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Friday, 30 August 2013

Vehicle Sales Boom in August

 Vehicle Sales Boom in August
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A Short Story

Wow! August vehicle sale are expected to be hitting full stride for the month, coming in at a seasonally adjusted rate of 15.7 million vehicles. That is the highest level in almost seven years. Good news - right? 

The biggest concern is what lies ahead as today's sales are pumped-up by the lowest interest rates for the longest period of time ever. Don't be fooled by 0% financing deals, because that is really a crafty way to move margins between business divisions to effect market pricing to consumers. In the end what counts is the consumer's monthly cash payment, particularly in the months and years ahead.

Like the airline industry there are dark clouds and turbulence on the horizon that will come from an imminent spike in interest rates along with rising oil prices. A one, two punch! Imagine what happens to vehicle sales when interest rates cause monthly payments to double, together with substantive gas pump increases as peak oil consequences unfold? At the same time product production costs will rise dramatically because they are affected by both rates and oil prices. Annual sales have the potential to drop by 25-40%, or more.

Our industry weather forecast calls for  - "expect heavy cloud cover and turbulence as you approach. Slippery runways. It's raining hard on a parade down there" 

How's that for a short story?

First Financial Insights
August 30, 2013

Interest Rates? Oil Prices? Production Costs? ... Again! 
Who would have thought?

Tuesday, 27 August 2013

BIG Mac Measures Inflation

Over 350,000 Trillion Served

The BIG point here is that no one in their right minds trusts or believes the CPI numbers anywhere on the planet. It is a number that by its very nature is subject to all forms of manipulation. Yet it is perhaps the most critical economic metric in the field of abstract economics.From this number investors set their expected rates of return inclusive of inflation. There are many pundits, economists and advisers who are saying this number has been pushed deliberately downwards to match the current policies of government.

We believe them because the grocery store bill, gas pumps and McDonald's prices seem to be way ahead of reported national CPI figures. Who do you believe? What is the real CPI?

One approach, as suggested is to look at the hours of work required to buy a staple or basket of staples. But even that is open to transgressions, such as: who is the average worker and what are their wages? Then do you apply local,  regional or national wages? Is there a solution?  Not really, save for doing you own personal calculations, both for personal and investment purposes. That number is probably as good as any, but certainly of more relevance to your circumstances.

Remember that in the end money is a medium - being a communication device intended to transmit a subjective value idea from sender to receiver. The message of value transmitted is an abstract that will never be subject to object scientific measure. It is simply the best social device we have to facilitate human activity.

First Financial Insights
August 27, 2013 

"Money ain't everything it's true, but what it can't get...?"
Beatles, Circa 1961

Saturday, 24 August 2013

The Jim Rogers Blog - Commodity Prices Going to Moon

Does this mean we should land on the moon again for bargains? Folks could be waiting there right now looking for our business. Who we wonder?

Commodity prices are ready to shoot upwards whether there is a war in Syria or any big event somewhere else on the planet. Syria is somewhat irrelevant in this regard as markets are poised more on fundamentals to lift skyward.

The world is more fragile today than it was twenty years ago for obvious reasons. More people, fewer resources and wider geo-political tensions and instability. For more worries you may add in climate change, wildfires, water supplies and worst - fewer and fewer pollinating bugs. And that's the war we are really losing sleep over.

Bottom Line: Anyday, anything, or anytime - LIFT OFF ALICE!

First Financial Insights
August 24, 2013

To the Moon...

Thursday, 22 August 2013

The Jim Rogers Blog : Financial Calamity US Dollar Collapse?

Just cannot see eye to eye with Jim on the collapse of the US dollar, albeit the financial calamity is more or less a hangover from the 2008 Meltdown and remains plausible. Indeed we had  forecasted such a collapse two years back, by 2020. Bonds yes; but a currency short is fraught with too many pitfalls.

There are many reasons behind the likely stability embedded in the US dollar in such times. Two are big ones. One,  it will simply win by default because other currencies that are competitive, in any significant way, should be that much worse off in the turbulent economic times ahead. Remember, the US is a Hegemony with about 60 -70% of the world's resources and economies within its influences and/or control. There is little else in terms of a viable surrogate exchange media that could handle the global financial volume and liquidity needs as well. Former communist countries have huge credibility issues to overcome to garner any trust for this role.

