The global population continues to expand at a steady pace, and agronomists believe that crop yields will need to double by 2050 to meet rising food demand. That should be leading to rising demand for fertilizer producers, but these firms haven’t seen much benefit from the trend in recent years.   Blame goes to a weakening Chinese economy and lower commodity prices, which reduce farm incomes.  The knockout punch came in July 2013 when Russian potash miner Uralkali decided to abandon cartel-like pricing policies and favor sales volumes over pricing. Potash is one of the three key compounds, along with nitrogen… Read More

The global population continues to expand at a steady pace, and agronomists believe that crop yields will need to double by 2050 to meet rising food demand. That should be leading to rising demand for fertilizer producers, but these firms haven’t seen much benefit from the trend in recent years.   Blame goes to a weakening Chinese economy and lower commodity prices, which reduce farm incomes.  The knockout punch came in July 2013 when Russian potash miner Uralkali decided to abandon cartel-like pricing policies and favor sales volumes over pricing. Potash is one of the three key compounds, along with nitrogen and phosphate, in organic fertilizers. #-ad_banner-#Until that seismic event, global potash prices had been set by two trading companies: the Belarusian Potash Company and Canpotex. The former is a joint venture between Uralkali and Belaruskali. The latter is controlled by Potash Corp. of Saskatchewan, Inc. (NYSE: POT), Agrium, Inc. (NYSE: AGU) and The Mosaic Co. (NYSE: MOS). By limiting potash production, the group kept prices higher than natural supply and demand would allow. When Uralkali decided to produce at full capacity in 2013, the publicly-traded companies saw 30% of their market capitalization erased in a single… Read More

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi’s pledge to do “whatever it takes” to get the region back on track. The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.  Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the… Read More

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi’s pledge to do “whatever it takes” to get the region back on track. The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.  Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the United States could get a big boost this year on a massive depreciation in the euro versus the U.S. dollar. All things considered, I would say it could be a very good year for European stocks, and possibly most of 2016 as well. #-ad_banner-#There is one fly in the ointment. Greece is back in the headlines as officials were said to have informally approached the IMF to delay repayment on the country’s debt but were denied. Thanos Vamvakidis, head of European G10 FX strategy at BofA Merrill Lynch Global Research, said the country may run out of money if a… Read More

After four decades trotting the globe in search of investing insights, Franklin Templeton’s Mark Mobius has built a reputation as the “Dean of Emerging Markets.” Although Mobius oversees 18 different mutual funds, focusing on emerging markets like China, Indonesia and Thailand, his current favorite way to play emerging market economies is an unusual one: Japan.   #-ad_banner-#The approach makes sense. The Japanese economy is on an upswing, thanks in large part to aggressive monetary stimulus. A weakening yen also helps, as exports rose 17% in the past 12 months. That’s a higher growth rate than many economists had expected just… Read More

After four decades trotting the globe in search of investing insights, Franklin Templeton’s Mark Mobius has built a reputation as the “Dean of Emerging Markets.” Although Mobius oversees 18 different mutual funds, focusing on emerging markets like China, Indonesia and Thailand, his current favorite way to play emerging market economies is an unusual one: Japan.   #-ad_banner-#The approach makes sense. The Japanese economy is on an upswing, thanks in large part to aggressive monetary stimulus. A weakening yen also helps, as exports rose 17% in the past 12 months. That’s a higher growth rate than many economists had expected just a few quarters ago. And the key boost is coming from emerging markets. Take Kawasaki Heavy Industries Ltd. (OTC: KWHIY), a $9-billion industrial firm that produces heavy machinery. Shipbuilding and defense contracting are a pair of strengths for the company. The firm projects annual revenue from emerging markets will more than double to $5.4 billion by 2020 from $2.5 billion in 2012. Annual revenue from all sources is currently just over $12 billion. Lately, Kawasaki has seen especially strong orders for industrial robots in China, India and Southeast Asia, which use the robots mainly in auto manufacturing and other factory… Read More

For four years I was a derivatives trader for a billion-dollar trading firm in Chicago. One important lesson I learned: pay attention to the biggest traders in the game. Professional traders go to great lengths to hide everything they do. It’s no different than poker — you don’t want your opponent to know your hand. But right now, one of the most powerful financial institutions in the world is broadcasting its hand to the world. And this isn’t just any old hand… It’s the biggest trade it has ever made — valued at more than $1.2 trillion. If history is… Read More

