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Dollar bears in for a future shock as US cuts energy imports - My thanks to a subscriber for this informative column (may require subscription registration) by Mansoor Mohi-uddin, managing director of foreign exchange strategy at UBS, published by the Financial Times. Here is the opening:

The future of the dollar is more likely to be determined in the shale gas and oilfields of Dakota and Texas than in the sovereign wealth funds of Asia and the Middle East. This is because striking new technological developments are set to transform America's energy supplies, significantly improving the US balance of payments and the long-term outlook for the greenback.

The US's current account deficit has been a longstanding drag on the dollar. At the height of the credit boom in 2006, it reached $800bn or 6 per cent of gross domestic product. Though the deficit has halved as the credit crunch has lowered imports, it still stands at 3 per cent of GDP, largely because the US, like the eurozone, Japan, China and India, remains a major energy importer, with annual net foreign oil purchases of $300bn a year. As the US economy slowly recovers, the International Monetary Fund expects the US current account deficit to start rising again. That would lead to foreign central banks accumulating greater reserves of dollars.

But such straight-line forecasts are likely to be challenged as the US's shale gas and "tight oil" reserves are commercially exploited over the next few years. The US has vast reserves of shale gas but, until recently, energy companies were unable to tap the gas trapped in shale rock. Now, through hydraulic fracturing or 'fracking', US reserves of economically available gas supplies have started to rise sharply.

Already the ratio of US gas reserves to annual production has increased from eight years to 12 years. This may not appear substantial when compared to other regions of the world. Qatar, for example, has proven gas reserves well above 100 years of current production. But fracking may allow the US to soon count up to one hundred years of gas reserves relative to current production. That would lead to a major shift in the US's energy outlook.

My view - I think that Mansoor Mohi-uddin is correct and Fullermoney has repeatedly emphasised the 'game-changing' reality of US gas and oil production in recent years. The US has the world's second largest known reserves of shale gas. Even more importantly, it has the world's largest known reserves of shale oil.

This item continues in the Subscriber's Area.

Email of the day (1) - On Apple:

"your comment yesterday re Apple.

i read what you have to say about reversion to the mean. (200 ema) but Apple provided they continue their 48 percent yearly increase in profits are on a prospective p/e of 11.9.hardly demanding.

re the 200 ema daily 390 and weekly 269. these seem a long way away.  i am advised that the i phone 4s is selling like crazy in china.
at 390 Apple would form a large part of my portfolio."

My comment - There is no doubt that Apple (historic, weekly-10yr, weekly-5yr & daily) is one of the great all-time technology stocks. However, all shares become overextended from time to time - in both directions - and the extremes are mainly due to mob psychology rather than fundamentals.

This item continues in the Subscriber's Area.

Tim Price: Beware false idols - My thanks to the author for his ever-interesting and often iconoclastic letter. It is posted in the Subscriber's Area but here is the opening:

For value investors of a certain age (e.g. mine), discovering that Warren Buffett has feet of clay is like suddenly not believing in Father Christmas. This twinkly-eyed, raspy-voiced, avuncular old gentleman almost embodies Clint Eastwood crossed with a Care Bear. And nobody can hold a candle to his long-term investment record. And yet.. The rot set in (at least as far as this writer is concerned) when Buffett went from investing in private non-financial businesses to siding with the establishment, using his institutional heft to win sweetheart deals in dubious banking institutions way beyond the reach of regular Joes. In other words, somewhere along the line he went from representing the 99% to representing the 1%. And at the first sign of trouble, he simply wraps himself up in the American flag.

Buffett's latest advertorial (for himself and for Wall Street), 'Why stocks beat gold and bonds', adapted from an upcoming version of one of his legendary shareholder letters and published in Fortune, may be the most irritating thing he's ever written (or had written for him). As an investor he rightly draws attention to the critical requirement to maintain one's purchasing power in the face of rampant state inflationism. He accurately highlights the staggering reduction of real value in the US dollar since 1965 (some 86%) as a result of overmuch dependency on the printing press. He fairly declares a dislike for currency-based investments in a world of rapidly inflating, unbacked fiat money. And he then goes on to rubbish gold, of all things, using the tired and specious argument that purchasers are simply displaying 'greater fool' theory, eagerly awaiting new rises in price that will suck in new purchasers ad infinitum.

My view - You should not miss the rest of this issue.

