 | | The Daily Reckoning | Wednesday, June 09, 2010 |
- Getting more coffee in your diet...and your portfolio...
- One place to find shelter during the Atlantic storm season...
- Bill Bonner explains why gold isn't bubble...yet...and more!
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|  | | Coffee Drinkers Rejoice!
| | Good news for your health AND your portfolio | |  | | Eric Fry |
Reporting from Laguna Beach, California...
Whenever your editor is not drinking espresso, he is usually drinking wine...and vice versa. It's all about the health benefits. Otherwise, why consume these foul-tasting fluids?
The documented virtues of (moderate) wine consumption include reduced risk of cardiovascular disease, stroke and certain cancers. Wine consumption may also reduce the risk of diabetes and dementia. Best of all, researchers from the University of Bordeaux have determined that moderate wine consumption (2-3 glasses a day) produces a 30% reduction in the death rate from any cause whatsoever. In other words, wine is literally "good for what ails ya."
Sold!
Now comes news that coffee also confers magical health benefits. "There is increasing evidence that coffee provides real and easily accessible protection from Alzheimer's disease," observes Patrick Cox, editor of the Breakthrough Technology Alert. "For several years now, studies have been coming forth that indicate coffee drinkers are less prone to suffer from a variety of diseases. These diseases range from Alzheimer's to cirrhosis of the liver to colon cancer and Parkinson's...
"I've hesitated to write about these findings," Patrick cautions, "because many of the studies are complex, with odd outliers that mean some people in some situations probably shouldn't drink too much coffee... On the other hand, I've got advice from one of the leading scientists, not only regarding Alzheimer's, but aging in general. That's Mark A. Smith, Ph.D., professor of pathology at Case Western Reserve University. He's executive director of the American Aging Association and editor-in-chief of the important Journal of Alzheimer's Disease, which recently published an entire special issue on the subject, "Therapeutic Opportunities for Caffeine in Alzheimer's Disease and Other Neurodegenerative Disorders." This is a remarkable issue, and it is available online here.
"I won't try to summarize the results," Patrick continues, "but I will quote Dr. Smith, who generously gave me his assessment:
"'The increasing evidence that coffee and caffeine are of significant benefit in slowing and reducing the impact of Alzheimer's disease bolsters the approach...that mitochondrial dysfunction, oxidative stress and metabolic alterations are underlying factors in Alzheimer's disease. While the exact pathways that coffee or caffeine impact are still under investigation, several factors appear to play a role in this protective effect, including coffee's anti-oxidative actions, as well as caffeine's ability to protect the blood-brain barrier. Based on this, including coffee as part of a balanced diet may be beneficial.'
"For years, Smith has been one of the leading critics of the theory that beta-amyloid and tau protein are the causes of Alzheimer's disease," Patrick concludes. "Finally, that message is sinking in. A recent Reuters piece reflects this new understanding - so you might pour yourself a cup of coffee and read it, as well as the JAD issue."
[Ed. Note: Thanks to in-depth research like this, Patrick's Breakthrough Technology Alertreaders are often some of the market's best-informed investors. In fact, he's recently showed his readers six (6) events in 2010 that could reshape the future. His predictions, and how he recommends you act on them, will give you a chance to get into the real money faster than the crowd... Please, if you do anything today, make sure you check out Patrick's entire 2010 predictions set right here.]
If, indeed, wine and espresso irrigate the verdant path to longevity, your editor holds out hope for other staples of his diet. Maybe T-bone steaks build immunity against West Nile Virus. Or maybe Pringles reduce the incidence of deep vein thrombosis. Or maybe whipped cream - applied epidermally - boosts the immune system against skin cancer.
Whatever the case, the fascinating findings of dietary science usually stop short of distinguishing between cause and effect. This brand of science merely identifies statisitical correlations between the two.
Chronic consumption of Krispy Kreme donuts probably correlates with a reduced incidence of sports-related injuries and deaths. Not because the donuts are healthy, but because the consumer of said donuts rarely abandons his couch to play any kind of sport.
Net-net, no matter how many scientists study the topic, we will probably never know, conclusively, if cabbage is healthier than cotton candy...or if cabernet is healthier than either one. Nor will we know, conclusively, if coffee produces a greater health benefit than either carrot juice or carrot cake.
