Wednesday, December 5, 2012

CMV December 2012

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It is with extreme regret that we will end the publication of the Contrarian Market View with this issue.

Most of you do not see or believe what is about to unfold in America and specifically the control of all media.  Any day the House of Representatives will attempt to pass HR 2471 which will allow the Federal government to access and read all online communication without a warrant.  In our opinion all conservative media including FOX News, talk shows such as Rush Limbaugh, Mark Levin and a host of others and all newsletters including CMV will be pressured and harassed to silence their dissenting voice.

Our focus will now be 100% committed to managing assets for our clients and attempting to find financial security in an extremely challenging environment.  If we can assist you in your planning or need additional information, please contact me.

Good luck and God Bless you and your family and God Bless the United States of America.

Market Overview

First and foremost CMV must and will unequivocally admit to its error in forecasting President Obama’s “landslide loss” for re-election.  In retrospect we were reluctantly swayed by the unequivocal convictions of Carl Rove, Dick Morris and the Rasmussen polling organization whose accuracy in past presidential elections was unrivaled.  It’s near unimaginable that Mitt Romney would garner 3 million less Republican votes than John McCain recorded in 2008.  Here’s one reason why.

Terry E. Branstad, the Republican Governor of Iowa, stated convincingly that his state (though the polls projected an easy Obama victory) would post a victory for Mitt Romney.  Branstad said (to paraphrase) “I know every county in my state and the enthusiasm and turnout for Romney will make Iowa a red state.”  The Governor was wrong.  What happened?  In CMV’s opinion the state’s Ron Paul supporters did not vote for the Republican candidate.  You’ll recall that Ron Paul secured about 33% of the primary vote in Iowa and Paul scored impressively in other states also.  To Paul supporters Romney wasn’t a Conservative and they stayed home.  You also may recall that Ron Paul was completely ignored at the Republican Convention and none of his ideas were included in the platform.  Additionally, Republican corn farmers, who have profited by the ethanol alternative energy plan favored by the Obama Administration voted for the President.  Equally noteworthy is that it appears that a large bloc of the senior sector also did not vote for the Republican candidate, which in our opinion will come back to haunt those who rely on Medicare.

The bottom line, in our view, is that Democrats of all stripes, banded together despite their philosophical and ideological differences, to win the Presidency.   The Republican s nitpick and are too narrowly principled to win.  Barrack Obama is a Democrat in name only and his vision for America won’t be shared by a large percentage of the Democratic party within two years.  Maybe Paul’s supporters had it figured out.  Let Obama destroy American Exceptionalism and the economy and even the masses will clamor for Conservative change.

A good example that supports the above is the noteworthy story of Hostess Foods, the maker of Twinkies (which we used to buy for $.02 in the 40s),  Devil Dogs, HoHos snack cakes and Wonder Bread.  As one pundit put it, “Hostess was eaten by a parasite.”  The company, unable to reach an agreement with one of its unions, has decided to liquidate and lay off 18,500 employees rather than endure another strike.  Hostess posted sales of $2.5 billion in 2011 but lost $341 million due to labor-rule burdens that included $52 million in workman’s compensation claims in 2011.  The company has 372 collective bargaining agreements and is required to maintain 80 different health and benefit plans, 40 pension plans and had a mandated $31 million increase in wages and health care for 2012.  Hostess simply faced an inevitable collapse and they chose to sell their brand names while they had value.  As cited below, this dire picture of entitlement over-burden will also include state and municipal employees all over the US.  The Mercer Company, which is one of the largest employee benefit firms in the country, says that of 1500 S&P companies reporting, there is $617 billion in under-funding in company pension plans.  Millions of Americans, union and non-union, are not going to receive what they expect to receive at retirement but most refuse to see it.  The long-term implications are ominous.

Although all the signs surround us, very few observers have factored in even more dire implications also.  The WEATHER.  According to the Department of Agriculture’s Drought Monitor, most of the farm producing Plains States are experiencing a severe drought as CMV has previously reported.  Despite the fact that this area has been through this before, those who contend that man-made climate change has caused this condition, need only to see Ken Burns’ “The Dust Bowl” a 4-hour documentary just released Thanksgiving week.  From 1931 to 1939 there was virtually no appreciable rain in an area from the Dakotas south to eastern Colorado, New Mexico and the panhandles of Oklahoma and Texas and east to Nebraska and Kansas.  A confluence of events at the turn of the 20th century including the Homestead Act, World War I, mass immigration from Europe, land speculators and “briefcase farmers,” the plains, lush in native buffalo grass, became the target of dry land farming.  The invention of tractors and the high demand for wheat resulted in hundreds of millions of acres to be tilled which destroyed the deep root system of the native grasses and set the stage for one of the most incredible and catastrophic events in American history – The “Dust Bowl.”

When the rain stopped and the winds blew, the top soil became airborne.  Clouds of billowing dust a mile high and hundreds of miles wide made night-time out of daylight.  Arizonans will recall the “Haboob” of 2011 that engulfed the Phoenix area.  In 1937 the “Dust Bowl” had such an event 79 times and each was more powerful.  An ecological and human disaster followed.  Adults and children died from dust-filled lungs and the Great Depression was the final blow that devastated farming communities throughout middle America.  John Steinbeck’s “The Grapes of Wrath” fully grasped the tragedy caused by man’s greed and nature’s wrath.  World War II and the cyclical change in the weather ended the crisis.  But, this not the end of this story.

Much of this area is now irrigated farm land and water has been provided by one of the nation’s largest natural underground aquifers called the Ogallala.  Over the past 60 years, however, drawing water has reduced this water supply 50% according to Burn’s documentary.  Experts have indicated that the aquifer will be essentially dry in 20 more years.

As CMV has reported numerous times the allotment of water to the San Joaquin Valley in California, which provides a substantial portion of America’s fruit and vegetables, has been severely curtailed.  Add to the loss of production there to the prospect of the eventual loss of the Ogallala to the plains and we have a prescription for a food shortage that will impact everyone.  In the 1930s the “Okies” set out for California.  Where will our farmers go in the future?  What have you done to guarantee a food supply for your family?

. . .

In a decided shift in tone, there are a number of positive factors that all of us can be thankful for on this Thanksgiving Day.  The following is brought to you from Wells Capital Chief Investment Strategist, Jim Paulson, via Gene Epstein’s “Economic Beat” in Barron’s.

●   From an October 2009 high of 10.0%, the unemployment rate has declined to 7.9%

●   The labor force is steadily rising despite the fact that 3.8 million potential male workers are unemployed.

●   Consumer confidence has returned to a 5 year high of 82.7%.  Normal is 90%

●   Housing activity is improving and housing starts in October were 42% higher than a year ago.

●   The stock market may finish its fourth consecutive year of positive returns but the S&P 500 Index remains 11% below its’ October 9, 2007 high.

●   A revision to the third quarter’s GDP growth is expected to show a much stronger pace, close to 3%.

The Fiscal Cliff

One pundit wrote that anyone who mentions the word “cliff” ought to pay a tax.  The continual discussion is getting laborious but there’s more to this tax and budget expenditure issue that you would glean by the talking heads on TV.  The editors of the WSJ provided the best insight in their “Review & Outlook” section November 15, 2012.

The President has declared that “the math tends not to work” when he asserts that closing tax loopholes wouldn’t provide enough revenue for a budget deal and raising tax rates would produce more government revenue.  The WSJ says that the President is being disingenuous.  For one, capping all deductions at $50,000 for all taxpayers would produce $749 billion in extra revenue over 10 years.  Reducing the cap to $25,000 would raise an additional $1,286 trillion and as Mr. Romney proposed reducing the cap to $17,000 would raise tax revenue by an additional $1,747 trillion.  These estimates were produced by liberal economists at the Tax Policy Center.  In comparison, Mr. Obama’s proposal to raise taxes on capital gains, dividends and income above $200,000 would yield  only $823 billion over 10 years or a piddling $82 billion per year when the deficit has been running over a trillion a year for the past 4 years.  The obvious question is, why is Mr. Obama so insistent on raising tax rates now when more revenue can be raised by reducing deductions?  The WSJ concludes: “He really doesn’t care if there’s a budget deal this year that avoids the cliff.”

The President’s position set in concrete is that any budget deal must raise $1.6 trillion in tax revenues which is twice the amount he agreed to with House Speaker John Boehner last year.  And, there will be absolutely no cuts to Medicare, Medicaid and Social Security.  Basically it is a deal the Republicans can’t approve so we will all fall off the “cliff,” there will be a recession next year and the Republicans will be to blame.  The WSJ maintains that “the President is playing a game of political chicken with the economy,” and they conclude:

“We’re beginning to think he (Obama) wants to go over the cliff this year.”

For the sake of argument let’s say there was an agreement to raise tax revenue by $1.6 trillion over 10 years by virtue of increasing the tax rates on the wealthy and there was an additional $1.6 trillion increase in revenue from limiting deductions for all taxpayers.  That would total $3.2 trillion over 10 years or $320 billion per year.  Here again with the deficit running over one trillion per year for the past four years there would still be a $700 billion shortfall per year going forward.  With 10,000 people retiring every day and all entitlements rising parabolically the deficit would widen.  The increase in the interest on the federal debt alone will approach a Trillion dollars a year.   Those type of numbers will NOT quell the angst in the financial markets and a decided downturn in the economy in 2013 could be unavoidable.  And, no mention has been made that the total federal debt limit of $16.4 trillion has already been breached and by law the US Treasury can not exceed that limit (the President just proposed that any debt limit be removed).

