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The Taipan Group�s 247profits e-Dispatch Baltimore, New York, Chicago, Berlin, Bonn, London and Paris October 1-4, 2004
***A drive through the countryside� the economic reality of Joe Sixpack and his fellow Americans� August incomes up� US construction spending up� and more �ups�! ***Calls for China to abandon its practice of pegging the yuan to the dollar are increasing in pitch. Find out why the yuan may be floating freely by the end of next year. Plus, what�s in store for China?
(That�s good enough to turn $5,000 into $3.5 million in 3 years.) ***********************************************
If you�ve recently taking a drive through the countryside, you will have noticed it yourself: There are simply not enough pastel-colored clusters of vinyl-sided clapboard boxes (a.k.a. townhomes) and �executive-style� McMansions around! Luckily, some brave and charitable souls are helping out, filling every available alfalfa field with domiciles whose two-car garages alone would have qualified as middle-class standalone homes twenty-five years ago� and are larger than the rented living space of a Central European family of four. Consequently, US construction spending zoomed skyward in August, to the highest level on record. The Commerce Department reported today that construction came in at a seasonally adjusted annual rate of US$1.02 trillion - a 0.8% gain over July. Not bad, considering July�s numbers were revised upward to a 1.1% increase. Residential projects by private builders rose by 1.7%, while commercial construction increased 0.8%. That is not only good news for the continuing strength of the US economy - it also represents a resounding confirmation that American consumers are not quite as depressed and defeatist about their economic prospects as they like to claim when polled by the various consumer confidence men� Overall, the economic reality of Joe Sixpack and his fellow Americans doesn�t seem to be all that bad: August incomes were up an average 0.4% in wages and salaries, following increases of 0.2% each in June and July. And with consumer spending rather flat for the month, we noticed that the personal savings rate rose to 0.9%, rebounding from July�s near-record low 0.5%. Just imagine: If that money was all kept in savings and money-market accounts - it�d generate a total yield of 1% in interest� in just about four years! (We hope people won�t spend that all in one place�)
In the past couple of weeks, we have reported on the efforts of a lobbying group close to US manufacturers� associations to launch an official investigation into what they consider China�s illegal subsidy of exports by an artificially depressed currency. This investigation could have led to a complaint at the WTO. The White House rejected that proposal� not because there is any basic difference of opinion or lack of influence of that interest group. (After all, the US dollar began its steep decline against the major world currencies right after US manufacturers complained that the 2002 level of the greenback was putting them at a competitive disadvantage.) Washington also holds that the yuan�s artificial low gives China an unfair advantage, as it makes Chinese exports more competitive - harming domestic producers. Recent studies published by Chinese economists also argue strongly for floating of the yuan. Their line, however, is that the US trade and budget deficits blamed for the greenback�s low conversion rate have resulted in increased debt for China, as well as higher prices for the raw materials required to feed the ravenous Chinese economy. (Most of these studies are written in the same reproachful tone as the musings of our friendly perma-bearish dyspeptics at The Daily Reckoning.) We at the 247profits e-Dispatch are convinced that we may see the yuan floating freely by the end of next year. Whether it will turn out to the advantage of the Chinese is a different matter: A higher yuan joining the line-up of the anti-dollars might very well coincide with a cyclical reversal of currency exchange rates� increasing labor and production cost in China to a degree that other developing countries will profit from.
Flu season is here. And this stock stands to profit as it kicks into full swing. �The last time we played this stock, we bought the October 47.50 calls on August 17, 2004, and exited twice with 38% and 24% gains by August 26. EVS subscribers may remember that we got out just in time, as shareholders began running for cover on news of a delay in shipments. �Today is a different story. The company has just assured a Senate committee that the company will be able to ship out about 50 million doses of flu vaccine to the US in October, a popular month for people planning to get vaccinated. The reassurance could help refill the gap left by the delay news.� Be in position to profit! Learn more about EVS today and find out how breaking news can lead you to hidden profits.
Today�s tradesports.com standings for the 2004 Presidential Election are: PRESIDENT.GWBUSH2004:
65.0/65.7 (yesterday�s standing: 68.5/68.7)
ATI Technologies Inc., Ruby Tuesday, and Vail Resorts Inc. are some of the companies releasing earnings.
�Nearly
nine out of ten French people would back John Kerry if they could vote in
the U.S. election.�
*** �Half of our indicators now point to yet another bullish day for tomorrow. And as even the negative indicators appear to tick upward toward the end of the day, we commit ourselves to a cautious prognostication of gains in the vicinity of 0.2% to 0.7%.� A little too cautious this time, we�d say: the Hang Seng closed the trading week at 13,120.03, up 169.23 points (1.31%) for the day. But our indicators are skittish after so much bull: Look for profit-taking to trim the index back by up to 0.5% on Monday.
Our indicators were a lot too cautious vis-�-vis the Nikkei, which nearly tripled their estimated gains, closing at 10,985.17 after climbing 161.60 points or 1.49%. Again, we see Monday�s trading focused on taking gains off the table, with losses of 0.7% or more.
This just in from Taipan�s resident Editor-at-Large, Martin Denholm: ***China�s Number 1. It�s official: China overtook the US as the world�s top destination for foreign direct investment (FDI) in 2003. Spurred by an extraordinary spell of economic growth, foreigners piled their capital into Chinese investments en masse - US$53.5 billion, to be exact. In fact, the entire Asia-Pacific region enjoyed a bumper year, attracting more foreign investment than any other region - a 14% jump over 2002 (from US$94 billion to US$107 billion). That coincided with an alarming 53% plunge in FDI to the US in 2003 - a total of only US$30 billion. According to the United Nations Conference on Trade and Development, that was the lowest amount since 1991. And things show no signs of slowing down for China. FDI jumped almost 19% to US$43.6 billion through the first eight months of 2004. More tellingly, Ministry of Commerce figures show future FDI ballooning by 39% to US$93.8 billion. Such solid growth in places like China, India, Singapore and Malaysia is helping decrease poverty across Asia. That�s according to a new study by the Asian Development Bank (ADB). Its most recent figures show that the number of people living on less than US$1 per day fell to 22% in 2002. In 1990, that figure was 34%. Today, 357 million people are classed as �extremely poor� in India, with 203 million in China.
This is thanks largely to tremendously strong export growth. Excluding oil, August exports shot up 4.8% from July and a remarkable 29% over August 2003, with overseas shipments of computer chips remaining particularly strong.
According to research firm Adams Beverage Group, the US beer market suffered its first fall in seven years last year, with shipments declining 0.3% to 2.8 billion cases (wow, that�s a lot of booze!). Apparently, folks are switching to wine and spirits these days to cut carbs, leaving beer barrels fuller than before. And those who still hanker for the sweet taste of suds are finding refuge in low-carb varieties these days, with sales up 3.6% last year. Me? I�m a fan of the microbrews, because I like to taste something approaching beer. Microbrew sales also rose 3.4% last year. But you really know something is amiss when the Irish stop drinking. Yes� for the first time in 16 years, consumption in the Emerald Isle declined by 6% in 2003. It came as the government introduced higher liquor taxes in an effort to reduce unhealthy and often violence-inducing �binge drinking.� Bloomberg reports that alcohol-related trouble cost Ireland 2.65 billion euros (US$3.2 billion) last year. But the 6% drop is really just a start, after a whopping 49% growth in consumption over the previous ten years. Fittingly, I�m now headed for the pub before watching my beloved Boston Red Sox play the Baltimore Orioles tonight. Have a great weekend.
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Title: The economic reality of American living
