- How militarized law enforcement wrecked high season for dozens of businesses
- Japan prints more: Dollar and stocks rally, metals smashed
- The most hated stocks of the year, now shining bright
- “Ebola stocks” that can profit even if there’s no pandemic
- Americans turn tightwad… daylight time defiance… gold as garbage… and more!
After seven weeks, everyday commerce can now resume in Barrett Township, Pennsylvania.
On a crisp Halloween morning, we find ourselves contemplating how Big Government interacts with small business. But not in the way you might think…
Since Sept. 12, Barrett Township had become “a ghost town,” said Justine Knipe, owner of Mountainhome Candle.
Usually, the fall foliage season in the Poconos means steady traffic. Not this year. On the day she was interviewed by a reporter from The Philadelphia Inquirer, she hadn’t made a single sale.
Hunting, meanwhile, had been banned in the surrounding area — bad news for the owner of Martinell’s Deer Processing. “If you’re a local processor and you depend on this for your living, it’s going to be tough,” Dan Martinell told the Associated Press.
The disruption began the day when someone shot and killed a state trooper and wounded another. Last night, the suspect, Eric Frein, was caught near an abandoned airport hangar.
The search for Frein — described by investigators as a “survivalist” — turned Barrett Township and environs upside down.
There was no evidence Frein posed a threat to anyone other than law enforcement. But businesses and schools were closed all the same. Halloween celebrations had been canceled well in advance.
“It’s become commonplace to see armed vehicles driving down the road with troops inside,” Gayle Horowitz, owner of the Brookview Manor Inn, told Fox News.
No wonder she called them “troops” and not peace officers…
The 14th Amendment guarantees everyone “equal protection of the laws.”
But it is safe to say that had the murder victim on Sept. 12 owned a bed-and-breakfast, or a deer processor, or a candle shop, the search for the killer would not have involved 1,000 officers and cost taxpayers $1.3 million per week.
Instead, the victim belonged to a “privileged caste,” to borrow a well-chosen phrase from the civil-liberties blogger William Norman Grigg. So no effort or expense was spared. And if commerce was all but shut down, well, them’s the breaks.
In any event, Frein is in custody now. The trooper’s grieving family will see some measure of justice. Commerce can once again go on. Heck, the kids in town can go trick-or-treating tonight after all.
To the markets… which are reacting big to another round of easy money from Japan.
While most of us were asleep in North America, the Bank of Japan announced it would expand its version of “quantitative easing” from roughly 65 trillion yen per year to 80 trillion, or $726 billion.
The biggest reaction is in the currency markets. It takes 112.4 yen to equal one U.S. dollar this morning — the most since January 2008. The dollar index, which measures the greenback against a basket of six currencies including the yen, is knocking on the door of 87 — the strongest since mid-2010.
And with that, gold has failed its fourth test of the crucial $1,180 level in 15 months.
At last check, the bid is down more than $32, to $1,166. Silver has broken below $16. Both are at levels last seen in — drumroll, please — mid-2010.
“It is clear that the bears, including the bullion banks with short books, mounted an attack on the $1180 level, where there were stops to take out,” writes Alasdair Macleod at GoldMoney. “Behind these moves is a strong U.S. dollar, weakening commodities generally and a collapsing yen.”
And stocks? Party on! Japan’s benchmark Nikkei index closed up nearly 5%, and the good vibes kept spreading west across the planet.
Germany’s DAX and France’s CAC 40 both closed up more than 2%… and at last check, the S&P 500 is in record territory, at 2,015. Ditto the Dow, at 17,383. In 11 trading days, those two indexes have rocketed up about 8%.
But the real star performer in the second half of October was the small-cap Russell 2000 — up more than 11%.
“The Russell 2000 actually finished higher after the carnage of two weeks ago — while the larger stocks sank like a stone,” explains Greg Guenthner of our trading desk. “And remember, these little guys were tanking all year. No one wanted small stocks in their portfolios. Small caps have endured their bear market. Investor sentiment had swung so far to the downside that small caps really have nowhere to go but up…
Greg saw the move happening in real time… and on Oct. 16, he urged his Rude Awakening PRO readers to pick up IWM, the Russell 2000 ETF, below $107.50. At last check this morning, it’s $116.51.
Nor is the move over: “Count on smaller stocks shedding their status as laggards as we approach the end of 2014,” says Greg. And for access to his daily trading guidance, look here.
Even if Ebola’s spread is contained, it will prove a profitable short-term phenomenon, says FDA Trader editor Paul Mampilly.
For the record, Paul still believes “the moment of Ebola panic” is coming in the United States. But even if that doesn’t materialize, “I believe governments around the world are going to order drugs and vaccines.
“That’s what happened in 2009, when it looked like the bird flu was going to spread around the world. Governments stockpiled Tamiflu, generating $10.74 billion in sales for its maker, Roche Pharmaceuticals. Roche stock soared by as much as 54% between March and December 2009, while the governments were stockpiling Tamiflu.