CMV recalls the mantra of this Administration.  “Don’t let a crisis go to waste.”  It’s Obama time.  It’s time for “revenge” as the President stated just before the election to his delirious supporters.  Revenge against the wealthy.  Now is the moment that he can “fundamentally change America” by destroying Capitalism.  Obama is the agent for change and the Trilateral Commission and their 39-year goal to create a totalitarian state is at hand.  Mitt Romney had to be defeated.  He wasn’t a member of that elite group that will soon offer all the Americas and the EU the New World Economic Order that will rescue all of us from the coming economic chaos and despair.

Real Estate

In Phoenix and some other areas of the US, there is almost an euphoria growing in the residential real estate market as the number of sales and the rise in median home prices are gaining momentum.  In contrast, however, when the financing sector of this market is examined, storm clouds are gathering ominously on the horizon.

With the election over, we now discover that the Federal Housing Administration (FHA) is insolvent.  As of the Federal Government’s fiscal year ending September 30, FHA’s liabilities exceeded its’ assets by $16.3 billion according to a WSJ piece dated November 20, 2012 and the gap could balloon to almost $100 billion in a worst case scenario.  In 2009, the WSJ predicted that this day would arrive but the Journal was soundly rebuked by the then FHA Commissioner, David Stevens who said that the WSJ was “just plain wrong” and “I can say undoubtedly that the FHA fund is playing a key role in the housing recovery and poses no immediate risk to the American taxpayer.”

As most of us observed, FHA was aggressively expanding its’ loan guarantee program to prop up home prices in 2007 to 2009 when the market was crashing.  While this helped the Obama Administration politically, it arguably prolonged the recovery by failing to let prices find a bottom.

With about a trillion in loan guarantees outstanding, the WSJ reports the percentage of loans that are now seriously delinquent and expected to reach a total of $70 billion in claims are:  25.82% of FHA’s 2007 loans, 24.88% of 2008 loans, and 12.18% of its’ 2009 loans.  This is precisely what happens when government responds to political rather than market incentives.  The other more pervasive problem is that there is no personal accountability and the losses are simply passed on to taxpayers.  And, here’s where the rubber hits the road.  As CMV reported last month, approximately 700,000 FHA borrowers will now qualify for new financing in 2013, after a three-year wait following foreclosure plus an additional 1.6 million in 2014.  Where will the money come from?  U NO WHO!

Typical of an irrational and delusional government agency, the FHA believes that they can rebuild their reserves by principally increasing their premiums for mortgage insurance.  They’re already raised premiums three times over the past two years from 0.9% of the loan amount to 1.15% one year ago and to 1.25% in early 2012. The proposed new rate will be 1.35%.  On a $300,000 FHA loan where the borrower makes a 5% down payment, the insurance premium will be approximately $347.00/month. In the past, mortgage insurance premiums would be waived after certain conditions were met.  Just recently the FHA announced that it will no longer offer waivers and the borrower will pay the premium for the life of the loan.  We calculate on a $200,000 loan with a P&I payment of approximately $910/month, the FHA mortgage premium would be about $200/month or 22% of the P&I payment before the new increase.  We could be at the point where the premiums are prohibitive, but since the government is the lender of last resort, what options are there?  That gives us a perfect segue to Fannie and Freddie.

At the height of the presidential election campaign, Americans were told by the Treasury Department (in a press release entitled “Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac”) that the Treasury would reduce the Government Sponsored Enterprises (GSE’s) portfolio of loans by 15% / year.  Recent reports indicate, however, that the two GSE’s are not shrinking in size and Fannie Mae, in particular, is expanding.  Fannie had 5,800 employees in 2008 when it was taken over by the government and as of early 2012 it had ‘bulked up” to 7,000 employees.  Rule #1 – Bureaucratize never downsize.

When the US Treasury bailed out both GSE’s, part of the deal was a cap on the mortgage assets that they own.  Fannie was permitted to own $729 billion as of December 31, 2009.  Fannie’s current balance sheet, however, lists $2.9 trillion in mortgages.  The un-admitted policy is simply this: The Federal Government and the Obama Administration, through its agencies FHA, FNMA, FRMC, VA and the US Department of Agriculture Rural Loan Program, wants to control the residential housing market and the question of profit and loss or solvency is not an issue.  This model fits perfectly into the redistribution scheme because the highest taxpayers will carry the bulk of the burden.

Aside from the above, a new trend is being established in the residential market.  Like the “olden days” and during tough economic times like The Great Depression, families are re-gathering under one roof.  Households could now consist of grandparents, their children who own the home and the jobless grandchildren who have returned home.  Lennar, is one homebuilder marketing one multi-generational model as “Next Gen–The Home within a Home.”  Pulte Group surveyed 1,000 homeowners and found that 72% of them who had aging parents living with them plan to renovate or buy a new home.  The next step is communal living for survival.

The (Unknown) Clinton Legacy

All US presidents, at least those since World War II whom we have observed and studied, have sought to achieve their place in history and create their own legacy by accomplishing great things  while they are in office.  Some have tried to repair their damaged image after they have left the presidency.

Richard M. Nixon’s term ended in disgrace with his resignation.  Despite his efforts to ameliorate his image later in his life, his legacy has been relegated to re-opening America’s relationship with Communist China.  Jimmy Carter’s legacy was foiled by an out-of-control inflationary economy that morphed into stagflation coupled with our US Embassy employees held hostage for 444 days in Iran.  Carter’s concerted effort for the past 32 years to recast himself as a statesman and a peacemaker has fallen woefully short to recast his legacy.

To most observers Bill Clinton has overcome his darkest hours of impeachment to become, not only one of America’s most popular presidents, but has enhanced his legacy during the past 10 years.  To CMV, however, Clinton left an indelible imprint on the Office of the Presidency of the US that has profoundly impacted not only the Oval Office, but our entire society and culture.  This “legacy” is not found anywhere in Bill Clinton’s bibliography.  It is a CMV original.  It is unknown – until now.

Last spring CMV observed the PGA Tour’s Humana Challenge Golf Tournament in Palm Desert, California, which was formally known as the Bob Hope Classic.  This tournament, sponsored by Humana Corp. (The health provider) bills itself as a partnership with the Clinton Foundation dedicated to build healthier lifestyles.   Clinton, known in the past for his workaholic 100 hour work weeks while subsisting on junk food, had a quadruple by-pass surgery in 2004 that probably prevented a heart attack.  He reportedly is now vegan and his Foundation is active in Haiti, Africa, Latin America and Europe to improve health and living conditions.  A laudable and worthwhile endeavor.

What struck us as remarkable, though, was how the Golf Channel reporters covering the Tournament, as well as the media in general, “gushed” over the ex-President.  No words were adequate or flowery enough to describe the outstanding character and the goodness of this man whose dedication to the various areas of extreme poverty was almost Mother Teresa-like.  Long forgotten was the dark side of the 42nd President of the US and what provides an ironic twist to the ex-President’s legacy.

William Jefferson Clinton won the election in 1992 with only 43% of the vote thanks to a 3-way split of the electorate between Clinton, George H. W. Bush and Ross Perot.  The first baby-boomer president entered the White House despite the baggage of numerous scandal-ridden events that dogged him.  There was the BCCI bank money-laundering scheme, the Mena, AK drug smuggling ring, Trooper-gate where state troopers ostensibly arranged for the Governor’s trysts, as well as Whitewater, a real estate promotion gone bad.  As the “boy” Governor of Arkansas, he acquired the nick-name of “Slick Willie” which was not in reference to his hair-do.  All the myriad of alleged misdeeds, however, would pale in comparison to what would occur in the first few months in 1993 while President of the most powerful nation in the world.

Buried and long forgotten is the shocking and mysterious death of Deputy White House Counsel Vincent W. Foster in July, 1993, barely 6 months into the new Administration.  Foster, who was a childhood buddy of Clinton dating back to grade school in Hope, Arkansas, later became a partner with Hillary Rodham Clinton in the Rose Law Firm in Little Rock.  Prior to his White House appointment, Foster was intimately involved in all the Clinton’s dealings including Whitewater and knew where all the “skeletons were buried.”  He was attempting to complete the tax returns for Whitewater and draft the President’s Blind Trust at the time that his body was discovered in Fort Mercy Park near the White House – a victim, according to the FBI and the Office of the Independent Counsel, of a suicide.

Not so say a number of reliable sources.  The Western Journalism Center hired 3 competent investigators who concluded that Foster’s death was “inconsistent with suicide” and that the White House Deputy Counsel did not die in Fort Mercy Park.  In Failure of Public Trust, written by John Clarke, Hugh Turley & Patrick Knowlton (who was a key witness) concluded that Foster’s death was a cover-up.  Accuracy in Media also did an exhaustive study of the death and autopsy photos that show a possible second gun shot wound to Foster’s neck.

There is probably no other president with such a clouded past as Bill Clinton but it was the Lewinsky affair that specifically qualifies this “Teflon Man” for this unknown though dubious legacy.  For those of us who attended grade school and high school in the 1940s and 1950s, lying, cheating and stealing were absolutely verboten.  Any one of these infractions (sins) would expose any of us to peer ridicule and possible expulsion from school.  Was there anything more humiliating than “liar, liar your pants are on fire?”  Bill Clinton, 10 years younger and a product of the rebellious sixties, grew up in an era where Progressives determined that character-building teachings were old-fashioned and out-of-date. When he faced perhaps 100 million or more American viewers on nationwide TV that day in January, 1998, he said:

“I did not have sex with that woman, Monica Lewinsky.”

