Thursday, July 26, 2012

Gold Ready To Go Up Big?

I have read two articles in the past few days that both said that gold may soon have a nice big breakout.  One of them is the new Jim Willie CB piece:

http://www.24hgold.com/english/news-gold-silver-banker-brushfires-risk-jumps.aspx?article=3994150008G10020&redirect=false&contributor=Jim+Willie+CB

(I have forgotten where I read the other article, but it described gold's recent prices as being in a wedge that will break one or the other)

I am not a market technician.  But, the recent price increases of the past two days HAVE crossed some important technical levels.  Take a look at the GLD at stockcharts:

http://stockcharts.com/h-sc/ui?s=gld

***

Recent economic news has been very bad lately.  The 10-Year Treasury yield is 1.43% as I write.  1.43% for 10 years???

The drought has already started to affect food prices.  There are reports that we are importing corn from BRAZIL.  Southern Europe (a major grain exporter) now has a drought as well.  Other parts of Europe are soggy or even flood riven (Russia).  And recall that much of our (shrunken) corn crop is being diverted to ETHANOL, which really ought to be scandalous to us all.

Mortimer Zuckerman (Chairman of US News & World Report, and no right-winger) wrote on July 24 that the job market is very grim, much worse than the massaged numbers we are getting from our .gov.  The title of his piece says it all: "Unemployment Is Still The Biggest Election Issue".  The book I recently reviewed (Jim Clifton's The Coming Job Wars) described in great detail how JOBS (lack of) is without doubt our nation's biggest problem.  Jobs, jobs, jobs should be what the upcoming election should be all about.

Who trusts the stock market now?  Who trusts their broker?  Recent scary articles about "Allocated Gold" (in which "your" gold bar, serial number and that you have to PAY them to store) could still be at risk...  MF Global and PFGBest still reverberate...  Who's next?

Real estate?  The banks are sitting on large numbers of foreclosed homes...  Commercial real estate? Most of the malls and shopping centers have more vacancies.  There is LOTS of commercial real estate I see for sale as I drive around my city.  Farm land has been in a bubble...

More QE?  Each QE variation brings less and less.  More debt now means economic DECLINE now.

.gov spending?  Even more out of control than ever.  Let's see what happens as we near the "fiscal cliff"...

Overseas?  Michael Pettis and others write that China is on the verge of a serious downturn.  The Middle East is in more-than-usual turmoil.  We have three carrier groups near Iran...  Europe is apparently down even more than we are.

***

So, where do you go with your money?  You buy some gold with it!  Real physical gold.  Do not buy ANY sort of paper gold!

Gold is truly a gift at a bit over $1600.  How high will it go and when?  I have no idea, VERY few do.  But, it looks like it WILL go WAY UP over time.

Gold has been the BEST wealth preserver for over 4000 years.  Only 1% - 3% of Americans own non-jewelry (investment) gold.

And you do not have to go "All Inn"!  A few ounces may make the difference between you and your family's survival.  5% of your total financial assets in gold is accepted by almost all mainstream financial advisers.  Yet, how many people have 5% of their assets in gold?  Not many.

Note that I have not discussed silver.  IMO, silver is "almost" as good.  But the seriously rich and the central banks park their wealth in GOLD!


Do you think that you do not have enough money to buy gold?  You can buy 1/10th oz Gold Eagles for about $190 at your local coin shop...

Gold is the best insurance against government mismanagement.  And there has been a LOT of government mismanagement in the past, what, 40 years?  And it is getting worse...

"Gold, get you some!  -- "Aristotle"

Sunday, July 22, 2012

Music Some Of You May Not Have Heard Before

Here are some videos that you may not have seen / heard before, I hope you enjoy some of them!  If clicking the videos do not work, I provide the link.

From "freegoldtube":






http://youtu.be/SKjpyWeSros


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http://youtu.be/au3wfKFIXVo







http://youtu.be/MJqWyFN0tkw

***

Some pretty music from Peru (mainly for the benefit of my newer readers).  The melody of "El Condor Pasa" was made famous here in the US by Simon and Garfunkel.

A traditional version of "El Condor Pasa"

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http://youtu.be/M_gSydN_BYM

Chet Atkins plays "El Condor Pasa" on his guitar a long time ago:






http://youtu.be/fAIIhhNbjbg

The below song, "Ananau" took Peru by storm a few years ago when we took our daughter to Cuzco.  It is sung in Quechua, the language of the Incas.  Quechua is still spoken by millions in Peru.






http://youtu.be/sZYpGocxxfo

The below song is beloved in Peru as well.  It is sung in Quechua (first part and at the end) and in Spanish (briefly in the middle).  Most of the filming was done at Machu Picchu...






http://youtu.be/kLeyvA_LQiU

***

Los Ronisch almost caught on big time with their version of "technocumbia", this music is really fun...  Even though they are from Bolivia, they were very popular in Peru.  It's OK to play these two LOUD...

"Amigos Traigan Cerveza" (Hey friends, bring beer!) (for his broken heart)






http://youtu.be/zHdh5riC3fw

"Prefiero Estar Lejos" (I want to be far away from you)

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http://youtu.be/SF57_eNkMPw

The below song was also popular in Peru a few years ago:

"El Arbolito" (The little tree) by Nectar, a Peruvian cumbia group:

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http://youtu.be/MtBtB1lGFAg

Saturday, July 21, 2012

Review of Barron's -- Dated 23 July

I was immediately curious about the Cover Story of this weekend's Barron's: "The Veggie Juice Craze" as I was en route to the only place like that we have here in my town.  They serve sandwiches as well, but really are into the smoothies and juices now getting very trendy.  So I went there right away, ordered a sandwich and a "Raspberry-Something" smoothie while starting in on the weekend's issue.

