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Wednesday, February 6, 2008
In Other News: CME
Allstate blames global warming for rate hike
From WTVT (Tampa Bay):
Now we know why Allstate wanted a 42-percent increase in home insurance rates. The company is using an unapproved model that factors the growing threat of global warming. Last month, company executives objected to a Senate subpoena. The state tried to suspend their license, and Governor Crist threatened to sue them. Now Allstate executives said they aren't price gouging. They say they're just very concerned about climate change, and trying to make sure they keep rates in tune with the growing threat. The ocean is a hurricane's fuel tank. Warmer waters could mean more and stronger storms (though this is currently a subject of scientific debate). "It's my professional opinion and others at Allstate, it appears that the increase in sea surface temperatures and the near term effect of hurricanes is something that is real and is a need that we need to consider for the protection of our insurers," said Allstate Floridian's Ryan Michel. Allstate executives also said they took a beating in Florida from the hurricanes of 2004 and 2005. "The Allstate Floridian companies paid out a million dollars more in claims it received in premiums in 2004 and 2005 totally exhausting its capital," said Allstate Floridian CEO Joe Richardson, "If not for a substantial infusion of capital from Allstate Insurance Company our parent company in the form of a not, Allstate Floridian would have been insolvent at that time." The past two years have been calm, and the property insurance industry scored record profits. Regulators tried to suspend Allstate's license for refusing to testify. A judge let them keep it until the case is worked out in court. |
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Carbon trading the winner in ‘Super Tuesday’
From Carbon Finance:
The US moved closer to a federal cap-and-trade emissions scheme yesterday, with Arizona senator John McCain emerging from ‘Super Tuesday’ as the likely Republican presidential candidate – holding a clear lead over his nearest rival, former Massachusetts governor Mitt Romney, who opposes cap-and-trade unless other countries join in.
The Democrat race remains too close to call, with New York senator Hillary Clinton slightly ahead of Senator Barack Obama from Illinois. Both candidates are in favour of cap-and-trade, and propose cuts of 80% on 1990 US emissions levels by 2050. Both also favour 100% auctioning of allowances (see Clinton backs 100% auctions in climate plans).
“If we don’t see a bill this year, we definitely will in 2009,” Eileen Claussen, president of the Virgina-based Pew Center on Global Climate Change, told Carbon Finance....MORE
Canadian Green Investments
Canada is an interesting case. Despite being a signatory to the Kyoto protocol, and making all the "harumph, harumph" noises that membership seems to encourage, Canada will blow right through the agreement that they voluntarily entered into. Last I saw, they were about 26% above where they pledged to be. Harumph.
It's not just the current Conservative government, which came into office two years ago, today. The Liberal party ran the show from Nov. '93 to Feb. '06. In those 13 years they didn't do much more than talk. And talk. And talk.
So what's the answer? Subsidies! Some of the best in the world. You ask for an example?
Ontario's Standard Offer Program has a solar feed-in tariff of $.42 per kwh!
How's that grab ya?
Here's the story from the Financial Post:
Save the world and make money at the same time
Solar tax breaks, rebates in Canada
Including the hit:
"free money" for Oregon business owners who invest in solar.
It's not just the current Conservative government, which came into office two years ago, today. The Liberal party ran the show from Nov. '93 to Feb. '06. In those 13 years they didn't do much more than talk. And talk. And talk.
So what's the answer? Subsidies! Some of the best in the world. You ask for an example?
Ontario's Standard Offer Program has a solar feed-in tariff of $.42 per kwh!
How's that grab ya?
Here's the story from the Financial Post:
Save the world and make money at the same time
..."Everybody's branding themselves now as a green investment," says Sucheta Rajagopal, a certified financial planner with Hampton Securities in Toronto. "Everybody has a sustainability report, but what do those reports really say? One of the challenges ahead for investors is identifying who's really doing what they say they're doing, and who's hopping on the bandwagon."...CAN GREEN INVESTMENTS MAKE MONEY?
Here's something to think about: The best performing stock on the Toronto Stock Exchange in 2007 was a Toronto-based company called Timminco Ltd., a maker of specialty metals used in solar-power applications. Over the course of the year, its shares went ballistic, closing on Dec. 31 at almost $22, up from 30¢ on the year's first day of trading - an increase of more than 7,000%.
The Timminco example, though extreme, proves that savvy stocks pickers certainly can profit from investing in environmental business. But most Canadian investors don't have the time or the expertise to build their own portfolios from scratch. Most opt for the relative safety and predictability of managed funds. And, with one or two exceptions, most of the green-labelled vehicles available today are simply too new to have track records that demonstrate their ability to generate strong returns....MORE
Here's another of our posts on Canada:Solar tax breaks, rebates in Canada
Including the hit:
"free money" for Oregon business owners who invest in solar.
That headline is a quote, I couldn't make it up. This either: In many cases, the incentives and credits paid end up being more than the actual cost of the system.
Alrighty then, time to hit the Oregon Trail.
Norway's Renewable Energy Corp. shares plunge on cost overruns, delays
Our last post on REC was on their November announcement that they would build the world's largest solar manufacturing plant, in Singapore. HERE
From Reuters:
Norwegian solar energy group Renewable Energy Corporation ASA (REC) (REC.OL: Quote) revealed cost overruns and delays in polysilicon production, pushing its 2008 targets out of reach and rattling confidence in its management.
From Reuters:
Norwegian solar energy group Renewable Energy Corporation ASA (REC) (REC.OL: Quote) revealed cost overruns and delays in polysilicon production, pushing its 2008 targets out of reach and rattling confidence in its management.
REC shares sank as much as 22.6 percent and at 1111 GMT were down 15.1 percent at 119.5 crowns, valuing one of the world's biggest makers of solar power equipment at around $10.6 billion.
REC said on Wednesday costs at its U.S polysilicon factory in Moses Lake, Washington, would rise by 20 percent to $800 million and the plant start-up would be delayed by two months to late 2008.
As a result of its Moses Lake woes it will miss its 2008 production target of 8,000 metric tonnes of polysilicon and now expected an output of some 7,000 tonnes...MORE
Solar: Conergy Drops to Record Low After Reporting 2007 (CGY.DE)
From Bloomberg:
Conergy AG, Germany's largest solar- power company, slid to a record low in Frankfurt trading after reporting a 194 million-euro ($284 million) net loss for 2007.
Conergy AG, Germany's largest solar- power company, slid to a record low in Frankfurt trading after reporting a 194 million-euro ($284 million) net loss for 2007.
Conergy fell as much as 4.57 euros, or 26 percent, to 12.73 euros, the lowest since the stock began trading in March 2005. It was at 14.37 euros by 9:57 a.m. local time. The shares are down 43 percent so far this year.
The company's full-year loss compares with an 8 million- euro profit a year earlier, Hamburg-based Conergy said late yesterday in an OTS statement. It plans a capital increase of about 250 million euros this year to help it repay short-term loans.
``The first point is that we have cleaned our balance sheet, we're getting more conservative,'' Chief Executive Officer Dieter Ammer said today in a telephone interview. Ammer said profit was hurt by the company being unable to buy all of the solar modules it needed.
The management board expects negative results of ``substantial double-digit millions'' in 2008, Conergy said. Sales are expected to rise to more than 1 billion euros. Under new accounting rules and reflecting discontinued operations, Conergy reported revenue of 712 million euros for 2007, up from 682 million euros the previous year....MORE
Chasing Iberdrola
Regular readers know that we have an abiding interest in the European utilities.
Here's a short piece from Lex at the Financial Times:
Here's a short piece from Lex at the Financial Times:
Has the impending takeover of Endesa by Italy’s Enel and Spain’s Acciona created a bridgehead for other companies keen to buy Spanish utilities? The latest two companies keen to find out are France’s EDF and domestic construction group ACS, who are interested in buying Iberdrola. The government grudgingly agreed to Enel and Acciona buying Endesa as less bad than a takeover by Germany’s Eon. Even so, its imposition of onerous conditions on the deal is being challenged by European regulators. Even sweetened with a Spanish partner, the government will not view favourably a takeover of its largest utility by state-controlled EDF.
