Wednesday, May 30, 2007

China Hiccups

The US markets opened lower today, as investors digested the overnight news from China. Stocks in China were down sharply on Wednesday because the government raised a tax on stock trades. The reason for this tax increase is an attempt to dampen some of the enthusiasm for stocks, due to a market boom. There are growing concerns about a possible bubble.

The main Shanghai Composite Index dropped 6.5 percent to 4,071.27 after hitting a record high on Tuesday. The Shenzhen Composite Index for China's smaller secondary market closed at 1,199.45 a decline of 7.2 percent. The market plunge came on the heels of an announcement by the Finance Ministry that tripled the "stamp tax" on stock trades from 0.1 percent to 0.3 percent. The change was effective Wednesday, as the the official Xinhua News Agency reported the ministry was trying to "cool the stock market".

The last time stocks plunged in China, which was February of this year, emerging markets took it on the chin. Stocks in the US and other mature markets also swooned as investors reacted to the news. Anytime you have a precipitous drop in a major market, there are bound to be ripple effects in all of the world's markets. One thing to remember is the fact that the markets do not move in a straight line, so after a period of increasing share prices, one has to expect a decline sooner or later. Hopefully, this will not be a correction that reclaims all of the gains made this year, but it is a distinct possibility. If you have a few dollars sitting on the sidelines, this may present an opportunity to buy shares at a lower cost. For those of you who continually dollar cost average, you will automatically reap the benefits of any sale on shares.

Later in the day, the US markets responded to the release of the FOMC minutes, as the S&P 500 index advanced to its first record close in more than seven years ending at 1,530.23. Investors concluded from the Fed report the evidence of a cooling economy might be a reason for the Federal Reserve to begin cutting interest rates in the second half of the year. The DJIA also closed in record territory at 13,633.08 as the markets shrugged off the news from China. Sometimes you just never know how the market will react to news, which is why I always recommend not letting emotion rule your investment decisions.

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Friday, May 25, 2007

Remember the Point of the Holiday

A friend emailed me and commented that I write a lot about the markets and investments, but wanted to know if I had any other interests. So for anyone who might be interested, I love the beach, especially reading while relaxing. I'm also into boating and gardening, as well as walking and doing my daily workout. Well, that's enough about me! I hope you all have a great Memorial Day holiday, and if you are down here in South Jersey, enjoy our beaches and boardwalks. Also, take a few minutes during your weekend to remember the reason for the holiday. There are many young men and women in harm's way, and many who have given their lives in defense of this country, throughout its history. Take some time to reflect on their sacrifices, be safe on the highways and have a wonderful weekend.

The S&P 500 still has not broken through the record we've talked about for two weeks now. It made it to within 2 points of 1,527.46 earlier this week, but closed out at 1,515.73 today. The Dow ended the week at 13,507.30 and the NASDAQ closed at 2557.20 ending a lackluser trading week. The markets will be closed on Monday for the Memorial Day Holiday, so with that said, I will signoff until we some more information to digest.

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Tuesday, May 22, 2007

Amero Paranoia

I've recently read a few blogs that have discussed the creation of a "new currency" called the Amero, which supposedly is being clandestinely prepared to replace the currencies of Mexico, Canada and the United States. Once again the conspiracy theorists and pessimists, who believe America is in decline and the collapse of the dollar imminent, are seizing upon the news of a decline in the dollar as a reason for spreading their paranoia. They cite the rise of China as an economic power, and the trade imbalance we have with them as further evidence to support theories of the collapse of the dollar, even as China prepares to buy $3 billion of stock in Blackstone Group's IPO, in order to diversify their portfolio.

I did a search on the net to find more information about the Amero, and found ONE page of references to it. I've copied the best source I found, which has links to just about all the other articles you can find on the net, for those of you who might be interested in reading just about all there is on the subject. It is always important to find out all you can about a subject, before you report it as fact. My interpretation of the information about the Amero is that we are a long way from any serious discussion about such a currency, and even further away from relinquishing our sovereignity through the actual adoption of it.

