• In its latest global outlook, the International Monetary Fund (IMF) slashed the growth forecast for every major country and urged more recovery actions. The IMF said the global economy will likely contract 1.3% this year and post a 1.9% gain next year, Reuters reported.

• Mercatto Estrategia FI, a Brazilian hedge fund that is beating 97% of its peers, is selling assets of the country’s largest homebuilders and banks, saying they are overvalued, Bloomberg reported. “Since we’ve lived through a liquidity crisis, it shook up the economy a lot and there have been huge declines in healthy names,” Regis Abreu, the head of equity at Mercatto, told Bloomberg.

• Prices of U.S. single-family houses rose a seasonally adjusted 0.7% in February, the Federal Housing Financing Agency (FHFA) said. The FHFA’s index is calculated by purchase prices of houses financed with mortgages sold or guaranteed by Fannie Mae (FNM) and Freddie Mac (FRE), Reuters reported.

• Home prices in Dubai could sink as much as 70% from their peak values late last year on sour demand and a halt in mortgage lending, UBS AG (UBS) said in a report. “We are still in relatively early stages of the property down-cycle in United Arab Emirates,” Saud Masud, a Dubai-based analyst at the Swiss bank, wrote in a report to clients, Bloomberg reported. “We believe risk-reward profiles are not yet compelling for investors to consider market re-entry, hence continued price declines are expected.”

• Apple Inc. (AAPL) reported second-quarter profit and sales that exceeded analysts’ estimates. Apple’s iPhones and new iPod models helped spur sales of $8.16 billion that yielded net income that amounted to $1.21 billion, or $1.33 a share, in the period which ended March 28 Apple said today in a statement. Analysts predicted profit of $1.08 a share and sales of $7.95 billion, according to a Bloomberg survey.

• Agents with the Pentagon’s Defense Criminal Investigative Service searched the Malvern, PA offices of a unit of Germany’s Siemens AG (ADR:SI) on Wednesday.  The search was part of an ongoing investigation, a Pentagon spokesman said.  Ed Bradley, special agent in charge, said the search began early on Wednesday and continued throughout the day, but he gave no details on the nature of the investigation, according to Reuters.
• David Kellermann, the acting Chief Financial Officer at Freddie Mac (FRE), was found dead early Wednesday in the basement of his home in a Washington suburb, police said. Early reports from sources in the police department indicated Kellermann’s wife reported a suicide. There were no signs of foul play, and the death is under investigation, Fairfax County, Virginia, Police Officer Shelley Broderick told Bloomberg. The medical examiner’s office said it’s conducting an autopsy.

• In a sign that efforts to overhaul its main auction and fixed-price retail site may be working, EBay Inc. (EBAY) reported sales and profit that beat analysts’ estimates, Bloomberg reported. The most-visited U.S. e-commerce site said net income was $357.1 million, or 28 cents a share, compared with $459.7 million, or 34 cents, a year earlier.  Excluding some items, earnings were 39 cents a share, beating the 34-cent estimate by analysts.

Source: Global Investment News Briefs Thursday April 23, 2009

According to a November report by the Federal Reserve, nearly 60% of banks severely tightened their lending standards on credit card loans and 65% on other consumer loans in the last three months. As unemployment and delinquency rates go up and lenders are trying to minimize their risk, the average American all of a sudden finds himself cash strapped… this at a time when home equity has dried up, 401(k)s and IRAs are losing value by the day, and many common stocks are barely worth the paper they’re printed on.

“We’ve been hearing about the liquidity crisis affecting banks for quite a while,” Joe Ridout, spokesman for the advocacy group Consumer Action, told the Washington Post. “Now we’re seeing it transform into a crisis affecting people’s personal finances as well. The next wave of the financial crisis may well be a credit-card-related crisis.”

Credit card companies are indeed clamping down hard on customers. Many Americans may have noticed that while their mailbox used to burst with junk mail of the “You’re Pre-Approved!” sort, these days the influx has slowed down to a dribble. That’s no coincidence – credit card direct mail offers in the third quarter of 2008 have seen a 28% drop year-over year as Visa, AmEx & Co. are struggling to cope with a tidal wave of defaults.