But Alan Knuckman, editor of the Resource Trader Alert, argues that coffee can produce an immediate benefit...to your portfolio. Alan doesn't care about drinking coffee, he cares about trading it. Alan is a "commodities guy."
For the last few years, Alan has been alerting his subscribers to trading opportunities in the commodities markets - everything from gold to crude oil to coffee. And just a few days ago, Alan urged the subscribers of his Resource Trader Alert to establish a bullish position in the coffee market. He provides his complete analysis in the column below... | | | The Daily Reckoning Presents
| Buy Coffee
|  | | Alan Knuckman |
The financial media has been focusing on the financial storm brewing on Wall Street, but today I'm here to tell you about an upcoming storm of a different sort. You see, the weather can have a palpable impact on financial markets, and right now it looks poised to send one of my favorite soft commodities soaring.
I think the coffee price is heading higher.
Right on cue, the announcement last week of higher storm estimates for the 2010 hurricane season has started to impact commodities. The National Oceanic and Atmospheric Administration, is predicting an above-average year of tropical storms for the Atlantic basin.
According to USAToday:
The agency's forecast for 2010, released today, calls for 14 to 23 named storms in the Atlantic Ocean, Caribbean Sea and Gulf of Mexico.
Of those named storms, 8 to 14 should become hurricanes, including 3 to 7 "major" hurricanes, with wind speeds above 111 mph, the agency says.
Tropical storms are given a name when wind speeds reach 39 mph, and are upgraded to hurricane status when sustained winds reach 74 mph. An average Atlantic hurricane season sees 11 named storms, including six hurricanes, with two becoming major hurricanes.
If this outlook holds true, this season could be one of the more active on record," NOAA chief Jane Lubchenco said today at a press conference. Some of the markets most affected by hurricanes are surely the soft commodities - coffee, sugar, and cocoa - which I want to discuss now.
Storms are a big deal for commodities because they impact the supply and demand equilibrium that would otherwise take place in the market. If a major storm system severely restricts coffee production, for instance, supply gets choked off, and prices rise as a result. That's a very good thing for commodities investors who place bets expecting prices to rise during storm season...
Right now, I think that one particular soft commodity - coffee - could be best poised to profit.
Coffee looks ready to test the $1.38 level for the third time since April. A strong triple bottom with prices holding $1.30 January, March and now April/May is very encouraging for bullish rallies.
Here's more from Bloomberg:
Coffee futures climbed the most in four weeks after a tropical storm slammed Guatemala, Central America's largest producer. Cocoa also gained.
Landslides and flooding killed at least 82 people and left 53 missing, David de Leon, a spokesman for Guatemalas national disaster agency, said yesterday. Downed bridges and landslides cut off access for some coffee growers in western Guatemala, said Lucrecia Rodriguez, a deputy manager at Anacafe, an industry trade group.
People are concerned about the conditions in Guatemala, said Tom Mikulski, a senior market strategist at Lind-Waldock, a broker in Chicago. When it comes to staking out your own coffee position, time is of the essence...
Needless to say, I've already briefed my Resource Trader Alert readers on the coffee spread play that I think is best positioned to profit as the spot price continues to climb. Our coffee spread position looks especially attractive right now since the higher strike options have little chance of any return. (And obviously, you can get that specific trade by accepting a risk-free trial to my service.)
But if you're willing to accept a less super-charged path to coffee profits, you can get decent exposure to coffee through an exchange traded note, the Barclays Capital iPath Coffee ETN (NYSE: JO). JO is a pure play on coffee; that's the good news. The bad news is that JO is not an actively traded security. With a market capitalization of only $12 million, JO rarely trades more than 10,000 shares a day.
The summer weather promises to be a bit wilder than usual. So keep your eyes on the "softs"...especially coffee...and look for opportunities to profit.
Alan Knuckman
for The Daily Reckoning
P.S.: Commodities can seem tricky to outsiders, but you might be surprised at just how accessible this "Millionaire's Market" truly is. If you'd like me to help guide you to step-by-step commodity gains, just read this report about my Resource Trader Alert.
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| | | Bill Bonner | A Gold Medal in Economic Incompetence
|  | | Bill Bonner |
Reckoning from Baltimore, Maryland...
They fought the correction; the correction won.
We refer to Bernanke, Summers, Obama, Geithner, Krugman - the whole lot of them. They added three trillion dollars to US debt in the last two years. In two more years the debt will be at 100% of GDP. Add in the debts they've guaranteed - from Fannie Mae, for example, and state and local debt implicitly backed by the feds - and you're already at 150% of GDP. Worse than Greece, in other words.