The links didn't transfer over to this blog, but if you would like to see the same information with the links included, please go to my blog on myspace:

Here is the information I've researched:

"Sovereignty is not infinitely valuable"
Herb Grubel

These are the words of a Canadian advocate for the creation of a new currency for North American
countries. His theories seem to lead the pack of similar philosophers and economists.

In a foreword for Grubel's study on the prospect, Gordon Gibson characterizes the situation as such:
"Most fundamentally however, Mr. Grubel makes the sensible observation that "sovereignty is not
infinitely valuable." Every nation in the world, even the mighty United States, has traded off
elements of sovereignty to multi-national associations such as the WTO, NAFTA, and the United
Nations. Canada has been in the forefront of encouraging every such development--a natural policy
for a middle power."
For a "middle power" whose economy is weak and exchange rate declining steadily, such a maneuver
may be in the best interest. This is not the case when the strongest economy in the world, the United
States of America, considers diluting its monetary system with Mexico, a third world, "developing" nation
and Canada, a second socialist nation on our two land borders.

Further, U.S. sovereignty is, perhaps, our most precious facet, as defined in our Declaration of
Independence and Constitution. Our sovereignty is part of the formula that makes our Republic the most
unique political and cultural experiment in the history of civilization.

Rather than try to decode, re-describe and publish commentary on the prevailing philosophies and
arguments surrounding the need and advantages for a common hemispheric currency, this site provides
links to information from legitimate proponents and detractors.

Be advised that there is a lot of code and doublespeak in these articles. Few of the more elaborate
articles discuss the disadvantages to the U.S., but concentrate on the advantages to Canada and Mexico.
The most significant and timely aspect of the movement involves current U.S. participation in a
elaborate international program called the "Security and Prosperity Partnership Of North America, "
described elsewhere on this site.

The link-listing method on this site is in development. If you have particular comments or would like to
inform the host of this site as to a link to be reviewed for inclusion in this or any other section of this site,
please visit the "contact" page and inform us by email."

These links reach discussions of the "Amero, " "dollarization" and offer insight to the conditions of the
U.S. dollar, as well as Canadian and Mexican currencies.
The Case for the Amero: The Economics and Politics of a North American Monetary Union
Herbert G. Grubel--Herbert G. Grubel was David Somerville Chair in Taxation and Finance, The Fraser
Institute, and Professor of Economics (Emeritus), Simon Fraser University. He has a B.A. from
Rutgers University and a Ph.D. in economics from Yale University. He has taught full-time at Stanford
University, the University of Chicago, and the University of Pennsylvania; and has had temporary
appointments at universities in Berlin, Singapore, Cape Town, Nairobi, Oxford, and Canberra.
Herbert Grubel was the Reform Party Member of Parliament for Capliano-Howe Sound from 1993 to
1997, serving as the Finance Critic from 1995 to 1997. He has published 16 books and 180
professional articles in economics dealing with international trade and finance and a wide range of
economic policy issues.

The Plan to Replace the Dollar With the 'Amero'
Mr. Corsi is the author of several books, including "Unfit for Command: Swift Boat Veterans Speak
Out Against John Kerry" (along with John O'Neill), "Black Gold Stranglehold: The Myth of Scarcity
and the Politics of Oil" (along with Craig R. Smith), and "Atomic Iran: How the Terrorist Regime
Bought the Bomb and American Politicians." He is a frequent guest on the G. Gordon Liddy radio
show. He will soon co-author a new book with Jim Gilchrist on the Minuteman Project.

American University
The Threat of the Dollar: A case study

The online encyclopedia

Queens University, Canada
One of Canada's leading universities, with an international reputation for scholarship, research,
social purpose, spirit and diversity. Consistently ranked among the top universities in Canada,
Queen's is known for its high quality and incomparable 24-hour learning environment. The
University was established by Royal Charter of Queen Victoria in 1841 - twenty-six years before
Canadian confederation. Classes were first held in 1842. The earliest degree-granting institution in
the united Province of Canada, Queen's has reflected and helped shape Canadian values and
policies, educating many of the country's most notable political and cultural figures. is a network of people dedicated to helping you. Find answers to important questions.
Learn new skills. Achieve personal goals. Get inspired. Fix what’s broken. Build. Create. Solve
problems. Change things. Accomplish stuff that matters., is a private research group and banking introductions services
company based in Vancouver, British Columbia, Canada.