Moody’s Investors Service reported that charge-off rates rose 48% in August compared to the same month last year, the 20th consecutive year-over-year increase. This number is expected to go even higher in 2009, potentially exceeding the charge-off rates during past recessions.

Thus, credit card members are increasingly coming under scrutiny – and not just those in the subprime category. Customers with a credit score of 700, who were deemed “most creditworthy” just a year ago are not anymore. According to cardratings.com, 730 is the new 700.

The palette of “risk factors” has also broadened. Aside from late bill and mortgage payments, now location, profession, and even shopping behavior are considered. If you live in a high-foreclosure area, work in the real estate, auto, or construction business, and buy your household necessities at Wal-Mart, you’re likely on the target list.

One of the measures credit card issuers have devised to reduce risk is slashing credit limits in half. 60% of banks lowered the credit ceiling for existing nonprime and 20% for prime customers. And, as a testament that the intended “trickle-down effect” of the Fed’s massive rate cuts didn’t work at all, many companies have kept their interest rates at the same level or even raised them by two or three percentage points. Late fees, too, have been increased.

This tightening of credit translates directly to people’s shopping habits. While Black Friday weekend brought an overall growth of 0.9% in sales from last year, retail sales data show that that wasn’t enough to save the month of November. The MasterCard SpendingPulse reading noted that electronics and appliance sales dropped by 25% in November, luxury goods by 24%, and sales at clothing and department stores by 20%. Foot traffic decreased by 19% from 2007, meaning shoppers visited fewer stores.

C. Britt Beemer, CEO and founder of America’s Research Group, who has correctly predicted percentage changes in Christmas retail sales for 16 of the last 17 years, published his first negative forecast (of -1%) in 23 years, calling the 2008 Christmas shopping season a “perfect storm” for retailers.

Even as the average American is battening down the hatches and reining in consumption, the Federal Reserve seems to be going the opposite way, judging from the $700 billion bailout package that has – literally within weeks – ballooned into an estimated $8.5 trillion colossus. But despite throwing fistfuls of money at the problem, says Bud Conrad, Casey Research chief economist and editor of The Casey Report, “all the king’s horses and all the king’s men haven’t been able to put Humpty back together again.”

We don’t know whether the Humpty Dumpty economy can be saved… what we do know, though, is that every crisis holds danger and opportunity. By making the trend your friend instead of swimming against the stream, you can preserve your assets and profit handsomely, especially in highly volatile environments like the one we are seeing now. To learn more about how to generate double- and triple-digit returns in a crisis, click here.

Source: The Credit Crunch, Close Up and Personal

So far this year, $736 million in municipal bonds have defaulted. That doesn’t necessarily mean they didn’t pay investors; they may have just drawn down reserves. That’s what happens just before they stop making payments to bondholders.

During all of 2007, only $226 million in municipal bonds defaulted, according to the May edition of the “Distressed Debt Securities” newsletter, published in Miami Lakes, Florida.

“This is peanuts, at least so far,” says contrarian blogger Mish Shedlock. “However, Ambac (ABK) and MBIA (MBI), both of which are the equivalent of the walking dead, are staring at more nails in their coffins should municipal bond debt head south in a big way.”

“For the most part, however, the subprime crisis is past its inflection point,” says Eric Roseman in the Offshore A-Letter. “What matters now is how and when other credit indicators normalize.”

But Eric is highly dubious that credit markets have bottomed.

Sub-prime is now largely history. But other segments of the credit spectrum that have a far more profound impact on the American consumer are just beginning to unravel.

The consumer is now threatened by a liquidity crisis. Housing values continue to heavily contract and revolving credit installment debt is becoming harder to secure.

The culprit is less the write-downs themselves and more the virtual “shutdown” in the securitization market. At its height, the securitization market provided 66% of household borrowings in the first quarter of 2007. Without this market, consumer credit losses may be far worse than currently estimated.

Auto loans, personal loans, mortgage loans, and other segments of installment debt are still contracting. Auto loans are especially vulnerable with defaults recently hitting a 10-year high of 3.4% in March. And more Americans are dropping their house keys to their local lenders as housing values continue to plunge below the cost of their mortgages.