And what do we get for it? A recovery? A healthy economy? A gold medal?
We'll take the gold medal, thank you. It's the only one that's real.
The stock market was ready for a little bounce yesterday. So that's what it did...a little bounce - the Dow up 123.
Gold kept climbing - to a new record high of $1,245.
If you had asked us 10 years ago which we'd rather have - stocks or gold - we would have said gold. Ask us now. Same answer.
Gold.
There aren't many times when it makes sense to favor gold over productive investments. But this is one of those times.
Why? Because the world's monetary system is heading for a crackup. And because the people running it have no idea what they are doing.
Bloomberg:
Pimco's Crescenzi Sees 'Endpoint' in Devaluations
June 8 (Bloomberg) - Nations have reached a "Keynesian endpoint" as exhausted balance sheets leave policy makers with few options to bolster economic growth, according to Anthony Crescenzi, an investor at Pacific Investment Management Co., the world's largest bond-fund manager.
"Time, devaluations, and debt restructurings might be the only way out for many nations," Crescenzi wrote in an e-mailed note titled "Keynesian Endpoint" that referenced the Great Depression era economist John Maynard Keynes. Debt-fueled spending programs aimed at combating the global financial crisis of 2008 are among policy tools now "being seen as a magic elixir that has morphed into poison."
The Obama administration forecast a $1.6 trillion budget deficit, the most ever, in the current fiscal year that began Oct. 1. You can fight a correction. You can delay it. You can distort it. You can make it bigger and nastier. But you can't beat it. Eventually, mistakes have to be corrected...one way or another.
Usually, the mistakes take the shape of bad investments or bad loans. You can pretend that they're still worth what you have in them. You can bail out the lenders and/or the investors. You can default and inflate. But somehow, someone, sometime is going to take a loss.
That's when you need gold. Every other asset could have bad debt behind it...in it...or standing so close beside it that a blow-up would be damaging.
The correction that began in '07 was needed to address all the bad debt built up in the bubble years. The feds tried to stop it. Since they didn't have any money they had to fight it by borrowing more money - that is, by increasing the level of debt!
We knew that wasn't going to work.
And now, there's bad private debt...and bad public sector debt too. And now we're approaching a Keynesian "endpoint" when lenders are growing wary. They've already cut off Greece. They've warned the rest of Europe. And when they stop lending...then, all your props fall down...along with the economy...and the markets too...
And more thoughts...
The people running America's fight against the Great Correction have no idea what they are up against. Here's Ben Bernanke, as reported by the Associated Press:
Federal Reserve Chairman Ben Bernanke said Monday he is hopeful the economy will gain traction and not fall back into a "double dip" recession.
"My best guess is we will have a continued recovery, but it won't feel terrific," Bernanke said.
That's because economic growth won't be robust enough to quickly drive down the unemployment rate, now at 9.7 percent, he said in remarks to the Woodrow Wilson International Center for Scholars, a nonpartisan research group.
The economy grew at a 3 percent pace in the first quarter of this year. That's good growth during normal times. But coming out of such a deep recession, the economy must grow much more strongly to make a dent in the jobless rate.
Fears have grown that the recovery could be derailed if Europe's debt crisis turns into a broader financial contagion, crimping lending in the United States and around the globe. The situation has spooked investors, sending Wall Street into fits of panic. Bernanke said the Fed is monitoring the European crisis carefully, and he believes European leaders are taking the right steps to deal with the problems.
Asked when the Fed will start raising interest rates, Bernanke quipped "in the future." Bernanke pretends that the problem is in Europe. It's not. It's in America. Total debt levels in the US are higher than in Europe. What's more, Europe is already tackling its bad debt problems. America is not.
Meanwhile, Larry Summers says Obama is having great success in "restoring the United States to strong economic fundamentals...while there remains much to do, the US economy is growing."
Money is flowing to the US now. Because America is thought to be a safe haven. This makes it possible - even easy - for US authorities to go even deeper in debt. As the Chinese philosopher Laozi put it, long before the birth of Christ, "a nation is never so poor as when it appears to be overflowing with riches."
*** Investment pundits are talking about a bubble in the gold market. And, yes, a bubble will develop in gold. But it's not there yet. You'll know there's a bubble in gold when the people who are now warning you against it begin urging you to buy it.
