The Economy Guy » Food

Rice Cartel

admin — Sun, 04 May 2008 13:19:30 +0000

Stocks were up and down, and ended up 48 points. Not much new there.

10 Year Treasury Bonds on the other hand bolted upward in interest rates to 3.85%. This has fought back to levels where inflation is the order of the day, and interest rates reflect that fear. You should too.

The Dollar continued its strengthening.

Oil, gasoline and gold came back strong today. Oil jumped back to over $116 a barrel, and gasoline jumped too. Gold came back into fashion too coming back up $7/ounce.

In the news today……

The FED in conjunction with the European Central Bank and Swiss National Bank are boosting the supply of money to the banks. The FED has stated they will be making $150B available in May, compared to the $100B it made available in April. Why did they jump up???? They said they needed to boost bank reserves to encourage lending, and they have increased the term of those loans to 28 days. They are taking worse junk in the TSLF auctions too.

What does all this mean?? The FED is still scared about the lack of liquidity in the world’s banks. The problem hasn’t gone away yet.

The FED is cracking down on the deceptive credit card practiced by the credit card issuers. The CC companies are playing lots of tricks, like raising interest rates, and creating more debt. In other words, the CC companies are shifting the problem from the mortgage arena to the CC arena.

Dinner Conversation for Tonight….

Thailand wants to create a Rice Cartel with Laos, Myanmar, Cambodia and Vietnam. This cartel would operate like OPEC. Thailand wants to start controlling the world price of Rice. This probably won’t work unless India and Pakistan join in, as they are major exporters of Rice.

What other countries are important in this thought process? Is it in the USA’s best interest to have this cartel formed??

A Rice Cartel is no different than having import or export tariffs raised by another government. What impact could this have on world trade?

Here are today’s numbers:
Dow Jones 30 Industrial – 13,058 (Up 48 points)
10 Year Treasury Bond – 3.85% (Up 0.10%)
Euro – 1.5424
Gold – $858 (Up $7)
Oil – $116.32 (Up $3.80)
Gasoline – $2.97 (Up $0.09)

No Rice For You

admin — Thu, 24 Apr 2008 04:10:20 +0000

Stocks moved sideways as did bonds today. All the headline news for stocks was “good” as major companies reported increased earnings. Profits are going down, and you had better know it now. Only companies with good overseas situations (like McDonalds) will show improved profits. Oil supplies increased pushing oil prices lower, and that was viewed (illogically) as a good sign for stocks…. Oil prices are so high that they will hit profits hard as the pressure of increased costs hit the bottom line of companies.

The dollar gained strength, but is well within a trading range that clearly shows that new Euro highs will be attempted in the future. The real future of the dollar is in the hands of the Yen. That’s the currency to watch.

Oil and gasoline were powerful today. Have you noticed your local gasoline station price increases?? Gas is $3.60 here in Hawaii.

Gold was the “odd man out” today. It fell $16 to $909 which makes it a good buy. It if falls below $900 tomorrow, it will be a “buy with both hands sign.”

I’m predicting that stocks go down tomorrow as well as the dollar. Now let’s see if I can really read those tea leaves.

In the news today…..

Sam’s Club has limited the sale of RICE to its customers. You can only purchase 4 bags of white basmati rice. Smaller restaurant’s are the main customers, and as rice prices go up, you can count on your Chinese, Japanese, Vietnamese, Indian and Thai menus will increase. A “limited supply” is VERY BAD NEWS for all people around the world. If a big expendable-loving country like the USA can’t get rice, the world is in deep pooh.

One of my favorite quotes is “When the US sneezes, the rest of the world catches a cold.” This is true beyond just the economic sense of this quote. It also is true in the food availability sense of the quote.

The FED will continue giving away cheap money tomorrow with $75B in loans to our beloved banks. Print, print, print, print….

The 30 year mortgage rate rose to 6.04% (up 0.30% in the week), and the 15 year mortgage rate rose to 5.60% (up 0.33% in the week.) These are very steep increases in rates, and show the volatility of the mortgage market . Also, the trend of 10 year Treasury Bonds is up slightly, and this influence influences an upward trend in mortgage rates too.

More interesting is that there is a major downtrend in the number of mortgage applications across the US over the past 9 months, and this trend is still firmly in place. While this is not “new news”, it will also provide a decent indicator of when we get to the bottom of the housing market crisis.

Here are today’s numbers:
Dow Jones 30 Industrial – 12,763 (Up 43 points)
10 Year Treasury Bond – 3.73% (Up 0.01%)
Euro – $1.5887
Gold – $909 (Down $16)
Oil – $118.30 (Up $0.23)
Gasoline – $3.05 (Up $0.03) - up, up, and away!!!!!

Food Crisis

admin — Tue, 15 Apr 2008 02:50:19 +0000

Again and again the stock market goes sideways, as does the bond market.

The IMF tried to bully the dollar into going higher today, and it indeed succeeded. However, after the dollar shorts covered, the pound investors took over, and called the IMF bluff. So in the end, the dollar moved sideways too.

Oil and gasoline moved higher, and oil is expected to hit a new high very soon. As will your local gasoline price.

Gold moved up $2.

In the news today….

In my opinion, the big news is that the UN Secretary General declared that FOOD was in crisis throughout the world. And, he is right. You’ve probably missed the doubling and tripling of basic commodities like wheat and corn and rice. These commodities are used around the world, and the world is truly suffering.

Prices of foods in Haiti have increased 40% in the last couple of months, and has resulted in riots. This could easily get worse throughout all parts of the world – think about Egypt.

Food riots are tied to the economic turmoil that I’ve been reporting the past 6 months. How’s that – you ask???? Follow this bouncing ball.

I’ll explain using one small example. Oil prices have been soaring – right? And that’s caused by the perceived inflation in the US Dollar. Well, oil has risen so far that it now pays for Ethanol to be produced from corn. Have you noticed? The reasons for using ethanol is a fraud, as the European Union has decided. US industrial interests keep ethanol alive in the US. The US corn harvest goes to ethanol production, and the amount of ethanol production will increase in the future in the US. So what eats corn to grow fat??? Beef and many other livestock. So, you can count of beef prices increasing in the future – definitely by next year. Why not now??? Well, cattle producers are getting squeezed by the high price of feed; so they are slaughtering their herds to pay their bills – ergo low beef prices.

However this FOOD crisis is real and very dangerous for the world. I’ll keep reporting on it, as it threatens your security and your investments.

Retail sales

Retail sales in March increased by 0.2%. A very small rise, and certainly negative if you adjust for inflation. The lack of retail sales will drive the US into recession faster than any other means.

Here are Friday’s numbers:
Dow Jones 30 Industrial – 12,302 (Down 23 points)
10 Year Treasury Bond – 3.50% (Up 0.03%)
Euro – $1.5832
Gold – $929 (Up $2)
Oil – $111.76 (Up $1.62)
Gasoline – $2.82 (Up $0.01) - Gasoline keeps moving up, up, up, up….