There is not doubt that ACS would love a deal. It already owns an 8 per cent direct stake in Iberdrola, could pick up its renewables business and some hydro plants, then merge them with Unión Fenosa, of which it owns 45 per cent. But politics is not the only obstacle. ACS and Iberdrola are fierce rivals domestically, reportedly fuelled by animosity between senior managers. For ACS to take on Iberdrola, four times its equity value, is simply a pipe dream....MORE
Buffett’s Final Word on Bond Insurers (BRK.A; ABK; MBI)
From 1440 Wall Street:
Warren Buffett's name often crops up when stocks and sectors fall out of favor. The rumors are usually wishful thinking, or amateurish attempts to move stocks around. This summer the rumor mill had Buffett buying homebuilders, but it did not turn out to be true.
Last month the rumor mill had Buffet making an investment in the large bond insurers, Ambac and MBIA. But his move to start his own operation, Berkshire Hathaway Assurance, was expedited by regulators from New York and other states, and it seemed like the end of the story. But apparently rumors over a Buffett bailout won't die, and the Oracle of Omaha made an appearance on Fox Business this afternoon to clarify his position, and get in a plug for his newly formed entity:
“We could have some kind of insurance transaction with them but we will not be investing in them or any other bond insurer…We’ve got our own bond insurer…Berkshire Hathaway Assurance is already up and running in New York State and has already done a couple of deals.” Fox Biz...MORE
Warren Buffett's name often crops up when stocks and sectors fall out of favor. The rumors are usually wishful thinking, or amateurish attempts to move stocks around. This summer the rumor mill had Buffett buying homebuilders, but it did not turn out to be true.
Last month the rumor mill had Buffet making an investment in the large bond insurers, Ambac and MBIA. But his move to start his own operation, Berkshire Hathaway Assurance, was expedited by regulators from New York and other states, and it seemed like the end of the story. But apparently rumors over a Buffett bailout won't die, and the Oracle of Omaha made an appearance on Fox Business this afternoon to clarify his position, and get in a plug for his newly formed entity:
“We could have some kind of insurance transaction with them but we will not be investing in them or any other bond insurer…We’ve got our own bond insurer…Berkshire Hathaway Assurance is already up and running in New York State and has already done a couple of deals.” Fox Biz...MORE
U.S. recession could be worse than recent downturns
From Reuters:
The chances of the United States avoiding a recession appear to be growing dimmer by the day, and any contraction in the economy will likely last longer and be more severe than other downturns in the past 20 years.
The chances of the United States avoiding a recession appear to be growing dimmer by the day, and any contraction in the economy will likely last longer and be more severe than other downturns in the past 20 years.
Recent reports have shown the housing market slump and rising defaults in the mortgage market are now taking their toll on job growth and on the manufacturing and services sector.
But heavy consumer debt, a growing federal budget gap, and rising prices could make any recession worse than Americans have experienced over the past two decades.
"If we do go into recession, it's going to be more severe and long-lasting than the last one," said Jeffrey Frankel, a Harvard professor and member of the private-sector panel that dates U.S. recessions.
The nation's last two recessions, in 1990-1991 and 2001, each lasted for just eight months.
But the two downturns that ended in 1975 and 1982, when economic conditions bore some similarities to today, each lasted 16 months, making them the longest recessions since the Great Depression of the 1930s, according to the National Bureau of Economic Research, the accepted arbiter of U.S. recessions....MORE
Tuesday, February 5, 2008
More Solar Capacity: Thin-Film Technology - New Solar PV Trend in Taiwan
Press Release via FOX Business:
Taiwan has always been a major place for thin-film technology and the semiconductor industry. Big players in the Taiwanese industry are now using this experience to explore and start new thin-film silicon solar production initiatives. The share of thin-film in the global supply of solar cells and modules is likely to grow from around 8% in 2007 towards 20% or more in 2010. After the year 2010, the production capacity in Taiwan could exceed 1 GW per year. This will make Taiwan one of the leading suppliers of thin-film silicon cells and modules in the multi- billion euro global market....
Taiwan has always been a major place for thin-film technology and the semiconductor industry. Big players in the Taiwanese industry are now using this experience to explore and start new thin-film silicon solar production initiatives. The share of thin-film in the global supply of solar cells and modules is likely to grow from around 8% in 2007 towards 20% or more in 2010. After the year 2010, the production capacity in Taiwan could exceed 1 GW per year. This will make Taiwan one of the leading suppliers of thin-film silicon cells and modules in the multi- billion euro global market....
...A list of the currently-known major new thin-film initiatives in Taiwan shows that for 2008 a total initial production capacity of at least 310 MWp is scheduled, ramping up to more than 800 MWp in two years time. Sun Well, one of the presenting companies in the program, is even aiming to boost its capacity to more than 1 GW by the year 2012. Some of the above-mentioned companies are involved in crystalline silicon technology as well, such as the major wafer manufacturer Green Energy Technology and cell manufacturer E-ton, both of which companies will be visited.
The thin-film manufacturers will use a variety of technologies as supplied by Applied Materials, Oerlikon Solar, Ulvac as well as the technology of EPV from the USA. Undoubtedly, with these equipment manufacturers predicting production cost levels of less than $ 1/Wp within 5 years time, these products will easily find their way in the growing global market....
Morgan Keegan, Bear Stearns upgrade Greenbrier (ARII; GBX)
From Forbes:
Morgan Keegan and Bear Stearns upgraded Greenbrier Cos Inc (GBX) to "outperform," after a filing on Monday revealed billionaire investor Carl Icahn's interest in the possible merger of the company with American Railcar Industries (ARII).
Morgan Keegan and Bear Stearns upgraded Greenbrier Cos Inc (GBX) to "outperform," after a filing on Monday revealed billionaire investor Carl Icahn's interest in the possible merger of the company with American Railcar Industries (ARII).
Icahn currently holds a 9.5 percent stake in railroad equipment supplier Greenbrier and owns about 53.7 percent of American Railcar's shares.
Bear Stearns analyst Peter Nesvold said American Railcar could pay $35 for Greenbrier, assuming an estimated $425 million lease fleet divestiture and $37 million of cost savings, and still see the deal adding 12 percent to its 2009 earnings per share....MORE
New Record: World’s Largest Wind Turbine (7+ Megawatts)
From MetaEfficient:
The world’s largest wind turbine is now the Enercon E-126. This turbine has a rotor blade length of 126 meters (413 feet). The E-126 is a more sophisticated version of the E-112, formerly the world’s largest wind turbine and rated at 6 megawatts. This new turbine is officially rated at 6 megawatts too, but will most likely produce 7+ megawatts (or 20 million kilowatt hours per year). That’s enough to power about 5,000 households of four in
Got Wood?
From the Financial Post:
The day before the loonie soared to US$1.10, Jimmy Pattison kicked off a month-long buying spree. From Nov. 6 to the first week in December, he shelled out a cool $38-million for 4.5 million shares in Canfor Corp.
The day before the loonie soared to US$1.10, Jimmy Pattison kicked off a month-long buying spree. From Nov. 6 to the first week in December, he shelled out a cool $38-million for 4.5 million shares in Canfor Corp.
All this as the loonie was committing murder on the bottom lines of forestry companies across Canada -- not least Canfor, which has struggled to slash costs in the face of what many are calling history's worst forestry downturn. What was he thinking?
Stephen Atkinson, a BMO analyst, doesn't get it. "My personal view is you have to be brain-dead to go into this industry," he said. "It is losing huge amounts of money, while government hasn't figured it out and they're still trying to tax it to death."
But if Jimmy Pattison -- one of Canada's pre-eminent billionaires -- is brain-dead, he's in good company. Over the past year, and especially in recent months, some of the names in the pantheon of Canadian -- and global -- investing have quietly parked their cash in an industry that has not generated a positive headline in a very long time.
