100-Years of the Ever-Disintegrating Dollar

November 7th, 2010

Ben Bernanke, Alan Greenspan, a Goldman Sachs Managing Director – a fitting invitee — and others descended upon Jekyll Island, Georgia, for the weekend to celebrate the Fed’s founding.

The immensely powerful and secretive institution, which has the exclusive reins on the US money supply, is coincidentally recognizing the occasion with another round of quantitative easing to the tune of $600 billion. Is the election going to help change things? Well… you can form your own opinion on that as you take a look at the clip below, which came to our attention via a Daily Bail post on the Fed celebrating a century of domination.

100-Years of the Ever-Disintegrating Dollar originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
100-Years of the Ever-Disintegrating Dollar




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

SPX’s Running Correction, Gold’s Setup, Oil Explodes!

November 7th, 2010

The financial markets continue to climb the wall of worry on the back of more Fed Quantitative Easing. Those trying to pick a top in this choppy bull market may prove to be correct for a couple hours but over time the shorts continue to get clobbered.

Quantitative easing was enough to turn gold back up and gave oil just enough of a nudge to breakout of its cup and handle pattern explained later.

The past few weeks the number of emails I receive on a daily basis about what individuals should do about short positions they took on their own has growing quickly. Usually when my inbox starts to fill up with traders holding heavy losses trying to pick a top I know something big is about to happen and its not going to be in the favor of the herd (everyone shorting). In the past couple week there have been some great entry points for the broad market whether its to buy the SP500, Dow, NASDAQ or Russell 2K. I focus on trading with the trend and entering on extreme sentiment readings as shown in the chart below.

Extreme Trend Trading Analysis

Below are my main market sentiment indicators for helping to time short term tops and bottoms. That being said I don’t pick short term tops in hopes to profit on the down side. Rather I wait for a extreme sentiment bottom to be put in place, then enter long with the up trend (Buy Low).

Once there is a 1-2% surge in price and sentiment indicators are showing a short term top I like to pull a little money off the table to lock in some profits while still holding a core position (Sell High). This is exactly what I/subscribers have done over the last couple weeks. This is a simple yet highly effective strategy and works just as well in a down trend except I focus on shorting extreme sentiment bounces. Subscribers know what these indicators are as I cover them each week in my daily pre-market trading videos as we prepare for the day ahead.

SPX Running Correction

Since early September the equities market has been on fire. In late September the market was extremely toppy looking and trading at key resistance levels from prior highs convincing a lot of traders to take a short position. But instead of a correction the market surged and has since continued to grind its way up week after week.

This rising choppy price action can be seen two ways:
1. As a rising wedge with a blow off top (Bearish)
2. Or as a Running Consolidation (Bullish)

The running consolidation happens when buyers are abundant picking up more shares on every little dip. Overall looking at the intraday price action you will see market shakeouts as it tries to buck traders out before it continues higher. This choppy looking market action if not read correctly looks extremely bearish to the novice trader and the fact the market is so overbought it easily convinces them to take short positions. This choppy action is just enough to wash the market of weak positions before starting another run up.

All that said, both a blow off rising wedge and a running correction are very bullish patterns for a period of time. Again I cannot state it enough, trade with the trend and the key moving averages.

Gold Shines On The Daily Chart

The gold story is straight forward really… Trend is up, quantitative easing is back in action and that is helping to list gold and silver prices. Key moving averages have turned back up and gold closed at a new high which shows strength.

Golden Rocket

With another round of quantitative easing just starting and gold making another new high last week there is a very good chance gold stocks will rocket higher in the coming 8 months. I have been following Millrock Resources Inc. because of the team involved with this company. A breakout to the upside here could post some exciting gains if you take a look at the chart and see where the majority of volume has traded over the years along with the bullish chart patterns (Cup & Handle/Rising Wedge) with strong confirming volume. From 84 cents to the $3.50 area there should not be many sellers other than traders slowing taking profits on the way up.

Crude Oil Breaks Out Of Cup

Crude oil has been dormant the past few weeks even though the US Dollar has plummeted. But last week’s news on more QE was enough to send oil higher. The surge took oil prices straight to the 2010 highs as expected and blew past my first target of $86.00 per barrel. I figure it will consolidate here for a while until we see if the dollar bottomed last week or is just testing the breakdown level.

Weekend Trading Conclusion:

In short, the market has played out exactly as we planned and all four of our positions are deep in the money. As we all know the market goes in waves in both price and for trade setups. The past couple weeks were great for getting into trades and now the market is running in our direction. It will take a few days for the market to stabilize (pullback or pause) before we could get anther round of trade setups. Keep position sizes small as the market remains overbought and a sharp correction could happen at any time. Until then, keep trading with the trend.

Disclaimer: I own shares of SPY and MRO.V

Get My Daily Pre-Market Trading Videos, Daily Updates & Trade Alerts Here: www.TheGoldAndOilGuy.com

Chris Vermeulen

Read more here:
SPX’s Running Correction, Gold’s Setup, Oil Explodes!




Chris Vermeulen is a full time daytrader and swing trader specializing in trading (NYSE:GLD), (NYSE:GDX), XGD.TO, (NYSE:SLV) and (NYSE:USO). I provide my trading charts, market insight and trading signals to members of my newsletter service. If you have any questions feel free to send me an email: Chris@TheGoldAndOilGuy.com This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Commodities

A Personal Story with Huge Profit Implications

November 7th, 2010

Larry Edelson

Larry here, with a personal story that may help you understand just how explosive the right investments can be in this new world of money printing gone wild.

It’s why a lot of our readers are making so much money in this environment. And it’s why the new presentation Martin and Monty just uploaded to the Web is so darn timely. (Click here to view it before markets open tomorrow.)

Here’s my story: Fourteen months ago, I bought a new home here in Thailand. The other day, I learned that my property has appreciated 20% in terms of the local currency. Plus, the dollar has fallen 20% against the Thai Baht.

Combined, that means my investment has gained a whopping 40% — in just 14 months.

But please understand. I’m not recommending you fly out to Bangkok to buy real estate. I’m just trying to make an important point — that we are in an environment of explosive profits in all of the asset classes we’ve been recommending: Emerging markets. Foreign currencies. Precious metals. Natural resources.

The key driver: U.S. dollar is collapsing. And the Fed is doing everything in its power to accelerate its decline! Think the Fed’s $600 billion of newly printed money is big? Think it’s going to trash the dollar? Ha! That’s just their first down payment.

Normally, the Fed’s money printing would NOT be good news for other countries because the falling dollar makes it harder for their exports to compete. So as you might expect, all the politicians here in Asia are publically complaining that the dollar’s going down too fast.

But the truth is, they’re doing nothing about it! Why? Because all those newly created dollars are flooding into Asia right now: Pushing emerging market stocks higher … precious metals higher … farm prices higher … and more!

Needless to say, local companies are loving it. Investors are loving it. And how can you blame them? The fact of the matter is that doing nothing in these kinds of markets is probably the biggest threat of all to your wealth!

THIS is why I’ve been urging you all along to diversify in all five major asset classes. With the Fed now printing money like there’s no tomorrow — and with the $600 billion it says it’s printing only the tip of the iceberg needed to get the U.S. economy going again …

We’re looking at massive asset re-inflation across the board. World stocks … gold and the other precious metals … bonds … and of course commodities — especially food — are ALL set to deliver huge gains in the months ahead!

Monty Agarwal — the renowned hedge fund manager who’s investing Dr. Weiss’ $1 million “Rapid Growth” account — has already invested in these areas.

He just posted a brand-new presentation to help you grab YOUR share of the huge profit potential in these markets.

