Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog.

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Of course, the situation gets more complex—and for my money, more interesting—when you expand your focus outside bi-national trade in only two currencies to huge global markets, with basic economic inputs traded in multiple currencies. Of course, I’m talking about oil.

Pricing Oil Around The World

As Americans, we’re used to seeing crude oil priced in U.S. dollars. Even those barely keeping up on the economy can tell you that oil has bounced around $75-$85 for the past several months. And for us, the pricing structure is easy to understand; we can generally explain price drivers in terms of basic supply and demand.

But consider our British brethren, who pick up their daily paper and, after sifting through dozens of extraneous vowels, get two prices for their oil: one for the price of a barrel of Brent crude (the typical British standard), and one for the price of a barrel of West Texas intermediate—as well as a description of price movements as compared to the value of theBritish pound. Slight compositional differences aside, Brent and WTI crude are essentially the same commodity. Yet once you go overseas and introduce currency effects, simple supply/demand is no longer sufficient to describe the system.

The reason for this discrepancy is that the United States has the honor/duty/privilege of trading WTI crude, the world’s oil benchmark (more properly known as light, sweet crude), in U.S. dollars on the New York Mercantile Exchange. That contract is bought and sold by hedgers and speculators the world over, from Los Angeles to Dubai to Shanghai to Chicago to Quebec to Buenos Aires.

When the global supply/demand system for oil is sluggish—that is, when neither force is particularly dominant in the market in the short term—oil prices have a tendency to depend largely on dollar strength. But since everyone the world over uses oil, how does the price of WTI change relative to the currencies of other nations?

This question has been particularly relevant over the last year, as we’ve seen the dollar get weaker while other currencies go crazy amid Greece’s debt woes. So we set out to ask: How much is a barrel of oil really worth?

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Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog.

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As far as the major classes of commodities go, grains tend to be the forgotten stepchild. We hear about crude oil andprecious metals such as gold nearly every day, but for some reason, grains, those most basic of economic inputs, are all too often neglected in financial news.

But when it comes to using commodities to diversify your portfolio, you can’t beat grains.

The Case For Grains

The whole point of diversification is to provide exposure to varied and diverse markets so as to reduce your overall risk. Therefore, you should naturally demand that whatever commodities you invest in for the purpose of diversification have very little to no correlation with an otherwise broadly diversified stock portfolio.

It’s here where grains excel. We’ve compared the continuous front-month prices of the five major grains traded on theChicago Board of Trade-corn, oats, rice, soybeans and wheat-with the SPDR S&P 500 ETF (NYSE:SPY), which tracks the S&P 500, the world’s favorite benchmark for diversified stocks. The following charts show the correlations between the two from January 2004 to March 2010. (A quick review: “R_Squared” indicates the degree to which the change in one factor—in this case, a grain commodity’s price—can be explained by the change in the other; here, the value of SPY.)

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Today’s Daily Angle comes from Wikinvest Wire member Kathy Lien of KathyLien.com and FX360.com. You can readthe full article on her blog.

My favorite forex trade right now is shorting AUD/NZD.

After hitting a 9 year high of 1.3124 last week, the rally in AUD/NZD is losing steam. I should have posted about this earlier, but I think there is still room for the currency pair to fall.

Last week, the Reserve Bank of Australia raised interest rates by 25bp to 4 percent but hinted that from here on forward, they will begin to slow down their pace of tightening. Having already doled out 80 to 90 percent of their planned rate hikes, the focus will now turn to the RBNZ who has not even started to raise interest rates. Granted, the Australian economy is doing far better than the New Zealand economy, it is time for New Zealand to catch up. In January, New Zealand turned its first trade surplus after 7 months of consecutive deficits and in February, business confidence hit a 10 year high. Yes my friends, a TEN YEAR HIGH. With numbers as strong as these, the Reserve Bank of New Zealand will most likely grow more hawkish, paving the way for a rate hike later this year.

Furthermore, 25% of New Zealand’s exports go to China and 25% go to Australia. Therefore the combination of highercommodity prices and strong growth in NZ’s most important trade partners should encourage the RBNZ to adopt a more optimistic tone when they meet later this week.

Finally AUD/NZD presents a good risk reward opportunity from a technical basis. It is currently trading at 1.2975 and if it rallies back above 1.31, the uptrend has resumed. Otherwise, there is no major support in AUD/NZD until 1.2775

Tecnical Chart of the AUD/NZD currency pair.