The President was strong, forceful and angry as he pointed his finger at all of us and lied about his affair with Ms. Lewinsky.  It was as if the President was chastising all of us for falsely accusing and pre-judging him as guilty of an adulterous affair that created an unwarranted crisis in the country.

So, what is the point of this discourse?

Bill Clinton lowered the bar not only for future presidents but he also re-wrote the code of conduct that had previously shaped the character of all of America’s youth since the founding of the Republic.  The fact that Clinton was impeached by the House of Representatives for lying under oath and obstruction of justice, but acquitted by the Senate, sent a clear message to all America that lying was not a sin and not an issue in the governance of the nation.  What has followed in the past 12 years is an unprecedented breakdown in the rule of law, fraud, unethical behavior and corruption which has permeated the realm of politics, business and social discourse.  Corruption will continue to escalate under the current Administration and undermine all aspects of our society and will inevitably culminate in the collapse of our economy.  Truth and American Exceptionalism has died.  A rebirth can only occur when the present groundswell towards Marxist Totalitarianism is soundly rejected and Americans return to the moral and ethical values that gave birth to this once great nation.


Illinois the “Un-fixable”

CMV recently wrote of the State of Illinois’ coming financial crisis which has now been validated by an opinion piece in the WSJ on November 11, 2012 with the above title.  The Commercial Club of Chicago, a business group, wrote that, because the November elections did not bring in lawmakers willing to push for real reform, the State’s $200 billion debt now threatens education, health care and basic public services.  The group also concluded that the State’s unfunded pension liability of $95 billion is heading for a “meltdown” and the crisis has “grown so severe” that it is now “un-fixable.”  And, get this.  The State currently has $6 billion in accounts payable past due for 6 months!  The Illini are deadbeats.

Illinois has become the poster boy of things to come in many areas of America.  A not so shining example of what happens when corruption becomes the rule of law and its’ citizens firmly believe that their jobs, pensions and health care will continue unabated and are guaranteed.  The Greek tragedy will be repeated in the streets of Chicago.  CMV’s inference that the State could be bailed out by its’ “favorite son,” the President, was seconded by the WSJ which said, “More likely is that the politicians keep abdicating and will hit up President Obama for a Federal bailout.”

Note: The Obama Administration has already funneled $100's of billions to Illinois, California and other blue states that has not been budgeted or accounted for.

The College Debt Bubble

You may recall that CMV wrote feature articles (December, 2011 and August, 2012) on how the various student loan programs (that have added up to one trillion dollars) have subsidized the building of massive “monoliths” called colleges and universities across the nation.  Hard evidence that this era is over and the repercussions that are about to unfold are illustrated in a WSJ feature article (November 23, 2012) entitled, “The Cost Of Dropping Out – Millions Struggle With High College Debt and No Degree.”  The following dropout numbers are jaw-dropping.  One Washington, DC study found that 58% of the 1.8 million borrowers whose student loans became due in 2005 hadn’t received a degree and 59% of those students were delinquent or in default.  A college degree in the past was considered to be a ticket to the middle class and financial security.  Now, there are 1.9 million unemployed college graduates plus those that never completed their degree and the ramifications are ominous. What are some of the possible outcomes?

●   The present student loan debt bubble has now burst and most of the trillion will never be repaid.  We expect that the President will “forgive” a large portion of the debt.

●   As part of this Administration’s redistribution scheme US taxpayers will incur the losses.

●   Universities and colleges will be forced to downsize even though the Federal government may adopt a free tuition policy.

●   The traditional model of awarding credits based upon classes and hours attended will change to a “competency-based” approach, favoring students who must work while going to school.

●   More students will earn degrees on-line and at community colleges avoiding high tuition costs and student loans.

Sub-Prime Debt Goes Prime Time

In a previous issue CMV brought to your attention that financing for new auto sales was about to rise dramatically.  An update supports our previous report.  Auto lending was the fastest expanding segment of consumer debt in the second quarter of 2012, totaling $750 billion.  In particular, demand for loans to buyers with sub-par credit commanding higher interest rates is nearing pre-recession (2009) levels but lenders are gearing up for more.  GM just announced that it had purchased the international operations of Ally Financial, Inc., after the company abandoned auto lending 6 years ago.  Banco Santander SA, the Spanish bank which is reeling from the EU debt crisis, is raising $6 billion for its’ US consumer finance unit to make auto loans enticed by the profitability of the secured debt. In CMV’s opinion the auto manufacturing and auto lending business is headed for the same head-on crash that it first experienced in the early 90s when the real estate market tanked and again in 2008-09 when the fit hit the shan.  Lending to non-credit worthy buyers in the past two periods and again currently creates an illusion of demand which allows the auto makers to churn out record volumes of new cars that keep their union employees fully employed.  No one seems to be concerned about the defaults and repos that will inevitably occur.  Our personal borrow-to-spend economic growth model is deeply flawed based upon a short-term fix strategy and to hell with the consequences.  Our government economic growth model is print and pretend and portends a hyper-inflationary “crack-up boom” is near at hand.

The Chinese Are Coming – (They’re Already here)
CMV has repeatedly reported on the Chinese inroads to the US including the US Fed’s authorization to allow Chinese banks to enter the US and also acquire US institutions.  Now, the Chinese are entering the US energy market.  The town of Medicine Bow, Wyoming, population 300, will be the target for an advanced facility that will convert coal to gasoline and would hope to capture and re-use carbon dioxide that would otherwise be emitted into the atmosphere.  China Petrolchemical Group, an arm of the state-owned Sinopec Group, will spend about $2 billion and create up to 2,300 construction jobs and 400 full-time employees.  The company did not reveal how many of the employees they would import from China as they have on other projects but they did say that they would purchase steel from China to keep costs down. They also indicated that they would establish retail gas stations in the US in a few years.  What chance do you think there is that the Obama EPA which is committed to killing all fossil fuel development, will deny a permit to Sinopec?

A Real James Bond Was Murdered

Neil Heywood, a British consultant, tooled around Beijing in a silver Jaguar with “007" on his license plate and created an air of intrigue as he seemed to have a direct connection to Bo Xilai, a big-time Communist (now ex) party leader.  Most observers in China though that Heywood was a fraud until the aspiring “007" met his untimely death and a real clandestine mystery began to unravel.  It turns out that Heywood was connected to the British secret spy agency M16 and that he reported  Xilai’s secret activities to the British government.  The police investigation revealed that Bo was plotting to undermine the ruling politburo and the investigation also revealed his self-dealing and corrupt practices.  Bo’s wife, Gu Kailai, who was often referred to as the Jacqueline Kennedy of China, was found guilty of poisoning Heywood.  Other than the intrigue, this story, which we have followed for almost a year, indicates that there truly is a power struggle in China and all is not well in the country that aspires to be number one.

Sector Overview

1.  Cash & Fixed Income

The normal seasonal trend of outflows of funds from treasuries to equities could reverse this year due to the threat of the FISCAL CLIFF and a desire for investors to seek the safe-haven of bonds.  Scott DiMaggio, Director of Global-Fixed Income at Alliance-Bernstein says,  “Even if we don’t go over the cliff, some of the policies that come out of it can still be pretty negative for stocks.”  Some experts who are pessimistic about a favorable resolution of the tax and budget issues, see a fall in the 10 Year T-Bond to 1.2% from the present 1.7% yield.  We don’t have long to wait.

There’s a rather unsuspecting outcome that could also impact the treasury market.  Under Operation Twist, the Fed has been funding its’ long-term Treasury purchases with proceeds from the sale of short-term debt that has kept the 10 Year and long-term mortgage rates low.  Problem is, the Fed is running out of short-term Treasuries to sell.  To keep buying them in 2013 the Fed would likely need to create new bank reserves thus expanding the amount of cash in the financial system and increase the size of the Fed’s balance sheet thereby increasing the prospect of inflation.  In addition some Fed officials have expressed concern that the Central bank has become such a big player in Treasuries and mortgages these markets could become illiquid and stop functioning properly, according to a November 23, 2012 article in the WSJ.  The bottom line is simply that the US can’t continue to run deficits of $5 billion per day to infinity.  The October, 2012 budget deficit was $122 billion up from $98 billion in October a year ago.

2.  US Equities

10 Stocks Account For 88% Of S&P 500 Earnings Growth
    Morgan Stanley's US Equity Strategy team led by Adam Parker just published their 2013 outlook for the stock market.  They're calling for the S&P 500 to end next year at 1,434.
    The massive research note included a lot of interesting information about the stock market including this: just 10 companies are accounting for 88 percent of all of the earnings growth in the S&P 500 this year.
    For 2013, the sources of growth are expected to be much more diversified with the top 10 names driving just 34 percent of growth.
    Still, the biggest names will play a big role next year. "Notably, Apple, Bank of America, Microsoft, GE, and Google are forecasted to be one-quarter of the entire S&P500’s earnings growth in 2013."

The above chart (in full newsletter on Yahoo Groups site) speaks volumes.  All of those 10 names are large cap or mega cap companies and the potential upside for appreciation of their stock price is limited by virtue of their capitalization.  During the past year they have benefitted from the Risk Off sentiment and have been a safe haven for investors.  AAPL recently has been an exception.  Good earnings but a significant drop in share price.  One of the great ironies in the US equity market, given the Risk Off sentiment, is the lack of fear.  The Chicago Board of Options Exchange Volatility Index or VIX has been benign.  The VIX is an index calculated from the prices that investors are willing to pay for options tied to the S&P 500's stock index.  As investors become nervous they pay more for the options therefore driving up the value of the VIX.  The VIX closed at 15.14 on Friday, November 23rd which is remarkably 5 points below its’ two-decade historic average of 20, while at the same time $9 billion exited ETFs and mutual funds the week ending November 23rd.  Some experts feel that this is a sign of complacency and a warning that there could be volatility ahead.  An unlikely favorable resolution of the FISCAL CLIFF could spark a rally and likewise a stalemate could cause a sell-off.

