TFN eNews 2009/08/11: Double your income using Sino-American New Math
Published via e-mail broadcast on August 11, 2009
In today’s TFN eNews:
* 40.7% gains on this free TFN pick
* With 20% gains under our belt, these 4 stocks are still in our buying range
* New Special Report: 4 Top Energy Stocks You Need to Own
Dear TFN Reader,
After studying the paper effects of economic stimulus programs for the past couple of weeks — both the U.S. package and the one Made in China — I’ve found a surefire way of doubling, even tripling, my household income.
You see, according to Sino-American New Math, you simply forget about the notion of real growth. You need some dexterity and slight of hand, to be sure, but if you limit your focus to the numbers at hand, you’ll be just fine.
Here’s how it works: I continue to earn my living… let’s call that Sum A. I also have savings: Sum B. And I’m still eminently credit worthy: That’s Sum C.
Based on old-fashioned math, household income would be measured only by Sum A.
The New Math is quite liberating: I can take my savings, Sum B, and hand them to my oldest son. He’ll spend them on Scandinavian death metal CDs, black t-shirts, and after-school lunches at the local pool hall. I can also tap into my potential credit line, Sum C, and hand the loan over to my second son. (He’ll convert it into didgeridoos, basketball shoes, skateboards, and that go-cart kit he’s been saving for.
Since Sum B exceeds Sum A and Sum C exceeds Sum B, I could multiply my New Math household income by a factor of 10 or more! But I’m modest. I’d be happy with an increase of 50%. Happy enough to let myself be dazzled by Sums B & C, and forgetting Sum A altogether.
After all, who needs the headache of worrying about new income if you can redistribute savings and loans?
Which is how the Chinese are currently maintaining both their levels in industrial production growth and increases in GDP.
But according to the most recent numbers, exports — the equivalent of my personal Sum A — have been decimated, falling 23% year-over-year earlier in July. Meanwhile, industrial production (Sums B and C paying death metal CDs and go-cart kits ) has gained 10.8%.
Much the same way July car sales in the U.S. will have “gained”.
A good bit of news, from the old-fashioned math point of view: New loans “plunged” to a mere $52 billion. That’s less than a quarter of June’s level, after a record total of $1.1 trillion of new lending in the first half of 2009.
Thanks to new math, GDP growth for China will be closer to 9% than to the dreaded 7% range — which for Chinese economic dynamics is the equivalent of a dead stop.
Anyone not working for the government might rightfully chime in that you don’t get richer by borrowing, or by pretending your savings are disposable income.
But dissent is unpatriotic in China… and elsewhere.
*** Of course, China still has something going for it: It’s government is fundamentally pro-business. It recognizes the importance of creating new income… mainly through exports of products manufactured in China.
That’s why Beijing courts international business and technology transfer with low-cost labor, tax considerations, special incentives. All the stuff that the new America has become too fancy and sophisticated for.
There’s one industry in particular that Beijing has its eye on. And it’s committed hundreds of billions of dollars to attract this choicest plum of all: The U.S. pharma industry.
Last week, as I was schlepping a canoe through hip-deep mud in Quetico, our HSC team closed out one of my Chinese-American pharma plays, American Oriental Bioengineering Inc. (NYSE:AOB), for gains of 20% in less than 2 months.
It was a good move for this crazy market: Take profits when they materialize!
But AOB is just one company that will benefit greatly from the impending emigration of pharma capital from the United States. In a recent report, I selected four Chinese ADRs — none more expensive than $3 — that not only will profit handsomely from China’s own “healthcare stimulus”. They’re set and ready to absorb American drug manufacturing capacity like a Shamwow!
One of them’s up 25% since I published my special report just 2 weeks ago. But I just upped my entry price range on it. Most of the others are moving on virtually no news at all — and while the Shanghai index is falling!
The key catalyst in this? Think quality control.
I’ve outlined my thinking in this special report… give it a quick read-over and see if you can agree with me!
And if you need the cash to pay for our very modest subscription fees, I suggest you sequester a share of the 40.7% gains our wealth-preservation stop loss locked in on Sangamo Biosciences (NASDAQ:SGMO) today!
*** U.S. Justice Department officials are on the case of U.S. refineries accused of buying stolen oil siphoned from Mexican government pipelines.
So far, the numbers bantered about seem small… only $2 million in fenced oil have been admitted to.
Still, the U.S. government plans to hand over $2.4 million to Mexico following a joint investigation.
Since drug cartels and “Big Oil” are involved, I have a feeling we’ll be hearing more about this. I wouldn’t be surprised if Mexican-American friendship and the War on Drugs were to be adduced to supplement price controls on oil and gas that have been outlined by the U.S. government.
*** “Call it an earnings season hangover. Call it profit taking. Or call it a technical reverse,” writes TFN stock guru Andrew Snyder today. “Just don’t call it a good day on Wall Street.
“With the equities market down by over 1% at the moment, investors who got in at the recent highs are wondering what in the world they may have gotten themselves into. A slew of the markets most-popular investments of late are taking it square on the chin:
“General Electric (NYSE:GE) is down by over 3%. Harley Davidson (NYSE:HOG) is down by nearly 3.5%. And Chevron (NYSE:CVX), a TFN Strategic Trader short position, is down by another 1.2% today, after dropping by an equal proportion yesterday.
“The breadth of the decline is wide and getting even wider. If you read my commentary yesterday, you know the downturn’s far from a surprise. Even better, you know how bullish I am on Asian markets. Just to prove the potential in Asia, I want to look at a winner in China’s growing economy.
“While the rest of the world contemplates just how an economy can grow without the creation of new jobs, companies like SmartHeat Inc. (NASDAQ:HEAT) are producing record-breaking earnings…”
What to do about this stock? Just finish reading Andy’s lead article on TFN!
Quote of the Day:
“Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States where men were free.”
*** 43 winning picks so far this year… can you really afford to keep that other financial newsletter??
“I have been very satisfied with the service thus far, which is why when I received the notice of my subscription expiring I didn’t even give it a second thought and renewed it immediately. I find your (right leaning) analysis to be accurate and well researched and several of your recommendations of the past few months have made me money — what more can I say!” — HSC Member Marshall M.
Cash for Clunkers, HSC-style: Trade in that do-nothing newsletter subscription for a shot at some real money!
Recommended Reading:
SmartHeat: A hot stock in a cool market
New Special Report: 4 Top Energy Stocks You Need to Own
The TFN Complete Guide to Biotech Penny Stocks
The TFN Complete Guide to Natural Gas Stocks
Today’s Top 3 Financial News Stories:
USAToday.com – Soaring deficit may defy forecasts “Stagnant unemployment, shrinking tax revenue and a struggling economy threaten to quadruple the size of last year’s federal budget deficit, raising more questions about the timing of costly proposals to overhaul health care.”
WSJ.com — Stocks Drop as Financials Fall “All the blue-chip measure’s financial components posted big declines. Bank of America was off 4.1%, American Express was down 2.2%, J.P. Morgan Chase was down 3.6%, and Travelers Cos. was down 2.5%.”
MoscowTimes.ru — Medvedev: Economy Hovers in Place “The Russian economy plummeted much faster than that of many other countries when the crisis hit, and this is because the structure of the economy hasn’t changed and is still based on exporting raw materials.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
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