By David Hughes -

SHIPPING is risky business. Apart from the physical dangers in carrying people and goods across the oceans, the shipping market is volatile and subject to cyclical booms and slumps.

Owners, at least those in the bulk trades, have always had to worry about either being locked into comparatively unprofitable use of their vessels or being unable to find charters for their vessels when demand is weak.

Traditionally the way to reduce risk is to split fleets between the spot market and time charters. This ensures predictable income for part of the fleet but it can also mean missing out on potential gains when the market is high.

By Rebecca Byrne

Stagflation is a word that might spring to mind on Friday morning after the second-quarter gross domestic product report is released.

Because economic growth is expected to rise a healthy 3.7% in the quarter and the GDP price deflator is projected to increase at a 3% annual pace, talk of stagflation -- a stagnating economy with spiraling inflation -- probably sounds like hyperbole and for the most part, it is. But it's easy to see why the term has crept back into investors' lexicon.

By Reuters

London - The world's top economies are likely to put in a strong performance this year, before growth starts to slow in the United States, Britain and Japan in 2005, according to a Reuters poll.
The poll of 160 economists on the outlook for the Group of Seven industrialised nations showed that only Canada and the Eurozone are expected to show faster growth in 2005. The sharpest slowdown in growth was expected in Japan.

"For the U.S. and Japan the peak in the growth rates is 2004 and therefore any growth gap between the regions would narrow as Europe catches up with the rest," said Adolf Rosenstock at Nomura International.

By Kevin Morrison

The colourfully attired oil traders who work on the floor of the International Petroleum Exchange (IPE) do not have to look far to see what the future may hold.

Each day as they walk in and out of their offices near the Tower of London, they can see the former trading floor of the old London Commodity Exchange. Here, as recently as 2000, cocoa, coffee and sugar futures were bought and sold by traders in colourful jackets.

July 26 (Bloomberg) -- Gold may rise for the first week in three on expectations that the lowest prices in a month will encourage jewelry makers to increase purchases.

Twenty-four of 48 traders, investors and analysts surveyed in New York, London, Singapore, Beijing, Seoul and other cities on Thursday and Friday advised buying gold, which dropped 4 percent last week to $390.50 an ounce. Fourteen recommended selling, and 10 said they would hold the precious metal.

Jewelers are quick to increase purchases when prices drop, limiting the size of any sell-off in the gold market, industry figures show. Gold jewelry demand in India surged 72 percent in the three months after the end of the first quarter of 2003, as prices fell to a six-month low, London-based researcher GFMS Ltd. said. India is the biggest user of the metal.

China's hopes of avoiding overheating in its booming economy wavered. Consumer prices grew by 5% in the year to June, after increasing by 4.4% in May, but the country's burgeoning rate of growth slowed. GDP in the second quarter grew by 9.6% over the year, down from 9.8% in the first quarter. Analysts had expected to see growth of up to 10.7%.

By Darrel Good

August 2004 soybean futures reached a high of $10.26 on March 24, 2004 and traded to a low of $7.05 on July 16. While some have termed the decline as unprecedented, it is reminiscent of some past price behavior.

July 1977 soybean futures reached a contract high of $10.64 in May 1977 and traded below $6.00 per bushel in July 1977, declining nearly $4.00 in less than a month. July 1988 futures reached a high of $10.995 in late June 1988 and declined to $8.20 at maturity, dropping $2.00 in the last week of trading. The most dramatic decline was in 1973, when the July contract reached a high of $12.90 in early June 1973 and traded below $6.50 in early July. However, the contract rebounded to $10.25 at maturity.

From The Economist print edition

The rush into hedge funds is pushing down returns

A GENTLE stroll around St James's, the nice part of London in which The Economist is based, and Mayfair, a little to the north-west, reveals to those with an eye for such things the changing face of the world's financial-services industry. Almost every doorway, it seems, has a clutch of brass nameplates which, apart from the occasional word “capital”, reveal little about the occupation of those within.

By Sherry Slater

The secret to predicting the stock market’s direction lies in understanding the commodities market, an Iowa-based author says.

Glen Ring, an analyst and speaker, will offer his insights to local investors Thursday and Friday as he explains how various markets interact. The evening, introductory session is free. The day-long, advanced session costs $199. He expects about 50 people to attend the first and about 30 to go on to the second.

By Howard Simons

The managed futures industry long has sold itself as a diversification away from conventional asset classes such as stocks and bonds. And, as we can see in the chart below, managed futures as a class do follow a different return path than U.S. equities, and with far less dramatic volatility.

But limiting comparisons to indices obscures an important question: Whether managed futures have a natural return, something intrinsic to the underlying futures themselves, or whether investors in fact are betting on the skill of the trader, something that could exist separate from anything in the underlying group of assets. An index of stocks, for example, has a natural return produced by the dividend stream plus or minus price change, and we can construct similar benchmarks for other conventional assets.

By Alex Skorecki

The first exchange-listed weather derivatives contracts for Asia will be launched by the Chicago Mercantile Exchange, the US's biggest futures exchange, later this month.

Weather derivatives allow investors and businesses to hedge against future conditions, including temperature, rain and wind. The CME contracts will apply to temperature changes as measured in the Japanese cities of Tokyo and Osaka, with summer and winter contracts for each.

By Michael Englund

A quicker-than-expected slowing in price pressures is looking more likely and will change the dynamic between the Fed and the markets

In May, investors were hit with some unwelcome news on inflation, courtesy of larger-than-expected increases in each of the closely watched indexes for consumer prices (CPI), producer prices (PPI), and trade prices.

However, early indicators are suggesting a lull in those reports for June (each is scheduled for release the week of July 12). And we at Action Economics expect this weakness to extend through July as well. The reports will provide a welcome relief from inflation worries for the bond markets -- and present new challenges for the Federal Reserve.

National Commodity and Derivatives Exchange (NCDEX), India's leading commodity exchange, has achieved a milestone by deploying 500 VSATs across 127 centers in the country, enabling more than 250 NCDEX members to undertake online commodity trading. HCL Comnet set up the VSAT network for this endeavor.

The VSAT network was set up in just 75 days, and now covers the major commodity markets such Kochi, Ahmedabad, Surat, Nagpur, and Jaipur making NCDEX the largest online commodity exchange of India.

By Ikuko Kitagawa

On the 29th floor of a skyscraper that towers over Tokyo's busy Roppongi entertainment district, traders peer over screens displaying foreign exchange rates. Right outside their window, Tokyo Tower soars above the surrounding buildings.

Traders Securities Co., a securities company that specializes in online trading, recently opened Top Traders Square, a place designed for individual investors seeking a tranquil area to do business, as well as those seeking help in polishing their trading skills.

By, Richard Daughty

As soon as the G-8 finished hatching their secret plans and drinking all the liquor, they hightailed it out of town, sticking somebody with the bill. Then things really quieted down. To illustrate the point, we cut to the dramatic scene where the hero peers into the dark and hostile surroundings, and says "It is quiet out there" and a voice says "Too quiet" and the next thing you know all hell is breaking loose and there are bullets flying everywhere and the next thing I know a minister is saying, "I now pronounce you husband and wife," and people are shaking my hand and clapping me on the back, and this strange woman is smearing wedding cake all over my face.