10/19 JP Morgan-Note the bit About Emerging Markets and Unspent PE Funds in Middle East, DTZ on Qatar, New Indicator

Written on October 19, 2010

Marhaba-

My buddy (pilot) told me that FedEx asked all its pilots to cancel their vacations for NOV and DEC (not done in two years) and it is rumored they may start hiring in January. I like anecdotal indicators, let’s see how this one works going forward.

I used to use the boat business, but as yet I have not heard any uptick in pleasure craft sales. Could be that the hammering in the dollar just ignited big shipping due to export growth. Let’s see how it works. The attached JP Morgan report shows value in growth stocks vs the market overall and also demonstrates intrinsic (less gov’t debt) health/value in the emerging market.

Government Gross Debt as % GDP for Advanced G-20 stands at 97% and is expected to be at 109% in 2011 vs only 78% in 2007. Levered, fat and broke.

Government Gross Debt as % GDP for Emerging G-20 stands at 37% and is expected to be at 36% in 2011 vs only 36% in 2007. Not, levered, hungry and growing.

Hmmmm…wonder who outperforms? Also compelling reasons as my mentor and genius friend told me two years ago. OWN GOLD THEY ARE WRECKING THE DOLLAR. Silver has outperformed and should continue to do so as the markets continue vertically.

The US is clearly picking the banana republic way out circa 1970-1990. If the US can convince the Arab world to de-link their currencies then they will have succeeded in hosing the Arabs on US debt as they have the Japanese. To accomplish a full-scale de-valuation of the dollar they will add the Arab world to the Japanese and keep jawboning the Chinese so they can pay back the dollars owed in much, much cheaper dollars. A company producing goods and shipping abroad and being paid in other currency for the bulk of its sales, that pays dividends, has and will be priced up like a commodity as the dollar falls. So, growth exporting companies in the US will hedge off a part of a sharply lower dollar. But it won’t be mistaken for a solid economy or job growth. If you are paid in dollars and have assets in dollars, this should concern you.

Praemonitus, praemunitus. Forewarned is forearmed.

All the best,

Leon