“Governments are worried about Ebola. They will stockpile vaccines, and do whatever it takes to keep people from panicking.”
Paul has three Ebola-related recommendations for his readers. If you’re risk-averse, you’re advised to steer clear. But if you can handle daily 10-20% swings, the profit potential is immense.
Americans are turning tight-fisted even as they enjoy falling gasoline prices.
The Commerce Department’s “income-and-spend” report is out for September. Personal income grew 0.2%… while consumer spending fell 0.2%. Some of that drop was a function of auto sales, which are always volatile… but it still came as a surprise to the “expert consensus” of economists, who were looking for a modest increase.
This report also includes “core PCE” — the Federal Reserve’s preferred measure of inflation. The year-over-year change remains at 1.5%, well below the Fed’s 2% sweet spot.
Is Utah about to step out from under the thumb of Daylight Saving Time?
Most of the country goes back to standard time this weekend. As we observed a year ago, researchers have concluded the energy savings brought about by daylight time are imaginary. But daylight time persists, like a wart.
Over the summer, the Utah Governor’s Office of Economic Development conducted an online poll. Two out of three respondents want to ditch daylight time and stay in sync with Arizona — which observes standard time year-round.
“There are very strong voices on all sides of this question,” the agency’s Michael O’Malley tells National Geographic. “We got close to 14,000 written comments, and if you add them together, they are almost the length of War and Peace.”
But daylight-time supporters are a strong lobby, especially those in the tourism and recreation trade: “For example,” says O’Malley, “the Golf Alliance for Utah estimated that dropping DST would reduce play by 6% during peak season and cost Utah’s economy $24 million each year, and they claim that is a very conservative estimate.”
Several state lawmakers plan to submit legislation in January. We’ll keep an ear to the ground…
The gold price might be down… but does it really qualify as trash? If you’re trying to smuggle it into India, yes.
As we’ve chronicled through much of 2013 and 2014, India has imposed a steep tariff on gold imports — the better to keep its balance of payments from getting out of whack. So smugglers, often bringing in gold from Dubai and other Persian Gulf locales, have resorted to everything from stuffing it down airplane toilets to building gold capacitors into old-style tube TVs.
Now from The Times of India comes the latest ruse: “With smugglers depositing contraband gold in garbage bags inside flights and retrieving them later, possibly with the help of garbage clearing staff, customs have been forced to take the unprecedented step of conducting X-ray scans on trash bags in flights arriving from the Gulf.”
For now, the trash scans are limited to the Karipur Airport, in Kozhikode. Gold seizures there have totaled 2,500 ounces this year and last.
The paper informs us customs inspectors are “already reeling under acute staff shortage,” and now they’re coming under suspicion. An official tells the Times, “We are in the process of questioning the staff who handle these duties.”
“It is the bureaucracy that has been killing this precious country of ours over the past 20 years,” writes a Nevada reader after we solicited stories about up-close-and-personal encounters with the machinery of government.
“I had formed a nonprofit entity in June 2011, and applied for 501(c)3 tax-exempt status. Mind you, this is a brand-new entity, and I had plans and hopes.
“The IRS kept harassing me with requests for more information for over 14 months, and I had given them everything I could even dream of, but it was not sufficient.
“Then, I worked with both my U.S. senators’ offices, then with IRS tax advocate in Las Vegas, and I finally gave up earlier this year.”
Check my new website. I am now still waiting on the State Department of Taxation for the Sales and Use tax exemption letter.”
The 5: Good luck.
“Thanks for an entire issue,” a reader wrote yesterday, “without mention of the word ‘Ebola.'”
The 5: What, we don’t get credit for the day before… and the day before that? This week, we’ve mentioned it only Monday and today…
“I don’t get it,” a reader writes. “The U.S. is becoming a Third World country, and you push the FDA as gospel.
“I’d rather trust an herbal expert. I’d rather trust anyone or anything over the FDA.”
The 5: Uhh… We’re not sure when we became shills for the FDA.
We’re the first to acknowledge the FDA has a horrible record. On the one hand, the agency protects Big Pharma by approving dangerous drugs that later have to be pulled off the market. On the other hand, the FDA requires small up-and-coming drugmakers to jump through bureaucratic hoops, while desperate patients are denied potentially lifesaving treatments.
Tamiflu, mentioned above? Roche withheld results from several trials that came to light only in 2012. Turns out it doesn’t come close to offering the promised benefits.
And yes, there’s a powerful lobby that aims to limit access to herbal and alternative treatments.
But helping you make money is at the core of what we’re all about. And we think there’s powerful moneymaking potential in the FDA’s “magic calendar.” The calendar identifies dates when, for better or worse, the FDA plays God and decides whether it will approve a company’s drug.
You can do anything you like with the money you make from the magic calendar — salt it away for retirement, fund a child’s college education or, for that matter, pursue herbal medical treatments.
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
P.S. The next “magic calendar” date, by the way, is next Wednesday. To take advantage, start here.