This Week in Barrons – 11-18-2012
“We shall draw from the heart of suffering, the
means of inspiration and survival.” … Sir
Winston Churchill
Survivors of Hurricane Sandy have sent us the following tips:
-
Water … two 55-gallon barrels would let a family of four
"flush" for a long time, and having 20 gallons of bottled water is
necessary for drinking, sponge baths, etc.
-
Heat … either preparing food or staying warm – a wood stove
and your outdoor grill (with some propane) become your best friends.
-
Power … a generator with a supply of ‘recreational’
fuel. This is gasoline that does NOT
have ethanol in it and will last up to 2 years.
An 8,000-watt generator will consume half a gallon of gasoline per hour
– so plan accordingly.
-
So for under $3,000 you can make your coastal home quite
livable for weeks during something like Hurricane Sandy.
A
more global survival list goes something like this:
- Because the
Dow and the S&P 500 are both down more than 5 percent since the
election and the U.S. government rolled up $22 Billion more debt in October 2012
than it did in October 2011 – think gold, silver, and agriculture as
alternative investments.
- Initial claims for
unemployment benefits soared to 439,000 for the week ending November
10th. This is the highest level that we have seen in more than a
year. The largest number of new unemployment claims came from the
swing states of Ohio and Pennsylvania.
- According to
the Federal Reserve of New York, economic activity is contracting. Their index measured a ‘minus’ 5.2 this
month after recording a ‘minus’ 6.2 in October. (Readings of less than zero signal
contraction.)
- The mid-Atlantic region is also slowing much faster
than analysts were projecting. It’s
index measured ‘minus’ 10.7 down from ‘plus’ 5.7 the previous month. Some of the fall can be
attributable to Hurricane Sandy – but unfortunately not nearly enough.
-
The number of Americans living
in poverty rose to a new all-time record of 49.7 million last year.
-
The
number of Americans on food stamps increased by 420,947 from July to
August. At this point, an all-time record 47.1 million
Americans are enrolled in the food stamp program.
-
The
Eurozone is officially in a recession once again, and unemployment in the
Eurozone is at an all-time record high.
-
China is buying gold and building uninhabited ghost cities.
-
Stealth inflation is running rampant – hamburger is over
$5/lb, and it costs $3.99 for a 10-piece loaf of sourdough bread.
-
We learned this week (thanks to the powerful corn lobby) that
our (non-elected) EPA is going to continue the ethanol subsidies – taking corn
from being a valuable food resource.
-
Companies like Denny's, Papa Johns and many others are
reducing worker hours and laying off personnel in order to avoid the Obamacare
mandatory price tag.
And
finally: The Middle East is a tinder
box, and if there's one thing we really don't need right now it's a full blown
outbreak of war across the Middle East, which brings into play Iran and the Straits
of Hormuz. An oil price jump linked to
additional US involvement would virtually assure a disastrous economic
condition.
Obama
could help us all survive by:
-
Opening all the Federal lands to natural gas and oil
drilling.
-
Opening the permits to build LNG plants on our coasts so we
could export LNG (liquid natural gas) all over the world.
- Donating Federal Property on closed military bases and have
several state of the art oil refineries built, supplying us with $2 gas and
exporting the rest.
-
Shutting down the EPA, and undo the ethanol madness so that
corn is once again be a food source instead of fuel – thereby lowering our food
costs.
Let’s
all try and survive the storms that are coming: inflation, hyperinflation, high
unemployment, and even more class warfare.
The
Market...
There
are a lot of reasons that the market has plunged for about 1000 points in the
past month and I’ll explore a few of them here.
-
1st the “Fiscal Cliff”. There's no doubt that some folks have decided
they'd cash out this year and take the lower tax hit than hold into next year
in case the tax rates are higher.
-
2nd Obamacare.
We have companies saying that Obamacare is going to cut into profits and
jobs.
-
3rd Revenues and Earnings. Revenues have been falling for years, and companies
have succeeded in keeping profits elevated by slashing jobs, cutting costs,
expensing things that should be illegal.
But you can only cut so far, and now profits are beginning to suffer.
Which
begs the question: “These elements have existed for a while now - why would
anyone stop buying stocks?” Honestly, I
think J.Q. Public is running out of money.
One thing to remember is that the 401K's and pension plans buy the bulk
of stocks for their mutual funds. As the
economy continues to slide, more and more folks will need that 401K money to
pay bills. Small businesses will
liquidate their 401K’s and IRA’s when they will close due to inflation and Obamacare. This year is on track for more than a $90B
withdrawn, on top of the $100B that was withdrawn last year. Eventually those exiting the market will
offset The Ben Bernanke billions pouring in – and a major league bear market will
begin. Many readers have told me that
raiding their 401K was the only way that they could send their kids to
college. Toss in the global slowdown,
the money troubles of Europe, and try as they might to keep the market
"up" – I just don't think they can pull it off in the long run.
