TFN eNews 11/16/2009: Other than that, things are fine!
Published via e-mail broadcast on November 16, 2009
In today’s TFN eNews:
* Loaves and Fishes
* Silver soars
* Matters of perspective
Dear TFN eNews reader,
We live in an age of miracles.
And like in previous editions, they require unflagging belief in the power of the Word.
The fashionable Keynesian kind — those based on the belief that government can establish a vibrant by paying a man to dig a hole, and another to fill it in — are now testing the limits of even American credulity. Sure, stimulus magic make the wondrous multiplication of the fishes and loaves look like child’s play:
Talladega County in Alabama reported it “saved or created” 5,000 jobs with just $42,000 in stimulus funds…
Shelton State Community College in Alabama reported 14,500 jobs “saved or created” on a shoestring of $27,000 from the General Accounting Office . (All of them, I believe, in the math and statistics departments!)
And $4.7 million in stimulus dollars for schools in north Chicago “saved” the jobs of 473 teachers — in a district with only 290 teachers employed .
With all this fictitious job creation, maybe we all can enjoy a fictitious recovery as well?
But most of your friends at TFN prefer reality. That’s why last Friday, I asked you to send in a snapshot of how economic reality looks like in your neck of the woods. Here are some for the album:
TFN eNews reader Jim H. writes:
“Our neck of the woods is southern Spain. The famed Costa del Sol is still sunny and a great place to live. The mountains still dip into the Mediterranean, and the wine is still great. What’s not so great is the economy. Stores are being shuttered at the mall. There are empty stores with for rent signs in the villages. The building boom is bust. The cranes are at a standstill. Property prices are plunging. There simply are no buyers. Along with this, we have the honor of having Europe’s highest unemployment rate.
“A little story might give you an idea of the situation here. The merchants, as you can expect, are in bad shape. Today my wife looked at a backpack — at a regular store, not a sidewalk vendor. He wanted 30 euros ($45). She offered 15. He came down to 25, then to 20, and, finally to 18. She said no and walked away. Later, as she circled the area, he came out of the store and said he would take the 15. She said no,she might see another she would like better. He asked if she would buy it for 10. She did.”
Carl B. from Michigan writes:
“Bleak would describe a good day here in Michigan. I am fortunate to work for a rock-solid financial services company after 28 years and 5 plant closings in manufacturing. The ultimate barometer of the economy here is that I just bought a nice 2-bedroom house in a nice rural bedroom community as a rental for substantially less than I paid for the car that I was driving to the closing. And the car is a VW!
“When cars sell for more than houses and there are new foreclosures coming every week, things are bad. 14% unemployment does not do justice to the havoc our economy is in. I have no shortage of friends that have left the state to find work someplace else, have become chronically unemployed because there is nothing left here for jobs.
“The press loves to parade the auto workers as overpaid, lazy people with no interest in quality. I’m here to tell you that that is not the truth. With 2 engineering degrees and a masters and 30 years on the plant floor with all levels of workers and ‘C’ suite suits, the one thing that I will say is that the schism between executive pay and hourly worker pay is what is causing the biggest riff. From a value-add perspective I wonder how much actual value an executive adds from their actual work effort to warrant a multimillion dollar salary. I have been to the mountain top and I am here to tell you that in many cases the emperor has no clothes!
“Things are bleak and there is growing resentment for bailed out Wall Street and the wholesale abandonment of our manufacturing base. For a country built on immigration and the American dream — which is indisputably linked to industry — it’s ironic to see how we have let the rest of the world pass us by. Other than that, things are fine.”
Send us your own slice of life: Write me a paragraph or two about how the recovery is progressing — or not — and email me at support [at] todaysfinancialnews [dot] com! I’ll share your experience in this week’s TFN eNews issues!
*** A positive start into the trading week lifted our current Hot Stock Confidential silver plays to new highs:
Silver Wheaton (NYSE:SLW) is now up 65% over our recommended entry price. And Silvercorp Metals Inc. (NYSE:SVM) clocked in with a gain of 21%.
