by Addison Wiggin & Ian Mathias
- China’s quiet government filing: Sino-SWF building huge stock portfolio of U.S. companies
- Dan Amoss on how to profit from the Fed’s anti-dollar campaign
- Chris Mayer says “the next few years should be good times” for those who own this unloved commodity
- Plus, irony to the extreme: Mortgage Bankers Association underwater on its D.C. headquarters
13-F filings. Usually, they’re like watching grass grow — unless someone from Berkshire Hathaway is involved. Today is a little different.
In short, 13-Fs are the form institutional investors have to send the SEC when moving $100 million or more. This 13-F, dear reader, is one everyone should see:
(For larger text click here.)
These investments weren’t all made in the fourth quarter of 2009. And they total less than $10 billion. But still… the biggest holder of the US national debt is slowly purchasing a very diverse set of U.S. enterprises.
China gained another “world’s biggest” title today, too. It’s officially the “world’s biggest exporter.” Germany, the old No.1, announced a 2009 total of $1.1 trillion in exports this morning. China, which announced its 2009 total last month, had $1.2 trillion.
Meanwhile, the U.S. is roaring ahead with its biggest export; debt. The American Treasury will auction $40 billion in 3-year notes today, $25 billion in 10-years tomorrow and $16 billion in 30-year bonds the day after.
Our current marketable debt stands at a record $7.27 trillion, roughly half our annual GDP.
“If the U.S. government had slowed the level of debt accumulation just a little bit in 2009,” Addison wrote in a note this afternoon ”GDP for the year would have been negative – even with the much ballyhooed 4th quarter increase.
“According to the federal budget, government spending for fiscal 2009 jumped from 21% of GDP to 28.1% of GDP — or growth of 7.1 percentage points. According to the same budget, GDP for all of fiscal 2009 climbed only .1%. So it stands to reason if government spending hadn’t grown 7.1%, the GDP would have fallen 7%.
“And that 28%, by the way, is significant. When we talked to Paul O’Neill for I.O.U.S.A., he thought the economy could bare 22-23% and still grow — as was the case at the end of the Clinton years. But he warned about going any higher. We’re much, much higher right now.”
“U.S. policymakers don’t understand the roots of the crisis that came to a head in late 2008,” our Dan Amoss writes.
“The Treasury Department still doesn’t appreciate that we lived through the building and bursting of a credit bubble aided and abetted by a reckless Federal Reserve. So the ‘remedies’ pushed by policymakers have not adequately addressed the root problem of bad debts, and are doing little more than debasing the U.S. dollar with endless deficits and money printing. They’re issuing trillions in new government liabilities — liabilities (dollars and Treasury securities) that will dilute the value of the existing stock of private savings. This will ultimately put upward pressure on consumer prices.
“Ben Bernanke will likely resume quantitative easing soon after the March 31 expiration date, and maintain this policy as long as the bond market vigilantes remain in hibernation. This policy will reaccelerate the debasement of the U.S. dollar. So stay tuned for a possible new recommendation sometime over the next couple of weeks: calls on GDX, the Gold Miners ETF. GDX is reaching an oversold level, and the gold miners will soon be reporting blockbuster earnings. This would be our third set of bullish trades on GDX, after having bought GDX calls in November 2008 and April 2009.”
Those trades, we note, pulled in profits of 330% and 68% for Dan’s Strategic Short Report readers. If you’d like to wage your own bold bets against the mainstream, now’s a great time to get Dan’s help… two-month trials of Strategic Short Report are available here.
Yet another reason to seek out Dan’s help: The Dow fell below 10,000 again yesterday. After falling 1% Monday, the stock market is back to its lowest level in three months and down 7.6% from its 15-month high set in January.
Interestingly, this is the Dow’s 57th trip across the five-figure mark since first striking 10,000 in 1999. As the Journal puts it, “effectively meaning it has made no progress in more than 10 years.”
Heh, yep.
But a stock rally is in the cards today — the Dow and S&P opened up over 1% this morning. The speculation du jour is that the European Union will write Greece a fat check… word leaked yesterday that ECB President Jean-Claude Trichet is leaving meetings in Australia a day early to come home and meet with EU officials over a Greek battle plan.
Heh, guess it hasn’t occurred to anyone that the emergency plan might be to kick Greece out of the euro club. Unlikely, but stranger things have happened…
The Trichet rumor mill is helping pull the euro up today, too. The multination money is up a cent from Monday’s low, to $1.37. Thus, the dollar index is down today, almost a half a point from yesterday’s high, at 80 even.
