The market is closed today as Hurricane Sandy descends upon the East Coast. Given the dangerous conditions, our customer service department in Baltimore is also closed. We apologize for any inconvenience. We'll man the phone lines again as soon as it's safe. You can also send an e-mail to the customer service team at info@stansberryresearch.com, and they'll respond as soon as possible.
The vultures are starting to circle Spain...
Last week at our Alliance conference in Sea Island, Georgia, I moderated the closing, hour-long panel discussion, during which our editors and guest speakers responded to questions from the audience.
One attendee asked when it would be time to "buy Europe" again – when it would be safe to start investing in European assets. He noted the recent interest from the private-equity firms...
Billionaire distressed-asset investor Wilbur Ross last week said he's interested in Spanish banking assets. Ross bought 10% of the Bank of Ireland in the midst of the crisis. And he purchased a stake in British bank Northern Rock in conjunction with Richard Branson's private-equity arm, Virgin Money.
Currently, Ross says he's in talks "almost every week" with representatives from Spanish banks. "Maybe next year will be the year for Spain," he said. "We've been doing a lot of work in Spain. We've put a lot of time and effort into Spain, but haven't put any money in yet."
Spanish officials will set up a "bad bank" to absorb toxic debt. It's looking to strip some $235 billion of bad assets tied to real estate from Spanish banks. (Ireland followed a similar strategy.)
"Spain has yet to go through the catharsis of real estate," Ross said. "I don't know if it'll be another six months or another 12 months or whatever, but at some point, we might very well do something in Spain."
Private-equity behemoth Kohlberg Kravis Roberts (KKR) is also looking for opportunities in Spain. Speaking at a ceremony for KKR's new Singapore office, co-chairman and co-CEO Henry Kravis said there was "real opportunity" in Spain and other European nations...
"We're not in any way writing off Europe. In fact, we're putting money into Europe," he said. "What we like to do is invest in countries or markets when most people don't like to be there."
Kravis said Spanish assets are selling for "cents on the dollar." And his firm is looking at real estate, hotels, and banks.
Today, KKR announced it made an offer for Spain's NH Hoteles, Europe's third-largest operator of business-class hotels. KKR would buy bonds that would be converted into shares.
On the panel, Porter (quoting Steve Sjuggerud's maxim on timing investments) said the time to buy is when nobody is talking about Europe anymore. That's not the case today, but we may be nearing a turning point.
U.S. money-market funds, a major source of funding for Europe's banks, are tiptoeing back into Europe... Money-market funds' exposure to European Union banks at the end of September was 16% higher than a month earlier, according to credit-ratings agency Fitch Ratings. That's the third consecutive monthly rise. Still, exposure to European banks is less than 11% of total money-market assets – compared with a peak of more than 30% in May 2011.
And last week, the European Central Bank (ECB) reported Spanish bank deposits had risen for the first time in six months. Private-sector deposits rose to 1.5 trillion euros at the end of September up from 1.49 trillion euros a month earlier.
As you can see from this chart of Banco Santander, Spain's biggest bank, shares are bouncing off their bottoms...
Singapore commodity traders think the worst is behind them… A recent Financial Times article quotes the "Asia head of commodities at a major bank" saying, "China has clearly bottomed out."
Supporting that view, the newspaper noted... iron-ore prices have jumped 26% in the past two months. China's iron-ore imports reached 65 million tonnes last month – a 20-month high (which the Financial Times attributed the increase to steelmakers restocking).
The Chinese purchasing managers index – which banking and financial services giant HSBC maintains to measure manufacturing activity – rose slightly last month off the August lows. And the latest survey from banking and fund-management firm Macquarie indicates capacity utilization at China's steel mills rose in October for the first time since May, as orders increased.
If the downward trend in China's iron-ore imports really has turned the corner… it would be great news for companies like Brazilian mining giant Vale and Australia's iron-ore producer Fortescue. Vale is the world's leading iron-ore producer and sends around 52% of its product to Asia – the bulk of which goes to China. Vale recently reported a 66% drop in net profit for the third quarter – due in large part to China's economic slowdown. Fortescue is even more China-dependent... sending 96% of its product to China.
As you can see in the chart below… Vale hit a low of just less than $16 a share in early September, which coincides with the low in iron-ore prices. It's bounced 15% since.
New 52-week highs (as of 10/26/12): Navigators Group (NAVG) and Southern Copper (SCCO).
