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 Bulls stampeded in the U.S. markets yesterday. Expressing some pent-up aggression, they helped rally the Dow, Nasdaq, and S&P 500 up about 1.5% each. The Dow now sits just below its precorrection May highs.
 The dollar rallied yesterday, too. Remarkably high retail sales numbers prove that the U.S. consumer isn’t ready to throw in the towel just yet. A rosy Beige Book released by the Fed also helped the greenback touch a 4½-year high against the yen… and an 11-week peak versus the euro.
 BP lowered its estimates of proven oil reserves for the first time since 1990. Yesterday, the British oil behemoth released its annual “Statistical Review of World Energy,” and what’s inside portends the end of the cheap oil era.
World oil reserves declined by more than 1 billion barrels between 2006-2007, BP claims. The 1 trillion barrels in reserve and projected global production is enough to last the world no more than 40 years at the rate of current consumption.
They also predicted global oil output would continue to rise to meet demand, but that growth would depend on areas outside the industrialized countries and in regions where state oil firms dominate. How wonderful for our favorite megalomaniacal dictator, Hugo Chavez.
Our Peak Oil pro Byron King is making his way back from Alaska, where he met to talk “inside baseball” with a cadre of energy analysts and geologists, including a few muckity mucks from BP. He’s preparing a report for you on the impact this latest news from BP will have on the energy markets… stay tuned.
You can also get Byron’s upcoming service Energy & Scarcity Investor free (a $995 value) by becoming a member of the Agora Financial Reserve today. Details here.
 Our own megalomaniacal Sens. Schumer and Graham reintroduced their tariff bill sooner than we thought. These guys are serious. They really want to upset the apple cart. The symbiotic relationship the U.S. has developed with China, whereby China makes cheap stuff and we borrow from them so we can buy it, will disintegrate if these knuckleheads get their way. Go away and let us consume…
 “There is always a bull market someplace,” reported Chris Mayer from metro D.C.
DLF, an Indian real estate group, raised $2.4 billion for its IPO -- the largest initial public offering in Indian history. DLF’s introduction to the marketplace doubled the previous IPO record holder, oil producer Cairn India.
And over on our side of the pond, a $2.1 billion listing of an Indian metals company in the U.S. exchange is in the mix… what will be the biggest Indian IPO in our market’s history.
“All the Indian growth might be a bit misleading,” Chris Mayer told us. “While their market is up over 20% since the start of the year, about half of those gains are currency gains,” Chris warned. “Also, the bulk of that market’s gain comes from about five stocks. The market’s median return for the year is around minus 17%.”
That’s right, a negative 17% return.
“Always interesting what you find out when you dig a little deeper,” said Chris.
(Side note: There are just a few spots left -- seven, I think, to be exact -- if you’d like to join Chris and me as we tour India in October with our friend Karim Rahemtulla. The itinerary looks fantastic. We’re going to meet business leaders, local politicians and man-on-the-street types and sample the culture and cuisine along the way. It will truly be a trip of a lifetime. For more details, if you’re interested, click here.)
 Naples, Italy, is a dump. Literally…
(Thanks to The First Post for the slide)
“The central business district of Naples,” the caption reads. “A spring heat wave has brought temperatures of 30C [86F] and the rubbish is rotting in the streets. ‘The stench is truly unbearable’ says student Michela Giordano, ‘look at all these dogs running about. We’ll all die at this rate’. Fire brigades have been called out every night as local residents, worried about disease, burn piles of rubbish.”
While the pileup in Naples is the result of a dispute between the city and the local mafia, landfill space is scarce worldwide. And recycling, well, not that many people do it.
“It will be smaller, innovative companies that will eventually help to revolutionize the way we dispose of our solid waste,” predicts our penny stock sleuth Greg “ Gunner” Guenthner. “In fact, I’m investigating one small startup trading on the OTCBB that claims it’s found a cheap, eco-friendly way to clean used plastics without the use of water.” Details forthcoming… once Gunner decides to pull the trigger.
 Chinese entrepreneurs have also found a way to profit from the things you and I label ‘garbage.’
“Do you ever wonder what happens to that old computer?” Christopher Hancockasked us in classic, out-of-breath and out-of-the-blue form. Cell phone conversation on hold for a moment.
“Huh?”
“Entrepreneurs in China, India and Nigeria have turned it into a $11 billion dollar business!” proclaimed Mr. Hancock.