3.  International Equities

What a mixed bag!  It’s a matte of the good, the bad and the ugly.  First the good.

Most investors probably wouldn’t consider Pakistan and the United Arab Emirates (UAE) as an investment opportunity in emerging markets but as Reshma Kapadia, who writes for Barrons’ and has stated in her November 19, 2012 column, the MSCI Pakistan index is up 20% this year and the MSCI UAE is up 21%

China’s picture has been bad but that could be changing.  The country’s manufacturing index showed its first expansion in 13 months indicating a turnaround for the Chinese economy.  The WSJ also reports that China is likely to loosen its’ monetary policy now that inflation pressures have begun to recede.  However, Byron King at the Daily Resource Hunter, reports that Chinese citizens are taking $50 billion a month illegally out of the country.

The ugly is one of the most beautiful and promising countries in the world.  We should all cry for Argentina.  As Mary Anastasia O’Grady reports in her AMERICAS column in the WSJ (November 19, 2012) “Argentina Runs Out of Other People’s Money.”  President Christina Kirchner, who was re-elected to a second term in 2011, had based the country’s economic model on a $100 billion default in debt, a weak peso, protectionism, confiscation of private property, capital controls, broken contracts and high taxes.  In other words, other people’s money.  Now, the economy has a negative GDP, inflation is at 25% annually and rising taxes have angered the PorteƱos.  And, Ms. Kirchner wants to amend the constitution so that she can run for a third term.  To add to her and the country’s woes, a US judge has just ruled that Argentina must immediately pay its creditors (mostly in the US) the nation’s 2001 default which had been restructured to pay $.33 on the dollar.  Why is this important to you?  The US is following the same path to destruction as Argentina and most of the Socialist/Marxist countries in Latin America and Europe.  The politicians promise the masses to lift their standard of living but never deliver and worst of all, they bankrupt the country and impoverish the masses.

4.  Hard Assets

You’ve read the headlines.  The US is likely to surpass Saudi Arabia as the world’s largest oil producer as early as 2020.  (If our vision is a perfect 20-20.)  Even the Paris-based International Energy Agency (IEA) believes that the global energy map is being re-drawn.  Analysts believe oil production in the US will increase from the 18 million BBL/day now to 23 million by 2020.  Overlooked by those on the left is that these results have been accomplished by new technology made possible by private risk capital and not government subsidies (i.e., Solyndra).  It also wouldn’t have occurred if the industry wasn’t able to drill on private or state land free from the Feds and the EPA.  Energy independence, first articulated during the Carter years and virtually unattainable until fracking and horizontal drilling was developed, is now coming under attack and could come undone.

The Sierra Club and other environmental groups are demonizing fracking as they have coal and natural gas.  These groups simply despise all fossil fuels and are determined to stop their development.  The Feds and their heavy-handed arm of authority, the EPA, have been consistently losing court cases on grounds that fracking endangers the water supply and is hazardous.  The Feds are now employing a new approach.  They are set to attempt to over-ride state law and prohibit the states from leasing their lands to oil and gas companies.  If they are successful energy independence  will again be unattainable.  And, no one is asking the cogent question.  If you eliminate all the fossil fuels for the production of electricity, how will demand be met?  Have you purchased a portable generator yet?

5.  Precious Metals

As gold and silver continue to trade in a rather narrow range waiting for a break-out, numerous events are occurring that investors probably haven’t encountered that support the bullish prospect for the PMGs.

1.  The Federal Reserve and financial writers and analysts constantly report that the Fed owns 261.5 million ounces of gold (8100 tons) currently valued at about $450 billion.  Walker F. Todd, a former Federal Reserve Bank attorney and now a Research Fellow at the American Institute for Economic Research (AIER) wrote a letter to the Editor of the WSJ which dispels the myth that the Fed owns this horde of gold.  He states that under the Gold Reserve Act of 1934 (when FDR confiscated all privately owned gold from US citizens) the Fed transferred legal title to its former holdings to the US Treasury at an official price then of $42.22/oz.  The Treasury issued non-transferable gold certificates to the Fed to pay for the gold – about $11 billion.  If the Fed claimed the gold, its’ claim would be the smaller number.  This information is critical going forward because there are those who believe that the Fed could escape the eventual accounting consequences of its’ QE by marking up the value of the official price.  As CMV has said repeatedly, the real problem comes when the Fed attempts to deleverage its’ balance sheet.  Rapidly rising interest rates.

2.  Turkey recently acknowledged that it had exported $10.7 billion of gold bullion in the first 9 months of 2012 vs. $1.5 billion in all of 2011.  It appears that $6.4 billion went to Iran in exchange for natural gas.  Iran provides 18% of Turkey’s needs for natural gas but is restricted by US and European sanctions from receiving US dollars or euros.  Turkey is paying in gold.  Another bit of evidence that gold has become real money, given the out-of-control inflation in Iran, the gold is greatly benefitting that country.

3.  There remains a major disconnect between the price of gold bullion and the price of the mining stocks as pointed out by Tatyana Shumsky in the November 26, 2012 WSJ.  She graphically illustrates that the SPDR Gold Trust shares have had over a 100% gain since 2009 whereas the NYSE ARCA Exchange Gold Bugs Index is essentially flat.  Investors have favored bullion ETFs over the miners which contributes to the divergence.  One aspect Tatyana fails to mention is that many of the senior producers pay a nice dividend based on these depressed prices. $2,000/oz gold and $40/oz silver will change these dynamics and the change could come much sooner than people think.

4.  CMV reported last month that the Bank of International Settlements (BIS) had mandated that gold be considered a Tier I asset on the balance sheets of all banks making it equivalent to cash effective January 1, 2013.  Previously, gold was a Tier III asset and was valued at 50%.  In a surprise announcement the US Federal Reserve and the US Treasury, notified its member banks that they did not have to comply with various rules promulgated by the BIS.  As of this writing we do not know if this announcement applies to the gold rule or not.  Unlike European banks, only the 5 major money center banks, if any, hold gold bullion as reserves.  All banks, however, would have been able to accept 100% of the value of bullion as collateral.

5.  As CMV has reported previously, the labor strikes in South Africa are causing an increase in the prices of platinum and palladium.  Demand for platinum this year will exceed 2011 by 400,000 oz., according to Johnson Mallhey a metals consulting firm.  Platinum has risen in price from around $1,400/oz in August to close at $1,586/oz on November 20, 2012.  There is about 15 months of inventory available but strong auto production, if it continues, will shorten this period.

NOTE: There was a sudden correction in gold of about $22/oz on November 28, 2012.  Reasons given by Bullion Desk and others was that the prospect of the break-down in negotiations to avoid the FISCAL CLIFF.  That doesn’t make much sense when the stock market rallied the same day.

6.  Commodities

CMV has subscribed to McMaster Online for many years to get a feel and a direction of this market which they dissect every day.  Here are a few highlights from McMaster’s November 29, 2012 report:

●   The Continuous Commodity Index is over-bought.  New recent low 11/28.  New recent high 11/27.  New 33 year high 07/03/08.

●   Lumber has broken out to a 5 year high on 11/28 to $340/thousand board feet in response to home construction.

●   Wheat is approaching $9/bushel as consumption has exceeded production in 6 out of the last 8 years.

●   Corn is approaching $7.50/bushel and reached a new recent high on 11/28.  Corn-based ethanol has supported US corn prices using 8.5 billion bushels in 2012.

What is important to note here is that key commodities are moving higher while the US economy is in a deflationary trend.  All the attempts by government to manage the economy is leading to supply and demand imbalances.  CMV sees commodity inflation as a trigger for wage and price inflation in the near-term future.

NOTE:  The current union demand that McDonalds double the minimum wage to $15/hour.

7.  Real Estate

Please refer to page 5 for CMV’s overview of this Sector.

8.  Special Situations
A.  Gold & Silver
    The explorers almost without exception have been beaten down to the point where many of their share price is less than cash in the bank.  CMV can’t think of any other Sub-Sector where the “Risk Off” sentiment has impacted share price so dramatically.  We are reminded of the period in 1990-1992 after the real estate market crashed and all the markets were depressed.  Explorers were pennies per share and there was little or no volume.  Being the Contrarian with pessimism at its’ peak, we bought a mix of explorers.  January 1993 was the turning point and suddenly Au jumped from $325/oz to over $440/oz within 6 months and the microcaps as well as the senior miners rose parabolically.  The current market reminds us of that point in time.  We are expecting a breakout from this oversold position within a couple of months.
B.  Platinum & Palladium
    Please refer to page 15 (5.)  for an overview.

C.  Rare Earths
    A feature article authored by Rhiannon Hoyle in the November 13, 2012 edition of the WSJ presented a very bearish outlook on this Sub-Sector.  He quotes Tim Dobson, Managing Director of Kimberly Rare Earths of Australia who says, “All of a sudden we have 400 years of rare earths being drilled out.  Smaller projects just aren’t viable anymore.  The impact on prices of certain REEs has been significant.  For example, a kilogram of lanthanum oxide used in oil refining and hybrid vehicles now sells for $13 a kilo vs. $110 a kilo a year ago.  The Chinese, who still control 90% of the world supply, have cut production drastically which may have an impact on prices.