For example…

Pr It holds the position of the largest private, non-governmental originator of mortgages in the US.

Con: It also holds the dubious distinction of being one of the most blatant issuers of sub-prime paper.

I’m talking about Countrywide Financial (NYSE: CFC) – the much-beleaguered bank and mortgage company.

And there is an interesting trend occurring at the bank – one that bodes well for banks and the economy as a whole…

The Importance Of “Average Joes”As a banking institution, Countrywide accepts deposits from individuals.

While that’s an obvious point to make, it’s also a significant one, since this is the most important aspect of Countrywide’s business. Especially during the recent turbulent times.

In order for Countrywide to loan money, it must do so using available funds from deposits, which it can then leverage into loans. It makes money from the positive spread between what the money costs (deposit rates on the money from you or I) and what it charges (loan rates to customers).

Another alternative is to borrow funds from the institutional market and re-loan them. But since this requires a strong financial rating – something that Countrywide does not have at the moment – that idea is a non-starter.

Now, about that trend I mentioned…

What Countrywide’s Interest Rates Reveal About The Financial Sector’s Health

Prior to the subprime mess hitting the fan, Countrywide’s deposit interest rate was as pathetic as those being offered by most large banks.

However, once the subprime crisis and ensuing credit shortage gripped the market, Countrywide found access to easy funds very limited – meaning it could not borrow low and re-lend high.

With institutional funding not an option, Countrywide mounted a full-court press on folks like you and me – yield hungry investors seeking higher returns on cash. And as an FDIC insured bank, the funds were pretty secure, provided they didn’t exceed the $100,000 threshold.

And in January, it was evident just how tough a time Countrywide was enduring in trying to obtain funds to re-lend.

The bank’s money market rates for a minimum $10,000 deposit were as high as 6% – significantly higher than the average bank.

Even with the Federal Reserve in the midst of an aggressive interest rate-cutting program, Countrywide was still paying over 5%, while most banks were paying closer to 2%. Even Internet banks like ING Direct were paying 3% to 3.5%.

The situation stayed this way until last month…

Follow The “Countrywide Index”Just after the “tipping point” collapse of Bear Stearns on March 17, the subprime crisis began to ease.

Around the same time, Countrywide finally started to lower its interest rates. Thursday’s Countrywide deposit interest rates were under 4% – the high end of the deposit rate range.

The days of grabbing high interest rates from troubled institutions may be over. Countrywide is not only finding money, it’s doing so relatively cheaply, considering its risky profile.

While that’s not exactly great news if you’re looking for a higher rate of return on your deposits, on a broader scale, it does bode well for the US economy and banks in the long-term.

After all, if a bank like Countrywide can borrow at lower rates, then the liquidity crisis that almost brought the financial system down is surely easing.

For future reference, go to Countrywide’s website at: www.countrywide.com and keep an eye on the deposit rates.

When they hit the same level at the major money center banks like JP Morgan Chase – or even close to the rates offered by Chase – then you’ll know that the financial crisis is almost over and the sector is ready to rally again in earnest.

Karim Rahemtulla

Source: Financial Indicator – Countrywide Financial

Good day… And a Happy Friday to one and all! No 3-day weekend this week, Shoot Rudy! Today is a “food day” in the office as we celebrate our cake maker, Cheryl’s birthday. I brought Krispy Kremes for the crew, as they truly eat them up whenever I bring them in.

Well… It wasn’t a Tub Thumpin’ Day for the currencies on Thursday, as the dollar was in the driver’s seat doing the Tub Thumpin’! There was a bias to buy dollars all day long and that carried over into the Asian and European markets. The euro is now looking up at 1.55…

The dollar bulls were all dancing in the streets when the 2nd revision to 1st QTR GDP was revised up to .09%, which was bang on expectations. Now, I would have one question for the dollar bulls, if I could just get them to stop with the dancing in the streets, and that is… What’s so good about GDP at .09%? Let’s say, for instance that we didn’t get a preliminary of .06%, and this was the first print… Most observers would gasp for air and turn into Chicken Littles, all screaming that the sky was falling!

