Dave Gonigam – December 1, 2011
- Online sales taxes, almost a reality now… ironically, thanks to the biggest online retailer
- Lousy jobs number + good manufacturing number = stocks drifting after yesterday’s Fed-induced rush
- Charting failure: How to profit when the “expert consensus” blows its forecasts again and again
- Frank Holmes with powerful evidence that high gold prices aren’t dissuading buyers
- The real story behind the fight over the payroll tax cut… claims of extraterrestrial intervention in the gold market… reader inquiries about “The 5 Minute Income BOOST”… and more!
Here comes the biggest thing yet in our ongoing chronicle of “new taxes and weird fees”: It’s looking a lot more likely this morning that you’ll soon have to pay sales tax when you buy something online.
And the irony is that the biggest online retailer — someone you’d think would put up fierce resistance — is behind this all the way.
In every Congress since 1999, someone’s floated a proposal to require online retailers to collect sales tax.
The rationale is it would “level the playing field” with mom and pop local businesses… and deliver as much as $12 billion a year in additional revenue to state and local governments.
The idea has gone nowhere… until now. “Amazon’s willingness to get behind the proposals — combined with pressure from states for new sources of tax revenue, and bipartisan efforts in the House and Senate — has given the movement more traction this year,” reports today’s Wall Street Journal.
Hmmm… Why would Amazon get behind something like this? Two reasons…
- Amazon can throttle its mom and pop competition online. “The Internet is the only place where someone like us can be next door to an Amazon,” Stacey Strawn, a purveyor of sterling silver trinkets in Virginia, tells the Journal. “If they don’t do something, the big retailers will eventually take over online shopping. And that would be a huge loss”
- Amazon has developed proprietary software that would make it easier for online retailers to keep track of the literally thousands of sales tax rates that vary from one ZIP code to another. “Amazon,” the firm’s vice president of public policy told Congress yesterday, “is prepared to make its technology available as a service to help sellers by collecting sales tax for them.”
For a 2.9% surcharge, he failed to add. “Rather than being hit by new sales tax regulations,” writes Maggie Severns of the New America Foundation, “the company is now using the regulations to profit.”
No telling exactly when Congress will get around to voting on this… but consider yourself on notice. If the “new taxes and weird fees” haven’t come around to your neighborhood yet, it’s only a matter of time.
The stock market’s sugar high, fueled yesterday by the Fed shoveling dollars into the European banks, is wearing off today.
Either that, or the market’s marking time until tomorrow’s October jobs report from the Labor Department. The major indexes are off fractionally.
In advance of the jobs report tomorrow, first-time unemployment claims topped the 400,000 level last week for the first time in three weeks.
At 402,000, the number takes away some of the shine that came with yesterday’s sunny private payrolls report from ADP.
This being the first of the month, we’re getting a read on the pulse of manufacturing worldwide. In short, factories are slowing down nearly everywhere but the United States.
For each of the following indexes, the number 50 marks the dividing line between a growing manufacturing sector and a shrinking one:
- China: Slipping into contraction territory for the first time since February 2009. The purchasing managers index rang in at 49.0, down from 50.4 in October. Now we know why yesterday the Chinese central bank lowered bank reserve requirements for the first time since 2008
- Eurozone: Sliding further into contraction territory, from 47.1 to 46.4 — the fourth month of shrinkage, and the lowest reading since July 2009
- United States: The ISM manufacturing index moved up last month to 52.7 — the highest reading since June. The new orders component of the index was especially strong.
The U.S. number exceeded the most-optimistic estimate of dozens of economists surveyed by Bloomberg. No surprise: The “expert consensus” gets it wrong all the time. But there’s actually a way to profit from this, as our own Abe Cofnas has uncovered.
“Economic data releases come out all the time,” says Abe. “And as you know, if the results aren’t what the consensus expected, the markets can move big. So we can define a surprise as a result that deviates from an expected result.”
