Posts Tagged ‘investing’

Here is the latest newsletter/article from Elliott Wave, one of my favorite trend researching and investment companies on the web today.

Think That Central Banks Move the Markets? Think Again
April 23, 2009

By Mark Galasiewski

The following is excerpted from Elliott Wave International’s Global Market Perspective. The full 120-page publication, which features forecasts for every major world market, is available free until April 30. Visit Elliott Wave International to download it free.

Conventional wisdom says that central banks can influence or even direct financial markets and the macroeconomy. The very existence of Elliott waves challenges such assumptions. For if markets responded to every central bank directive, how could Elliott waves exist? Parallel trend channels, Fibonacci price relationships, the similarity of form between waves of different sizes and time periods—none of that would be possible. Central bank decisions would have to coincide perfectly with turning points in Elliott waves, and we know that just doesn’t happen. But even without using waves, we can expose the conventional wisdom for the fallacy that it is.

Take, for example, this assertion in a recent article in a U.K. economic weekly: “Part of the aim of central banks in driving down interest rates is to encourage a greater risk appetite among investors.” Two key assumptions underlie that statement: a) central banks determine interest rates; and b) lower interest rates can increase society’s appetite for risk.

To see how the first assumption is false, let’s take a look at the daily chart of Australian interest rate data. It duplicates a study that Elliott Wave International has often done with U.S. interest rate data. It shows how movements in the cash target rate set by Australia’s central bank, the Reserve Bank of Australia (RBA), appear to follow those in 3-month Australian Treasury Bills. After decisive moves up in T-bills from 2006 to early 2008, for example, the RBA faithfully raised its target. T-bills have since led the RBA during the financial crisis of the past year. In fact, the record indicates that the RBA almost always follows T-bills over time.

The proper conclusion to draw is not that the RBA has orchestrated the decline in rates since the early 1980s—but that it’s been riding it. During good times, central bankers look like geniuses; during bad times, they get tarred and feathered. Closer to the truth is that their interest-rate decisions are not proactive, but reactive, and that they continually follow in the footsteps of the market for lack of any other useful guide.

Now let’s look at the second assumption: that lower interest rates increase society’s appetite for risk. A simple glance at the weekly chart shows this assumption to be false. After the 1987 crash, the ASX All Ordinaries actually rallied for two years on rising rates and then sold off through 1990 on falling rates. Stocks then rose in 1991 on continued falling rates and sold off in 1992 on even lower rates. Continue following the chart to the right and you will see that there is no consistent correlation between the direction of interest rates and that of the stock market.

The myth of central bank potency is so pervasive that conventional analysts can’t even imagine a better explanation for price trends: that the market is the dog wagging its central bank tail, not the other way around.

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For more information, download Elliott Wave International’s FREE issue of Global Market Perspective, available until April 30. The 120-page publication covers every major world market, global interest rates, international currencies, metals, energy and more.

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Mark Galasiewski is the editor of Elliott Wave International’s Asian Financial Forecast and member of EWI’s Global Market Perspective team covering Asian stock indexes.

If there was ever a maxim that lived throughout the ages of investing, sticking with “what everyone needs” certainly rings true today as it did 1000 years ago. That is, what “everyone needs” is basic necessities such as housing, food, clothing, healthcare products, and such items that people cannot live without for more than a few days. In economics we call this kind of item “demand inelastic,” which means that the demand for these kinds of items remains relatively the same as income decreases or increases compared to other items like cars, computers, and other luxury items like televisions and so on.

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The problem the US and Canada are facing is that a large portion of their manufacturing base has been off shored or sent to other countries in the past 20 to 30 years as so called trade agreements such as NAFTA, World Trade Organization, and other so called free trade instruments have been established which gave companies incentive to send middle class jobs to other countries which effectively stripped the parent coutnries of their bread and butter jobs, which eliminated or significantly reduced the spending power of the middle class.

