Investing: Monsanto - Feeding The World?

Recently we learned that the population of the world crossed the mark of 7 billion. The UNO predicts that the global population could reach the mark of 10 billion by the year 2100. How can we feed so many people?

The answer is rising productivity. For centuries farmers are boosting their harvests by cultivating better seeds and modernizing their cultivating and harvesting methods. Now they get some help from genetic engineering (wikipedia). More and more farmers use genetically engineered seeds which are more resistant against fungal infections, viruses, droughts, chilly weather and other challenges and improve therefore indirectly their crop yields.

This also is a topic for investors with a long term view. Last week Monsanto reported strong numbers (thestreet.com). The company is a multinational agricultural biotechnology and the leading producer of genetic engineered seeds (wikipedia) (monsanto.com).

In the first quarter of their new business year Monsanto`s revenue rose  33 percent to $2.44 billion as farmers in the southern hemisphere bought more genetically modified corn seed, the management explained (bloomberg). They reported that Latin American farmers grew more genetically modified corn. They also said that U.S. orders are ahead of last year (seekingalpha.com).   

The management also is very optimistic about the long term. It claims that genetic engineering is still in an early phase of a long-term technology cycle. The situation today seems be comparable with the electronic industry in the 60s of the last century which brought us computers, Color-TV, copy-machines and similar technologies. Today just 10% of the seed used in the U.S. are genetically enhanced. Monsanto therefore expects a large potential to grow.

The Monsanto stock is a wager on the growing use of genetic engineering in farming. But the stock (finance.yahoo) also has a lot of risks of course. There is a huge political resistance against genetics, which might result in restraining laws and very costly legal fights. There also are competitors, like the German chemical company BASF, who may develop attractive products and could conquer the markets. Some of the fantasy might be already priced in the stock price.

Disclaimer: I don´t have any position in Monsanto and BASF.

Globalization: Europe - The Center Of The World?

Europe is the center of the world, other regions are irrelevant! This is the message the media want   us to believe. They are excessively focussed on the old continent.  Every political action in Europe dominates the headlines in the media and influences the stock markets in U.S. and Asia.

This Eurocentric picture of the world fit to the 17th century, when Europe indeed ruled the globe and possessed most of the world`s wealth. But the obsession with Europe doesn`t fit to the reality of 2012. We have still the Sistine Chapel and the Cologne Cathedral, but we don`t dominate the world any more. The Eurocentric picture ignores the huge and growing economies in America & Asia.

The recent economic news from U.S., including rising retail sales and an improving labor market,  show that the American economy is now getting stronger - instead of the European mess. The data show that Europe isn`t big and important enough to slow the U.S. economy down. And the other engines of the global economy are running too, including China, other emerging markets (Turkey, Mexico) and the former Sovjet-empire (Russia, Ukraine). The (economic) world is now too big and too dynamic to be seriously endangered by a small group of countries.

The strength of the economies in U.S., Latin America and Asia should also contribute to the healing of Europe. At least the German economy, which is focused on exports, should benefit from the ongoing growth of the global economy. In turn a stronger Germany could stabilize the ailing rest of Europe.

Movies: Carnage

 

(Drivebycuriosity) - Dealing with conflicting interest is always a challenge. It gets more complicated when more than 2 people are involved. The movie "Carnage", directed by Roman Polanski (imdb), is a fine example for this.

The film shows just 2 married couples who are talking about a conflict their sons had before on a schoolyard, costing one of the boys 2 teeth. "Carnage", which is based on a theater play by Yasmina Reza (wikipedia), is very spartan; you see just 4 actors staying in a single room.

But anyway, I had a lot of fun watching the flick. I enjoyed spotting how the characters tried to settle the conflict in the beginning, but got more and more agitated and how the situation escalated in the run of the movie. Both couples were middle class, but on the opposite sites of the spectrum. There was a growing dynamic between the couples and also between the married spouses, reflecting conflicts of social status, education, income, sex, Weltanschauung, whatever. These conflicts lead to dialogues which were sharp and sometimes funny.

"Carnage" benefitted of course from the superb actors: The parents of the injured boy and hosts of this event were played by Jodie Foster, as a very political correct but unemployed book writer and collector of art books, and John C. Reilly as her husband and proud owner of an appliance store. Their counterparts were represented by Kate Winslet, as a slick investment banker, and Christoph Waltz, playing an extremely busy and self-conscious attorney.

My favorite was Waltz. I was fascinated how the Austrian actor`s character couldn´t care less about all the fuss and indulged his own ignorance. I want to see more from Waltz. I also enjoyed spotting Kate Winslett loosing her coolness and Jodie Foster getting more intense as her liberal conviction got more and more cornered while the earth bound John C. Reilly tried to be a rock in all the turbulence.

Bravo Herr Waltz! Bravo Mrs. Winslett & Foster! Bravo Mr. Reilly!

Culture: Hung, at Knitting Factory, Brooklyn, New York

 

 (Drivebycuriosity) - Attending a heavy metal concert gives me always a vitalizing experience. I enjoy the dynamic and the power the performers radiate. 

Recently I watched a gig from "Hung", a heavy metal group based in New York (myspace). They performed at the "The End of The World"  show at Knitting Factory in Brooklyn, New York (knittingfactory.com) which had a lot of local metal bands. 

"Hung" delivered the usual power but they added an unusual melodic element - a violin. The violin player, who`s style reminded me a bit to Nigel Kennedy (wikipedia), was a valuable ingredient. Her play gave the performance more melodic structure and made it more intense. 