D.   Uranium
    The Ux spot price has dropped from $44/lb in October, 2012 to $42 on November 26, 2012, hammered by the supply-demand cycle that effects all commodities.  In a November 26, 2012 article by David Sterman for the Financial Advisor web-site, the author maintains that “The phase of declining prices of Uranium appears set to change.”  He says that rising demand and falling supply are going to push Ux higher.  The spot price has risen $2/lb in the past week.  Specifically, Sterman says that Russia’s agreement in 1993 to supply decommissioned warheads for the US expires at the end of 2013 and US nuclear plants are now seeking alternate sources.

E.   Oil & Gas
    Please refer to page 14 for our overview on this Sub-Sector.

F.   Potash
    With world population rising, arable land decreasing, and demand for higher quality diets,  the need to maximize the efficiency of farmland is absolutely necessary.  Potash is the key ingredient for fertilizer. The coming food shortage as related above makes this Sub-Sector more necessary than ever.

G.   Graphite, Vanadium & Beryllium
    A recent research and development project for the development of the next generation rechargeable batteries using graphene with lithium iron phosphate materials hold much promise.  The batteries will be targeted for automobiles as well as mobile electronic devices.
    Vanadium is a chemical element and is a hard silvery gray, ductile and malleable transition metal that was long used for strengthening steel as well as preventing oxidation.  Its’ role as a new-age metal used for the mass storage of energy has opened huge opportunities.  Imagine a battery as large as a house to replace a power grid when it breaks down.
    Beryllium is another new age metal that has newly discovered application for a wide range of industries such as custom precision optical systems for defense, aerospace, laser, medical, process control and metrology.

If you want to learn more, please give me a call at (602) 840-4117.  At a time of crisis there’s always opportunity.

Thursday, November 8, 2012

H. L. Quist Conducting Real Estate Class November 15th

Hello World,

H. L. Quist will be conducting a Real Estate Class at the Southwestern School of Real Estate at 12:00 p.m., Thursday, November 15, 2012.

The talk will be held at:

Camelback Scottsdale Resort
6302 East Camelback Road
Scottsdale, Arizona.

In addition to his discussion of Boom and Bust Cycles, H. L. Quist will focus on how the election could impact all the markets.

Pre-registration is required.

Call H. L Quist at (602) 840-4117 or email, to reserve a place.

There is a $10 fee payable to Southwestern School of Real Estate to attend.

Sunday, November 4, 2012

CMV - November 2012

Hello World,

The Contrarian Market View Newsletter is now free. (Some parts of the newsletter do not display well on the blog - to see the complete newsletter sign up at the Yahoo Group site (below).

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Market Overview

In the 67 years since the ending of World War II both political parties have shared power with little significant extreme  changes in economic conditions during the various administrations, save two.  During the Presidency of Jimmy Carter (1976-1980), the US experienced the worst inflation the country had seen since the Civil War. Three years of a double-digit rise in the Consumer Price Index (CPI), a prime rate of 21.5% and residential mortgage rates of 16% or more led to a severe recession and stagflation by 1980 at the end of Carter’s one-term Presidency.  The other is the current Presidency of Barack Obama where unemployment reached almost the same level as it did at the end of Carter’s Administration and out-of-control budget deficits of nearly $5 trillion in 4 years bringing the total unimaginable Federal debt to an unmanageable $16 trillion.  As we’ve been reminded over and over again the blame for this fiscal catastrophe rests with the prior Republican Administration but future historians and bipartisan economists will simply record the numbers which will speak for themselves.

The Carter and Obama Administrations have a number of characteristics in common.  Namely:

●   Centralization of power and control in the hands of the Federal Government.

●   Subscribe to the flawed theory that Keynesian fiscal and monetary policy advocating deficit spending will create economic growth and reduce unemployment.

●   Increasing estate and income taxes on the wealthy are necessary to balance the budget and promote equalitarianism.

●   Increasing entitlements and benefits for lower income citizens and the poor will end poverty and social injustice in America.

●   Both Carter and Obama are pawns of a global elitist organization known as the Trilateral Commission that was organized by Zbigniew Brzezinski and David Rockefeller in 1973 to create a “New International Economic Order.”  This August group which lists 87 members from the US plus 337 from other nations plans to utilize the current US and global financial crisis to destroy what remains of our national sovereignty and subvert the US into the governance of the United Nations. (Every President of the US elected since 1973, with the exception of Ronald Reagan, has been a member of the Trilateral Commission.  At this moment a search can’t reveal whether or not Mitt Romney is a member.)

●   Both President Carter and Obama had inept foreign policy which led, in part, to disastrous attacks on US embassies in the Mid-East and ultimately played a major role in their defeat for a second term.

There’s more, but CMV has made its’ point.  As Yogi Berra reportedly once declared, “When you get to the fork in the road – take it.”  We’ve now passed that fork.  Does America continue on the current path to the left or reverse its’ direction to the right?  An Obama victory on November 6th would have created a pre-determined economic catastrophe that would end our sovereignty, make us wards of the United Nations, and  foster a “nanny state” where free enterprise and freedom can’t co-exist.  Fortunately, Barack Obama and his minions of collectivists will suffer an ignominious defeat and Mitt Romney and Paul Ryan will be faced with the arduous task of rebuilding America.

Unfortunately and surprisingly, Wall St. doesn’t concur with CMV’s outlook on the election.  Here are the results of Barron’s Fall 2012 Big Money Poll of 131 institutional investors:

●   Who will win the 2012 Presidential Election?
    Obama    74%
    Romney    26%

●   Which candidate would be best for the economy and the stock market?
    Obama    17%
    Romney    83%

●   Describe your investment outlook through June 2013.
    Very Bullish      2%
    Bullish    44%
    Neutral    27%
    Bearish    22%
    Very Bearish      5%

The polling concludes that an Obama victory would be decidedly negative for the economy and the stock market but 46% say they’re bullish, which appears to CMV to be contradictory.  Wall St., however, always sees the cup half-full despite any looming storm.  Here are some other forecasts that re-enforce this point.

●   Larry Fink, CEO of Black Rock, the world’s largest asset manager, says the Fiscal Cliff and the ongoing problems in the Eu will cause a Recession in the US in the first quarter of 2013.

●   According to Lombard Street Research, going over the Fiscal Cliff could result in a potentially disastrous 5.2% reduction in GDP but they do not expect that to happen.

●   One vocal critic who wished to remain anonymous opined to Barron’s, “Bernanke and Co. now risk damage to both the dollar and the Fed’s own balance sheet.  This is the biggest mis-allocation of capital in the history of mankind.”

●   BCA Research thinks that Romney could win the popular vote but Obama the electoral college.  They also believe that a possibility exists for a tie in the electoral vote which then would result in a Republican-controlled House to determine the victor. 

Imagine, if you can, months of lawsuits, recounts and turmoil and renewed uncertainty and its’ effect on the economy.  CMV concurs on the prospect of a tie in the electoral vote which would have to be negative for the equity market.  CMV will repeat itself.  This is the most significant election in the Nation since Abraham Lincoln.

Real Estate

The good news in this market has confounded experts as well as pundits who maintained that a rebound in the housing industry was years away.  Robert Shiller, one of the industry’s most visible and prominent experts on a national basis said a year ago that a significant improvement in home building was at least 5 years from occurring.  One of Arizona’s most recognized experts maintained in April, 2011 that no recovery in the residential housing market was in sight because, “No one was showing up” – meaning there was no net immigration of people into the state.  What happened?  Why did these experts miss the dramatic turnaround in this industry?


Over two years ago your writer met with several companies that were acquiring single family homes, restoring them and renting them out to tenants who, in most cases, couldn’t qualify for financing to purchase.  Early in this game one company was making acquisitions at auctions and direct sales at a price below “Par” or as much as 50% below replacement cost.  About the same time, your writer spoke to the Arizona Real Estate Investor’s Association (AZREIA) and observed an extremely motivated and successful group of individual entrepreneurs who had the courage and insight to pursue this opportunity, which validated our forecast.  Surprisingly, however, few seasoned real estate professionals truly saw what was occurring.  One Realtor commented during a speech your writer was delivering, “Yes, but these (investors) aren’t real sales.”  What the professional and the experts missed was three fold:

One, investors were motivated by double-digit yields of 10% to 15% when other investments produced little or no return.

Two, investors were motivated by the security of a hard and secure asset in a dynamic growth area (Phoenix), and

Three, the unexpected liquidation of inventory of homes on the market (which was over 60,000 at the time) plus the “shadow inventory” reduced the total inventory to less than 25,000 in less than two years.

Now, of course, supply can’t meet demand and prices are accelerating at almost warp speed.  Realtors are upset because their traditional home buyers can’t buy a house at a reasonable cost.  Investors have the dilemma that there are no bargains and the stream of investor capital is pouring in from Australia, Canada, United Kingdom, the EU, US Hedge Funds and Ltd Partnerships, which is a harbinger of things to come.

On a national basis here is some supporting data from the October 18, 2012 edition of the Wall St. Journal. Single and multi-family construction is now running at its’ highest level in four years at a seasonally adjusted rate of 872,000 units in September.  That’s up 15% over the past August and 34.8% over September last year.  Michael Feroli, the chief economist at JP Morgan/Chase & Co., said that the current pace could add two percentage points to the Nation’s GDP which struggled to finish at 1.3% in the third quarter. New building permits, a barometer of future construction, rose 11.6% also the highest level since 2008.  The highest area in the US is the Western Region where new building rose 20.1%. The best of the west is Phoenix which leads all sections of the US in sales and new construction.