Countries like Japan have, since the 70s to 1980s, pegged their currency to the dollar to take advantage of the manufacturing sector which gave incentive to US and Canadian producers to relocate to Japan or to allow more imports from Japan to be dumped into the US. Now we have a different problem: China, Mexico, Thailand, and Vietnam, but mainly China and its huge population base, extremely low standards, and manipulated currency.

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Since it is predicted that a large portion of the manfuacturing industry we have offshored in the past 20-30 years will return probable best way to attack this is to go back to Standard &Poor’s sector data for the time. However, it won’t be a very fine analysis as it would likely miss emerging industries. It is known that electronics were hot investments as the 1930s wore on– particularly radio, which was state-of-the-art at the time. Zenith Radio emerged as a leading producer: its stock languished until 1935 when it went from the range of 2-2 5/8 at the beginning of the year to 13 1/2 at the end of the year.

Many items, including stocks, reached a historic low in the early 30s.
Some never recovered, but others doubled from their low before the end of the thirties. Therefore we could be in a good buying position later this year, but it is assumed that large increases are unlikely from today’s position. Selling short would be smart before a crash later this year, but there is a fair chance weak prosparity will continue several more years, resulting in large losses for short sellers. So many things have changed since the 30s, and it is thought we won’t learn much, except that a disasterous crash is possible.

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Precious metals are where you can never go wrong since Canada has a large reserve of natural minerals, metals, elements such as uranium and paladium used in nuclear reactors and catalytic converts, respectively (not to mention other uses). Specifically, food and food production is pegged to become the next “big thing” in the United States as the world’s producer of food, or so the prediction goes.

In mainstream economics, the theory is that the primary sector is agriculture from where the development cycle begins for any country. After that comes the secondary sector (manufacturing) and then the tertiary one (services). USA is now sitting at the tertiary sector at the top of this value chain and China seems to be enjoying its manufacturing status. India just jumped from primary to tertiary because of its’ hopping on the information technology bandwagon.

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All one has to do is look at Canada and see fields of gold for there is tremendous potential in the prairies and the agricultural areas of the country including areas like Southwestern Ontario where there are areas full of tomatoe and other plant growing regions such as Leamington. In areas like this you will find millionaires already reaping the rewards of demand for quality produce that Canadian health standards enforce. It would be wise to agree with Mr. Roger’s views that farmers will become the next millionaires because as the previous paragraph explores, the economic theory is that the US and Canada are poised to shift back to an agricultural demand driven economy.

In addition to investing in commodities such as those found in the agricultural industry, the best additional bets would be to invest in essential metals like gold, silver, copper, and paladium because these metals will always be in need and will likely raise in price as the world consumes more of the latter two metals. Indeed, copper and paladium are increasingly being used in electronics and other modern applications.

Written by EconoChristian.com

The Canadian government has passed new legislation which extends the foreign worker visa program from one (1) to three (3) years in the past 6 months. On December 15, 2008, professionals seeking to work temporarily in Canada under the North American Free Trade Agreement (NAFTA) can now receive work permits for up to three years, the Honourable Jason Kenney, Minister of Citizenship, Immigration and Multiculturalism, announced today. Previously, NAFTA workers were required to renew their work permit every 12 months.

Below is a letter written by an EconoChristian.com writer who is dismayed with the Canadian government’s repeated attempts to displace and reduce the middle working class of citizen in that country. Indeed, it has already undermined middle class workers by its unfettered immigration policy which allows some 400,000 new immigrants into the country. Proponents argue that increasing immigration increases economic prospertiy, while critics argue it actually limits economic opportunity because a majority of immigrants granted citizenship are sponsors of highly skilled immigrants.

Skilled immigrants are what Canada needs, not the former type of person. Indeed, the reason so many immigrants are admitted is because a majority of them are sponsored into the country (often family members), but also because of humanitarian reasons. Essentially Canada is a dumping ground for all kinds of people who do not contribute anything substantial to the economy.

