Free Republic

Forget Egypt for a moment. If you want to see how extreme the effects of surging food prices are becoming, look to wealthy Japan. So big are the increases that economists are buzzing about them pushing deflationary Japan toward inflation. Yes, rising costs for commodities such as wheat, corn and coffee might do what trillions of dollars of central-bank liquidity couldn't. Yet the economic consequences of food prices pale in comparison with the social ones. Nowhere could the fallout be greater than Asia, where a critical mass of those living on less than $2 a day reside. It might have...

Some Pittsburgh-area steelworkers are being warned that taking off to watch the Steelers in the Super Bowl could cause "severe disciplinary action." The Pittsburgh Post-Gazette reports that U.S. Steel's Mon Valley Works has issued a notice to employees (below right) which states that missing work on Sunday or Monday without just cause will result in a Super Bowl-sized penalty.

The signs of currency devaluation are all around us. Yesterday (Feb. 4th) commodities surged. Gold surged too. Are we really supposed to believe there is that much extra demand for commodities and gold, or their supply that restricted, that prices have been positively skyrocketing these last few months? Of course not. What has been happening is a devaluation in the underlying currency these commodities are priced in, the US Dollar. Currency depreciation can be tough to spot in an environment such as the current one, as most people will look for currencies to appreciate vs other currencies. What they are...

Whirlpool's shrunken margins could be a warning. Could higher costs thwart hiring? Rising commodity prices, which are depressing real living standards and are contributing to the social unrest spreading around the globe, also are beginning to be felt at the top end of the economic pyramid as shrinking profit margins. And as higher costs eat into earnings, will companies to try to compensate by curtailing hiring? Whirlpool's (ticker: WHR) earnings report, released Wednesday, provides a good example of the stresses Corporate America increasingly faces. While the appliance maker's sales are booming abroad, especially in the rapidly growing emerging economies such...

GOLD GAINS: Gold and silver prices rose after Federal Reserve Chairman Ben Bernanke said the economy won't recover fully until more jobs are created. His remarks suggested the Fed will continue its $600 billion Treasury bond-buying program aimed at bolstering the economy. OIL SLIPS: Oil fell as protests continued in Egypt. West Texas Intermediate crude for March delivery fell 32 cents to settle at $90.54 per barrel on the New York Mercantile Exchange.

Companies Stock Up As Commodities Prices Rise By LIAM PLEVEN And MATT WIRZFeburary 3, 2011 Companies contending with rising commodity prices are stockpiling rubber tires, cotton clothing and other goods, a maneuver that is aimed at insulating them from inflation but also could contribute to it. John Anton, founder of Anton Sports, with his surplus supply of cotton T-shirts in Tempe, Ariz., last month. Spice-maker McCormick & Co. stocked up on some ingredients and Monro Muffler Brake Inc. bought extra tires and motor oil, assuming prices of those goods will keep rising. Anton Sport, a small athletic-wear wholesaler in Tempe,...

Why You Should Be Buying Gold As the Fed Prints Money By Bill Bonner 02/03/11 Los Perros, Nicaragua – Stocks were flat yesterday. Gold was down $8. Just noise, in other words. Doesn’t mean a thing… But wait…sugar at a 30-year high…cotton at a record high…oil at a 28-month high… What’s going on? Could the markets have been so wrong last year…and the year before…and the year before? All of a sudden, they’re discovering that commodities are a lot more valuable than they had thought. How could they have been so wrong before? Or are they wrong now? Or is...

Inflation’s First Phase By Chris Mayer 02/03/11 Gaithersburg, Maryland – The year 2011 is the year when inflation will play the role of wrecking ball. It seems to threaten everything from emerging markets to the pretty earnings narrative of the market as a whole. I use the term “inflation” here as the man on the street does. It is when prices for most everything go up. It is not the best definition, because it obscures the reason why prices for most everything go up in the first place. The reason is that governments everywhere can’t help but print lots of...

Companies contending with rising commodity prices are stockpiling rubber tires, cotton clothing and other goods, a maneuver that is aimed at insulating them from inflation but also could contribute to it. Spice-maker McCormick & Co. stocked up on some ingredients and Monro Muffler Brake Inc. bought extra tires and motor oil, assuming prices of those goods will keep rising. Anton Sport, a small athletic-wear wholesaler in Tempe, Ariz., amped up its fabric purchases to avoid higher prices. These pre-emptive purchases are a fraction of overall business activity, but the trend is being watched by economists and business executives. The stockpiling...

