An article titled ‘Industry Fears U.S. May Quit New Car Habit’ asks this question:  “For all the drastic cuts and financial overhauls that are meant to secure a future for General Motors and Chrysler, their prospects in coming years will be determined more by the answer to a simple question: Can American drivers live without that new-car smell?”.  It is a question I have been pondering for at least the past 4 months.  4 months ago my wife and I were contemplating trading her car.  We didn’t, largely because we found the trade-in value of her car had dropped precipitously last October – November, and that drop in trade-in value was not matched by a % drop in new car sticker prices let alone a matching drop in absolute $ prices.

As I have said many times on this blog – and as reported in the referenced article - in the 2002 – 2007 period Americans borrowed against their houses, had access to easy credit, and in the case of ‘new car

Continue Reading »

Email this Post to a Friend.

An article titled ‘Consumer sentiment rises in May; better times seen’ says “U.S. consumer sentiment rose in May, reaching the highest level since September, as more Americans feel the end of the recession is approaching, according to a survey released Friday by the University of Michigan and Reuters”, stating that the consumer sentiment index rose to 68.7 from 65.1 in April.  The article says that in mid-May the estimate was 67.9 and that economists were looking for a final May result of 68.  Consumer sentiment was at a 28 year low last November at 55.3, and has averaged 88.2 over the past 10 years. That said, the Michigan report says the Consumer Expectations Index rose to 69.4 in May from 63.1 in April, and is up 27% over the past three months.  Finally, in the past few days The (U.S.) Conference Board reported that the one-month increase in confidence indicated that consumers believe the economy’s worst has passed.

I find these different indices confusing and difficult to assess in the context of how meaningful they are.  According to Wikipedia:

•    the University of Michigan Consumer Sentiment Index ‘is a consumer confidence index’ normalized to a value of 100 in December 1964, and is based on 500 telephone interviews each month in which 50 core questions are asked.  The objective is to gain a near term assessment of consumer attitudes on the business climate, personal finance, and spending; and,

•    the U.S. Consumer Confidence Index is normalized to a value of 100 in 1985.  5,000 households are each asked 5 questions about current business conditions, business conditions for the next 6 months, current employment conditions, employment conditions for the next 6 months, and family income for the next 6 months.

Whether meaningful conclusions can be drawn from these surveys will depend on at least the efficacy of regionality of respondents, whether the surveyed populations are representative of the population as a whole, and the consistency with which the questions are asked.  I would be surprised if these things are not accounted for in the surveys.  That said, I find it difficult to believe a cross-section of U.S. households collectively think things are getting better when jobs continue to the lost.  Accordingly, I for one do not place much weight on these reports, but rather look to the actual retail sales numbers when they are reported.

Click here for Oil & Gas Stock Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

An article titled ‘Billions of bacteria produce nickel and clean water’ says that Vancouver’s BioteQ Environmental Technologies Inc. has developed a process called anaerobic respiration where bacteria “breathe in” sulphur and “exhale” sulphide, a substance used to crystallize nickel remnants in water generated in Xstrata PLC’s Raglan Mine, near Kattiniq, Nunavik - which nickel remnants can be extracted and sold along with the rest of the mine’s production – and that armed with new funding from the Canadian National Research Council “BioteQ is adapting its method for one of Canada’s toughest environmental conundrums: how to deal with massive amounts of contaminated water generated by the oilsands in Alberta”.  The article also says Brad Marchant, CEO of BioteQ is confident of a solution by this time next year, and quotes him as saying “A lot of water problems are the same (across) industries”.  To put experimental oilsands remediation into perspective, the article reports that this remediation effort has received recent Canadian Federal Government commitments of at least $1 billion.

While there is no assurance that such a process will work in the Canadian Oil Sands, and the article itself quotes at least one doubter, this is an interesting development that I think bears watching.  The Canadian Oil Sands represent approximately 1/3 of the world’s known oil reserves in circumstances where the referenced article says new UN data largely blame the oilsands for a 4% jump in carbon emissions to 747 megatonnes in 2007.  It seems inconceivable to me that the Canadian Oil Sands will not be developed.  That technology is required to ensure the ‘greenness’ of extraction going forward is not surprising.  That such technology will be developed, while not certain, surely can be assigned a high probability given the need to extract that oil commercially combined with scientific ingenuity.

Click here for Canadian Oil Sands Company Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

An article titled ‘GDP hints recession is moderating’ says that reports released this morning says the U.S. economy contracted slightly less than initially estimated in the first quarter and U.S. corporate profits rebounded – and that U.S. GDP, which measures total goods and services output within U.S. borders, dropped at a 5.7% annual rate (forecasters expected a drop of 6.1%, down from a 6.3% annualized decrease in Q4 2008. Exports fell 28.7% in Q1 2009, the largest decline since Q4 1971 (the decline was 23.6% in Q4 2008.  Business investment dropped by 36.9% (a record) and residential investment dropped 38.7% (the biggest decline since Q2 1980).  Importantly (as I see it) U.S. consumer spending rose 1.5% - albeit lower than the 2.2% estimated last month by the U.S. government.