Here is my own take on the Buffett article, which I posted on Thursday 9th February.

Email of the day (2) - On the 50th Annual Contrary Opinion Forum:

"It's great to hear that you are speaking again at this great Contrary Opinion Forum 3-5 Oct. I looked up the map and it seems Basin Harbor Club is about 3 hours drive from Hotchkiss. I was there last October to attend the Parents Event and it was beautifully red and orange everywhere in the countryside. Perhaps I will try to get my wife Shirley out to join the forum this year and meet with you and your wife (lots of other great minds and pretty ladies, I am sure). Visiting Hotchkiss is of course high on the agenda."

My comment - A splendid coincidence! I assume that the Forum occurs before your important Parents Event at Hotchkiss and you could fly to Burlington VT and either take a taxi to Basin Harbor or hire a car. The drive to Hotchkiss following the Forum would be very pleasant. Most Forum delegates bring their spouses, so there are plenty of pretty ladies present, mostly reassuringly mature. It would be great fun to see you again.

Additional commentary by Eoin Treacy

Proview Asks Chinese Retailers to Stop Selling Apple's iPads – This article by Mark Lee for Bloomberg may be of interest to subscribers. Here is a section:

Proview International Holdings Ltd., which claims ownership of the iPad trademark in China, asked retailers to stop selling Apple Inc.'s tablet computer as the dispute between the two companies intensified.

Some retailers halted iPad sales after Proview submitted complaints, Roger Xie, a lawyer representing Hong Kong-traded Proview, said by phone today while declining to identify them.

Separately, Internet shopping sites including Amazon.com Inc.'s Amazon.cn and 360Buy.com no longer displayed iPads or quoted prices for the product.

Proview, a maker of computer displays, said this week it asked China's customs bureau to block imports and exports of the iPad after winning a local court decision against Cupertino, California-based Apple over the trademark. Apple quadrupled revenue in China last year after adding stores and expanding online distribution of its products.

Carolyn Wu, a Beijing-based spokeswoman at Apple, declined to comment beyond a statement earlier this week that Apple acquired Proview's rights to the iPad trademark in 10 countries, including China.

June Jin, a Beijing-based spokeswoman at Amazon, said the unavailability of iPads on the company's website isn't related to the trademark dispute. She didn't elaborate. Calls to the general lines of 360Buy.com in Beijing weren't answered.

My view – On initial inspection, this appears to be a nuisance suit designed to extract as many concessions from Apple as possible, just as Chinese sales of the iPad ramp up. For a high profile company like Apple, efforts such as this come with the territory of being the producer of some of the world's most desired consumer products. However, if it succeeds in delaying sales growth, that could have an impact of the share price.

This section continues in the Subscriber's Area.

PPR Confident of Growth in 2012 After 2011 Beats Estimates – This article by Andrew Roberts for Bloomberg may be of interest to subscribers. Here is a section:

Gucci, its biggest luxury brand, performed worse than the rest of the unit, rising 14 percent in the fourth quarter. Sales in the luxury division, which also includes the Bottega Veneta and Balenciaga brands, rose 22 percent. Growth at the division was slightly better than that in January, deputy Chief Executive Officer Jean-Francois Palus said on a call with reporters.

The market for high-end goods is showing a “strong dynamic,” Palus said, echoing comments by LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury maker, and Florence, Italy-based Salvatore Ferragamo SpA. Gucci will open 43 stores this year, Bottega will open 22 and Yves Saint Laurent will open 15.

“In the uncertain economic climate of early 2012, the core strengths underpinning PPR's robust 2011 results will continue to propel our performance this year,” Chief Executive Officer Francois-Henri Pinault said in the statement. “PPR is confident that 2012 will be another year of sustained revenue growth and improvements in our operating and financial performances.”

The sale process for Redcats is continuing and PPR is in talks with several private-equity buyers for the unit, deputy Chief Executive Officer Jean-Francois Palus said on a call with reporters. The suitors are working on financing. Potential acquirers for Fnac Italy are industrial, with no private-equity interest in the business, he said.

PPR is widening its executive committee to include Gucci CEO Patrizio di Marco, Bottega CEO Marco Bizzarri, Puma CEO Franz Koch and recently appointed Chief Financial Officer Jean- Marc Duplaix, Palus said. The move will enable the company to be more integrated and closer to its brands, he said. PPR will also announce a human resources director this morning, he said.

