by Addison Wiggin & Ian Mathias
- Jobs report enters new realm of silliness… drastic revisions and dubious data below
- Dollar soars while gold tumbles… why Byron King isn’t selling
- Chris Mayer on a coming resource boom… that could even put Middle East oil to shame
- Plus, readers raid the inbox… your thoughts on “jingle mail” and investment optimism
“Facts are stubborn things,” the saying goes. “But statistics are more pliable,” Mark Twain famously concluded. The U.S. government confirmed Twain’s bias this morning… again.
The U.S. economy shed 20,000 jobs, the BLS reports…
…but the unemployment rate dropped significantly — from 10.1% to 9.7%
…even though the BLS also revised in an extra 1.2 million lost jobs since the recession began (oops!).
Yesterday, there were 7.2 million victims of this recession. Today, there are 8.4 million.
December’s job losses alone were revised from 85,000 lost jobs to 150,000. We’ve said it before, but it’s still shocking when presented with such remarkable proof… with margins of error this large, there’s little point in paying attention at all.
Traders could give a hoot. Upon the 8:30 release of the jobs report, futures on major stocks indexes went right to break-even. The S&P has been drifting down since its flat opening.
That’s especially interesting given yesterday’s steep decline:
Sovereign debt woes in the eurozone created a sort of worldwide margin call yesterday. Rumors are flying left and right over the fiscal fates of Portugal, Greece and Spain… regardless of the outcome, traders took their bets of the table in nearly every sector. And it looks like there will be no bounce back today.
The upside? Dollar strength!
Huh? We’ve been suspecting a return to the trend that kicked the dollar up 22% in the Panic of ’08. This morning helps confirm the trend.
The euro is down to $1.36 as we write. Not exactly cheap if you’re planning a European vacation, but still at its lowest level since last May. The U.S. dollar index remains at 80 today — its highest since July.
Of course, that’s not good for gold investors… unless you’re inclined to look at this as a buying opportunity. Heh. The spot price got a lot more enticing yesterday, down about $45, to $1,060 as we write.
“If President Obama and the U.S. Congress were cutting taxes,” Byron King assured his readers yesterday, “eliminating regulations, spurring energy development and doing things to help the U.S. economy grow, I’d be selling our gold miners — and even some of the physical gold. There would be other and better opportunities, so I’d take money off the table.
“But the fact is that our government leadership isn’t doing that. Indeed, we’re looking at higher taxes this year, next year and into the future. Government payrolls are increasing, which means more government mouths to feed, as well as more regulations from the regulators…
“Meanwhile, government spending is going up, up and away. Government borrowing is going through the roof. What do you think will happen to gold and silver prices over the long haul? And what about the shares in mining companies? As the Mogambo Guru says, ‘Right. Yes. Exactly. You can go to the head of the class.’”
Considering the bloodbath for equity investors yesterday, oil is not doing too bad. A barrel of the stuff is down just a buck, to $73.
“Australia is on its way to becoming to natural gas what the Middle East is to oil,” Chris Mayer notes, fresh back from leading a tour of investors down under. “This could become Australia’s biggest resource boom yet.
“Asia is the fastest growing market for liquid natural gas (LNG). Currently, Japan is the largest buyer. Japan and South Korea together make up 53% of current global regasification capacity. (That is, the ability to import LNG and turn it back into a gas for consumer and industrial use.) But demand elsewhere in Asia is catching up:
“So how will the market meet this surge in Asian demand? That’s where LNG from nearby Australia comes in. The amount of money going here is just staggering. The Gorgon project alone — a joint venture between Exxon Mobil, Chevron and Shell in Australia — will cost some $50 billion. It already has supply contracts from India and China worth $60 billion and will surely get more before it opens in 2014.
“There are other firms pushing ahead with aggressive LNG ambitions. Woodside Petroleum, an Aussie oil and gas company, wants to be the leader in LNG by 2020.
“As a result of all this activity, Australia will challenge Qatar as the world’s largest LNG exporter. One analyst quoted here said: ‘The numbers are phenomenal. When you look at them, it’s mind-boggling. It’s going to be LNG boom times.’
“It’s quite possible that in the next decade, LNG will surpass coal as Australia’s most valuable export. The government is certainly supporting LNG projects — it will add a gush of tax revenues to its coffers. Look at what oil did for the Middle East; the same kind of thing could well happen for Australia.”
And what happened to early investors in Middle East oil could happen to the first believers in Aussie LNG, too. For a meager price of admission, you can get Chris’ favorite ways to play this coming boom, right here.
