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The Money Map Advantage
Thursday, November 10, 2005
By Horacio Marquez
#17
** Positive Vibes From China
I am in Beijing right now, on the Sovereign Society’s Far East Tour. After a 13-hour flight, I checked the markets in Tokyo, London and the pre-open in New York…
China posted a record trade surplus, which coincides with the record trade deficit posted by the U.S., at $20 billion in China. Expect more pressure from the U.S. to have the Chinese revalue its currency faster, but with little effect.
Also, Bank of England left rates unchanged, as its economy deflates its housing bubble. Which brings us to Fannie Mae’s problematic numbers: $8.4 billion in losses from hedge accounting, and $2.4 billion in losses from its mortgage commitments.
The U.S. will promptly follow England in cooling both the housing market and the economy. The housing index futures, coming to the market in April 2006, arrive just in time to sell out of real estate while keeping a place to live in. The soft landing in the U.S. economy will help it deal with its current account deficit gradually next year.
And despite the Al-Qaeda Amman and Bagdad bombings, I believe the markets will not sell off. The people on this tour, including myself, are not paring our activities because of the warnings of possible bombings here. Insane terrorist violence will be defeated. In fact, the S&P 500 tested the 1,285 strong resistance again yesterday, and will probably retest it today. When it goes through, it will fly, salvaging the year and greatly helping all our positions. And oil at $58 is helping a lot.
As I wrote to you in the last issue, our stocks took a breather. This creates buying opportunities. Why?
In Japan, despite the recent weakness in the market (and especially in the red-hot financial industry), we need to remember that this is only the beginning of a very favorable and long cycle for the Japansese banks. It is not far-fetched to expect Mitsubishi UFJ Financial’s (NYSE: MTU) stock price to rise several-fold over the next decade, like Citigroup’s stock rose some 16 times over, starting in 1991. Take a peek at Citi’s chart and marvel. You do not want to be out of Japan when it rallies.
Machinery orders in Japan came out sizzling, and Mizuho Financial, the top competitor of our MTU, reported a doubling of second quarter profits , aided by very strong stock trading and brokerage business as well as lower credit costs (improving loan portfolios). Foreigners were big net buyers of Japan equities last week. MTU looks well oversold right now.
Also, I saw Cerner, (Nasdaq: CERN) up strongly in the pre-market as it announces today the adoption of its technology by one of the highest-ranked health care centers in the country, Mission Health and Hospitals, in western North Carolina. This comes right on the heels of Carolinas health care system awarding Cerner a contract three days ago. When you have the leading technology demanded by a fast-growing and very profitable industry, good things are bound to happen.
Tenaris (NYSE: TS) reported on Tuesday, doubling earnings and increasing sales by 60%. Profit margins were up strongly. Tenaris’ stock has formed a bottom and will jump up dramatically when oil turns up once more, which can’t be much farther than the first winter storm in the U.S. The stock is up strongly in pre-market, along with Unibanco’s stock (a brazilian competitor of Bradesco, which bodes well for Bradesco today).
Bradesco (NYSE: BBD) also reported on Tuesday, and like Mizuho and Tenaris, doubled earnings.
Petrobras (NYSE: PBR) reports this Friday after the close and it should be very positive, due to higher prices and volumes in Brazil.
In continental Europe, banks appear to be reducing their charge-offs for bad loans, which indicates a very healthy pickup in activity. This should help MSCI Austria Fund (AMEX: EWO).
Enjoy and profit,
Horacio Marquez
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
Stock
Current Price
Comments
Banco Bradesco (NYSE: BBD)
$55.63
Buy. Sell stop is $43.
Petrobras (NYSE: PBR)
$63.00
Buy. Sell stop is $55.
Mitsubishi UFJ Finan. (NYSE: MTU)
$13.09
Buy. Sell stop is $10.20.
iShares Japan Fund (AMEX: EWJ)
$12.15
Buy. Sell stop is $10.
Tenaris (NYSE: TS)
$107.53
Buy. Sell stop is $95.
MSCI Austria Fund (AMEX: EWO)
$25.38
Buy. Sell stop is $20.90.
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