This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
Exactly one month ago, on Jan. 23, news leaked that a gigantic new shale oil field had been discovered… right in the middle of nowhere.
The location is a secluded town in southern Australia – Coober Pedy. It’s abou…
There’s a lot of talk about currency wars these days, but very little understanding about what that means for specific countries, economic growth, inflation, and your pocketbook.
Let’s fix that.
First of all, there has been no declaration of any currency war. And there likely won’t be.
That’s because open currency warfare could quickly lead to a mushrooming global crisis.
But that doesn’t mean countries aren’t already engaged in currency battles; they are. They almost always are.
Here’s an over-simplified explanation about how currency wars affect you.
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street…
As the global currency war intensifies, the majority of attention has been paid to the 17% fall of the Japanese yen against the U.S. dollar over the past few months.The implosion has given cover to the sad performance of another once mighty currency: the British pound sterling.
But in many ways the travails of the pound is far more instructive to those pondering the fate of the U.S. currency.
Japan has a unique economic and demographic profile which makes it a poor stalking horse. Newly elected Prime Minister Shinzo Abe and the Bank of Japan have clearly and forcefully committed Japan to a policy of inflation at any cost.
Even in a world of serial money printers their plans stand out as exceptional. Britain, on the other hand, is charting a more conventional course to the same destination.
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The UK government, under conservative Prime Minister David Cameron and Chancellor of the Exchequer George Osborne, has succeeded in bringing marginal discipline to their budgetary imbalances.
From 2009 to 2012, British government expenditures rose a total of just 1.6%, which was far below the official pace of inflation. (In contrast, U.S. federal spending grew by 7.9% over that time period). Since 2009 the British have kept their debt-to-GDP ratio lower than America’s and have cut into that metric at a faster rate.
Though tame through most of last year, food inflation has begun to surge again in 2013 – just as Money Morning Global Resources Specialist Peter Krauth predicted it would.
“Food inflation hasn’t reared its head for some time, and I think it’s about to start making headlines again before long,” Krauth wrote in a Jan. 18 note to subscribers of his Real Asset Returns investment service.
Sure enough, an inflation report yesterday (Wednesday) from the Labor Department showed that the biggest increase in January prices came in the food category.
Food prices – for both groceries and food eaten at restaurants – rose 0.7% in January, compared with December, accounting for more than three-fourths of the increase in the Producer Price Index (PPI).
The biggest driver of food inflation in January was the cost of vegetables, which rocketed 39%, withbroccoli, cauliflower and lettuce increasing the most.
The U.S. Department of Agriculture’s Economic Research Service is projecting food prices in 2013 will increase 3% to 4%, an annual increase the agency says is above the historical average.
The ERS said it expects animal-based food products (mostly meats) to be hit hardest, with cereals and bakery products also seeing above-average price increases.
The return of food inflation to the U.S. should come as no surprise, as it has become a worldwide trend over the past decade.
The Food Price Index developed by Food and Agriculture Organization of the United Nations has more than doubled from 97.7 in 2003 to 209.8 now following a decade of stability. (The index stood at about 102 in 1993.)
CNBC stock picker Jim Cramer calls it a “Great Gatsby market,” the growing divide between the rich and the rest of us.
And you can profit from it – by buying stocks of retailers that cater to the rich.
That’s because these luxury retailers don’t feel the pinch of economic hardships among their rich customer base nearly as much as lower-end retailers do.
Cramer says the rich can afford to buy expensive items, while much of the rest of the population struggles to get by and has less discretionary income now, partly because of the recent increase in the payroll tax and soaring gas prices.
“This is a Great Gatsby market; the rich are not like us,” Cramer says.
Even if the stock market slows this year, analysts don’t expect that to reduce spending among shoppers at high-end retail stores.