These numbers are better than I would have expected.  As best I know, in 2008 U.S. Government revenues were approximately U.S.$2.6 trillion.  Assuming a direct relationship between GDP and U.S. Government revenues – which I think is unlikely to be accurate but likely to be directionally correct – a 5.7% reduction in GDP would, all other things equal, result in an approximate U.S.$150 billion in U.S. Government revenues in 2009 from 2008.  A second article written by Casey Research says that “when you add in all revenue from all sources (including Social Security revenue, government fees, etc.), the fiscal year-to-date – October through April – revenue shortfall comes to 19%, vs. the 14.6% projected in Obama’s budget, and that in the midst of the Great Depression, the 1931 federal tax revenues had fallen by 52% from their 1929 highs. While we do not expect anything that dramatic in 2009, it would not be unrealistic to see a 20% to 25% reduction in cash flow from tax collections this tax season. Such a drop would pose significant challenges given that spending commitments are off the charts and climbing”.

Reduced U.S. Government revenues – at whatever amount they finally come in at – will increase U.S. Government deficits and the U.S. Cumulative National Debt.  This has to be a significant concern.  As I have said in prior posts on this blog, U.S. jobs must go positive and the U.S. consumer must spend so as to directly and indirectly create U.S. Government, State and Municipal tax revenues - or in my view there is nowhere economically positive for the U.S. (and to some degree the rest of the world) to go any time soon.

Click here for Gold Mining Stock Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

A recent article titled ‘Mexico’s Woes: Quakes, Flu and Oil Production Collapse’ says Mexico’s oil production has been ‘collapsing relentlessly, and the the author can’t recall a single forecast by PEMEX that was not undercut later by worse than predicted production data.  The article reports that Mexican oil production fell 7.8 percent in Q1 2009 to 2.7 million barrels/day and that “The trajectory here is on pace to take Mexico’s output from 3.4 Mb/day as recently as early 2005, to 2.4 Mb/day perhaps as soon as this Fall”.   A question not addressed in the article is what these oil production declines will mean to Mexican Government revenues, and what alternate revenue sources might be available to the Mexican Government.  Clearly one place the Mexican Government could look for revenues are mining producers operating in Mexico – perhaps particularly those that are foreign owned.  While presumably the Mexican Government would have to walk a careful line so as not to dissuade mining companies operating in Mexico from reducing investment in exploration and mine development, that is not to say that it could not target such companies going forward for incremental income tax revenues.  I am not suggesting that it is by any means a certainty the Mexican Government will do this, but I think it is something investors in mining companies operating in Mexico ought to consider and possibly factor into their thinking going forward as they research, and do their research updates, on those companies.

Click here for Gold and Silver Mining Company Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

An article just released titled ‘12 pct. are behind on mortgage or in foreclosure’ reports that “a record 12% of (U.S.) homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit”, and that according to the Mortgage Bankers Association “the wave of foreclosures isn’t expected to crest until the end of next year”.  The article also says the foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures, and that almost 6% of fixed-rate mortgages to borrowers with good credit were in the foreclosure process while almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure.

I consider these statistics shocking.  How people could be so foolish as to borrow beyond their means without considering the consequences is to me even worse than the borrowers lending them the money.  Ultimately I believe everyone is responsible for their own actions and suffers the consequences (ggod or bad) of those actions.  It is thought by some (in absence of reliable studies) that over 25% of all U.S. consumer spending in the 2003 – 2006 period came from homeowners borrowing against their private residences.  If there is any truth to this, assuming I am correct in my belief that increased spending by U.S. consumers is the key to getting out of recession, I can’t see how in light of the foregoing foreclosure and mortgage delinquency statistics the U.S. will get out of recession in the foreseeable future.

Click here for Gold Mining Stock Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

An article this morning titled ‘U.S. durable goods orders rise, jobless claims ease’ reports new orders for durable goods rose 1.9% in April, the biggest % gain December 2007, but concurrently March durable goods orders were revised sharply lower to -2.0% from the previously reported 0.8% decline.  In a separate U.S. Labor Department report initial claims for state unemployment insurance dropped by 13,000 to a seasonally adjusted 623,000 in the week ended May 23, falling for a second straight week.  That said, the number of people staying on benefit rolls after drawing an initial week of aid increased 110,000 to a higher-than-forecast 6.8 million in the week ended May 16.  A Baltimore ‘fixed income strategist’ is reported as saying “The data is consistent with the view that the rate of contraction is slowing, but we are still working our way through a recession. We haven’t hit a bottom yet”.  The article also says high unemployment, underscored by the Labor Department report showing that continued claims have set record highs in every week since January 24, indicate that any recovery after the recession will be painfully slow.

I would have thought that at some point durable goods orders would begin to rise as inventory levels should by now have to some large degree have worked their way out of the system.  Whether that will mean a return to work for some of the workers laid off in the past few months remains to be seen.  The number of people drawing unemployment insurance should come as no surprise to anyone.  The U.S. stock markets have responded to this news by losing a small amount of ground so far this morning.  I am continuing to look to the May U.S. job loss numbers as an ‘trend indicator’ of whether an end to the current recession is anywhere in sight.  I will report my thinking on that on this blog when the May job loss numbers are released.