When your office tosses that 16-pound behemoth that made the permanent dent at the end of your desk for the latest high-tech flat-screen, it usually ends up in a landfill, along with the 20-50 million tons of e-waste generated by the world each year.
For $2 per day, the locals at a dump like the one in Guiyu, China, sort, disassemble and pulverize hundreds of tons of e-waste. What’s in it for them?
Gold.
“Computers are loaded with precious metals,” said Christopher. They're filled with gold, copper and aluminum. One ton of computer scrap contains more gold that 17 tons of gold ore. Circuit boards can be 40 times richer in copper than typical copper ore.
“This is still a huge and growing opportunity for entrepreneurs all over the world,” agrees Brad Wiggin, owner of Newport Computer Services in Rochester, N.H. The company specializes in “asset recovery” in the tech world and has been doing brisk business recycling old computers for over a decade.
 “What's so special about teachers that they should make over $100,000 a year?” asked a reader with an entirely different perspective. “What about the millions of us who work in ordinary jobs for private companies, who do not have guaranteed pay, tenure, fantastic benefits and very generous retirement benefits? Don't we ‘deserve’ really good pay and benefits because we have (1) a college degree; (2) professional status of some sort; and (3) years of experience in our chosen field? I'm sick of people whining about ‘public servants’ and what they ‘deserve’!”
 “Education is the hope of the future?” questioned another reader. “Not if ‘education’ continues to be the same socialist, feminist and environmentalist drivel our teachers have been shoving down our students’ throats for the past 40 years. Most modern public school teachers are not even worth $30,000 a year!”
Ooh… ouch.
 “So I've read all your books (Empire of Debt , The Demise of the Dollar , Financial Reckoning Day) and see how the dollar is in dire straits and is ultimately doomed,” writes a reader… one with excellent taste in books, we might add. “However, doesn't this depend on what you compare it to?
“My local currency, the British pound, is currently strong, as it is seen as being backed by North Sea oil, but I understand that we will be a net importer of oil this year, and the debt piling up over here seems to be proportionally just as large as in the U.S.
“The euro experiment is about to get its first real test when the Irish and Spanish discover the downside to having someone else set your interest rates for you. And the demographics aren't good with a static and aging population.
“That leaves the yen and other Asian currencies, and although I think the governments in this area have already [begun to] decouple themselves from the U.S. as the engine of growth, they aren't going to sit idly by as the U.S. debases its currency, since they hold so much of it.
“Therefore, isn't the USD simply in a race to the bottom with all the other fiat currencies? In which case I should probably sell up, buy some gold and silver coins, bury them in the bottom of the garden and take a break from worrying about investing.”
The 5 responds: Well, you don’t have to go that far, but, yes, “a race to the bottom” is an accurate description. A few years ago, Dr. Mahathir, prime minister of Malaysia, suggested backing the dinar by gold. If he were successful, there would likely have been a rush out of fiat currencies into the dinar. But he was stopped by the IMF. Their “rules” don’t permit any currencies that are exchanged at the consumer level to be backed by gold or silver. The alternative would have been for Islamic countries to settle up trade accounts in gold, rather than using U.S. dollars.
There hasn’t been much activity on this front since Dr. Mahathir made his proposal. And just try raising the idea of a gold standard at a cocktail party. You’ll clear the room and be asked politely to leave before things get ugly.
“Regards, and thanks for all the great information you publish”
Cheers, thanks for reading…
Addison Wiggin,
The 5 Min. Forecast
P.S. “Am I the only one that has noticed the overwhelming similarities between Addison and Sean Hannity?” a reader asked in an e-mail titled “Addison Look-Alike.” “Despite the resemblance, you guys [actually] do a tremendous job and I am looking forward to the release of the documentary very much. Keep up the great work!”
Yeah. I don’t even know what to say. Who are these guys?
P.P.S. “Dear 5,” another reader wrote, “or should I say 7,” noticing that we had a little trouble keeping track of time yesterday. “IOUSA is a great, great title for your documentary -- keep it! And tell me when the T-shirt is in print.”
Hmm. We’re still getting used to it, but it’s growing on us:
“IOUSA: The nation that can’t save a dime is out to save the world.”
We’re considering doing a companion book to the film with the same title.
P.P.P.S. “I really love you guys!” writes yet another, “‘IOUSA’ is great. Or ‘USA IOUs’ – ‘USAOsU’ big time. Something... please help stop the madness.”
We’re doing what we can. But it’s a collective euphoric denial we’re in. Maybe the T-shirts will help. |
