21 DEC 2008 Happy Winter Solstice

The Outlook is essentially unchanged at bad (and getting worse).


Interest rates (Fed Fund) now (12/16/08) zero to 0.25%. Rates cannot go lower unless the Fed pays us to borrow money. (Maybe?)

What does this mean? It means we can borrow money at no cost. It means that money is free. Usually, free things have little or no value.

What does this mean? It means we should GET OUT OF THE US $$$.

*The US dollar has recently reversed trend and is beginning to fall against most currencies. (What to do?)

Obama to the rescue:
Obama’s plans, when he takes over, are to borrow, print and give away even more money. His recent plan, when he takes office, is to give $850 billion (Maybe $850 trillion?) for “shovel ready” projects. “Shovel ready?” It may mean the recipients will use a shovel to load the money into their car trunks, pockets and freezers.

The Madoff Ponzi Scheme may cost a lot more than 50 billion. Obviously, the SEC has been rendered useless and incompetent. Cox, the head of the SEC, admits they (the SEC) failed. The CTFC, Congress and all regulatory have failed to protect the consumer/investor.

CHANGE!
12/17/2008: Mary Schapiro was named to head the SEC and Gary Gensler to head the CTFC. Wall Street, Bankers and politicians are happy. The same people who helped caused the economic disaster are still in control. But, you can’t please everybody. Why did Obama pick these people? (Check Schapiro and Gensler on Google)

What does it mean? Don’t look for any major reforms that will help the public. Look for those in power (Wall Street, Banks, Brokers, etc.) to do more of the same with greater impunity. It means business as “usual”. It means more of the same and maybe worse. Not good!

Ticking time-bombs:

Annuities: It is becoming apparent that the investments made by insurance companies (with annuity money) are not in US Treasury or FDIC or truly AAA securities. Instead they are in mortgage backed securities, real estate loans, sub-prime loans and other "toxic waste". Eventually, there will be a problem. When the news comes out, run for cover. What does this mean? It means GET OUT OF ANNUITIES. Be first! If Annuities crash, be safe. If Annuities don't crash, no great loss. Be safe, not sorry.

Ticking time-bombs cont'd:

SIPC. A Federal judge said SIPC will cover the Madoff investors. SEC, Treasury, Politicians, etc. say OK (so far). What does this mean? It means more claims on SIPC to come and another potential $ trillion "bailout". It means more to come.

And ... Investment firms, brokers, etc. have separate insurance for accounts above the SIPC limit. The Insurance Companies that issue the insurance are questionable at best. What does this mean? Do you have an idea? Help!


January Effect Ideas: go to ... http://seekingalpha.com/article/110970-how-to-play-the-january-effect-with-cefs?source=email

Briefing Outlook: Briefing (15 DEC 08) Economic conditions continue to worsen. Our forecast for fourth quarter real GDP has been lowered to an annual rate of -4.5%. Consumer spending and Business investment is dropping sharply. Nonresidential construction is collapsing and could turn into a rout.
Macro-economic trends are being significantly worsened by the negativity in the Media and scare tactics associated with the various bailout and stimulus proposals.
Any economic optimism is based on the idea that 535 elected congressmen will get together and make efficient decisions on where to invest in infrastructure instead of looking out for (their) political interest, count us as skeptical. Hah!

Bottom line: Outlook is BAD and getting WORSE!

Ideas:

L.M. and D.R.: Believe $$$ is worthless. Idea: Buy foreign oils and assets REP, TOT, PBR, BP, BHP, RTP, RIO, GLD, SLV, etc.

J.G.: Is there opportunity after deals go kaput? Look at HUN and BCE. Take advantage of “Busted” deals, takeovers, mergers, etc. (Watch List)
(BCE, CES, MIR, NWE, HUN, NRG, IRF, etc.) They drop far below asset value when the deal “busts” or is put on “hold”. Some offer good dividends, share “buybacks” and the deals are frequently resuscitated within one year.

R.V: Global Perspective and Outlook. go to .. https://www.mfs.com/wps/portal/!ut/p/c0/04_SB8K8xLLM9MSSzPy8xBz9CP0os3j_QKNAf3MPIwN342BnAyMXE39j01BjQ5cQY_2CbEdFABE9QaM!/?contentAreaId=1209&contentId=templatedata%2Finternet%2Farticle%2Fdata%2Fnews%2Fglobal_perspective

Site: Seeking Alpha has a lot of ideas and insights. http://seekingalpha.com
You can sign up (free) and choose what you want.