For four years I was a derivatives trader for a billion-dollar trading firm in Chicago. One important lesson I learned: pay attention to the biggest traders in the game. Professional traders go to great lengths to hide everything they do. It’s no different than poker — you don’t want your opponent to know your hand. But right now, one of the most powerful financial institutions in the world is broadcasting its hand to the world. And this isn’t just any old hand… It’s the biggest trade it has ever made — valued at more than $1.2 trillion. If history is any guide, there’s a lot of money to be made from reading the cards right. Let me explain. Since 1900, there have been a total of 32 bull markets in U.S. stocks. During this 114-year period, the current bull market is the fourth longest, currently lasting 75 months. The market bottomed out at 666 in March 2009. It has since surged more than 200% and is now trading above 2,000. In the meantime, international stocks have struggled. The chart below depicts this disparity, showing the S&P 500 versus the Vanguard FTSE All-World ex-US ETF (NYSE: VEU) over the last five… Read More

Based on this year’s 17% spike in the Stoxx Europe 600 Index, it seems investors have found a home in European stocks. They’re especially enthused about the German market, which is currently sitting on more than a 23% gain and recently cracked 12,000 for the first time. As Europe’s strongest economy, and the world’s fourth largest, Germany may seem like a no-brainer investment. Especially now, as the European Central Bank (ECB) embarks on a historic bond-buying program aimed at sparking economic activity across the region. However, I think many investors are following the herd into European (and German)… Read More

Based on this year’s 17% spike in the Stoxx Europe 600 Index, it seems investors have found a home in European stocks. They’re especially enthused about the German market, which is currently sitting on more than a 23% gain and recently cracked 12,000 for the first time. As Europe’s strongest economy, and the world’s fourth largest, Germany may seem like a no-brainer investment. Especially now, as the European Central Bank (ECB) embarks on a historic bond-buying program aimed at sparking economic activity across the region. However, I think many investors are following the herd into European (and German) stocks on the assumption that these equities have nowhere to go but up. While investing in Europe still makes great sense for the long haul, investors may become disappointed with the results of ECB stimulus. Best House In A Tough Neighborhood So what does Germany have going for it? Jobs and wage growth, for starters. After peaking at about 8% during the last recession, German unemployment is down to 4.7% — low by any standard and a far cry from the region-wide average of 11.2%. Youth unemployment, which remains at alarming levels in southern Europe, is a more modest 7.1%… Read More

The European Central Bank (ECB) has finally joined the global bond-buying party with its 19-month program to inject more than $1.2 trillion into the region. The program calls for the central bank’s monthly purchase of more than $60 billion of sovereign bonds along with asset-backed and agency debt.   #-ad_banner-#The new buying program could have some unforeseen consequences. Liquidity in sovereign bonds has already been a global concern, as evidenced by a 70% decrease in the amount of 10-year U.S. Treasury notes available to buy or sell over the last year. With the ECB program buying… Read More

The European Central Bank (ECB) has finally joined the global bond-buying party with its 19-month program to inject more than $1.2 trillion into the region. The program calls for the central bank’s monthly purchase of more than $60 billion of sovereign bonds along with asset-backed and agency debt.   #-ad_banner-#The new buying program could have some unforeseen consequences. Liquidity in sovereign bonds has already been a global concern, as evidenced by a 70% decrease in the amount of 10-year U.S. Treasury notes available to buy or sell over the last year. With the ECB program buying up European bonds, that same liquidity problem could hit the eurozone.   For example, a lack of liquidity in Italian bonds has already caused transaction costs to rise. In fact,  the volume of  futures contracts has surged 800% since 2009, as investors use derivatives to take a position that they can’t get in the bond market.   The new competition in bonds pushed the average yield to maturity of eurozone government debt to 0.538% in late February, the lowest since at least 1995 (when Bank of America started tracking this rate index).   Weak economic growth in Europe, coupled with… Read More

#-ad_banner-#The commodity slump of the past few years, divergent growth rates between the United States and other developed economies and a sudden glut in crude oil have been dominating the headlines. Yet the major U.S. stock markets indexes continue to toil near all-time highs. It’s not a coincidence. The United States has clearly become a safe port in stormy seas, and many of the world’s leading hedge funds and sovereign wealth funds are selling assets abroad and doubling down on U.S. stocks. As a perhaps unintended side effect, the surging dollar has absolutely decimated a wide range of other currencies. Read More