The goal of this presentation: To show you how to get the most mileage out of the tremendous new wealth that the Fed’s money printing is creating right now in gold, silver and platinum … foreign currency ETFs … emerging markets and more.

Click this link to view it before markets start taking off again, possibly as early as tomorrow morning!

Best wishes,

Larry Edelson

Related posts:

  1. Personal Finance Corner
  2. New home sales at 1963 levels, but that’s only part of the story
  3. Profit from the Falling Dollar With ETFs

Read more here:
A Personal Story with Huge Profit Implications

Commodities, ETF, Mutual Fund, Real Estate, Uncategorized

Economic Recovery: The View From Bernanke’s Helicopter

November 6th, 2010

This week, the world caught a glimpse of what Henry Hazlitt might have called the “seen” – the primary, most conspicuous consequence of a preposterous economic policy. Of course, it is the “unseen,” what comes next, that we ought to be worried about.

We are referring here to the dawning of the QE2 era. In the shadow of the midterm elections, Federal Reserve Chairman Ben “full steam ahead” Bernanke announced the second round of quantitative easing, or, for us non econo-scholars, “money printing.”

In a nutshell, Bernanke committed the Fed to purchase $600 billion in Treasuries over the next 8 months. In addition, those nasty mortgage securities the Fed gobbled up during operation QE1 will continue to be rolled over into Treasuries. All in, the total price tag comes to $875 billion brand spankin’ new dollars…with the option to open the spigots further should inflation (the CPI version) come in under what the Fed deems as “healthy.”

Markets rejoiced over the news, sending the major indexes up 2…3…4%. Gold rallied to within $3 of the $1,400 per ounce mark yesterday. Silver leapt out of the gates too…as did just about everything else priced in dollars. Oil made a charge towards $90 per barrel and the “ags,” already on a blistering run this year, continued to soar.

Behind the scenes, the dollar took it firmly on the chin. Our mates over at The 5 provided the following chart, showing the once-mighty greenback’s response to Bernanke’s systematic currency debasement:

Quantitative Easing

The dollar is now more or less at parity with the Canadian loonie (CAD), the Aussie dollar (AUD) and the Swiss franc (CHF).

But not everyone was pleased with the Fed’s magic monetary potion.

Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the US economy is creating “risks for everyone.” The Chinese, who hold an uncomfortably large quantity of ever-depreciating dollars, were equally miffed. Vice Foreign Minister Cui Tiankai said, “many countries are worried about the impact of the policy on their economies.” Tiankai went on to say that the US “owes us some explanation on their decision on quantitative easing.”

Bernanke defended his position to a group of college students in Jacksonville, Florida, on Friday. “Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” he said. “A strong US economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”

Has Bernanke stumbled upon the ultimate formula for wealth everlasting? Has the man who once said he would drop money from helicopters if the need arose cracked the code to eternal, effortless prosperity? Just print money and be happy?

“If this were true,” ventured Bill Bonner earlier this week in his essay “Plumbers Crack”, “it was a giant step forward for humanity, at least equal to discovering fire, creating Facebook or blowing up Nagasaki. Jesus Christ multiplied loaves and fishes. But He had something to work with. The Federal Reserve multiplies zeros…creating money – out of nothing at all. If it can really do the trick, we are saved. The legislature can go home. It no longer needs to worry about raising taxes or allocating public resources. Government can now buy all the loaves and fishes it wants.  And give every voter a quart of whiskey on Election Day.”

Readers may feel a healthy welling of skepticism here. To be sure, a strong economy, a recovering economy, is important…but debasing the nation’s currency won’t get you there. If a country could grow rich and prosperous by simply allocating printed money to troubled sectors of its economy, Zimbabwe would be the jewel of the African continent and there would be a statue of Gideon Gono, her former central banker, in Harare’s town square. If the Weimar Republic had been able to make WWI reparations in 50 billion mark notes, the world may have avoided the unmitigated catastrophe of WWII. And, to belabor the point, if the Romans were allowed to finance their foreign escapades by simply handing out I.O.U.s, Edward Gibbon’s classic, The Decline and Fall of the Roman Empire, might seem a little odd on the bookshelf of history.

For the moment, the markets have awarded Bernanke’s stimulus plans a vote of confidence. That is the immediate, seen, effect. Like an athlete on steroids, they are looking to break records, to rewrite their own history books. The Fed has them off to a flying start, but pretty soon the effect of the drug will wear off. Reality will kick in. It is then that the “unseen” effects of trying to cheat the system will come into plane view. The global economy, built on the back of a strong, stable world currency, will once again come to realize that history makes no excuses and does no man any favors.

Regards,

Joel Bowman
for The Daily Reckoning

Economic Recovery: The View From Bernanke’s Helicopter originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Economic Recovery: The View From Bernanke’s Helicopter




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Buy These Beaten Down Shares and Then Watch Them Soar

November 6th, 2010

Buy These Beaten Down Shares and Then Watch Them Soar

So many stocks are having a great year. Oil refiner Sunoco (NYSE: SUN), for example, has shot up more than +47%. Southern Copper (NYSE: SCCO) has spiked +38% and its competitor Freeport-McMoRan Copper & Gold (NYSE: FCX) has gained about +27%. Many broad indexes are looking good, too, like the Russell 2000, which has risen +16%, and the S&P 500, up almost +11%.

Yet I'm going to suggest you buy a stock that's been doing just the opposite. It's down almost -20% this year, -23% off its one-year high and -39% shy of its five-year peak. With shares of so many other companies posting big gains, why should you bother considering this firm?

Investors have bid down the company's stock over concern about reduced demand for one of its key products, which accounts for more than half its sales. But I believe the setback is short-lived and the stock will soon be delivering well above-average returns. From its current price of about $29 a share, it could return an average of +17% to +27% a year for the next few years or more. In absolute terms, it should rise by +90% to +150% from now through 2015.

For one thing, so many of us rely on this firm even if we do take it for granted. Its software loads every time we boot up, and most of us have used that software to create, print or send files. The company has long been entrenched in the market for software used to produce content for the Internet, TV and print media, and it's expanding into new high-growth areas.

I'm referring to Adobe Systems (Nasdaq: ADBE). Investors have been punishing its stock because of slipping sales for its flagship Creative Suite (CS) software that artists, desktop publishers and others use for design and illustration. The latest version, CS5, drove a +37% increase in fiscal third quarter sales to nearly $550 million at Adobe's Creative Solutions division. Adobe expects the division's revenue to be roughly the same in the fourth quarter, again with CS5 as the main driver.

The problem: At current levels, Creative Solutions' revenue appears to be tailing off from its $571 million peak in the fourth quarter of 2007, when CS3 generated the lion's share. The concern is that, from here on out, it'll be progressively more difficult to sell each new upgrade, causing sales of that crucial product line to continue eroding — hence this year's poor stock performance.

It's a valid concern, but management isn't just going to sit back and watch it happen. They're already aggressively pursuing other avenues and recently made a key acquisition, announcing on October 29th that Adobe bought Swiss software maker Day Software Holding for $250 million. Day's CQ5 online marketing and communications platform should be a profitable addition to the stalwarts that make up Adobe's CS package, such as Photoshop, Acrobat, Illustrator and Flash Player.

Also, on September 15th of last year, Adobe began moving into the rapidly growing field of web analytics — the measurement of website traffic and activity — by acquiring Omniture, a firm specializing in that area. Omniture already accounts for about 10% of Adobe's total revenue (which should hit about $3.7 billion by year's end).