Robin G. Blumenthal writes that fresh juice (that is, made right there in the shop from fruits and vegetables) and the specialty (expensive) bottle juices have become a $5 billion business, and is predicted to grow at 4% - 7% a year.  This is a trend seen nationally, not just as a meal replacement or snack, but a move towards healthier eating, especially among the young (20s and 30s).

These juices are not cheap!  My sandwich and smoothie left me $15.00 lighter...

Because this is a growing trend and because the business is highly fragmented (lots of small players, no cartel formed yet), some large players have already started to act.  Campbell Soup (ticker: CPB) has just agreed to buy Bolthouse Farms (of California, I mix their "Berry Boost" with grapefruit juice on many mornings).  Coca-Cola (CO) bought Odwalla and PepsiCo (PEP) bought Naked juices.

Starbucks (SBUX) is now about to enter this space in a big way, they have already opened up an Evolution Fresh store there in Seattle and plan to expand.

Blumenthal provides a handy table showing chains of juice stores, the 10 largest in number of stores with their estimated 2012 sales.  The biggest chain (sales) is Jamba Juice.  Just because there already ARE at least 10 major players, do not think that is stopping others from coming into this space...  McDonald's (MCD) and Dunkin' Brands (DNKN) are already there as well.

My prediction?  Lots of blood will be spilled in this battle for juice customers...

***

Alan Abelson writes that the Bad-News Bulls are back!  Whatever bad news (Europe, bankster thievery, whateva) comes out, that means it's bullish!  (He does not say if he reads Zero Hedge, LOL)  There is LOTS of bad news out there (Spain is the disaster du jour), and the ugly possibility of us hitting the Fiscal Cliff (automatic tax hikes and spending reductions starting January 1) looms.  And the (now seems like age-old) question of more QE, why Senator Schumer of New York told Bernanke straight out "to get to work!" (meaning cut rates or other QE).  Abelson wonders if the stock market is starting to sober up from its six week mini-buying binge.

Abelson then goes on to write comments on PFGBest (in liquidation, it is not clear if any customers will get their money back...), Stephanie Pomboy (more below, she is interviewed in this week's edition) and finally Abelson notes the death of Wall Streeter Barton Biggs.

(No ad for Swap Clear this week)

***

"He Said:"


Our on-the-ground sense of the emerging markets leaves us more positive than we were a few months ago."

Vikram Pandit -- CEO Citigroup  (finally someone different, but another bankster...?)

***

Jack Willoughby writes up the interesting case of Calpine (CPN) and electric power company that (I guess) uses natural gas to power all of its plants, and their power plants are scattered nationwide, though somewhat concentrated in Texas.

Natural gas power plants have lower emissions that cola-fired power plants do, and so the likelihood in the future is more NatGas power will be generated.  NatGas now represents some 32% of our electricity generation, tied with coal, in 2009 NatGas was only about 20%.  The very low prices of NatGas have meant that Calpine now is running its turbines at low prices.

Calpine DID go bankrupt in 2005, as the then CEO had made a big bet that NatGas would be the future, so Calpine overbuilt (and with high debts) just as restrictions on coal were eased...

But, Calpine is back, and even thought the Heat Wave has cut power usage somewhat, and the share price is down from its 52-week high of $19.02 to it current $17.50.

Willoughby makes his bullish case on the fact that Calpine still retains unused capacity from before its bankruptcy...   In that in some of its markets, it would be easy to ramp up production.  And in its important Texas market, the regulators are allowing them to raise electricity prices, as the state needs more power...

The US has some 100 years worth of NatGas (well, that depends on whom you talk to), and it seems likely that NatGas will be a BIG component of US electricity production.

So, yeah, OK, I go along with Willoughby on this one, looks bullish!

***

Teresa Rivas writes in "Weekday Trader" that AT&T (T) looks to be a better bet than Verizon (VZ), partly because of its higher yield (5%, hey, that's pretty good!).  But, both AT&T and Verizon might be becoming a duopoly...  And that tablet & smartphone sales are good for both as more people do their Internet stuff wirelessly...

Disclosure: I have a tiny position in AT&T.

***

Tiernan Ray ("Technology Week") writes that investors are holding their breath as Windows 8 looms to be launched!  Well, I am not holding my breath, but you get the idea.  Both Microsoft (MSFT) and Intel (INTC) came out with acceptable earnings (former because MS Office and SQL Server software did well).

[rant]

Hey, Microsoft!  Sell me SQL Server (one guy here!!!) for cheaper than the THOUSAND$ you normally charge!  I could REALLY use your program!  While you're at it, create a good STATISTICS (complete)  program too!  You'll clean up!


(any of you readers who are hooked up w/ Microsoft, please let them know, thanks!)


[/rant]

There is still a LOT of uncertainty in tech-land as to whether PCs, laptops, tablets, smart-phones, etc. are going to wind up on top.  Still a LOT of worry among investors too.

***

Leslie P. Norton interviews Stephanie Pomboy, founder of MarketMavens.  I am always happy when Barron's interviews her, especially when they include a photo...  The title of the interview is "Coming: The End of Fiat Money".

She believes that the current fiat system will break within five years (but, almost everyone I TALK to does as well, yet everyone I SEE on TV says everything's OK, back to sleep sheeple...).

She believes that the Fed will continue to be a huge buyer of Treasuries in the future (who else will buy them?) and she opines that another QE will happen before the election.  She says that recent corporate high profits are based in large degree to non-repeatable cost cutting, and that margins are now getting squeezed.  And that the middle-income investors are cutting spending.  Deleveraging.

And if we go over the Fiscal Cliff?  A severe recession.

She says that if Romney wins, and does things right (cuts corporate taxes, improves the regulatory climate), then it might get better a little sooner, I'll along with that.