The National Association of Realtors (NAR) reported recently that existing homes were selling at a seasonally adjusted annual rate of 4.75 million units, up 11% YOY.  Inventories, NAR reported, were 20% below a year ago and is the lowest since 2005 and represents about a 5.9 month supply.  More importantly, the median home price has risen 11.3% YOY to $183,900, according to NAR.

One factor that has led to the surge of single family homes is the return of buyers who suffered through foreclosure but now are eligible for financing.  The WSJ referred to these buyers as “boomerang” buyers.  According to Moody’s Analytics, there are about 729,000 FHA mortgage holder households who were foreclosed upon three or more years ago who are now eligible to apply for a FHA mortgage.  That number, Moody’s says, will grow to 1.5 million by the first quarter of 2014.  These numbers do not include former mortgage holders of Fannie and Freddie or commercial banks.  Given historically-low mortgage rates, accelerating demand and low inventories, the real estate inflationary boom forecast by H. L. Quist in his “How To Profit From The Coming Inflationary Boom: And Avoid The Next Crash” has already become a reality in 2013 and could continue subject to the election, the fiscal, monetary and regulatory cliff and the prospect for economic chaos spelled out below.

Amidst all the growing euphoria in the real estate world there’s always underground activity that follows the scent of money.  You’ll recall that in March, 2012, five of the nation’s largest banks (Ally Financial, Inc.; Bank of America Corp.; Citibank, Inc.; JP Morgan/Chase & Co.; and Wells Fargo & Co.), agreed to a $25 billion settlement over charges that they had improperly processed foreclosures.  To date, the states have received $2.5 billion of the total, but only one billion of that amount has been designated for some type of homeowner aid while another billion will go to the states general fund according to an October 18, 2012 feature article in the WSJ.  In California, Democratic Governor Jerry Brown opted to put the state’s entire $410 million payout into existing state obligations over the objection of  State Attorney General  Kamela Harris, also a Democrat, who said the funds should go to distressed homeowners.  As readers of CMV are well aware, the LeftCoast is broke and has been feeding from the federal trough for the past four years.  High Noon is at hand and there’s no Gary Cooper to save the state.  Arizona isn’t innocent of “fast fingers” either.  Jan Brewer, a Republican (who possesses a prominent and notorious finger herself) along with the legislature chose to divert nearly one half of the state’s bounty from the $98 million settlement to the state coffers.

Another underground caper was recently revealed by Catherine Reagor who is the Arizona Republic’s guru on real estate.  Her October 10, 2012 column states that in late July almost 300 Fannie Mae foreclosed homes in Metro-Phoenix were “quietly” purchased for $34 million in a cash deal by the Ltd Partnership called SFR 2012-1 US West based in Pasadena, California, which turns out to be an entity created by Fannie Mae.  The buyer nor the prices paid for the homes has not been disclosed.  Taxpayers have been subsidizing both Fannie and Freddie to the tune of over $150 billion over the past four years.  A little transparency from the “evil twins” would be appropriate.  The two Government Sponsored Enterprises (GSEs), which were fraught with fraud and insider dealing subsidized by you-know-who, were a major contributor to the sub-prime fiasco.

Which Cliff?

Most of the discussion today pertains to the expiration of the “Bush Tax Cuts” that will expire on January 1, 2013, which will result in income tax increases for all taxpayers in almost all brackets.  This event has been dubbed the “Fiscal Cliff” and we are constantly bombarded with images of the family automobile with all of us seated inside driving off a cliff.  As unnerving as this may be, there are, in CMV’s perspective, three cliffs facing us on the road ahead.  In addition to the Fiscal, there is the Monetary and the Regulatory.  A brief summary will provide you with a more complete picture of what we face.


Without going into much detail the marginal tax rate will increase the most for the lowest bracket up to $17,400 for married joint filers from 10% to 15%.  For those earning between $17,401 and $70,700, the marginal tax rate will remain at 15% and the higher three brackets up to $388,350 will see an increase of 3%.  Those joint filers over $388,350 in taxable income will experience an increase from 35% to 39.6% or a 4.6% increase in the marginal tax rate.

President Obama has proposed extending the “Bush Tax Cuts” to those whose income is under $250,000 and has threatened to veto any tax bill that will not increase taxes on those earning over $250,000.  Congressional Republicans want the “Bush Tax Cuts” extended for all taxpayers citing that most small businesses in the US are “S” Corporations and pay at the personal rate.  Increasing taxes in a weak economy, the Republicans argue, is an Rx for disaster.

Most observers, however, fail to realize there are other tax increases that affect everyone.  The 2% Social Security (FICA) will be reinstated.  The 3.8% health care tax will apply to all taxpayers and the Medicare tax on individuals will increase from 2.9% to 3.8%.  As a salaried employee your share of the Medicare tax will increase from 1.45% to 2.35%. The highest earners could see their effective tax rate rise from 35% to 44.3% and when state income tax is added the tax will approach 50%.  Bruce Watson, who writes the tax section of AOL’s Daily Finance blog, estimates that the average family will see their taxes increase from $1,550 to $6,400 per year.

For investors and savers the tax increases are much more onerous and will have a decided impact on the financial markets.  Taxes on passive income (dividends and interest) will increase from 35% to 43.4%, including the healthcare tax.  The long-term capital gains tax will increase from 15% to 23.8% including the healthcare tax.  For the wealthy who have accumulated a sizeable estate, the increases are confiscatory or should we say “redistributory.”  The lifetime exclusion for estate and gift taxes is now $5,000,000 for an individual and $10,000,000 for both spouses.  The excess over that amount is subject to a 35% tax.  If the present law doesn’t change the lifetime exclusion will revert to $1,000,000 and the tax rate will increase to 55%.  Many small family businesses, farms and ranches will have to be liquidated to pay these taxes or be encumbered by a first lien to the IRS for a long-term payout.


The current Federal Debt ceiling, which was bitterly debated and reset a year ago is $16.394 trillion.  At present the debt is about $16.300 trillion and the limit will be breached just after the election.  Another rancorous debate is about to occur and the Republicans vowed last year not to increase the ceiling unless commensurate spending cuts were included.  If President Obama is re-elected and the Dems retain control of the Senate, the Monetary Cliff could precipitate a US Treasury default and an onerous and catastrophic re-rating of US debt.


Most Americans will not have this third leg of a wobbly stool in mind when trying to deliberate the uncertainties that lie ahead.  Jim McTague, who writes his DC Current column for Barron’s (October 22, 2012) adds clarity to a foggy picture.  He says that “CEOs are keeping an eye on the Federal Register where final rules from government departments and agencies are announced and published after passing through the bureaucratic pipeline.  Post-election, the Environmental Protection Agency (EPA) alone could wreck havoc on the economy with a flood of new mandates that will cost businesses hundreds of billions of dollars.”  He adds that there are 620 rules in the EPA pipeline just 3 years into the Obama Administration. One rule, McTague writes, would declare large swaths of the US “closed for new business,” until emissions are reduced to meet lower caps.  In one study 351 power companies including 150 biofuel producers seeking new building permits were turned down because they couldn’t meet new mandates.  A coal-fueled power plant on the Navajo Indian Reservation near Farmington, NM, and 2 others that serves a four state area, have announced that they will shut down soon.  The Obama Administration is determined to kill the coal industry but doesn’t have an alternative to meet energy demand.  The Navajos will lose 1700 jobs and $500 million in revenue.

Lisa Jackson’s EPA, despite numerous losses in court actions throughout the US, has raised the bar to an outrageous level.  Her agency has taken an action to not only expand the EPA’s authority, it plans to prevent an Alaska gold and copper mining project from development, prior to the firm’s submission of their plans for government approval.  The Pebble Partnership has spent a decade and $132 million exploring what would be the largest mine in North America, which should be reviewed and permitted by the US Army Corps of Engineers. Mrs. Jackson’s EPA wants to supercede the Corps.  A district judge in Alaska has ruled that the EPA’s view that it could “unilaterally modify or revoke” a Corps permit “at any time” was a “stunning power for an agency to arrogate to itself when there was no mention of it in the statute.”

The bottom line?  Given four more years, the Obama Administration, utilizing the fiscal, monetary and regulatory cliff could absolutely destroy the US economy.  What most Americans don’t realize is that it is a deliberate design of the Trilateral Commission and its pawn, Barack Obama.  We’ve only had a preview of how the President plans to “fundamentally change America.”  If re-elected the Trilaterals and the President will have “mission accomplished.”

Note: On October 25, 2012, The Daily Caller reported that Mark Levin’s legal group, Landmark Legal Foundation, has filed suit against the EPA to force the agency to publically disclose what regulations it intends to implement after the presidential election.  This action confirms CMV’s position that these regulations have the power to effectively destroy the US economy.

Big Brother

Your writer first read the novel “1984" by the British visionary George Orwell, in the late fifties while in college.  To the average American reader then, who enjoyed unbridled freedom, the prospect of an all-powerful, all omniscient and all controlling government seemed absurd and too “futuristic” to be believable.   Your writer, however, had the opportunity to spend a considerable amount of time with Russian athletes (then the USSR) in 1959 and discovered first hand how Orwell was able to create his vision of the future of “Big Brother is Watching You,” modeled after Josef Stalin’s brutal totalitarian state.