Established products still have plenty of earning potential, too, provided Adobe continues to provide high-quality updates. Flash Player, for example, is the foundation for YouTube and many other video websites. Acrobat and Flash Player combined are on more than 600 million PCs and other computers. And once people have learned how to use them, they're not usually that quick to switch to competing software.

I therefore agree with projections for revenue growth at Adobe of +10% per year and earnings growth of +12% to +14% annually, on average, through 2015. That's with all the potential headwinds like competition from rivals such as Microsoft (Nasdaq: MSFT), any issues with the ongoing integration of Omniture, and progressively greater difficulty selling CS upgrades.

Action to Take –> If you've got cash and a spot in your portfolio for a high-quality, established software firm, buy Adobe for its market-beating return potential. Importantly, main rival Microsoft probably won't be able to compete like it could if it didn't constantly have to fend off antitrust complaints from competitors and government officials.

Also, I haven't heard of any notable problems with the integration of Omniture other than its CEO resigning last July, less than a year after Adobe acquired the company. Overall, the integration seems to be going smoothly and hasn't saddled Adobe with any financial burdens it can't handle.


– Tim Begany

Tim Begany has worked at several financial planning and investment advisory firms. He also holds a Series 65 investment consultant license. Read more…

Disclosure: Neither Tim Begany nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Tim Begany
Buy These Beaten Down Shares and Then Watch Them Soar

Read more here:
Buy These Beaten Down Shares and Then Watch Them Soar

Uncategorized

Buy These Beaten Down Shares and Then Watch Them Soar

November 6th, 2010

Buy These Beaten Down Shares and Then Watch Them Soar

So many stocks are having a great year. Oil refiner Sunoco (NYSE: SUN), for example, has shot up more than +47%. Southern Copper (NYSE: SCCO) has spiked +38% and its competitor Freeport-McMoRan Copper & Gold (NYSE: FCX) has gained about +27%. Many broad indexes are looking good, too, like the Russell 2000, which has risen +16%, and the S&P 500, up almost +11%.

Yet I'm going to suggest you buy a stock that's been doing just the opposite. It's down almost -20% this year, -23% off its one-year high and -39% shy of its five-year peak. With shares of so many other companies posting big gains, why should you bother considering this firm?

Investors have bid down the company's stock over concern about reduced demand for one of its key products, which accounts for more than half its sales. But I believe the setback is short-lived and the stock will soon be delivering well above-average returns. From its current price of about $29 a share, it could return an average of +17% to +27% a year for the next few years or more. In absolute terms, it should rise by +90% to +150% from now through 2015.

For one thing, so many of us rely on this firm even if we do take it for granted. Its software loads every time we boot up, and most of us have used that software to create, print or send files. The company has long been entrenched in the market for software used to produce content for the Internet, TV and print media, and it's expanding into new high-growth areas.

I'm referring to Adobe Systems (Nasdaq: ADBE). Investors have been punishing its stock because of slipping sales for its flagship Creative Suite (CS) software that artists, desktop publishers and others use for design and illustration. The latest version, CS5, drove a +37% increase in fiscal third quarter sales to nearly $550 million at Adobe's Creative Solutions division. Adobe expects the division's revenue to be roughly the same in the fourth quarter, again with CS5 as the main driver.

The problem: At current levels, Creative Solutions' revenue appears to be tailing off from its $571 million peak in the fourth quarter of 2007, when CS3 generated the lion's share. The concern is that, from here on out, it'll be progressively more difficult to sell each new upgrade, causing sales of that crucial product line to continue eroding — hence this year's poor stock performance.

It's a valid concern, but management isn't just going to sit back and watch it happen. They're already aggressively pursuing other avenues and recently made a key acquisition, announcing on October 29th that Adobe bought Swiss software maker Day Software Holding for $250 million. Day's CQ5 online marketing and communications platform should be a profitable addition to the stalwarts that make up Adobe's CS package, such as Photoshop, Acrobat, Illustrator and Flash Player.

Also, on September 15th of last year, Adobe began moving into the rapidly growing field of web analytics — the measurement of website traffic and activity — by acquiring Omniture, a firm specializing in that area. Omniture already accounts for about 10% of Adobe's total revenue (which should hit about $3.7 billion by year's end).

Established products still have plenty of earning potential, too, provided Adobe continues to provide high-quality updates. Flash Player, for example, is the foundation for YouTube and many other video websites. Acrobat and Flash Player combined are on more than 600 million PCs and other computers. And once people have learned how to use them, they're not usually that quick to switch to competing software.

I therefore agree with projections for revenue growth at Adobe of +10% per year and earnings growth of +12% to +14% annually, on average, through 2015. That's with all the potential headwinds like competition from rivals such as Microsoft (Nasdaq: MSFT), any issues with the ongoing integration of Omniture, and progressively greater difficulty selling CS upgrades.

Action to Take –> If you've got cash and a spot in your portfolio for a high-quality, established software firm, buy Adobe for its market-beating return potential. Importantly, main rival Microsoft probably won't be able to compete like it could if it didn't constantly have to fend off antitrust complaints from competitors and government officials.

Also, I haven't heard of any notable problems with the integration of Omniture other than its CEO resigning last July, less than a year after Adobe acquired the company. Overall, the integration seems to be going smoothly and hasn't saddled Adobe with any financial burdens it can't handle.


– Tim Begany

Tim Begany has worked at several financial planning and investment advisory firms. He also holds a Series 65 investment consultant license. Read more…

Disclosure: Neither Tim Begany nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Tim Begany
Buy These Beaten Down Shares and Then Watch Them Soar

Read more here:
Buy These Beaten Down Shares and Then Watch Them Soar

Uncategorized

5 Great Stocks Under $10

November 6th, 2010

5 Great Stocks Under $10

There's a balance between performance and stability when it comes to stock prices. Equities priced under $5 per share can offer huge percentage returns, but are generally volatile. Stocks priced more than $10 are generally more predictable, but offer a muted upside. In between $5 and $10 though, stocks offer the best of both worlds. Here are five sub-$10 stocks to consider today…

1. Boise Inc. (NYSE: BZ): Paper and forestry stocks have been one of the market’s recent-but-quiet big winners, and Boise Inc. has been blazing the trail every step of the way. Shares are up about +46% in the past 12 months, while the forestry indices are up about +28% in the same period. The overall market, by comparison, has only gained about +14% in the same timeframe.

While such outperformance has often been followed by matching underperformance in the past year and a half, for paper stocks — and Boise in particular — a continued uptrend may be more than merited.

Skyrocketing materials costs through 2007 nearly brought the paper and corrugated box industry to its knees. For better or worse, the recession that began at the end of that year solved the problem. Though materials costs were up on a year-over-year basis for Boise last quarter, they’re still well under 2007’s stunning levels, despite the mild economic rebound since then. The result? Boise just posted record-breaking third-quarter operating income of $0.44 per share, and the sustainable balance between materials costs and paper demand remains intact.

2. Aircastle LTD (NYSE: AYR): While it may feel too late to tap into the revival of the airline industry, it’s not. The back door is still open, via Aircastle.

The company arranges sales and leases of commercial jet aircraft, which was admittedly a lousy business to be in through 2009 while air passenger traffic was declining. In 2010, a light appeared at the end of the tunnel. Though bottom lines haven’t actually rebounded yet, but they’re expected to in 2011 on a year-over-year as well as on a sequential basis.

Besides, with a trailing as well as a projected price-to-earnings ratio (P/E) just above 8.0, it’s not like value is a question mark with Aircastle.

3. American Axle & Manufacturing (NYSE: AXL): The initial reaction to last quarter's earnings for American Axle & Manufacturing wasn’t a kind one. Despite topping analyst estimates of $0.39 by actually bringing home $0.52 per share, the company dropped from a high of $10.15 to an ultimate low of $8.84 thanks to a “disappointing” full-year revenue forecast in the $2.2 billion to $2.3 billion range.