But, she is a BEAR!  Recently she wrote that even the Bank of Kazakhstan wants out of the US dollar!  And many of our creditors overseas are migrating to gold and other hard assets.  She does NOT like junk bonds, which have become a crowded trade in today's yield-starved environment.

***

Washington pro Jim McTague ("D. C. Current") writes that a quantitative trader (Reid Holloway) has a computer model showing an Obama victory this November...  And Holloway's record has been pretty good...

***

Editor Thomas Donlan visits a topic I have run into before: just because China is building a national high-speed rail network does not mean that WE need to.

Donlan is completely correct.  High speed rail in this country is WAY too expensive, and there would be considerable resistance at the local levels (and he writes that it would be much worse that the resistance against the Interstate Highways).  He rightly pans the California plan to connect the first phase: to connect Bakersfield with Madera (Madera, California, where's that?) as the first part of the plan to connect LA to SF.  Like that is going to happen...

China has certain advantages in building such a network that we do not.  A command economy (police state) to get people out of the way (of the rail lines).  Cheap labor.  Plenty of corruption.

The USA has real estate that is just worth too much to let its value be destroyed by rail lines (witness the Big Dig in Massachussetts).  Donlan finishes:

"The answer is paradoxical but true: America cannot build high-speed rail because it's too rich already."

***

I will not discuss too much in the Market Section, because last week not much happened in the markets!

"European TRader" author Jonathan Buck writes that BollorĂ© (BOLFrance) is worth a look.  Vincent BollorĂ© has built a rough equivalent of Berkshire-Hathaway there, buying stakes in other companies to get them to clean up their act.  ANd he runs hos own businesses well.

"Asian Trader" Kopin Tan writes about Chinese milk companies...  *yawn*  But, China is bringing in 55,000 cows from Australia to meet increased Chinese demand for dairy products.

Michael Aneiro ("Current Yield") writes for the second week in a row that pension funds are having problems meeting investment expectations, this time it is Calpers, the public sector pension fund in California only made 1% last year...  I have a feeling that Mr. Aneiro is going to be busy about writing up woes in pension funds woes because they earn so little but have promised so much...

The "Bond Center" (which shows those informative four graphs) shows the continued STEEP drop in euro short term rates, rather remarkable, but easy to understand given what a mess there is over there.

Alexandra Wexler ("Commodities Corner") writes that lousy weather in Brazil (too much rain) may drive up coffee prices...

In the Classifieds there is an intriguing ad: "Own A Gold Mine".  I will email the guy, and since he is in my telephone Area Code, maybe meet up with him.  I will keep any of you all up to date if you ask.

Northern Tier Energy LP may IPO this coming week.  They are an oil refinery in Minnesota that appears like it will be a REIT...  That might be interesting...

NO big insider sales or 144 Filings.

The Mighty Peruvian Sol was not so mighty last week, it declined about 0.1%, after last week's leap of almost 1.0%.  Ningun problema...

Thursday, July 19, 2012

Ninety Miles An Hour Down A Dead End Street

Thanks to "FEDbuster" at Zero Hedge (2634137, article at: http://www.zerohedge.com/news/government-your-legal-right-redeem-your-money-market-account-has-been-denied-sequel#comments) for posting the below information.

Required reading.  Ann Barnhardt tells us like it is.

NINETY MILES AN HOUR DOWN A DEAD END STREET
POSTED BY ANN BARNHARDT - JULY 12, AD 2012 11:39 AM MST
People are emailing asking what firm I recommend.NONE.
GET OUT.
GET OUT.
GET OUT.
GET OUT.
GET OUT.
GET OUT.
GET OUT.
GET OUT.
GET OUT.
The ENTIRE SYSTEM is totally, completely corrupt and therefore NO FIRM IS SAFE. Don't be stupid. Don't be obtuse. Snap yourself out of the Stockholm Syndrome that you are clearly stuck in. Get ALL MONEY out of the ENTIRE FINANCIAL SYSTEM, including stocks, bonds, retirement accounts, futures, EVERYTHING.
But what about . . .
What part of EVERYTHING are you not comprehending?
One. More. Time.
If you can't touch it, if it isn't physically on your property such that you can stand in front of it with an assault rifle and PHYSICALLY defend it, you don't own it, and it could be confiscated/stolen from you at any time, if it ever actually existed at all.



"Warning signs are flashing by us, but we pay no heed
'Stead of slowing down the pace, we keep picking up the speed
Disaster's getting closer every time we meet
Doing ninety miles an hour down a dead-end street


Link in case the video above does not play:

http://youtu.be/ZuRyouEOUJ8

Sunday, July 15, 2012

Book Review: The Coming Jobs War (Jim Clifton)

Jim Clifton is the CEO of Gallup, the polling organization that has been doing business for over 75 years.  They are respected, and they have a HUGE database of information (that I will go into some details later).  He wrote (2011) a remarkable book: The Coming Jobs War.  Please do not let the sort of bland title push you away from either the book or my comments here, Clifton is on to something...

In my opinion, this is a very important book.  It needs to be read by people who matter, who can get things done.

In Chapter One ("What 7 Billion People Want"), I will quote verbatim Jim Clifton (here and later his remarks will be color backgrounded):

More and more often, global leaders ask Gallup the same simple, yet colossal question: "Does anyone know for sure what the whole world is thinking?"


Traditional economic data record an infinite amount of human transactions, from GDP to employment to everything everyone bought throughout their lives to birth and death rates.  These data go to great lengths to indicate what man and woman are doing, but there is no ongoing, infinite, systematic account of what man and  woman are thinking.


He means that few are looking at behavioral economics, what is going on "under the hood" if you will of what people are thinking.  All of the other data is easy to collect.  So, starting in 2005, Gallup decided to start a massive project: the World Poll, and they are committed to doing it for 100 years.  (If nothing else, give them credit for thinking BIG)  This World Poll would ask questions about what people are thinking.  


