February 7, 2013
- “Deep-seated distrust” of the dollar prompts a “lifeboat study”: Why we’re not holding our breath
- When high-tech meets biotech: How the “magic material” could be the building blocks of artificial muscles
- Dirt-cheap Fannie and Freddie foreclosures become (a little) more accessible to the retail investor
- A new potential war to worry about… the one thing Belgium has going for it these days… how one state’s lawmakers view their citizens as pawns (literally)… and more!
This week, the Virginia House of Delegates passed — by a 2-to-1 margin — a bill setting up the proverbial blue-ribbon panel to study whether the Old Dominion should issue its own currency.
“This is a lifeboat study; what happens if?” says the bill’s sponsor, Del. Robert Marshall. A close reading of the U.S. Constitution, he believes, could allow states to coin silver and gold.
“I view it,” says George Mason University economist Lawrence White, “as a kind of state-level expression of concern about the uncharted course the Federal Reserve has been on in monetary policy.” That is it’s a protest, however feeble, against a shrinking dollar.
The bill still has to pass the Senate. But if it does, we wouldn’t be at all surprised if Gov. Bob McDonnell signs it… with the same sort of guffaw up his sleeve that Utah Gov. Gary Herbert made when he signed a bill affirming Gold and Silver Eagles as legal tender.
“If somebody is stupid enough that they want to buy a Snickers bar at 7-Eleven with a gold coin worth thousands of dollars,” one of Herbert’s flunkies told CNN, “they will be able to do that.”
Stocks are tumbling today. All the major indexes are down a little less than 1%. The S&P is holding on to 1,500 by a slender thread.
Lacking any obvious explanation, but desperate to come up with one anyway, the financial media are latching on to the morning’s economic numbers…
- First-time unemployment claims rang in last week at 366,000 — worse than the most optimistic guess among dozens of economists polled by Bloomberg
- Nonfarm business productivity as measured by the Bureau of Labor Statistics fell an annualized 2% during the fourth quarter.
Or maybe it’s Europe. That’s always a handy explanation. Or the automatic budget cuts in Washington. Really guys, just pick up the Magic 8 Ball.
Apple took another hit this morning after hedge fund manager David Einhorn filed suit over the firm’s plan to eliminate preferred shares.
“I have to say that Apple’s stock price collapse does not surprise me,” says Chris Mayer — who took no shortage of grief for declaring Apple a sell 11 months ago at $538. This morning, it’s $458 — even as the broad market sits near new highs.
“It goes to show you again that what’s popular is not often a good investment,” Chris adds. “The unpopular opinion is the one worth listening to. As of now, I am no longer bearish on Apple’s stock. It’s in the muddled area of fairly priced, in my view.”
All’s quiet among the precious metals – gold at $1,675, silver at $31.60. Relative to the dollar, they’re looking pretty resilient; the dollar index has soared this week, up to 80.2 at last check.
“New artificial muscles,” Xuanhe Zhao, assistant professor in Duke’s Pratt School of Engineering tells Plastics Today, “are enabling diverse technologies ranging from robotics and drug delivery to energy harvesting and storage.”
The implications of these “artificial muscles” are vast: Lightweight and super-strong prostheses, full-page, modifiable Braille displays and automatic harvest and storage of energy are the tip of the iceberg.
The broad impact of which is, according to Zhao, “potentially analogous to the impact of piezoelectric materials on a global society.”
In other words, this could become useful in not only improving the lives of the disabled and revolutionizing robotics, but could also become ubiquitous in everyday technology.
How’s it done? If you guessed through our favorite “magic material,” graphene, you’re right on the money.
“Indeed,” Zhao goes on, “the crumpling and unfolding of graphene allows large deformation of the artificial muscle.”
And Zhao’s team has found a way to exploit this by mixing graphene with plastic and rubber, creating what is, essentially, an artificial muscle. “Our approach has opened avenues to exploit unprecedented properties and functions of graphene,” Jianfeng Zang, a postdoctoral fellow on Zhao’s team, explained. “For example,” he said, using electricity, “we can tune the graphene from being transparent to opaque by crumpling it, and tune it back by unfolding it.”
[Ed. Note: "If this ONE penny stock takes off..." Byron wrote more than a year ago about a tiny company set to become a major source of graphene, "you could retire rich -- without worrying about your future financial security."
We don't think he imagined the "magic material" was going to take off this quickly. The good news is the company is still extremely "cheap" by his standards. But after Feb. 28, that could change. To see why, click here.]
Want to buy Fannie Mae and Freddie Mac foreclosures at bargain-basement prices? It’s getting more affordable. Sort of.
“JPMorgan Chase & Co. is giving its wealthiest clients the chance to invest in the single-family rental market after other investments linked to the U.S. housing recovery jumped in value,” Bloomberg reports. You can get in with a net worth of at least $5 million.
Well, the price of entry has fallen considerably from the $1 billion we cited a year ago in Apogee Advisory. “In a dystopian America of the near future,” we wrote, “millions of foreclosed homes sitting on the federal government’s books are flipped at fire-sale prices to hedge funds and private-equity firms with government connections.”