While the actual numbers may have been shy of estimates, valuations here are also teetering on being ridiculous. American Axle shares are priced at a mere 8 times earnings on a trailing basis in the last four quarters, and even if earnings shrink per current EPS estimates of $1.35 for 2011 (which isn’t likely), the stock’s still priced at about seven times forward-looking forecasts. The market seems to have caught its mistake though; the stock has bounced back to $9.96.

Bottom line: this stock has far more upside potential packed into its future.

4. Celestica (NYSE: CLS): A stock that rallies on good news makes sense. A stock that rebounds despite bad news may not make much sense, but in many regards it speaks volumes more about how investors view the company.

After the electronics manufacturer announced last week it would likely be posting income under analysts’ estimates of $0.25 per share for the current quarter, shares fell from $8.84 to a low of $7.96 — for half of a day. Now it’s even higher than where it started that journey.

So the company countered the bad news with a rebound catalyst? No. It’s just that Celestica is (1) still consistently growing earnings on a year-over-year basis, and (2) is still bargain-priced at less than 10 times 2011’s anticipated earnings.

5. Excel Maritime Carriers (EXM): Finally, there’s a difference between “based in Greece” and “dependent on the Greek economy.” Excel Maritime Carriers is only guilty of the former, but the stock has taken several lumps in the past few months, suggesting investors are assuming the latter.

That’s not to say the company escaped the global recession unscathed — Excel Maritime did indeed dip into the red throughout most of 2009. In the last three quarters though, operating profits have not only improved, they’ve been positive, and the company appears to be coming out of the storm. In fact, the company topped last quarter’s EPS estimate of $0.10 with a per-share profit of $0.11.

While one — or even three — solid quarters don’t mean everything, the plausibly forecasted (2011) P/E of 8.8 goes a long way toward that end.

Action to Take –> Investors don't have to choose strictly between stability and performance. The narrow band of stocks priced between $5 and $10 offer a very rewarding balance of both. These five names are among the picks of that particular litter, and could serve as a well-balanced addition to almost any portfolio.


– James Brumley

P.S. –

Uncategorized

5 Great Stocks Under $10

November 6th, 2010

5 Great Stocks Under $10

There's a balance between performance and stability when it comes to stock prices. Equities priced under $5 per share can offer huge percentage returns, but are generally volatile. Stocks priced more than $10 are generally more predictable, but offer a muted upside. In between $5 and $10 though, stocks offer the best of both worlds. Here are five sub-$10 stocks to consider today…

1. Boise Inc. (NYSE: BZ): Paper and forestry stocks have been one of the market’s recent-but-quiet big winners, and Boise Inc. has been blazing the trail every step of the way. Shares are up about +46% in the past 12 months, while the forestry indices are up about +28% in the same period. The overall market, by comparison, has only gained about +14% in the same timeframe.

While such outperformance has often been followed by matching underperformance in the past year and a half, for paper stocks — and Boise in particular — a continued uptrend may be more than merited.

Skyrocketing materials costs through 2007 nearly brought the paper and corrugated box industry to its knees. For better or worse, the recession that began at the end of that year solved the problem. Though materials costs were up on a year-over-year basis for Boise last quarter, they’re still well under 2007’s stunning levels, despite the mild economic rebound since then. The result? Boise just posted record-breaking third-quarter operating income of $0.44 per share, and the sustainable balance between materials costs and paper demand remains intact.

2. Aircastle LTD (NYSE: AYR): While it may feel too late to tap into the revival of the airline industry, it’s not. The back door is still open, via Aircastle.

The company arranges sales and leases of commercial jet aircraft, which was admittedly a lousy business to be in through 2009 while air passenger traffic was declining. In 2010, a light appeared at the end of the tunnel. Though bottom lines haven’t actually rebounded yet, but they’re expected to in 2011 on a year-over-year as well as on a sequential basis.

Besides, with a trailing as well as a projected price-to-earnings ratio (P/E) just above 8.0, it’s not like value is a question mark with Aircastle.

3. American Axle & Manufacturing (NYSE: AXL): The initial reaction to last quarter's earnings for American Axle & Manufacturing wasn’t a kind one. Despite topping analyst estimates of $0.39 by actually bringing home $0.52 per share, the company dropped from a high of $10.15 to an ultimate low of $8.84 thanks to a “disappointing” full-year revenue forecast in the $2.2 billion to $2.3 billion range.

While the actual numbers may have been shy of estimates, valuations here are also teetering on being ridiculous. American Axle shares are priced at a mere 8 times earnings on a trailing basis in the last four quarters, and even if earnings shrink per current EPS estimates of $1.35 for 2011 (which isn’t likely), the stock’s still priced at about seven times forward-looking forecasts. The market seems to have caught its mistake though; the stock has bounced back to $9.96.

Bottom line: this stock has far more upside potential packed into its future.

4. Celestica (NYSE: CLS): A stock that rallies on good news makes sense. A stock that rebounds despite bad news may not make much sense, but in many regards it speaks volumes more about how investors view the company.

After the electronics manufacturer announced last week it would likely be posting income under analysts’ estimates of $0.25 per share for the current quarter, shares fell from $8.84 to a low of $7.96 — for half of a day. Now it’s even higher than where it started that journey.

So the company countered the bad news with a rebound catalyst? No. It’s just that Celestica is (1) still consistently growing earnings on a year-over-year basis, and (2) is still bargain-priced at less than 10 times 2011’s anticipated earnings.

5. Excel Maritime Carriers (EXM): Finally, there’s a difference between “based in Greece” and “dependent on the Greek economy.” Excel Maritime Carriers is only guilty of the former, but the stock has taken several lumps in the past few months, suggesting investors are assuming the latter.

That’s not to say the company escaped the global recession unscathed — Excel Maritime did indeed dip into the red throughout most of 2009. In the last three quarters though, operating profits have not only improved, they’ve been positive, and the company appears to be coming out of the storm. In fact, the company topped last quarter’s EPS estimate of $0.10 with a per-share profit of $0.11.

While one — or even three — solid quarters don’t mean everything, the plausibly forecasted (2011) P/E of 8.8 goes a long way toward that end.

Action to Take –> Investors don't have to choose strictly between stability and performance. The narrow band of stocks priced between $5 and $10 offer a very rewarding balance of both. These five names are among the picks of that particular litter, and could serve as a well-balanced addition to almost any portfolio.


– James Brumley

P.S. –

Uncategorized

4 Speculative Stocks That Could Pay Off Big-Time

November 6th, 2010

4 Speculative Stocks That Could Pay Off Big-Time

What's the opposite of a value stock? A company with a large market value but a tiny or non-existent revenue base. These companies often hold a great deal of promise to their backers, but can also be a black hole for investors' dollars if they need to keep raising money just to stay afloat.

On occasion, these highly speculative plays really pay off, as we saw with VirnetX Holdings (AMEX: VHC). I took a look at this owner of telecom patents in August — after its stock had tripled from $2 to $6. [Read the article here.]

Around that time, VirnetX told investors that revenue from its patents would finally start streaming in. These days, shares trade around $18, up some +900% from the 52-week low. Of course for every Virnet, there are numerous duds, so a basket approach to speculative stocks makes the most sense.