They started by looking for big data sets that would help Gallup's scientists get started.  They looked in a lot of places and found very little.  So, they made up a comprehensive poll on their own.  It was a big challenge, they wanted to cover every issue in every country of the world.  Another challenge was to engineer sampling so that they properly sampled people speaking many different languages in the 150 countries.  They had to choose how to ask the questions correctly, so that the Manhattan socialite and the Masai mother would be asked the same thing in the same way in their proper contexts.  They then searched for benchmarks (poverty, law and order, healthcare, etc.).  One thing they found right away: how little is known about what is known about the hearts and minds of our 7 billion people here.


They collected a huge amount of data, and the data set and the conclusions are complex.  Except for one conclusion that has come out.  This one conclusion is not one I would have thought of as Number One.  The Number One issue in every country is the same thing.  It is NOT liberty.   It is NOT seeking love.  It is NOT war and peace.  It is NOT about corrupt government nor government spending.  It is NOT about the environment.  It is NOT even poverty.


What the world wants is a good job.


Gallup found that in every country.


And our leaders need to understand this and what it means.  Paraphrasing (summarizing) Clifton:


-- Lawmakers need to know whether mew laws will help or hurt job creation
-- The public schools need to think how their students can be ready to get a good job
-- Our top leaders need to think whether wars and occupations will help or not
-- Local leaders need to think about what they do re the context of creating good jobs


He writes that ALL leaders worldwide should be thinking along these lines, not just in America.


In Chapter Two, Clifton explores what joblessness is and its consequences.  Clifton:


...  (discusses other problems)


None of these problems matter when when compared with the likely possibility of America slowly and then suddenly going broke -- because none of these problems are so near.  Going broke is what happens when there aren't enough good jobs.


So what would going broke look like on a national scale?  Well, take a look at Detroit, and imagine that economic disaster coast to coast.  Look at California.  California can't pay its pensions, it will likely declare bankruptcy, a lot of its employees are going to be out of a job, and its bond holders won't be able to get their money.


Note he wrote that in 2011 about California.  As mentioned below in my Review of Barron's, three cities in California have declared bankruptcy.  Clifton:


And it's happening now.  You and I, our friends and relatives are going broke now now because the United States of America is going broke.


Gallup estimates unemployment at 10% and under-employment at 10% more.  Clifton:


So why is it so hard to create jobs?


Jobs are at the heart and sole of a nation, the thing that sustains everyone.  Leaders know that.  But almost nobody knows where or how jobs are created, especially those who think they know how to create jobs -- the government, academics, experts from institutions of all types.  Those people are usually the most wrong about job creation.  They tend to dig in the wrong places.


(Emphasis mine)


Now he starts heading us in the right direction, but pauses to place America into context re the rest of the world (especially China).  My personal opinion is that China will not grow as he posits, throughout history, China has always found a way to screw up when on the verge of greatness, but what do I know.


After the context, he gets back to business:


But the government doesn't have money.  People and companies have money.  And if the overwhelming majority of Americans aren't working outside of government jobs, America goes broke.

The overwhelming number of jobs are created by small and medium sized businesses.  Big businesses are often job cutters...


***


Clifton then goes to write a chapter about our biggest rival: China.


Apparently almost all respected economists think China will overtake the USA in GDP in the next 30 years.  Clifton thinks that is BAD, unless we start growing our own GDP, which is tightly correlated with employment.


But, our economic future is not set in stone.  In his next chapter he reminds us that over 30 years ago economists were saying that Japan and Germany would overtake us...  They did not.  Why not? Because no one foresaw Bill Gates, Steve Jobs or Meg Whitman...  Entrepreneurs who changed the world, who brought us the Internet.


So, we WON the Jobs War from the 1970s to 2000.  Our Baby Boomer (and Gen X) entrepreneurs won it.  Conventional economics missed all of this.  Because classical economics measures transactions, not unpredictable people such has who will become a successful entrepreneur...


***


Chapter Five brings us Clifton's discussion of Behavioral Economics, and how and why that is important.  Classical economics measures transactions, behavioral economics is the science of choice.  Each of us makes many choices every day, and even small decisions sometimes have BIG effects, he specifically mentions Mohammed Bouazizi, the Tunisian man whose vegetable cart was confiscated, he set himself on fire, then Tunisia had its revolution and then Egypt.  All because a policewoman took away Bouazizi's vegetable cart (his job).  The Tunisian cops made a local decision that continues to roil the whole Middle East.


Behavioral economics is the attempt to measure the state of mind of people, to try and figure out how people decide to do something.  So Gallup has created a "secret weapon", metrics to measure states of mind and attitudes.


Authentic job creation (NOT "shovel ready" government jobs) happens more when people have more freedom.  Not more government stimulus money.  Not more credit.  Not building bridges.  Who creates real jobs?  Entrepreneurs operating in a free environment is who.  And they must have confidence.  Confidence is a metric that Gallup measures...


And where are the jobs created?  In Chapter Six, Clifton says in cities.  It is in the cities where the bulk of jobs are created by entrepreneurs.  Washington does not create jobs or even much affect job creation, it happens (or does not happen) in the cities.


Cities do more to set a good environment for job creation than other levels of government.  He uses examples.  Think of San Francisco (Silicon Valley), Seoul and Singapore -- all cities that have had great success creating great economies and job creation.  Detroit and Havana are examples of bad decisions, with lousy economies and job creation.