Peter Kellogg, a New York investing legend Forbes ranks the 108th-richest man in the United States, is one. He has been buying shares in Mercer International Inc., a U.S.-headquartered pulp producer with assets in Canada....MORE
Thin Film Si Solar Cells to Be Produced in India (First 'external' AMAT "SunFab")
From TechOn:
Moser Baer India Ltd of India has its optical disc and solar cell manufacturing center in Greater Noida on the outskirts of New Deli.
Other companies including LG Electronics of Korea and Franco-Italian STMicroelectronics also have their manufacturing facilities around it. Moser Baer's manufacturing center is currently drawing interest from solar cell-related manufacturers across the world.
Moser Baer's subsidiary Moser Baer Photo Voltaic Ltd is currently advancing preparation to manufacture a new thin film Si solar module. This solar module's distinctive feature is the adoption of a huge glass substrate that measures 2.2 x 2.6m. Its manufacturing equipment is a glass-to-module total production line dubbed "SunFab," which Applied Materials Inc (AMAT) is promoting.
Applied Materials' "SunFab" glass-to-module total production line for thin film solar modules
Moser Baer will be the first external company that AMAT has ever supplied its SunFab to. The new manufacturing center's success or failure is being closely watched not only by global solar cell-related manufacturers, but also by firms that are considering entering the market. That is because the glass-to-module production line lowers hurdles to entering the market, while the large substrate also slashes solar cell manufacturing cost....MORE
Advice to Investors: Sit Tight and Batten Down the Hatches
From Knowledge@Wharton:
The worldwide collapse of stock prices has many victims -- pension funds, insurance companies, hedge funds, financial services firms. But those are players who, if they are smart, have the wherewithal to withstand a steep sell-off. Some will even use short-sales or derivatives bets to profit on falling prices.
What about the small investor, the individual who is socking away modest sums for retirement or college costs? Should small investors rush for the sidelines? Or should they view this as a buying opportunity and plough more money into the market?
Neither, according to the majority of experts Knowledge@Wharton interviewed in recent days as the markets rushed downward: Wharton finance professors Jeremy Siegel, Richard Marston, Richard Herring and Franklin Allen; Jack Bogle, founder of the Vanguard Group, the mutual fund company; and Princeton economics professor Burton J. Malkiel, author of A Random Walk Down Wall Street.
While Wharton's Allen says investors would be smart to flee stocks for the safety of short-term Treasury securities, most of the others suggest that the best response is no response at all -- to sit tight and assume that, over the long run, stocks will continue to produce the inflation- and bond-beating returns they have for more than a century....MORE
We'll have more on those "inflation-and-bond-beating returns..." tomorrow.
Off-Topic: Blog Resources for Microsoft- Yahoo News and Views (MSFT; YHOO)
From Information Week's "Top 60 Little-Known Technology Web Sites"
Todd Bishop blogs about everything Microsoft. A five-year veteran of the Seattle Post-Intelligencer, Bishop uses his proximity, access, and press credentials to bring a newspaper reporter's perspective to the blogosphere. Bishop covers breaking news on theblog
. When a former Microsoft employee was recently indicted for embezzling more than $1 million, Bishop posted updates throughout the afternoon. His tone is more measured than some Microsoft bloggers, which is one reason to like it.
Our guide to great blogs and Web sites worth adding to your bookmarks. The selection ranges from obvious picks like Technabob and Search Engine Watch to more obscure destinations such as Location One, istartedsomething, and GottaBeMobile.24. Todd Bishop's Blog
Todd Bishop blogs about everything Microsoft. A five-year veteran of the Seattle Post-Intelligencer, Bishop uses his proximity, access, and press credentials to bring a newspaper reporter's perspective to the blogosphere. Bishop covers breaking news on the
25. LiveSide.net
Run by three former Microsoft MVPs -- basically, hardcore Microsoft fans -- this blog covers everything about Microsoft's online strategy. There are sections for interviews, developer content and editorial posts, plus an ever-growing list of Windows Live services.
LiveSide doesn't just spout opinions all the time; instead, its proprietors actually go out and report. They do interviews and hunt down new betas lurking around on the Web. Their unwavering eye on Microsoft's online strategy makes them an important site during an era where Microsoft struggles to maintain perceived relevance on the Web. Though they don't work for Microsoft, the LiveSide guys bring an almost-insider's perspective on the company's online strategy, particularly with Windows Live services.
LiveSide is ahead of the curve on Microsoft's online strategy, and makes and breaks news as often as some of the "real" press.
27. Mini-Microsoft Sure, it's anonymous and has way too many inside jokes and references, but Microsoft employees read and comment, and you should read it too. Consider the 224 comments the blog received on the firing of then-Microsoft-CIO Stuart Scott, many of them from Microsoft employees claiming to have the answer on why it happened. Or the snarky remarks Mini-Microsoft makes on the company's stock and results. Never boring, the masked Mini-Microsoft is worth a peek if nothing else. 29. WinBeta WinBeta does a better job than others at keeping on top of the latest from Microsoft. It might not be the most original, but anyone wanting to stay apprised of what's coming next and what's here now can get their fill from this site. The site is a solid news aggregator that keeps close track of a fast-moving Microsoft.
Mini-Microsoft doesn't post often, but when he does, he's often disgruntled. This blog is a real insider's perspective on Microsoft, by an anonymous, veteran Microsoft employee.
WinBeta is one of a few sites that do nothing but aggregate news on Microsoft. It's a tough task, because true Microsoft watchers know that news comes quick and steady out of Redmond. WinBeta puts its news in a sort of bloggy form where each post is a headline and excerpt from an article or page elsewhere on the Web. The site's bulletin boards are also active.
Climateer "Line of the Day"
From the Reuters story "China asks for more leeway on greenhouse gas".
I know it's early but what's going to top this?
I know it's early but what's going to top this?
"So this greenhouse gas emission is not just for meeting the needs of the Chinese people's daily necessities, but meeting the needs of many people in the world, especially the low-income people in the world"The better pitch would be "It's for the children". We have to cut the Chinese some slack though, they're new to this democracy political lingo thing. Here's how they do it in Cook County:
-Foreign Minister Yang Jiechi
"For the health and safety of children and the entire community, shall the State of Illinois enact a comprehensive ban on the manufacture,From the Wikipedia "For the Children" page.
sale, delivery and possession of
military-style assault weapons and .50 caliber rifles?
Infrastructure: a New Alternative Asset Class?
The number I keep hearing is $20 Tril. over 20 years.
From Credit Suisse:
Infrastructure is becoming a new alternative asset class, as demand is likely to run in the trillions of US dollars over the next 10 to 20 years, experts said during a panel discussion held at the World Economic Forum in Davos. Private sector involvement, notably through specialized infrastructure investment funds, will soar.
"The future of infrastructure development is a particularly topical subject. There is tremendous scope for infrastructure investments to be made," said Paul Callello, CEO of Credit Suisse's Investment Banking Division. Demand for infrastructure will run into the trillions of dollars over the next 10 to 20 years, according to Adebayo Ogunlesi, Chairman and Managing Partner at Credit Suisse's Global Infrastructure Partners (GIP) , a private equity firm specializing on infrastructure investments.
And to invest in infrastructure pays off, both for investors as well as for the countries where infrastructure is built. India's economic growth would for instance be faster than China's if the country had decent infrastructure, Ogunlesi said during a panel discussion held at the sidelines of the World Economic Forum in Davos, Switzerland. Demand for private sector financing will surge in times when governments, being the traditional financers, don't have the means or are no longer willing to finance this type of projects, Ogunlesi said.
Public sector investments in infrastructure can be problematic, mainly due to the lack of management skills or expertise, according to the experts on the panel. This gap could easily be filled by the private sector, notably through the banking sector, they said. Banks are increasingly setting up their own investment funds specializing in infrastructure investments (e.g., airports, harbors, utilities, roads)....MORE
From Wired:
Study: Climate Change Escalating Severe Western Water Crisis
From Credit Suisse:
Infrastructure is becoming a new alternative asset class, as demand is likely to run in the trillions of US dollars over the next 10 to 20 years, experts said during a panel discussion held at the World Economic Forum in Davos. Private sector involvement, notably through specialized infrastructure investment funds, will soar.
