What We’re Reading

by CC May 18, 2011 9:26 am • Commentary


Crude oil and gold will lead a rally in commodities as production fails to keep pace with demand, said Ray Eyles, chief executive officer of JPMorgan Chase & Co. (JPM)’s commodity business in Asia.

Oil supply will trail consumption in the second half as the Organization of Petroleum Exporting Countries and other producers won’t increase output fast enough, the bank said in a report May 6. Rabobank Groep expects shortages in corn and cotton this year while Barclays Capital is predicting deficits in copper, nickel, tin, lead and platinum.


Investment spending in emerging markets is outpacing expenditures in developed economies for the first time, as a surge in infrastructure supports global growth and profits at companies from Siemens AG (SIE) to Caterpillar Inc. (CAT)

The “biggest investment boom of recent decades” will help boost expansion worldwide about 4 percent this year and next, compared with a long-run average of just below 3 percent, according to Michael Saunders, Citigroup Inc.’s chief European economist. International Monetary Fund data show investment will top 24 percent of global gross domestic product in 2012, the most in more than two decades, and then rise above 25 percent, the highest since records began 30 years ago.


Interest rates are heading lower, counter to what many in the bond market thought might happen as the Federal Reserve reaches the end of its quantitative easing program.

The 10-year yield Tuesday slipped below 3.1 percent, just above a key technical level of 3.05/3.07 percent and the psychologically important 3.0 percent level. Treasury yields fall in an inverse move as buyers push bond prices higher.

Strategists say there are several catalysts moving bonds, including a series of weaker economic data; reinvestment from accounts that were in cash; and the flight to safety on concerns about European sovereign debt.


Dell shares jumped in extended-trading Tuesday after earnings easily exceeded Wall Street estimates, though the firm handed in revenue that fell just shy of analysts’ forecasts.

Business Insider

Hmm, do ya think a company that sells office supplies has a pretty good read on this economy?Thought so.

Hence, you should pay attention to the latest earnings from Staples, which just reported a 1% same-store comp sales declines.

Business Insider

There’s probably no better person to assess the state of this economy than Richard Koo, the Nomura economist whose book The Holy Grail Of Macroeconomics is all about the unique nature of a post-crisis, deleveraging, balance sheet recession.

So when he speaks out on QE2, it’s a must read.

The first key points from his new report are encapsulated in this chart, which confirms that QE2 has had no positive impact on the money supply. There’s simply no connection. The world is NOT awash in cash.

Business Insider

Well-known China bear Jim Chanos is on CNBC.

We’re taking notes:

  • The residential slowdown has already begun. Sales offices are closing.
  • The overall China boom is already beginning to sputter.
  • Not sure if a collapse will have systemic risk for the global economy.
  • When asked about elites moving their money out of China… “As the party elites and others are trying to get their money out… the American public is trying to buy right in through the IPO market.”
  • Anti-Chinese bet has been a winner. Property market has been a big underperformer.
  • If I’m right about credit creation and the real estate bubble, then the yuan might collapse. A lot of the hot money coming into China is based on the double-barreled thesis of yuan growth and underlying asset growth.
  • Jim Chanos reveals that he is short UK-based offshore gaming companies due to the fact that the management are shady people that we cant necessarily be trusted.


Bonus Fun:

A Tumblr blog where someone is painting every sweater from every single episode of the Cosby Show. In order.