BNN: Top Picks

Jeff Black, director and portfolio manager, Crestridge Asset Management, shares his top picks.


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Markets could correct in October-November: Marc Faber

You are known as Mr Contrarian in India. You always like to advise the reverse of what the global consensus is. The current global consensus is ‘buy emerging markets and sell US bonds’. What is your take?

That’s correct and there in general, I am still positive about economic growth in the emerging world. But what disturbs me at the present time is that in late August, sentiment was very negative worldwide and people said that Dow will drop to 1000 and so forth and so on. Suddenly now, the consensus is that you have to be in equities, you have to be in gold, you have to be in assets because central banks around the world will print money. That is correct, they will print money. But sentiment has become so universally bullish that about all assets, including especially emerging economies - in US dollar terms - are up. The Indian market this year is already up 19%, Malaysia 28%, the Philippines, Indonesia and Thailand each over 40%.

We already have big moves and I see all the brokers upgrading the earnings estimates and so forth. So I become a little bit apprehensive about this universal bullishness. I would rather think that after a strong month of September - when everybody was expecting September to be a horrible month - October and November may be bad months. In the past, October has frequently been a disastrous month like we had the October 1987 crash, we had the late September-early October 1929 crisis. In 1976 and 1978, we had very bad months in October and November. So who knows, out of this present bullishness, we could have some kind of a sharp correction developing. (more)

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McAlvany Weekly Commentary

The Corruption of Capitalism: An Interview with Richard Duncan

Posted on 29 September 2010.

Richard Duncan is the author of The Corruption of Capitalism and The Dollar Crisis: Causes, Consequences, Cures – the bestseller that accurately predicted the global economic crisis that began in the 2008 and the government’s unorthodox policy response to it. Since beginning his career as an equities analyst in Hong Kong in 1986, Duncan has served as a global head of investment strategy at ABN AMRO Asset Management in London, worked as a financial sector specialist for the World Bank in Washington DC, and headed equity research departments for James Capel Securities and Salomon Brothers in Bangkok. He also worked as a consultant for the IMF in Thailand during the Asian Crisis and is now chief economist at Blackhorse Asset Management.

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What’s Really in the Social Security Trust Fund?

“You’re kidding, right?” a Daily Reckoning reader wrote after our briefing from last week: “The End of Social Security As We Know It.” “Are you the only ones who believe in the accounting farces that are the Social Security and Medicare ‘Trust Funds’? Every dollar in both of those funds has been spent by the US Treasury…”

We weren’t kidding, dear reader… There’s only so much reckonin’ we can do in one day. Last week we chronicled a turning point for retirement in America: On September 30, the Social Security Trust Fund will officially begin paying out more than it’s taking in. Now, you – and many others who wrote in – provide an inadvertent introduction to our final question in this Social Security Series: What, exactly, is in that fund?

The quick answer is this, as we noted Saturday. “With $2.6 trillion left in the Social Security war chest, there is no immediate threat to the status quo.”

The Social Security Trust Fund is, in fact, worth roughly $2.6 trillion. The status quo is safe at the moment. But as you hinted, there isn’t a single US dollar in that fund…and anyone who thinks the money they’ve been sending the government to pay for retirement is neatly stacked in a giant vault – some super-sized swimming pool of money – has the wrong idea. (more)

RUMOR?: Federal Reserve Note to be Devalued in Next Few Days - Stock in Food NOW

This arrived from one my long time friends who never passes on info unless he's pretty sure it's true.

Folks,

In the last 24 hours I have had reports that the Government is about to devalue the Federal Reserve Note in the next several days. If the information I received is correct then the reduction is going to be major, approximately 10% of its present value.

If this happens there will be major increases in the cost of food, gasoline and almost everything that is real product, not paper. Therefore I recommend that you consider buying some food ahead of this change. That means that you need to do it today or at the latest tomorrow.

Obviously this could be an error, but I do know that the 82nd Airborne has been put on 18 hour alert for deployment in this country and that I have verified. The only reason I can see to do that is to help control populations in big cities where we could see major rioting. At the time I first found out about that I could not figure out why, but this currency change could be the explanation.

In any case being prepared with some additional food is wise I believe. Most of us can't do anything about the fuel cost, but we can do what we can with the other things that are going to change in price if this devaluation occurs. (more)

Dave

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U.S. Economy "Close to a Destructive Tipping Point," Glenn Hubbard Says

"America is very close to a destructive tipping point," co-authors Glenn Hubbard and Peter Navarro warn in their new book Seeds of Destruction. "We must change how we conduct our politics and economics...or we will inevitably go the way of all once-great nations and suffer an irreversible decline."

Hubbard, dean of Columbia Business School, joined Dan Gross and I to discuss the "major structural imbalances" facing America, chief among them being the government's profligate spending.

Hubbard, you may recall, was chairman of the President's Council of Economic Advisers during George W. Bush's first term. As you might expect, he is a strong advocate of smaller government and lower taxes. But Hubbard and Navarro, a business professor at UC Irvine, are also harshly critical of Bush's "gross mismanagement" of the fiscal stimulus bequeathed to his administration by President Clinton. Specifically, Hubbard chastises his former boss for the creation of a new unfunded federal mandate, Medicare Part D.