#-ad_banner-#The commodity slump of the past few years, divergent growth rates between the United States and other developed economies and a sudden glut in crude oil have been dominating the headlines. Yet the major U.S. stock markets indexes continue to toil near all-time highs. It’s not a coincidence. The United States has clearly become a safe port in stormy seas, and many of the world’s leading hedge funds and sovereign wealth funds are selling assets abroad and doubling down on U.S. stocks. As a perhaps unintended side effect, the surging dollar has absolutely decimated a wide range of other currencies. And that spells opportunity as a wide range of global securities can now be had for fire-sale prices, at least in dollar-denominated terms. Too Soon? While the dollar continues to rally, many assume it is wise to let the process play out before starting to pick up assets among the global carnage. Yet we may be closer to the end of the currency shifts than many realize. Right around the time the Fed acts (perhaps in June) “it will be embedded in the dollar” said Jens Nordvig, Nomura’s global head of currency strategy, to… Read More

Six years after the collapse of global financial markets, it seems most countries missed their invitation to the economic growth party. Massive monetary stimulus was supposed to jumpstart economies, but it seems the United States is dancing by itself.  China is still growing impressively, but mostly by state-led investment spending, and growth is slowing every year. Japan has yet to really benefit from its own monetary stimulus, as Prime Minister Shinzo Abe’s arrows seem to have missed their mark.  Europe is really the place to watch. Acting the old codger, Europe completely shunned the monetary stimulus party in… Read More

Six years after the collapse of global financial markets, it seems most countries missed their invitation to the economic growth party. Massive monetary stimulus was supposed to jumpstart economies, but it seems the United States is dancing by itself.  China is still growing impressively, but mostly by state-led investment spending, and growth is slowing every year. Japan has yet to really benefit from its own monetary stimulus, as Prime Minister Shinzo Abe’s arrows seem to have missed their mark.  Europe is really the place to watch. Acting the old codger, Europe completely shunned the monetary stimulus party in favor of restrictive fiscal cuts. The European Central Bank (ECB) only recently, and grudgingly, accepted the invitation. But there are signs that its stimulus program may be the economic story of 2015. #-ad_banner-#Taken together, the euro zone is the largest economic region on the planet at $18.45 trillion. If the region meets its expected 1.5% growth rate for 2015 it would be the fastest growth since 2010. This should help boost investor confidence as the region finally digs itself out of five years of economic stagnation. The central bank just started its 19-month program to pump… Read More

With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these… Read More

With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these stocks look expensive right now. AT&T and Verizon sport price-to-earnings, or P/E, ratios of 29 and 21, respectively — well above the S&P 500s historical average of 15. And while a 5% dividend yield might seem like a lot, in the telecom industry, you can find much higher yields… and at a much better price. For example, I’ve found a telecom that’s currently yielding 7.7%. It enjoys the same competitive advantages as both AT&T and Verizon, and better yet, it’s trading at a P/E ratio of less than 12, making it a much better… Read More

Although memories of the Great Recession linger, a case can be made that better days lie ahead. That’s because central banks around the world are pursuing bold stimulus measures. And the United States is looking solid enough for the Federal Reserve to contemplate its first interest rate hike in nearly a decade. Moreover, gas prices have fallen sharply, which aids consumers, and the stock market is way up, having nearly tripled from recession lows. But this is no time for investor complacency: indeed a key economic indicator suggests trouble may… Read More

Although memories of the Great Recession linger, a case can be made that better days lie ahead. That’s because central banks around the world are pursuing bold stimulus measures. And the United States is looking solid enough for the Federal Reserve to contemplate its first interest rate hike in nearly a decade. Moreover, gas prices have fallen sharply, which aids consumers, and the stock market is way up, having nearly tripled from recession lows. But this is no time for investor complacency: indeed a key economic indicator suggests trouble may be brewing just beneath the surface. The index in question: the Baltic Dry Index. As a composite measure of worldwide daily shipping prices for commodities like iron ore, steel, cement and coal, the BDI provides insight into manufacturer demand for the raw materials that, literally and figuratively, form the foundation of the global economy. Typically, a rising BDI coincides with stronger demand from producers, who’ll need raw materials to generate energy and manufacture a variety of things, from roads and bridges to cars and machinery. This is… Read More