And the key to getting big things done in a city are to tap what Clifton calls the "Tribal Leaders" of the city,  The tribal leaders are not the politicians or with the police and fire departments.  The tribal leaders are people who care about the city and typically include philanthropists, university presidents, hospital presidents, some business leaders, local stars, sports teams owners, wealthy & prominent families and many others who care about their city.  Every city has tribal leaders, but some cities have better leaders than others.  Clifton argues that the tribal leaders, who know where to go and how to get things done.  They have much money and influence, much more so than the Mayor and City Council...  Clifton gives us a great example: Warren Buffett in the case of Omaha.


Clifton lays out the case that it is within our cities where we succeed or fail in creating jobs.  The cities need to ATTRACT entrepreneurs and job creators.  And that it is up to the tribal leaders to make each city attractive to small businesses...


Clifton (with a clarifying comment of my own):


So if cities are the core of job-creating energy, "everything is local," and "so go the the local tribal leaders so goes the soul of the city," then it follows that the future of the United States rides on the leadership success or failure of only 10,000 highly influential Americans [Clifton uses a round number of the 100 largest cities in the country who have an average of 100 tribal leaders].  These are arguably the most important leaders in the United States because new job creation depends on them. While 10,000 tribal leaders aren't very many people, they're the ones who will largely determine whether America recharges an economic engine the whole republic is counting on.


10,000 people will determine whether our future is bright or bleak.


***


In Chapter Seven Clifton discusses entrepreneurs and innovators.  Apparently there is a LOT more innovation happening than the former.  Apparently there are LOTS on innovations just sitting on laboratory shelves because no high energy and talented businessmen there to commercialize them.  And that is the secret: commercializing those innovations.


Cities (and countries) are spending resources on less-needed innovation, and MUCH LESS on the more important entrepreneurs (and he uses the term to include key players in all organizations).  The good money and the good jobs will come from the business model and leaders, not the invention.

Clifton uses as an example of a great entrepreneur: Wayne Huizenga.  He had three humble ideas (lousy sounding ideas) ideas through his career.  He started out in the trash collection business, where there were already many players.  He turned it into Waste Management, Inc., a Fortune 500 company.  He then started a business that sounded even worse, renting movie videos, and turned that into his second Fortune 500 company (Blockbuster, Inc., OK yes now in trouble).  He then went on to sell used cars, and made Auto Nation, Inc., another Fortune 500 company.  Note that Huizenga did not innovate much...  He put together great businesses.


Another example is Ted Turner with his idea of a 24 hour news channel...  Became CNN, because of his energy and business skills.


Another dumb innovation: an Internet site to sell each other their junk to each other.  But Meg Whitman made eBay a giant...


Bet on the horse (the leader) not the cart (the idea or innovation).  Great entrepreneurs are rare, they should be mentored and attracted, they should be welcomed so they can work their job creation magic.


In Chapter Eight (High-Energy Workplaces) and Chapter Nine (Customer Science) Clifton illustrates some of Gallup's Behavioral Economics.  He asks people to rate their workplace from one to five on various subjects (Chapter Eight), here are some examples of questions based on Behavioral Economics):


Q01.  I know what is expected of me at work.
Q02.  I have the materials and equipment I need to do my work right.
Q07.  At work, my opinions seem to count.
Q10.  I have a best friend at work.
Q12.  This last year, I have had opportunities at work to learn and grow.


Chapter Nine shows more such questions (answered from one to five):


CE2.  How likely are you to continue to do business with (Company)?
CE4.  (Company) is a name I can always trust.
CE5.  (Company always delivers on what they promise.
CE6.  (Company) always treats me fairly.


The ABOVE questions are the type that Gallup now uses to study the world...  And they know more  of this than ANYBODY ELSE!


***


Clifton then goes on to discuss other specific BIG problem areas in America in Chapter Ten (the schools) and Chapter Eleven (the health care system).  


In a remarkable observation, he says that our healthcare system costs us 10 times as much as our wars...  And that about one half our health care costs are wasted.  Wasted because our leaders are digging in the wrong place (figuring out who will pay the bills -- exactly what Obamacare is doing) and NOT on prevention.  Over 50% of health care costs could be saved by prevention of expensive chronic health conditions...  And to over-simplify: that would be to encourage healthy habits and discourage unhealthy ones.  Is this dreaming or actually possible?  Yes.  Look what happened when smoking became shunned...  Clifton then names it: Obesity.  That is what causes heart disease, diabetes, hip and knee joints, most of which the TAXPAYERS pay for.


In Chapter Twelve, he lays it on the line what CITIES gave to do, in order, to attract talented and hardworking people (with an example of each, questions asked all over the world):


Step 1: Law and Order  Do you feel safe walking alone at night in the city or area where you live?


Step 2: Food and Shelter  Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?


Step 3: Key Institutions  In the city or area where you live, are you satisfied or dissatisfied with the availbility of quality health care?


Step 4: Mobility and Communication  Does your home have access to the Internet?


Steps 5, 6 and 7 are Youth Development, Job Climate and Job Enhancement.


He then goes on to write that America should attract the best and most talented people in the world.  Look at what happened in Silicon Valley.  Some 1000 people are mostly responsible for that national treasure.  500 of those were immigrants. 300 - 400 came from India alone.


His Conclusion summarizes the book.  I summarize the book is that we must get our cities' tribal leaders to get each CITY to create an attractive environment to attract the hard working entrepreneurial types who will create good jobs and bring America back to world leadership.


***

It is difficult for me to recommend this book highly enough to anyone interested in a New Way to bring America back.

Review of Barron's -- Dated 16 July

The Cover Story this weekend shows a big graphic of $1 = 1 euro, so I thought, yeah, OK, I'll buy it...

Randall W. Forsyth ("What Europe Must Do") writes about Europe's plight, with which we are all pretty familiar. Part of the genesis of all the Eurozone problems has been the fact that the euro is a fairly rigid currency for countries that work rather differently (more differently than our own states).  I will note that at the outset of the euro experiment, it "seemed like a good idea" to me.  Well, I was wrong on that one wrong...

