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Credit-default swaps have lately become the norm and is rapidly being assimilated into the mainstream. They have all of a sudden become a sizable chunk in debt portfolios as investors go into riskier markets. This trend started at about the time the US housing market started to decline.

In case the investor incurs losses with regard to bonds and loans, proctection against them are covered by cheaper contracts — much cheaper than purchasing cash securities for the reason that costs have increased following the decline of subprime mortgages.

There was an 87 percent growth for credit derivatives market in 2007 to cover a notional debt of US$62 trillion. As losses mount, we see a surge in default protection costs, which by July have swelled to more than twice the original cost as investors try to find means to protect themselves as conditions get worse at the largest global financial companies.

Taking a leveraged position becomes more expensive with higher funding assets, thus unfunded assets, such as credit-default swaps have increasingly become more appealing to investors. Some of the largest users of credit-default swaps, which also serve as new bond pricing benchmarks, include hedge funds, dealers and insurers, banks,

The thing that makes credit-default swaps quite attractive nowadays is it protects creditors from default in that instead of receiving the underlying securities or their equivalent in cash, buyers are paid at face value, in case the company cannot fulfil its debt obligations.

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The falling prices of oil have decreased corporate bonds’ risk protection costs from default, easing up the concern regarding energy costs eating up consumers’ and companies’ cash alike.

There has been a decrease in credit-default swaps on the Markit CDX North America Investment Grade Index of 125 companies in the U.S. and Canada by 5.5 basis points to 101.5 basis points as they traded in New York, as revealed by Deutsche Bank AG. A rise would mean that there is degradation as regards the perceived credit quality.

The Markit LCDX index, a US leveraged loan market indicator that increases with improving confidence, gained 0.3 percentage point to 99.05, as reported by Goldman Sachs Group Inc.

Being contracts conceived to protect bondholders against default, credit-default swaps pays buyer at face value in return for the securities that underlies or the equivalent in cash in case a company should default in relation to the debt agreements.

Crude oil fell $2.48 per barrel, or 1.9 percent, to $126.37 per barrel that helped fuel a surge in US stock index futures. Oil prices were at their lowest since May 19, at an excess of $5 contract losses in a span of two days.

A majority of Japanese stocks incurred severe losses as they were being weighed down by trading companies and shipping lines, amidst declining commodity prices and cargo rates.

Companies, like Mitsubishi Corp. and Mitsui & Co. that get greater than one-half of their realized profit from commodities, sent trading companies grazing the bottom. Kawasaki Kisen Kaisha Ltd. after having incurred huge losses led a decline by shipping lines.

“Some investors want to reduce their holdings of commodity-related stocks as volatility increases. I expect the stock market’s nauseating gyrations to continue,” according to said Hideo Arimura, who helps oversee US$26 billion at Mizuho Asset Management Co., Tokyo.

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The Topix index has been swinging, six times, between opposite ends of gains and losses. This has further resulted in ending down 2.98, or about 0.2 percent, to 1,376.69. This week, there has been 1.4 percent gauge lost, trimming a two-month rally by 22 percent up to May 16. The Nikkei 225 Stock Average increased by 33.74, or 0.2 percent, and closed at 14,012.20, and incurred a 1.5 percent loss.

Crude oil fell 1.8 percent, the largest losses ever incurred since April 30, to $130.81 per barrel yesterday. Gold, on the other hand, plunged 1.1 percent from a one-month high. Copper hit bottom this week.

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Chinese stocks incurred heavy losses as they end their worst week ever out of five, amidst concern that the said drop in stocks after the earthquake last week will be much larger than what investors initially expected.

Today the China’s biggest producer of gold, Zijin Mining Group Co., incurred so much losses and is now at its lowest since the first day of trading after the decline in metals. Jiangxi Copper Co. also fell to its lowest this month.

China United Telecommunications Corp., however, showed signs of improvement as it surged before a trading suspension despite reports that China’s phone industry is being reorganized by the government.

“The earthquake has further weakened market sentiment, prompting investors to sell first as they gauge the real loss it has caused to the economy,” according to investment manager Yan Ji, HSBC Jintrust Fund Management Co., Shanghai.

“Market sentiment is pretty weak. Any negative factor, such as the retreat in commodity prices, will trigger selling of related shares,” said fund manager Wu Kan, Dazhong Insurance Co., Shanghai.

The earthquake that wrecked havoc on Sichuan province May 12 had a magnitude of 7.9. The calamity was the cause of death of greater than 55,000 people.

The earthquake disrupted production that of course resulted in losses. Companies such as Sichuan Hongda Chemical Industry Co. and Dongfang Electric Co. have suffered tremendous losses that reached an estimated 67 billion yuan (about US$9.6 billion), according to the Ministry of Industry and Information.

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A number of U.S. carriers that include United Airlines parent UAL Corp. incurred losses in New York trading, taking a benchmark stock index to its lowest week since the terrorist attacks on Sept. 11, based on speculations that the risk for bankruptcy is increasing.

The sudden rise this week by 2.3 percent (86 percent 12 months) in jet fuel prices has been stripping the airlines of cash and prompting analysts to increase their loss estimates’ scope.

“We view the value of the stocks as primarily coming from the chance that fuel prices plummet before the carriers must seek bankruptcy court protection. This is certainly one possible outcome, but we are not holding out much hope,” said analyst Kevin Crissey, UBS Securities LLC.