Even more heartening, one of our favorite Chinese biotech plays, Sinobiopharma Inc. (OTC:SNBP) soared over 35% just today, after announcing that it has production rights for 23 generic drugs listed in China’s National Essential Drugs List, which covers pharmaceuticals used to treat up to 80 percent of the most common diseases in China.
We still have some ground to make up on this stock. But based on its incredible record of sales and net growth, we have high expectations!
*** Normally, we warn investors that the market as a whole is too short-sighted. People react to all kinds of news, buying and selling at what appears the most ludicrous of news.
(At least that’s what the daily financial commentary in the mass media makes it out to be. Then again, how many people do you actually know who sell off their retirement portfolios because of “jitters” about oil prices?”)
These days, in the era of the wondrous multiplication of jobs, Loaves and Fish era, we’re getting worried that the market’s expecting way too much from the future. And not just investors! Companies, too!
Just this past weekend, while driving a budding young artist to the torture chamber that is her piano lesson, I noticed that a last patch of woods along a commercializing strip of road had been cleared to make room for another Lowe’s store.
Apparently, two hotly contested home improvement franchises within a mile and streets full of For Sale signs swinging in the wind are not enough to dampen hope and change. Even double-digit unemployment spells opportunity.
TFN’s chief analyst Andrew Snyder writes this morning: “A good look at where things stand can be obtained by peering into Lowe’s (NYSE:LOW) third-quarter figures. The home-improvement giant made just $344 million in profits over the past three months, compared to a gain of $488 a year ago. On the top line, Lowe’s reported a 3% decline in revenues, selling $11.38 billion in goods and services.
“Sure, it tells analysts it sees signs that the housing market is finally beginning to level off, but is leveling off good enough? My answer is no!
“Last decade, the industry got used to a low-competition environment. With McMansions popping up on just about every corner, consumers had very little control over prices. But now that the nation is holding off on big purchases and searching for the ultimate best deal, Lowe’s and its competition have a fierce battle on their hands. While this may be a microscopic look at one segment of a giant industry, it’s indicative of the power a slumping home market will have on the economy. Now that the home-equity ATM has been unplugged, massive amounts of spending have vanished. It won’t be coming back anytime soon. And that is big trouble for a so-called ‘V-shaped’ recovery…”
Read on: http://www.todaysfinancialnews.com/investment-strategies/dont-look-too-far-forward-10341.html
*** 12 stocks with ”Moon Shot” potential:
Even in this market, it’s not really uncommon for some stocks to return 500%, 1000%, even close to 3,000% in just a few months. Sometimes it only takes weeks. Or even days. What do they all have in common? We’ll tell you right here…
http://www.todaysfinancialnews.com/PSC/LAUNCH/WPSCKB07.html
*** Quote of the Day:
“The reality is that much of Beijing’s $600bn stimulus has been spent building yet more plant and infrastructure so that China can ship yet more goods, or has leaked into property and stocks.” —Ambrose Evans-Pritchard
Recommended Reading:
Natural Gas Prices: “Stealth Buyer” tips his hand
Today’s Top 3 Financial News Stories:
Telegraph.co.uk – China has now become the biggest risk to the world economy “Far from taking over as the engine of growth from an exhausted West, China is making matters worse. Its ‘beggar-thy-neighbor’ policies continue to play havoc with global trade and risk tipping the world into a second leg of the Great Recession.”
ContrarianProfits.com — The Gold Bubble – Is it big enough to burst? “Anyone who believes gold is too popular with the mainstream public simply doesn’t know who the mainstream public is… and they don’t understand how bull markets end.”
Bloomberg.com — China’s Stocks Climb Most in Five Weeks; Shenhua, SAIC Rise ” China’s stocks rose the most in five weeks, led by raw materials companies and makers of consumer products, after commodity prices rallied and a government spokesman said he expects retail sales to accelerate.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: Sinobiopharma (SNBP) soars!
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