If one were to look at other countries such as Japan and other Asian countries, one will quickly discover that their economies are prosperous not because of increased immigration, but because of an export-oriented economy and a high savings rate that the Japanese have been known for and is ingrained in their cultural consciousness. Canadians, on the other hand, and Americans, have extremely low savings rates and are actually borrowing money from places like China. Take a look at the growing trade deficits and the US dollar holdings of treasuries the Chinese have because of these deficits.
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OUR GOVERNMENT’S OWN RESEARCH CONTRADICTS WHAT IT IS DOING

The federal government’s own research has told it that with regards to Canada’s economy, immigration consumes 99% of the economic benefits it produces. With regard to population decline, in 1990, when Canada had a population of 26+ million, Health and Welfare Canada’s demographic research told the federal government that Canada’s population would continue growing until 2026 with half (130,000) the immigration we have today, so population decline should not have been an issue to be looked at in 1990. The same Health and Welfare study concluded that Made-In-Canada alternatives (such as making use of 45+ year old unemployed males and encouraging more females to enter the workforce) are superior to immigration in dealing with a larger number of older people in Canada.

In other words, the federal government’s research contradicts what it is doing. (See highlights of the major federally-sponsored studies entitled “Charting Canada’s Future” and New Faces In the Crowd” in the “Research” section of this web site) (Canadian Immigration Watch, 2009).

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Dear Readers,

I am writing to protest my dismay to the changes in the Federal government’s immigration rules which now allow foreign workers to remain in Canada for three (3) years instead of one (1) year. I am writing you to halt your destruction of the labor force of our country, as well as undercutting the permanent residents of Canada by importing cheap labor from other countries.

The United States has taken similar steps to fill supposedly vacant positions for which employers “can not find applicants” for, particularly in the engineering, scientific, and information technology fields, by instituting the H1B Visa program. Much evidence, particulary from government studies, institutes, and numerous other think-tanks have found that there is indeed no such labor shortage (1) and that the only reason the government has instituted such “temporary” guest worker programs is to undercut the American working class.

There is strong evidence [2,3,4] from numerous think-tanks and institutions showing that a similar situation in Canada is developing, and that the real reason we are changing our immigration rules to allow more supposedly highly-skilled immigrants and foreign workers is just to undercut permanent Canadian resident citizens’ earnings. An example is the skills and labour shortage in the Eastern Canada region (2), where top University professors dubbed Nova Scotia a “low wage ghetto” due to the increase in productivity in the past 15 years, but an overall reduction in wages.

Why would someone stay in a Province that continually reduces wages, does not allow workers to easily unionize, or has an employer which does not participate in training and/or profit-sharing programs?
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I severely question why our elected representatives and those whom we pay taxes to continually try to undermine our way of life by importing cheaper labor from other countries instead of providing incentives to corporations/companies to train existing employees in “higher skilled labor” or paying them sufficient wages to perform “jobs that regular Canadians do not want to do.”

I am also very, very disappointed that you, our elected representatives, do not invest public funds or provide tax incentives for companies to train permanent resident Canadians in the the areas of the economy that need these workers.

Indeed, this kind of practice was largely shown to have been extremely detrimental to other countries in the past who have practiced completely open borders, such as the Corn Laws of Great Britain; the bracero program of 1942-1964 that is so often touted by immigration enthusiasts as the example of how well such things work; as well as a study in 1991 by the Economic Council of Canada found that periods of immigration were not directly linked to periods of high growth [6].
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A study by the C. D. Howe Institute, a conservative think tank, suggests that immigration cannot keep Canada’s population young and could possibly contribute to population ageing in the near term.[3] Employment statistics also bring into question whether skilled worker immigrants, with a 34% unemployment rate,[4] are successfully meeting existing labour market needs in Canada. Many developed nations have much lower fertility rates than Canada but have not embraced immigration (Japan, Korea, etc).

In conclusion, I am writing to you to do your duty and lobby the Federal government to limit the amount of immigrants we admit each year, as well as reduce the amount of time temporary workers from other countries stay in our country; taking our positions when a fully-qualified or potentially fully-qualified Canadian could already take the job. I am very tired of paying taxes to our government when it does nothing to attract and retain quality companies to provide spending power to permanent Canadian residents.