So if the dollar is down, gold must be up. Indeed, the spot price perked up about $10 this morning, to $1,075.
Oil’s up a buck, too, at $72 a barrel.
“The next few years should be good times for those that produce uranium, the feedstock for nuclear reactors,” Chris Mayer reports. Chris spent time in Australia last week with some key uranium insiders, including Rick Rule and the co-founder of Cameco. These are some of his findings:
“In looking at supply and demand, it seems clear that we’ll need more uranium than we mine now. At least if we expect to run all the power plants that are on the board. The World Nuclear Association (WNA) reports there are 50 nuclear reactors under construction around the world that’ll need some 23 million pounds of U308. (U308 is the oxide you get when you mine uranium ore.) There are 432 more on the planning board. Based on these projects, the world’s nuclear power production will more than triple from 2008–30.
“Not surprisingly, China has a big role to play here. Its power needs are growing dramatically. China has only about a dozen reactors today, which supply about 3% of its power needs. But the growth curve is steep. The WNA says there are 15 more under construction, which will more than double China’s nuclear capacity. It has another 114 either planned or proposed. If everything gets built, that will be nearly a fourfold increase.
“Also, I want to say a few words about the uranium mania of 2007, which cracked in 2008, along with most things. In 2007, there was certainly a uranium rush. Besides the small circle of established players that were actually producing uranium, there were over 750 exploration companies created to look for more. Almost all of these flamed out in 2008 as the uranium price sank and the credit crisis finished off the wounded.
“Thinking in contrary fashion, it looks to me that uranium is due for an upturn. Investing well often requires you to buy what is out of fashion or what has done poorly. Uranium is a pretty good candidate, as the price of U308 has done nothing but fall since peaking in the summer of 2007.”
Chris hasn’t told his readers which uranium player he prefers yet. If you want to be on board when he does, better subscribe to Capital & Crisis today.
Remember the Burj Khalifa, AKA Burj Dubai? Well, it’s already been shut down.
The world’s tallest building was indefinitely closed yesterday a month after its grand opening. The Burj’s handlers cited “technical issues with the power supply” and “unexpected high traffic,” and battered the doors.
The first tenants are supposed to arrive in just a few weeks… looks like another speed bump for the great hope of the Middle East.
Last today, some of the finest irony in recent memory: The Mortgage Bankers Association is officially WAY underwater on its Washington headquarters.
“We have come to the inescapable conclusion that owning our own building was the smartest long-term investment for the association," MBA President Jon Kempner said in a 2007 press release right after the MBA bought its 10-story, glass-plated building in downtown D.C.
Heh.
Turns out it was the stupidest long-term investment for the association. Not only did the group buy it at the peak of the commercial real estate bubble, but it borrowed money to do it… of the $79 million sticker price, all but $5 million was financed.
Late last Friday, they sold it (double irony: to CoStar, a commercial real estate data firm) for $41 million. That’s a roughly $30 million gap the MBA will have to plug… ouch.
Way back when, at the tender age of 20, your editor was a clerk for the Baltimore City Public Defender’s Office. Essentially, I was sent to jail every day to interview indigent felons — or from their perspective, I was sent there every day so they could have fun scaring the hell out of me.
One takeaway: Ask any crack dealer, no matter how big or small, if he uses the junk he’s selling and you’ll get a response something like “What are you, f***ing nuts? Hell no.” Even dope dealers know better than to get hooked on their own product.
“First, I must say of all the dozens of e-mail newsletters I receive, The 5 Min. Forecast is the only one I always read,” a flattering reader writes. “Great service, remarkably clear writing and incredibly insight. You are to be commended.”
The 5: Thanks, that’s nice of you.
“My comment is directed toward the ‘strategic default debate,’” the reader continues, getting down to business.
“The current situation is unique; it’s more like a nationwide fraud. Its like agreeing to buy a bar of gold every year for the next 30 years, only to find that this ‘gold’ is actually 50% lead, and thus worth only half of what you are paying for it. And then finding out that not only were the miners involved in the scam, but the people who certified the gold as pure and the people who knocked on your door and ran the ads and sold it to you. All of them making billions in bonuses to keep the fraud going. And then, as a final insult, not only are you unable to get back the money you’ve already spent, but you are told you still have a moral obligation to keep paying those who scammed you.
“My point is this: Not only is it certainly moral to walk away from a mortgage that was essentially a fraud perpetrated on you, it is, in fact, immoral to continue paying those who created the fraud in the first place, thus rewarding these criminals for their bad behavior.”
Best,
Ian Mathias
The 5 Min. Forecast