With that in mind, I ran a screen for stocks that are valued at more than $100 million, yet have trailing revenue of less than $1 million. That's a different set of criteria — yielding a largely different list of stocks — than the last group of speculative stocks I reviewed. [Read: "The Most Speculative Stocks on the Market"]

Alternative Energy Holdings (Pink sheets: AEHI)
You have to scratch your head and wonder why this little start up is worth $200 million. The company is looking to build a nuclear power plant in Idaho, and recently secured an equity line of credit (which means new shares are issued on an as-needed basis) that is likely to take its market value even higher as more and more shares are in play). But the hurdles for nuclear power are massive, despite the fact that nuclear power appears to enjoy bipartisan support. Trouble is, the Obama administration and the GOP greatly differ on other energy policy initiatives, so nuclear power opportunities have become stuck in gridlock.

If and when the nuclear power industry springs back to life here in the United States, the process of getting the right permits and then building a plant can take years. Moreover, the upfront costs of nuclear power plant construction are so high, and prices for natural gas — another “clean source of energy” — are so low, that the business case for nuclear doesn't look very good right now. Lastly, how do you even place a value on a business like this?

Presumably, management has built spreadsheets projecting robust cash flow many years down the road. But those forecasts never seem to account for all of the stumbling blocks along the way.

Augme Technologies (Nasdaq: AUGT)
Some investors think that Augme could become the next explosive play on wireless telecom patents, as was the case with Virnet noted earlier. Augme's shares surged from $1 in June to a recent $2.75 on hopes that the company would prevail in various lawsuits that might ultimately yield robust payouts.

But Augme isn't just a patent play. The company sells a series of software developer tools that enhances the display and interactivity of mobile ads that are increasingly being deployed on smartphones. The company's revenue appears to be starting to build toward the $1 million per quarter mark, which is admittedly tiny but at least a sign that customers are starting to sign up.

But caution is warranted. Augme's balance sheet is quite weak, and the recent stock surge virtually guarantees an imminent capital raise. You're likely better off researching this stock now, and should look to buy only when the company has raised enough money to carry it through the next 12 months. The fact that the company already has 58 million shares outstanding tells you that existing shareholders have already felt the pain of dilution, many times over.

Cadiz (Nasdaq: CDZI)
If current weather trends continue, parts of the U.S. Southwest may run out of water in a decade or two. As a solution, little-known Cadiz has bought up 45,000 acres of land in Southern California, not far from the Colorado River, that could potentially remain as an untapped resource. The company is securing agreements with local utilities to buy water supplies in the event that other aquifers run dry. Cadiz can also store imported water in its aquifers in case water utilities look to stockpile million of gallons of water.

Yet it's not clear how this business model will come into play, until and unless a water crisis emerges. Management even said so in the last 10-K: “We do not know the terms, if any, upon which we may be able to proceed with our water and other development programs.” In the interim, the company would like to install solar power on its land and presumably secure rent or other revenue streams. And nearly 10,000 acres of its land is zoned for agricultural use.

So here's the play. If you see the U.S. Southwest head into another deep drought, check out this stock. Until then, consider the water plays my colleague Tim Begany recently wrote about. [Read Tim's excellent piece by clicking here .]

Single Touch (Nasdaq: SITO)
This company wins the 2010 award for the most inane press release headline: “Single Touch July Revenue Tops Third Quarter Earnings.” That's a claim that can be made by virtually every company in the world.

All kidding aside, this provider of retail-focused instant messaging services has a pretty intriguing business model. Retail stores can send out alerts to smartphones in its vicinity that notifies consumers about in-store specials and reminders when products or services, such as photos, are available for pick-up. A wide number of retailers have signed up for the service, although the company hasn't yet figured out how to translate that into meaningful sales growth.

Single Touch's $100 million market value tells you that investors have high hopes for eventual strong sales and profit growth. You may want to check out the company's upcoming fiscal fourth quarter (September) earnings release to see if such lofty hopes are justified.

Action to Take –> Of the companies mentioned here, only Augme and Single Touch look set to deliver impressively rising sales in the near-term. At this point, it's tough to tell if they will be the type of true game-changers my colleague Andy Obermueller, editor of StreetAuthority's Game-Changing Stocks, likes to talk about (these two stocks are still a bit speculative — Andy likes stocks that can deliver huge gains over a long time) — but they could still deliver big gains. The other stocks mentioned here are worth monitoring in anticipation of the day that their business models take off or their market values shrink to a more manageable level.


– David Sterman

P.S. –

Uncategorized

4 Speculative Stocks That Could Pay Off Big-Time

November 6th, 2010

4 Speculative Stocks That Could Pay Off Big-Time

What's the opposite of a value stock? A company with a large market value but a tiny or non-existent revenue base. These companies often hold a great deal of promise to their backers, but can also be a black hole for investors' dollars if they need to keep raising money just to stay afloat.

On occasion, these highly speculative plays really pay off, as we saw with VirnetX Holdings (AMEX: VHC). I took a look at this owner of telecom patents in August — after its stock had tripled from $2 to $6. [Read the article here.]

Around that time, VirnetX told investors that revenue from its patents would finally start streaming in. These days, shares trade around $18, up some +900% from the 52-week low. Of course for every Virnet, there are numerous duds, so a basket approach to speculative stocks makes the most sense.

With that in mind, I ran a screen for stocks that are valued at more than $100 million, yet have trailing revenue of less than $1 million. That's a different set of criteria — yielding a largely different list of stocks — than the last group of speculative stocks I reviewed. [Read: "The Most Speculative Stocks on the Market"]

Alternative Energy Holdings (Pink sheets: AEHI)
You have to scratch your head and wonder why this little start up is worth $200 million. The company is looking to build a nuclear power plant in Idaho, and recently secured an equity line of credit (which means new shares are issued on an as-needed basis) that is likely to take its market value even higher as more and more shares are in play). But the hurdles for nuclear power are massive, despite the fact that nuclear power appears to enjoy bipartisan support. Trouble is, the Obama administration and the GOP greatly differ on other energy policy initiatives, so nuclear power opportunities have become stuck in gridlock.

If and when the nuclear power industry springs back to life here in the United States, the process of getting the right permits and then building a plant can take years. Moreover, the upfront costs of nuclear power plant construction are so high, and prices for natural gas — another “clean source of energy” — are so low, that the business case for nuclear doesn't look very good right now. Lastly, how do you even place a value on a business like this?

Presumably, management has built spreadsheets projecting robust cash flow many years down the road. But those forecasts never seem to account for all of the stumbling blocks along the way.

Augme Technologies (Nasdaq: AUGT)
Some investors think that Augme could become the next explosive play on wireless telecom patents, as was the case with Virnet noted earlier. Augme's shares surged from $1 in June to a recent $2.75 on hopes that the company would prevail in various lawsuits that might ultimately yield robust payouts.

But Augme isn't just a patent play. The company sells a series of software developer tools that enhances the display and interactivity of mobile ads that are increasingly being deployed on smartphones. The company's revenue appears to be starting to build toward the $1 million per quarter mark, which is admittedly tiny but at least a sign that customers are starting to sign up.

But caution is warranted. Augme's balance sheet is quite weak, and the recent stock surge virtually guarantees an imminent capital raise. You're likely better off researching this stock now, and should look to buy only when the company has raised enough money to carry it through the next 12 months. The fact that the company already has 58 million shares outstanding tells you that existing shareholders have already felt the pain of dilution, many times over.

Cadiz (Nasdaq: CDZI)
If current weather trends continue, parts of the U.S. Southwest may run out of water in a decade or two. As a solution, little-known Cadiz has bought up 45,000 acres of land in Southern California, not far from the Colorado River, that could potentially remain as an untapped resource. The company is securing agreements with local utilities to buy water supplies in the event that other aquifers run dry. Cadiz can also store imported water in its aquifers in case water utilities look to stockpile million of gallons of water.