This personal experience should be interesting and insightful.  As a member of the US Track & Field Team that competed against the “Rooskies” (as we called them), my roommate (world record javelin thrower Al Cantello) invited our two competitors to dine with us one evening in Philadelphia.  They soon pointed out to us that we were being followed by their police.  When your writer became too “friendly” with a female member of the Russian team, another official quickly interceded.  After the meet was over your writer proposed a vodka toast to his opponent.  He refused the drink knowing that Big Brother was watching.  There were no “defections” during this “Friendship Meet” between the world’s two most powerful nations.  The political tension then was as thick as molasses and  equally as sticky.  In short, the USSR was an “Orwellian” state.

Fifty years later, the United States of America, is rapidly approaching a police state and the diminishing individual freedom is done all in the name of protecting us from our enemies and criminals.  The Patriot Act passed in 2001, began an unprecedented intrusion of governmental power and invasion of privacy which no longer exists.  80% of the automobiles sold in the US now have “event data recorders” (EDRs) that record all our driving habits in case of accident.  Google, Twitter and Facebook users have willingly provided in-depth personal details of themselves, stored in a server somewhere to be recalled by anyone.  In 1949, Orwell envisioned “telescreens” which  were “two-way” and Big Brother could observe all their citizen’s moves.  Today we have “robo cops” and cameras everywhere to track our every move.  Marketers know all your personal proclivities and shopping habits and target their products to us.  Within a short period of time, the Federal government will know everything there is to know about us, will be able to pick us out from a crowd with facial recognition technology and will know where we are or where we will be at any time.  CMV is only touching the surface here as technology complicitly and compliantly provides data to a government that desires to control every aspect of our lives.

Note: CMV would like to acknowledge and thanks James Dines (The Dines Letter) for his recollections of George Orwell’s “1984" and its’ application to 2012. We are certainly riding the same wave.

Technological advances are becoming a powerful weapon for our offshore enemies also.  Iranian hackers have stepped up a campaign to disrupt financial institutions and recently specifically targeted Capital One Financial Corp. and BB&T Corp. The attack carried out by a group that calls itself Qassam Cyber Fighters has a super sophisticated program known as itsknoproblembro and has been successful at disrupting services at US financial institutions and plans to unload further attacks on an ongoing basis.  These attacks could be in retaliation for US and Israeli cyber attacks on Iranian nuclear facilities which has probably been successful in delaying the production of a nuclear weapon.

The Low tech attacks are also continuing. In mid-October Quazi Mohammed Rezwanul Ahsam Nafis tried to detonate what he thought was a 1,000 pound car bomb outside the Federal Reserve Bank of New York, aiming to destroy the US economy.  His mistake was in trying to get assistance via the internet and he recruited an FBI agent who posed as an al Qaeda facilitator.  There’s just a little irony here.  There’s a greater chance that the Fed will destroy itself and the US economy given the Fed’s 100 year pursuit of a flawed monetary policy than it being bombed by terrorists.

CMV would be derelict in its’ responsibility to its’ readers if we didn’t mention the attack in Benghazi, Libya on the US Consulate there.  Even if you read major publications, you would have missed “it” because it wasn’t ‘newsworthy’ to most of the print media.  Recent revelations indicate that as early as two hours after the attack began, emails from State Department were sent to US intelligence officials as well as the White House situation room, reporting that the Consulate was under attack.  The Islamist group Anar Al-Sharia was responsible and they also planned an attack on the US Embassy in Tripoli – five days before the US Ambassador to the UN was publically saying that the attack was a public protest in response to a video.  Three requests were made by the endangered Americans and the CIA and State Department reportedly denied assistance.  A heavily redacted copy of one of the emails appeared in the October 25th edition of the Arizona Republic.  On a minimum basis President Obama, US Ambassador Susan Rice and Secretary of State Hilary Clinton deliberately deceived the American people and for some yet unknown reason, tried to cover up this catastrophic event that left our Ambassador and three other Americans dead. The truth, unfortunately, won’t be told until after the election, if ever.  This event should be the tipping point for America to rid itself of a President whose interest is not in the Nation’s best interest.

Sector Overview

1.  Cash & Fixed Income
    Treasury yields were basically locked in their pre-QE 3, pre-Fiscal Cliff range of concern as the 10 year finished at 1.75% near the end of October, and the 30 year at 2.91%.  Despite large inflows into bond funds BofA Merrill Lynch sees a rotation out of bonds in 2013 and that 37% of surveyed fund managers would sell bonds to buy equities.

A major focus has been on Municipal Bonds and the potential loss of their tax-exempt status as part of the debate over deficit reduction and tax reform.  The Obama Administration takes the view that since the wealthy are the prime beneficiaries of these tax-exempt bonds this exemption should terminate on existing as well as new issues and the interest income should be taxable.  There is also in the mix a discussion about eliminating federal interest payment subsidies for Build America Bonds (BABs) which have prevented potential municipal bankruptcies over the past four years but added hundred of billions to the Federal liability picture.

BABs have also allowed a few states to avoid financial Armageddon. Take Illinois as a leading example.  The State’s debt per capita is the highest and its’ credit rating is the worst in the US.  Illinois is ‘essentially insolvent’ and can’t pay its’ bills much less contribute to the State’s pension fund that has an unfunded liability of $85 billion.  A recent teacher’s strike was settled giving union members a 15% increase in pay.  The State can’t pay current salaries much less the new benefits.  Sometime after the election you can expect headlines depicting the fate of the State.  CMV wagers that the Obamas won’t retire to Illinois next year which is a model of failed Obamanomics.

2.  US Equities
    It had to happen.  CMV has been citing for months that higher raw material costs and reduced revenues would “squeeze” earnings and lower equity prices.  Our supposition is that QE 3 has supported the market beyond fundamentals and the time period when prices should have been negatively impacted and a correction should have taken place.  The Dow Jones has dropped four out of the last six weeks down 2% for the week ending October 26th but remains up 6% YTD.  The S&P 500 has outperformed the Dow up 2% YTD.  A number of major highly visible companies such as Apple, Amazon and Caterpillar had disappointing earnings and others like DuPont and Xerox lowered their outlook going forward into 2013.  Even Chipotle Mexican Grill, despite a 20% increase in earnings, saw their stock sell off 20% one day in mid-October.  As of October 22, 2012 one out of every five S&P 500 companies had reported their earnings.  Only 42% have seen third quarter revenue surpass analyst’s estimates which is the worst since early in 2009.

Jeff Clark points out in his October 23, 2012 “The Growth Stock Wire” that the Volatility Index (VIX) has broken out to the upside and appears to indicate rising volatility.  He also says that the S&P 500 Index shows a topping pattern which often signals the end of a bullish trend.  What the equity market really needs first is a positive resolution of the election which will remove some uncertainty.

We May Have To Wait A Lot Longer For The Corporate Earnings Rebound
    After third-quarter earnings reporting, during which profit growth is expected to turn negative for the first time since the financial crisis, most Wall Street strategists were hoping that the worst would be over, setting up for a nice rebound in Q4.
    As it turns out, however, the negativity coming through so far in corporate guidance for fourth-quarter earnings is nothing short of "stunning," says National Bank Financial economist Matthieu Arsenau.
    As the chart below shows (Chart available in full file on Yahoo Groups), the ratio of negative earnings preannouncements to positive preannouncements for Q4 is at an all-time high: – Business Insider

3.  International Equities
    Since there are few opportunities in China, the Eu and other foreign markets (with the exception of Russia) and since this is the political season, CMV will focus on Latin America. Mary Anastasia O’Grady, who writes her Americas column in the WSJ every week, is an expert on Venezuela, a model of how a Marxist government can destroy an economy and impoverish the very citizens that it swore to support.

Henrique Capriles Radonski, the 40 year-old governor of the Venezuelan state of Miranda and his enthusiastic supporters, had fully expected to unseat Presidente Hugo Chavez, who has ruled the country for 14 years.  The results however, showed that the Marxist leader had won another 6 years term by a wide margin of 11%, whereas polls showed that Radonski was ahead by four percentage points.  How could this happen?  The fact that Mr. Chavez had seized control of television and radio stations and the owner of the only independent station had to flee to the safety of the US, might have had something to do with the outcome.  Chavez’ control of the voter rolls could have been another contributor.  The rolls list at least 10,000 names between the ages of 111 and 129 and a total of 19 million eligible voters whereas there were only 11 million in 1999.  The state-owned oil company, which is the country’s largest employer and government employees were required to supply a thumb print and a signature with their vote which may have influenced their choice of candidate.  Venezuelans  have “voted” themselves more inflation (now 20%) and price controls, a shortage of food since Chavez confiscated all the farms and production has fallen 30%, a 28% decrease in oil revenue, since the state confiscated all production, and a crime rate that has seen 155,788 murders since el Presidente took office in 1999.

Ms. O’Grady’s column shows a picture of Barack Obama greeting Hugo Chavez at the Fifth Summit of the Americas in Port-Of-Spain on April 17, 2009.  Is this a portrait of things that could come to fruition in the US in the next four years?

Contrary to the picture in Venezuela and a number of other Latin American countries that have become totalitarian states, Brazil is far outpacing the US economy.  James Davidson, who writes the monthly newsletter “Strategic Investment” and who has authored Brazil is the New America: How Brazil Offers Upward Mobility in a Collapsing World, has also established 3 companies there.  He is very bullish on the country.  Today Brazil is the world’s largest exporter of five major crops, the third largest producer of aircraft, as well as railcars, machine tools, footwear, and a host of other products.  After being ravaged by hyperinflation and political corruption in the 1980s, Davidson believes that a conservative banking system gives Brazil the same business and investment opportunities that existed in the US in the late 1960s.  (

4.  Hard Assets
    Somewhat lost in the presidential debate is the fact that US oil production now just about equals that of Saudi Arabia.  The US Energy Department estimates that US oil and biofuels production will equal 11.4 million BPD in 2013, just below the Saudi’s 11.6 million BPD. We use 18.7 million BPD so we’re still dependent on foreign imports.  A combination of increased production and improving fuel efficiency of the Nation’s cars and trucks indicate that imports could be cut in half by 2020.

