A Brave New World

As you approach Dubai by freeway you traverse vast desert and scorching hot sun. Many Mosques line the sides of the road, as well as numerous housing projects that seem to go on forever.

Then suddenly in what seems to be a haze or fog a shadow, a tall shadow appears. It’s the burj Dubai.

When completed it will be the tallest building in the world, by far. The question is for how long, other big projects are planned. Yikes, are there any cranes left, any steel, any cement, any brains?

In the meantime, that’s a lot of office space to rent out. But then again Dubai plans to have an astonishing 180,000 hotel rooms by 2015. 141,000 just in the next seven years. Currently there are a mere 60,000 hotel rooms available.That is the blaring headline on the front page of the Gulf News Daily Business section.

Anyway, the burj is huge, but Just how tall the tower will be remains to be seen.

As with any skyscraper, there is a certain amount of “fudge room” where the actual height of the construction may not be exactly what was anticipated. With a project as massive as this, more flexibility is called for in the design, planning, and execution. At this time, the tower is expected to be 2,683 feet tall (818 meters).

However, those numbers have changed in the past and are likely to change again. There are estimates that it could go as high as 3,116 feet (950 meters) when all is said and done. It is also unclear how many stories will be in this tower. Early estimates were around 200, but those have been lowered to 189 as construction progresses.

Anyway as we continued on to my hotel, the Fairmont Dubai, I noticed the new monorail/train Dubai is building. In fact the elevated train runs along the freeway almost the whole way as you enter Dubai. I could see the workers on top of the pylons and trestles, seemingly without any harnesses or safety equipment several stories in the air.

Surely, if the fall doesn’t kill you the cars going 85 mph below most certainly will. Suddenly my job doesn’t seem so bad. Throw in the 120 degree heat and 15 hour day and well I think you have the job from hell.

Aussie Joel, my mate from Agora and his girlfriend were telling me at dinner the other night, that these guys, mostly Indian and Malay’s, work in these conditions in July when the heat is even more intense. Worse still, during Ramadan they cannot even drink water due to the fasting requirement.

That means from Sept 1st-September 30th certain things are off limits, refer to chart above.
Now I am not criticizing or judging anyones religion, not at all. I just am saying I can’t imagine working in those conditions, especially in that heat, and no water. Joel said that at least one a week keels over or slips and falls into traffic, it’s just part of it. Nice!

Anyway, nobody fell on my car so we drove onto the Fairmont and pulled up to the front of the hotel. Below you can see the Fairmont in the lower right corner.

Now want to get a real sense of the growth rate here in Dubailand. Here is the same stretch of road only a few years ago. It’s simply incredible.

Now I’m sure like me you may have seen these before and after pictures somewhere else, but let me tell you until you see it up close it’s really hard to grasp.

Anyway, I checked in to the Fairmont, always a fantastic hotel. In fact that is the hotel chain the Agora Investment Symposium is held each July in Vancouver. I hope you can come join us this year. I will put a link on here soon.

Anyway. I settled into my room and figured out all the things I wanted to see. First I rang Joel and we planned for dinner out by the Palm Islands, but first I had to run to CNBC Arabia to do an interview.

Again, it beats working on a three story pylon above a freeway, it’s still work. More from Dubai in my third installment tonight right here.

Also I will post my appearance on CNBC Friday on Kudlow & Co. I was noticeably jet lagged but still able to get in a few punches…lol Check back this afternoon.

By the way happy Mothers Day. Alexandra and I took Mom to the Brooklyn Botanical Garden, she loves to take photos so we knew she would like it. We both love her very much, because of course she is the best mom in the world.

Enjoy the day with your MOM!

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Welcome to the City of Gold

I am fortunate, very fortunate to be able to travel the globe and almost everywhere I go I know someone or someone knows me from my newsletters. It’s an amazing thing to be able to learn about a new culture and to experience our changing world first hand.

My Journey to Dubai began in Abu Dhabi last week. I was asked to speak at a conference of Sovereign Wealth Funds regarding commodities prices , mainly energy. I then had a few private meetings with some of them. While I cannot discuss the conversations I will say I was impressed.

Needless to say the 15 hour flight from New York got me into Abu Dhabi in the early morning around 7am.

