Forget the U.S. Market — Your Money May be Safer in This Country…
December 31, 2011 by stanh
Filed under Misc. Articles
It has been a crazy year for U.S. stocks, with the market surging higher into the spring, slumping badly in the summer and regaining some lost ground as the year came to a close. After all that swing, the S&P 500 stands right where it was last Christmas.
Our neighbors to the north have not been so lucky. The iShares MSCI Canada fund (NYSE: EWC), which owns a basket of that country's largest companies, has slumped 15% in the past year. In fact, the fund is right back where it stood in February 2007. This flat performance is a bit curious when you take a deeper look at the Canadian economy, which in many respects, stands on much firmer footing than the U.S. economy. As such, Canadian stocks represent a great opportunity.
To be sure, the U.S. and Canadian economies are heavily interdependent. But recently, the Canadian economy has demonstrated resiliency even as the U.S. economy has sputtered. In the third quarter of 2011, the Canadian economy grew at twice the pace of the U.S. economy. This marks the sixth-straight quarter the Canadian economy has grown at a faster clip.
Some of the growth differences can be explained by the structure of the two economies. Canada has a greater focus on natural resources and is benefiting from rising output at key mines and energy fields. Yet another part can be explained by the confidence business leaders express. In the past four quarters, the Institute of Supply Management's (ISM) index of purchasing managers has been stuck in a tight range of 50.6 to 52.7 here in the United States. (Any number above 50 signals an upturn in activity). In Canada, the same survey has yielded readings between 55.6 and 63.4. Simply put, Canadian firms are ending 2011 on a much more bullish note.
Looking beyond recent economic indicators, the Canadian economy stands on firmer footing by other key measures as well. Take a look at the stats in this table:
Canada consistently runs a trade surplus with the United States, invests more in math and science education, and has better health care (as measured by infant mortality and life expectancy). These are key determinants of the long-term health of an economy.
Now consider these facts:
• The United States has four times more arable land than Canada, yet has 27 times the amount of actual farmland in production. This means Canada has much more expansion potential in terms of future agricultural production. Recent persistent droughts in the U.S. southwest and a trend toward warming winters in Canada could push the amount of arable land in Canada closer to U.S. levels.
• The Canadian government's total debt peaked at 3 billion in 1997 and has stayed below that level ever since. The U.S. government's debt load has surged throughout the past decade and now stands at .1 trillion. So government debt, as percentage of gross domestic product, stands at around 100% in the United States, while this figure stands at just 32% in Canada.
• Canadian unemployment peaked at 8.7% in September 2009 and now stands at 7.4%, more than a percentage point below U.S. levels. This has a direct effect on government finances, as fewer people need social services support.
This isn't to say that the United States in deep trouble. Indeed, I've written recently on several occasions that the U.S. economy still has tremendous long-term growth potential. But you can infer that Canada is better-positioned to withstand any possible speed bumps in 2012 related to the European crisis. Moreover, with a much smaller level of government debt, Canada is less exposed to a potential systemic shock in the event of bond-market shocks that boost government borrowing costs. Lastly, tackling the relative debt loads is likely to require much greater austerity in the United States than it is in Canada. So even as the upside for the U.S. and Canadian economies are similar, the downside scenarios are starkly different.
This is why an investment in Canada makes so much sense right now, especially since the iShares MSCI Canada fund has lagged the S&P 500 by about 15% this year. It presents an opportunity to buy a developed, yet still promising economy at a bargain price.
So what does the fund hold? Well, bank stocks predominate, as Royal Bank of Canada (NYSE: RY), Toronto Dominion Bank (NYSE: TD), Bank of Nova Scotia (NYSE: BNS) and Bank of Montreal (NYSE: BMO) are four of the top six holdings and account for roughly 18% of the fund. Canadian banks never loosened their lending standards back in the middle of the last decade and have come out of the recent financial crises virtually unscathed. Those banks are all moving to take market share in the United States while beleaguered U.S. rivals such as Bank of America (NYSE: BAC) retrench.
Commodity stocks such as Barrick Gold (NYSE: ABX), Suncor Energy (NYSE: SU), Potash Corp. (NYSE: POT) Goldcorp (NYSE: GG), and others make up about half of the fund. The rest of the fund is made up of key transportation and industrial firms.
Risks to Consider: The United States remains Canada's biggest trading partner, so any deep economic distress south of Canada's border will be felt — to an extent — in Canada as well.
Action to Take –> If countries were looked at as companies, then the United States is in need of a restructuring, while Canada looks set to benefit from prudent management choices. Sound government finances, a healthier and more employed workforce, and a vast trove of commodity resources make Canada an appealing long-term investment. If you're looking for a stable place to diversify your investment dollars in 2012, you'll find few better options than the MSCI Canada fund.
– David Sterman
This article originally appeared on StreetAuthority
Author: David Sterman
Forget the U.S. Market — Your Money May be Safer in This Country…
U.S. stocks start last session of 2011 lower
NEW YORK (MarketWatch) — U.S. stocks began the final trading day of the year mildly lower with Europe’s troubles in view. Ahead of Friday’s opening bell, Spain’s new government unveiled austerity measures and said it expects a 2011 budget gap of nearly 8%. The Dow Jones Industrial Average fell 12.79 points to 12,274.25. The S&P 500 shed nearly 1 point to 1,262.13. The Nasdaq Composite fell almost 2 points to 2,612.15.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
Airline stocks dip and are off sharply for 2011
WASHINGTON (MarketWatch) — Airline stocks declined Friday, the last trading day of the year. The NYSE Arca Airline Index slipped about 1% to 34.47 points with all but four of its 15 components trading off. Shares of US Airways fell 1.3%, Delta Air Lines lost a fraction and Hawaiian Holdings declined more than 2%. Shares for American Airlines parent AMR Corp. fell about 34% after the company said its stock would be delisted on Jan. 5. The Arca Airline Index is down more than 30% because of withering demand and high fuel prices, versus a relatively flat Standard & Poor’s 500 Index , the market benchmark. Next year isn’t shaping up to be much of an improvement, though Wall Street expects most airlines will be profitable.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
Trading Psychology for Newbie
I have been wondering how to teach myself to think and to approach the trading business like a successful, independent or employee, professional traders of Capital Markets.