So, Europe is floundering about, trying to relatively easy solutions, like trying to impose austrity on Greece and setting up all of those confusing entities like the EFSF, to be succeeded by the ESM.  And the ECB behind it all.  LTROs and the like abound.

Forsyth writes that two key people re the euro re ECB chief Mario Draghi and German Chancellor Angela Merkel.

Forsyth notes that several BIG European companies have set up shop here in the USA to manufacture (BMW and Mercedes-Benz to make cars) and will soon be joined by mighty Airbus.

He then writes that his opinion (and others, including the respected Bank Credit Analyst) is that they should just devalue to euro.  He notes that Germany would suffer unwanted inflation.  And he believes austerity will not work (Spain has become a land of rioters now under austerity).

I really do not have the expertise to offer an opinion as to whether Forsyth is right or not.  It's a good article, and he makes a good case, but devaluation...?

***

Barron's "Pole Position" writer Alan Abelson writes of Ponzi's Legacy...  Now we have yet another brokerage reun off with their customers' money, PFGBest.  It is getting hard for me to keep up with all the thievery we have seen, despite my attempts to chronicle the BIG scams that we are witnessing after the Bubble.  The big scams are always seen after the Bubble.  PFGBest, at this point, is believed to have lost a "mere" $225 million.  Abelson then goes on to note that JPMorgan has fessed up to its recent $5.8 billion trading loss.  All these numbers always seem to go UP, not down.

Abelson then goes on to write some history for us: that one of the very worst hyperinflations happened in Greece after the Nazis took over in WWII.  Worse, he writes, than Weimar Germany's (uhm, a fact check might be of use here). Nonetheless, a bout of German-induced hyperinflation in Greece would likely indeed left some hard feelings towards German among the Greeks...

He finishes this week with a comment and nice pair of graphs on China.  He doubts that China is really doing well.  The two graphs note a very high correlation between China's real GDP growth rate and China Shnaghai Composite (stock index).

***

What is $306,338,843,832,754?


That number is not just a big number, but it is "SwapClear's total outstanding notional debt as of July 4, 2012".


I presume that means the world total, not SwapClear's share of it.


Readers of last week's review might remember that I mentioned these guys, apparently pretty new (at least at Barron's) as the only ones to have successfully resolved an IRSwap default).


If you are interested in derivatives clearing, etc.: swapclear.com

***

Michael Santoli writes the FIRST PIECE I have ever seen (by a non-conspiracy-theorist-whacko) that says that it does not matter much whether our next Capo is Obama or Romney!

He says that the economic cycle and central-bank policies that matter more.

I still would rather endure Romney...

***

"He Said:"

"We made a mistake.  We completely disclosed [it]...  We are in better shape than we were before."

JPMorgan CEO Jamie Dimon on the earnings call.

Barron's!  It is almost always Dimon, Bernanke, Draghi or Soros that you guys always quote!  Let's see what some others, OUTSIDE the bankster circle have to say!

***

One of my favorite writers there at Barron's is their DC Pro Jim McTeague ("D.C. Current", this week's article is titled "The Greased-Palm Index).

He writes this week that the Center for Responsive Politics puts out a list of companies that gave the most in political contributions.  Among the 32 companies studied, the average stock price went up 8.1% (as of July 9)  while the S&P 500 was up 7.5%.

Surprise!  But, an outperformace of 0.6% is not all that much.  I hope that Jim keeps up with this analysis in future columns.  He would then be chronicling "Corruption at Work"...

***

Author Tiernan Ray ("Technology Week") writes that earnings for many big tech names are likely to be ugly...

Intel (INTC), Yahoo! (YHOO), eBay (EBAY), IBM, Qualcomm (QCOM), Nokia (NOK), Verizon (VZ), Advanced Micro DEvices (AMD), Google (GOOG), Microsoft (MSFT) and Xerox (XRX) all report in this week.

He says to start preparing your shopping list if tech goes down.  Uhm, I will wait...

***

I always give myself an "Inner Smile", thanks Susan A, hey Susan, you're famous!, when I see that "investment pros" or others (in this case) perform worse than the S&P or even LOSE!

Andrew Bary writes "Nothing to Write Home About", which is this edition's review of Barron's recent stock picks (that is, by their writers).  In sum, they picked about 3 times as many bullish picks vs. bearish ones.

Re their bullish picks, their writers averaged a -5.7% (vs. a benchmark +0.3%, the benchmark being an index similar in size or scope to the company written about), so they way under-performed.

Re their bearish picks, they came out with a 1.2% positive (they made money calling the bearish movement correctly) vs. a -1.2% benchmark.

Bary notes that stocks often DO need a longer time frame than six months.  I applaud Barron's in being transparent about their calls.  Mine would likely have been WORSE.

***

Leslie P. Norton interviews a man named Paul Isaac, who is very respected (Jim Grant dedicated a book thusly: To Paul Isaac, who knows everything).  Mr. Isaac runs a hedge fund and writes a nuanced and beautifully reasoned newsletter according to Ms. Norton.

Isaac thinks that we are not addressing our problems well (I would agree), that the Europeans maybe are (?),and yet that there are good ways to make money (his hedge fund has average 21% per year since its founding in 2001 -- an amazing number IMO).  He is a value investor, he likes good companies at cheap prices.  His two US picks: Devon Energy (DVN) and Greif Brothers B (GEFB).