Another thing giving the dollar some love these days is the falling Oil prices… Oil dropped to $125.75 yesterday…

But that’s the story Larry… Oh, and the dollar is hogging all of the spotlight these days that dollar bulls failed to see the problems with an interview that took place that doesn’t shed any sunlight on the financial problems in the U.S. Let’s listen in…

“MARGARET POPPER, BLOOMBERG NEWS: It could be huge. You’re talking about the securitization issue and how that market drying up drives up the ability of consumers to shift their debt around. So they’re in essence, facing a liquidity crisis just like Wall Street did in the capital markets is that -

WHITNEY: No doubt. Margaret, there are two things that are going on here, number one, there’s been an over reliance on consumer liquidity coming from the securitization market. So, for example for ever $1 of mortgages that was put on bank balance sheets since 2007, $7 of mortgages, or seven times that rate has been securitized in the broader market.

So, most people think when the securitization market shuts down, oh lets look at the revenue decrease, revenue declines in investment banks. The bigger deal is it constrains consumer liquidity.

Now, the second issue is that regulators that have clearly gaffed on the housing bubble are now going to make up for lost time and are going to make it so prohibitive for credit card lenders to make profits, maybe that’s a good thing long term, but what’s it’s going to do is extract, I think, over $2 trillion of liquidity from the consumer balance sheet. So the consumer is going to get it from all sides, consumer spending is going to decline and I think consumer defaults are really going to pick up.”

OK… Back to me… And… So it’s not just me that thinks we are far from being out of the woods with this whole mortgage mess… Sometimes I feel like I’m all alone on this island shouting to the wind all these thoughts, but obviously no one can hear me… But then I wake up and realize that I have tons of readers that know what’s going on… Too bad the markets aren’t waking up to smell the coffee!

You know, within the past 10 days I’ve mentioned the fact that Treasury yields seem to be on the rise… The fact is they are rising… The 10 year yield moved over 4% to 4.08%… This increase in Treasury yields began in April, albeit slowly… I just don’t see how this helps the mortgage mess… Or the consumer…

Nor would a rate increase from the Fed help the economy / consumer… It might take a small chunk at inflation’s armor, but to stomp our inflation the Fed would have to aggressively go after rates to move them much higher… And… Turn off the Money Supply spigot! But, they can’t do that… It’s like a drug for the Fed Heads… And getting them off the drug will be a tough row to hoe!

OK… So Fed Head Kohn, was speaking yesterday and thought it was important to give the audience a wink and nod that the Fed window would remain open for business… Again, this is one of the things that has the markets all revved up and ready to roll. The removal of “risk”… If a financial institution gets in trouble with the junk they have on their books, no worries, just take it down to the Fed Window, the Fed will take it as collateral and lend money to keep the financial institution going…

My friends over at the 5-Minute Forecast, Addison and Ian, talked about this “collateral” in their newsletter the other day… Addison and Ian do a GREAT job with the 5-Minute Forecast, it’s a must read each day! Anyway, here’s what they printed the other day…

“Illiquid collateralized debt obligations — including mortgage-backed securities,” says our government stats watchdog John Williams, “now total in excess of 20% of the collateral backing the Federal Reserve Notes.”

Yikes. One-fifth of the U.S. currency is backed by fetid CDOs. Think about that.

“According to the Fed,” John explains, “U.S. dollar currency in circulation is estimated at $818 billion, the better portion of which circulates outside the geographic confines of the United States. While the U.S. currency has been a fiat currency for decades, the Federal Reserve Notes presently in circulation are collateralized by securities held by the Fed.

“Those securities traditionally are U.S. Treasury securities.

“Since the onset of the banking solvency crisis and the establishment of various new lending facilities by the U.S. central bank, however, an increasing portion of the U.S. Treasury securities held as collateral has been lent to troubled financial institutions in exchange for largely illiquid collateralized debt obligations.”

OK… Enough of that… But really these are the storm clouds that are brewing, and the markets are ignoring them… I sure hope they get to the storm cellar before the twister touches down… They don’t want to get caught outside the cellar like Dorothy!