In today's mailbag… one subscriber describes how he's taken advantage of what we believe is the safest strategy for making consistent income in the markets… and another shares some boots-on-the-ground insight into the energy sector… Send your e-mail to feedback@stansberryresearch.com.
"Prior investing guides were 'select well, hold and forget' and try to trade only when qualified for long-term capital gains. The 'select well' was always a bit random. My track record was losses usually larger than gains and no real protection from large market swings.
"Purchased my initial membership about six months ago and after reviewing the advice given I took note first of the WDDG concept and specific recommendations and recognized most had risen above the recommended purchase level. Then reevaluated my holdings while also learning about selling puts and covered options and realized there was a better way to acquire desired stocks as well as a better way of unloading stocks that just selling. After several more months of reading and gaining option trading approval from my broker, I sold puts and covered options gaining $13,186 'free money', a portion of which I used to upgrade my membership.
"I am of an age where I do not tend to buy green bananas and favor stability, however I have come to realize it is profitable to utilize holdings for covered calls and if there is turnover this opens up opportunity to sell additional puts on WDDGs.
"Though I am a so-called 'rocket scientist', this has been almost as good a learning experience as when some years previously I met a retired IRS auditor, who stated he considered us engineers and school teachers the least informed about the hows and the whys of tax regulations. Conclusion: Never too old to learn how to make the rules work for you." – Paid-up subscriber Dr. TK
"'Japan is by far the world's biggest natural gas importer – bringing in a massive 116 billion cubic meters (bcm) last year. And it's a lucrative business for Qatari producers. According to Bloomberg, Japan pays around $18 for gas – up to six times more than domestic prices in the U.S."
"This is interesting, I live in Japan, but work at a U.S. base. The off-base price for gas is about 3 times the price as gas on base, offered through AAFES. If the mark up for Japan is 6 times more than domestic US prices, what does that say about how much the US is marking up the price at the pump?
"Of course there may be a difference in the end product, but this looks interesting all the same. Keep up the good work!" – Paid-up subscriber Joel S.
Goldsmith comment: We're actually talking about the price of natural gas, not gasoline (from the pump). That is a interesting observation, though.
Regards,
Sean Goldsmith
New York, New York
October 29, 2012
The market is closed today as Hurricane Sandy descends upon the East Coast. Given the dangerous conditions, our customer service department in Baltimore is also closed. We apologize for any inconvenience. We'll man the phone lines again as soon as it's safe. You can also send an e-mail to the customer service team at info@stansberryresearch.com, and they'll respond as soon as possible.
The vultures are starting to circle Spain...
Last week at our Alliance conference in Sea Island, Georgia, I moderated the closing, hour-long panel discussion, during which our editors and guest speakers responded to questions from the audience.
One attendee asked when it would be time to "buy Europe" again – when it would be safe to start investing in European assets. He noted the recent interest from the private-equity firms...
Billionaire distressed-asset investor Wilbur Ross last week said he's interested in Spanish banking assets. Ross bought 10% of the Bank of Ireland in the midst of the crisis. And he purchased a stake in British bank Northern Rock in conjunction with Richard Branson's private-equity arm, Virgin Money.
Currently, Ross says he's in talks "almost every week" with representatives from Spanish banks. "Maybe next year will be the year for Spain," he said. "We've been doing a lot of work in Spain. We've put a lot of time and effort into Spain, but haven't put any money in yet."
Spanish officials will set up a "bad bank" to absorb toxic debt. It's looking to strip some $235 billion of bad assets tied to real estate from Spanish banks. (Ireland followed a similar strategy.)
"Spain has yet to go through the catharsis of real estate," Ross said. "I don't know if it'll be another six months or another 12 months or whatever, but at some point, we might very well do something in Spain."
Private-equity behemoth Kohlberg Kravis Roberts (KKR) is also looking for opportunities in Spain. Speaking at a ceremony for KKR's new Singapore office, co-chairman and co-CEO Henry Kravis said there was "real opportunity" in Spain and other European nations...
"We're not in any way writing off Europe. In fact, we're putting money into Europe," he said. "What we like to do is invest in countries or markets when most people don't like to be there."
Kravis said Spanish assets are selling for "cents on the dollar." And his firm is looking at real estate, hotels, and banks.
Today, KKR announced it made an offer for Spain's NH Hoteles, Europe's third-largest operator of business-class hotels. KKR would buy bonds that would be converted into shares.