"The future of infrastructure development is a particularly topical subject. There is tremendous scope for infrastructure investments to be made," said Paul Callello, CEO of Credit Suisse's Investment Banking Division. Demand for infrastructure will run into the trillions of dollars over the next 10 to 20 years, according to Adebayo Ogunlesi, Chairman and Managing Partner at Credit Suisse's Global Infrastructure Partners (GIP) , a private equity firm specializing on infrastructure investments.
And to invest in infrastructure pays off, both for investors as well as for the countries where infrastructure is built. India's economic growth would for instance be faster than China's if the country had decent infrastructure, Ogunlesi said during a panel discussion held at the sidelines of the World Economic Forum in Davos, Switzerland. Demand for private sector financing will surge in times when governments, being the traditional financers, don't have the means or are no longer willing to finance this type of projects, Ogunlesi said.
Public sector investments in infrastructure can be problematic, mainly due to the lack of management skills or expertise, according to the experts on the panel. This gap could easily be filled by the private sector, notably through the banking sector, they said. Banks are increasingly setting up their own investment funds specializing in infrastructure investments (e.g., airports, harbors, utilities, roads)....MORE
From Wired:
Study: Climate Change Escalating Severe Western Water Crisis
A water crisis in the Western United States is primarily due to manmade global warming, and it could force difficult choices for the region as farmers, residents and biofuel producers fight for their share of water.
Sixty percent of the changes in the West's water cycle are due to increased atmospheric greenhouse gases, write scientists in a paper published Thursday in Science. Small increases in winter air temperature, the research found, reduce the amount of snow falling in mountains. In turn, snow packs that previously acted as time-release water storage provide less water as they melt in the spring.
"In a place like California, the snow pack is going away or melting earlier. We don't have enough dams to catch it all so we have to let it go out to the ocean," said Tim Barnett, a research physicist at Scripps Institution of Oceanography and the study's lead author. "All of our infrastructure has been set up to take advantage of climate the way it was, but things are changing."
The new research comes as Western states are already struggling to supply water for both their farms and cities. Increased migration to the water-poor regions of the Southwest into cities like Los Angeles, Phoenix and Las Vegas has increased the amount of water necessary to support the rising U.S. population. With such a constrained supply and rising demand, the cost of water is likely to rise, experts said. Some California farmers, responding to a record water shortage, are even beginning to consider selling their water rights, instead of their crops....MORE
Ya gotta love it, give the farmers subsidized water so they can turn around and sell the rights.
As grandpa used to say, "It beats working".
And from Portfolio.com:
The Next Asset Bubble
Infrastructure investing is growing in popularity as stocks and real estate tumble. But too much money is once again threatening to chase too few opportunities.
Gaze out your window at the cars going by. Now pretend you will be paid a quarter every time one passes.
These days, the world's largest investors are making similar calculations, and they like what they see. Stable cash flow is something to cherish, with volatility whipsawing stocks and the debt market nursing the sting of billions in collateralized debt obligations gone awry. So the once-sleepy backwater of infrastructure investment—the buying up of public roadways, utilities, airports, hospitals, and even prisons—has become fertile ground for Wall Street titans.
The problem is that the chief benefit of the investment—a safe long-term inflation-adjusted return—becomes harder to reach as more investors pile into the market seeking it.
Experts worry that prices have already been driven too high for many of the best assets. As evidence, they note that more deals are being loaded up leveraged-buyout levels of debt. At the same time, yield-hungry investors are increasingly willing to build or buy infrastructure in riskier corners of the world.
Monday, February 4, 2008
The Rise of Systemic Financial Risk
From MIT's Technology Review:
Yesterday, a week after Societe Generale disclosed a $7.2 billion loss by a single rogue trader, Bank of France chairman Christian Noyer declared to a French senate finance committee, "None of the controls within Societe Generale seem to have worked as they should have."
But beyond the evident failure of internal control technologies lie wider vulnerabilities in the global financial system. It is possible that the deeds of 31-year-old Jerome Kerviel at Societe Generale triggered global stock sell-offs, says Andrew Lo, director of MIT's Laboratory for Financial Engineering. And that points to widening systemic risk in ever more complex financial markets.
Technology Review: First, what do we know about the failures of those Societe Generale controls?
Andrew Lo: They are still trying to piece together the different methods he used, but apparently, it was his intimate knowledge of Societe Generale's systems infrastructure that allowed him to circumvent various controls. From news reports, it appears he was able to access internal financial databases and not only alter the stated holdings of the accounts he was trading, but was also able to circumvent the checks and reconciliation processes that were put into place to make sure these were accurate. Apparently, the standard reconciliation processes did run, but he was able to alter the records both before and after these processes ran so as to avoid detection and maintain his portfolio.
TR: Can't we just build better software and other technologies to prevent a recurrence?
AL: Yes, but anytime there is an interface between technology and human behavior, you open yourself up to the potential for fraud. Systems don't build themselves: humans program them. A big event like this happens every so often, and then people say, "Gee, we have to spend more time and money to improve our systems," and the systems become safer. Once the systems become safer, we get lulled into a false sense of security and complacency. And eventually, we experience a rude awakening when the next disaster strikes. I would argue that it is impossible to prevent these disasters with 100 percent certainty.
TR: Okay, so bad things will happen. I take it you are mainly concerned about the ripple effect when they do?
AL: Exactly. The financial system as a whole is getting more complex. Financial institutions rely on ever more elaborate systems architecture and electronic communications across different counterparties and sectors....MORE
Draaisma: stand by for a bear market rally
From FT Alphaville:
Even when things are glum, Morgan Stanley former super-bull Teun Draaisma is unreformed. In his latest note, the MS equities man is starting to grow weary of all that bearishness since November.
Strategically, says Draaisma, the dominant themes for the next 6-18 months will be recessionary:
…earnings recession, continued deleveraging, lower commodity prices & inflation, and more reflationary policy initiatives. In addition, we expect further fears about the global economic cycle as a result of the US recession. Therefore, the equity trades we favour on a 1-year view are large over small caps, defensive over cyclical earnings, and low over high leverage.
But - and here’s the bullish bit - in the short term, expect a bear market rally....MORE
...So the prognosis in the short-term? Looking at bear market rallies of the past as a yardstick - as the above indicates - we’re looking at a median bounce of 21 per cent over 4 months.
Roll on Spring.
They've Got Juice- Dynegy (DYN)
From Barron's:
A BUDDING BULL MARKET IN electric power could give Dynegy a welcome jolt. The Houston-based independent power producer, which narrowly escaped bankruptcy in 2001, doubled its size last year with an acquisition and now boasts 29 power plants in 15 states that generate almost 2,000 megawatts of power. Dynegy's shares, currently at $7 apiece, also look poised to just about double, as the company's cash flow and asset value increase.
"Power demand is catching up with supply," says Vance Brown, a principal at money manager Grisanti, Brown & Partners. "Existing power plants are going to be increasingly valuable."
Brown estimates that the replacement value of Dynegy's plants could be $15 to $18 a share. The company values those assets at $17 to $24 a share. The shares easily could trade up to 80% of replacement value, which would put the stock at least at $12 if the electricity market tightens, as expected.
Granted, $12 is a long way from $59, where Dynegy (ticker: DYN) peaked in September '01. But doubling its share price would be a remarkable turnaround for a company that nearly crashed and burned, like rivals Enron and Calpine, in the aftermath of the 2000 energy bubble. Dynegy made its share of ill-fated investments in the late 1990s -- in overseas assets, telecommunications and electricity trading -- and the company's failed bid for Enron in 2001 was followed by charges that Dynegy had manipulated the California energy markets and boosted earnings through improper accounting. Exacerbating its problems, excess capacity in the industry pushed prices down for the first time in decades....MORE
Setback for UK wind farm push
There seems to be a change in the wind regarding the types of renewable energy getting ink (electrons). Below we link to a post from the WSJ's Environmental Capital blog.