Citigroup actually has indicators made up of these Bloomberg predictions, called the Citigroup Economic Surprise indexes. “If the release surpasses the median estimate,” Abe explains, “the result is a positive surprise — shown on a chart as moving upward. If the release is less than the median estimate, the result is counted as a negative surprise, and the line on the chart goes down.”
When you plot that line relative to major market indexes, you get some interesting results. Exhibit A: The S&P 500…
“The Surprise index bottomed out in late 2008 before the S&P 500 bottomed out,” Abe notes. “It recently bottomed out again, but it has moved up. In other words, there has been a shift. Economic data have surpassed the consensus estimates in the past few months. The crowd of economists had been wrong again, and overly pessimistic.”
“The Citigroup Economic Surprise indexes reinforce our approach to trading the markets using a one-week time frame,” Abe concludes. “Every week, data releases engender pessimism and optimism.”
“We don’t have to choose sides. We just need to be in the action and ride the volatility on what is clearly a pessimism-optimism wave.”
In choppy markets such as we’ve had since August, Abe’s strategy delivers big short-term gains driven by traders’ own fear and greed. While the stock market has gone essentially nowhere, with huge swings a routine occurrence…
…Abe’s delivered regular gains of 72%… 125%… even 161%.
And all these gains play out in four days or less in the market Abe follows, unique among North American advisories. Intrigued? Much more here.
Here we go again. Even as Uncle Sam could once again bump up against the debt ceiling before year-end, Congress is at odds over extending the payroll tax cut.
As noted yesterday, there’s broad agreement about continuing it for a second year. But there’s no agreement on how to pay for it: Democrats want a “millionaire’s tax” while Republicans want to freeze federal worker pay for three years.
As with last year, expect a partisan food fight that will end with an extension of the payroll tax cut… and no more money put into the Social Security “trust fund.”
Of course, no money will be pulled out of it, either. It wasn’t this year. That’s because the “trust fund,” as former comptroller general and I.O.U.S.A. protagonist David Walker observed, “can’t be trusted and isn’t funded.”
This year, Congress resorted to an accounting fiction, borrowing money to fill the gap and adding to the deficit.
“On paper, [the payroll tax cut] does nothing to Social Security,” says Andrew Biggs of the American Enterprise Institute. “It is just as solvent as it was before. But that’s not the sort of bookkeeping that you would do in the private sector.”
True… In the private sector, that sort of bookkeeping would earn you a date in Club Fed.
We’re not sure when the current Social Security promises will be broken… but broken they will be, for sure. Much more on the reasons why — including another sneaky fix to the cost-of-living increases — tomorrow…
Gold is retreating a bit after yesterday’s big run-up. At last check, the spot price is $1,739. Silver’s holding up better at $32.87.
“In an uncertain era in which many asset values are declining,” says U.S. Global Investors chief Frank Holmes, “gold has thrived.”
“Gold prices averaged $1,700 an ounce during the third quarter of 2011, 39% higher than the same time last year and 13% above the previous quarter,” says Frank, citing figures from the World Gold Council.
Note in the following chart how demand grew in the third quarter — topping 1,000 metric tons again — even as the price rose steadily.
“In total,” Frank goes on, “investment demand increased 33% on a year-over-year basis to reach the third-highest quarter of investment demand on record, says the WGC. The increase was broad in scope. Investment in gold bars and coins jumped 29% year over year, while holdings in gold ETFs reached an all-time high.
“All global markets other than India, Japan and the U.S. experienced gains in investment demand; many of them (except Thailand and Saudi Arabia) saw double-digit increases.”
We’re fond of citing factors like paper money, high demand and diminishing mine supply as reasons the gold price has risen nearly sixfold over the past 10 years.
We confess until this week we hadn’t considered the possibility of extraterrestrial involvement.
Aliens have been stripping the Earth of gold for centuries, according to the organizer of a UFO Science and Consciousness Conference held last week in South Africa.
“South Africa has been dubbed as the cradle of humankind and the place where all life form began,” says Michael Tellinger. “We have scientific evidence that there was physical life before humans which were African knowledge keepers and custodians of secret knowledge.”
