Author: ColinTwiggs

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The Weekend Interview with Peter Brabeck-Letmathe: Can the World Still Feed Itself? – WSJ.com

Recent decades have seen “the creation of more than a billion new consumers in the world who have had the opportunity to move from extreme poverty into what we would call today a moderate middle class,” thanks to economic growth in places like China and India. This means a billion people who have “access to meat” for the first time, Mr. Brabeck-Letmathe [Chairman of Nestle] says.

“And the demand for meat,” he says, “has a multiplier effect of 10. You need 10 times as much land, 10 times as much [feed], 10 times as much water to produce one calorie of meat as you do to have one calorie of vegetables or grain.”

via The Weekend Interview with Peter Brabeck-Letmathe: Can the World Still Feed Itself? – WSJ.com.

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Dow runs out of buyers

Dow Jones Industrial Average failed to reach resistance at 11900/12000. Low volumes indicate a lack of interest from buyers rather than large numbers of sellers. Expect a test of support at 10600 to 10800. A strong surge in volume would indicate buying support, but failure is more likely and would offer a target of 9600*.

Dow Jones Industrial Average

* Target calculation: 10800 – ( 12000 – 10800 ) = 9600

The S&P 500 Index is similarly headed for a test of support at 1100/1120. 21-Day Twiggs Money Flow peaking below the zero line [bear] warns of strong selling pressure. Failure of support would offer a target of 1000*.

S&P500 Index

* Target calculation: 1120 – ( 1260 – 1120 ) = 980

The Nasdaq 100 Index fared better over the last few weeks, but a failed breakout above 2200 warns of another test of 2000. 13-Week Twiggs Money Flow reversal below zero would further strengthen the bear signal.

Nasdaq 100 Index

* Target calculation: 2000 – ( 2200 – 2000 ) = 1800

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China’s Low-Wage Export Engine Starts to Sputter – China Real Time Report – WSJ

UBS Economist Jonathan Anderson: Beijing has relied on super-low wages to win a bigger slice of global exports…….But for the past 24 months….China’s share of low-end light manufacturing imports into the U.S. and European Union “has peaked” at around 50% of those markets. In the U.S. market, Vietnam, Bangladesh, Indonesia and Mexico are picking up market share at China’s expense. In the EU, it’s those Asian nations along with Poland, the Czech Republic and Hungary.

via China’s Low-Wage Export Engine Starts to Sputter – China Real Time Report – WSJ.

Look for growth in these markets: Vietnam, Bangladesh(?), Indonesia, Mexico, Poland, the Czech Republic and Hungary.

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Troika Talks on Aid to Greece Stall – WSJ.com

“I expect a hard default definitely before March, maybe this year, and it could come with this program review,” said a senior IMF economist who is keeping close tabs on the situation. “The chances for a second program are slim.”

Failure of Greece to meet its targets, growing reluctance by some euro members to continue lending and the fact that private-sector participation in a second bailout won’t significantly alter Greece’s debt profile are the primary factors, the IMF official said.

via Troika Talks on Aid to Greece Stall – WSJ.com.

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The Problem With Your Bond Fund – SmartMoney.com

Twenty years ago the average bond fund cost $100 in sales charges and yearly expenses for each $10,000 invested, according to the Investment Company Institute. At the time, $10,000 was enough to produce a yearly income of $825 in 10-year Treasury bonds and $1,050 in corporate bonds rates Baa (“moderate credit risk”) by Moody’s.

The good news: last year, bond fund fees averaged $70 per $10,000 invested. The bad: $10,000 put in the same Treasurys or corporate bonds now provides only $220 or $540 in yearly income, respectively.

via The Problem With Your Bond Fund – SmartMoney.com.

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Jobs Paralysis Raises Odds of Fed Action – Real Time Economics – WSJ

Job market paralysis in August increases the chance the Federal Reserve will do something new to help the economy……. The current environment is pushing the Fed towards action. A week ago, Chairman Ben Bernanke told a gathering of the world’s top economic officials he was expanding the length of the upcoming September Federal Open Market Committee to give policy makers additional time to talk about what the Fed can do, which by itself increased the odds something was going to happen.

via Jobs Paralysis Raises Odds of Fed Action – Real Time Economics – WSJ.

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