Saturday, December 29, 2007

2008 - Simple Predictions

  • Sub Prime Loses will be much worse than everyone expected.
  • The Chinese won't care because Americans are still buying their junk with more borrowed money thanks to Ben 'the put' Bernanke.
  • Australia will keep selling rocks to China to turn into junk for Americans to buy with money they don't have.
  • Twiggy Forrest will get to $10bn in quick time and won't look back.
  • Australian interest rates will rise.
  • Everyone will get sick of Kevin 'the Turnip' Rudd's smuggness and lack of substance.
  • Inflation will rise.

Monday, December 17, 2007

The World isn't going to end.

I don't think it's particularly rosy for the next few months. Inflation is back on the agenda in the US, with higher than expected CPI numbers. This has to be a concern in an environment where Bernanke is dropping interest rates at the first sign of trouble. I'll be buying a few out of the money index puts as a little protection over the next few months. The Fed is in a difficult place because at every sign of trouble in the US economy, people are expecting them to drop rates, which is counter productive when you're trying to fight inflation. This seems to all be part of modern man's inability to be accountable for their actions. 'I'll borrow a stack of money and if I can't pay it back, then the government will freeze my interest rates at artificially low levels or drop interest rates to help me out'. All seems a little quick fix, a little phoney and bound to fail.
A lot of people think the world is going to end on their shift, it's not, but the US economy might head into recession.

Tuesday, December 11, 2007

igrin - Peer to Peer lending in Australia

Well, it didn't take long for peer to peer lending to appear in Australia. offers the same service in Australia as does in America. It will be really interesting to see how it goes. It seems to me that it will take a long time to get the sort of volume of lenders required to really make it work, but who knows.

Monday, December 10, 2007

Ethanol is stupid

Soft Commodity Prices will keep going up if people keep using their food as fuel for their cars and not themselves. One tank of ethanol for a standard sized car requires about the same amount of maize as to feed a standard sized human for a year. The increasing use of ethanol fuels, particularly in America means that they are forced to import more and more food as ridiculous ethanol subsidies encourage farmers to grow corn for oil (I'm blaming you Al Gore).
Another string to the bow in the Bull market of food is that fact that China is eating more and more meat. China was consuming 20kg of meat per person in 1985, by 2007 that is expected to be 50kg. It takes 8kg of grain to produce one kilo of meat. It's not hard to see where this is going.
Maybe we'll see America embark on a new global security program, this time securing an alternate source of energy, food. Anyway, the upside of it is, there's plenty of compelling reasons to be exposed to soft commodities prices.

Monday, December 3, 2007

Primed for PrimeAg

With wheat prices up above $400 a tonne the drought and surging global demand for soft commodities means that the coming float of PrimeAg, which is being managed by Comsec will be a hot float. Macquarie Group has recently moved into this sector with one of their 'infrastructure' style funds being created earlier this year. If you want exposure to rising soft commodity prices (and you do) then try and get hold of some of this float. I'll definitely be putting my hand up.
The economies of scale in farming and in particular cropping are huge, so this is a trade that makes a lot of sense. Key management seems sound with Roger Corbett and a former president of the National Farmer's federation on board.

Key Dates:
Lodge prospectus with ASIC 14 November
Offer Opens 26 November
Shares trade on ASX 17 December