Friday, November 5, 2010

BNN Top Picks

Derek Webb, Chairman and CIO, Webb Asset Management, shares his top picks.

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International Forecaster: Creation of Debt As The Basis For Growth

Welfare states by regulation, a system by which growth is created with debt, money no longer a store of value, punishing savers and creating speculators, outrage over the last three US federal administrations has led to the current midterm election result, currency war, trade war, virtual fence broken.

The UK, Europe, the US and Canada are different degrees of welfare states. By way of regulation, government controls via taxation. The states and their inhabitants send taxes to Washington, which takes its cut and sends funds back to the states with strings attached. You either do what we want you to do, or we cut off your funds. The states and the people are subject to extortion with government using their funds to do so. By using regulations, welfare and extortion, the federal government creates dependency.

Another phenomenon that has developed is a second dependency. People in society, not just in the US, but also in many countries, are dependent on their grandparents and parents and as years progress that situation will worsen. Earning power to maintain a previous lifestyle is no longer available with the staggering tax burden. Including income and VAT taxes in Europe, taxation averages 70%. The ability and opportunity to become successful and wealthy is more limited in today’s societies. Even the college degree has been demeaned. Almost anyone who can hold a pencil today is college material, when 60% of attendees shouldn’t even be there. Adding insult, the jobs once available to college attendees are no longer available, because more often then not illegal aliens hold them. As a result, it is far more difficult to work your way through college and as a result one graduates with a loan for $60,000 that will be paid back in many cases over a lifetime. In most cases that means most won’t be able to afford to buy a house until they are in the 30s or 40, if ever. (more)

Goldman: Real Cost Of Fed “Easing” Will Exceed $2 Trillion

Goldman Sachs anticipates that the real cost of the second round of quantitative easing will be in excess of $2 trillion and will continue well into 2012, while other prominent economists have denounced the Fed’s actions.

The Fed announced yesterday that it would purchase $600 billion in Treasury securities in a statement that left open the possibility of the real cost rising much higher.

“The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.” the statement read. (more)

Axel Merk: Dollar at Risk of Crashing, Triggering Inflation

The Federal Reserve’s decision to embark on another round of quantitative easing (QE2 as it has been dubbed) puts the dollar at risk of a plunge, says Axel Merk, chairman of Merk Investments.

The Fed will buy $600 billion of Treasuries over the next seven months to jump-start the sluggish economy. Such purchases hurt the dollar by increasing supply of the currency.

The euro hit a nine-month high of $1.4282 Tuesday, and at 80.70 yen, the dollar isn’t far from its post-World War II low.

As for QE2, "It's with the best of intentions but I think it's a very, very wrong policy," Merk tells CNBC.

Inflation is on the way, he says. "One of the key things here is a weaker dollar has traditionally not been inflationary because Asian exporters like to absorb the higher cost of doing business," Merk explains. (more)

How to Play the Scramble for Rare Earths

Rare earths have gotten a lot of attention lately. Deservedly so, as you’ll see. This creates some opportunity for nimble speculators. Let’s take a look…

Last month, China cut its shipments of rare earth exports to Japan. China and Japan have a maritime spat going on and this ban is probably fallout from that. In any event, the ban alarmed Japanese manufacturers who depend on China for rare earths.

The term “rare earths” refers to a group of obscure minerals, such as cerium, rhodium and neodymium. They are critical to a host of cutting-edge technologies. We use them in everything from hybrid cars to low-energy light bulbs. They are also used in all kinds of electronics, from cell phones to laptops. You’ll also find rare earths in batteries, polished glass, exhaust systems and more.

Japan makes all these things. In fact, it is the world’s largest consumer of rare earths. China is the world’s largest producer of rare earths, with 95% of the market. So you can see this is a match up of heavyweights. (more)

9 Stocks to Protect Yourself From Dollar Devaluation

I won’t make the foolish mistake of pushing my personal political views into this letter. My wife calls my ideas crazy, if not offensive and downright unrealistic. So if my politics elicit disgust and confusion with my own wife, I doubt I’ll have much luck parading them here.

Who you vote for is your business. But when it comes down to what you should vote for, I have a few things to say on the subject.

I’m talking about the way that we all conduct our personal investment portfolios, as well as the goods and services we buy. I’ve long believed that these everyday activities are a much more important ongoing vote than any one you cast into a ballot box. And today, there’s one vote you should be making above all others.

Because right now, as I write this letter, Ben Bernanke and dozens of other un-elected bureaucrats are deciding how much they want to devalue the dollar.

The mainstream media calls it Quantitative Easing, and whether it’s a $100 billion drop in the bucket, or a $5 trillion printing bonanza, we know what it means in the long run. (more)

Commodities gone wild! Prices spike post Fed

( -- Commodity prices have been on a tear since the Federal Reserve hinted back in August that it was prepared to take aggressive action to help boost the economy. The big announcement finally came, and a day later commodities are staging a massive rally.The Fed said Wednesday afternoon that it will buy $600 billion of longer-term Treasuries by mid-2011. That caused the U.S. dollar to slide and helped give a giant boost to oil, gold, coffee, sugar and silver.

Commodities remain in the spotlight because the Fed's asset purchases will put pressure on an the already weak U.S. dollar. Since commodities are priced in dollars around the world, a lower greenback makes it cheaper for foreign investors to buy.

"The Fed is basically printing money with these purchases, which weighs heavily on the dollar," said Carlos Sanchez, precious metals analyst at CPM Group. "This is what the commodity market wanted."

Crude oil for December delivery hit a six-month intraday high Thursday, rising above $86 a barrel for the first time since May 3. (more)

3 Stocks With P/Es in the Single Digits

Stocks are up big so far this year, but bargains still abound.

For example, shares of the large, American firms that make up the S&P 500 index have returned about 9% this year, following a 26% return last year. Despite the run-up in price, the index still seems reasonably valued. It would need a gain of more than 30% to reclaim its all time high. Today's level puts it at 14 times forecast 2010 earnings, about average by historical standards. Also, 10% of the index's members have price-to-earnings ratios in the single digits.

Three of these relatively undervalued firms are listed below. Each faces challenges, but each also increased its sales in its most recent quarter and generated free cash over the past year. (more)

Lindsey Williams : 50% devaluation of the US Dollar 2010, get out of paper money

Lindsey Williams provides new revelations and predictions from an
illuminati insider - the same insider that predicted the oil plunge of 2009,
the bankruptcy of Dubai and rising costs of food and other commodities...
2010 will most likely experience a 30%-50% devaluation of the U.S. dollar's
purchasing power. Lindsey Williams also reflects on the U.S. dollar's
over 91% devaluation since 1971, etc.

Stocks rally around the world after Fed action

Global stock markets staged an explosive rally Thursday, embracing a move by the Federal Reserve to try to rejuvenate the U.S. economy by buying $600 billion in Treasury bonds.

The Dow Jones industrial average reached its highest point in more than two years, and stocks surged from Tokyo to London.

Elsewhere around the world, economic dominoes began to fall: The dollar sank. Oil prices surged. And Asian countries raised fears that their currencies would rise relative to the dollar, making their exports more expensive.

And some fretted about the prospect of financial instability in Asia and other regions. But stock investors, at least, celebrated the Fed's move.

Fed Chairman Ben Bernanke said the bond purchases would drive down interest rates on mortgages and other borrowing. That could get individuals and businesses to borrow and spend and aid a U.S. economy stuck with 9.6 percent unemployment. (more)