(and a shout-out to AltEnergyStocks, thanks for the link this weekend)
Here's the headline story, from the Financial Times:
The large subsidies paid by electricity users to fund the drive towards wind power are generating profits for existing wind farm owners – without producing many new turbines.
Vestas: Wind In Their Sales
(and a shout-out to AltEnergyStocks, thanks for the link this weekend)
Here's the headline story, from the Financial Times:
The large subsidies paid by electricity users to fund the drive towards wind power are generating profits for existing wind farm owners – without producing many new turbines.
A huge expansion of wind energy is needed to meet the government’s climate change targets, and the amount of subsidy paid to renewable power generators through consumers’ electricity bills will rise from more than £600m a year to £3bn a year by 2020.
Most customers are unaware of this, as it does not appear on bills. But the format of the subsidy system, known as the renewables obligation (RO), combined with bottlenecks in the planning system, mean these cash injections are enriching the operators of existing wind farms well beyond their expectations.
The proportion of electricity coming from renewable sources has scarcely budged in recent years – it rose from 4.2 per cent in 2005 to 4.6 per cent in 2006, the latest year for which government figures are available – mainly because of lengthy delays in the planning system.
From the WSJ's EC blog:...Peter Atherton, head utilities analyst at Citi Investment Research, said: “It’s a bonanza. Anyone who can get their nose in the trough is trying to.”
Alive to the fast returns which can be made, the big electric utilities have been snapping up wind farms from small operators, and slowly building their own. But they do not disclose how much money they make from them.
Ofgem told the FT that wind farm owners could make more than £100 per megawatt hour.
Assuming industry averages apply, RWE Npower, which owns the most onshore wind farms, could expect to turn over more than £90m a year from them at these rates.
But Npower said Ofgem’s estimate was too high, and wind farms were receiving about £75 to £85 per megawatt hour...MORE
Vestas: Wind In Their Sales
If a rising tide lifts all boats, what does a rising wind do? It lifts shares in wind-power companies, apparently.
Denmark’s Vestas gave the market some cheer today by upgrading its forecasts for 2007 after a strong fourth quarter, upping the outlook for its top-line growth and its operating margin. It will report 2007 earnings later this month. Because it is the world’s biggest wind turbine maker, Vestas acts as a bellwether for the industry, and often for renewable energy as a whole....MORE
China Said To Target Fortescue Metals (BHP; FMG.AX; RTP)
From Forbes:
China appears to be embarking on a global offensive to secure iron ore supplies.
Its $200 billion sovereign wealth fund, China Investment Corp., and coal miner China Shenhua Group are reportedly in talks to take a sizable stake in Fortescue Metals, a major Australian iron ore producer that is building its own rail line in Western Australia to the sea, seeking to circumvent the rail duopoly in the region held by Rio Tinto (nyse: RTP) and BHP Billiton (nyse: BBL).
The news comes on the heels of a stunning share raid Friday by Alcoa (nyse: AA) of the U.S. and Chinalco in which they took a joint 12% stake in Rio Tinto, putting them in position to potentially block a takeover of the miner by BHP. (See: " China Takes A Shine To Rio")
On Monday, Fortescue Metals, the third-largest iron ore producer in Western Australia after BHP and Rio Tinto, confirmed it “has held confidential discussions with a range of potential strategic equity investors.” Its statement was in response to inquiries from Australian regulators sparked by an article Monday morning in Hong Kong's South China Morning Post that claimed China Investment Corp. and China Shenhua, China’s largest coal miner, were seeking to buy a 15.85% stake in Fortescue Metals for about $2 billion.
London's Sunday Telegraph also reported over the weekend that state-controlled China Development Bank had expressed interest in buying a 35% stake in the miner Xstrata (other-otc: XSRAF) from Swiss commodities firm Glencore.
China Development Bank financed Chinalco's involvement in its joint $14 billion share raid with Alcoa on Rio Tinto....MORE
Nymex Holdings Plans To Offer Emissions Contract By 1Q End
From Dow Jones via CNN Money:
The chairman ofNymex Holdings Inc.
The chairman of
Nymex Chairman
Nymex Holdings is working with Wall Street banks including
Billionaire Carlos Slim calls for massive infrastructure effort in Mexico
From the AP via Sympatico:
Billionaire Carlos Slim, one of the world's richest men, proposed Mexico create a national infrastructure commission to take on what he described as US$60 billion in badly needed public works projects.
Billionaire Carlos Slim, one of the world's richest men, proposed Mexico create a national infrastructure commission to take on what he described as US$60 billion in badly needed public works projects.
Speaking before a conference of engineers Tuesday, the telecommunications magnate - who also has business interests in construction - said the effort would also help Mexico's economy.
Slim said it is urgent "to stimulate the domestic economy, which has been neglected, with investment in agriculture and support for small and medium businesses and specifically by investing in the development of human and physical capital through infrastructure," said Slim.
Slim called for an independent commission that would promote mixed private and public investment in public works and plan and develop projects....MORE
Sunday, February 3, 2008
The repercussions of China's big chill
Not as far behind MarketWatch as we usually are, we had a little spec. chambered*.
(we haven't pulled the trigger)
From MarketWatch:
As the weather in China sends investors and the general population diving for cover, watch out for opportunities in the big chill.
(we haven't pulled the trigger)
From MarketWatch:
As the weather in China sends investors and the general population diving for cover, watch out for opportunities in the big chill.
Blame it on the weather. That would seem the obvious response to the chaos in China as the country grinds to a halt under the worst freeze and snow in 50 years.
The current La Nina cycle, characterized by unusually cold ocean temperatures in the Equatorial Pacific, hasn't just flattened 223,000 houses and left 100 million people across China shivering. It's also sent a deep chill through mainland-related equities. Investors have taken cover by selling first, with the A-share market down to lows not seen since last July.
By dramatically exposing the frailties of China's quasi-market economy, the weather chaos should also have policy repercussions. Some comfort is that at least it's a short week ahead with markets closed from Wednesday for the Chinese New Year holiday.
But with more freezing weather forecast, the question remains how bad will it get? Prime Minister Wen Jiabao has been doing his utmost to ensure this La Nina season does not become his own equivalent of George W. Bush's Hurricane Katrina.
Of course he didn't draw that particular parallel, but rather compared the wintry havoc that's already caused an estimated $7.5 billion in direct economic damage to that caused by the SARS outbreak five years ago....
One beneficiary of China’s weather crisis
With snow storms sweeping across China and shutting down large swaths of China’s industry, one company could come out ahead. Just a few months ago, Bosideng’s (3998.HK) IPO was seen as a flop as the shares headed straight down from its IPO price of HK$3.28 in October to a low of HK$1.73 recently. The company is a leading player in the down apparel market in China and sells better-quality down jackets under brands such as Snow Flying and Bosideng (a Chinese homonym for the city of Boston). Its market share is over 30%, well ahead of competitors. ...Sitting back until things have thawed over the Lunar New Year could be the safest course of action. But for long-term investors, if we substitute blood on the streets with 800,000 Chinese on a train platform we could have similar chaos. Anyone who was brave enough to buy during SARS in Hong Kong did very well. Many H-share commodity stocks in Hong Kong are now down a staggering 60% from their peaks -- which may yet look a bargain six months from now.*From Red Cat Journal:
One beneficiary of China’s weather crisis
Just a few weeks ago, investors seemed to believe that Bosideng was a casualty of global warming. Temperatures in December and early January were a bit higher than is seasonally normal. How things change. Now, China is facing winter weather so bad that power plants have had to shut down as coal shipments are held up and millions are stranded at train stations trying to make it home by Chinese New Year. At the Red Cat Journal, we aren’t the types to speculate in weather, but now seems an appropriate time to review Bosideng. Besides the fact that down jacket demand may get a short-term boost, here are some other things going for Bosideng:...MORE
Buffett may emerge as the winner from U.S. bond market turmoil (BRK.A; MBI; ABK)
See post immediately below for more of Mr. Buffett.
