How to Profit From Your Morning Cup of Joe
Written by Adam Lass, Senior Editor, WaveStrength Options Weekly
http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-080510.html
Coffee up, or dollar down? Here's how to turn java's spike into cash in pocket.
Enjoying your morning cup of coffee? Would you enjoy it as much if it cost you two bits more? How about a dollar more?
Just the other day, Justice wrote to you as to how wheat futures seemed to be picking up the pace a bit. But that's not the only commodity that's kicking it these days. Coffee beans have been on a real "caffeine jag," gaining some 79% in 2010, with about 9% of that coming on in the last week or so.
With raw goods costs rising like that, J.M. Smucker Co. (SJM: NYSE) has been forced to raise prices 9% on some of its popular U.S. brands, including Folgers, Millstone and Dunkin' Donuts. This hike follows close on the heels of a 4% increase last May. Tot it all up and your average mug of steaming java is up about 13% over the past few months.
It Isn't Demand
I can certainly see how this steamy little spiral got started, what with most all consumer stuffs and stocks rising for the better part of the past 12 months.
Unfortunately, that last big push in prices had nothing to do with any sort of coffee-fueled shopping jags. I have on my desk in front of me the latest reportage on our current shopping - or perhaps I should say "not shopping" habits. And it seems that Americans have discovered the virtue of saving at the worst possible time.
• The Commerce Department notes that June Factory Orders came in off some 1.2%, the second declining month after nine months of gains.
• The National Association of Realtors frets that index of sales agreements fell 2.6% in June, confirming what I told you a week ago about the truly awful situation in housing.
• In fact, the whole previous quarter turned out rather wan, with GDP growth slowing from 3.7% per annum to 2.4% per annum.
The only thing that's up right now is the money we are not letting go of. All this talk of vanishing jobs and a meandering economy has induced us to jack our personal savings rate to just a whisker off a 12-month high at 6.4%.
(If you're interested in more of my and fellow editor Justice Litle's financial market predictions and investment commentary, sign up for Taipan Daily.)
Too Much Money!
This has produced a most interesting phenomenon. Remember a year or so ago, when American banks were all "stressed" out because they didn't have enough cash lying about? Well, now they are drowning in dollars. In fact, they really wish that folks would stop saving quite so much, because they really can't figure out anything profitable to do with it all.
One of the reports I have been perusing today comes out one of those little b-to-b journals, the National Mortgage News, wherein we can read as to how bankers are whining that they have cranked interest rates down to nearly nothing, taken toasters and the like off the table, and even taken to being downright rude to children with passbook accounts, and yet people still insist on showering them with money.
Problem is, there's a bit of a structural issue building up. The reason banks are paying out virtually no interest is because depositors are so nervous about the future, they are refusing to lock their money into longer- term devices, leaving the bankers uncertain as to how long they can hang onto this largesse.
"Just Not Prudent to Lend Right Now"
With that uncertainty hanging over them, the bankers complain that they just don't feel but so comfortable lending all this cash to anyone, and even though they aren't paying out any interest to speak of, they still have to print deposit slips and pay tellers to accept them.
To make matters worse, the new financial reg s out of Washington mean that the banks can't leverage these deposits with exotic trading. And the new rules have also cut way back on those hidden fees and penalties that used to warm a banker's heart at night.
Not to worry: Washington claims to have a cure for the bankers' woes! I have heard that come the Federal Reserve's next policy meeting, they will rewrite their "hawkish" language.
No longer will the Fed warn that it will only keep rates near zero for the foreseeable future. Instead, we are told, they will strongly suggest a raft of additional measures to force even more capital onto a system that can't figure out what to do with the specie that is already sloshing about.
When the Dam Breaks
Is it any wonder that the world is slowly backing away from the Greenback as a reserve currency? Take a gander at the chart for the US Dollar Index, and you can clearly see the dollar's 9% decline over the past 60 days compared to most any other salient currency.
One can only imagine how dollar investors, or perhaps I should say "dis-investors" will act as this overflow magnifies into a veritable flood of excess specie.
A Canoe, or Maybe Even a Speed Boat
We are occasionally accused of being god-awful pessimistic around here, always describing how the dam is about to break without offering much of a paddle.
So here is a boat, a paddle, and perhaps even a decent little outboard engine for you.
This declining dollar trend is showing up clearly in the chart for the Power Shares DB US Dollar Index Bearish (UDN: NYSE ), with buy signals showing up that match one for one against the signals that predicted the ETF's previous launch.
A simple investment in UDN shares ought to gain some 11% over the next few weeks, and perhaps even 20% or more over the coming months. While it may not be an FDIC- insured asset, it is offering a heck of a lot better return than any passbook account, or Treasury device.
And if you were inclined toward some speculative leverage, an appropriate call option might easily raise those gains upward toward 300%, which would certainly pay for your next cup of coffee.
Don't forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.
Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content orwww.taipanpublishinggroup.com.
