MEXICAN MARKET MAY OFFER KEY

Here's an interesting read one could with a little imagination label correlation.

http://www.minyanville.com/sectors/global-markets/articles/Mexico-Markets-Face-Impending-Risk-mexico/7/8/2013/id/50668?camp=newsletter&medium=email&from=recapemail
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CALL THEM BROKE

You could call them the Big Three or the Little Three or PGC or CPG.

Or you could just call them broke, Portugal, Greece and Cyprus. After the market closed Monday the EU forked over another 3 billion euro tranche to Greece to keep the balloon afloat for another quarter.

These three will undoubtedly need more aid as the summer wears on and German elections begin capturing more media attention. It is widely expected German Chancellor Angela Merkel will be re-elected. She is known for taking a less than sympathetic stance about bailouts.

And more elections in Portugal could also capture investor attentions.  As for Cyprus it is expect with the nation's falling economy and banking problems the tiny country will need more money than previous predicted.
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DB UNION

DB could well stand for Deadbeat Union as in soaring bad debts plague the EU, according to a story in today's WSJ.

In the face a a continuing shrinking economy business owners are calling on what you to be known as  the low man or the repo guys. We once knew a guy who reposed cars for a major bank. It can be a frustrating, nasty business.

Judging from the WSJ Piece it's also a costly one. It's also an insight on EU small businesses and capital starvation.

http://online.wsj.com/article/SB10001424127887324251504578579190607237804.html?KEYWORDS=Debt+collectors
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DON'T LOOK NOW

You may soon be paying to cash your paycheck or pay card. It's another way big banks have figured out how to screw workers. They've enlisted the help of employers to steal some more money and your elected officials, left and right, who are owned by the banks, sit there with their usual response: "Duh!"

http://www.moneytalksnews.com/2013/07/05/prepaid-cards-are-replacing-paychecks-at-more-companies/?utm_source=newsletter&utm_campaign=email-2013-07-06&utm_medium=email
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                                     RISING INTEREST RATE OPPORTUNITIES

Cyclical stocks have been the market’s best performers during lengthy periods of rising rates. Research firm Birinyi Associates studied nine such cycles since 1962 and found that the technology, industrial and materials sectors averaged double-digit gains in the six months after interest rates started to rise, while the utilities and telecommunications sectors lost ground and consumer staples lagged the S&P 500.

http://www.marketwatch.com/story/why-rising-yields-wont-derail-dividend-stocks-2013-07-08?pagenumber=2

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AN EXCERPT: HABITS

Habit is either the best of servants or the worst of masters.

                                                              Nathaniel Emmons

Webster’s defines habit as a thing done often and hence, usually done easily; a custom; a pattern of action that is acquired and has become so automatic that it is difficult to break.

“I am your constant companion. I am your greatest helper or heaviest burden. I will push you onward and upward or I will drag you down to failure. I am completely at your command. Ninety percent of the things you do might just as well be turned over to me, and I will do them automatically. I am the servant of all great people and, alas! of all failures as well. I am not a machine, though I work with all the precision of a machine, plus the intelligence of man. You can run me for profit or run me for ruin—it makes no difference to me. Take me, train me, be firm with me, and I will place the world at your feet. Be easy with me and I will destroy you. Who am I? I am Habit.”

                           Anonymous

We all accumulate habits, some good and some not so good. But it’s always the same: Your choice. Whether you’re working out or just trying to live your life, choose your habits carefully.  And on those days when you find your spirit flagging a bit, try to remember something the author Somerset Maugham wrote years ago: “The unfortunate thing about this world is that good habits are so much easier to give up than bad ones.”

Habits play an important role in our investing whether we realize it or not. Buying at the top and selling at the bottom is widespread among retail investors. Swimming always with the crowd is a confirmation habit. It often provides a false sense of validation, a feel good factor.

I started this book out with a piece about habits because they play such a large role in our lives.  All of us are forming habits daily. Habits are like the saying, “Be careful what you wish for.”  Habits fill vacuums.

So be extra careful what you’re leaving unattended. It just might get filled with a habit.

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CONSENSUS CAN PROVE DANGEROUS

But here's one from three sources you should be aware of even if they could be reading too much into the June job numbers.

http://blogs.barrons.com/incomeinvesting/2013/07/05/blackrock-jpm-goldman-now-see-fed-taper-starting-in-september/?mod=BOL_hpp_blog_investing#

CAIIFORNIA BUSINESSES

While some say the decline in the number of California's businesses isn't clear, those businesses and lots of  jobs with them are disappearing.  And California is not alone.

That's the bad news. The good news is some states have seen an increase in new businesses.

Could the differences between California and Florida, both whacked hard by the real estate bubble, the former losing firms and the latter growing them, be about the difference in taxes?

