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The Taipan Group�s 247profits e-Dispatch Baltimore, New York, Chicago, Berlin, Bonn, London and Paris October 11-12, 2004
***Bad news for Germany�s economic future, the EU and the euro� ***52 mini bull markets are getting ready to take off this year. Plus, find out what company gives you a 17% dividend. Read on�
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German finance minister Hans Eichel is not very happy: his 2005 budget was based on an assumed German GDP growth of 2%. But his latest calculations show that he�d be lucky to see 1.8%. More realistically, the German economy - plagued by stagnant if not recessive domestic demand and slowing exports - might limp in with just 1.5% GDP growth next year. With unemployment at 10.4% - and that�s not counting those out-of-work Germans who�re currently being �retrained� by the Labor Department - and tax revenues shrinking despite last year�s major crackdown on tax loopholes, that means billions of euros in budget shortfalls. For next year, Germany is looking at once again breaking EU stability pact regulations that prohibit member countries from running up deficits in excess of 3% of GDP three years in a row. Luckily, however, the stability pact has already been successfully short-circuited by France and Germany, which have been able to introduce a relativist spin into how the European Commission looks at this kind of situation: Eurocrats are now more likely to interpret the regulations as meaning, �Thou shalt not borrow in excess� unless you feel you have to.�
I found a vociferously negative consensus. This wasn�t exactly news to me, as I regularly receive this kind of assessment over the phone in the nasal Berliner staccato of my father. But what struck me was the general sentiment that there was no real political or ideological improvement in sight: Today�s economic mess is as much the fault of the (nominally) conservative Christian Democrats who were in power for most of the 80�s and 90�s. The governing Social Democrats� attempted reforms, in turn, are actually heading in the right direction� but are colliding with an ultra-liberal welfare state and entitlement mindset that became ingrained among Germans back in the 1970�s. It is this mindset that I consider far more detrimental to Germany�s economic future than anything else. And given that Germany still is the largest net payer of European Union monies, I�d consider this bad news for both the EU and the euro as well. But Currency Land resembles Bubble Land more than anything else these days: How else can you explain an exchange rate of close to US$1.24 to the euro? The latest IMM Commitment of Traders report indicates, however, that euro/dollar longs have increased from 32,334 to an all-time high of 44,811� allowing for the conclusion that the euro is overbought and may be poised for a major decline.
He�s discovered a company that gives you a 17% dividend. Here�s how he found it� �The way it started was I used one of our screeners to find a list of stocks with good dividends, good growth prospects and potential for price appreciation. �As you may know, screeners are immense financial databases. They have just about every financial fact on all the 15,000-plus stocks that are traded daily. �In addition, screeners have powerful search engines. These search engines let me �slice and dice� this huge database of 15,000 stocks to find the ones with the exact profile I�m looking for. �And what I was looking for this particular day was a list of worldwide stocks that had both good dividends and good growth prospects. �The screener searched the database and gave me a list of stocks with these characteristics. It wasn�t all that big. �But when we checked out the fundamentals of the companies on this list, we ended up with one that had the following stats: (1) It had a forward P/E of 10. The P/E (price-to-earnings ratio) is a quick way to see how reasonable a stock�s price is compared to other stocks� prices. And a P/E of 10 is terrific when so many stocks are selling at P/E�s of 20 and even 30. In other words, this told me the stock was a bargain. (2) The company had a PEG ratio of 0.80. PEG is the P/E divided by the yearly rate of growth (G) of a company�s earnings. It is a way of seeing if a stock is under- or overpriced. I shoot for PEG�s of less than 1. A stock with a PEG of less than 1 is underpriced given its earnings growth. In this case, that meant we could reasonably expect a price appreciation in this stock. (3) It paid a staggering 17% annual dividend the previous year. When I saw this, I said to myself: Holy Christmas! Because if you just wanted to hold on to this stock and the price unexpectedly went nowhere, you would still make 17% on your money. �Frankly, I can�t think of any other place, today, where you can make that kind of return on your investment. �What�s more, suppose you invested $5,000 in this stock and forgot about it for five years. Didn�t look at it. Didn�t even remember you�d made this investment. �Five years later your $5,000 would be $10,962.24! � That�s just one stock that Chris is looking at. In the days ahead we�ll tell you more about how and where to find the 52 mini bull markets this year. In the meantime, to learn more about the company featured today� investing in Brazil� or to hear more from Christian DeHaemer, please visit this link.
