Jack A. Bass: Manage Contacts - MyBlogLog

Jack A. Bass: Manage Contacts - MyBlogLog

March 15th

The Apprenice Millionaire Market Letter


Our AMP Thesis: - ( from my notes for a speech to Rotary this week )

The economy is moving up - but it is no Olypmic record sprint
The stock market will move up more rapidly than economic stimulus spending

The basis of the U.S. Economic ( and then world economic ) Decline was :
) the U.S. Housing bubble
2) the U.S. banking / financial sector build on toxic assets.

and those problems remain large enough to hinder recovery

The low point - Lehman/ Bear Sterns and Mortgage Defaults led to the low point on the DOW one year ago - this month.

Shrugging off some lingering reminders of the credit crisis and recession, investors last week marked the one-year anniversary of the bear market low by pushing many benchmark equity indices to cycle highs.

Wall Street scaled 17-month highs on the back of easing concerns of sovereign debt defaults and increased hopes for a global economic recovery as the US dollar pulled back and the CBOE Volatility (VIX) Index approached 22-month lows. The Index is also referred to as the “fear gauge” of US stock markets and is used as a contrary indicator that moves inversely to equity prices, when it is plotted against the S&P 500 Index.

We are recovering :

The U.S. Economic Recovery ( the American Recovery and Reinvestment Act of 2009 ) had a $750 Billion price tag .
By the end of 2009 only a third of those funds were spent but:

1) most large banks are on the road to recovery
BUT - toxic assets remain on their books
and the question is what happens when the Fed stops buying assets
such as mortgages that no one else will buy.

and Wall Street Has Learned NOTHING
It is the Wall Street equivalent of a coroner's report -- a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.The report, compiled by an examiner for the bank, now bankrupt, hit Wall Street with a thud late Thursday. The 158-year-old company, it concluded, died of multiple causes, The New York Times reports. Among them were bad mortgage holdings and, less directly, demands by rivals like JPMorgan Chase and Citigroup, that the foundering bank post collateral against loans it desperately needed.But the examiner, Anton R. Valukas, also for the first time, laid out what the report characterized as "materially misleading" accounting gimmicks that Lehman used to mask the perilous state of its finances.


2) mortgage foreclosures continue - at a slower pace
Defaulted loans precvent bank borrowing to all but the best credit risks.
Foreclosed homes are the cheap competitors to better prices and a recovery
in home owner wealth. It is estimated 25 % of all homes with mortgages
are " under water " - that is the mortgage exceeds the current value.


Signs of hope ; Obama-nomics at work ;

1) One million temporary jobs were created this month as the U.S Census takes
place
2) retail sales in the U.S. rose despite snow storms that shut down the north-east
3) China and India continue to boom and draw natural resources from around
the world - lifting commodity prices.
4) World wide - inflation remains a far off risk.


What to Buy :
" Buy when there is blood in the streets "- Rothchild

Buy the Banks :

Bank of America
Citi
JPMorgan Chase

Buy the homebuilders

Standard Pacific
Beazer Homes
Hovnanvian
KB Homes


But gold for insurance:
The Richarson/ Bass Quant sees a rise above $1400

Yamana
Barrick
Agnico Eagle

Buy Fertilizer stocks

- people can'tt stop eating - and the population continues to grow in China where they must use potash to create food AND they can pay for it.

Potash Corp. of Sask.


By cautious - but don't sell and run until the headlines change from predicting the end of the world to announcing all is well.




Jack A. Basshttp://www.jackbassteam.com
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