Click here for Base Metal Mining Company Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

An article today titled ‘Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look Levy Viewed as Way to Reduce Deficits, Fund Health Reform’ says that “with budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax”.  I suggest you take the time to click on the link and read the full story.

Under a heading ‘Seeking New Revenue’ the article says “The surge of interest in a VAT is testament to the extraordinary depth of the nation’s money troubles”.  I would say so!  Herein lies the conceptual problem I see facing the U.S. and any other government, business or individual borrower who spends beyond its/their means.  If one does that and incurs debt it/they can’t service and repay in the end, absent the ability to print fiat currency – which of the three only a government has - the borrower has only two choices or a combination of two choices (or declare bankruptcy):  reduce spending, save and service debt and pay down debt principal with those savings, or find a way to increase income (revenue in government parlance).  So what is the U.S. to do?  Its politicians are unlikely to cut spending anytime soon, and where can the U.S. government increase revenue – surely not by taxing its citizens who are losing both jobs and personal wealth at unprecedented rates.  The U.S. politicians can debate a ‘value added’ or any other incremental tax they want to, but from my perspective I don’t see how that plays well with either its citizens or U.S. economic recovery.

Click here for Uranium Mining Stock Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

An article yesterday titled ‘Canada poised to take stake in ailing GM’ says “Canadian taxpayers are poised to own a stake in General Motors Corp. under a reorganization plan being hammered out for the automaker as it edges towards a bankruptcy protection filing by Monday”, and that such aid would represent roughly 20% of the U.S.$50-billion that will be pledged to the automaker by the U.S. government – which U.S.$50 billion includes U.S.$19.4-billion in loans GM has already drawn down.

In my view Canadians better have great trust in both the Federal and Provincial Governments that propose to anti-up this assistance to negotiate iron-clad guarantees that Canada on a permanent basis going forward maintains 20% of all GM’s North American assembly business – the approximate historic percentage over many prior years.  This negotiation also better guarantee the ongoing jobs currently held by Canadians in the auto supply parts businesses that are based in Canada (principally in Ontario and Quebec) that feed the Canadian GM assembly plants and some of the U.S. assembly plants.  Personally, I have grave concerns that U.S. protectionism will result in returning a good number of those Canadian assembly and auto supply parts jobs to the U.S.  No matter what contracts are signed between the U.S. and the Canadian governments concurrent with Canadian governments subsidization of GM I can’t see how they will be able to be drafted in so iron-clad a way to avoid job leakage to the U.S. going forward.  As a Canadian I hope I am dead wrong in this view.

Click here for Gold Mining Stock Research.

See Blog Legal Disclaimer

Email this Post to a Friend.

To date, over 500 Subscribers to StockResearchPortal.com have created their own private ‘My Stock Alerts’ table, and that number is increasing significantly each month. The ‘My Stock Alerts’ feature enables Subscribers to create their own private table of Companies within our 1,650 Company Universe and elect to receive automatically generated e-mails whenever six different events are reported - being (1) Press Releases (2) Insider Trades (3) Corporate Filings (4) Expert Comments (5) Analyst Reports and (6) Newsletter Writer Comments.  We are planning to add six more data points to the website’s ‘My Stock Alerts’ function within the next few weeks.

The following is a brief description of the ‘My Alerts’ feature and how to use it.

Step #1 - After you log into StockResearchPortal.com you will be taken to the Home Page.  On the Main Navigation Bar find ‘My Stock Alerts’.

Step #2 - If you have not previously created a ‘My Stock Alerts’ table you will be taken to a page where you can ‘Add Alerts’ and subsequently ‘View Alerts’.  If you previously have created a ‘My Stock Alerts’ table you will be taken to that table where you can Add or Edit Alerts.

Step #3 - Whenever you visit a Company Data Page for a Company you have not previously included in your ‘My Stock Alerts’ table you can immediately add that Company to your table by clicking on the Gold Button found on the upper right corner of each ‘Company Data Page’.  When you click on that button the steps required to add that Company to your ‘Stock Alerts’ table are straightforward.  Note that the Gold Button on the Company Data Pages that enables you to Alert that Company does not appear on the Company Data Pages for those Companies you have alerted.  If you delete a Company from your ‘Stock Alerts’ table the Gold Button will reappear on that Company’s Data Pages.

Step #4 - When you have finished reading or adjusting your Stock Alerts table, clicking on the ‘Home Link’ on the Main Navigation Line of the website will take you back to the website’s Home Page.

If you are interested in one or more of the approximate 1,650 Mining and Oil & Gas companies and income trusts that trade on the Toronto and Toronto Venture Stock Exchanges you ought to visit StockResearchPortal.com to determine if you think it website features and content can help you and your investment advisers with your investment research.

See Blog Legal Disclaimer

Email this Post to a Friend.