Today�s tradesports.com standings for the 2004 Presidential Election are: PRESIDENT.GWBUSH2004: 58.4/59.0 (Friday�s standing: 58.6/59.0)
Adtran Inc., AMB Property Corp., Crucell NV ADR, Fastenal Co., Gannett Company Inc., Helen of Troy Ltd, Infosys Technologies Ltd ADR, Innovo Group Inc., Johnson & Johnson, Linear Technology Corp., M&T Bank Corp., Merrill Lynch & Company Inc., Sonic Corp., State Street Corp., Travelzoo Inc., WestJet Airlines., and Yahoo Corp. are some of the companies releasing earnings. Brought to you by your free daily �Fear and Greed� e-newsletter. You can sign up for your copy here.
�This
is one of those �only in California� stories - elementary school students
in Berkeley are receiving a class credit for �lunch.� Since they learn about
nutrition, lunch is now considered a class. See, that�s when you know we�re
getting too fat in this country, when students are actually majoring in lunch!�
�Here is the man who finds clever ways to
reduce his own tax liability while voting for higher taxes on the middle class
dozens of times in his Senate career. He even voted against the Bush tax cut
that saves each middle-class family about $1,000. [The Kerrys] have unwittingly
made the case for what George W. Bush says he wants to do: radically simplify
and flatten out the tax code. [�] So before John Kerry is given the opportunity
to raise taxes again on American workers, shouldn�t he and Teresa at least
pay their fair share?�
*** �There are signs of reinvigorated bullish movement on Monday, probably maxing out at 1%.� Well, �she took us half the way there.� The Hang Seng today finished at 13,305.13, up 63.67 points or 0.48%. Our indicators are sticking to their guns, calling for another upswing tomorrow. We�ll call it at around 0.7%.
Not quite. Japan�s Nikkei 225 made it to 11,349.35, a gain of 5.24 (0.05%). Signs for tomorrow point to a slight decline, with half our indicators calling for a pullback of up to 1%.
This just in from Taipan�s resident Editor-at-Large, Martin Denholm: Hi there, and welcome back to the DoD after my quick jaunt to Florida last week. What with all the hurricane ravages recently, I was pleased to see the place in surprisingly good shape. And it was certainly more than hot enough to satisfy your pasty English correspondent! But my goodness� I go away for a few days and look what happens. Oil prices now over US$53 a barrel. Talk about being jolted back to reality! Norwegian oil workers extended a three-month strike on Saturday - a move that halts the production of 55,000 barrels per day from the North Sea oil fields. Not good when you consider that North Sea oil production was already down 12% over the first half of the year compared with the same period in 2003. In Nigeria, the story is equally grim, as workers today began a four-day strike. This is significant as it could affect output in Africa�s largest oil-producing nation. Oil remains the country�s most lucrative commodity, but many citizens are nevertheless mired in poverty. While they used to receive government fuel subsidies, that benefit was removed last year, leading to a 25% spike in fuel costs. Naturally, folks are upset and are striking in protest at the government�s lack of action. After that, the government has a two-week window to negotiate a successful outcome with the unions before strike action resumes.
The increase comes just two months after BA last raised surcharges amid fuel costs that it says will be �225 million higher this year than in 2003. While the rise won�t exactly bankrupt customers, it nevertheless comes as another unwelcome addition. In response, BA has now hedged over 70% of its fuel costs until 2005 - a smart move considering global oil demand still considerably outstrips supply. The International Energy Agency revised its demand forecasts up every single month from November 2003 through August 2004, with global usage set to swell by 2.5 million barrels per day this year to 82.2 million bpd. Air France and KLM-Royal Dutch Airlines have also announced increased fuel surcharges.
In fact, the 74 companies that issued lower profit warnings represented the highest number since early 2003. And I don�t think it�s a coincidence that 38 firms issued warnings in September alone, just as the oil price rise hit feverish levels. Is this cause for concern? Hardly. Not with the economy growing briskly and unemployment remaining at a 28-year low. And it�s worth noting that the number of profit warnings in the key IT, construction and hotel sectors actually declined. Ciao for today.
***Not only is the looming �real-estate crash� a Big Lie� but a new hidden real-estate boom is emerging - and it�s making some people very rich. Discover the government-issued �Secret Certificates� that could make you 10 times your money in 5 years.
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Title: Bad news for the EU and the euro