Site: Frontline offers market perspective and insights. Sometimes good and sometimes not. It is free and worth every penny. http://www.2000wave.com/gateway.asp

SEND IDEAS, SITES and COMMENTS

10 December 08 8:00 AM

No change in outlook.
The recent up move is nice. The follow-up down is not nice. We may have a “bounce”. I don’t know. The news going forward is getting worse. This rally is an opportunity to raise stops and switch to safer income producing investments. Stop loss orders work!

Technical Matter:
Many Hedge Funds, Investment Partnerships and Pension Plans provide liquidity quarterly. That means investors who want their money out must wait until the end of the quarter. DEC 31. The Hedge Funds, etc. that don’t have cash or haven’t sold, will be forced to sell.
Many workers who lost jobs will “roll” or withdraw their Pension Plans, 401Ks, etc. Many people will be forced to look at their IRAs, 401Ks, etc. at the end of the quarter. This is likely to generate a lot of selling pressure.

Our Government is printing money at an insane rate. The stated obligation is now over $7 trillion. That doesn’t include private and public pension plans, City, State and Municipal deficits, etc. A true amount is many times the $7 trillion. The amount of money (potentially) has increased by 700%. Our political leaders make Mugabe and Zimbabwe look good.

Recently the $U.S. has gained value as a “flight to safety”. When the realization hits that the $U.S. is becoming worthless, $U.S. will lose value and we will be faced with an inflationary spiral.
So …. Ideas needed: How can we take advantage? How can we hedge against a declining dollar and inflation? What to do with money?

From S.K.: Technical + commentary advisory. It is supposedly very good.
Go to... https://www.technicalindicatorindex.com/Default.asp
Bad news = it cost $. Good news= 30 days free trial. (I have not used it yet.)

From V.K.: Market advisory. Go to... http://www1.blackrock.com/eIndex.aspx?ln=36499&cmty=ind&m=ind_3&m1=ind_3_1&lo=4&eid=37536

From B.S.: Obama will push Infrastructure, Environment, Utility grid build-out, Water, etc. A worldwide NYSE class act is VE. Go to … http://www.veoliaenvironnement.com/ (also it is a $U.S. hedge)

From D.R.: http://www.2000wave.com/ Frontline. Free weekly market and economy advisory. Sometimes very good.

Sites:
Fixed Income, preferreds, convertibles, etc ….
http://quantumonline.com

Closed-end funds, NAVs, composition, ideas … http://closed-endfunds.com/

Investment Tech Newsletter. https://home.investmentnews.com/
Some good ideas. Some not. Free.

Hedge Funds must dump. Interesting view and ideas, go to …

http://briefing.com/GeneralContent/Investor/Active/ArticlePopup/ArticlePopup.aspx?SiteName=Investor&ArticleId=NS20081208111435TakingStock


Wanted! Obama and Congress promise infrastructure stimulus in 2009. What stocks, ETFs, groups will benefit?

Also … Sharing this site with intelligent colleagues who have ideas or insights or sites to contribute is a good thing. So … if you work with someone or know someone, invite them to join us.

News! T-bills at 0.001%. What does this mean? It means that anyone with any brains is scared. It means that people believe Congress, the US Economy, our Financial Systems, etc. are out of control.

News! EP (El Paso) sold $500 million 12% 5-year notes at a 12% discount to yield 15.25%. Much of the money is to refund 6.38% notes. What does this mean? (See above.)

Ideas and Outlook DEC 7 2009

IE Outlook + Ideas

The I/E Outlook will be published as a Blog instead of a newsletter. Why? Easier access, greater distribution and better feedback. The negative is that you will have to go to the letter instead of it coming to you. Go to .. http://ideasoutlook.blogspot.com/

The current outlook for the US and world economies is terrible. The people in charge (government, politicians, the financial sectors, most economists, the media, “experts”, etc.) are making things worse. The U.S. is printing and giving away money. They are making the U.S. dollar worthless.

Stock Market(s) outlook:
Near term (3-6mo.) Short term “bounces” may happen. Short-term “bounces” should be used as an opportunity to raise cash or raise “stops”. Probability is for a continuing down trend with high volatility. There is a lot of “bad” news out there. A very severe drop during the next 3-6 months is very possible. Severe drop? 50+%
Intermediate term (6-12mo.) there is no more than a 35% chance of a “bottom” or upturn. Damage is still being done. Economic numbers will be dismal.
Long term (1- 1½ yrs) there is less than a 50% chance of a meaningful change or rise. Over the coming year (2009) the probability is for continued weakness in world economies and declines in financial assets, commodity prices and real estate. The probability of world-wide financial meltdown or “crash” during this time period is real and more than 35%.