After
we get whatever "bounce" we're going to get from an agreement on the ‘fiscal
cliff’ (and the fact that we're entering the single strongest period for the
market (Dec- Jan) ) – I sense the market heading lower for a long time (ending
below 7K) starting in the spring of 2013.
For
now keep your powder dry and sit on your hands.
Wait for the turn, jump in and ride it up, and then go short next year. There's going to be some huge money to be made
on the short side of things in the future.
Tips:
In
terms of investing your way OUT of this market.
I hate to be a broken record by Gold and Silver have remained fairly
stable vs the 1,000 point drop in the DOW (quite honestly) – so consider them
safe-havens for your dollars.
Also,
Dave S and Francis D reminded us that “DBA” the agricultural exchange traded
fund (ETF) is about to produce its first “higher low” in a long time. It should use its moving average as support. Additionally, we see that the weekly Relative
Strength Index (RSI) is about to become oversold, and this means that higher
prices are likely to come in the months ahead. In addition to that, the moving average
convergence divergence (MACD) index diverged from the falling price action
earlier in the year, and this showed that DBA’s descent was likely coming to an
end. That happened and now DBA has
surged so much that the MACD’s lines are now above its zero line. This tells us that the likelihood of an
uptrend forming and continuing is high. And
with what we expect in terms of higher food prices in 2013 and beyond, we know
that we’ll see DBA head much higher in the months ahead. So you may want to hedge some of your higher
grocery bills and dining out costs by buying DBA – the agricultural ETF.
I continued to hide out in ‘cash’ over the past week –
exiting SLW even. After our ‘Santa Claus
Rally’ – please remember the list below – as they will come in handy in order
to manage a bear market (ETF’s offered by ProShares):
-
Short the DOW 30 –
ticker symbol = DOG
-
Ultra Short the
DOW 30 = SDOW
-
Short the
‘Financials’ – ticker symbol = SEF
-
Ultra Short the
Financials = FINZ
-
Short the Nasdaq =
PSQ
-
Ultra Short the
Nasdaq = SQQQ
-
And if you LOVE
SILVER = Ultra Silver = AGQ
My current short-term holds are:
-
SIL – in at 24.51 (currently 22.34) – no stop
yet
-
GLD (ETF for Gold) – in at 158.28, (currently
165.80) – no stop ($1,714.30 per physical ounce), AND
-
SLV (ETF for Silver) – in at 28.3 (currently 31.35)
– no stop ($32.36 per physical ounce).
To follow me on Twitter and get my daily thoughts and trades
– my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the
BARRONS REPORT, a Private and free weekly economic newsletter, are those of
noted entrepreneur, professor and author, RF Culbertson, contributing sources
and those he interviews. You can learn
more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.
Please write to <rfc@getabby.com>
to inform me of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
.
If you'd like to view RF's actual stock
trades - and see more of my thoughts - please feel free to sign up as a Twitter
follower - "taylorpamm" is my
handle.
If you'd like to see RF in action -
teaching people about investing - please feel free to view the TED talk that he
gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0
To unsubscribe please refer to the
bottom of the email.
Views expressed are provided for
information purposes only and should not be construed in any way as an offer,
an endorsement, or inducement to invest and is not in any way a testimony of,
or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not
registered and licensed brokers. This
message may contain information that is confidential or privileged and is
intended only for the individual or entity named above and does not constitute
an offer for or advice about any alternative investment product. Such advice
can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future
performance. Please make sure to review important disclosures at the end of
each article.
Note: Joining BARRONS REPORT is not an
offering for any investment. It represents only the opinions of RF Culbertson
and Associates.
PAST RESULTS ARE NOT INDICATIVE OF
FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN
INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING
HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME
PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF
INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS
MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING
INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can
be volatile. An investor could lose all or a substantial amount of his or her
investment. Often, alternative investment fund and account managers have total
trading authority over their funds or accounts; the use of a single advisor
applying generally similar trading programs could mean lack of diversification
and, consequently, higher risk. There is often no secondary market for an
investor's interest in alternative investments, and none is expected to
develop.
All material presented herein is
believed to be reliable but we cannot attest to its accuracy. Opinions
expressed in these reports may change without prior notice. Culbertson and/or
the staff may or may not have investments in any funds cited above.
Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.
R.F. Culbertson
No comments:
Post a Comment