Blogger Charles Hugh Smith is on the case this morning: “In effect, private capital puts a few bucks down and Fannie Mae loans them the rest at zero interest. It also gives them roughly 30% of the rental income for managing the properties.”
That was the first wave of deals we spotlighted in January 2012: The feds allowed only private equity, hedge funds, investment banks and the like — bringing $1 billion or more to each transaction. Now that J.P. Morgan is on the inside, it’s offering its well-heeled clients a chance at 8% annual rental income, plus a cut of the proceeds whenever the house is sold.
You catch that? JPM gets 30%… Its clients get 8%. Damn, it feels good to be a bankster.
And what of the poor retail investor? “The traditional places people might look — homebuilder stocks and appliance makers — probably aren’t the best places for new investments,” asset manager John Buckingham told Bloomberg. “They’ve had fantastic runs.”
What about the IPOs in the sector? PRO-level readers are tipped off today about one to avoid at all costs. If you missed out on a charter subscription to The 5 PRO, we plan to reopen it soon.
It’s hard to keep up, but we do anyway: We now hear distant war drums between Japan and two countries over strategically meaningless islands.
We brought you the latest on the Japan-China dispute Monday. This morning comes word that the Japanese government accuses Russian jets of breaching its airspace. Russia, of course, denies it.
We’d write off the incident except for this fact: “Because of the dispute,” says the BBC, “the two nations have not yet signed a peace treaty to end World War II.”
Because they’ve solved all their other problems…
The country has had three straight quarters of zero or negative growth… S&P has their sovereign debt on negative watch… and separatists in the north are gaining momentum…
But by golly, the Belgians have chocolate-flavored postage stamps.
“We have added a chocolate taste to the glue of the stamps,” the country’s postal service announced yesterday, “which you can taste when you lick it.
“It was not easy to get the scent and flavor of the dark chocolate right,” the statement added. “In the end, people from Belgium, Germany, the Netherlands and Switzerland all worked on it.”
Maybe the Belgians can license it to the U.S. Postal Service. That’ll solve their budget crisis, for sure!
“Assemblyman Phil Ting,” a reader writes of the California lawmaker proposing mandatory liability insurance for gun owners, “should be taxing those who do not have a weapon to defend themselves by paying for the police protection that shows up after the crime is committed.”
“We have many rights,” another reader chimes in, “that are in some way taxed or requiring insurance (effectively the same thing, as far as the pocketbook is concerned), so why not liability for gun owners?
“My state requires automobile insurance, my mortgage holder requires property and liability insurance and almost anything done in the ‘pursuit of happiness’ likely has some fee structure for participation. Guns are dangerous, just the same as cars, certain chemicals, etc.
“The insurance executives must be drooling at the prospect.”
The 5: Here in Maryland, thousands of people trudged to the capitol in Annapolis yesterday to speak up against scads of new gun limits proposed by Gov. Tommy Carcetti — er, Martin O’Malley.
One of the guys on our team felt strongly enough to put in for the day off to make the trek. “Testimony went on for hours,” he said. “Hundreds of people testified before their lawmakers… And our lawmakers disrespected all of us, by playing chess during testimony.”
The people’s business, indeed…
“To add to the list of ways local governments are grabbing a buck,” a reader chimes in after yesterday’s parking space outrage from Tel Aviv, “a friend in Philadelphia recently received a traffic citation for having a ‘For Sale’ sign displayed in the window of his legally parked automobile.
“Apparently, having a car with a ‘For Sale’ sign parked on a city street is now a citation offense. The total: $301.00!! So much for Brotherly Love!”
“As a regular reader and Jew with working knowledge of basic Yiddish,” writes another clarifying the use of the word ‘schlemielism’ in the Tel Aviv story, “I thought I would throw you a definition of schlemiel… basically it means someone who messes something up, usually through incompetence or disregard (a fool).
“There is a Yiddish joke… A schlemiel is the guy who spills his soup on the person next to him. A schlimazel is the fellow he spills it on.
“So in this, the city is the schlemiel, and the ticketed person was the schlimazel.”
“Devolution rears its ugly head in the most interesting places,” chimes in our final reader on the Tel Aviv incident.
“Oh well, as Laverne and Shirley say…
“Schlemielism! Schlemuzzelosity! Hasenpfefferocracy Incorporated!”
The 5: Oy…
The 5 Min. Forecast
P.S. Fancy this above the masthead of today’s Wall Street Journal…
If you’ve been with us for a while, you can imagine the angle they took…
“‘I was thinking about Ortega, Sandinistas,’ said Rina Anoussi, president of the Travel Business in New York, whose clients include art-world and entertainment celebrities. ‘I’m trying to absorb what kind of people I can sell this to — people with illicit love affairs? No one will see you.’”
But that’s changing, the Journal suggests, with the opening of the country’s first full-blown luxury hotel last week. It’s part of a $300 million development called Guacalito de la Isla… not far from Rancho Santana, our own little patch of paradise on Nicaragua’s Pacific Frontier.
Property values in the area are already on the rise with the arrival of the new development… which may be one reason we got overwhelming response to our invitation for the latest Chill Weekend at the ranch later this month. We’re filled up now, but we’re considering another for April. Watch this space for further announcements…