Yet it's not clear how this business model will come into play, until and unless a water crisis emerges. Management even said so in the last 10-K: “We do not know the terms, if any, upon which we may be able to proceed with our water and other development programs.” In the interim, the company would like to install solar power on its land and presumably secure rent or other revenue streams. And nearly 10,000 acres of its land is zoned for agricultural use.

So here's the play. If you see the U.S. Southwest head into another deep drought, check out this stock. Until then, consider the water plays my colleague Tim Begany recently wrote about. [Read Tim's excellent piece by clicking here .]

Single Touch (Nasdaq: SITO)
This company wins the 2010 award for the most inane press release headline: “Single Touch July Revenue Tops Third Quarter Earnings.” That's a claim that can be made by virtually every company in the world.

All kidding aside, this provider of retail-focused instant messaging services has a pretty intriguing business model. Retail stores can send out alerts to smartphones in its vicinity that notifies consumers about in-store specials and reminders when products or services, such as photos, are available for pick-up. A wide number of retailers have signed up for the service, although the company hasn't yet figured out how to translate that into meaningful sales growth.

Single Touch's $100 million market value tells you that investors have high hopes for eventual strong sales and profit growth. You may want to check out the company's upcoming fiscal fourth quarter (September) earnings release to see if such lofty hopes are justified.

Action to Take –> Of the companies mentioned here, only Augme and Single Touch look set to deliver impressively rising sales in the near-term. At this point, it's tough to tell if they will be the type of true game-changers my colleague Andy Obermueller, editor of StreetAuthority's Game-Changing Stocks, likes to talk about (these two stocks are still a bit speculative — Andy likes stocks that can deliver huge gains over a long time) — but they could still deliver big gains. The other stocks mentioned here are worth monitoring in anticipation of the day that their business models take off or their market values shrink to a more manageable level.


– David Sterman

P.S. –

Uncategorized

Currencies: Seven Charts You Should See

November 6th, 2010

Bryan Rich

The currency market, as well as all markets, have been heavily focused on the U.S. and the Fed’s plans for more quantitative easing (QE).

And that’s had a huge impact on the dollar and on dollar sentiment.

The question is: Will it last?

There’s no disputing that the dollar is the key to making this “reflation trade” tick. However, there is much dispute over whether the Fed’s QE2 plans will work … whether the strategy will produce demand, thus inflation, and whether it will have a sustainably devaluing effect on the dollar.

Despite all of the mania surrounding the dollar in recent months, history suggests from the Fed’s last adventure with QE, that none of aforementioned desired economic outcomes will ultimately pan out from QE2. Nor will it affect a draconian outcome for the dollar!

For a big picture perspective let’s take a look at seven key charts to see what may be in store for the dollar after the QE buzz has faded.

Chart #1:
Long-term dollar cycles

You can see in the chart below the roughly seven-year cycles in the dollar, dating back to the failure of the Bretton Woods system 40 years ago. These cycles argue that a bull cycle in the dollar started in March 2008.

chart1 Currencies: Seven Charts You Should See

That would put the dollar just 2.6 years into its new bull cycle or a bit more than a third of the way through a typical long-term dollar cycle.

Without question, this recent cycle has been very volatile. But the buck continues to trade comfortably above its 2008 all-time lows and the lows of last year, making higher lows along the way — a bullish pattern.

Chart #2:
10-year dollar chart

The chart below shows the roughly seven-year downtrend in the dollar and the subsequent ascending channel that started in 2008. You can see that the dollar is now testing the bottom line of this bull channel, an attractive area to buy the greenback.

chart2 Currencies: Seven Charts You Should See

A bounce from these levels would project a move toward the top line of the channel or about 23 percent higher.

Chart #3:
10-year euro chart

This chart for the euro is essentially the inverse of the dollar. And here too, you can see a long multi-year trend, higher in the case of the euro, followed by a descending channel.

chart3 Currencies: Seven Charts You Should See

The euro also is bumping into a technical boundary, one that represents a downward trending channel. A fall from this level of resistance would open up a downside for the euro that would be right on target with most bearish estimates espoused when the euro zone was at the height of its crisis … parity versus the dollar.

Chart #4:
Euro’s 22-week run

For more on the euro, consider this: The euro is in the midst of its strongest 22-week run on record, surpassing its prior record surge in 2003 — both areas are noted in the chart below.

chart4 Currencies: Seven Charts You Should See

What’s notable here is that in 2003, a 9 percent correction abruptly followed this strong climb. From current levels in the euro, a similar correction would mean a move down to 1.30 over the next few months.

Chart #5:
Pound still weak

Despite all of the fuss over the weak dollar, the British pound is still trading nearly 25 percent weaker against the dollar since the onset of the financial crisis three years ago.

chart5 Currencies: Seven Charts You Should See

And in the chart above, you can see that while the dollar and the euro are bumping into critical long-term technical areas, so is the pound.

Chart #6:
Yen near all-time highs

Now, for the Japanese yen, the other remaining major currency in the world …

This long-term chart in dollar/yen going back 40-years since the failure of the Bretton Woods system, shows its steady decline.

Even given its recent intervention the pair is nearing all-time lows (lows in the dollar, highs in the yen). From this chart, compared to the charts of the euro and the pound, you can see the lion’s share of dollar weakness over the past few years has come from the surging yen.

chart6 Currencies: Seven Charts You Should See

And now as this dollar/yen exchange rate nears all-time lows, the Bank of Japan is rolling out its most aggressive deflation-fighting act yet: With more QE, more fiscal policy and a cut in what’s left of its interest rate.

Plus, the Bank of Japan is officially in intervention mode — all things that make a case for a bounce in dollar/yen.

Finally …

Chart #7:
Battle against the yuan

With the Fed’s QE2 policy officially on the table, the emerging market and Asian countries that have been waging a fight to keep their currencies from a runaway surge have already stepped up with more currency market intervention and talks of capital controls.

chart7 Currencies: Seven Charts You Should See

And they are doing so because the dollar is weakening. But more importantly they’re reacting because the Chinese yuan is getting weaker relative to their currencies in the process — a competitive disadvantage for their export trade.

The key take-away: A grossly weaker dollar is not an economically or politically acceptable proposition for the world. And trouble for the world economy represents trouble for the U.S. economy.

So, despite all of the bold projections of a continued rout in the dollar, these seven charts suggest the exact opposite outcome could be around the corner.

Regards,

Bryan

P.S. This week on Money and Markets TV, our analysts took a look at the third quarter’s strong corporate earnings and discussed what’s ahead for the fourth quarter and beyond. If you missed Thursday night’s episode or would like to see it again at your convenience — it is now available at www.weissmoneynetwork.com.

Related posts:

  1. G-20 Meetings Could Prove Very Important for Currencies
  2. Gold up $41! Commodities, currencies exploding higher!
  3. What the Big Mac Can Tell You about Currencies

Read more here:
Currencies: Seven Charts You Should See

Commodities, ETF, Mutual Fund, Uncategorized

Currencies: Seven Charts You Should See

November 6th, 2010

Bryan Rich

The currency market, as well as all markets, have been heavily focused on the U.S. and the Fed’s plans for more quantitative easing (QE).

And that’s had a huge impact on the dollar and on dollar sentiment.

The question is: Will it last?

There’s no disputing that the dollar is the key to making this “reflation trade” tick. However, there is much dispute over whether the Fed’s QE2 plans will work … whether the strategy will produce demand, thus inflation, and whether it will have a sustainably devaluing effect on the dollar.