Tellinger believes these extraterrestrials first arrived 300,000 years ago, cloned their genes and began mankind. “They came to Earth looking for gold,” he says. “We are all still obsessed with gold.”
“There’s a battle for Earth by some interesting dark forces,” Tellinger goes on. “All the governments in the world are puppets and instruments to implement the will of a small group of individuals. The royal political bloodline goes back thousands of years.”
Just one question we have, which Mr. Tellinger did not address in the South African media: Does this mean the aliens absconded with the gold in Fort Knox?
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Sound intriguing? We’re 24 hours from launching Jim’s premium income-investing advisory… one in which he guides you step by step through “The 5 Minute Income BOOST” as well as “Income SAFE IOUs”… and one more technique he details in today’s Overtime Briefing. Read on…
The 5 Min. Forecast
Imagine an asset class that you can buy and sell as easily as a stock… something you can get into with only a small grubstake… but that delivers 6-8% yields.
Sound impossible? Not at all, as our income specialist Jim Nelson is back to explain…
Part Four: Stock Market Giving You Ulcers?
Try This Instead…
Try This Instead…
Today I’d like to introduce you to the final secret for generating high-income payments… in a zero-percent interest rate world.
This secret is something I call “Elite Dividends.”
While “Elite Dividends” do trade on common exchanges, they’re NOT stocks in any normal sense of the word. As you’ll see today, they normally pay much higher income payments (double to triple those of common stocks). And they’re also much less volatile than stocks.
And while they do contractually promise these large income payments, they’re also NOT corporate bonds. That means you won’t need thousands in savings to get started.
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Despite these benefits, I’ve never seen this secret talked about on nightly news. And unless you know exactly what you’re looking for, they’re virtually impossible to find on mainstream sites like Yahoo Finance! or Google.
That’s because “Elite Dividend” issues are small. They can’t be pitched to herds of investors. After all, that’s one of the reasons I call them “Elite.”
But once you do some digging, you can find public companies that pay “Elite Dividends” that could be double and triple what they pay their common shareholders!
And lest you think that this is just another advertising gimmick, you should know I’m so confident about the profit potential of the “Elite Dividend” strategy that I’ve personally put my money into this type of play.
If you’re interested in the idea, let me show you an example of how they work…
Consider the company Public Storage — ticker symbol PSA.
Most people think that the only way to generate income from Public Storage is to simply buy the common stock and wait for the 3% dividend.
Of course… that’s IF they can stomach the roller coaster ride that Public Storage’s stock has taken investors on. In just the past year, for example, PSA has gained $20… dropped $10… recovered….
But in April of this year, Public Storage quietly issued a round of “Elite Dividends.” The “Elite Dividends” pay more than DOUBLE what the common stock pays.
Instead of 3% yields, “Elite Dividend” holders are entitled to just over 6.5% annually — paid on a quarterly schedule.
And since they were issued, Public Storage’s “Elite Dividends” have been extremely safe. While the common stock’s been on a wild ride, these “Elite Dividends” haven’t lost more than $3 per contract!
Unlike with regular stock dividends, PSA’s company management can’t cut the income from “Elite Dividends.”
Think about that for a second…
The same company… with the same management… and the same financial statements…
Pays one group of people 3%, while taking them for a bumpy ride. And an “elite” 6.5% while keeping them relatively safe.
Which side would you rather be on?
That’s why I fully believe that “Elite Dividends” are one of the easiest… and safest… ways to generate additional income for retirement.
And remember, these “Elite Dividends” are just one of the secrets you could use starting today to quit the normal way of generating income… and enter into a whole new world of LARGER payments and MORE security.
“What’s the catch behind all these secrets, Jim?” I bet you’re wondering.
Well, there is a catch. I won’t lie. But it’s one that I think you’ll appreciate. And that’s what I’ll show you in tomorrow’s final edition of this income series…
Stay tuned (you’re only one email away from learning the final way to put all the pieces together… to generate safer retirement income!)