Well done "Hung"!

Oil: Another Bubble Ready To Pop?

The demand is shrinking, but the price is rising anyway. This is the situation on the market for oil. But this could change soon.

At least in the U.S., the world´s largest consumer of energy, the demand for oil is falling. This week the U.S. government published that the total petroleum demand fell in the last week of December 2.6 percent to 18 million barrels a day (bloomberg).

We got more data from MasterCard,  which counts payments at gas stations made by credit cards and checks (bloomberg). They reported that last week the U.S. gasoline demand sank 14 percent from the prior week to the lowest level in more than seven years of records. Fuel use fell below a year earlier for the 18th consecutive time last week, slipping 3 percent from 2010 levels. Fuel demand over the previous four weeks was 3.4 percent below a year earlier, the 41st consecutive decline in that measure.  Gasoline consumption in 2011 fell 1.6 percent from 2010.

These data are more impressive if we compare them with the still climbing retail sales in the U.S. The U.S. consumers spend more money for goods & services, but they save on gasoline.

I reckon that oil demand in Europe, where retail is much weaker than in the U.S., is falling even faster. I couldn´t find statistics for that but other interesting numbers. Gasoline supplies in independent storage climbed to the highest level in almost six months in the European hub of Amsterdam-Rotterdam-Antwerp, reported Bloomberg (bloomberg). Stockpiles rose 14 percent to 706,000 metric tons in the week to last Friday.

All these statistics show that the users of oil react on the high oil price. The commodity costs now around $100, around 4 times the average price we had to pay in the 90s! Last year the U.S. gasoline price rose 6.5%. Companies & consumers are trying now to burn less energy. For instance modern cars need much less gasoline than old one. Home appliances like refrigerators, washing machines and dishwashers are a lot more energy-efficient and use less electricity. The high gas prices are also dampening the appetite to drive. Companies, which are more cost conscious than consumers, also are anxious to save as much energy they can. For instance airlines are replacing their old planes with modern jets which burn less fuel.

While the demand for oil is curbed by more efficiency, thanks to the technological progress, and a sluggish economy, the supply of oil is still sputtering. The OPEC nations are keeping their output level, because thy need the money to please their unruly population. Independent producers like the U.S. are pumping much more oil & gas, thanks to the technical progress, which helps to unlock the resources. Even Russia  stretched its oil production in the last year significantly.

The oil market ignores these developments for now. The market is obsessed with the Iran conflict. The price of oil doesn`t reflect real supply & demand. Instead it reacts on speculations that Teheran may endanger the supply of oil by military actions. But I believe that the Iranian government is just playing games and will avoid a real war against the U.S. and Europe. As soon as the market will become aware of that it should react to the real supply and demand situation which means  the oil bubble could pop.

Economy/Stock Market: Appetite For 2012

The stock market started the year with gains. No wonder, the news from the economic front made appetite for 2012.

Yesterday we learned that the engine of the U.S. economy, the consumer spending, is still running smoothly. "Many U.S. retailers are reporting solid sales gains for December, ending a decent holiday season", wrote Reuters (finance.yahoo). Especially the luxury chain "Limited Brands" (the mother of "Victoria`s Secret"), up-market department store "Macy's" and teen retailer "The Buckle" posted strong revenue gains that beat analysts' estimates.

But not just the retail is doing well. The whole U.S. service sector, which includes banking, insurance, restaurants, traveling, health care and more, accelerated a bit in December (bloomberg). The Institute for Supply Management’s index (NAPMNMI) of non- manufacturing industries, which account for almost 90 percent of the economy, rose to 52.6 last month from 52 in November (numbers above 50.0 indicate expansion).

The growing consumer spending is fueled by the improvement of the labor market. The weekly jobless claims dropped to 372k, the lowest level since June 2008 (calculatedriskblog).

We also got encouraging news from the U.K. The british service industries grew at the fastest pace in five months in December, reported Bloomberg (bloomberg). The data suggest the U.K. economy strengthened in December after surveys earlier this week showed construction and manufacturing improved. These data strengthen the hope that Europe may escape the recession expected by the still gloomy majority of spectators, added Bloomberg.

These data suggest a solid start into 2012. As the pessimistic majority are still betting on doom & gloom the ongoing economic recovery could lead to a powerful rally on the stock market.

Movies: Mission Impossible - Ghost Protocol

Being an entertainer in a world of growing competition is getting more & more challenging. Making a fresh & surprising action movie is almost a "mission impossible". There are now so many competing products like the "James Bond" franchise, the  "Bourne" serials, the "Mission Impossible" collection and a lot of other expensive cinema & TV spectacles.

The makers of "Mission: Impossible – Ghost Protocol" did a good job (imdb). The producers (J.J. Abrams, Tom Cruise et al.), script writers (Josh Appelbaum & André Nemec) and the director (Brad Bird) delivered cutting edge action cinema.

The Tom Cruise vehicle followed the approved role model of the computing James Bond movies and showed a lot of of awesome but plausible  technical gadgets. The use of 3-d-printers, which create perfect masks, gloves which permit gluing at the glass walls of skyscrapers. and a lot of other devices made the action scenes much more thrilling.

Well done was also the use of a lot of scenic & exotic locations. Especially the views of Dubai and its Burj Khalifa, now the highest skyscraper of the world (wikipedia), are especially awesome. I guess the challenges in the market of action flics are now a bit larger.