Today’s Daily Angle comes from Wikinvest Wire member REITWrecks.com. You can read the full article on the REIT Wrecks blog.

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Whew! After a furious year of churning CMBS, repurchasing outstanding corporate debt and refinancing its bank loans, among other feats, Northstar Realty Finance (NRF) actually ended the year with a little bit of cash. That’s the good news. The bad news is they’re going to need it.

Northstar now has about $238 million in cash, which includes the all important figure of $138.9 million in unrestricted cash. This is discretionary cash, the kind of stuff that Hamamoto can use to expense dinners at Bobby Van’s. The remaining $99.4 million is bottled up inside Northstar’s CDOs, and the ability to profitably reinvest that cash is diminishing by the day as credit spreads tighten and the CDO reinvestment periods expire.

If you strip out all the non-GAAP AFFO noise from NAREIT, you can see the nail-biting story unfolding: Northstar’s cash flows from continuing operations have been declining rapidly. It’s true, Northstar did manage to generate $54 million in cash for all of 2009, but that’s down from $88 million in 2008 and $102 million in 2007. Obviously, an almost 50% drop in operating cash flow is not the sign of a healthy business, but the fact that Northstar is currently in an unhealthy business should also come as no surprise.

The question is, what can Northstar do about it? In the short term, the answer is not much. Northstar’s portfolio is running off, interest rates are at all time lows, and Northstar’s CDO funding model is dead. 2009 interest income of $142.2 million was $70 million less than 2008, and $150 million less than 2007. As Northstar’s asset balances decline, so too have Northstar’s advisory fees and rental income.

The lack of good options may be why NRF is attempting replace this revenue with management fees, and in the meantime Hamamoto is generating a lot of work for his accounting department with the debt buybacks and CMBS trading, but all of this is clearly a stop gap, and it’s just not enough.

Not only that, management fees are not ramping up nearly as fast as Northstar needs them to ramp up, and at the current pace, they may never ramp up. Northstar Realty Income Trust, the new non-traded REIT, has not yet been declared effective by the SEC, and Northstar can’t start raising money in earnest until that happens.

However, judging by its new Reg D offering, Northstar Income Opportunity REIT I, Northstar’s shiny new Denverbroker/dealer operation isn’t knocking the cover off the ball. The first investor commitment was made on September 24th, but as of early February, Northstar Income REIT I had only raised $3.1 million in equity. This is certainly not failure, but managing $3.1 million will definitely not pay the rent at 399 Park Avenue. Furthermore, starting a broker/dealer from scratch is neither cheap nor risk free. Northstar must now comply with a whole new raft of federal and state securities laws, and be exposed to the liability that arises from selling shares to retail investors through hundreds of rowdy, independent securities brokers across the country.

On top of paying rent on the 18th floor, dinner at Bobby Van’s, and the expense of starting up a brand new broker/dealer, under its new credit facility with Wells Fargo, Northstar must make $30 million in annual amortizationpayments. Also, through its loan book, NRF is on the hook for $80 million in future funding commitments, of which only $51.9 million will come out of the CDOs. $50 million in operating cash flow doesn’t create a huge margin for error in a capital intensive business, so Northstar will likely have to borrow most of the remaining $28.1 million using credit facilities.

So what is Hamamoto thinking? That’s unclear, but NRF is definitely walking a tightrope, and that may explain the management and board changes at the end of Q4. Curiously, REITs have collectively raised almost $30 billion of debt and equity capital since the crisis began, and Crexus, Colony Capital and Starwood Capital were among several Mortgage REITs to raise almost $1.5 billion. Somehow, despite the stellar performance of its portfolio, NRF just barely managed to squeeze $25.7 million out of this deluge.

Some portfolio managers I know have said that Hamamoto is not part of the “REIT Mafia”, and therefore he is not always invited to the REIT fundraising parties. This may or may not be true, but I’m not sure what else could explain NRF’s decision to throw a hail mary into the cesspool of Reg D offerings and non-traded REITs.

I spent all day reading the 10K in search of an answer, and it seemed to confirm the REIT Mafia conspiracy theory, as well as the fact that NRF has chosen a particularly rocky path to circumvent it:

“we cannot currently raise large amounts of corporate equity capital at attractive levels…we hope that our reputation in the marketplace will enable us to be early in raising corporate capital when market conditions improve.”

One thing is for sure, Reg D offerings and non-traded REITs won’t do much for NRF’s reputation, so shareholders may also want to hope there is a contingency plan brewing somewhere on the 18th floor.