Here is the latest from Jim Rogers today on Bloomberg. He has some great investing ideas. Rogers is basically long commodities, short long term treasuries and neutral on the stock market. I like a lot of his investment ideas here. I plan on picking up some TBT after the next drop in the stock market which will take treasuries higher.
I have a couple of thoughts after the videos.
It was a very quiet day in the stock market as the world awaits the election results tomorrow. The global recession is taking a serious toll on manufacturing. Manufacturing in the US contracted at the fastest pace in Octomber in 26 years:
"Nov. 3 (Bloomberg) -- Manufacturing in the U.S. contracted in October at the fastest pace in 26 years as a record share of banks made it tougher to get loans and faltering economies abroad eroded prospects for American exports.
The Institute for Supply Management's factory index fell to 38.9 from 43.5 in September; 50 is the dividing line between expansion and contraction. The Commerce Department said separately that construction spending fell for the eighth time in 10 months in September.
Today's report may add to pressure for further interest-rate cuts and an additional federal package of tax and spending measures. The figures also showed the weakest level for U.S. export orders in the two decades the ISM has kept the data, a sign of slowdowns in Europe and Asia.
``Manufacturing is definitely in a deep recession right now,'' John Lonski, chief economist at the Moody's Capital Markets Group in New York, said in an interview with Bloomberg Television. ``We're definitely going to have more rate cuts'' and possibly ``more in terms of fiscal stimulus"
Manufacturing essentially fell off a cliff in October as the consumer continues dramatically pull back. I love the solution offered by economist John Lonski from Moody's. We need more rate cuts: Yeah! Like that's going going to help. When are these economists going to realize that the Greenspan easy money approach is no longer the answer. We are now at 1% and things continue to deteriorate. He also wants a stimulus. Great idea John! The last one worked so well!
This mentality among economists has to stop. What we need is a serious recession that wrings out the excesses of the economy. The cheap money "Greenspan approach" created the debt bubble that we now find ourselves in today. More liquidity is not the answer when consumers don't want to borrow and banks have no desire to lend!
Another stimulus will do nothing but dig us even deeper into debt and give us one quarter of growth like the last one did. Then it will be right back to our regularly scheduled recession/depression. It makes no sense to piss away another $150 billion when it does nothing to fix the problems in the economy.
Take that money and throw it into a infrastructure investment that creates jobs. Don't give it to J6P! He will just waste it paying down debt or buying another flat screen TV.
Lets take a look at the car biz:
"Nov. 3 (Bloomberg) -- U.S. auto sales plummeted 32 percent in October to the lowest monthly total since January 1991, led by General Motors Corp.'s 45 percent slide, as reduced access to loans and a weaker economy kept consumers off dealer lots.
Ford Motor Co. reported a 30 percent drop in car and light- truck sales from a year earlier and Toyota Motor Corp.'s declined 23 percent. Honda Motor Co.'s slid 25 percent, Nissan Motor Co.'s were down 33 percent and Chrysler LLC's fell 35 percent.
``If you adjust for population growth, it's the worst sales month in the post-World War II era'' for the industry, said Mike DiGiovanni, GM's chief sales analyst, on a conference call. ``Clearly we're in a dire situation.''
The last time car sales were this bad we had just defeated the Germans in WWII. Yikes! The more data I see, the more scared I get folks.
What frightens me the most is I don't see how we dig ourselves out of this. Could we have another lost decade similiar to Japan that Jim Rogers warns of above? The answer to this is looking more and more to be yes.
Well its election day tomorrow! It looks like Obama has it in the bag. In my opinion neither candidate has the goods to get us out of this mess. The next president is almost assuredly a one termer as our economy heads into the abyss. There will be little that either candidate can do in reaction to this mess. The war chest is empty and the economic hand has already been dealt.
It will be interesting how the markets respond tomorrow. I think the next trade is shorting treasuries. Its becoming pretty clear that the government is hell bent on attempting to bailout the economy no matter what the price. An Obama presidency will most assuredly take this government spending to an even higher level.
As a result, its highly likely that investors will start backing away from buying treasuries until we either learn to control our spending or we default on ourselves.
Make sure you get out and vote tomorrow. Every vote counts!