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Canadians are not fooled by the government Public Relations material which is released to the media for consumption of the public. We do our home-work and experience these events daily and we do not agree with the increases in immigration or the need for longer-staying foreign workers when permanent resident Canadians could be trained to fill these jobs.

Sincerely,

Author

Windsor, Ontario

References:

(1) A study by the Pratt School of Engineering at Duke University also found that there is no shortage of U.S. engineers. Eighty percent of respondents to a Pratt survey say U.S. engineering jobs are filled within four months, and 88 percent didn’t offer signing bonuses.

(2) Larry Haiven, a professor at Saint Mary’s University, said the report he wrote for the Canadian Centre for Policy Alternatives shows while productivity has increased over the past 20 years, Nova Scotia’s wages are lagging far behind.

(3)No Elixir of Youth: Immigration Cannot Keep Canada Young, Backgrounder, C. D. Howe Institute, Number 96, September 2006, URL accessed 29 November 2006

Democracy is a popular phenomenon currently embracing political and governmental systems throughout the world. An increasing number of countries are or have been shifting toward open elections, improved human rights, granting of free assembly, freedoms of speech, and other seemingly-Western concepts of how populations of people should be governed. We’ve seen this trend increasing in countries like Russia, after the fall of the Soviet Union; Iraq, currently being forcefully converted to a democratic state with the aid of the United States; and it doesn’t seem to be stopping.
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Countries such as Iran, Afghanistan, and other traditionally-Islamic states have been seen as targets for Western-style Imperialism. Here the primary objective of the most Western states seems to be the acquisition of economic resources in the arrogant guise of freeing the worlds’ people under tyrannical governments often founded upon secularist, dictatorial regimes (the Iraqi War of 2003 would be a prominent example). Here we see the beginnings of conflict between civilizations.

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Samuel Huntington is one of the most popular authors of our time who’s contemplated the idea of a conflict between civilizations, particularly between Western and Islamic states. In his book “The Clash of Civilizations and the Remaking of World Order” (1996) he argues that cultural differences between, for instance, Islam and Western cultural values are clearly in opposition to each other and that differences between these two cultures occur not along ideological lines but “civilizational” (ie. Western, Hindu, Islamic). He managed to determine that to understand the idea of conflict, we must comprehend the cultural cleavages and that culture must be seen as the centre of war.

Huntington (1996) argues that, because the Koran rejects the distinction between religious and political authority, Islamic civilization cannot easily coexist with democracy. In addition, Kedourie (1994) maintains that mass egalitarianism, elections, and representation are “profoundly alien to the Muslim political tradition” (Kedourie, 1994). Moreover, Shariah Law – to which the very foundation for the legal system borne for both secular and religious lives of Muslims – not only covers religious aspects of their lives but also many day-to-day dealings of life including politics, economics, and social issues.

