Roseman's Eruptions

USDA Grain Report Sparks Selling

Zurich, Switzerland

The United States Department of Agriculture (USDA) released its crop estimates for June 5 yesterday. The news triggered waves of selling in the grains complex.

Corn, soybean and wheat futures all declined more than 3% on Monday. Peripheral trades in the agriculture space, including fertilizer companies and grain processors, were also hit hard.

Archer Daniels Midland (NYSE-ADM), has seen its stock price decline more than 15% since late April. I doubt ADM’s business is 15% worse since May 1st.

All Currency Roads Lead to Zurich

Zurich, Switzerland

The world’s strongest currency since the advent of the global financial crisis in late 2007 has failed to dent exports. Switzerland is on a roll…

Exports are strong, real estate is booming and large-cap earnings are buoyant.

Despite a surging Swiss franc over the past 12 months against the dollar and the EUR, the Swiss economy has remained incredibly resilient. The economy grew 2.4% in Q1 compared to 12 months earlier while exports climbed 5.7% — largely benefiting from a resurgent Germany.

Soft Data Point to Reluctant Fed Exit

Montreal, Canada

Global markets don’t like the prospects of a weaker economy. That’s the case now as it pertains to softer economic data in the United States and China over the past few months. One bit after another, economic statistics have been soft, suggesting another round of money-printing by the Federal Reserve might be on the horizon.

Palladium’s Turn to Shine

-Dugald Malcolm, Montreal, Canada

Despite recent pullbacks, 2011 has proved to be a good year for commodities thus far. The S&P Goldman Sachs Commodity Index has had a 12% gain year-to-date, and the precious metals have certainly been no exception.

Germans are Right to Ditch Nuclear Power

Montreal, Canada

First the Swiss decided to ban nuclear power. Now the Germans will do the same.

German Chancellor, Angela Merkel, perhaps pandering to the rising tide of Green voters in that country, supported legislation to ban 17 power plants by 2022. Nuclear energy is responsible for 25% of Germany’s electricity. The news surprised the markets.

Yesterday’s announcement jolted alternative energy stocks with solar by far the biggest beneficiary.

Extreme Weather a Boon for Ag Prices

Montreal, Canada

The recent rout in most commodities markets should be viewed as a positive event within the context of a secular bull market that remains intact. Overcrowding by speculators made the situation worse leading up to May 2nd combined with tighter margin requirements by the CFTC managed to flush-out the fast-money.

But not all commodities are down in a rough May.

Most agricultural commodities are actually up this month, including corn.

Goldman Sachs and Oil: Long-term Bull Intact

Montreal, Canada

Probably one of the most influential investment houses in the world, Goldman Sachs (NYSE-GS) can move the markets. The sharpest trading minds and the most expensive salaries on Wall Street are paid at Goldman Sachs. I’d also postulate that some of the biggest liars and thieves work at this bank and were in many ways responsible for exacerbating the crash in mortgage-backed securities in 2008.

Chinese Water Torture

Montreal, Canada

China’s Three Gorges Dam is in the midst of a bear market in water levels. That means more contract work for local and possibly, foreign water companies and engineers to bridge the gap at the world’s largest hydropower dam. It also implies rising oil imports to supplement the power lost from the Three Gorges.

On Monday, some of the top-performing stocks in Shanghai belonged to the water and electric utility sectors even as equities continued to struggle on the broader market.

Tanker Troubles

- Dugald Malcolm, Montreal, Canada

Over the past few months, Eric has been talking about the oil and gas services and equipment sector. He sees the sector as a very attractive investment opportunity for the next several years. Daily rig rates are commanding high premiums and oil services companies are raking in the money, especially with the high price of oil. The higher the price tag on a barrel of oil, the more money can be attributed by the oil companies to seeking out and finding new sources of this rare resource.

Agriculture Stocks Slammed; Time to Nibble

Montreal, Canada

The “Feed the World” investment theme will eventually rank as one of the most powerful secular bull markets over the next 3 to 5 years.

Global inventories of foodstuffs and other important edibles are largely in a long-term decline as population growth exceeds total available food supplies. This situation will get much worse as falling water tables result in lower crop yields in the years ahead; investors should target this compelling theme now amid a deluge of negative sentiment in the peripheral soft commodities space.