Until then, we're still in the second stage of the bull market. Smart investors are accumulating gold. Most investors barely know it exists.
In the first stage, gold is a bargain. It is out-of-whack with the rest of the markets. That's what happened at the end of the '90s. It had been going down for nearly 20 years and was severely undervalued in comparison to other assets. In 1980, you could have bought the entire Dow for one ounce of gold. But by 1999, you would have needed 43 ounces to buy the Dow - a huge fall-off in the price of gold.
Today, gold is no longer a bargain. It's about where it ought to be. Maybe even a little on the high side. Not too long ago, a large cache of golden objects dating from the 8th century was found buried in England. It looked like booty from a raiding party. It had been hidden in the ground...but the raiders never returned to claim it. Why? Maybe they were captured or killed. Or maybe they were driven out of the territory.
It's hard to track prices back over the centuries. But when Roy Jastram did it in his book, The Golden Constant, he discovered little difference in gold prices over the centuries. In today's money, gold was always in the $800-$1,200 range.
But when modern paper currencies were cut loose from gold - in 1971 - they lost value fast. In Britain, for example, the pound lost as much purchasing power in the last 40 years as in the previous 7 centuries.
The post-'71 paper-backed money system tricked out everyone. The credit markets went wild. Total debt in the US is 10 times higher than it was then. Almost every major developed nation is nearly bankrupt...yet practically every household in Europe and America now depends on the state to provide essential support. Retirees count on Social Security and socialized medicine. Homeowners depend on government-backed mortgage markets. In America, 40 million people collect food stamps. Millions more collect unemployment or other forms of income support.
It is no wonder the markets are getting edgy. There's a whiff of disaster in the air...like the smell of an approaching storm. Stocks are prices for sunny skies...and there's a hard rain coming. The US dollar is priced for stability...and there's a whole lot of shakin' coming. People are putting money into US bonds as if you could trust them...and they long ago crossed over to the cheatin' side of town.
What do you buy when you suspect that the monetary system is a scam and a shambles? Gold. Anything else is a promise. A company promises to pay you a dividend. A renter promises to pay you rent. A homeowner promises to make a mortgage payment. The government promises to pay you interest. And each one of them depends on some other debt-bent promisor.
Gold makes no promises. It is what it is. Not perfect money. But the best kind of money ever discovered.
Regards,
Bill Bonner
for The Daily Reckoning
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Editor's Note: We've just been alerted to a brand new opportunity from our Executive Publisher, Addison Wiggin, and we wanted to make sure you had first crack at it...
It's a unique, brand new service that allows you to listen in on Addison's "private" conference calls as he and his inside contacts debate ways to potentially profit from the hottest financial topics.
The first call is on June 17th. Entrance into this elite service is extremely limited...with possibly less than 1,000 total subscribers allowed to "eavesdrop" on the call. If you're interesed in learning more, sign up here and we'll send an invitation your way early next week.
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Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor atjoel@dailyreckoning.com
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| |  |  |  | Government Spending Won’t Stave Off a Correction
Yes, dear reader, now our leaders are called upon to solve problems that they are not equipped to solve. They are not prepared for the challenge. They cannot do it. Even the best minds in the world are stumped. The latest important news came out on Friday. Eighteen months. Two trillion dollars. And now this: the number of unemployed people is still going up!
The Specious Reasoning of Census Employment
Honohan, Meet Havenstain | Insufficient Silver to Supply China’s Growing Demand
Most people have never heard of “the invisible hand” of the market, which is the surprising result of everyone working to get money with which to satisfy their own selfish interests, and it ends up benefiting everybody, a result that is so glorious that it seems that things are being guided by some “invisible hand.” On the other hand, most people have heard...the oxymoron “Hi. We’re from the government and we’re here to help you.”
Inflation Corroded Copper Coins
Re-Animating a Debt Dog | Lubrizol Corporation (NYSE:LZ) — Suffering From a Weaker Euro
Lubrizol Corporation (NYSE:LZ) is a specialty chemical company and, although it has over 6,700 employees and facilities in 27 countries, it might have become too dependent of late on a weaker US dollar. The dollar’s turnaround could have a significant impact on company earnings.
Game Show: European Debt Road to Global Failure
Debt-Fueled Spending Programs are “Poison” | |
| | The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists. | |
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