Written by Adam Lass, Senior Editor, WaveStrength Options Weekly
http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-080510.html
Coffee up, or dollar down? Here's how to turn java's spike into cash in pocket.
Enjoying your morning cup of coffee? Would you enjoy it as much if it cost you two bits more? How about a dollar more?
Just the other day, Justice wrote to you as to how wheat futures seemed to be picking up the pace a bit. But that's not the only commodity that's kicking it these days. Coffee beans have been on a real "caffeine jag," gaining some 79% in 2010, with about 9% of that coming on in the last week or so.
With raw goods costs rising like that, J.M. Smucker Co. (SJM: NYSE) has been forced to raise prices 9% on some of its popular U.S. brands, including Folgers, Millstone and Dunkin' Donuts. This hike follows close on the heels of a 4% increase last May. Tot it all up and your average mug of steaming java is up about 13% over the past few months.
It Isn't Demand
I can certainly see how this steamy little spiral got started, what with most all consumer stuffs and stocks rising for the better part of the past 12 months.
Unfortunately, that last big push in prices had nothing to do with any sort of coffee-fueled shopping jags. I have on my desk in front of me the latest reportage on our current shopping - or perhaps I should say "not shopping" habits. And it seems that Americans have discovered the virtue of saving at the worst possible time.
• The Commerce Department notes that June Factory Orders came in off some 1.2%, the second declining month after nine months of gains.
• The National Association of Realtors frets that index of sales agreements fell 2.6% in June, confirming what I told you a week ago about the truly awful situation in housing.
• In fact, the whole previous quarter turned out rather wan, with GDP growth slowing from 3.7% per annum to 2.4% per annum.
The only thing that's up right now is the money we are not letting go of. All this talk of vanishing jobs and a meandering economy has induced us to jack our personal savings rate to just a whisker off a 12-month high at 6.4%.
(If you're interested in more of my and fellow editor Justice Litle's financial market predictions and investment commentary, sign up for Taipan Daily.)
Too Much Money!
This has produced a most interesting phenomenon. Remember a year or so ago, when American banks were all "stressed" out because they didn't have enough cash lying about? Well, now they are drowning in dollars. In fact, they really wish that folks would stop saving quite so much, because they really can't figure out anything profitable to do with it all.
One of the reports I have been perusing today comes out one of those little b-to-b journals, the National Mortgage News, wherein we can read as to how bankers are whining that they have cranked interest rates down to nearly nothing, taken toasters and the like off the table, and even taken to being downright rude to children with passbook accounts, and yet people still insist on showering them with money.
Problem is, there's a bit of a structural issue building up. The reason banks are paying out virtually no interest is because depositors are so nervous about the future, they are refusing to lock their money into longer- term devices, leaving the bankers uncertain as to how long they can hang onto this largesse.
"Just Not Prudent to Lend Right Now"
With that uncertainty hanging over them, the bankers complain that they just don't feel but so comfortable lending all this cash to anyone, and even though they aren't paying out any interest to speak of, they still have to print deposit slips and pay tellers to accept them.
To make matters worse, the new financial reg s out of Washington mean that the banks can't leverage these deposits with exotic trading. And the new rules have also cut way back on those hidden fees and penalties that used to warm a banker's heart at night.
Not to worry: Washington claims to have a cure for the bankers' woes! I have heard that come the Federal Reserve's next policy meeting, they will rewrite their "hawkish" language.
No longer will the Fed warn that it will only keep rates near zero for the foreseeable future. Instead, we are told, they will strongly suggest a raft of additional measures to force even more capital onto a system that can't figure out what to do with the specie that is already sloshing about.
When the Dam Breaks
Is it any wonder that the world is slowly backing away from the Greenback as a reserve currency? Take a gander at the chart for the US Dollar Index, and you can clearly see the dollar's 9% decline over the past 60 days compared to most any other salient currency.
One can only imagine how dollar investors, or perhaps I should say "dis-investors" will act as this overflow magnifies into a veritable flood of excess specie.
A Canoe, or Maybe Even a Speed Boat
We are occasionally accused of being god-awful pessimistic around here, always describing how the dam is about to break without offering much of a paddle.
So here is a boat, a paddle, and perhaps even a decent little outboard engine for you.
This declining dollar trend is showing up clearly in the chart for the Power Shares DB US Dollar Index Bearish (UDN: NYSE ), with buy signals showing up that match one for one against the signals that predicted the ETF's previous launch.
A simple investment in UDN shares ought to gain some 11% over the next few weeks, and perhaps even 20% or more over the coming months. While it may not be an FDIC- insured asset, it is offering a heck of a lot better return than any passbook account, or Treasury device.
And if you were inclined toward some speculative leverage, an appropriate call option might easily raise those gains upward toward 300%, which would certainly pay for your next cup of coffee.
Don't forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.
Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content orwww.taipanpublishinggroup.com.
