. Clean, green technology will be a must, as will large-scale delivery of generic medicines and major infrastructural development like roads and pipelines.

Hedge Fund Hari-Kari

We have warned you about the debt and derivatives-driven frenzy in hedge funds and private equity firms for quite awhile. Using dirt-cheap financing, and astronomical leverage, these secretive funds have lit the fuse on a ticking time-bomb in global financial markets.
So long as global rates stay low, and liquidity remains abundant, there's no reason to worry -- or so the story goes. But lately we've seen some fraying at the edges of the global liquidity glut, as this story points out, and it may be only the tip of the iceberg.
These two hedge funds got into a jam when the ongoing housing-sector bear market clipped the value of "complex securities backed by subprime mortgages". These are essentially highly leveraged derivatives tied to shaky home loans, which are rapidly going bad.
These exotic investments like most derivatives probably looked great on paper, but the trouble is, they sometimes trade infrequently if at all. And that means it's hard to unload or "unwind" these leveraged derivatives bets in a hurry -- much less obtain an accurate market value for your positions.
But still the hedge fund and private equity crowd continues to play the game with reckless abandon. According to the article, funds borrowed on margin hit a record $318 billion in May on the New York Stock Exchange. However, "the risk is that recently placid markets start to crack, turning these profitable leveraged bets into deepening losses."
Attentive investors should keep a close eye on these leveraged financial shenanigans this summer.

Look East Young Man

The Pacific - the world's primary economic growth engine this decade.
Asia offers the best stock-market values today, bar-none! Asia has some of the most undervalued currencies, bulging trade surpluses and $1.6 trillion dollars' worth of combined foreign exchange reserves. In short, it's truly an economic Titan.
What's compelling about most of Asia in mid-2007 is that unlike the rest of the world, the region has already suffered an economic depression in the late 1990s.
Compared to Europe or North America, for example, countries across the Pacific have already been forced to fix their fiscal imbalances through painful economic adjustments since 1997 when Thailand's currency devaluation unleashed a crisis in the region.
Today, Asia harbors bulging trade and budget surpluses for the most part, booming foreign exchange reserves, a rapidly rising savings rate and labor pension reform promising to boost local stock market investments.
For Real Asian Bargains, Look to the Land of the Rising Sun
Even Japan, a basket-case economy in the grips of deflation (falling prices) for many years, has emerged since 2003 as a strong economy having resurrected its economic model through regional (mostly Chinese) outsourcing.
Japanese companies have initiated a series of unprecedented stock buybacks, rising dividend payments and have even begun to appease foreign shareholders by approving the ouster of management at companies deemed capital inefficient.
The best values in Asia over the next 12-36 months reside in distressed REITs (real estate investment trusts) in Hong Kong, Japanese smaller companies, Taiwanese shares, and Thai blue-chip stocks.
All four sectors and countries provide the best absolute and relative values in the world today while the majority of financial assets sit at, or near, all-time highs. This means that you enjoy a big margin of safety when investing in these undervalued markets, which should be highly rewarded over the next few years.
Many of these markets have either declined or stagnated in recent years, creating outstanding values. Plus, these markets are also home to some of the most undervalued currencies against the U.S. dollar and especially, the euro. I'd also add Singapore to this bullish list of high-value markets.
Though REITs in Singapore have already soared over the last three years, this city-state's net supply of available commercial property is declining. I'd use any short-term correction as a long-term buying opportunity.
Singapore extols a surging trade surplus, strong economic growth, looming tax cuts and a steadily rising currency. Singapore is also one of Asia's fastest growing banking and investment hubs - in effect it's helping finance the economic boom going on in right now throughout Asia.
The main threat to Asia's strong growth prospects are rising U.S. interest rates, but I'm not too concerned at this point.
Rising Global Interest Rates a Worry,But Shouldn't Hurt Undervalued Asia
Despite all the noise about rising long-term bond yields across the globe since early June, U.S. Treasuries continue to trade in a five-year range. Interest rates are rising faster in other countries - mostly in non-dollar-based economies. And most of Asia's markets are still dollar-pegged and therefore follow the trail of U.S. monetary policy, not the European Central Bank or the Bank of England, which continue to tighten.
The threat of rapidly rising global long-term interest rates is unlikely to occur at this stage of the economic cycle because the United States is still struggling to find a bottom in its real estate bear market.
Housing woes will continue to put pressure on the Federal Reserve to either cut short-term rates or at the very least, leave them unchanged. Also, in a presidential election year in the United States in 2008, the Fed won't be in a rush to bury the economy through rate hikes. And China, despite its occasional rhetoric, won't derail its economic miracle ahead of the Beijing Olympic Games in July of next year.
Bottom line: Buy Asia. The region continues to offer the best risk-adjusted returns over the next 12 months and beyond. My favorite markets and sectors should also significantly outperform regional benchmarks since they remain well below their highs and harbor cheap currencies and strong macroeconomic fundamentals.