One currency bucking the trend to weaken VS the dollar is the Brazilian real… Brazil received some more good news yesterday, when the rating agency Fitch, announced that they were upgrading Brazil to “investment grade”…

This is a huge deal folks… You see, there are pension funds, etc. that DO have investment criteria (unlike our Federal Reserve Bank) of which, buying bonds with investment grade is a standard… So, all these “buyers” that have been shut out of the Brazilian market, are now able to join the rest of the world that has seen Brazil as an investment choice…

So, obviously, the news helped push the real stronger VS the dollar… The real’s performance year-to-date is +8.63%… Not too shabby, eh?

OK… As I’ve been writing, the euro has turned around, and is back above the 1.55 level, so maybe, just maybe, you-never-know (Joaquin Andujar’s favorite word) (a St. Louis joke), someone has said “enough”!

Today, we’ll see Personal Income and Spending data from April… We’ve been spending more than we make for so long now, I just can’t see this changing. We’ll also see the color of the last reading to the U. of Michigan Consumer Confidence for May… I would expect this to remain near the 59.50 index level it hit at the last print, which is its weakest level since 1980.

We’ll pay the devil his due with inflation data in the form of the PCE Deflator, which measures U.S. Personal Consumption Expenditures. This data is expected to fall, which means U.S. Consumer spending slowed… Of course one would think that with higher food and energy prices, they would easily make up any slow down in spending… So, we’ll have to see, eh?

I just think that the U.S. Consumer has been backed into a corner (OK, the Consumer did some backing of its own!) and there are only a few paths out of that corner… One path leads to run-away inflation, one path leads to deflation, one path leads to recession, and another leads to bankruptcy and foreclosures… That’s dire straights right there folks… Whenever I say “dire straights” I think of Mark Knopfler (dire straits), and the song… Money for nothing…. That cracked me up!

Currencies today 5/30/08: A$ .9570, kiwi .7825, C$ 1.0110, euro 1.5520, sterling 1.9745, Swiss .9540, ISK 74.55, rand 7.59, krone 5.1025, SEK 6.0175, forint 155.50, zloty 2.1750, koruna 16.20, yen 105.50, baht 32.50, sing 1.3650, HKD 7.8050, INR 42.50, China 6.9410, pesos 10.33, BRL 1.6370, dollar index 73, Oil $125.85, Silver $16.85, and Gold… $883.15

That’s it for today… So, a Happy Birthday to Cheryl, who has been with us almost since the beginning of EverBank World Markets. My little buddy, Alex, broke out of his slump and got the game winning RBI hit last night… I was holding my breath as he strolled to the plate. His swing had gotten all messed up and I tried to help him (as best I can given my immobility)… But a nice soft liner over the 3rd baseman’s head brought home the winner! Another game tonight and one on Sunday! I just heard on the radio that Harvey Korman died… He was great in Blazing Saddles and High Anxiety!

Cards take two of three from the rival Astros… Now that’s a good thing! Any time you can beat that team! My long time neighbors, Kevin and Lisa, moved out of the “hood” yesterday… I must be running the neighbors away, that’s the second good neighbor that has moved in the past year! UGH! OK… I could go on, but it’s time to go! I hope you have a fabulous Friday!

Chuck Butler

Source: An Upgrade For Brazil!

There’s a great wish for American finance to return to business-as-usual — raking in fantastic fees for innovating new modes of tradable paper, and engineering mergers and buy-outs that generate huge fees plus $100 million kiss-offs for corporate CEOs in the noble struggle to dismantle America’s productive capacity — but apparently events are still out of hand.

The Federal Reserve itself has been instrumental in promoting abnormality by doing everything possible to prevent the work-out of bad debts in the system. Since money is loaned into existence, and loans are debts, the work-out of bad debt suggests the discovery that a lot of money has disappeared — which is exactly the case. The Fed has postponed the work-out by sucking up truckloads of impaired, untradable securities in exchange for loans to giant banks who don’t have enough cash on hand to pay their janitors.

