Each year Index Universe holds its annual Inside Commodities Conference at the New York Stock Exchange. The last two conferences have featured speakers such as Jim Rogers, Noriel Roubini, Peter Schiff, and John Brynjolfsson. Unlike last year’s conference where most panelists and speakers agreed that commodities would soon shoot to the moon this year’s conference was full of diverging opinions on everything from $2000 gold to inflation.

The key speaker of this year’s conference was Noriel Roubini. The NYU economist was recently voted the fourth best financial mind in the world by Bloomberg terminal users. He stated that he expects the recovery to be “U” shaped although the markets are pricing in a “V” shaped recovery. As a result asset prices have increased “too much, too far, too soon”. He said that there is a 25% probability of a “W” or a double dip in the economy and he stated if a “W” were to occur the markets would break through previous lows set back in March.

It’s unfortunate, but the stimulus plan itself is not going to be enough to revive our broken economy this year. While the price tag may be staggering, even jaw-dropping, the funds to consumers will merely fill holes and the funds to businesses will not create enough new jobs in the near term.

$145 billion could be funneled back to employed consumers through several payroll cycles. But as we saw with last year’s rebate checks, consumers did not spend the money as planned. Consumers that were sent rebate checks merely used them to fill holes, and this was at a time when the economy was in much better shape. In fact, the rebates that were sent out last year were only 12% effective. An additional $191 billion will be used for unemployment benefits, earned income credit expansion, COBRA, AMT tax relief and feeding the hungry.

It’s that time of year again. The time when market strategists emerge from the beleaguered investment banks to give you their best guesstimate on how high or how low the indexes will be by the end of the New Year. But should we be listening? After all they are all too happy to talk to us about the future while sidestepping the results of their previous year end forecasts in the most recent Outlook 2009 article. In an effort to justify the four foot stack of Barron’s on my living room floor, I intend to review the previous years’ prognostications given by the typical group of esteemed market strategists in Barron’s magazine.

Only five of the market strategists that participated in Barron’s Outlook 2009 participated in the Barron’s Outlook 2007 and the Barron’s Outlook 2008 printed in the corresponding December issues. The five strategists that have participated in each of the Outlooks from the past three years are from Deutsche Bank (DB), Citigroup (C), JP Morgan (JPM), Goldman Sachs (GS) and Morgan Stanley (MS). We will review the calls of only these five strategists since they are the only strategists with a history to evaluate. We will be looking at their S&P forecasts, sector picks and pans, 10 year treasury rate forecasts and fed fund target rate forecasts.

The U.S. government has committed $7.8 trillion and spent almost $1.4 trillion according to a recent New York Times article, which used information from the treasury department and the Federal Reserve to break down U.S. commitments pledged to save us from the financial crisis. Will this lead to the ultimate demise of the dollar? If so, how would you set yourself up to profit from it?

Hyperinflation is a condition in which prices increase rapidly as a currency loses its value. While you could open up a currency account and simply short the dollar, I am going to focus on a few funds that are readily available to the average investor that doesn’t trade currencies. Purchasing real assets or commodities is one way to profit from rising prices so let’s take a look at some diversified investment offerings in the commodity arena (click to enlarge):

It's 13F filing time again. Institutional money managers who oversee more than $100 million must report their holdings to the SEC each quarter in their 13F report. These reports can be used to analyze the position movements of the best fund managers in the industry. Sometimes they can even be used to figure out the manager’s current strategy, but keep in mind the funds that I am going to review are most likely hedged in some way. Also keep in mind that not every position held is shown in these filings and many of these funds have high turnover; so don’t simply assume you can buy one of their positions and sit tight. 

I decided to look at several firms which I feel are some of the best in the industry, but feel free to comment if you know of any other firms that I should list next quarter.  

Bernanke & Co. are going to make sure that the U.S. does not become the next Japan, a country that was plagued by deflation for years.  If there is one thing we can count on, it's that our government will do everything possible to reflate our economy, from cutting taxes to lowering interest rates, buying assets, and even buying companies, which in the long run will result in higher taxes for everyone, an increase in the money supply and higher inflation.

Ben Bernanke is an expert on the Great Depression and he also has a great understanding of the financial crisis that occurred in Japan.  His nickname, Helicopter Ben, was given to him after a speech in 2002 regarding deflation, where he mentioned a statement made by Milton Friedman about using a "helicopter drop” of money into the economy to fight deflation.  He has made it clear that he believes deflation can be prevented when the government controls the money since the government can simply issue more money.  With the recent talk of deflation, it doesn’t take a genius to figure out what Bernanke will likely do to avert a crisis.