Despite all of the mania surrounding the dollar in recent months, history suggests from the Fed’s last adventure with QE, that none of aforementioned desired economic outcomes will ultimately pan out from QE2. Nor will it affect a draconian outcome for the dollar!

For a big picture perspective let’s take a look at seven key charts to see what may be in store for the dollar after the QE buzz has faded.

Chart #1:
Long-term dollar cycles

You can see in the chart below the roughly seven-year cycles in the dollar, dating back to the failure of the Bretton Woods system 40 years ago. These cycles argue that a bull cycle in the dollar started in March 2008.

chart1 Currencies: Seven Charts You Should See

That would put the dollar just 2.6 years into its new bull cycle or a bit more than a third of the way through a typical long-term dollar cycle.

Without question, this recent cycle has been very volatile. But the buck continues to trade comfortably above its 2008 all-time lows and the lows of last year, making higher lows along the way — a bullish pattern.

Chart #2:
10-year dollar chart

The chart below shows the roughly seven-year downtrend in the dollar and the subsequent ascending channel that started in 2008. You can see that the dollar is now testing the bottom line of this bull channel, an attractive area to buy the greenback.

chart2 Currencies: Seven Charts You Should See

A bounce from these levels would project a move toward the top line of the channel or about 23 percent higher.

Chart #3:
10-year euro chart

This chart for the euro is essentially the inverse of the dollar. And here too, you can see a long multi-year trend, higher in the case of the euro, followed by a descending channel.

chart3 Currencies: Seven Charts You Should See

The euro also is bumping into a technical boundary, one that represents a downward trending channel. A fall from this level of resistance would open up a downside for the euro that would be right on target with most bearish estimates espoused when the euro zone was at the height of its crisis … parity versus the dollar.

Chart #4:
Euro’s 22-week run

For more on the euro, consider this: The euro is in the midst of its strongest 22-week run on record, surpassing its prior record surge in 2003 — both areas are noted in the chart below.

chart4 Currencies: Seven Charts You Should See

What’s notable here is that in 2003, a 9 percent correction abruptly followed this strong climb. From current levels in the euro, a similar correction would mean a move down to 1.30 over the next few months.

Chart #5:
Pound still weak

Despite all of the fuss over the weak dollar, the British pound is still trading nearly 25 percent weaker against the dollar since the onset of the financial crisis three years ago.

chart5 Currencies: Seven Charts You Should See

And in the chart above, you can see that while the dollar and the euro are bumping into critical long-term technical areas, so is the pound.

Chart #6:
Yen near all-time highs

Now, for the Japanese yen, the other remaining major currency in the world …

This long-term chart in dollar/yen going back 40-years since the failure of the Bretton Woods system, shows its steady decline.

Even given its recent intervention the pair is nearing all-time lows (lows in the dollar, highs in the yen). From this chart, compared to the charts of the euro and the pound, you can see the lion’s share of dollar weakness over the past few years has come from the surging yen.

chart6 Currencies: Seven Charts You Should See

And now as this dollar/yen exchange rate nears all-time lows, the Bank of Japan is rolling out its most aggressive deflation-fighting act yet: With more QE, more fiscal policy and a cut in what’s left of its interest rate.

Plus, the Bank of Japan is officially in intervention mode — all things that make a case for a bounce in dollar/yen.

Finally …

Chart #7:
Battle against the yuan

With the Fed’s QE2 policy officially on the table, the emerging market and Asian countries that have been waging a fight to keep their currencies from a runaway surge have already stepped up with more currency market intervention and talks of capital controls.

chart7 Currencies: Seven Charts You Should See

And they are doing so because the dollar is weakening. But more importantly they’re reacting because the Chinese yuan is getting weaker relative to their currencies in the process — a competitive disadvantage for their export trade.

The key take-away: A grossly weaker dollar is not an economically or politically acceptable proposition for the world. And trouble for the world economy represents trouble for the U.S. economy.

So, despite all of the bold projections of a continued rout in the dollar, these seven charts suggest the exact opposite outcome could be around the corner.

Regards,

Bryan

P.S. This week on Money and Markets TV, our analysts took a look at the third quarter’s strong corporate earnings and discussed what’s ahead for the fourth quarter and beyond. If you missed Thursday night’s episode or would like to see it again at your convenience — it is now available at www.weissmoneynetwork.com.

Related posts:

  1. G-20 Meetings Could Prove Very Important for Currencies
  2. Gold up $41! Commodities, currencies exploding higher!
  3. What the Big Mac Can Tell You about Currencies

Read more here:
Currencies: Seven Charts You Should See

Commodities, ETF, Mutual Fund, Uncategorized

The Absurdity of Central Planning

November 5th, 2010

That’s the great beauty of a real economy! It rarely takes you where you want to go…especially if you’re an activist central planner or an interventionist finance minister. But no matter how much you struggle with it…no matter how badly you manipulate it…no matter how much you try to stitch it up with rules and regulations…

…it ALWAYS takes you where you deserve to go.

Look at what happened back in ’71. Nixon’s move to take the US entirely off the gold standard was hardly noticed. Because he announced something even stupider that day. He told the world that henceforth prices and wages would be controlled by the feds. No kidding. His wage-price controls were designed to put a brake on inflation.

Did they work?

Ha…ha…do you have to ask? If you could control inflation by executive decree…well, it would be a lot different world than the one we live in. You can’t do that. And when you try to do that, you don’t get a world of stable prices, growth and prosperity. What you get is what they got in the Soviet Union, when they controlled the price of everything. They got a lot of nothing…

…nothing on the shelves…and nothing worth buying.

We remember visiting Poland in 1977. It was a delightful place for a driving holiday because there were no cars on the roads. People didn’t have cars. And the trucks were usually off the roads too. They were broken down…usually alongside the road with their hoods up.

There were no hotels either. And no restaurants worthy of the name. You just had to make do.

You’d go into a shop. It was drab. Empty. There were usually two or three dozy clerks…but nothing to sell. Just a few cans. What was in the cans? It was hard to tell. But since that was all there was, you bought it and ate whatever dreadful thing was inside.

Later, in the ’80s, we took a trip to the Soviet Union. On the plane with us, on a flight from Moscow to Minsk was a woman with a toilet seat in her lap. It turned out that she had been raised in Tennessee and had a twang to her English.

“What are you doing with a toilet seat,” we wanted to know.

“Oh… I just bought it in Moscow,” she explained. “There aren’t any toilet seats for sale in Minsk.”

“But isn’t that an expensive way to get a toilet seat? I mean, this is a three-hour flight.”

“No… The flight is priced in rubles. And the ruble isn’t worth anything. It actually cost me more to buy the toilet seat than the roundtrip ticket.”

See what central planning produces? Absurdities. Monstrosities. Imbecilities. Coming soon…to your neighborhood.

Enjoy your weekend,

Bill Bonner
for The Daily Reckoning

The Absurdity of Central Planning originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
The Absurdity of Central Planning




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

The Absurdity of Central Planning

November 5th, 2010

That’s the great beauty of a real economy! It rarely takes you where you want to go…especially if you’re an activist central planner or an interventionist finance minister. But no matter how much you struggle with it…no matter how badly you manipulate it…no matter how much you try to stitch it up with rules and regulations…

…it ALWAYS takes you where you deserve to go.

Look at what happened back in ’71. Nixon’s move to take the US entirely off the gold standard was hardly noticed. Because he announced something even stupider that day. He told the world that henceforth prices and wages would be controlled by the feds. No kidding. His wage-price controls were designed to put a brake on inflation.

Did they work?