But most importantly - they have bigger GUNS! In the end, that may be all that matters. 

First Financial Insights
August 22, 2013 

Pentagon 2020 Outlook:
 Continues to See Strong US Dollar

Tuesday, 20 August 2013

Faber Buys #Sprott - Is On-Going Disclosure Required?

(Read More)

International investment adviser Marc Faber is author of The Gloom, Boom & Doom Report. (SHERWIN CRASTO/SHERWIN CRASTO/REUTERS)


While we have long held a position that in the long-run there is no legitimate or logical reason based on sequential forward events, and both historical asset-class performance and purchasing power losses over the past thirty-three years to own this object, yet this psychotic placebo continues to attract the attention of speculators.  Nouriel Roubini had candidly referred to it as a "barbaric relic" - his kind diplomacy is respected. 

So why do promoters such as Dr Doom continue with there promotions despite all this? We can presume that they understand the psychosis of small investors attracted to such a cure all placebo and operate to take advantage of their fantasy. The above purchase of Sprott affirms the possibility of such a tactic by promoters. 

But the most important issue is not whether to buy or sell this object - the real issue is disclosure. That is will the promoters advise the public of subsequent sales before they are effected or will they cleverly front-run them in various de facto forms ahead of small investors, underneath the radar of a complex myriad of international rules, laws and regulations?

Funny thing, we really don't expect  answers to these questions any time soon.

First Financial Insights 
August 20, 2013  

Just Keeping them ... 


Friday, 16 August 2013

#APPLE Drifts Without Jobs says Oracle CEO


Many months# ago we actually concluded that without Steve Jobs the company would not be able to repeat or meet the achievements or expectations of its founder. There is an artistic-creative element in people of Steve's character that cannot be replicated by professionally trained managers from Ivy-league business schools. 

Moreover, entrepreneurial vision and drive is a talent few ever configure in a similar way. 

So whether its Ford, Buffet, Carnegie, Gates, Stronich or Jobs, their unique compositions are rare and the companies they build and run are never the same once they move on.

Keeping Apple on the watch list, but our vision for the future remains short-sighted.

First Financial Insights
August 16, 2013

Thursday, 15 August 2013

#Facebook Executive Dumps Shares

One primary rule of investing - when the Company's top executives start dumping their shares, it's time to head for the hills. We are not going to set out all the reasons why and all the excuses executives use to justify their dispositions. Nope, instead we are going to ask you to look at the fellow captioned above and ask "what if this guy started dumping shares in that small town company from Omaha?

Never happened, and if it did - you know that the flood waters are really coming. 

It all boils down to how do you believe in folks that do not believe in themselves? Just plain-old folksy small-town stuff. There is however - one City-slicker - Jimmy Rogers, who thinks that Facebook is not an investment,its a waste of time. We agreed with him then, and still do. 

This also may explain why Facebook users are so depressed - they finally figured out Jim's astute observation.

Stockholders may soon join its users, as t is still just a click away from ten or less, on the Ticker. 

First Financial Insights
August 14, 2013 

" Facebook is not an investment, it's a waste of time" 

Monday, 12 August 2013


TORONTO CONDO bubble CRASHING – WHAT NEXT? - READ MORE   2008 Meltdown or Japanese Bubble... (read more)

When will they ever learn? Or is it simply in the nature of our species to always create these gigantic credit-driven asset bubbles? And why is it a social phenomenon that no country, culture or region is immune to through-out history? 

From a investment view, we are seriously perturbed about Toronto's Condo Bubble and the possible outcomes that could occur when the bubble further deflates. As a result, we have placed a number of sectors on our watch list; obviously including  retail, financial, property development and construction industries. In the weeks ahead, we will provide further.comments and analysis regarding the much anticipated fall-out with more specific industry assessments.  

Remember also how globalization was sold to us as the best way to improve national economic well-being, standards of living, create jobs and lower risk levels. Now everything is so deeply inter-connected financially, physically and politically, yet these promised improvements seem to be moving us in the opposite direction. Do you think it was all a big lie serving a few special global interests? Do you think that they pulled the wool over the eyes of our political geniuses?  If you do - then you are not alone!

