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 U.S. investors await the Fed’s policy statement today with bated breath. Not much else to report there. All the major indexes finished a tad higher yesterday.
 The euro and pound both batted back against the buck this morning, up to $1.34 and $2.00, respectively.
“While the U.S. seems to be teetering on the brink of recession,” comments Chris Gaffney from the EverBank World Markets desk, “Europe continues on its steady growth path. The euro will continue to benefit from this stable growth and should move back to challenge $1.40 later this year.”
 Consumer confidence has fallen to its lowest level since August 2006. The Conference Board cites high gas prices and the housing bust as the bad juju weighing on consumers’ minds this month. If the consumer ever truly taps out, the U.S. economy is in trouble. But since the tech wreck in 2000, we’ve seen nothing but perseverance from that scrappy bunch. The U.S. consumer’s desire to spend at all costs has been the only constant in economics and the markets for nearly a decade now.
 And… in come the feds. The SEC has opened 12 separate “probes” into collateralized debt obligations (CDO) linked to the sinking value of subprime mortgages… and created a “working group” to focus on subprime market problems (yawn).
"To maintain our capital markets' leadership, we need a modern regulatory structure complemented by market leaders embracing best practices," said Treasury Secretary Paulson as he unleashed his pack of wolves.
Just like the federal government, eh? Wait ’til there’s blood in the streets, and then use the situation to extend authority. Where were they when the “no credit, no problem” ads were suckering in the subprimers in the first place? Better yet, why not just stay out altogether and let the market work things out?
For a more “rude” explanation of the looming CDO disaster, check out this conversation with Eric Fry in yesterday’s Rude Awakening.
 GM announced this morning they’re selling their Allison Transmission arm for $5.6 billion to private equity firms Carlyle Group and Onex Group.
With visions of fall 2002, GM also announced this week that it will be offering 0% financing for three years plus 1,000 bucks cash back on select cars and trucks. Ironically, the gimmick is a product tie-in to the movie Transformers. Transform is exactly what GM needs to do right now. Toyota handed them their hat in first-quarter sales… beating them squarely on their home turf: tough trucks for the meathead set.
First-quarter sales hoisted Toyota to the top as the world’s most successful automaker.
 Alabama, Tennessee, Georgia and Mississippi have now reported the driest springs in 113 years. Many Western states are experiencing decade-high drought conditions, as well.
Those fires near Lake Tahoe are just one of the results. We’re also seeing mounting crop losses, hay shortages, low water levels… the list goes on and on.
“Water is more precious than ever,” writes Chris Mayer. “A rising water price seems inevitable. Water conservation is more important than ever. That’s good for irrigation companies, for example. But it also means that this year’s grain crop could be light, driving grain stocks to new lows and prices to new highs.”
 The USDA says that by the end of this year’s harvest, global inventories for corn, wheat and other grains will cover only 45 days of consumption. That’s the lowest level since the government began keeping records in 1960 -- almost half a century ago.
As with any commodity, inventories of grains fluctuate. But the average since 1960 has been about 79 days’ supply. Today, it’s about 49 days. Yet the “big money” still isn’t listening. "I had 70 meetings with institutional investors and not one had seen the USDA data," says Don Coxe, portfolio strategist at BMO Financial Group in Chicago.
“The fact that Wall Street still isn’t clued in to what’s happening,” says Mayer, “shows that you can still get ahead of the game by investing in companies that should do well in this period of agflation.”
Which businesses will do well? “Fertilizer, crop protection and farm equipment. Also, the value of farmland should continue to rise. More farming also means more water and energy use -- good news for owners of the relevant commodities.”
Chris will have more about the trends leading to agflation and the spillover effects in his next issue of Capital & Crisis. Look for it: [link to product page].
 “If Chavez thinks he’ll create a ‘worker’s paradise’ out of the proceeds from his expropriations, he’ll have a rude awakening,” reports Dan Amoss. Our favorite South American dictator officially forced Exxon Mobil and ConocoPhillips out of Venezuela on Tuesday, and with them go the best Venezuelan oil minds.
“Frigid, remote Alberta has become one of the world’s fastest growing enclaves of Venezuelans,” reported the WSJ yesterday, “rivaling such warm-weather spots as Weston, Fla., outside Miami; and Sugar Land, Texas, near Houston. There are now 3,000 Venezuelan-Albertan families, up from 800 or so last year.
“The new arrivals are hardly huddled masses. Many are oil field veterans who have taken positions in Canadian refineries at salaries topping $100,000 a year. Canadian bosses prize the Venezuelans’ ability to apply techniques pioneered in South America, where oil deposits in Venezuela’s Orinoco region are mined much like Alberta’s gooey oil sands…
When oil sands development began in 1967, the “oil sands” boomtown Fort McMurray had just 4,000 people. Now it has 65,000, including 200 Venezuelan families, up from 30 a year ago. And there are still plenty of unfilled jobs.
“Good for Alberta,” says Dan. As it turns out, Hugo’s loss is their gain. “These professionals not only mitigate skilled labor shortages by filling vital engineering roles, but they can help train the future generations needed to bring about the kind of oil sands production growth everyone’s counting on to lessen future supply gaps.”
 “Regarding the piece on Exxon and Conoco refusing to sign on the Orinoco by the deadline, and your ‘Adios, Hugo... buena suerte,’" asked a reader, “are you implying that Chavez is: A) likely to meet with an armed or military force or assassination or B) have problems developing the resources?”
Interesting, we hadn’t even considered armed intervention.
 “As treasurer of the Ontario Libertarian Party in Canada, I have dealt with the conundrum of libertarians in politics,” declared a reader. “Is it contradictory to say we are seeking power in order to give it away? It seems most libertarians can’t be bothered with politics, until their ox is gored. But as a retiree with a decent pension and good investments, I can afford to spend a fair bit of time trying to fight leviathan.
“While libertarianism may be a personal philosophy, politics is a subset of ethics in philosophy. Politics deals with the issue of when government should use force against its citizens. Libertarians believe force may only be used to protect life, liberty and property. Therefore a libertarian government would be similarly limited. This is the objective of the Libertarian Party.
“The Canadian government has decided we may not use incandescent light bulbs! How bad is that?”
 “You reported that Peruvian gold and silver production was down, which resulted in the price of gold and silver going lower,” wrote a reader. “Why? I would think that such shrinkage in supply would cause prices to rise, if anything. What am I missing here?”
You would think, right? But in this case, you can thank the 10-year note. Bond yields have been rising up, making them more attractive as safe havens. When bond yields rise, metals lose some of their luster as “hedges” against a falling market. The news of slagging production in Peru couldn’t stem the momentum metals traders were reading on their charts.
 The Spanish government ordered a seizure of two vessels belonging to Odyssey Marine this week.
You’ll recall Odyssey’s ships found $500 million in sunken treasure late last month. And we’re trying to secure an exclusive offering of those coins on your behalf. We’ve just learned that those ships will be detained once they leave the Strait of Gibraltar and enter Spanish waters.
Odyssey has stated that it welcomes the search, as its exploration has been “totally transparent.” For security reasons, they’ve refused to reveal the location of the undersea booty. The Spanish are miffed because they think it’s somewhere in their territorial waters. Persnickety of them, we know... but we’ll keep you posted...
Best regards,
Addison Wiggin
The 5 Min. Forecast
P.S. There’s exactly one week left. You can still get our newest $995 investment research service free... on the house... gratis... no charge. But only if you act by midnight July 5, 2007. After that, the doors close. You’ll never see our best offer, this low in price, ever again. Click here:
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Monday. June 25, 2007: 