As I cleared customs and headed outside my driver greeted me and as the doors to the outside opened it felt like when you open the oven door and are checking on your food. A sudden a searing heat hit me. I am not a big fan of heat, I mean you will never see me living in Arizona.

Anyway, as my driver escorted me to the waiting BMW I was happy to sit down and crank the A/C. Well what did you expect Kevin? It’s a desert.

So my time in Abu Dhabi was very interesting and the conference was very well done. I wandered around Abu Dhabi at night and during the day when I had time, you can tell it is growing and changing, yet is far behind it’s neighbor Dubai. Still you can see the Western influence creeping in, form Pizza Hut to Gloria Jeans Coffee. Still the fact that this is a Muslim country is clear, as evidenced by the Mosque underneath my hotel room at the Millenium Hotel which broadcast a call to prayer 5 times a day (even at 3:30am I think)

If you would like to experience this amazing Adhan call to prayer, click below…(Just not at 3:30am)

http://www.youtube.com/watch?v=UlLaUCAQlQQ

Anyway as the conference wrapped up my good friend and fellow editor Joel “Aussie” Bowman showed up and watched me speak, we agreed to meet in Dubai the next day.

So I was off the the City of Gold and to see what all the fuss is about, and if it was really “all that”

We’re Not in Kansas Anymore To To

As I left the Millenium my driver took my bags and said it will be about 1 hour and a half to Dubai. As we drove along I saw an amazing Mosque and then not much, then suddenly a long strip of houses, like town houses being developed, but none finished…it seemed to go on for miles and miles and miles.

As we drove past these developments I couldn’t help but think as I sipped on my bottle of water, where will all these homes get water, electricity and Air Conditioning from?

So we drove on and on and as I started to listen to my i-pod in the distance I could see what appeared to be fog, and then ever so faintly I saw a thin grey/black line in the fog, reaching into the sky… Couldn’t make it out. After all on either side of me and in back of me was all sand and barren desert as far as the eye could see. Suddenly it was like the scene in the Wizard of Oz where Dorothy wakes up in Oz after the tornado. Black and white went to color and suddenly I realized I was in another world completely.

More on all that I saw and did in Dubai in Part II and III over the weekend, please check back Sunday for part II.

I am off to the Brooklyn Botanical Garden with my family to celebrate Mother’s day, we wish you all a happy Mother’s Day indeed.

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Many of you have wanted to now when our new 2008 Agriculture Trading Report would be released. Well good news it’s here and available now to you by clicking on the picture below or on the front page of our website at www.kerrtrade.com ENJOY!

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Well as I wake up this morning I am greeted with a voicemail message, not good I think.  ”Mr. Kerr this is Anthony at RCG…(UH OH) You sold your June gold at 925 on a stop, have a nice day!”  Morning sunshine!  It’s always nice to wake up to losing several thousand dollars…lol  Losses are a part of trading and I always tell people this, granted they are not a fun part but truly necessary.  

Ok now bear with me while I get a bit philosophical on you.  How we handle losses is as important as how we handle winners.  It is important to keep everything in perspective.  Now this account I have the gold in was a small account and over the past 3 months I have taken a good deal of money out of it…In dribs and drabs here and there.  Certainly more than I have now lost.  So in actuality this correction and subsequent loss is not as dramatic as it could have been.  And I am going to need the write off anyway.  See the glass can be half empty or half full, it’s up to you.  

The most important thing is never to let a loss break you down or blow you out.  In other words let your account go debit or some other nightmare.  Don’t be that guy that we hear about on TV.  Set your limit and then take the loss.  Trust me it will clear the decks and then you can proceed on. If anything in all this my worst mistake was absolutely unforgivable…I didn’t even take my own advice…

Here  I am last week saying that commodities are ripe for a correction and yet I held onto some gold…  You see sometimes you can give good advice that you just can’t heed yourself…i.e Governor Elliot Spitzer comes to mind.

Anyway, if you haven’t already be sure to check out my clips on Kudlow & CO. and CNBC’s Squawk Box last week and Monday where I say we are headed for a big correction.  Now let’s look at why commodities are really pulling back so sharply…

Basically what we have is a global margin call a wave of liquidation.  Is it really that anyone believes the Fed is about to start supporting the dollar?  It seems like wishful thinking at the very least.   Heavy job losses, mounting inflation, and constant interest rate cuts to appease Wall Street have put us here and now we have to take it.  