It begs the question - who is really governing sovereign nations given all the operative trade agreements, and organizations, such as the WTO, EU, IMF, World Bank and others, with relegated powers? Have all these supra-constitutional connections watered-down sovereign constitutions so much that national destinies have been moved beyond elected officials' powers? This may explain why Canada patterned its monetary policies after the FED - they have to!

This is a big issue that requires a good deal more analysis and thought, but there are clear hints that "globalization" was just a crafty synonym disguising "annexation". What does that have to do with the price of Condo's in Toronto?

Lots! Just ask its Mayor.   



First Financial Insights

August 12, 2013

Asset Bubbles 101: 

In the end, remember nothing is...

Friday, 9 August 2013

BLOOMBERG - OOPs! - #Japan's Economy Grows Less Than Forecast


Japan’s Economy Grew Less-Than-Forecast 2.6% Last Quarter

Investment Drops - 
Annualised Growth 2.6% 

Recently folks were applauding the turn around in profits for some of JAPAN INC's biggest exporters, as short-term delusional benefits of its managed currency devaluation jumped earnings in the second quarter, leading some to even proclaim that the two decades of economic decay had finally come to an end. That celebration was short lived, as overall GDP growth for the period, did not meet expectations.

Moreover, business confidence, as measured by capital investment, drifts hesitantly despite improved profits. Consumers can look forward to a possible increase in sales taxes, that certainly cannot add to their feel good levels. Plus, as import costs increase, they can expect their pocket books to be squeezed much more in the months ahead. 

In all, the deflationary overhang is still there as low interest rates cause both consumers and businesses to act cautiously. It is still hard for commercail banks to lend too, because lenders " collateral values" can disappear in an overnight whisper of a rate increase. These internal structural weaknesses play into foreign competitions' hands as they can invest capital more effectively. That's not good for the export business.

At some point, Japan's deflation should disappear with the import of hyper-inflation on materials from other countries, at same time, so should exports. Then what?  Growing global populations and shrinking resources will not work to save this economy from the fix it entered after its financial bubble burst and the finite constraints of a shrinking planet set  in.

First Financial Insights
August 9, 2013

Wednesday, 7 August 2013

US Population Distribution by Age (1900 -2060) - Calculated Risk

U.S. Births per Year

Looking at this moving graph gives you that sinking dizzy feeling after a while, but nonetheless it is interesting from a general point of view. The baby boom and subsequent bust are obvious as well as the general flattening of the distribution over time as medical health care improves. By 2060, the vast majority are over 21 years old - that should shape into different consumption patterns.

Moreover, more breakdowns would be useful such as income, education, origin, gender, geography, and occupation, amoung other attributes. Calculated Risk provides its own observations.

But lets not forget the most important factors are the growing population numbers and diminishing resources (wealth dilution), that makes immigration of any sort economically illogical. What corporate entity gives away its shares for free and dilutes its current stakeholders' wealth? None! Down the road, as this issue becomes more apparent, then the levying of hefty "Immigration  Taxes" of say a $100,000 per applicant or higher, starts to.make a whole lot of sense as a way earn revenues to balance fiscal budgets, sustain taxes and keep the dilution of real national wealth in check

This form of tax recognises that the ideals of three hundred years ago no longer apply in a shrinking world, where key resources grow scarcer by the moment. To do otherwise, exposes nations to the greater possibilties of social unrest and political upheaval as austerities unfold  - when the planet's capacity to deliver the essentials of living is curtailed.

First Financial Insights
August 8, 2013

Growing sentiment for taxation fairness

Tuesday, 6 August 2013

The Jim Rogers Blog: Shale Oil not enough to solve Americas Debt Problems

(more video)

Shale's Big Shoes to Fill

No kidding? In fact, we have done this analysis once before using Bill Gross's (PIMCO) numbers that puts US total debt closer to $100 trillion once all contingencies, guarantees  and other unfunded future liabilities are thrown into the pot. And that's present valuing related assets using today's long-term treasury rates. What happens when they double?

