Today, the big news that could move commodities is not in China or the Middle East -- it's right here at home. US banks are failing and the Federal Government is going to bail out Fannie Mae and Freddie Mac. I think this has big implications for the US dollar, and not in a good way. I'll be writing more about this in Wednesday's Money and Markets. For now, here is some news of interest ... Fannie, Freddie Too Critical to Fail, Lawmakers Say A government takeover of one or both companies is among several options that have been considered by White House officials, according to a person familiar with the discussions who spoke on condition of anonymity. Senior Bush administration officials are considering placing either or both firms in a conservatorship if their problems get worse, the person said. Paulson Puts Treasury Behind Fannie Mae, Freddie Mac in Bid to Calm Market Paulson, speaking on the steps of the Treasury facing the White ...

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 ...

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The housing downturn and rising gasoline prices are each exerting a significant contractionary influence on U.S. GDP. There is also an interactive effect between the two. Temecula, CA. Source: Los Angeles Times. Temecula is a community in southern California some 60 miles from downtown San Diego and not a whole lot closer to anywhere else. And yet I've known people who commute to work here from Temecula, having been willing to trade driving time for more affordable housing. The population of Temecula doubled over the last decade. But with gas now nearing $4.50 a gallon in San Diego, the housing-commuting tradeoff is looking a lot less favorable for these exurban communities. Via Calculated Risk, the Los Angeles Times reports that as many as 15% of the homes in Temecula are ...

One of the ingredients for "bubbles" is the quest for the home run. Investors look to how much they wish to gain rather than to risk and reward. What happens when this quest intersects with a major downturn in an asset class? The Foreclosure Boom: Donald Trump Our local papers have featured ads from Donald Trump, explaining how you can profit from the foreclosure explosion. This article, while a few months old, is typical of what is happening. It is from Seattle, a pretty strong housing area which we visit four times a year for board meetings. But not to fear, capitalists, because one man's misery is another man's meat. In the same issue of the P-ITrump University"," a class where Trump promises "If you're not a millionaire by December 2008, you didn't attend my foreclosure workshop." Yes, that's right. Your struggling neighbors who are losing their homes in the subprime fiasco, are easy ...

Knock on wood but we continue a strange streak of no major earnings blowouts from the myriad fund holdings. I had reduced both positions going into earnings to reduce risk, but looks like both came through quite well. As opposed to Huron Consulting (HURN) which we sold out of yesterday, peer FTI Consulting (FCN) just continues to execute quarter after quarter; beat estimates and raise guidance - par for the course for these guys. All the drivers that should be driving HURN are in fact driving FCN. All this earnings growth even with a large share count increase (nearly a quarter) - even more impressive. Business advisory firm FTI Consulting Inc. said Wednesday its first-quarter profit more than doubled, surpassing Wall Street's expectations, as fallout from the subprime mortgage mess spurred strong revenue growth across all business segments. For the three months ended March 31, the company reported income ...

As I perused what positions to close this weekend, Huron Consulting (HURN) looked like a good candidate but I wanted to give these guys 1 more chance with earnings out this week. I consider Huron Consulting to be the Goofus of the sector [Mar 27: Adding to Huron Consulting on Earnings Warning] but enough is enough - it's warnings have gone from mildly amusing to annoying. They "beat" but that's because they warned in March... so it's not a real beat in my book; it's a "Wall Street" beat. Huron Consulting Group Inc (HURN) posted a quarterly profit above market estimates, helped by a 32 percent rise in revenue from its health and education consulting segment, but slashed its 2008 outlook. The weak outlook comes at a time when the credit crisis in the United States is widely being seen as a boon for consulting companies. ...

Looks like the "fertilizer correction" is over. Adding to all 3 of my names on their bounces off support; actually like the Potash (POT) chart the best here, but they all move together. I love this market. Uncle Ben has apparently created so much money, but none of it goes to people who need it out on Main Street. Instead it is flooding Wall Street pushing up equities (along with commodities) :) Kind of perverted but we all thank Uncle Ben as investors, as we curse him at the grocery aisle. $122 oil? No problem. That only affects US consumers - stocks are independent of the "little people". (X amount of stock) versus (Y amount of money supply x 20% annual growth rate) = prices go up. Economics 101. Equities are simply another commodity at this point, it appears. Every other commodity is going ballistic ...