Soaring food prices have been, perhaps, the most pressing global issue of the past two years – yet the U.S. Federal Reserve has taken a "hear no evil, see no evil, speak no evil" approach to the global crisis. Instead, the Fed has dutifully maintained its focus on so called "core inflation" in the United States – even as Americans suffer the consequences of the "hidden inflation" the government refuses to account for. The Federal Reserve excludes food and fuel prices from its preferred gauge of inflation because they are often influenced by erratic weather patterns and political turmoil. That...

The run-up in global commodity prices is stirring debate in a number of countries over the role of financial speculators, a prospect that could fuel a regulatory backlash by governments keen to control food prices.

Positioning For A Food Riots Economy by: Kevin McElroy January 16, 2011 On Monday I wrote something that caused my coworkers to look at me even more sideways than usual. I said, “I think we can expect the words “food riot” to enter the American lexicon sometime in the next 18 months, and I don’t say that flippantly.” Just to be clear, “lexicon” is a fancy word that means vocabulary – and “food riot” is a phrase that refers to a group of angry, hungry, violent people who destroy property because they feel (among other things) that food prices are...

Federal regulators took a step Thursday to limit speculative trading of oil, food products and other commodities...The Commodity Futures Trading Commission proposed limiting the volume of futures contracts that financial investors can trade for 28 commodities. The panel voted 4-1 to advance the rule, which opens it to public comment. Lawmakers had proposed establishing limits on speculative trading of commodities as part of the financial overhaul law enacted last summer. But they left the details of the rules to regulators to sort out.

Brazil's raw materials and the Chinese bikini problem By Justin Rowlatt BBC, Rio de Janeiro China's presence in Brazil is due to become widespread China is one of Brazil's most important trading partners but the relationship poses dangers as well as offering huge money-making opportunities. "Do you want to see Jesus?" the helicopter pilot asked us. It would be an unusual offer from anyone, but from a pilot it would normally be a cause for serious concern. Not today, though. We were in the private helicopter of Eike Batista, Brazil's richest man. We had just flown past Sugarloaf mountain and...

I know this may appear to some to be an enviable job—getting to speak about the one asset class that seems to continually out-perform all others year after year—but it is a double edged sword. I’ve struggled to find an appropriate simile. The best I can come up with is that speaking about gold is like one of those good news bad news jokes, you know the ones—your doctor phoned with some good news and some bad news. The good news is they will be naming a new incurable disease after you. The good news is that gold is rising...

Massive Silver Withdrawals From The Comex Commodities / Gold and Silver 2011 Jan 09, 2011 - 10:49 AM By: Jesse It will be interesting to see how the CFTC, the Obama Administration and the Comex deal with this situation with silver, including massive paper short positions. Harvery Organ's commentary: "And now for the big silver report. We witnessed a massive withdrawal of silver unprecedented in the history of the comex. First there was a smallish 6507 oz of silver deposited to two customers, one being 497 oz and the other 6010 oz). But just look at the huge withdrawals: Four...

Gold, Commodities Divergence Against Baltic Dry Index Trend Commodities / Commodities Trading Jan 07, 2011 - 05:38 AM By: Anthony_J_Stills For weeks now I have been going on about the divergence between the commodities prices and the Baltic Dry Index as the former rallies while the latter sinks almost daily. Last night was no exception as the Baltic Dry Index took another big dive as you can see here: The Index dropped another 72 points, after a 5% drop the day before, to close at 1,622. This is a second consecutive close below the 2010 low of 1,700 and a...

World food prices continued to rise sharply in December, bringing them close to the crisis levels that provoked shortages and riots in poor countries three years ago, according to newly released United Nations data. Prices are expected to remain high this year, prompting concern that the world may be approaching another crisis, although economists cautioned that many factors, like adequate stockpiles of key grains, could prevent a serious problem. The food price index of the United Nations Food and Agriculture Organization rose 32 percent from June to December, according to the report published Wednesday. In December, the index was slightly...

Commodities have been the story of 2010, having been much more robust than any other capital market this year. Oil is up a relatively weak 22%, a paltry move in comparison to metals like copper, up more than 30%, or silver, up 70%. Soft commodities have shown even greater strength, with corn, wheat, coffee up around 50% for the year while cotton has nearly doubled in price. What the heck is going on ? I've been following and trading commodities for most of my adult life and while I have seen moves like these in the past, this universal commodity...

If there is one obvious short in the global economy for 2011, it has to be Australia.  They have developed a leveraged relationship to growth in China, with an internal currency that has appreciated to parity with the US dollar.  This sets their equity markets up for a serious beating if any of the following happens.  I personally would not be shocked if all 4 of these happen at or near the same time. Slowdown in Chinese demand for raw commoditiesHousing Bubble Pops due to raising interest ratesRaising interest rates due to inflation expectationsYuan ~ US Dollar volatility Any slow...