Real Estate Outlook: The Real Estate Industry, Government, Investment “gurus”, etc. try to be positive. The “stimulus packages” are pushing mortgage rates down now, but won’t continue forever. Rates will rise as lenders expect greater risk and continued falling prices.
Real Estate taxes will probably rise sharply to make up for Local and State tax shortfalls. Property owners can’t move their property to another location. The best they can do is sell, move or do the traditional, “bribe” your local politician.
Probability is a further continued 10-25% value drop over the coming year. There is a good possibility of a repeat of the 1990-92 collapse when some values fell by 50% or more.

Interest Rates: Near term trend is obviously down. Rates cannot go lower than zero. The U.S. and foreign governments are flooding the markets with money. At some point, foreign and domestic lenders will realize that all those dollars we are issuing and borrowing are backed by nothing and will never be repaid. When that happens, they will stop buying U.S. Treasuries and lending us money. At that point the dollar will fall and interest rates will start to rise. When? Probably 3-9 months.
Recent events:
The $700 billion or $2 trillion or $7 trillion “bailout” is making the problems worse. The money disappears almost as soon as it is allocated. No one is quite sure where the money is going. One thing is sure, a lot of it ends up in the pockets of politicians and their friends. A lot of the money has already gone (despite denials) to pay “bonuses” and “retention incentives” to those who caused the problems, to make “whole” Sovereign Wealth Funds, Hedge Funds, private investment pools, etc. (The Sec. Treasury can supply the information).
The Treasury gave AIG another 25 or 50 billion, Citigroup and other banks endless billions and just about any entity with political influence anything they ask for. The total is now over 150 billion. (The top people at AIG used part of the first 25 billion to have a $400,000 party in addition to bonuses and other “giveaways”.)
Congress and the Treasury now want to give another 25-80 billion to GM and Cerberus Capital. Cerberus Capital is a private investment partnership that owns Chrysler and GMAC.
The beneficiaries (partners in Cerberus, relatives, etc.) include past and current members of Congress and at least one President. Carlyle Group will also benefit. Carlyle Group also includes past and present U.S. government officials, relatives, etc.
Cerberus also is trying to convert into a bank so it can get more money directly from the Treasury and have the US Treasury guarantee part of their obligations and bad investments.
Government (Sec. Treasury, Fed, Congress, etc.) keeps changing their public statements almost daily. Nobody (including, Congress, Paulson, Bernanke, etc.) knows what they are doing, how much money has disappeared and where the taxpayers money is going. The only “plan” seems to be to steal as much money as possible.
The most recent “scam” is to declare a company a “bank”. This allows them to gain access to US Treasury money.

The stock markets continue to be wildly volatile and manipulated. Congress, the current Administration and regulatory agencies refuse to enforce the rules and regulations that are supposed to protect our markets.
Investors looking to Obama for help or leadership are disappointed. He explains inaction and silence by muttering, “There is only one President at a time”.

NYTimes (12/03/08) The chairman of China’s sovereign wealth fund said here on Wednesday that China had no plans to further invest in Western financial institutions, nor did it have any plans to “save” the world through economic policies.

The U.S. Government Accountability Office reported that there is no or inadequate oversight of how Treasury is giving away money. This will be one million times worse than when Bremmer gave away bundles of $1 million in Iraq. $millions to $billions to $trillions.

What to do right now? Help! We need ideas!
Cash (FDIC protected) is good. T-Bills have a lousy rate of return, but they are safe. Liquidity is important.
Keep short-term! If foreign buying stops, who will buy our Treasuries?
The market will go up, stay the same or go down. If it goes up, you may lose part of a minor move. If it stays the same, you will lose worry, loss and agita. If it goes down, you are a genius.

Ideas:
From V.R. Look at BIDU. China will survive and prosper.

From C.S. Many utilities are selling below their replacement costs. He believes “takeovers”, mergers and buyouts will accelerate. Suggestions (some are in play now) include; CES, MIR, NRG, ED,

From J.G. Convertible preferreds selling below redemption price and offering good yields include; AESprC, EPprC, CEpr, CITprI, CITprA. Many are down sharply because mutual funds are forced to sell to meet redemptions. Opportunity is income plus upside potential.

From: R.T. Look at SKS. He estimates the shares are well below the value of their real estate. Good candidate for buyout or takeover.

For daily updates, go to … http://www.marketwatch.com/ (skip the ad)

For daily buy/sell/hold, and new ideas, go to .. http://briefing.com/Investor/Public/Calendars/UpgradesDowngrades.htm

Please send IDEAS, LINKS, etc. Send to actnow98@aol.com

More to come.

DEC 7 2008