Here we see direct conflict with the fundamental virtues of democracy wherein liberal democracy affords everyone to the same rights, freedoms; right to life, liberty, security of person; and that no one shall be held in slavery of servitude (United Nations Declaration of Human Rights, 1948). Islamic law, on the other hand, declare women to be essentially inferior to men; that immigrants or non-islamic people living in Muslim countries are declared inferior; those of the atheistic tendency are also thought to be inferior (violating freedom of religion under Article 2 of UNDHR); and lastly, Sharia recognizes slavery (which also violates UN declaration of human rights). How then, would those practicing Islam be able to peacefully co-exist with those exercising secular ideals as outlined in most Western-state constitutions and Charter of Rights? Given these short contrasts, those of Islamist and democracy-driven ideals cannot – and will not – be able to peacefully co-exist with one another.
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The first problem with the claim by some that Islam would be able to co-exist with liberal, democratic ideals would surely be the issue revolving around the separation of Church from State. Indeed, one of the fundamental bases of democracy has been the separation of the two because of the inherent problems when governments attempt to adopt non-secularist laws and customs. Given a country as the United States or Canada, where the populations essentially descended from immigrants of differing backgrounds, coming to a consensus revolving around which religion to adopt would have been a feat in itself. Claiming to officially support one religion over another would undoubtedly lead to accusations of discrimination in countries like Canada where equality rights are deeply entrenched1. The foundations of such ideas of separation came as early as John Locke and other philosophers of the enlightenment. Locke gave many reasons for this separation of Church and State in his “A Letter Concerning Toleration”: First, because souls are not committed to the state [magistrate] any more than other people; secondly, because the care of the spirit cannot belong to the state because its power consists only in external matters (not of the soul) (Locke, 1689).
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In summation, what he’s describing is the business of the state has no right to interfere with the conscience or thought of its citizens; a fundamental, liberal-democratic ideal. The Founding Fathers of one of the greatest democracies in the world defended religious freedom in adoption of a Bill of Rights where the rights of religious minorities were outlined, among other things2, to avoid discriminatory practices by Government. Looking toward Canada we see similar traits in the Court ruling of Canada v. Big M Drug Mart Ltd [1985] where it ruled that a 1906 statute required most places to be closed on Sundays did not have a legitimate purpose in a “free and democratic society3,” and was ruled an unconstitutional attempt at establishing a religious-based closing law. Here we see the successful separation of Church from State. Islamic societies, on the other hand, have had much harder times in separating religion from state operations mainly because the very idea of Islamic society is the integration of religion and state.

The separation of Church and State in Islamic societies, as it’s already been mentioned, is a much more difficult matter and only a couple states have been “successful” in implementing such strategies4. The reason Islamic societies have not been very successful in co-habitating with other religions is due to its’ inherently xenophobic and intolerant teachings toward other religions and beliefs such as those associated with the countries of Sudan, Libya, and Afghanistan (NY Times, 2000). From the perspective of Westerners, Islam presents a structurally intolerant religion (Hofman, 1998, p. 142) as demonstrated by the strict Shariah law that forms the basis of these societies.
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Undoubtedly, the usual Muslim view has been that Islam does not allow distinction between the temporal and the sacred or between religion and state that has been the defining feature of the secular West (democracy) since the beginning of the Enlightenment. Whereas Islam stands as a religion and fundamental way of life for those living under its rules, democracy and its propensity toward individual choice leaves much to be desired in the eyes of Islamists. Democracy could never be considered as such a strong unifying force than Islam could ever aspire to be.

Download the full report here in PDF format

This has been a pressing issue for the United States since 1994 when China started to peg it’s currency to the United States dollar. In 2005 it started to change this pegging regime to a more managed, floating currency policy in which it would be weighted against other currencies including the US dollar.

The Chinese deny any claims that they have been manipulating their currency, but it is clear they have been and are still doing so now as we speak. Why else would they change their pegged currency regime in July 2005?

By REUTERS

Filed at 7:45 p.m. ET

WASHINGTON (Reuters) – President Barack Obama should consider new steps to stop “China’s ongoing manipulation of its currency,” including a possible case at the World Trade Organization, U.S. congressional Democrats said on Monday.

“We urge the new administration to consider a new approach,” top Democrats on the House of Representatives Ways and Means Committee said in a letter to Obama one day before the U.S. Trade Representative’s office was scheduled to release its annual report on foreign trade barriers.

Many U.S. lawmakers have complained for years that China’s currency is undervalued and gives Chinese companies an unfair price advantage. The concern is fueled by the huge U.S. trade gap with China, which hit a record $266.3 billion in 2008.

Obama will meet with Chinese President Hu Jintao later this week in London, where both are attending a summit meeting of the Group of 20 developed and developing countries.

Last year, House Ways and Means Democrats used the March 31 trade barriers report to excoriate the administration of former President George W. Bush for failing to aggressively enforce U.S. trade agreements and act on currency concerns.

They demanded Bush immediately begin formal WTO consultations with China and to “file a WTO action if China does not agree swiftly to begin to revalue the yuan.”

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This year’s letter to Obama was softer in tone, but said the Bush administration policy of “quiet diplomacy” to pressure China to raise the value of its currency had failed.

