Tuesday, January 25, 2011

Global Commodity Crunch Concerning

A global commodity crunch is driving prices up with little relief in sight.Freezes in China,droughts in Russia and Australian floods,coupled with emerging market diets that are tending toward more protein and sugar,are generating costs that lead to civil unrest worldwide.
Citigroup says that corn and soybean prices will remain elevated for the next 6-12 months.U.S. corn and soybean production are down.Algerians are paying up to 30% more for staples.
Abdolreza Abbassian of the UN Food and Agriculture Organisation thinks we are entering a very precarious situation.We do not see any good news coming in from the crop side or the weather angle.In terms of prices,we are already as bad as 2008.Commodity exchange traded funds are also affecting prices as investor demand for shares continues to increase.
We would like rules and regulations and transparency by investors,Mr.Abbassian said.The weather will be the main driver in the months ahead.It is a very unpredictable and often unfavorable weather outlook,the FAO official noted.

Tuesday, January 18, 2011

AIG:Rescuing a Business

We've resolved the debt to the Federal Reserve.The real challenge is making sure we have good performance,said Robert Benmosche(pronounced "Benmoshay"),CEO of American International Group.Treasury's goal is to get as much as it can from the next initial public offering of AIG stock.My focus now is tomorrow.You can't make yesterday better.
How do you make the most money from selling the smallest amount of profits?Among AIG's businesses are SunAmerica Financial Group,U.S. Life,aircraft leasing and Mortgage Guaranty.We're gonna continue to look overseas.
AIG has the most entrepreneurial culture.That capability is not easy for people to underprice.Our turnover is below normal levels;our retention of clients is above normal levels.We have a core of people in leadership positions-they're excited.
We have a succession plan in place.I would love to see this all the way through,to see the last share be sold.The government will probably sell over a year and a half.
Europe is gonna be a tough haul.My sense is,they're gonna work through these problems.I don't see this as a disaster.It's just gonna slow things down a little bit,observed Robert Benmosche,the veteran business leader with a shock of gray hair to prove it.
AIG has repaid four billion dollars to the Federal Reserve Bank of New York,a milestone on its way back to independence from the government following the bailout that rescued it from the financial crisis.Plans for the sale of Treasury's stake in the company are well underway,which will mark AIG's return to normal corporate life.
AIG is a leading property-casualty insurer and financial services provider in more than 130 countries and jurisdictions.Its stock is listed on exchanges in the U.S.,Ireland and Japan.AIG employees are still aggressive achievers and pleased to be part of the recovery plan.
American International Group(AIG)

Saturday, January 15, 2011

Tuesday, January 11, 2011

Molycorp To Help Fill The China Gap

Molycorp Minerals is stepping up to the task of revitalising the U.S. rare earth elements industry as China cuts back on its exports of the strategic materials,which are vital to high tech industry and national security.China has an increasing internal demand for the minerals,which is currently at 60% of its production.
Mark Smith,Molycorp's cordial CEO,says there is an absolutely overwhelming demand for these materials.Rare earth processing,setting up the circuits,is a very time-consuming process.Molycorp will proceed carefully and with good chemical engineering.
At its Mountain Pass,California facility,Molycorp has one of the world's largest and richest rare earth deposits.It will take an additional 100-200 million dollars to double production by 2012.So far,20,000 tons per year have been funded.The additional money would come from certain interested parties.We expect to announce some good news in that regard in the next 3-6 months,Mr.Smith indicated.
The U.S. rare earth industry withered as China became the world's dominant producer of the minerals used in everything from cell phones to wind turbines and miltary hardware,a fact now regretted in the halls of Congress.A bill providing for revitalisation of the rare earth industry died in the last session of Congress, when it was passed by the House,but the Senate failed to take it up.The legislation,which authorised loan guarantees for rare earth projects,may be reintroduced in the new Congress.
Molycorp Minerals(MCP)

Tuesday, January 4, 2011

Guggenheim CIO:European Debt To Play Out In 2011

Scott Minerd,Chief Investment Officer at Guggenheim Partners,notes that every bank in Europe has some exposure to sovereign debt risk or some other European bank.There's a lot of stuff hidden under the carpet here.
There's gonna be some precipitating event,such as an Irish bank run.The Irish government doesn't have the resources to fully pay the deposits off.The European Central Bank has the printing press.
Already,5% of domestic deposits and 20% of foreign deposits have been withdrawn from Irish banks.The ECB will ultimately resort to printing money.I think this a 2011 event.
In the first half of the year,we will begin to see these events play themselves out.We'll be dealing with the ramifications through the second half of 2011.
We're positioning our clients to be long gold and credit protection in France,Germany and Italy.This is also a money-making opportunity,Mr.Minerd believes.
Guggenheim Partners is a global,diversified financial services firm active in money management,advising,investment banking and merchant banking.It operates from offices in the U.S.,Europe and Asia.