Adding to this positive picture is the production and supply of natural and shale gas which is also responsible for increasing the production of “tight oil” trapped in shale.  The US has such an abundance of natural and shale gas (that can be produced and marketed in the US at $2.66/thousand cubic feet), that it can be exported and sold as Liquid Natural Gas for two to three times domestic cost.  Daniel Yergin, who is Vice-Chairman of IHS, a global analytics company, says that 1.7 million jobs have been added since the shale gas revolution has started and that could rise to three million by 2020.  There is one major obstacle, however.  The “Green Lobby” is opposed to all fossil  fuel production, including gas, which was also lost in the debates.

5.  Precious Metals
    You may recall that we saw a BUY signal on August 22, 2012 when gold (Au) broke out of a trading range from about a June low of $1,525 to a high of $1,625.  From $1,625 it moved smartly to just under $1,800/oz early in October and retrenched to $1,700 before closing at $1,712 on October 26th.

Silver (Ag) followed the same pattern from $28/oz on August 22nd to a high of $35 the first week in October.  Both Au and Ag broke through their 50 day moving average, which now rests at $1,730 for Au and $32.87/oz for Ag.

Why the correction?  If we’ve learned anything during the past 14 months, uncertainty creates a flight to US Treasuries which strengthens the USD and lowers the PM Group.  The fear of a fiscal and monetary crisis has not moved Au and Ag north.  If we knew, however, that taxes were going to increase and even though that would be GDP negative, the uncertainty would be removed and all markets including Au and Ag would respond and find their real value in the marketplace.  On a larger scale, if we knew that Barack Obama would have four more years, most of CMV readers would consider that a multi-tiered negative but the markets would react more definitively.  CMV and others see this event as very bullish for the PM Group despite being negative for US equities.

On June 18, 2012, the US Federal Reserve and the Federal Deposit Insurance Corp. (FDIC), circulated a letter to US banks that proposes to harmonize US regulatory capital rules with Basel III, promulgated by the Bank of International Settlements which is the world’s central bankers bank in Basel, Switzerland.   Basel III is an international accord that tells a bank how much capital it must hold in reserves to establish the banks solvency and stability as a result of the recent banking crisis.  This letter proposed that US banks now consider gold bullion as a Tier I asset which means that it would increase its’ weighting to 100% rather than 50% as a Tier III asset.  This puts gold on an equal basis with any reserve currency or government bond.  In simple terms, gold has returned to its’ former status as real money.  This could be one of the principal reasons why China and central banks around the world are accumulating massive amounts of Au.  In a recent internet recording Brian Hicks, the publisher of “Wealth Daily,” forecasts that gold bullion prices could double due to “Basel III” after January 1, 2013.

Collectively, central banks around the world, plus the International Monetary Fund (IMF) report that they own about 23,349 tonnes of gold which at today’s price represents about $1.3 trillion.  Eric Sprott of Canada’s Sprott Asset Management says that central banks have been a massive unreported supplier of physical gold and that their gold reserves are negligible today.  He says, “ ...a large portion of the Western Central banks stated 23,000 tonnes of gold reserves are merely a paper entry on their balance sheets – completely un-backed by anything tangible other than an IOU from whatever counter-party leased it from them in years past.  As this stage of the game, we don’t believe these central banks will be able to get their gold back without extreme difficulty, especially if it turns out the gold has left their countries entirely.”

Add to Sprott’s analysis, the distinct possibility that some of the gold bars stored at Fort Knox have proven to be gold plated tungsten and we’ve got the potential of one of the most explosive frauds in world history and that the stated supply of bullion is in question.

Keep tuned.

6.  Commodities
    This entire Sector has languished due to one major factor – China’s appetite for everything from the metals to food products has been starved due to the country’s planned and unplanned slowdown.  One example tells the story – iron ore.

Through 2011, China’s steel production grew at an annual average rate of 16.5% according to Barrons’ Commodity Corner (October 29, 2012).  This compares to this year’s 1.7% rate.  China’s steel production accounts for almost 50% of all production worldwide, so the country’s economic slowdown has sent the price of iron ore plunging from a high in 2011 of $190/tonne to $87/tonne this September.  China has recently announced a new stimulus program which includes massive infrastructure spending. If China’s plan comes to fruition, the price of iron ore as well as most all base metals like copper, lead, nickel, zinc et al will follow.  The resurgence of home construction in the US will also add to the demand for copper and lumber.

7.  Real Estate
    Please refer to pages 3-5 for CMV’s extensive overview of this Sector.

8.  Special Situations
    This Sector, which primarily features microcap stocks focused on natural resources, is the victim of the “risk off” sentiment but should be the beneficiary of a breakout to the upside once the political and economic uncertainty is resolved.

A.  Gold & Silver
    The exploration companies are the most beaten up of any equities, some losing as much as 90% of their value in the past year despite the fact that most of them have proven resource in the ground.  James Dines says in his August The Dines Letter, The precious metals should end their consolidation within a few weeks and then turn up.  In fact, we are turning increasingly bullish on the beaten-down Toronto Stock Exchange, if only because everybody is so deeply pessimistic on mining stocks.   Jim’s track record is unparalleled. CMV agrees.

B.  Platinum & Palladium
    Despite the fact that labor strikes have curtailed the production of these two metals in South Africa and available supply has plummeted, prices of platinum have fallen to a 6 week low due to the economic outlook in the EU and the reduction in the demand for autos.  30% of all platinum production is for catalytic converters to reduce auto pollution.  Another factor is that rising labor and production costs and lower prices are severely effecting the bottom line of the South African  miners.  If prices don’t trend higher some of the mines could close which would reverse the metals trend.

C.  Rare Earths
    China’s largest REE producer announced on October 25th that it had suspended production in an effort to shore up plunging prices of these elements so critical to the electronics industry.  China has about 30% of the REE deposits but accounts for 90% of the world’s production and their “centralized government management” effects the entire world. The US is coming closer to the production of REEs which will begin the end of China’s monopoly.

4.  Uranium
    Jim Dines introduced your writer to the most ignored and unloved energy source in the world (uranium) when its’ spot price was $7/LB in 2002. Within a couple of years U3O8 rose dramatically to $140/LB and the penny uranium stocks rose parabolically.  That won’t happen again but the Fukushima nuclear power plant disaster has created some value in this Sector which has been over-sold.  China is building a whole new generation of nuclear reactors anticipating their inability to meet their energy needs while the rest of the world debates the issue and runs the risk of the lights going out in the near future.

5.  Oil & Gas
    As CMV has stated in our Hard Asset Sector (page 11) this industry has been the one bright light both in the increasing demand for workers as well as investment opportunity.  Microcaps drilling for oil and shale gas in the US have produced outsized returns.  Of particular note are new developments in the Bakken Formation in Montana.  A Romney victory will spur development on Federal lands which should present additional opportunities.

6.  Potash
    Fertilizer is one of the key opportunities in the commodity Sector.  The failure of this year’s corn crop has reduced current supply to a mere 50 days and will cause farmers to plant considerably more acreage in the 2013 crop year.  Corn requires a great deal of nitrogen because its’ yields are much higher per acre than those of soybeans or wheat.  This is another sub-Sector that is a long-term hold.

7.  Graphite, Vanadium & Beryllium
    These “new age” metals have also suffered from the “risk off” sentiment that has negatively impacted all of the Special Situation sub-Sectors.  In late October, however, the stock of one of the micro vanadium companies doubled on the market’s recognition of the vital role this metal plays in the mass storage of energy and steel production.  Online you can hear an interview with Ron McDonald the former Canadian Secretary of International Trade, who has become a spokesperson for the vanadium industry.  Another key component is that the world is now reliant on the supply of vanadium from such unreliable sources as China, Russia and Venezuela. There is now a proven resource in the US that will be North America’s only primary producer of this marvelous metal.

Demand for graphite for just one market – EV cars – will exceed supply by the year 2020, but its’ role in ion batteries will result in a critical shortage before that date.  Graphite’s sister component graphene has more application as it is 200 x stronger than steel and so thin it can be transparent.  A Canadian microcap just received a Preliminary Economic Assessment (PEA) of its proposed graphite mine that would have a pre-tax net present value of $246 million and a 32% pre-tax Internal Rate of Return (IRR).

Beryllium is now being tested for its technical and commercial viability for use in custom precision optical system for the defense, aerospace, laser, medical, process control and metrology industries.

If you want to learn more, please give me a call at (602) 840-4117.  At a time of crisis there’s always opportunity.

Friday, November 2, 2012

H. L. Quist Speaking Engagement

Hello World,

H. L. Quist will be conducting a Real Estate Class at the Southwestern School of Real Estate at 12:00 p.m., Thursday, November 15, 2012.

The talk will be held at:

Camelback Scottsdale Resort
6302 East Camelback Road
Scottsdale, Arizona.

In addition to his discussion of Boom and Bust Cycles, H. L. Quist will focus on how the election could impact all the markets.

Pre-registration is required.

Call H. L Quist at (602) 840-4117 or email, to reserve a place.

There is a $10 fee payable to Southwestern School of Real Estate to attend.