iPath Copper ETN (JJC) 6 Month Chart

The 6 month chart on iPath’s Copper ETN (JJC) looks incredible. Like other commodities, copper prices have been steadily increasing as countries begin to spend stimulus money on infrastructure projects.

UNG ETF Running Out of Shares

Word is that the UNG ETF is running out of shares to sell. This is probably due to the huge increase in volume we’ve been seeing over the last few months. I think investors are pretty much convinced that natural gas can’t get any lower so they’re loading up now for the pending run up. Natural gas has been lagging behind oil pricewise which is strange because oil usually leads the way for all commodities. We’ll know soon enough.

No ETF for Coal?

Can someone explain to me why there’s no ETF for coal? The closest thing I could find was KOL, which holds coal companies. Seriously, we have ETFs for gold, silver, oil, treasuries, but nothing for coal.

Commodities Play – Natural Gas (UNG)

I like natural gas as a commodities play. Demand for electricity will only increase as the car industry begins to shift towards plug in hybrids. Natural gas, while not renewable, is the cleanest burning fossil fuel out there. Besides electricity generation, natural gas is also used to making fertilizer and is used is chemical industry. Right now oil prices are on the rising again but natural gas prices haven’t caught up. The UNG 1 year chart below shows us that we might be at a bottom for this particular commodity. If we can get a reversal, the upside could be huge.

Markets Up for the week 6/12/2009

The Dow closed 100 points up for the week. Definately an encouraging sign. We’re seeing support at 8650 and some resistance at 8800.

Looking back, the 8500 mark break through was the catalyst for this latest run up. If we can stay above 8500, look for more money to start trickling into the market. The recent run up looks like it’s slowing down a bit from the March low of 6500. Investors should be cautious about buying new positions and look to lock in some profits from existing positions. Look to add new positions on the next pull back.

Beginning of the End or End of the Beginning?

Is this the end of the recession cycle or are we doomed to fall even further? My gut tells me that we’ve hit the bottom, at least for now.

Credit Freeze Hammers Market

Either this is the bottom or we head down to 8000. I think this might be it. Consumer spending comes down and companies start reporting worse than expected quarterly losses, we could be headed to 8000. But I think bad news is already priced into most shares. Exports. Exports. Exports!

Bear Stearns bailed out by Fed, JPMorgan

NEW YORK (AP) — Bear Stearns Cos., one of the most venerable names on Wall Street, turned to a rival bank and the federal government for a last-minute bailout Friday to prevent it from collapsing.

The Federal Reserve responded swiftly to pleas from Bear Stearns that its coffers had “significantly deteriorated” within a 24-hour period as rumors about the bank’s situation fueled the Wall Street version of a run on the bank. Central bankers tapped a rarely used Depression-era provision to provide loans, and said they were ready to provide extra resources to combat an erosion of confidence in America’s biggest financial institutions.

Nearly half the value of Bear Stearns, or about $5.7 billion, was wiped out in a matter of minutes as investors felt the bailout signaled that the credit crisis has reached a more serious stage, and now threatens to undermine the broader financial system — and the U.S. economy.

The Subprime Primer and “Systemic Margin Calls”

A friend of mine sent me this slide show explaining the subprime mortgage debacle. I thought it was both funny and enlightening so I’m passing it along to you.

Also, a recent article from Reuters.

Banks face “systemic margin call,” $325 billion hit: JPM

By Walden Siew

NEW YORK (Reuters) – Wall Street banks are facing a “systemic margin call” that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), said in a report late on Friday.

JPMorgan, which sent a default notice to Thornburg Mortgage Inc. (TMA.N: Quote, Profile, Research) after the lender missed a $28 million margin call, said more default notices and margin calls were likely. The Carlyle Group’s mortgage fund also failed to meet $37 million in margin calls this week.

“A systemic credit crunch is underway, driven primarily by bank writedowns for subprime mortgages,” according to the report co-authored by analyst Christopher Flanagan. “We would characterize this situation as a systemic margin call.”

The credit crisis that began about a year ago will likely intensify after Friday’s weak February U.S. employment report “that most definitely signals recession,” JPMorgan said.

Indeed, corporate bond spreads widened to a new record on Friday, surpassing levels seen in October 2002 during a boom in bankruptcies following the dot-com crash. U.S. employers cut payrolls in February for a second consecutive month, slashing 63,000 jobs, the biggest monthly job decline in nearly five years, the U.S. Labor Department reported on Friday.

“The weak February employment report points to an economy in recession,” JPMorgan said.

The JPMorgan report included a revised bleaker forecast for subprime-related home prices. The bank now sees prices falling 30 percent, from its prior 25 percent forecast. Those prices have declined 14 percent since mid-2006, JPMorgan said.

The U.S. jobs results also came after the Federal Reserve expanded the amount of its short-term auctions to $100 billion in total in the central bank’s latest effort to ease credit concerns. Ongoing concerns about bond insurers, known as monolines, and their effort to save their top ratings also are weighing on market sentiment.

(Editing by Eric Beech)

Life Takes Visa – IPO

Open up your checkbooks! On March 20, Visa (symbol V) begins trading as a public company. Visa is looking to raise at least 18 billion dollars with shares priced near $40. This could well be the largest IPO in US history. If Mastercard (symbol MA) is any indication of what will happen with Visa’s IPO, early investors will be buying in at a price that can’t go anywhere but up.

It could be argued that with the current turmoil in financial market, investing in a credit card company makes absolutely no sense. But I’d like to point out that Visa and Mastercard aren’t in the business of lending. They are in the business of processing electronic payments between retailers and banks. Credit is wholly extended by the banks alone, not by the processing companies. Visa and Mastercard are the middlemen. They take a cut from every transaction that takes place between the retailers and banks.

Well, what about a slow down in consumer spending? Signs do point to a slowing economy, however the proportion of credit card transactions for everyday purchases like gas and groceries is rising. Take, for example, the proliferation of debit cards. Banks now issue debit cards for free while charging you for paper checks. Even the government is into plastic. During the Katrina aftermath, the government doled out $2000 debit cards rather than cut paper checks. So guess who monopolize the debit cards? You got it: Visa and Mastercard.

So mark your calendars for March 20. Symbol V.