Fiscal and Generational Imbalances: An Update Adobe Reader required--get it here, free
A report to the Federal Reserve by Jagadeesh Gokhale and Kent Smetters, August 2005

Sunday, May 20, 2007

Happy Memorial Day

The summer months, which usually are considered the doldrums by those in the investment community, could provide some interesting outcomes as we head into the Memorial Day weekend and what many see as the onset of the summer season. This is also the start of the summer driving season, and gasoline is already hovering around $3.00 a gallon. As hurricane season also begins to heat up, I hope there are no direct hits on the oil infrastructure, or the possiblity of $4.00 a gallon gasoline I've read about could become a reality. Meanwhile, the Dow Jones Industrial Average continues to set record after record, and now the S&P 500 is is less than 5 points away from its all time record of 1,527.46 set in 2000. If the Federal Reserve holds interest rates steady at the FOMC meeting in June, they will have held rates steady for a year, something the Fed does not do often. The Fed has held its target for short-term rates at 5.25% since June 2006, after raising it steadily for two years to tame inflation. Banks use the rate as a benchmark for pricing consumer and business loans. These issues could be setting the stage for a very interesting second half of 2007.

For well over a year now, I've been writing about the dual concerns of a slowing economy and inflation. Fed policy has been concerned with remaining hawkish on inflation, while some economists, investors and journalists expected rate cuts as early as September 2006. The midcycle slowdown economists predicted seems to be exactly what has happened, with the bottom being symbolized by April's paltry retail sales figures. While many thought the housing slump would drag the economy into a recession, it seems the builders and subprime borrowers are the ones bearing the brunt of the pain. Most homeowners remain solvent and able to meet mortgage expenses. As long as the employment numbers continue to hold steady, consumers should be able to continue to meet obligations and make discretionary purchases.

Where the economy goes from here no one can predict with certainty, but there are reasonable hypotheses one can make based on the data. This economic cycle is in the mature phase of the current expansion and the mid cycle slowdown was like a breather, before growth picks up again. Expansions don't last forever, so at some point in the future we will have a recession again. With that said, it looks as if the second half of 2007 will be a time when growth reignites and inflation will continue to be the number one concern of the Fed. With the productivity of workers declining, and the pool of skilled workers drained, labor will begin to demand higher wages. Usually, when the economy slows down unemployment ticks upward, but that hasn't happened during the first two quarters this year. Some economists think this is because the slowdown in housing hasn't worked its way down to the employment figures. Others think there is a possibility the economy is actually growing faster than the GDP numbers indicate. As we head into the Memorial Day weekend, one thing is certain, gas is going to cost you about $3.00 a gallon. As far as interest rates are concerned, the jury is still out. Will the Fed raise, cut or hold? Will the S&P 500 EVER break 1,527.46? Time will tell. Enjoy the holiday!

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Sunday, May 13, 2007

Utilizing Affiliate Programs

If you own your own website or blog, affiliate marketing programs can greatly improve your income and enhance your credibility among your customers. When signing up for affiliate programs, it should involve consideration as to the types of information that you already have on your website or blog. For example, you are more likely to have increased sales if you own a website about cats and place affiliate links on your website related to pet care. The affiliate products that you promote should always be related to the primary website or else you run the risk of confusing potential customers. Confused customers may not provide the business you are hoping for.

There are many affiliate marketing programs to choose from, so selecting an appropriate one for your website should not be too difficult. Before you join, you want to be fully aware of the pay structure and any changes that could be made to the pay structure. Be sure to thoroughly review the affiliate program and make sure you understand it completely before you associate your name with it. Credibility is very important if you want to build a loyal group of customers. If you mislead them, they will not be back.

If you are an affiliate, many times you will need to do more than simply place their link on your webpage. Although, some affiliates are simply link based, others may provide you with an entire internet based operation, or what is sometimes called a turnkey solution. Be sure to keep the links on your site updated. Some companies may be promoting seasonal items and you will appear more credible if your links reflect the seasonality of your affiliates. If a customer visits your site in December and notices that you are still promoting summer items, they are more likely to leave your site without considering the other information or products that you offer.