***

I have written many times now that I have become enchanted with the "CEO Spotlight" and that I always try to read it.  This week Michael Santoli writes up Hyatt Hotels (ticker: H) CEO Mark Hoplamazian (an Armenian last name, literally meaning "one who doesn't jump or dance").  Hyatt had been owned for a long time by the large Prtizker family of Chicago, and some of the Pritskers wanted to cash out.  Hoplamazian, who did not have much experience in that industry (he worked on Wall Street as an analyst, banker and consultant), but he was able to bring Hyatt through the complicated Pritzker family politics and bring out this well respected hotel brand.  That he was chosen as interim CEO surprised him.  He spends much of his time on the road, listening...

A LOT of these CEOs have had interesting lives, and almost all of these pieces I have read have led me to respect many of them.

***

James Bovard this week pinch-hits for Thomas Donlan on the Editorial page.  I remember Bovard from years ago when he attacked our government giving special privileges YEARS ago (in that case, one the beneficiary companies was Timken, the US bearing company who had successfully lobbied to put up various import barriers to foreign bearings).

Bovard punches the government hard for wasting money, vast sums of money on programs that have proven themselves unworthy of funding.  And actually causing even more bad consequences, the same kind of thing as when a company miss-allocates capital.  Except those companies go broke if they keep it up.  Not Uncle Sam.  He specifically attacks ethanol, which boosts smog and damages car engines...  Unintended consequences...

Five stars Mr. Bovard!

***

In the Market Week section, I was dismayed that neither "Asian Trader" nor "European Trader" (weekly columns following those mega-markets) had anything of interest for me this wee.  Maybe next week!

***

"Current Yield" this week is by Michael Aneiro and discusses California municipal bonds...  Dangerous territory, as California has three cities seeking bankruptcy protection: Stockton, San Bernardino and Mammoth Lakes.  All three cities have been hit by two things: lower property tax revenues and onerous public sector union benefits.  Think that's the last of them to go bankrupt?  He does not come out and say so, so I will:  LOTS more municipal bankruptcies (and so muni bond holders) to come in California, if they do not FIX the public sector pensions (default on them in part).

Aneiro also mentions another under-funded muni sector: the tobacco bonds!  You remember, they were all going to get all this money and spend it wisely!  Ha ha ha!  Guess not!  Fewer people smoking, another example of unitended consequences by our .govs...

The "Bond Center" four graphs are on the same page.  I noted last week that European short term rates for the first time fell below ours (the ECB cut rates).  This week the European short term rates went down again, they are approaching Japanese levels...

***

Insiders sold at Visa (3 insiders, $36,500,000 worth) and Monsanto (7 insiders, $22,000,000).

Verisk Analytics (144 Filings) had their CEO sell $30,000,000 worth (after a big ride up, mentioned at Barrons's), Broadcom and GNC also had big 144 Filins (similar to Insider Trading reports).

***

Matt Day writes this week's "Commodities Corner", he thinks that even in tough times that Cliffs Natural Resources (CLF) and Peabody Coal (BTU) are good places to hide.

Well, maybe.  Not for me though.

***

Fender Musical Instruments may IPO soon, for any of you who like guitars...

***

M2 money supply is just shy of $10 trillion, a mere blink away at $9,991,500,000,000.  Hey, print it!  Less than $9 billion away from a VERY round number!

I always like to close my Review with the performance of the Mighty Peruvian Sol, which this week AGAIN reached an all-time high vs. the US$.  The Sol jumped over 1%, and now our buck fetches a mere 2.625 soles...  A few years ago it was 3.45 soles to the dollar.  Offhand, I cannot think of ANY other currency up so much vs. the US dollar.

Friday, July 13, 2012

Debt, Gold and Miami!

I note today that the Debt Widget above shows us that we are about to clock over $130,000 per TAXPAYER by the time many of you read this.  Soon after I started my blog in May, 2011, I took note that the widget turned over $119,000.  So in the 14 or so months since I noted the widget reaching $119,000 that debt per taxpayer has grown $11,000 more...

So how many here are ready, willing and able to cough up $11,000 MORE to pay "our fair share"?  Not me and not most of you.

I once again note that the above widget throws off a slightly different number than other sources.  But, so what?  In a sense, it is all imaginary...  The debt will NEVER be paid off, how can it be?  It will not be paid off.  It will continue to grow, and at some point it will be defaulted on, by inflation or outright default.

And if Treasury rates go up, the interest burden upon us will just get that much worse.  Yet 10-year Treasuries hover around 1.50%...  Weird.., hey, you tell me!

***

Gold is moving up today, creeping up to nearly $1600.

I think that physical gold at $1600 is still way underpriced, I ate my own dogfood just yesterday by buying a little more.  When will I sell it?  Never.  It will be given away.

I read here and there that China continues to import lots of gold.  China is already the Number One producer of gold, yet they import more.  China now has about 1040 tonnes (official gold holdings, I printed out the chart from a Zero Hedge article yesterday), but many think they have more that they quietly buy...

Apparently LOTS of physical gold is moving from London to Hong Kong (and then to China).

FOFOA has a new article out: fofoa.blogspot.com.  He discusses why "paper gold" functions differently from physical gold as well as "paper corn" and other commodities.  FOFOA's previous piece is his concise interview with the newspaper journalist from India, and highly recommend that article as well.  FOFOA may be more popular in INDIA than here in the USA!

***

Since moving here to Miami some 11 years ago, I have picked up some statistics on "The Magic City" that some of you may enjoy!  Hey, we're Number One!  Among major US cities, we are number one in (I am unable to cite sources, heard them on the radio over the years):

-- worst driving in the country!
-- worst road rage!
-- poorest city in the USA (nudging out San Antonio some 3 years ago)
-- stupidest city (lowest educational attainment)
-- VAINEST city (guys working out, women having "work" done on them)
-- and now..., the SEXIEST city (177 times per year, 73% sexually satisfied)

Update!  One of my "key readers" advised me that Miami is No. 1 in yet another way:


#1 in cannibal zombies too! 


/Update


"We're Number One!"