From the International Herald Tribune:
There is likely to be one sure winner when the dust settles from the turmoil in the U.S. bond insurance industry: Warren Buffett.
From the International Herald Tribune:
There is likely to be one sure winner when the dust settles from the turmoil in the U.S. bond insurance industry: Warren Buffett.
Whether the insurers get rescued as regulators seek capital for them, or suffer credit rating downgrades that threaten their business or survival, Berkshire Hathaway, run by Buffett, looks like it could cash in.
Berkshire, which created Berkshire Hathaway Assurance on Dec. 28 to enter the bond insurance market, has the balance sheet, credit ratings and pedigree to become a major force in the industry, analysts say.
Buffett's entry into the business comes amid expectations that MBIA and Ambac Financial Group, and smaller rivals like FGIC and ACA Capital Holdings, are going to be severely weakened at best.
On Thursday, MBIA reported a $2.3 billion quarterly loss and said it was looking for ways to raise capital....MORE
Bill Gate's and the Retirement Planning Team
I'm not sure who the guy in the red sweater is, probably an actuary
or something.
By the way, here's the real retirement video. I know, I thought the CES vid was real.
HT (on the real retirement video): Gizmodo
or something.
By the way, here's the real retirement video. I know, I thought the CES vid was real.
HT (on the real retirement video): Gizmodo
Carbon Prices and How to Trade a U.S. Carbon Market
Here's a tip, no charge.
If cap-and-trade comes to the U.S., and the permits aren't auctioned off, wait 8-12 weeks after the first trade and
SHORT THE PISS out of it.
(the why, you can figure out for yourself [see *note in post below on tipsters])
One month chart, from PointCarbon:
If cap-and-trade comes to the U.S., and the permits aren't auctioned off, wait 8-12 weeks after the first trade and
SHORT THE PISS out of it.
(the why, you can figure out for yourself [see *note in post below on tipsters])
One month chart, from PointCarbon:
The price of carbon allowances in Europe’s cap-and-trade scheme was broadly unchanged on Friday as traders paused for breath following sharp falls in recent days, prompted by strong coal, weak natural gas and big volumes of selling in UN-approved emissions reduction credits.
A Gilt-Edged Year for the Stock Market
In How To Think About The Markets, And Your World I mentioned that I recently re-read Only Yesterday and Since Yesterday. Something that has fascinated me about history is how blind we are in the moment*, only gaining insight after the fact. The headline above is from a Time magazine article dated January 8, 1973, looking back on an above-average year in the markets, 1972.
Here's Time:
Here's Time:
THE first definitive year-end report card on the economy—the stock market average on the final day of trading —was cause for solid optimism on the part of investors. Last week the Dow Jones Industrial Average closed at 1020 —up 130 points for the year, a remarkable gain of 15%.Most Wall Street analysts are convinced that the market will continue to climb smartly in 1973. Brokers looking for a marked increase in trading volume see signs that small investors are beginning to overcome fears instilled by the Wall Street slide of 1970 and return to the market. Investment from abroad is also on the rise. Economist Alan Greenspan estimates that foreigners put $1.6 billion into American securities last year and will buy $3 billion worth in 1973.
The biggest gainers are expected to be cyclical issues, the stocks that react most directly to swings in the economy. For example, the projected spending burst for capital improvements should burnish the allure of heavy equipment and machine-tool issues. Business inventory accumulation, which is just now beginning in earnest, should brighten prospects for copper, aluminum, steel, chemical and paper stocks. Among the categories expected to lag in 1973 are food stocks, which analysts believe are already fully valued, still-limping aerospace stocks and many speculative issues. For a broad range of stocks, however, 1973 is shaping up as a gilt-edged year.
Here's what actually transpired:
In the 694 days between 11 January 1973 and 6 December 1974, the New York Stock Exchange's Dow Jones Industrial Average benchmark lost over 45% of its value, making it the seventh-worst bear market in the history of the index 1972 had been a good year for the DJIA, with gains of 15% in the twelve months. 1973 had been expected to be even better, with Time magazine reporting, just 3 days before the crash began, that it was 'shaping up as a gilt-edged year'.[3] In the two years from 1972 to 1974, the American economy slowed from 7.2% real GDP growth to -2.1% contraction, while inflation (by CPI) jumped from 3.4% in 1972 to 12.3% in 1974.
Worse was the effect in the United Kingdom, and particularly on the London Stock Exchange's FT 30, which lost 73% of its value during the crash. From a position of 5.1% real GDP growth in 1972, the UK went into recession in 1974, with GDP falling by 1.1%. At the time, the UK's property market was going through a major crisis, and a secondary banking crisis forced the Bank of England to bail out a number of lenders. In the United Kingdom, the crash ended after the rent freeze was lifted on 19 December 1974, allowing a readjustment of property prices; over the following year, stock prices rose by 150%. However, unlike in the United States, inflation continued to rise, to 25% in 1975, giving way to the era of stagflation.
All the main stock indexes of the future G7 bottomed out between September and December 1974, having lost at least 34% of their value in nominal terms, and 43% in real terms. In all cases, the recovery was a slow process. Although West Germany's market was fastest to recover, returning to the original nominal level within eighteen months, even it did not return to the same real level until June 1985. The United Kingdom didn't return to the same market level until May 1987 (only a few months before the Black Monday crash), whilst the United States didn't see the same level in real terms until August 1993: over twenty years after the 1973–4 crash began.
From Wikipedia. This short entry has some interesting links.
*Which is a good reason to be dubious when someone purports to foretell the future. Especially in the case of markets, such a claim marks your interlocutor as a fool (if they don't know that they don't know), a charlatan (if they are aware but make their claims anyway), a knave i.e. stock manipulators or MOI!
I've got no ax to grind, I do not have positions in stuff I write about. I have some sophisticated tools and an internalized pattern recognition system.
I can call the next tick on a major index with 52-55% accuracy. Le marché boursier, c'est moi!
(unfortunately, this talent has zero commercial value as I am clueless as to the direction of the second and subsequent ticks)
Saturday, February 2, 2008
Abiogenic Hydrocarbon Production at Lost City Hydrothermal Field
Maybe Tom Gold wasn't crazy after all*. He was however, odd.
From Science:
Low-molecular-weight hydrocarbons in natural hydrothermal fluids have been attributed to abiogenic production by Fischer-Tropsch type (FTT) reactions, although clear evidence for such a process has been elusive. Here, we present concentration, and stable and radiocarbon isotope, data from hydrocarbons dissolved in hydrogen-rich fluids venting at the ultramafic-hosted Lost City Hydrothermal Field. A distinct "inverse" trend in the stable carbon and hydrogen isotopic composition of C1 to C4 hydrocarbons is compatible with FTT genesis. Radiocarbon evidence rules out seawater bicarbonate as the carbon source for FTT reactions, suggesting that a mantle-derived inorganic carbon source is leached from the host rocks. Our findings illustrate that the abiotic synthesis of hydrocarbons in nature may occur in the presence of ultramafic rocks, water, and moderate amounts of heat.
*The deep, hot biosphere.
T Gold
From Science:
Low-molecular-weight hydrocarbons in natural hydrothermal fluids have been attributed to abiogenic production by Fischer-Tropsch type (FTT) reactions, although clear evidence for such a process has been elusive. Here, we present concentration, and stable and radiocarbon isotope, data from hydrocarbons dissolved in hydrogen-rich fluids venting at the ultramafic-hosted Lost City Hydrothermal Field. A distinct "inverse" trend in the stable carbon and hydrogen isotopic composition of C1 to C4 hydrocarbons is compatible with FTT genesis. Radiocarbon evidence rules out seawater bicarbonate as the carbon source for FTT reactions, suggesting that a mantle-derived inorganic carbon source is leached from the host rocks. Our findings illustrate that the abiotic synthesis of hydrocarbons in nature may occur in the presence of ultramafic rocks, water, and moderate amounts of heat.