Personally, my theory has been that the specter of peak oil pretty clearly implies the inability of industrial economies to continue producing real wealth in the customary way. In the face of this, either consciously or at a more mystical level, the worker bees in banking recognize that, in order to maintain their villas in the Hamptons, money has to be loaned into existence some other way (than in the service of industrial productivity).

We’ve tried just about everything else. There was the so-called service economy, an attempt to replace manufacturing with hamburger sales. Then there was the information economy, in which work would be replaced with knowing about stuff. Then there was the tech thing, which was about bringing internet companies that existed only on the back of cocktail napkins to the initial public offering stage of capitalization – which allowed a few-hundred-or-so thirty-year-old smoothies to retire to vineyards in the Napa Valley, while hundreds of thousands of retirees lost half the value of their investment portfolios. Then there was the housing boom, which was all about the creation of more suburban sprawl under the theory that houses (or “homes” in the jargon of the realtors) represent an obvious sort of wealth, and therefore that using houses as collateral would allow humongous sums of money to be loaned into existence – along with massive fees for structuring the loans into bundles of bond-like thingies.

This has all failed now because the racket went too far. Every possible candidate for a snookering got snookered. Too much collateral for which there were no takers went into the ground. The insane run-up in house values made a downward price movement inevitable, and as soon as the turnaround happened, it fell into the remorseless algebra of a deflationary death spiral. More importantly, however, this society ran out of tricks for loaning money into existence and instead began to experience the pain of money thought-to-be-in-existence being defaulted into a vapor – and worse, these defaults led to logarithmic chains of money destruction in its places of origin, the investment banks that had created the racket.

The important part of this is that the money is gone. What makes matters truly eerie is that the “bubble” in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life – oil – has entered its scarcity stage.

The logical conclusion of all this is not what the American public wants to hear: we have become a much poorer society and are now faced with the unavoidable task of making major changes in how we live. All the three-card-monte moves at the highest level of finance lately amount to an effort to avoid the unavoidable, acknowledging our losses. Certainly the political fallout of all this will be awesome. But it’s not about politics, really. It’s about the entire society’s inability to form a workable new consensus of reality.

It’s hard to predict how long these institutions at the heart of our economic system can linger in the “far from normal” limbo of pretending that money has not been defaulted out of existence. Since the same process is underway in Great Britain and Spain, places beyond the control of Bernanke, Secretary Paulson, and the Boyz on Wall Street, and since actions and reactions there will affect the destiny of money here, its hard to escape the conclusion that we’re at most months away from the brutal recognition that Wall Street has managed to bankrupt itself (and, by extension, the United States). This is dark heart of the matter of which no one dares speak.

Meantime, on the ground, everyone in the land sees the gas pumps levitate beyond the $4 hash mark, and notes with bugged-out eyes the double-digit price stickers on common supermarket items, and feels the rush of blood from the extremities when some check-out clerk at the Wal-Mart declares that a certain proffered credit card is maxed out, and some strangers in overalls – the neighbors say – managed to hot-wire the GMC Sierra in the driveway, and took it away….

The candidates for president will have a lot to talk about. I wonder if they’ll dare to.

James Howard Kunstler
for The Daily Reckoning Australia

P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Source: American Public are Becoming a Much Poorer Society

David Dreman made one of the greatest calls in stock market history. In 1980, Dreman told investors to buy stocks.

Dreman didn’t just tell a few clients or friends to buy stocks. He literally wrote the book on buying stocks in 1980. He called it Contrarian Investment Strategies. And he said, “The stock market appears cheap by nearly every historical standard.”

Saying “buy stocks” was bold stuff. Stocks hadn’t made money in 17 years. But Dreman was absolutely right. After 17 years of losses, the stock market started the longest bull run in recorded history, which stretched from 1982 until 2000.

Fast forward to 2008. Dreman is guarded, but optimistic again. In the upcoming issue of Forbes (dated May 5) he says: “Frightening as the markets look today, there will come a time when the liquidity crisis ends and today’s prices for bank stocks look, in retrospect, like bargains.”

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Today we have a unique opportunity to invest with David Dreman. It’s not often that you can get in with one of history’s great investment managers at 85 cents on the dollar… and potentially pocket more than 60% gains in two years. But we can today, through the Dreman Value Income Edge Fund (DHG).