They urged Obama to consider several options to increase multilateral pressure on China, including insisting the International Monetary Fund enforce its rule that members “avoid manipulating exchange rates … to gain an unfair competitive advantage over other members.”

Other actions could include bringing a case at WTO, beginning multilateral talks aimed at reducing currency-driven imbalances and enforcing existing U.S. trade and exchange rate laws, the Ways and Means Democrats said.

During last year’s campaign, Obama also criticized China for manipulating its currency. Earlier this year, U.S. Treasury Secretary Timothy Geithner angered Beijing when he repeated those comments to the Senate Finance Committee.

China has proposed shifting away from a dollar-dominated world in favor of new a global reserve currency under the International Monetary Fund. That has prompted both Obama and Geithner to defend the current system.

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The Obama administration soon will have its first official chance to say whether it believes China is manipulating its currency when the Treasury Department issues a semi-annual report on foreign exchange rate practices.

That report is due on April 15, but is often late because of the sensitivity of the issue.

The Ways and Means Democrats noted the Bush administration was the only one not to label any country as a currency manipulator since the report was created in 1988.

“China’s massive, prolonged, one-way and sterilized intervention in the currency market, its unprecedented foreign exchange accumulation ($1.9 trillion), and its massive current account surplus demonstrate that, once again, China is manipulating its currency,” the lawmakers said.

One of the ways people can save a lot of money is buying the right automobile insurance.   The problem is that most consumers make many mistakes in choosing the best insurance policy for their vehicles and themselves.  Many people falsely believe that they are getting the best deal for their money with the company they are with and become comfortable with the company and/or the broker.

Here are six inside-tips to save on automobile/car insurance

1. Raise your deductibles. These are the amounts which you pay out of pocket before the insurance company pays out anything. For example, raising your deductible from 900 to 500 dollars will reduce your premium from 10 to 20 per cent. Raising it from 1000 dollars will save 25 to 30 per cent.  It may pay to absorb the cost of accidents yourself, as well.
2. Drop your collision ad comprehensive coverage if you have an older car. After all why pay a premium on a vehicle you will probably replace if its badly damaged? Read the rest of this entry »

Certainly the prevailing knowledge of our parents’ time was that every young boy or girl would attend a prestigious University when they grew up. Back in the day when the Western economies were more stable than they are today, this may have been the best path a parent could put a child on. However, in today’s economies, employers want students who are ready to “hit the ground running” and be productive immediately.

Gone are the days of our parents or grandparents when they simply had to walk into a company or corporation, apply for a job, and if you had any sort of brains (this would be proven by a test they would often administer), you would be hired and then trained at the company’s expense. Today, however, employer-paid education is on the down-low. There are many theories as to why this is, but the most hard evidence explaining this situation has been that the competition is too stiff for young people. There are simply too many people with “education” on the job market nowadays, often without the necessary experience needed to get you that career.

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Today, students and young people need to attend a community college, subsequently attend University, and if you have the grades high enough, attend a Masters program. This all seems like a lot of work, but many institutions now are working together to stream-line colleges and Universities. On a similar vein, while many institutions encourage students to attend their college and under-graduate courses in-person, many are additionally encouraging their students to complete on-line Masters degrees. This option can have many benefits including being able to complete it while at home, part-time during a full-time career.

Honestly, if you earn an on-line Masters degree in art, science, or management, you will be in much better shape than the students just coming out of University with undergraduate degrees and no experience. With that, some of the best online Masters degrees I am mentioning below:

On-line Master of Arts (MA):
Being primarily researched-oriented, these kinds of degrees are perfect for completion at home during your part-time hours. This sort of Masters degree is normally awarded all over the world and is normally studied-for in areas like Humanities, science, and the Arts.
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On-line Masters of Education (M. Ed.):
If you are a current teacher or thinking about becoming one, these kinds of degrees are perfect for being more competitive in terms of salary increases later in your career. Usually these types of degrees require 40-48 credit hours to complete.