*The deep, hot biosphere.
T Gold
Cornell University, Ithaca, NY 14853.
There are strong indications that microbial life is widespread at depth in the crust of the Earth, just as such life has been identified in numerous ocean vents. This life is not dependent on solar energy and photosynthesis for its primary energy supply, and it is essentially independent of the surface circumstances. Its energy supply comes from chemical sources, due to fluids that migrate upward from deeper levels in the Earth. In mass and volume it may be comparable with all surface life. Such microbial life may account for the presence of biological molecules in all carbonaceous materials in the outer crust, and the inference that these materials must have derived from biological deposits accumulated at the surface is therefore not necessarily valid.
ubsurface life may be widespread among the planetary bodies of our solar system, since many of them have equally suitable conditions below, while having totally inhospitable surfaces. One may even speculate that such life may be widely disseminated in the universe, since planetary type bodies with similar subsurface conditions may be common as solitary objects in space, as well as in other solar-type systems....
There are strong indications that microbial life is widespread at depth in the crust of the Earth, just as such life has been identified in numerous ocean vents. This life is not dependent on solar energy and photosynthesis for its primary energy supply, and it is essentially independent of the surface circumstances. Its energy supply comes from chemical sources, due to fluids that migrate upward from deeper levels in the Earth. In mass and volume it may be comparable with all surface life. Such microbial life may account for the presence of biological molecules in all carbonaceous materials in the outer crust, and the inference that these materials must have derived from biological deposits accumulated at the surface is therefore not necessarily valid.
ubsurface life may be widespread among the planetary bodies of our solar system, since many of them have equally suitable conditions below, while having totally inhospitable surfaces. One may even speculate that such life may be widely disseminated in the universe, since planetary type bodies with similar subsurface conditions may be common as solitary objects in space, as well as in other solar-type systems....
The hedge fund manager who bought a farm
From the Times of London:
Investors are buying a slice of the countryside to make the most of rising food prices
Investors are buying a slice of the countryside to make the most of rising food prices
The cost of farm property looks likely to soar as traditional British “lifestyle farmers” are joined by multimillion-pound investors hurriedly moving their wealth out of stocks and shares and into farmland. Across the world, hedge fund managers, property developers and other investors are turning their eyes to places such as Russia, Argentina and Uruguay, where farms are thought to be underdeveloped and provide an opportunity to profit from the rising prices of staples such as wheat, barley and oil-seed rape.
Britain is likely to feel the effects because our farmland is cheap by Western European standards. Marc Duschenes, of the property company Braemar, hopes that the surge in grain prices will persuade hard-pressed British farmers to sell their land. Braemar aims to raise £20 million for its agricultural land fund. “We are speculating that commodity prices will feed through into higher land prices,” says Duschenes. Carter Jonas is quoting forecasts of prices increases of 10-15 per cent this year.
At the same time lifestyle farmers - typically City high-fliers - have become the largest group involved in buying British farmland. According to Mark Ashbridge, of Savills Private Finance, 40 to 45 per cent of farm purchases are now made by lifestyle farmers. Knight Frank puts the figure at 38 per cent, with only 32 per cent of farm purchases by “genuine” farmers. Institutional investors (11 per cent), agribusiness (11 per cent) and developers (6 per cent) account for the rest of the purchases, Knight Frank says. This mounting interest, combined with a shortage of supply, has meant increases of up to 40 per cent in the price of UK farmland in 2007.
Nevertheless, now could be a good time to buy a farm, Ashbridge says....MORE
Farmers Wonder if Boom In Grain Prices Is a Bubble
From the Wall Street Journal:
Come spring, Tim Recker plans to demolish two rotting barns and a dilapidated workshop on his 1,500-acre farm in Arlington, Iowa. In their place will sit about three acres of rich, black topsoil prime for capitalizing on the biggest global grain boom in decades.
"Every acre is more valuable than it was five years ago," says Mr. Recker, a farmer and land excavator.
With corn, wheat, soybeans, barley, sunflowers and other grains selling at or near record prices, U.S. farmers are preparing for a potentially historic planting season. A rush to make biofuels from crops and soaring demand for grains in China, India and other emerging markets have pushed up grain prices world-wide, helping drive food prices higher.
Just yesterday, Kraft Foods Inc. -- echoing similar announcements earlier in the week by Tyson Foods Inc. and Hershey Co. -- said it will raise prices this year because of higher costs, and Kellogg Co. said its fourth-quarter profit fell because of higher commodity prices.The shift has created huge opportunities in the Farm Belt as growers make their annual decisions about which crops to plant, how much land they need, which fertilizer and pesticides to buy, and how much of their crop to sell ahead of time on futures markets.
But there are risks, too. Farmland prices have climbed more than 20% over the past year in many Midwestern states, so the many growers who lease land are shelling out higher rents. Some seed prices have jumped 30%, and fertilizer prices have doubled nearly across the board. Nocturnal thieves are stealing grains from unlocked bins. And ever looming is the prospect of a drought, which could push prices even higher, sending shock waves through global grain markets....MORE
Fact Checking the LEDs and Compact Fluorescents That Will Replace Your Light Bulbs
From New Energy and Fuel:
Nothing is so alarming than a government mandate to force you to do something. The latest Energy Bill out of the U.S. Congress and signed by the President does just that – cancels the availability of the familiar incandescent bulb and for the most part consigns them to the junk bin of history.
Right off you have already guessed that its going to cost a lot more to buy the new bulbs than the old ones with the idea you’ll get the money back over time in savings of electricity. This is a truth, but not a fact as the Internet has lots of sites and posts about junk high efficiency bulbs that last a very short period of time making them a huge cost compared to the savings. There is nothing like mandates from the government to waste your money and open the door to the bandits.
With that thought still fresh, the fact remains that a good high efficiency bulb can save you money over time. So, before you join the rush to stockpile the old incandescent bulbs lets look into the facts....MORE
Tips from Axa's star stock-pickers
From thisismoney:
Experience is what is required to manage investment funds in today's challenging stock markets, so claim many financial advisers. If they are right, Nigel Thomas and George Luckraft fit the bill perfectly.
The Axa Framlington pair have it in bucketloads - more than half a century between them - though it hasn't immunised their funds against the violent slide in the UK stock market that took place last week and resulted in 'Black Monday', the biggest one-day market fall since September 11, 2001.
...But over the past year, in particular, both funds have underperformed. 'As a fund manager, I got screwed by the market last year,' admits Luckraft, hands in air. 'More than 40% of the assets of the two funds were in small-cap stocks and they fell in value 20%. I hate underperforming. It's something that hurts.'
...So, Thomas has his fund set up very defensively. This means a big concentration on FTSE 100 stocks - representing 46% of the portfolio - and an emphasis on defensively minded stock market sectors such as industrials, oil and gas and utilities.
Thomas is also massively underweight in financials and consumer goods, shares that are hyper-sensitive to the fortunes of the UK economy. He holds no banks, property companies or housebuilders. The result is a fund dominated by household names such as BG Group, BP and Unilever and Thomas sees no reason to change the fund's defensiveness. 'I'm happy with where the fund is,' he says. 'I'm worried about future bank earnings and I'm still concerned about many of the housebuilders....MORE
£700m British Gas in 'profiteering' row
British Gas is to unveil record profits of nearly £700m at a time when millions of customers have been hit by vastly increased bills.The figures represent a rise of more than 600% on the £95m the business made in 2006. And they will add momentum to claims of profiteering by the power giants.
Gas and electricity suppliers cashed in last year because they failed to pass on the full value of falls in wholesale costs to customers....
Don't Bother with the "Green" Consumer
From Harvard Business Review-green:
It seems so logical on the face of it. A company wishing to go green should focus on the green consumer, right? Not so. Marketing to the green consumer has proved difficult, even downright dangerous, for companies large and small. Here's why.
