Investors might forget we’re in a bear market because investing this year has looked easy. Those who have missed out on the rally must be tearing their hair out. Their money burns a hole in their pockets.
The oil price is stubborn, like a two-year-old who refuses to eat his mashed peas. Despite all evidence that the market is well supplied, oil is over $70 a barrel again as I write. Taking the view out to the horizon, though, I think it will go higher and will drag the price of most commodities higher in its wake.
All the factors that set the fertilizer bull market in motion in the first place are still here. Populations are still growing. Diets are shifting toward more fruits, vegetables and meats — all fertilizer intensive. As Potash CEO Bill Doyle says, “This will continue to put pressure on global grain supplies, as farmers are being challenged to produce more with land and water resources that are shrinking on a per capita basis.”
Kazakhstan was once a nation of nomads wandering vast steppes. They herded cattle, goats and camels. On the country’s western edge lies the Caspian Sea. Towns grew up along the shore there, hauling in catches of sturgeon and black caviar.
Gold stocks are taking a drubbing, as are most of the other classic inflation hedges. Why? Because inflation fears have abated. The deflationist view of the world is the one that now prevails. That’s why 10-year Treasury yields have dropped all the way down to 3.35% from a high of 3.95% one month ago.
After the crash of 1929, the market had a nice recovery. By April 1930, the market was up 41% from its lows of Nov. 13, 1929. Many believed the worst was over. One of those who did was Benjamin Graham, the father of security analysis, Warren Buffett’s teacher and a great investor in his own right.
This is an eye-opener. Whenever I talk about the Great Depression and compare it with what is going on today, I get a lot of skepticism. I hear a lot of people say, definitively, “This isn’t as bad as the Great Depression.”
The housing bubble was one for the ages. We’ve all heard stories of one kind or another… There was the glass cutter who earned $5,000 per month, pretax. WaMu gave him a $615,000 home loan with payments of $3,600 per month.
Iran has a bigger place in the global economy than most people know.
China is hungry…and gets hungrier every day. Satisfying hunger requires fertilizer…lots of it. Think: Potash. China is not only getting hungrier, it is also developing a taste for the good life. Protein consumption always increases as a population’s wealth increases.