That couldn't be part of the answer.

http://www.businessweek.com/articles/2013-07-03/why-are-californias-businesses-disappearing#r=rss
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                                   OPPORTUNITY KNOCKS 

We've talked about the chaotic bond market before. Where some smell fear, others smell opportunity. The trick is not to let your opinion pre'vent you from making money. 

Thank Bernanke for his flub, intended or otherwise, as some have suggested. If he was just pluming the market, fine. If he just screwed up, fine. He created opportunity.

The only real freedom in this increasing government-controlled world is to have your own stash of screw-you-money. Make the money and be gone.

And yes we've looked at Moises Naim's recent book The End of Power.
 http://www.bloomberg.com/news/2013-07-04/fidelity-sees-bargains-as-98-of-asia-bonds-sink-credit-markets.html
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AUSTERITY FATIGUE

 Portuguese stocks and bonds take another dive owing to what some are calling "austerity fatigue."

In 2011 the EU's Big Three--the ECB, the IMF and the European Commission--coughed up $106 
billion to help the nation's ailing economy. No small amount for a country with a $215 billion GDP.

Portugal's unemployment hovers near 18% and its GDP has been in a slump since late 2010. The money came with strings in the form of required budget cuts. Those cuts, according to some, are starting to bite. Complicating matters two political figures tendered their resignations in recent days raising questions about government stability.

The stock market is down nearly 18% and yields on 10-year government bonds linger near 8%, up from 5.5% just two months ago. And Portugal is not alone. Greece faces similar problems meeting its demands trying to qualify for more handouts from EU officials.

Austerity fatigue or not, the EU's economic turmoil looks a long way from being resolved.
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YOU NEED TO

I have a way of starting sentences with "You need to...." as if I am trying to tell the other person what to do when I'm not. It's a bad habit. But we all at times need to do something not because you or I or anyone else says it.

W. B.Yeats, the great Irish poet, warned against "hitching our Pegasus to a plow" trying to "please every knave and dolt."

Pegasus you recall was the winged horse in Greek mythology that could fly. In more modern times he was the image for years for Mobil Oil now known as Exxon Mobil.

Yeats concluded by saying: "I swear before the dawn comes 'round again, I'll find the stable and pull out the bolt."  In other words, free up his creative self after years of writing to please others that proved most unsatisfying.

Most of us are taught not to be selfish, not to pound our own drums or sing our own praises. Don't know if that's Christian-Judea or what. I do know, as Yeats was pointing out, it's a recipe at best for mediocrity if not worse.

So here's the point. Never be afraid of finding that stable and dislodging that bolt.

And the same holds true for investing. Sometimes following the herd works as in the trend is your friend or, as the late Marty Zweig use to say, not fighting the tape.

The tape today seems to be Federal Reserve controlled, at least for the nonce. Some, however, believe a structural shift is afoot based on better fundamentals caused by all the easy money these past few years. These people cite an improved housing market, the so-called lack of inflation, a moot point if ever there was one, and improved consumer confidence.

The SM is supposed to be a leading not a lagging indicator of what's ahead. It could just be if these folks are correct that when these positives become accepted fact, the market might just head south again, anticipating the next economic down turn.

Forget death and taxes. With the politicians and bureaucrats running this charade, there will most certainly be another one playing at a venue near you in the not too distant future.
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KNOW YOUR EXITS

We recently wrote a brief--Have An Escape Route--about following the news but make sure you know where the exits are.

Following the news is akin to following the money and until recently, for nearly the last four years, that money was flowing into emerging markets. According to a piece in today's WSJ between 2009 and 2012 private money flowing into emerging markets totaled $4.2 trillion, "more than all the money invested in the Tokyo Stock Exchange."

A nice piece of change anyway one chooses to count it. Troubles in Emerging Market Land seem to be spreading. From Brazil to China to India and Turkey it appears that the prospects of slower growth and rising interest rates are taking their toll.

End result: investors are fleeing as they yank their capital from bond and equity funds. Like rigor mortis, reality has a way of setting in. Toss in political unrest and the slowing of the global locomotive most know as China and it looks more and more like another round of investor hand-wringing time.

A quick scan of some currencies tells much of the tale. Brazil's real is down more than 20% this year. The South African rand has lost a similar amount against the US dollar as gold prices tanked and to the north the Canadian loonie is, well, looking a bit loonie owing to a high level of household debt, a looming real estate bubble and weak energy prices.

Recall back in 2009 when the EU turmoil erupted many investing soothsayers like Bill Gross and others touted EMs, especially their debt instruments. Have they called you recently and warned you where the exits were located?

Much of this could be summarized by one word--growth. Investors flock to it. But they get their hats over non-growth. How much non-growth? Probably a lot more than MSM is predicting.
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