- Established companies fear alienating their base of mainstream consumers by appealing to the green consumer, and rightly so. The majority of consumers seek to satisfy their personal needs before considering those of the planet. Green for green's sake products often don't meet the basic needs that most people require from their products. Take hemp clothing, for example. If green for green's sake products could go mainstream, we'd all be wearing hemp sweaters and be happy
about it. - Small, streamlined green brands that truly appeal to the environmentalist consumer can't reach the mainstream. Those companies get stuck in a green ghetto—virtuous, but limited in scope.
The result is that most companies are stuck somewhere in the middle—and that turns out to be a very dangerous place indeed. We've all watched a company take a traditional product and tout its green virtues. When the approach doesn't work all that well, they simply take out a bigger megaphone. Hence the green-washing epidemic we have today....MORE
Jim Cramer challenges 'laissez faire' government
From Bucknell University:
An impassioned and sometimes fiery Jim Cramer, the investing guru and host of CNBC's "Mad Money," said Tuesday night that government deregulation was nothing short of a "covert attempt" to eliminate the federal government's responsibilities to its citizens.
An impassioned and sometimes fiery Jim Cramer, the investing guru and host of CNBC's "Mad Money," said Tuesday night that government deregulation was nothing short of a "covert attempt" to eliminate the federal government's responsibilities to its citizens.
"Do not be fooled by the sirens of laissez faire," he told a packed audience at Bucknell University's Weis Center for the Performing Arts in the continuing national speakers series, "The Bucknell Forum: The Citizen & Politics in America."
"Ever since the (President) Reagan era, our nation has been regressing and repealing years and years worth of safety net and equal economic justice in the name of discrediting and dismantling the federal government's missions to help solve our nation's collective domestic woes," he said. "We call it deregulation … a covert attempt to eliminate the federal government's domestic responsibilities."
...'Nonsensical rebate'Cramer took issue with the proposed $150 billion economic-stimulus plan, calling it a "nonsensical rebate, the functional equivalent of a fancy iPod and an expensive pair of Nikes, and layer on still more debt that we can't pay for. … What a waste, what a travesty."
The bemused best-selling author noted the "utter inconsistency" of laissez faire.
"We want laissez faire when it comes to business -- except when it comes to the insistence of a politically popular but economically and environmentally hazardous renewable fuel, ethanol," he said....
A fuel that doesn't work
As a result, he said we have unequivocal government support for a fuel that doesn't work and that raises the price of food for everyone including those who can least afford it, which, in turn, forces the Federal Reserve to keep the money supply tight to rein in resulting inflation."So we are laissez faire when it suits us … and we are anti-laissez faire when we can help farm states crucify us on a cross of ethanol," he said.
He railed against a tax structure that supports "tax rates for billionaires at a lower percentage level than those who make $30,000 a year. This is utterly shameless.">>>MORE
Aging Boomers to Put More Pressure on Housing Market
Via Research Recap:
As if the news on the US housing front were not bad enough already, a new study finds there may soon be more sellers than buyers for a very long time.
DOI: 10.1080/01944360701802006
Publication Frequency: 4 issues per year
Published in:
Journal of the American Planning Association
First Published on: 31 December 2007
Subjects: City & Town Planning; Planning; Planning - Geography; Planning - Human Geography; Environmental Geography: Planning, Housing & Land Economy; Geography: Planning, Housing & Land Economy; Urban Studies;
Formats available: PDF (English)
Previously published as: Journal of the American Institute of Planners until 1978 View Article: 
View Article (PDF)
As if the news on the US housing front were not bad enough already, a new study finds there may soon be more sellers than buyers for a very long time.
Research by Professor Dowell Myers and Sung Ho Ryu, a graduate student, at the University of Southern California analyzes house buying and selling, state by state, as it relates to baby boomer retirement.
The research finds that when boomers are aged 65 to 75, there will be three sellers for each buyer.
“Our analysis depicts a coming generational transition in the housing market that will upset the historic balance of buyers and sellers,” the authors find. “Residents in most states are net buyers of homes well into their 50s. The resulting upward pressure on demand by the large baby boom generation will soon peak, and after age 70 they will be net sellers in all except three states.”
Boomers were an incoming tide for four decades. Now the tide’s turned, and it’s going to make it much harder for housing markets to rise....MORE
Here's the paper:
Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition
Authors: Dowell Myers a; SungHo Ryu bc (Show Biographies)| Affiliations: | a School of Policy, Planning, and Development at the University of Southern California, |
| b Southern California Association of Governments, | |
| c School of Policy, Planning, and Development, |
Publication Frequency: 4 issues per year
Published in:
Journal of the American Planning AssociationFirst Published on: 31 December 2007
Subjects: City & Town Planning; Planning; Planning - Geography; Planning - Human Geography; Environmental Geography: Planning, Housing & Land Economy; Geography: Planning, Housing & Land Economy; Urban Studies;
Formats available: PDF (English)
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Previously published as: Planners' Journal until 1943 FREE ACCESS Previously published as: Journal of the American Institute of Planners until 1978
Abstract
Problem: The 78 million baby boomers have driven up housing demand and prices for three decades since beginning to buy homes in 1970 and continuing up the housing ladder. What will happen when boomers begin to sell off their high-priced homes to relatively smaller and less-advantaged generations?
Purpose: This article presents a long-run projection of annual home buying and selling by age groups in the 50 states and considers implications for communities of the anticipated downturn in demand.
Methods: We propose a method for estimating average annual age-specific buying and selling rates, weighting these by population projections to identify states whose growing proportions of seniors may cause an excess of home selling sooner than others. We also analyze the likely supplier responses to diminished demand, and recommend strategies for local planners.
Results and conclusions: Sellers of existing homes provide 85% of the annual supply of homes sold, and home sales are driven by the aging of the population since seniors are net home sellers. The ratio of seniors to working-age residents will increase by 67% over the next two decades; thus we anticipate the end of a generational housing bubble. We also find that younger generations face an affordability barrier created by the recent housing price boom. With proper foresight, planners could mitigate what otherwise could be significant consequences of these projections.
Purpose: This article presents a long-run projection of annual home buying and selling by age groups in the 50 states and considers implications for communities of the anticipated downturn in demand.
Methods: We propose a method for estimating average annual age-specific buying and selling rates, weighting these by population projections to identify states whose growing proportions of seniors may cause an excess of home selling sooner than others. We also analyze the likely supplier responses to diminished demand, and recommend strategies for local planners.
Results and conclusions: Sellers of existing homes provide 85% of the annual supply of homes sold, and home sales are driven by the aging of the population since seniors are net home sellers. The ratio of seniors to working-age residents will increase by 67% over the next two decades; thus we anticipate the end of a generational housing bubble. We also find that younger generations face an affordability barrier created by the recent housing price boom. With proper foresight, planners could mitigate what otherwise could be significant consequences of these projections.
Are the Dow Transports defying doom and gloom?
Teresa Lo at InVivoAnalytics addresses one of my favorite (i.e. low IQ) indicators, the transportation stocks:
Have you noticed lately how quickly people’s emotions are changing day by day? Last week, it was doom and gloom and this week it’s relief that the Fed saved the day.
Have you noticed lately how quickly people’s emotions are changing day by day? Last week, it was doom and gloom and this week it’s relief that the Fed saved the day.
Everyone is glued to the financial media outlets listening to so-called experts talk about ‘this, that and the other thing’ AFTER the fact. It’s amazing.
Time is money, and your valuable time is better spent listening to what the market is saying.
While everyone is talking about the Fed, recession, unemployment, inflation, etc., something very interesting has appeared on our radar, standing out in these uncertain times: transportation....
...In conclusion, we stress the importance of watching the price action within the context of The Sentiment Cycle. The reason to watch the trucking industry and the Dow Transports in general is because this sector says a lot about the state of and the health of the economy.
It will be interesting to see what unfolds in the coming weeks. Are the Transports telling us a different story of the economy’s health than the financial media?
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