|
 U.S investors shook off their pre-holiday hangovers yesterday and yelled, “Buy!” Major indexes rose about 1%. Mainstream market analysts credit positive news from the manufacturing sector for the rally. But don’t light those fireworks just yet… the underlying currency is all but giving these gains back...
 At $1.36 and $2.01, the greenback is dangerously close to record lows versus the euro and pound. The British currency hasn’t been this expensive for Americans since 1981.
But that’s just the beginning: Yesterday, the U.S. dollar also hit all-time lows against the Aussie dollar, a 25-year low against the New Zealand dollar, and is just shy of a 30-year low against the loonie.
“Investors are favoring currencies where they believe interest rates will rise,” explains Chris Gaffney, from the EverBank trading desk. “The Bank of England and the ECB will likely announce rate increases later this week, and currency traders are buying these currencies in front of those decisions. The European economies continue to expand, and unemployment fell to a record low in May as companies added jobs to meet strengthening demand.”
 The largest leveraged buyout in history is about to get inked. A private partnership led by the Ontario Teachers’ Pension Plan will buy Bell Canada in a deal worth $48.5 billion.
“Not so long ago, it seemed that KKR’s signature $30 billion takeover of RJR Nabisco in 1988 was insurmountable,” Chris Mayer writes. “That deal was so huge, so audacious, it became the subject of a best-selling book -- Barbarians at the Gate.”
And yet, if the Bell Canada deal goes through, that will round out the top 10 largest leveraged buyouts of all time… and they will have all taken place over the last 12 months.
 Ormat Technologies, one of the U.S.’s finest geothermal energy producers, just penned its biggest contract to date. Southern California Edison buddied up to Ormat in a “power purchase agreement” that guarantees SCE will buy 50-100 megawatts of geo over the next 20 years.
“Geothermal isn’t going away,” writes Byron King. As the above map shows, geothermal potential in the West is substantial. “There is enormous potential to harvest geo-energy here in the states,” writes Byron, “and government legislation is going to force big power companies to go green.
“Thus far, 22 states plus the District of Columbia have adopted ‘renewable portfolio’ standards. These are legislative mandates for public utilities to meet specific targets for renewable energy. My home state of Pennsylvania, for example, has a target that mandates 18% renewable, non-polluting electricity generation by 2020.
“Last fall, California Gov. Arnold Schwarzenegger signed into law a bill that, as of the beginning of 2007, all but prohibits utilities in the state from signing long-term contracts for power unless the sources emit less than 1,000 pounds of CO2 per megawatt-hour of electricity produced. While the law does not specifically ban coal-fired electric power from sale or use in California, it sets a CO2 limit that is so low as to effectively rule out coal plants as a future source for electricity sales into the West Coast market. Geothermal is a likely candidate to pick up the slack.”
If you’re reading Outstanding Investments, you know Byron issued a buy on Ormat last week. It’s up 6% on this news. We suspect there’s a lot more to come…
 We love this next item. Our two favorite nut jobs, Hugo Chavez and Mahmoud Ahmadinejad, have become playmates.
 During his visit to Belarus this week, Chavez announced an agreement with the Belarusian president, Aleksandr Lukashenko. Apparently, Venezuela, Iran and Belarus have “initiated the joint construction of a methanol complex” in southern Iran. Heh.
“The complex, with a capacity of 1 million tons of methanol per year, will be built in the Pars Special Economic Energy Zone in Assalouyeh, Iran,” say our friends at Stratfor.com. “A similar project is planned in the Zigma industrial zone in Venezuela. Iran and Venezuela also signed 14 new memoranda of understanding in various fields including energy, trade, petrochemical and mining industries.” The Full-On Oil War of 2007
 China is on track to lose over 61,600 square kilometers of land by 2010 due to soil erosion. That’s a plot of land about the size of West Virginia. E Jinping, the Chinese vice minister of water resources, attributes China’s annual net loss of 300 million tons of soil to irrational overgrazing, deforestation, various construction projects and hillside farming. Does this look like a farm to you?
“China has five times the population of the United States but less than half the farmable land,” reports Kevin Kerr. “As a result, farmers must use all available space, and even not-so-available space.
“The practice of ‘terracing’ is helping to speed up erosion and is a farming disaster waiting to happen,” says Kevin. (Mr. Kerr supplied The 5 with these photos.)
“My main presentation in Vancouver is going to focus on agricultural and tropical commodities and China,” Kevin tells us. “The ags are the best market to trade right now, and that trend is likely to continue for a long time to come. The farming situation in China is getting out of control.”
If you’ve already paid for the Vancouver conference and decide to become a Reserve member this week, we’ll give you your registration fee back. Reserve members attend all our events free… for life. If you’d simply like to attend the conference, you’ll find details here:
Rim of Fire Investment Symposium: July 24-27, 2007, Vancouver, British Columbia
 Here we go again… retail prices for beer at supermarkets in America rose 3% in May -- the biggest increase in 2½ years. According to this morning’s USA Today, many farmers who used to grow barley have switched to corn. Barley prices are up 17% this year and are sitting on an 11-year high. It was one thing when we learned the price of beer was rising in Germany, but this…
“This we can’t stand!” exclaims Greg "Grizzle" Grillot, managing editor of Whiskey & Gunpowder. “First gas... then milk... then pork... then even my damned tortillas. But beer! How can I stomach Independence Day while suffering from this nasty inflation?”
 “If you truly believe in the K.I.S.S. principle,” wrote a reader last night, “why don't you send the AFR to all your subscribers at no cost, and we will invest accordingly and send you the first profits made until your subscription price is paid plus 10% per annum interest.
“WHAT COULD BE SIMPLER? You will start receiving all these checks every month in increasing amounts just like manna from heaven. No bookkeeping, no accounting, no problems! If you do it on the honor system, you might be surprised with the results. You might even have enough to share some with Mr. Bonner.”
The 5 responds: Please stop.
 “I read today’s comments from the ‘GMC Truck Guy,’ and I would like to reply to his statements about the Financial Reserve,” writes another reader. “He stated that his portfolio was ‘way too small to invest this sort of money’ and that ‘you're after the big guys, I know (or at least the bigger little guys).’
“These statements could not be further from the truth. You have already posted one e-mail from me with an update on the success I’ve had using my Financial Reserve membership, so I won’t reprint all of the details. But I can tell you that I am a ‘regular’ investor with a pretty small portfolio. I just started investing about four years ago after finally reaching a financially stable point in my life. My company does not offer any retirement plan options, so my wife and I only contribute $333.33 each per month to our individual IRA accounts (as per the IRS max of $4,000 annually). We only save about $8,000 per year total, and I use an online discount brokerage service to invest the money.
“Using different recommendations from the various services provided by my Financial Reserve membership, I have recouped approximately 70% of the cost for the Financial Reserve membership. Not too bad for a small-time investor. When I joined the Reserve, I was looking at the long-term prospects of being a member and did a ‘big-picture’ analysis to see if I could afford the cost. I know that everyone’s situation is different, but it has worked out great for me so far. Thanks again to you and your staff!!”
You hit the nail on the head. Ask any editor or writer on the Reserve staff, this is exactly why we do what we do. There aren’t too many people who give a rat’s arse about the “little guy.”
Addison Wiggin,
The 5 Min. Forecast
P.S. 72 hours left… this countdown is getting kind of fun!
|
Monday. June 25, 2007: 
