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Category Archives: Commodities
By Martin Fluck | Published: December 19, 2012
The good news is that emerging economies in Asia, Latin America, and Africa are set to boom in the coming decades. The bad news though – if you’re a deluded environmental activist - is that their growing energy needs cannot possibly be met by renewable energy, as their large and growing populations invest in infrastructure and housing. The world’s “insatiable demand” for energy will instead have to be met by an increased use of coal, the International Energy Agency admits. Coal’s share of the global energy mix will continue rising, with coal closing in on oil as world’s top energy source by 2017.
By Martin Fluck | Published: October 4, 2012
How a Wall Street elite contrived to turn the physical commodities market into a casino, and trigger damaging “spikes” in everything from oil to foodstuffs was beautifully reported on by Matt Taibi of Rolling Stone Magazine in 2008. But the food riots last year may be spurring politicians on both sides of the Atlantic to take action. Retail investors, the "long only" bettors who have for years forced prices upward, are part of the problem. So the Democrats are proposing rule changes that would force small investors in the US to divest themselves of the $50 billion they have tied up in commodity derivatives - if Obama wins the election.
By Martin Fluck | Published: September 13, 2012
Anyone who bought into the recent grain bubble and sent the price of corn soaring past its 2011 high - on the back of the worst drought in the US in more than 50 years - must be a little consternated. The US crop doesn’t look its going to collapse as was expected.
By Martin Fluck | Published: May 21, 2012
Timing is everything when it comes to investing, which is why “playing the growth of the middle class consumer in Brazil” is likely to prove a major conceptual blunder by fund managers selling the idea of emerging market ‘decoupling’ to unsuspecting retail investors - even as the tide turns on the emerging markets growth story. No county has benefitted more from China’s economic growth, and unparalleled demand for resources than Brazil. But it is also because of its American-style consumer debt bubble that it is likely to prove one of the most leveraged bets on emerging market growth.
By Mart | Published: May 19, 2012
Chinese construction has sowed the seeds of its own destruction, and that of the commodity producers who have supplied it. The unprecedented build up of metal stocks in China suggests the global economy is in real trouble, Reuters reported yesterday.
By Martin Fluck | Published: May 16, 2012
If a blizzard of awful Chinese economic data isn’t enough to convince you that China is heading into a deflationary slump and the commodity “super-cycle” is coming to an end, then the deepening crisis in the euro-zone should be. That’s because not only will a massive reduction in foreign lending by European banks hurt investment in emerging markets, but supplier economies will be hit disproportionately, as they were post-Lehman.
By Martin Fluck | Published: May 5, 2012
Generous solar subsidies were never going to survive in an age of austerity and cheap natural gas. Nowhere is this more apparent than in Germany. Solar energy was supposed to herald a new age of clean energy, and provide thousands of green jobs, but not a single solar manufacturer is expected to survive there. With governments elsewhere, like Italy, also ending their tax payer funded bonanzas, the industry is facing total collapse, globally.
By Mart | Published: May 1, 2012
With Austerity in Europe and China’s property bubble deflating, it is not surprisingly that metals prices are weakening. But unless something drastically changes to push fundamental demand of metals higher, or the outlook for equities is not good, says Morgan Stanley.
By Martin Fluck | Published: June 26, 2011
In the crosshairs of the world’s conscience, biofuels are under fire. Converting ever more farmland to fuel rather than food production is causing great suffering in the developing world - which is why the World Bank, the WTO, and other international agencies have teamed up to argue that the use of ethanol to ‘save’ the planet should be curbed. So the airlines’ desire to increase the use of aviation biofuels couldn’t be more badly timed.
By Martin Fluck | Published: June 5, 2011
What should alarm investors in Asia is the speed at which China is losing competitiveness. Inflation in China is probably more intractable than official headline statistics reveal, and because Chinese productivity is failing to keep pace with wage increases, while US productivity is far outstripping wage increases, the wage differential between the US and China is being compressed. So significant is the loss of Chinese competitiveness, that it’s argued that American manufacturing could experience a renaissance over the next five years.