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)