Ha…ha…do you have to ask? If you could control inflation by executive decree…well, it would be a lot different world than the one we live in. You can’t do that. And when you try to do that, you don’t get a world of stable prices, growth and prosperity. What you get is what they got in the Soviet Union, when they controlled the price of everything. They got a lot of nothing…

…nothing on the shelves…and nothing worth buying.

We remember visiting Poland in 1977. It was a delightful place for a driving holiday because there were no cars on the roads. People didn’t have cars. And the trucks were usually off the roads too. They were broken down…usually alongside the road with their hoods up.

There were no hotels either. And no restaurants worthy of the name. You just had to make do.

You’d go into a shop. It was drab. Empty. There were usually two or three dozy clerks…but nothing to sell. Just a few cans. What was in the cans? It was hard to tell. But since that was all there was, you bought it and ate whatever dreadful thing was inside.

Later, in the ’80s, we took a trip to the Soviet Union. On the plane with us, on a flight from Moscow to Minsk was a woman with a toilet seat in her lap. It turned out that she had been raised in Tennessee and had a twang to her English.

“What are you doing with a toilet seat,” we wanted to know.

“Oh… I just bought it in Moscow,” she explained. “There aren’t any toilet seats for sale in Minsk.”

“But isn’t that an expensive way to get a toilet seat? I mean, this is a three-hour flight.”

“No… The flight is priced in rubles. And the ruble isn’t worth anything. It actually cost me more to buy the toilet seat than the roundtrip ticket.”

See what central planning produces? Absurdities. Monstrosities. Imbecilities. Coming soon…to your neighborhood.

Enjoy your weekend,

Bill Bonner
for The Daily Reckoning

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What’s Holding Americans Back?

November 5th, 2010

What had happened to that rebellious Yankee spirit and the American mind? Could it have been the food that overstuffed and immobilized them?

The Pop-Tarts® and Egg McMuffins® washed down with Coke® for breakfast?  The Baconator® Triple, The Whoppers®, The Big Macs®, the $5 Foot-Long Subs, the bucket-of-chicken and 32oz. Big Gulp®? Too many trips to the All-You-Can-Eat-Buffet or The Never Ending Pasta Bowl®? Or was it the Slurpees, tubs of ice cream, or boxes of donuts grabbed at the convenience store?

Could it have been the factory-farmed, battery-raised, hormone implanted, antibiotic-laced, pesticide sprayed, genetically modified beef, fish, chicken, eggs, dairy, vegetables, grains that were used in the highly processed, synthetic, ultra pasteurized, artificially sweetened, colored and flavored “product” passed off as food?

What drove a nation with a relatively well-off and well-educated population to inflict such suicidal behavior upon itself? It was easy to point to the poor for buying cheap and eating stupid. But what excused the smartest of the smart and the richest of the rich from buying cheap and eating stupid?

A case in point: celebrated for “powering his way through the day with a punishing Diet Coke regimen,” even Obama’s chief economic advisor – the always “brilliant” Larry Summers (who brilliantly jumped the sinking ship of state when his “brilliant” economic strategy to rescue America failed brilliantly) – was too stupid to eat smart.

A look around the cabinet, survey of Capital Hill, AMA, ABA, PTA or pow wow of American Indian chiefs proved he was not alone.  America had become one big “Mike & Molly” sitcom. Yet, even though just about everybody knew better, just about everybody made the same excuse for abusing the body and deadening the mind: it was cheap and/or it was convenient.

Sure, money was tight and time was precious, but plenty of people were still going to the malls and spending big on hi-tech, high-end running shoes, taking vacations, eating out and buying new cars. Even low-end shoppers at Dollar Stores – while saving a buck – were filling their carts with junk snacks, junk soft drinks and junk “Made in China” bric-a-brac.

Or was it something in the polluted air and fluoride-treated water that deadened individual pride, courage, passion and self respect? Could it have been the quadzillions of tons of chemical mix poisoning the planet that made everyone susceptible?

Or could it have been the medicine chests full of Lipitor®, Oxycontin®, Xanax®, Celebrex®, Paxil® … or the Ritalin® force-fed to kids and gobbled down like M&Ms® that deadened heir minds or whacked them out?  Whether prescribed indiscriminately as quick fix, symptom-relief solutions by legal “pushers” (a.k.a. doctors) or unwittingly washed down with a glass of municipally doctored “pharma-water,” voluntarily or involuntarily, a large segment of the populace was doing drugs.

Drugs Found in Drinking Water

A vast array of pharmaceuticals — including antibiotics, anti-convulsants, mood stabilizers and sex hormones  — have been found in the drinking water supplies of at least 41 million Americans, an Associated Press investigation shows. (AP, 10 March 2008)

Or was it the “food for thought”? Could it have been the mind-numbing news served 24/7 by networks, cable and radio? All those know-it-alls — anchors, big mouths, blow-hards, clowns, pundits, experts, strategists, think tank wankers — telling audiences what to think, how to think and what to believe?

Food, pharmaceuticals, movies, music, TV, literature, art, fashion — down the line, across the board, from top to bottom, every sector was monopolized by the unholy trinity of Big Government, Big Business and Big Media.

The “American Century” — an age of opportunity characterized by the entrepreneur — had passed into history. America had been corporatized, homogenized, dumbed down and chained to the chains … and by the chains … restaurant chains, retail chains, movie chains, funeral home chains, auto-parts chains. They had cornered the market on everything they could get their hands on: tires, eye glasses, mufflers, dental care, banks, brokerages, drug stores, hardware, pet supplies.

Even in the mad rush of the monopolistic, oligopolistic, mega-maniacals to control the market place, there was room for the individual entrepreneur to flourish. In certain sectors, particularly retail and food, the quality conscious “Davids” — providing gourmet/unique products, tasteful ambience, impeccable service — could operate among the Goliaths.

If you were chained to a chain, you were chained. Working for a chain or patronizing a chain, there would be no real freedom until the chains were boycotted and finally broken. It would take a mass awakening; a quality revolution across the socioeconomic spectrum to bring down the gluttonous Goliaths.

Yet, in 2010, it was still neither welcome nor “politically correct” (itself an oxymoron since nothing “political” is “correct”) to tell Americans to look in the mirror to see what they had become; overweight, overstressed, overmedicated, under-motivated, slovenly dressed. A trip to Wal-Mart spoke a thousand words. The American psyche was reflected in the American physique.

Of all the Renaissance-related trends forecast by Gerald Celente and The Trends Research Institute, few could play a more powerful role in the creation of a new society than the upcoming Agrarian Revolution. From titillating the taste buds and nourishing the body, to providing the satisfaction of getting fit by working the land and living with — and from — nature, the trend would revivify Americans.

Besides providing millions of jobs and new entrepreneurial opportunities (especially for the young unemployed and the many unemployables) the Agrarian Revolution was a unique feature of the “American Renaissance.”

“Renaissance”! The word conjures up an image of the artistic and cultural ferment that began in 14th and 15th century Italy and subsequently spread across Europe. When asked what to do with his excesses of wealth, Cosimo de Medici’s answer was “create beauty.”

The “American Renaissance” that begins in the 21st century will not be initiated by excess wealth, but rather by pressing need. And it will have different distinguishing features, among them: the rebirth of food. For, finally, both the man in the street and the man in the ghetto would realize the life and death consequences of eating well; that, yes, “you are what you eat.”

Already in 2010, the seeds of change could be seen in the farmers’ markets, “buy local” movements, urban gardens and roof gardens that were sprouting up around the nation. Backyards and lawns that once grew nothing but grass were now growing food.

Regards,

Gerald Celente
for The Daily Reckoning

[Editor's Note: The above essay is excerpted from The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.]

What’s Holding Americans Back? originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
What’s Holding Americans Back?




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

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