Honestly, I’d rather learn from successful independent traders because as an employee they would most likely have pricey resources that are not available for retail traders due to money constraints.
I’ve got a good boost regarding the Trading Psychology, Healthy trading, and Money Management aspects of trading using the DIY Mastery Kit tools. I’ve spent about k and, imho, it’s a good one for someone who start to discover the Trading psychology of it.
SubConcious training, which is basically positive trading affirmations is pretty good besides the fact that there are really good guest speakers giving lecture in the Mastery Kit.
International veteran traders like Joe Ross, Roy Barros, Steve Nison, Norman Hallet, were all take parts in the mastery kit.
I’ve come across this kit on ebay. There’s one for Bid on ebay that will end in January 3rd, if you guys are interested:
http://www.ebay.com/itm/NEW-MASTER-T…-/270883682948
However, I would still like to ask forum participant if you would be willing to share some good one in this posting.
Looking forward to hear good bits from fellow traders of Capital Markets.
Nasdaq on track to end 2011 in red
SAN FRANCISCO (MarketWatch) — Technology stocks were mostly lower Friday, with the Nasdaq Composite Index on track to wrap up 2011 in the red. The benchmark lost about 3 points, or 0.1%, at 2,612, and was down about 1.6% for the year. Major tech shares posted fractional declines, including Cisco Systems , Oracle Corp. and Dell Inc. . Slight gains came from Hewlett-Packard , Google Inc. and Amazon.com . The Morgan Stanley High Tech 35 Index and the Philadelphia Semiconductor Index were each off a fraction.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
Professional Women and a Secure Retirement
The first generation of highly paid professional women is about to enter retirement—and their path could serve as a model for others
Gold rebounds; oil falls below $99
SAN FRANCISCO (MarketWatch) — Gold futures rose Friday, rebounding from a 4.7% six-session loss as crude-oil futures edged lower to trade below a barrel. Gold for February delivery was up .80, or 1.7%, at ,566.70 an ounce on the Comex division of the New York Mercantile Exchange. Futures prices are poised for a gain of around 10% for the year. February crude oil traded at .82 a barrel on Nymex, down 83 cents, or 0.8%. Crude futures trade around 8% higher year to date.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
Two Lectures On The History Of Austrian Economics
December 31, 2011 by stanh
Filed under Misc. Articles
When it comes to the types of people in this world, there are those who say that the only way to fix the current economic catastrophe is to keep doing more of the same that got us in this condition in the first place (these are the people who say mean regression is irrelevant, and 10 men and women in an economic room can overturn the laws of math, nature, physics, and everything else and determine what is best for 7 billion people), and then there is everyone else. The former are called Keynesians. The latter are not. Only those in the former camp don’t see the lunacy of their fundamental premise, a good example of which is the following. Luckily, the world is nearing the tipping point when the camp of the former, which for the simple reason that it allowed the few to steal from the many under the guise that it is for the benefit of all, is about to be overrun, hopefully peacefully and amicable but not necessarily, and the camp of the latter finally has its day in the sun. Naturally, when that happens the status quo loses, as the entire educational and employment paradigm is one which idolizes the former and ridicules the latter even though the former has now proven beyond a shadow of a doubt it is a miserable failure (ref: + trillion excess debt overhang which will, without doubt, lead to a global debt repudiation or restructuring, with some components of “odious debt”). So for all those still confused what some of the core premises of the ascendent “latter” are, below we present two one-hour lectures by Israel Kirzner. We urge readers to set aside two hours, which otherwise would be devoted to watching rubbish on TV or waiting in line for In N Out burger, and watch the two lectures below. Because, contrary to what the voodoo shamans of failure will tell you, there is a way out. It is a very painful way, but it does exist. The alternative is an assured and complete systemic collapse once the can kicking finally fails.
Part 1:
Part 2:
h/t ZH_Crown
Mid-Day Report: Euro Extends Fall after Italian Auction
Euro extended its broad based decline after Italian bond auctions. Italy sold EUR 7.02b of 3- to 10-year bonds today, below maximum target of EUR 8.5b. Sales of 2022 bond hit max target of EUR 2.5b. Yield was just below the unsustainable 7% at 6.98% even though it dropped from
Action Insight (Market Overview)
Airline traffic weakens globally for November
WASHINGTON (MarketWatch) — Global air traffic demand weakened further in November as the world economy softened, the International Air Transport Association said Friday. International passenger traffic rose 4.3% for the month, but that number is skewered by an uncommonly weak year-ago period, the trade group said. Freight markets declined 3.1%. Load factors, or the percentage of seats filled, fell to 76.3% from 78.5% in October. “Regional differences are sharp. While North American carriers saw a 0.8% decline in travel, carriers in the Middle East experienced a 10.1% increase, followed by 9% for Latin American airlines,” IATA said in a statement.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