Sometimes a company goes out of business and their links can be replaced by an adult site or one that is unrelated to your content. If you do not keep on top of updating your links, you could be promoting an offensive or unrelated site. You should constantly review the various links you've placed on your site and eliminate dysfunctional links, because customers can get very frustrated if a link doesn't do what it is supposed to do. If your website is professional, visitors are more likely to spend time on your site, come back for subsequent visits and eventually convert to being paying customers.

John Kaighn is a Registered Investment Advisor with Jersey Benefits Advisors and writes articles on various business and investment information, ideas and opportunities. For more information about this and other topics you can visit and

Wednesday, May 9, 2007

Fed Still On Hold

The Federal Reserve left interest rates on hold at the current level of 5.25% during the Federal Open Market Committee meeting today. The central bank noted the economy has been slowing, but is still expected to grow between 2.5% and 3% this year. As a result, they felt inflation is too high for their comfort level and still the number one threat to the economy.

The Dow Jones Industrial Average sprinted to another record close finishing at 13,369.29 for the session. The Standard and Poor's 500 added 4.86 points to close at 1,512.58, which is getting closer and closer to the record set in 2000, when the index reached 1,527.46. The Nasdaq composite index rose 4.59, or 0.18 percent, to 2,576.34. Of course, it is still far from the record set in 2000. Maybe someday, it too will surpass the old record, but I am not holding my breath for it to happen before the end of the decade.

Sunday, May 6, 2007

Markets, Limbo, News and Opinions

As we have been witnessing for the last seven months, the Dow Jones Industrial Average continues to set new records, since surpassing the old record attained back in 2000 at the height of the Tech Craze. Once again, the DJIA closed Friday at 13,264.32, another record high. Since the Dow surpassed the old high back in October of 2006, I have been concerned that the broader market, represented by the S&P 500 index, hasn't beaten its old mark, which was also set back in 2000. However, the S&P 500 has stealthily been adding points and is now within 21.84 points of surpassing its previous record of 1,527.46. The broader market setting a new record and adding to it would be a very positive sign for the continued advance of the current bull market. This past Friday's weak employment numbers indicate a further slowing of the economy. This should give the Fed the ability hold interest rates at the current level during the FOMC meeting on Wednesday. The Treasury Department releases the Producer Price Index on Friday, which will give a further indication of the direction of wholesale price inflation.

While I expect the S&P 500 to beat the old mark this upcoming week, I don't think the advance of this bull market will, by any stretch of the imagination, be easy or rapid going forward. One of the things I expect is that shortly after the S&P 500 sets a new mark, we could see a bit of a sell off and profit taking, which is a good thing. It is interesting to note this current rally is being led by mostly professional investors, while the retail investor is not really participating. My thoughts on that one are that the "cocktail party conversation" investors are still occupied by real estate and trying to flip houses. By the time these trend setting, band wagon jumpers climb aboard the stock market train again, the bull market will be nearing its peak. Let's hope we have some time before this happens. I'm hoping another year or so, because it may take some of them that long to sell their speculative houses!

This morning I also read an article in my local paper about Limbo, and the fact that Catholics, and any other religion that espoused the concept before, don't have to believe in it anymore, if they choose not too. For those of you who don't know the meaning of Limbo, it is the place an unbaptized baby goes if it dies. I just wonder if that means the word will disappear too, because then we wouldn't have a way to describe where our county is right now. Limbo, you see, seems to be as good a word as any to describe the standoff between Congress and the President on the funding of the Iraq War. The Democrats are showing exactly why they are so out of touch with the huge group of Americans who are neither right wing conservatives nor tree hugging liberals. Instead of coming up with a plan to have meaningful debate about the Iraq War, the Democrats have acted like they won a sweeping majority in both Houses of Congress, rather than their rather narrow majority. Immediately, out came the white flag and the pessimistic, defeatist attitude. Of course, the President hasn't been much better at listening to anyone.

