Roseman's Eruptions

The Next Big Trade as Oil Prices Eventually Decline

Skyrocketing energy prices are making the headlines almost daily since last spring. Over the last 12 months, crude oil prices have more than doubled and gas prices are heading to $5 per gallon. Investors are blindly buying energy stocks and commodity funds are lunging after crude oil and natural gas futures. A full-blown mania now surrounds the energy pits.

Party is Over for Emerging Market Bonds

The world’s best performing fixed-income index since 1992 is now stuck in a rut. And as stagflation concerns continue to mount in the emerging markets, returns are likely to turn negative for the first time since 1998.

The J.P. Morgan Emerging Markets Bond Index has outpaced the returns generated by all other debt markets over the last 15 years, including strips and junk bonds. Emerging market debt has also outpaced the S&P 500 Index since 1993 and many other industrialized economy stock markets.

Another Reason Investors should be Patient with Japan

Over the last several years, investing in Japan has been a difficult exercise in patience.

Safest Currency Bet with Low Risk Remains the Yuan

China’s currency is probably the best risk-adjusted play for low risk currency investors over the next ten years and beyond. Its gradual appreciation since July 2005 when the central bank raised its trading band has delivered consistent returns for investors. Over the last three years, the yuan has risen a cumulative 16.9% against the dollar.

The FDIC's Suspicious Marketing Campaign

To mark its infamous 75th anniversary this year, the Federal Deposit Insurance Corporation (FDIC) has recently launched a series of full-page advertisements in U.S. newspapers. The latest such campaign, published in Monday’s Wall Street Journal, celebrates the institutions’ long-term safety net of public funds up to $100,000 and serves to remind depositors that the FDIC is there to protect cash deposits and CDs.

The Dollar Won't Bottom until Housing Stabilizes

Over the last seven years, the U.S. dollar has attempted to muster several rallies only to succumb to newer lows as measured by the U.S. Dollar Index. The last calendar year gain for the buck was in 2005 when it rose 12.7% versus the euro.

Fed Actions Speak Louder than Words

Actions speak louder than words. That famous adage is especially true when it concerns the United States Treasury and the Federal Reserve. I remain highly suspicious of this U.S. dollar rally – if you can call it a rally – as signs increasingly point to more trouble ahead for the American economy this year.

The Fed, Inverse Stagflation and Soaring Asian Inflation: A Bad Cocktail for Global Stocks in 2008

The U.S. Treasury market is coming undone in a big way after suffering one of its worst months in years thus far into June trading. Benchmark ten-year bond yields have climbed from 3.94% on June 6 to 4.26% recently as the Federal Reserve continues to talk the dollar higher and on the heels of better than expected May retail sales.

Speculators and Index Funds Don't Control Grain Markets

Global governments continue to debate whether speculators and index funds are responsible for huge gains in commodities lately – including the grains. Since April, the United Nations reports that over 30 countries are in the midst of food riots caused by rice shortages. The grains, including rice, have more than doubled over the last 18 months. From their lows in 2006, the grains complex has more than tripled in value.

No doubt, soaring grain prices are having an adverse effect on food distribution and affordability, especially in the Third World.

The Fed’s Mirage and the Specter of Rising Interest Rates

Global markets have been decked hard again this week as talk continues to surround the possibility of higher interest rates in the G-7. Too bad the global economy can’t handle a round of monetary tightening as deflation continues to accelerate across housing markets in the United States, Europe and Australia.