But if Bush was a big spender, President Obama is "taking it to a whole other level," Hubbard says, citing the familiar critiques of ObamaCare and Financial Reform and "excess government spending" in general. (more)

Another Downleg in Housing Prices

By Dirk van Dijk

In July, home prices started to slip again, but unevenly across the country. The Case-Shiller Composite 10 City index (C-10) rose 0.03% on a seasonally adjusted basis, and is up 4.01% from a year ago. The broader Composite 20 City index (which includes the cities in the C-10) fell by 0.13% on the month and is up 3.13% from a year ago.

In June, the year-over-year gains were 5.02% for the C-10 and 4.22% for the C-20, so it looks like the year-over-year gains are rolling over. Of the 20 cities, only four posted gains on the month, while 16 saw prices fall. Year-over-year, 10 metro areas saw gains and 10 suffered losses. In June, 15 were up year over year and 5 were down.

There is a seasonal pattern to home prices, and thus it is better to look at the seasonally adjusted numbers than the unadjusted numbers. Most of the press makes the mistake of focusing on the unadjusted numbers. While the 4.01% rise in the C-20 is good news, it hardly makes up for the damage that was done in the popping of the housing bubble, and it is also unlikely to last. (more)

Gerald Celente, Trends Research: The Future Has Arrived

Gold is trading at $1309 per ounce as fears of a currency crisis spread worldwide. Most of those fears will soon be realized, and then some. "Current events form future trends." Today, all across Europe, people are taking to the streets to protest massive bailouts to save the banks while austerity measures and taxes are imposed upon them.

As a former subscriber to the Trends Journal, none of this should come as a surprise. Virtually every aspect of the current dire situation was foretold. The EU-meltdown and continent-wide strikes were confidently predicted in the Trends Journal^® over the years – even as the IMF and Central Banks were talking "recovery."

We have not often missed, and in most cases, what may appear to be misses, are simply postponements; results of some new scheme dreamed up by the power structures to forestall still more (white) shoes dropping. And drop they will.

But, on the plus side, as many grateful subscribers report back to us, by listening to Trends Journal forecasts and putting money in gold, they multiplied their investments by as much as 500 percent. Others thank us for trend insights that inspired them to branch out in new directions and start up new ventures. (more)

Today in Commodities: Interim Tops and Bottoms

Crude oil broke out to the upside today, confirming that the next leg is likely higher, closing back above the 50 day MA; in November at $77.35. From here next stop should be $79.15 and a settlement above that level should bring $82/83 in the month of October. Heating oil was able to close above previous resistance gaining nearly 3.50% today, and RBOB looks bullish as well, trading up by 2.35% today. A settlement over the $2/gallon level in November is required for confirmation in RBOB. Natural gas is biding time trading sideways today dancing around the $4/level. We’re suggesting scaling into November and December futures and purchasing at the money December call spreads. We’ve revised our upside target in the November contract from $4.76 to $4.53.

We remain convinced that the indices are overstretched to the upside, thinking the 10% rally in the last month will be cut in half. The next leg lower should drag the S&P to 1087 and 10000 in the Dow.

In the last 2 weeks cocoa has gone from oversold to overbought lifting prices back above the 50 day MA having gained 10%. We will be looking to get clients short December 10′ or March 11′ contracts in the next few days…stay tuned. Sugar looks toppy but it has for the last 10-15% so wait for confirmation of a top. Cotton was down limit today giving up 3.8%. Another market that we feel is over priced and we’ve again put shorts on our radar. Some clients got short coffee yesterday and we’re temporarily rewarded today with coffee down 1.69%. This is an unrealized profit so we’re not celebrating just yet. My downside target is $1.72 and then $1.65. On that clients should be able to pick up 35-50% on their options… stay tuned. Clients were advised to take a small loss on their feeder cattle today; just over $100 including fees/per position. As long as live cattle hold the trend line in December at 98.50 we will remain bullish. (more)

'Euro teetering on the edge, austerity measures inevitable'

Don't Get Shaken Off the Gold Bull Market

The question now is not whether Gold will go higher or not. Most of us know the primary trend is higher and will continue in the years ahead. The real question is three-fold. Are you invested? How much are you invested? Will you hold on? Going forward, as the bull strengthens and as more come on board the last question becomes most pertinent. Let me present you with some quotes that will elucidate my point.

Jesse Livermore once said: "It was never my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! Men who can both be right and sit tight are uncommon."

I believe Richard Russell said that the job of a bull market is to throw off as many people as possible along the way. After all, if everyone jumped on board all at once, the bull market wouldn't be sustainable.

Finally, consider this wisdom from Dr. Marc Faber. "An investor could have done very well over the last 30 years with just a handful of investment decisions. In 1970, a long-term investor should have bought gold, silver, and oil (commodities); in 1980, he should have sold his gold and oil and bought Japanese stocks; then, in 1989, he should have switched out of Japanese stocks into the S&P 500 or, ideally, into the Nasdaq, which he should have sold at the beginning of 2000." (more)

World gripped by 'international currency war'

The Guardian,
The world is in the midst of an "international currency war" according to Brazil's finance minister as governments force down the value of their currencies to boost their struggling economies.

The comments are the first public admission made by a senior policymaker about a practice which has become increasingly widespread since the global economic downturn.

Many countries, notably China, have been deliberately weakening their currencies by selling them on foreign exchanges or keeping interest rates artificially low to make their exports cheaper.

Economists fear that such moves are resulting in increasing currency volatility and instability. Increasing competition among individual countries to devalue also makes it harder to mount a co-ordinated policy response to the economic downturn, particularly amid fears of a renewed slowdown. (more)