So what would it take to pay off the US debt - you would  think that one trillion barrels in  world -wide oil reserves would do it?  Under strict assumptions it does, but then how do you run the future economy? To be fair, this assumes too, that all US debt is owed to foreigners. It isn't. The vast majority is owed to other citizens that Keynesian economists believe we should  not fret about under the theory  - it is just money you owe  to yourself. That could be a hard one to explain to pensioners if one day that debt is cancelled for whatever reasons.

Still. we are on-side with Mr Rogers, as it is going to take a lot more than shale oil to pay the debt and keep the "physical economy" running for a few more decades. Think about it!

First Financial Insights 
August 6,2013 

Another set of NUMBERS

Friday, 2 August 2013

US BANKS HUGE PROBLEM PERSISTS - Unofficial Problem Banks - FDIC Report

US BANKS HUGE PROBLEM PERSISTS -Unofficial Problem Banks - FDIC Report
(Read More)

Hmm ... Emerging Pattern?

Despite how others are interpreting the latest figures, reported by the FDIC - we do not share their same enthusiasm. In fact, we have grave concerns, as the pattern appears to mimic the one experienced during the credit humbling days of the Great Depression. Here are some numbers to consider. 

In Q2 2009, nine months after the meltdown, only 4.7% of the 8,195 insured banks were classified as problems. By the second quarter of 2012, the percentage rose to 13.3% of 7,513 insured creditors - at the same time, over 600 banks had vanished for a host of reasons. Today, we are looking at a figure of 10.3%, on a total report of 7,018 insured banks. Now these percentages do look somewhat comparable, in shape, to the 1930-32 period graph for bank failures, prior to the big collapse of 1933. Spooky.

Add to this numerical and graphic analysis, the fact that we have seen an extended period of monetary and quantitative easing, that has not seen benefits flow down to the Main Street banks. Disturbing! These banks are indeed no where near the numbers reported just nine months after the great 2008 meltdown - 4.7% to 10.3%. Meaning the problems have not been fixed to any great extent by policy measures, so far.

But could there be another 1933 in a year or two? The odds are good that a further market and credit meltdown is in the cards. First, because policy has had very little impact on the credit system's organic health; and secondly, a rise in interest rates would deflate financial and property assets, and thereby wipe out much of the equity in an already problematic and highly levered system. Thirdly, let's not forget that the global economy is fragile and exposed to contract widely with minor tremors.

These numbers and analysis are forewarning, so it would be wise for policy-makers to have the toxic-asset bail-out (disaster) plans in place well before events transpire, breaking the bank machine.  But, should we ever expect them to Think ahead? Perhaps as 2008 indicates, the idea is just too novel.

Investors should also take note that another credit crunch is, not only terrrible for markets, but also the domestic economy, as the banking system that is even numerically weaker than it was back in 2009, cannot quickly act to stabilise both activity and valuation contractions. Meaning that the breach in valuations could also be much greater than the September 2008 meltdown losses, as market liquidity is also more susceptible to rapid tightening with weaker banks.

To close, analyse and draw your own conclusions, but we cannot help having this sinking feeling inside - there is something in the Autumn Air.

First Financial Insights
August 2, 2013

When the bank machines are broken, expect...


Thursday, 1 August 2013

The Jim Rogers Blog : WE ARE IN BIG TROUBLE! - There is a huge artificial Boom (video)

The Jim Rogers Blog : WE ARE IN BIG TROUBLE! - There is a huge artificial Boom (video) 

We are right behind Jim on this issue and recommend reminding yourself often and keeping an eye the ball, not getting caught when the trap collapses.

This is beginning to sound like a chorus line with a song that sings about the coming collapse of almost every kind of asset value. We recently commented in The New York Times that values could collapse by as much as 50% should long rates rise by 2% or more. Readers got mad at us, but it's not our fault, because we did not invent financial mathematics -someone else did! Nor we do believe that these rules are open to negotiation, legislation or persuasion of any kind. They are absolute.

So how did we ever get backed into this corner? Well. you can blame the usual suspects who lost sight of common sense and were "influenced by the political immediacy of their times." Now there is no where to run or hide.


First Financial Insights
August 1, 2013

Remember these guys - Unusual Suspects?

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