Hot money is getting sucked out of commodities as well it should.  Many of them moved too far too fast.  Gold, oil, the grains markets all had become un-tradeable, as they basically became detached from any sort of market fundamentals.  Now with these dramatic pullbacks we will see certain commodities return to very attractive buying levels and the grain markets are the first ones on my radar.  Precious metals and oil will take longer to recover and soft commodities, well they are on a case by case basis.

The most important thing to understand is this is a correction, albeit a dramatic one and a reminder of how volatile these markets can be.   However, it is in times like these when we get necessary yet knee jerk type reactions, that we really take a long look at the landscape and see what has been oversold and why?

Again, if this selling is merely on fund liquidation and profit taking then so be it.  Maybe that means that down here some of the commodities got thrown out like the baby in the bath water and may well be a bargain that on the next move higher.  You may have to act fast because we may not see the chance for again.   Again grains seem to be the best bet.  More on this from Singapore while I am there all next week. 

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Panic is never good.  Life in NY can be rough (If you can make it here) you know the song. Is this guy running away from falling Cranes or falling brokers? Hard to say, maybe it’s both. I would look for falling office equipment over there too as most of the workers are screwed.$2 a share…I would be pissed too.   I mean my coffee and bagel this morning cost $8 so basically I could own 4 shares of BS.   Yes absolutely that is B.S., all we saw was a modern day run on the bank.  I don’t think it’s over yet either.   Meanwhile over in TV Land.  Make me “Mad Money”…. More like Irate…. if you owned Bear Stearns stock and watch Jim Cramer last week.    I hope he is watching his back out there in Englewood cliffs as a sniper may be in the trees around the CNBC campus.  People lost millions, billions… and he told them no to be stupid and sell when it was at $65 a week ago.. As someone who does a lot of TV I know that the age of You Tube and the DVR make anything you say on TV a public record, basically forever.  I am very proud of most of my predictions.  In fact I called for commodities to back off here, I mean you don’t have to be Sherlock Holmes to figure out a correction was overdue, but it will also be short lived so bargain hunt now.  Anyway here I am on Kudlow talking about the coming commodities correction. Segment #1  http://www.cnbc.com/id/15840232?video=684970418  Segment#2  http://www.cnbc.com/id/15840232?video=684968409  Segment #3  http://www.cnbc.com/id/15840232?video=685020572   And here I am on CNBC talking about an oil pullback before the market opened, when it did open it fell about $5.  Go figure.  http://www.cnbc.com/id/15840232?video=687289924     Now I have also made some bad calls on TV.. like Evergreen Solar and a couple of uranium stocks a few years ago but nothing completely absurd, and I always take responsibility for it when a call goes wrong. Now Jim Cramer on CNBC made the mother of all bad calls recently and then was on TV the next week as if nothing happened. The 5 Minute Forecast (from Agora Financial pointed this out in their issue yesterday.    

The 5 Min. Forecast

P.S. We’ve heard (and made) some bad calls in our time, but this is certainly one of the worst.

Jim Cramer on Mad Money last Wednesday: “Don’t move your money from Bear… that’s just being silly” Ouch.

 http://www.redlasso.com/ClipPlayer.aspx?id=ae47b67d-2523-4946-a2ad-aadc68176f67 

To be so wrong and still say it with such conviction to millions and then not acknowledge your mistake…Humility is the most important trait of a trader… that is what Jim is after all, isn’t it?

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So commodities finally gave us a breather yesterday, thank God.  My phone was ringing off the hook yesterday!   “Is this a meltdown? Is it time to go short? Is the bubble bursting…?  ”  Ah, no!  What is really happening is opportunity is knocking.   Here is part of what I wrote yesterday at MarketWatch.com.  To read the full article please subscribe.From MarketWatch.com

MARKETWATCH GLOBAL RESOURCES TRADER

Bear necessities

Commentary: The law of trading gravity provides opportunity

By Kevin Kerr, MarketWatch

Last update: 4:46 p.m. EST March 4, 2008

Even in a cyclical bull market, such as we’re in right now in the commodities, corrections are inevitable. A sign of a healthy market is a correction that comes during overbought conditions. That’s what we got today; nothing more, nothing less.