Miami is "The Magic City"!  Hey, I believe it, because it ALL happens here!

Tuesday, July 10, 2012

Ameru's Big Week!

Our Peruvian bearing import company (Ameru Trading del Peru S.A.) had its biggest week ever (first week of July)!  We sold a bit over $70,000 in one week!  $70,000 in sales is a fairly normal amount for one MONTH.  The below shows sales by month in our most excellent year 2012, the LAST figure is for the first week of July:

2012
$126,166.70
$42,748.30
$123,310.15
$65,222.28
$87,667.94
$106,563.17
$71,014.89

Our previous best-ever week was on the order of $55,000.

The single biggest reason for our huge week was the arrival of our KBC bearings, with LOTS of "carnecitas" ("small pieces of meat" = big selling items).

***

Last week also featured a sale (one piece only) of our most EXPENSIVE piece (for wheel of Ford "F-350 Super Duty" pickup truck (1999 - 2002)):

11-IJ-223019  
$242.95

The above is a big & heavy "Hub & Bearing Assembly" made by our second largest supplier, Iljin of Korea.


***


The below bearings are the pieces for which we sold over $500 worth last week:


Codigo
Qty
Sales
(Comment)
02-6007-RS    
4830
$17,407.88
Daewoo Tico FW
02-6205-RSC3   
1960
$5,004.85
Daewoo Tico RW
02-6204-2RS   
1950
$4,472.09
Daewoo Tico RW
02-33005-JG   
837
$4,188.99
Daewoo Tico transmission
02-6302-2RS   
1753
$3,685.67
Daewoo Tico transmission
02-6000-2RSC  
1780
$2,855.07
Daewoo Tico  drivetrain
02-6002-2RS   
1771
$2,647.83
Daewoo Tico  transmission
02-32004-XJG  
266
$1,266.37
Daewoo Tico drivetrain
03-DAC3562W   
67
$1,031.94
Suzuki Alto wheel
13-38BWD22    
66
$971.89
Toyota Probox RW
29-518445/10  
55
$863.92
Fruehauf trailer
02-30205-J    
256
$801.55
Daewoo RW
11-IJ-111001  
52
$779.94
Hyundai Accent FW
11-IJ-212001  
12
$698.10
Hyundai Gran Starex FW
02-30204-J    
243
$676.58
Daewoo RW
11-IJ-111009  
54
$674.44
various cars FW
02-DT-255237  
42
$661.23
Chevy Aveo/Sail (Korea) RW
02-6207-2RS   
149
$580.26
Daewoo drivetrain

To my knowledge, only the Fruehauf trailer axle, the Hyundai Accent and the Chevy Aveo are sold in the USA.  We got a large lot of bearings for the "Daewoo Tico", a small tinny car that is still very common in Peru (you can see a picture of the Tico and other vehicles in Peru not seen in the USA here).  Obviously, the "Tico bearings are very important to Ameru...

In the above list, Codigo prefix starting with "02" are KBC (Korea), our biggest selling brand.  "11" is Iljin (Korea), our second best selling brand.  "13" is MBS (Japan), whom I also visited on my recent trip to Korea and Japan (see articles in May).  "29" is ZWZ (China), there are many buyers of cheap Chinese bearings for trailer axles.  "03" is some leftover Koyo (Japan) which we are not buying anymore.

***

Compare the list above with the list of best selling bearings over a longer time period (biggest selling pieces only (over $30,000 total) from 2009 until present).  The numbers under each year is quantity sold each year for that piece.


Codigo
Qty
Sales
2009
2010
2011
2012
02-6007-RS    
129228
$401,912.55
36984
38515
38954
14775
02-6000-2RSC  
77516
$110,301.80
21422
25184
20335
10575
C3-RCT283SA   
10201
$97,347.13
4080
5118
1003
02-6007-2RSF  
32422
$91,714.84
10868
21553
1
11-IJ-212001  
1446
$83,615.22
120
230
559
537
02-6007-2RSC  
23619
$81,221.00
685
3281
8143
11510
02-6204-2RS   
39086
$80,444.81
9582
11178
11405
6921
02-6205-RSC3  
34232
$77,088.14
9194
9969
9054
6015
03-DAC3872-8  
4185
$62,788.30
1576
1155
1118
336
02-6302-2RS   
33921
$62,363.58
11553
11225
7250
3893
11-IJ-113002  
1196
$55,905.11
278
428
290
200
02-68149G/11  
12654
$52,664.36
3017
3855
2740
3042
02-6002-2RS   
39792
$52,030.93
11653
13963
9529
4647
11-IJ-111001  
3176
$49,138.75
365
346
1100
1365
02-33005-JG   
9383
$41,997.27
2312
2658
3243
1170
11-IJ-111003  
2074
$40,419.95
596
415
687
376
02-6007-ZZ    
13493
$37,392.81
9746
864
2397
486
13-38BWD22    
2686
$37,380.04
269
731
1686
11-IJ-113015  
715
$33,785.05
150
245
155
165

Some differences, but you can see that the "Tico" bearings have been VERY important to our company.

***

People who like NUMBERS might enjoy the below graph, it shows sales of all our bearings, piece by piece, same 2009 - 2012.  If any of you, dear readers, knows how to do "curve fitting" I would like to know how to compare THIS graph (better said: distribution) compares with the exponential distribution.  "CLICK on the image for a better view."


Note that I cut off the "tail" about 20% to reflect sales of bearings available all four years.  This distribution is likely related to the famous "80/20 Rule", in that the top 20% of customers represent 80% of sales, also the top 20% selling PRODUCTS usually works the same (the top 20% represent 80% of sales).

Ameru is more like "90/10" though.  That does leave us vulnerable to changes.  But, this does nothing to prevent me from thanking my in-laws in Peru for a job well done!