So, here we sit in LIMBO, waiting for someone who "gets it" and stops catering to and polarizing the right and the left in this country. While the 2008 campaign is already in full swing, I am really somewhat disturbed by the lack of qualified leaders who might actually be able to unite this country. It must be done in the middle. We have to stop fighting the old battles between the right and left, and realize there is a real enemy out there that wants to destroy everything America stands for, and he isn't going away! I think it is safe to say most Americans are somewhere in the middle politically. Many moderates believe it is a woman's right to decide the fate of her unborn child within limits, don't have a problem with civil unions and what people do in their bedrooms, would like to keep taxes low, realize the government wastes tons of money and would like to see it be more frugal, hate the fact we are having soldiers killed in Iraq, but realize we CAN'T CUT AND RUN, understand we can't close our borders and isolate ourselves from the rest of the world, understand the threat posed by islamic terrorists, probably inhaled, and want to see policies that bring the most jobs and wealth to the largest majority of people in our country. What is your feeling on some of these issues?

John Kaighn

Wednesday, May 2, 2007

Midweek Economic Report

The Dow Jones Industrial Average surpassed 13,200 for the first time today, after a report on U.S. factory orders generated strong investor enthusiasm and optimism about the economy. The Dow gained more than 75 points and reached its second straight record close. The Commerce Department reported orders to U.S. factories rose 3.1 percent in March. This was the most robust in a year, led by strong demand for commercial aircraft. This increase was much higher than the 2 percent rise many analysts had been anticipating. The report was accompanied by a sharp increase in the level of business investment. The Labor Department will be reporting on March job creation and unemployment on Friday, and investors will be eyeing this report, as well corporate profits. All of this information will be dissected in an effort to ascertain how rapidly the economy might be slowing and whether earnings reports, which for the most part have beaten expectations, might continue to give stocks a lift. With the direction of the economy by no means certain, the competing scenarios of inflation or economic slowdown, which we've discussed since last year, still ring true today.

The term used by economists to describe what seems to have happened at this juncture is a mid cycle slowdown. With the initial first quarter GDP growth reported on Friday at an anemic 1.3%, and with the reports concerning factory orders and business investment reported today, the conclusion one could draw is the economy bottomed in the first quarter. If this is the case, it implies there may be quite a bit more life in the current expansion. The stock market, which is a leading indicator, seems to be signalling higher highs are in the future. If this is a true mid cycle slowdown, it would be very positive because it helps to ease concerns about inflation, which in turn could mean the Fed will continue to hold interest rates steady.

In all fairness, it is important to point out this bullish outlook is not shared by everyone. While some of the statistics can give one a true dose of optimism, there are those who look at the weaker dollar, the housing slowdown and the endless use of leverage in the financial system as a harbinger of bad times to come. Those in the bear camp tend to feel the stock market is overly optimistic about an economy that has slowed substantially and will continue to do so in the face of ever mounting pressure on consumers, due to decreasing home values and the inability to refinance mortgages with ever increasing monthly payments. According to Alan Abelson, the fabled writer for Barrons and the quintessential bear, "We think the economy will slide into recession, as the drag from housing and unprecedented consumer debt make themselves increasingly felt. We think the dollar will continue down the slippery slope, complicating Mr. Bernanke's life and inducing slumpflation. We think this overleveraged, overheated, overhyped market will blow itself out and touch off a chain reaction that'll rock global bourses. And all this will happen, if not tomorrow, then soon enough, we're afraid." These are some very sobering thoughts to ponder as we march toward Dow 14,000. I am relatively sure that number will not reached in the scant six months it took to go from 12,000 to 13,000. But then again, you just never know!

So how does one deal with the starkly different opinions about the direction of the economy and the markets? Well, you could sit on the sidelines in cash. The problem with that is, you just never know when it is safe to jump back into the market. I think it is better to have a disciplined, diversified, long term approach to investing. You should use a mix of cash, stocks, bonds, mutual funds or ETF's, commodities and real estate at a comfortable level of risk for YOU. This diversification can help protect you from the gyrations of one or more asset classes, when they fall out of favor. There are many risks lurking out there in the world to upset your apple cart. While you can't protect yourself from every risk to your portfolio, the more diversified your assets, the better chance you have of riding out the financial storms you'll encounter.

John Kaighn