Dreman’s fund is a safe play. It pays 11.67 cents a month in dividends ($1.40 per year). Always has. As of the end of April, the fund’s price was $13.69, so the dividend yield on the fund is over 10%.

Interestingly, the actual value of the stocks and bonds the fund holds is $16.07 per share (as of the end of April). So by buying in at $13.69, we’re able to buy in at a 15% discount.

Dreman’s Value Income Edge Fund is a bit of a strange beast…

The goal of the fund is maximum returns with minimum variability. That’s exactly the way I want to invest. Dreman isn’t just sitting in stocks, waiting for them to go up. To achieve his goal, Dreman invests in a unique way…

He invests roughly 65% in bonds and 65% in stocks. You’re probably thinking, “That math doesn’t add up.” You’re right. David balances it out with a 30% “short” position in stocks.

David splits his stock positions: half long, half short. And sometimes he borrows a little bit of money to leverage his gains. So he has three strategies going on at once… an income strategy (bonds), a “long” strategy, and a “short” strategy.

The goal, of course, is to minimize risk.

The income strategy portion helps pay the big dividend. The stock strategy – where David buys extremely undervalued stocks – will provide significant gains when the market gets going again. And the short strategy should continually add a few percentage points per year to our returns.

So here’s how we get to 60% in two years…

So if we could buy today at $13.69, and realize $22.44 (that’s $19.44 plus $3 of dividends), we’d make more than 60% – safely – in two years.

Dreman can do better than that. With nearly four decades of experience, he knows what he’s doing.

It’s not often we can buy David Dreman’s management for 85 cents on the dollar – and earn a 10% dividend yield. So you ought to consider the Dreman Value Income Edge Fund today… with the conservative goal of earning a safe return of 60% over the next two years.

Better yet, you should consider our Monthly Dividend Program. Right now, Dreman’s Value Income Edge Fund is in our Monthly Dividend Program’s Top 10 list… along with nine more of the best high-yield opportunities that will pay you monthly dividend checks.

Good investing,

Steve

P.S. Funds like Dreman’s are one of the great tools of the Monthly Dividend Program. It’s a quick course that provides a list of the 10 best monthly income opportunities in the world and teaches you how to find other opportunities for yourself. Click here for the details on how to sign up.

The following was taken from the 60-Second Buzz on TFN.

Watch this video.

Welcome to the 60-Second Buzz.

I’m Ian Cooper, editor for SC Trading Pit and Pure Energy Trader.

Blood-in-the-streets investing may sound cold, heartless, and a cheap way to make a buck, but we’re investors. We’re looking for the political turmoil… financial hardships… assassinations… bloody uprisings… the events that seed wealth. So when Bear Stearns imploded on liquidity issues, how could you help but use the crisis-led broad market sell-off as a buying opportunity. At least, that’s what we did at SC Trading Pit.

After a troubling February 2008 incident that took MF Global from $30 to $14, insiders began loading up — including CEO Kevin Davis who bought 60,000 shares between $16.28 and $17.15.

And all was going well… until Bear Stearns got a $2 buyout offer and rumors of MF Global’s demise began circulating. With Bear Stearns, MF Global plummeted 78% on fears that the collapse could spread.

But the sell-off was nothing more than overreaction, and we bought the stock only to watch it snap back two days later. Per Briefing.com: “The company is very well capitalized with $1.4 bln in a committed, undrawn credit facility. As previously announced, as of today, volumes and net revs for the current quarter to date remain at higher levels than in any comparable period during the current fiscal year.”

Plus, the company has enough cash ($46.6 billion) to offset debt and no liquidity crisis. This was a stock taken down on nothing more than false rumor, and quickly became a “blood in the streets” buying opportunity, one that helped some SC Trading Pit readers realize a quick 60% gain. But the opportunity to buy hasn’t passed… There’s still a gap to be filled.

______________________________________

Picking the Best Trades… Trade After Trade

Ian Cooper is the real deal. Since joining our team of experts, Ian has initiated 20 trades in the Pure Energy Trader.

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