Another potential safe haven for a coming correction: the VIX. The volatility index shot up about 20% yesterday as stocks fell. Now at 26, it’s still way below its crisis high of 89 back in October 2008.
China hit U.S. farmers with a chicken tariff this morning. The Chinese first hinted at this new duty back in September when the U.S. announced its tire tariff… evidently the jawboning we mentioned yesterday has pushed China over the edge.
Starting next weekend, U.S. chicken producers will have to pay tariffs ranging from 40-80%.
Last, here’s a crash-proof investment fitting for this weekend: Super Bowl tickets. According to Stephen Schork of The Schork Report, Super Bowl ticket prices have risen between 13,920-43,300% — depending on the seat – since Super Bowl I in 1966.
Geesh… we’re in the wrong business.
“Mailing in the keys is strategic in just a few states,” a Reserve member writes in response to our Jingle Mail Threshold, “where the mortgage holders cannot come after the defaulting homeowners. But in most states, the mortgage holder/bank can come after you for the deficit difference — i.e., the difference between the mortgage balance and the final hammer price, which can be very significant.
“The banks are starting to enact this action with a vengeance now, because they see what’s in store in having to significantly reduce the asset valuation on their balance sheets. I think you might want to take care in discussing this issue, as you make it sound like everyone can just mail the keys in and there will be no consequences. It’s hilariously ironic that California is one of the only states that can literally use the ‘jingle mail’ solution; you know, these ‘chosen ones’ are so fiscally responsible in a general sense.”
“Whatever happened to integrity?” another asks. “This is pretty simple: When you borrow money for a home, you sign a mortgage AGREEMENT, a promissory note that you will repay the debt. To walk away when you can still pay your mortgage makes you a thief and you should never be trusted or afforded credit again — nor should the banks allow you to just walk away. These banks should sue to recover damages. They should also publish your name in the paper every week. Why not just walk away from your car note, your furniture note, etc.? Why pay for anything if there is no downside to not doing so?”
“I’m a real estate broker in Nevada,” another writes. “The only regrets my investor clients have is not defaulting earlier on their purchases. Some have been able to negotiate short sales, and those who haven’t have walked away anyway. A number of these investors refinanced before the dramatic collapse and paid off second deeds of trust, anticipating difficulty in being able to refinance in the future, possible increases in interest rates on their adjustable seconds and potential appraisal issues. No one anticipated condos (in particular) that sold for $170,000 dropping to $55,000 and the subsequent drop in rental rates.
“Those who refinanced thought they were doing the right thing at the time, but after feeding the beast for 12 months and seeing the mess at the top of government, tax cheats in high offices, unsavory business practices by financial institutions, etc., no one I know has any moral regrets about strategically defaulting.”
“Having been in medical research now for 35 years and as a past head of research for several national biotech firms and genetic research firms,” writes another reader, shifting gears to discuss Patrick Cox’s optimism regarding the future, “I fully understand and appreciate what Patrick Cox is uncovering and saying. The key issue, in my opinion, is the implicit targeted investment time frame. If you are looking out five years, maybe 10, Patrick is going to make you a lot of money.
“This is similar to my Omaha buddy Warren Buffett (who looks out even further). However, if like me you think the market will be at least 50% lower in less than 24 more months, taking all boats direly down with it, then a more nimble strategy of contra ETFs for the next 18 months makes more sense, with a buy-in for Patrick’s recommendations at pennies on the dollar of their current prices thereafter.”
“The reader who criticized Patrick Cox for being too optimistic in his predictions of the future,” chimes in another, “forgets that after World War II, U.S. exports made up only around 5% of GDP and didn’t increase dramatically for years. The growth came from internal demand, rather than exports.
“Patrick is dead right in saying that the U.S. now has even better prospects. According to the World Bank, exports currently account for something like 11% of GDP, which is almost a high. A growing international market can only be a good thing for the U.S. economy.”
Cheers,
Addison Wiggin
The 5 Min. Forecast
P.S. One tiny California company Patrick has been writing about frequently is ready to release some important news today. News that could cement its future of attaining virtual Wal-Mart-style control of its growing field.
The company is expanding its operations and sports a coalition of Russian scientists who 25 years ago couldn’t have worked together. These are brilliant folks — and yes, the stuff they’re doing is new, is only in testing — but if you agree with Patrick’s view — you’d be a fool not to snoop around in these weeds. “It’s about to get exciting,” says Patrick. “Today, you can buy the brilliance of a man akin to Sam Walton 60 years ago.”
We’ll keep an eye on the company’s news release. In the meantime, I strongly suggest you consider getting the next four months of Patrick’s ideas for free. The free four month offer concludes this evening.