So is it time to panic and sell everything across the board? Absolutely not! Actually, it’s quite the opposite.

No panic required

The fact is that a correction in some of the key commodities is overdue, so I am glad to see it today.

What we need to focus on now is which profits to grab and which to let ride back up — and most importantly, which commodities offer good value to establish new long positions. Now I know it can be very unnerving when a market comes unglued like this. The worst thing to do is panic or make knee jerk reactions. Resist the temptation to do so; it’s one of the big reasons the majority of people who invest in commodities lose.

First thing, take a deep breath. Second, turn off the quote screen. Third, take another deep breath.

Now take a look at which commodities sold off the most and where they are relative to their 52-week high, Orange juice stands out. You will gain a lot of insight from that exercise. I have done that and see some very good values now — one of which we will be adding today. At the same time, we don’t want to miss an opportunity to also grab some gains, so we will do that today as well.

The overall bull run for commodities is far from over. Even so, we need to take advantage of these corrections when we can. It also underscores the need to keep the portfolio rather small and to grab profits quite often.

Grabbing profits to fuel more trades

So while we don’t want to panic we also don’t want to let some of our extreme profits melt away. So today let’s grab profits on two of our open positions and then we will add one new one.

We have three trades in all today.

** Please note: Due to the closure of floor trading operations in New York, the ICE exchanges including (coffee, cocoa, sugar, cotton, dollar index, et al.) markets no longer accept stop orders or Good till Cancelled orders, effective immediately. For more information please contact the ICE exchange or speak with your broker.   <<<<<Did you read this nonsense…What a joke…ICE is destroying the soft commodity markets.  No Stops, no GTC’s, absurd. Who is running that show down there.  I guess the members have only themselves to blame, after all they voted for it. Shame really.

Meanwhile my friends over at Jurojin weekly sent this to me on gold.  Very interesting indeed.  I won’t  fall in the trap of writing of gold $1000 just yet.  Below is courtesy of Tyche Research and is not necessarily the opinion of KTI.

Jurojin Special UpdateMARCH 5, 2008 WHERE TO BUY A GOLD PULLBACK Pullbacks are a normal and necessary part of any bull market, and I like them a lot because they give us an opportunity to buy on the cheap.So gold bulls can consider it good news that Tuesday saw an ugly reversal for gold. If the yellow metal heads lower, there is plenty of support below.This chart shows common retracement and support levels for gold, using this week’s peak as a top. Where to fix the bottom is more art than science, but I’m using the November 2007 bottom, right before the recent run-up. It gives us support levels including 937, 882, and 856. On the other hand, if you measured from the August 2007 low, your support levels would be 905, 819, and 778.So when picking your entry point, you have to ask yourself: “How bullish are you?”While I think gold could retrace its steps in the short-term, I’m very bullish in the long-term. Some reasons why include

* The Federal Reserve is weakening the US dollar. The Fed seems to believe that drastically devaluing our currency is the only way for the US to get out from under its massive debt burdens (national debt, trade deficit, and credit crisis debt). The proof is in that Fed Chairman Ben Bernanke is not only cutting the benchmark interest rate but says he’ll cut it even more. That sends the dollar sliding. Since gold is priced in dollars, as the dollar slides, gold generally climbs. They’re on either end of what I call the “seesaw of pain.”

* Investor demand for gold is surging as investors try to hedge against inflation. One of the biggest funds that holds physical gold - the streetTRACKS Gold Shares ETF - now holds more gold than many central banks. And a new gold ETF is starting this year in India, where 1.1 billion people will suddenly have a new way to buy the yellow metal.

* The supply/demand crunch in gold is real and getting worse. Gold mine production fell to a 10-year-low in 2007, and was 182 metric tonnes short of demand. The rest is made up by scrap, but with investor demand kicking into high gear, prices are heating up.These are just three forces driving gold higher in the longer term. In the short-term, I believe you should use a pullback to add new positions. Depending on your own tolerance for risk, you can buy at near-term support levels or wait and see if gold goes lower to other support levels.

One more thing that could help you decide when to get in - if the March gold futures contract closes below 934.90, that is a signal that a short-term top is in, and gold could be in for a quick slide that will give plenty of traders heartburn.Good luck and good trades.

Black Bear

The Secret Order of Jurojin   www.jurojinweekly.com

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