By: Adam Nikulicz
The price of a bushel of corn traded at the highest levels allowed as fear mounts that the rise in inflation related to agricultural commodities will only increase after a government report that forecasts supplies and acreage planted. This past winter has been tough, it has been cold throughout the United States with times where each state in the country has snow falling in it. This has resulted in poorer harvests of agriculture commodities, while global demand for these products has only increased.
The stockpiles of corn in the United States dropped to their lowest levels since 2007, while conversely the futures prices of such commodities rose to their highest levels since 2008. Feelings by analysts are summarized as having expectations that prices will only continue rise as there does not appear to be enough supply to ration off demand. At ...
By: Adam Nikulicz
Today the Supreme Court in short order, rejected a bid by the Clearing House Association (a trade group representing large banks) to keep the information regarding the loans made to financial institutions via the Federal Reserves’ discount window during the 2008 crisis a secret. The high court without comment refused to consider any of the group’s appeals and kept in place the decision previously made by a lower court to release the information.
At issue is a concern by the banks that the public will be able to draw inferences and conclusions, whether justified or not, on the financial health of these businesses at that time. The Fed discount window being the facility that was in place and tapped to provide institutions liquidity in the wake of the bankruptcy of Lehman Brothers. There was no word on when the data would ...
By: Adam Nikulicz
Warren Buffet has pointed out what most investors knew as a result of the March 11th earthquake, tsunami, and subsequent nuclear reactor problems that have affected the area north of Tokyo in Japan. The billionaire investor believes that this series of truly life-changing and horrifying events are the genesis of an extraordinary time where excellent buying opportunities are created. Katrina, September 11th, both Gulf Wars and the 2008-2009 financial crisis are all very recent examples of times when unforeseen disastrous events created situations for large profits to be made relatively quickly. Perhaps more importantly they provide those flush with large cash reserves a chance to invest in a company or industry that they previously had felt too expensive. It should be noted that capital markets are not the only areas where these events can transpire, but for their quick movement, ...
By: Adam Nikulicz
As news of the effects of the earthquake in Japan continue to captivate the world, we are seeing easing in the global commodity fuels markets. The very real chance of a prolonged disruption to the economy of 3rd largest consumer of oil in the world shows again how geo-political events have the largest impact on markets.
The move out of oil by traders that is driving the price down, shows a flight to quality in the movement of their money. Instead of betting on the highly volatility commodity which had produced enormous returns in recent month, they are seeking out a safe haven till real demand observations for oil becomes clear. The nuclear crisis has added additional fears of the long term impact of the 9.0 magnitude earthquake and subsequent tsunami and could continue to drive down demand.
This move in ...
By: Adam Nikulicz
On Monday, Berkshire Hathaway announced that it would purchase the specialty chemicals company Lubrizol for approximately $9 billion. This would mark the one of the largest acquisitions every by the Warren Buffet led firm and also make for the second large investment made by the cash-flush fund in as many years. By paying nearly 28% above the current price per share of the company, Berkshire is taking ownership of the world’s largest producer of lubricants.
The attraction is plain given the investing decisions made in the past by Buffet. The company is large with a relatively consistent solid performance on earnings. The product is simple and easy to understand; Lubrizol produces good for global transportation markets, both for the retail consumer and the industrial buyer. (It’s products are essentially grease and fuel additives, the stuff that makes things move ...
