By Martin Hutchinson Contributing Editor With sky-high growth potential, China and India are the two markets no investor can afford to miss out on. But that doesn’t mean they’re impervious to market turbulence, and in times of trouble, India is the more reliable investment. No doubt, both countries’ markets are suffering this year, with China’s Shanghai A Index down 50%, and India’s Sensex Index down 25%.  It’s no secret that India is struggling with both a growing budget deficit and mounting inflationary pressure. But China has problems too – it’s just hiding them under the carpet until the Olympics are over. That’s why, for me at least, the investment decision is clear – I’ll buy the country whose problems are out in the open and already reflected in stock prices. China’s Pending Credit Crunch China’s inflation has been quiescent recently. It declined from 8.7% ...

Mining will keep economy growing Need to increase production Prices may fall but demand will be strong

 

THE mining boom will help keep Australia’s economy from falling into a hole until at least 2013, a report suggests.

Economic forecaster BIS Shrapnel said record levels of mining investment together with a ramp-up in production will insulate the economy from recession for the next five years - even with commodity prices tipped to fall.

“We didn’t really do enough investment, with the benefit of hindsight, through the 1990s to gear ourselves up for maintaining strong growth in mineral output and what we’re trying to do now is catch up,” said Adrian Hart, senior manager of BIS Shrapnel’s mining unit.

“The next five years will all be about increasing production to meet demand from China and other emerging economies . . . and once that production comes on stream that will drive weaker prices for a lot of commodities.”

The

...

Source This morning we were pleased to welcome Janet Yellen, President of the Federal Reserve Bank of San Francisco, to our UCSD Economics Roundtable. She focused on three main challenges: the housing slump, financial market turmoil, and commodity prices, which she likened to the three witches from Macbeth. Her complete speech is available from the FRB SFO Here are some excerpts. Janet Yellen (photo courtesy of FRB SFO). Housing. Unfortunately, it appears to me that there are at least three reasons for thinking that housing prices have further to fall. First, the ratio of house prices to rents-- a kind of price-dividend ratio for housing-- still remains quite high by historical standards.... Second, inventories of unsold homes remain at elevated levels.... Third, the futures market for house prices predicts further declines in a number of metropolitan areas this year.... Financial markets. ...

If our report of earlier in the week wasn’t bad enough about the British economy, more figures have come to light that suggest it’s almost in free fall, so rapid is the downturn. It’s a slump that is being repeated in more and more of Europe. The Irish economy is moving closer to recession, and now economists say that Denmark, Portugal, Italy and Spain are hovering on the brink as the European Central Bank prepares to lift rates tonight (our time) by 0.25% to 4.25%. That rate decision could very well change the dynamics of markets here, in Europe, the US and Asia. A rate of 4.25% from the ECB, compared to 2% from the US fed, has the potential to cause more damage to the US dollar, drive commodity prices even higher, especially oil, and further boost inflation. Commodity prices moved up sharply overnight with oil above $US144 a barrel, copper hitting a ...

Reeds Inc., a brewer/manufacturer and marketer of all-natural beverage, candy and ice cream products, works to offer natural food products primarily to the California market. The company’s primary lines of product feature the herb, ginger, but it also offers lines of carbonated cola, cream soda and root beer. At present, the company is selling its product lines through 10,500 supermarket, gourmet and natural food store outlets.

The company has been finding great success with adding large direct-to-chain outlets. Its most recent addition is the 215 outlets of Ralph’s Supermarkets – a division of Kroger Inc. The company’s product line has been included as an integral part of Ralph’s current advertising campaign, with inclusion in two currently running television ads. It has also been included within Ralph’s Optimum Wellness Program. From a general perspective, Reed’s is positioned to take full advantage of all marketing and promotional opportunities that Ralph’s has to offer.

The

...

Location-Channel: CNBC Asia

Day and Date: Thursday, 26th June 2008

Hong Kong Time: 11:10

Show Notes:

1) Many believe that the Fed will keep rates on hold for now. Your views? Do

you think that Ben Bernanke has good reasons to stay neutral for now? Has

the Fed been doing a good job?

· I cannot imagine them hiking rates before the elections are over with

·

…

Source: Mineweb.com  06/17/2008
In its review of global trends of the mining industry, Price WaterhouseCoopers predicts that “2008 will reflect production growth that reflects growing cost pressures.”

“Commodity prices will remain volatile; however, recent significant price rises for bulk commodities will positively impact the bottom line,” according to PwC’s fifth annual review of the global mining industry.

“Consistent with the prior year, the industry leaders will continue to spread out from their geographical homes to operate assets globally,” the PwC global mining team forecast in their report, Mine-As good as it gets?

Price WaterhouseCoopers’ global mining team said diversified global miners fared better last year than gold companies who have experienced the weakest margins.

Emerging market companies have shown especially high growth with these companies now comprising 36% of the Top 40 miners’ market capitalization.

The total market cap of the global mining industry achieved 54% growth as measured by the HSBC …

Congress is up in arms. And the Commodity Futures Trading Commission (CFTC) is on the warpath. Their target: Speculators in the natural resources market. The CFTC said this week that it's investigating a dramatic rise in cotton prices from earlier this year. It also plans to tighten some rules that apply to investors in the broader agricultural futures markets. Those steps come just a few days after the regulatory body said it would investigate oil trading activity to see if prices are being manipulated. Meanwhile, the Senate Commerce, Science, and Transportation Committee just held a hearing on commodities speculation. At the gathering, legendary hedge fund manager George Soros said: "There is a strong prima facie case against institutional investors pursuing a commodity index-buying strategy ... It is intellectually dishonest, potentially destabilizing and ...

Here is a rare piece of dis-inflationary commodity news. China Aluminum Corporation (also known as Chalco) cuts its wholesale spot price of aluminum by 16.7%. I don't own Chalco and I sold my energy stocks 2 weeks ago and this is another piece of confirmation that tells me commodity prices are overdue for a pullback.Temporary...but a pullback nonetheless.

Investors have been surprised by the FTSE/JSE All Share Index’s strong rally of 24,9% since the market’s low on 23 January 2008. What is even more surprising is the large difference in the improvement of the major sub-indices. Resources companies have rallied by an incredible 44,8% on the back of only a few shares, followed by industrial companies with 18,6% and financial companies with only 9,4%.

As a result of the sharp rise in commodity prices on global markets and the woes of foreign banks (owing to the credit crunch), investors are sorely tempted to switch investments in resources companies to financial companies. However, investors should bear in mind that the return on an investment in a

…