On the panel, Porter (quoting Steve Sjuggerud's maxim on timing investments) said the time to buy is when nobody is talking about Europe anymore. That's not the case today, but we may be nearing a turning point.
U.S. money-market funds, a major source of funding for Europe's banks, are tiptoeing back into Europe... Money-market funds' exposure to European Union banks at the end of September was 16% higher than a month earlier, according to credit-ratings agency Fitch Ratings. That's the third consecutive monthly rise. Still, exposure to European banks is less than 11% of total money-market assets – compared with a peak of more than 30% in May 2011.
And last week, the European Central Bank (ECB) reported Spanish bank deposits had risen for the first time in six months. Private-sector deposits rose to 1.5 trillion euros at the end of September up from 1.49 trillion euros a month earlier.
As you can see from this chart of Banco Santander, Spain's biggest bank, shares are bouncing off their bottoms...
Singapore commodity traders think the worst is behind them… A recent Financial Times article quotes the "Asia head of commodities at a major bank" saying, "China has clearly bottomed out."
Supporting that view, the newspaper noted... iron-ore prices have jumped 26% in the past two months. China's iron-ore imports reached 65 million tonnes last month – a 20-month high (which the Financial Times attributed the increase to steelmakers restocking).
The Chinese purchasing managers index – which banking and financial services giant HSBC maintains to measure manufacturing activity – rose slightly last month off the August lows. And the latest survey from banking and fund-management firm Macquarie indicates capacity utilization at China's steel mills rose in October for the first time since May, as orders increased.
If the downward trend in China's iron-ore imports really has turned the corner… it would be great news for companies like Brazilian mining giant Vale and Australia's iron-ore producer Fortescue. Vale is the world's leading iron-ore producer and sends around 52% of its product to Asia – the bulk of which goes to China. Vale recently reported a 66% drop in net profit for the third quarter – due in large part to China's economic slowdown. Fortescue is even more China-dependent... sending 96% of its product to China.
As you can see in the chart below… Vale hit a low of just less than $16 a share in early September, which coincides with the low in iron-ore prices. It's bounced 15% since.
New 52-week highs (as of 10/26/12): Navigators Group (NAVG) and Southern Copper (SCCO).
In today's mailbag… one subscriber describes how he's taken advantage of what we believe is the safest strategy for making consistent income in the markets… and another shares some boots-on-the-ground insight into the energy sector… Send your e-mail to feedback@stansberryresearch.com.
"Prior investing guides were 'select well, hold and forget' and try to trade only when qualified for long-term capital gains. The 'select well' was always a bit random. My track record was losses usually larger than gains and no real protection from large market swings.
"Purchased my initial membership about six months ago and after reviewing the advice given I took note first of the WDDG concept and specific recommendations and recognized most had risen above the recommended purchase level. Then reevaluated my holdings while also learning about selling puts and covered options and realized there was a better way to acquire desired stocks as well as a better way of unloading stocks that just selling. After several more months of reading and gaining option trading approval from my broker, I sold puts and covered options gaining $13,186 'free money', a portion of which I used to upgrade my membership.
"I am of an age where I do not tend to buy green bananas and favor stability, however I have come to realize it is profitable to utilize holdings for covered calls and if there is turnover this opens up opportunity to sell additional puts on WDDGs.
"Though I am a so-called 'rocket scientist', this has been almost as good a learning experience as when some years previously I met a retired IRS auditor, who stated he considered us engineers and school teachers the least informed about the hows and the whys of tax regulations. Conclusion: Never too old to learn how to make the rules work for you." – Paid-up subscriber Dr. TK
"'Japan is by far the world's biggest natural gas importer – bringing in a massive 116 billion cubic meters (bcm) last year. And it's a lucrative business for Qatari producers. According to Bloomberg, Japan pays around $18 for gas – up to six times more than domestic prices in the U.S."
"This is interesting, I live in Japan, but work at a U.S. base. The off-base price for gas is about 3 times the price as gas on base, offered through AAFES. If the mark up for Japan is 6 times more than domestic US prices, what does that say about how much the US is marking up the price at the pump?
"Of course there may be a difference in the end product, but this looks interesting all the same. Keep up the good work!" – Paid-up subscriber Joel S.
Goldsmith comment: We're actually talking about the price of natural gas, not gasoline (from the pump). That is a interesting observation, though.
Regards,
New York, New York
October 29, 2012