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Stimulating harvest mice and Mexican telecoms

Today's Financial News - Posted February 12, 2009

Government pork is earmarked to lift San Francisco Bay salt marsh harvest mice from their misery and stimulate infrastructure construction. Migrant Central American labor will yet again be able to send home remittances… good news for Mexican telecom providers like Telmex (NYSE:TMX) and Maxcom Telecomunic (NYSE:MXT).

by J. Christoph Amberger

Baltimore—TFN: I hope you’ll be glad to know that the $789 billion economic stimulus bill that Congress finalized behind closed doors includes $30 million for wetlands restoration in the San Francisco Bay Area. That’s Nancy Pelosi’s stomping grounds. Apparently, lagging consumer demand has endangered the continued job prospects of the salt marsh harvest mouse.

Oh, the humanity.

Mice are reported to have breathed a sigh of relief. (No more government cheese for them!)

So have free trade proponents who were put off by President Obama’s anti-NAFTA campaign preening. Among them are the governments of Mexico, Guatemala, and Ecuador… whose economies had been suffering not just from shrinking U.S.-bound commerce, but from contracting remittances.

You see, last year, the money sent home from the U.S. by Latin American migrant workers fell for the first time on record.

That’s bad.

Because migrant labor lost in the States doesn’t just mean lost revenues. The United States graciously provides jobs for a whopping 10% of the entire Central American labor market and saves the countries involved to deal with pesky reforms on their own. Returning migrants increased spending on welfare and unemployment in the home countries.

For Mexico, migrant labor is what natural gas is to Russia: The second-largest export good, right after oil. Remittances, accordingly, are the second-largest source of foreign income. They fell 3.6% to $25 billion last year, compared with $26 billion in 2007.

The percentage drop is nearly twice what the government had expected.

Luckily, the amounts earmarked for U.S. infrastructure spending, school renovations, park maintenance are custom-tailored to support immigrants eager to work.

(And gainfully employed immigrants may be easier to assimilate under the coming immigration amnesty, which will swell the ranks of grateful new Democrat voters and converts to the savior economy by 2012.)

Of course, the billions of dollars that will be re-routed to Central American or Filipino villages will not quite make it into the “circular flow” that the government is counting on to justify spending the money in the first place. Few Mexican road workers with families to support south of the border buy jet skis or electric golf carts.

(More about that in a second!)

But who’s counting if only the harvest mice are chipper!

However, we should expect to see a stabilization in the decline of the Mexican peso in the coming months. I also think we should see a recovery in some Mexican telecommunications stocks that have declined over the past year. After all, migrant workers will be able to call home again.

Telmex (NYSE:TMX) at this point is still too expensive for a speculative punt. (Plus, the company has run into lots of regulatory problems.)

But there’s Maxcom Telecomunic (NYSE:MXT), whose ADR trades at just under $3. MXT is an integrated telecommunication services operator who provides voice and data services to residential and small- and medium-sized business customers in four metropolitan markets in Mexico. Services provided include local and long-distance voice, data, high-speed, dedicated and dial-up Internet access, public telephony and voice-over Internet protocol.

I think as the good news percolates through and sufficient synapses connect, we may see an increase of 20-30% in the stock’s valuation.

*** But I admit, that’s a once-removed benefit. There are more linear ways of piggybacking on Nancy Pelosi’s generosity. Some of them don’t even involve salt marsh harvest mice.

I’ve been harping on this for a couple of days now: Congress has earmarked $2 billion in spending on hybrid vehicle technology. This morning, at around 10 o’clock, I recommended a tiny company that has a lock on two of the key buzzwords that serve as a stimulus magnet: Hybrid Vehicle. And Lithium Battery.

This company combines the best of both worlds: It has a trendy product that is custom-tailored for the government dole… and it focuses on a market segment that will benefit from a retooling of the government vehicle fleet. Best of all, it’s still trading at below $2 right now!

The stock didn’t move much today as our HSC Members took their positions. So there’s still time to get in. Why don’t you make it easy on yourself and just join us… Just click here! %%track {http://web-purchases.com/EHSCK1A/EHSCK201/?o=[messageid]&u=[memberid]&l=[urlid]} -name {HSC HSP Advertorial} -group {HSC Upsell}%%


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