PPR said it will pay an unchanged dividend of 3.5 euros a share for 2011, payable on May 7.

My view – The luxury brands sector has become emblematic of the emergence of a wealthy Asian consumer class. Most major brands are expanding aggressively and Asia represents their fastest growth markets. As with the emergence of a new bourgeoisie throughout history, competition increases for items of limited supply and high value that help delineate the new arrivals from those less financially privileged. Luxury goods manufacturers target this demand.

While the luxury brands sector exhibited a high degree of commonality until 2010, there has been more variability in performance evident since early 2011. (Also see Comment of the Day on January 4th 2012).

This section continues in the Subscriber's Area.

1% rise in CPI would boost land prices in six major cities 10% - Thanks to a subscriber for this note by Yoji Otani, and Akiko Komine for Deutsche Bank. Here it is in full:

BoJ introduces de facto inflation target

At its Monetary Policy Meeting on 14 February, the BoJ's Policy Board decided to carry out additional monetary easing, and clear price goal for the rate of increase in the CPI of 1%, thereby introducing a de facto inflation target. We view this as positive for the construction, housing, real estate, and J - REIT sectors.

This is because the large rises in the stock market and real estate prices from 2003 to 2007 was the result of the direction of the CPI having turned from negative to positive, leading to expectations that the economy had emerged from deflation. With the monetary easing that is currently in place, the direction of the CPI has already recovered to close to 0% YoY. We believe large increases in stock prices and real estate prices can be expected if the direction of the CPI moves into positive territory as a result of this inflation target.

As shown in the figure, because real estate is a type of good, real estate price movements conform to movements in the CPI. The impact differs, however. Put simply, we believe a 1% rise in the CPI would have the effect of boosting land prices in the six major cities by 10%. We maintain our overweight view on the construction, real estate, and J - REIT sectors. CPI and Land Price Index.

My view – Japan's property sector has been in the doldrums for decades but it offers attractive yields in a domestic environment where globally competitive pay outs are rare. The TSE REIT Index has a yield of 5.95% and has held a progression of higher reaction lows since posting an upside weekly key reversal in December. A sustained move below 850 would now be required to question potential for some additional upside.

This section continues in the Subscriber's Area.

Email of the day – on an addition to the Chart Library:

“Could I please ask you to add McEwan Mining (MUX) to the chart library? Its predecessor, US Gold, was listed but it has recently been merged into MUX Thank you.”

My comment – Thank you for this suggestion which has been added to the Chart Library.

Speaking engagements in the USA - I have accepted invitations to speak to a number of associations and groups while in the USA for The Chart Seminar. My schedule is still filling but here are the details so far:

San Diego MTA chapter in the first week of April. Time and venue yet to be arranged.

Los Angeles MTA chapter on April 11th venue to be arranged but will be in the Long Beach area.

“To Hoard or to Horde: risks and opportunities from participating with the crowd.” Will be the topic of my talk to both these associations.

CFA Institute San Francisco April 12th 3pm. The venue has yet to be finalised but the topic will be “Differing patterns of development, comparing the USA & UK with China & India.”

The TSAA-San Francisco April 13th. Venue and time have yet to be confirmed by the topic will be “Investment implication of competing inflationary and deflationary forces”.

If you would like me to speak to your local chapter or organisation in California or New York please contact your respective chairperson and ask them to contact me.

The Chart Seminar 2012 - Following a sell-out tour to Singapore and Australia last year, The Chart Seminar will be held in San Francisco, New York and London this year. Please be aware that the early booking rate for non- subscribers at the US seminars expires on January 31st.

We are currently taking bookings for our San Francisco and New York dates in April as well as London seminars in May and November. Anyone interested in securing a place at any of our events should contact Sarah Barnes at sbarnes@fullermoney.com.

The date and venues for my seminars so far in 2012 are:

San Francisco - April 16th &17th 2012 Nikko Hotel

New York - April 23rd & 24th 2012 at The Manhattan Club (above Rosie O'Grady's) at 800 7th Avenue

London - May 25th & 25th 2012 at the Radisson Edwardian Hampshire

London - November 22nd & 23rd 2012 at the Radisson Edwardian Hampshire

The full rate is £950 + VAT. (Please note US delegates, as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires on January 30th for the US seminars. Paid-up Fullermoney subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

Please note – I will be in Guangzhou and Shenzhen next week and will return to the office on February 27th.