Energy & Commodities
Every entrepreneur dreams of discovering an untapped market where they could start with a low investment and build a huge business. If that’s you, consider the developing legal marijuana industry.
This sector is growing faster than ganja under grow lights.
The best part is, it’s early days for this — cough — budding sector.
Marijuana is now legal for medical use in just 23 of the 50 states, and will soon be legal for recreational use in four — Alaska’s law goes into effect later this month, Oregon’s in July, and in Washington and Colorado, it’s already legal. Alaska’s addition to the legal-pot state roster has some wags dubbing the legal-pot opportunity the “Green Rush.”
Now that full legalization is spreading from state after state, many sector observers believe it’s just a matter of time before more states get on the bandwagon, and before marijuana becomes federally legal. The spread of legalization will open up huge new markets — and startups that get going now will be ready and waiting to take advantage of the increased demand.
The U.S. economy doesn’t spawn an entirely new industry very often, and legal pot may well be the best ground-floor opportunity we’ve seen since the early days of the Internet. While there are some established companies in this niche already — especially in Canada, where medical pot has long been legal — new figures from the Marijuana Business Factbook 2014 map reveal how young most cannabis businesses are, and how quickly they’re becoming profitable.
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$7 Billion in forecast growth
First off, let’s talk size of the U.S. legal-pot sector. Last year, Factbook publisher Cannabusiness Media estimates, there was between $1.6 billion and $1.9 billion of legal pot sold for medical use in the U.S., and another $600 million to $700 million was sold for legal, recreational use.
The Factbook projects that legal cannabis businesses will do roughly $8 billion in revenue by 2018. So that’s more than $7 billion of upside potential in the near-term marketplace.
USDCAD Overnight Range (including post payrolls) 1.2385-1.2495
The post payrolls pyrotechnics’ were spectacular and the Loonie was dazzled, jumping up and down like cold feet on hot sand. Canada posted a whopping 35.4 gain in jobs, greatly surpassing the mere 5K predicted and a huge jump from last month’s 11.3 K loss. USDCAD plunged to 1.2385 from 1.2430 and then roared straight up to 1.2595 because the US data was even more impressive. Nonfarm payrolls rose 257K, average hourly earnings were higher and November and December data were revised higher by another 147K.
Loonie’s head still spinning.
USDCAD traders don’t know whether they are coming or going this morning.The impressive rally from 1.2385 topped out at 1.2495 and it has retreated steadily. In fact USDCAD is sitting pretty much where it started before both employment reports.
WTI and Data at odds
The headline Canadian employment number is misleading as all the gains were part-time. In addition, recent history questions the accuracy of this Stats Canada data. On the other hand, WTI enjoyed an impressive rally yesterday and it is higher today ($51.61/bbl). Further gains in oil will likely put even patient long USDCAD positions to the test and result in a test of support at 1.2320.
Bullish CAD data at odds with US report
The mix of the better than expected Canadian employment report (headline number) and oil price gains have given new found life to the beleaguered Loonie.Unfortunately, getting bearish USDCAD on this mix at this level (1.2445) may be as dumb as passing on 2ndand 1 in a super Bowl game with Marshal Lynch on your team and on the field.The reason is simple. The US data was strong and with the large revisions, way better than expected.The added bonus was the rise in average hourly earnings. Taken together, it strengthens the case for a midyear US rate hike.
USDCAD technical Outlook
The intraday USD technicals are bearish USDCAD while trading below 1.2480 but needing a break below 1.2420 to extend losses to 1.2380. A break of 1.2380 would lead to a test of the short term uptrend line currently at 1.2320. A move above 1.2480 targets 1.2580
Gold and silver prices surged in January having an even more spectacular month in foreign gold price terms. With the gold price rallying alongside the US Dollar, gold prices in currencies such as Canadian Dollars surged by 20%, rallying from C$1,375 an ounce to as high as C$1,650 at month’s end.
1-year Gold Prices: Canadian Dollar | Euro | Japanese Yen | US Dollar
The big news last month was the overnight surprise by the Swiss National Bank (SNB), removing the Swiss Franc/Euro currency peg. This was done just prior to the latest round of ECB money printing, which would have forced the Swiss to devalue the Swiss Franc even further. SNB holds nearly $1/2 trillion in foreign reserves – mostly from their Euro purchases since 2009.
….continue reading HERE
With Crude giving up its early weekly gains yesterday and falling over 8% from its recent high,coupled with the ECB announcement of the termination of its “relaxed” treatment of Greek debt as collateral for loans from the ECB,led to a flight quality bid,weakness across risk assets and generally stronger USD dollar.However,this morning saw the European Commission raising its assessment of Eurozone growth for 2015 to 1.3%. The initial knee jerk reaction to the ECB Greek collateral decision has subsided as Greek banks will sill have a life line to funding through the Emergency Liquidity Assistance program of the ECB.Together, these developments have given a bid to the Euro currency(1.1429,+.77%).Equity markets across Europe are trading better and crude is near its best levels for the day up 1.28% ( 49.10), while the USD is giving back some yesterday’s gains.This mornings, Bank of England meeting saw no change to monetary policy.Canadian Balance of trade ( -1200M prev -644M) is to be released this morning along with the weekly Initial Jobless and continuing claims data in the US.
CAD/US Range 1.2586-1.2508 Currently 1.2535 RES 1.2641 1.2718 supp 1.2445 1.2317
The Sage of Omaha has spoken. On Fox News yesterday Warren Buffett dismissed the possibility of an interest rate rise in the middle of this year. To paraphrase this multi-billionaire, the global economy is too weak to allow it to happen: money would flow from Europe to the US disrupting the delicate balance of a global economic slowdown.
The signs of the slowdown are only too obvious if you care to look around: the slumping price of oil, iron ore and copper; falling US and Chinese order books; monetary policy easing by 13 central banks; the uneasy sight of the UK as the world’s best performing economy in a deliberating engineered pre-election boom set to end shortly after May 7th; and disappointing Q4 US economic growth.
Global recession
All these indicators are harbingers of the next global economic recession which has probably already started. With these headwinds the US will do well to maintain its present lacklustre momentum in the worst economic recovery in its two-century history. How can the Fed possibly raise rates this summer or anytime this year?
So that probably means that the US dollar is also already past its peak valuation for the year. Twas ever thus. When everybody is on the bullish side of a trade it has nowhere else to go but down. If dollar interest rates are not going higher why would you want greenbacks or US treasuries?
Warren Buffett told Fox News that the 30-year treasury is the asset he would least like to hold in the world. Quite an indictment from the world’s most successful investor.
What will be the major beneficiary of a weakening US dollar? There seems to be something of a rush to buy European stocks at a seven-year high so far this year. Spot another doomed consensus move. Do you really want to invest in an asset class at an all-time high just before a major recession?
Wall Street crash
Equities will not defy gravity forever in this environment. Profits will come down across the board and share prices will fall. What’s going to be the catalyst? The tie-free Greek finance minister? An all-out assault on Kiev? A banking crisis in China? A hedge fund failing due to oil price losses?
That leaves precious metals as the one safe haven left in town. Gold bottomed out at the end of last year along with silver and the monetary metals are on the way back up. The next 18 months to two years could see precious metals back as the last great bubble before a global currency reset.
Warren Buffett has avoided investing in precious metals thus far but he is avoiding US treasuries and sticking to US equities that will protect him from hyperinflation. He doubled his money on silver in the late 90s and perhaps that is where he ought to be putting his money right now.
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