“If [jet fuel] prices continue to go higher, some of the airlines could be at risk of bankruptcy by early next year,” according to Philip Baggaley, Standard & Poor’s analyst.

The biggest US carriers may be in for a $7.2 billion operating loss in 2008. Northwest Airlines Corp., US Airways and AMR are most definitely the ones who will seek protection under Chapter 11 bankruptcy.

In Tokyo, rubber futures escalated in 28 years to a record high as surging oil prices made manufacturing of synthetic rubber more costly, thus shifting traders’ attention to natural rubber.

As Chinese stockpiles, for an eleventh week, declined, and rubber was able to rise by as much as 3.4 percent. The reason why synthetic rubber is so tied up with oil is that it is made from a petroleum distillate called naphta.

Today Thailand, the biggest rubber exporter and manufacturer, raised offer prices due to slow production, increasing costs for the biggest car manufacturer of Japan — Toyota Motor Corp., and tire producer Bridgestone Corp., which forecasts that there will be decline in profit by 32 percent this year because of rising costs of raw material.

Being the fastest-growing major economy of the world, China is importing more and more rubber as economic growth pushes the demand for cars and trucks.

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“Both natural and synthetic rubber are used for tires and increased prices are negative for earnings of tire makers and carmakers. Rising material prices may eventually weaken demand,” according to analyst Jun Nishimuta, Kanetsu Asset Management Co., Tokyo.

“Prices were also boosted by strong demand from China, where rubber stockpiles were drawn down to a very low level,” said strategist Kazuhiko Saito, Interes Capital Management Co., Tokyo.

Retirement is within reach and for some, working as an option is already playing in their minds. If you did your job well during your powerful youthful days, your kids are now in college because of your college plans and you are now scouting for Caribbean Cruises or laying the plans of constructing your dream home.

Asset Allocation should be more conservative at this point of time as there is less time to recuperate losses from untimely investment mistakes. If you were not prudent during your youth days, maybe it’s time to be more aggressive on your asset classes. Bonds and Fixed Income investments should be the mix of half of your portfolio. Be more careful in screening for your stock issues and trading options or futures should be considerably less this time.

Careful investing in this stage of life could help you reach your financial goals a lot more smoothly. Be more prudent in your asset classes as you cannot afford to loss anymore any capital as there is very little time to recuperate it just in case. Play your cards right and make working as an option possible!

This is the time for you to make the big bucks if you were very prudent in your finances back then. At this time, probably you are earning as much as 5 times more than when you first began working. This trend would continue to grow exponentially over the next several years.

Along with marriage and kids, here come long-term financial commitments like mortgage on a house and car/s, insurance for your estate and family, and educational plans for your kids.

In this case, you should already start building a large emergency fund. It should be liquid and easy to access in cases of emergencies. Manage to keep 6 month’s worth of salary to 1 year depending on your preferences.

This time is where your disposable income was a lot bigger than before. But with kids, be prudent and a bit more conservative in your portfolio. You should be drifting very slowly from aggressive positions to stable and sound ones. Try to slowly accumulate your fixed income as you go nearer to retirement.

This period of time is also the period where you should be boosting your monthly contributions to your IRA or 401k. The name of the game in your 30s is wise and prudent savings. Make sure you visit and clear things up with your financial advisor or banker about what you like and expect.

Everyone knows that our income is meant to be spent. In fact, consumer spending accounts for two thirds of economic growth. With that figures, a change in consumer behaviour could even create a recession. But how do we properly allocate our personal resources to meet our desired objectives in an environment where there is high inflation?

1.    Commodities

Commodities is not only inversely proportional to the greenback, but also it is considered a hedge against inflation as commodities itself creates inflation. Take a look at Gold; gold was playing at $700 an ounce last year until recently where it hit a high of $1030 an ounce. If you were hedging yourself from the depreciation of the greenback back then and you bought Gold, you just not only purchased your portfolio an insurance policy against inflation, but you may have also made a lot of money with the Gold play.

2.    Bond Markets

When people are scared and are running away as fast as they could on equities, people do tend to prefer fixed income which also a symbol of capital preservation over the equities market or maximum growth potential. This has been proven with the Bond Rally of the 1970s where yields went at their records. So when fear is the market’s sentiment, stay on the sidelines or switch to fixed income.

Let’s face the fact that recession is part of the economic cycle. And what we need to do is not to blame the markets for our own mistakes but adjust our sails with the wind. In this kind of environment, my mentor would always reiterate that “Cash is always King”.

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Harley-Davidson, Inc. (NYSE: HOG) Board of Directors has approved a cash dividend increase of $0.33 per share for the second quarter of 2008, at the Annual Shareholder Meeting in Milwaukee, April 26, 2008, the company said.

All items of business presented to shareholders were approved at the meeting. The dividend is payable June 20, 2008, to shareholders of record as of June 5, 2008, representing a 10 percent increase over the previous dividend paid March 18, 2008.

During the meeting, the shareholders approved the re-election of George H. Conrades, Sara L. Levinson, George L. Miles, Jr., and Jochen Zeitz as Class II Directors. Also, Ernst & Young LLP was ratified as the Company’s independent registered public accounting firm for calendar year 2008.

Based in Milwaukee, Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell) and Harley-Davidson Financial Services (HDFS). Harley-Davidson Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, general merchandise and related services.