Here are four tightly regulated stocks Mark recommends that are selling at “incredible bargains. ”

The U.S. financial system is a mess – according to the World Economic Forum, the United States ranks 40th among banking systems around the world. Without federal bailouts, the two largest banks in the country, Citibank (NYSE: C) and Bank of America (NYSE: BAC), would be in bankruptcy, and the good ol’ USA would be headed for the Greater Depression, as my friend Doug Casey likes to call it.

But you’ll never guess where the world’s No. 1 banking system is. No, it’s not fabled Switzerland nor booming Hong Kong.

While the central banks around the world are desperately trying to stem the flow of red ink, this country’s red is emblazoned on its iconic mounted police force.

It’s right next door: Canada. The land of hockey and moose has the world’s soundest banking system. While European and Asian banks are collapsing, Canada stands out as an oasis of financial calm.

Canadian Banks Receive Highest Rankings

According to the Global Competitiveness Report, Canadian banks received the highest ranking, 6.8, out of a possible 7.0 (healthy, with sound balance sheets). The lowest ranking of 1 means insolvent and possible government bailout.

Canada’s stock has been rising quietly – the Canadians are known for their modesty and self-restraint – as American financiers and media are astonished to find that their northern neighbors have somehow avoided the subprime lending scandal and the housing market mess.

What’s Canada’s secret? With the exception of oil-rich Alberta, Canada did not have a strong construction surge as the United States did during the boom years. And mortgage interest is not tax deductible in Canada.

Canadian banks are national in scope; the top five banks have branches in all 10 Canadian provinces, making them less susceptible to downturns. They have large numbers of loyal depositors and a more solid base of capital. They are more tightly regulated than their U.S. counterparts, more liquid and less leveraged.

Canadian Banks – 4 of The Top 10 Largest North American Banks

Among the top 10 largest banks in North America, 4 are Canadian banks:

• Royal Bank of Canada (NYSE: RY),
• Bank of Nova Scotia (NYSE: BNS),
• Bank of Montreal (NYSE: BMO),
• and Toronto Dominion (NYSE: TD), which bought Commerce Bank last year.

Canadian bank executives don’t have to be excoriated by Parliament before taking a pay cut. The CEOs of Canada’s three-largest banks have all voluntarily cut their own pay in response to the global economic crisis.

Canada has its share of problems – being linked to commodity prices – but financially it’s done a better job than its southern neighbor. While the Bush administration ran up massive deficits year after year, Canadian officials finally pushed through a stimulus package that resulted in the government’s first deficit in a decade!

Right now, the Canadian banks are selling at incredible bargains. With operating margins exceeding 30%, and dividend yields between 6% and 8%, Canadian banks are selling at only around eight times earnings. Bank of Montreal is my favorite – it’s selling for only six times this year’s expected earnings and is yielding 10%.

During a crisis, the good investments get hit like the bad ones. But when the markets recover, the good bank stocks will skyrocket, especially those across the border.

Source: Canadian Banks: An Oasis of Financial Calm

Well, front and center this morning, the euro and other currencies are still reeling from that shot to their mid section by George Soros at the World Economic Forum, in Davos Switzerland. The dollar has flexed its muscles a bit more and taken the euro to just above 1.27… Not that euro holders want to hear this, but this IS what I was talking about all last month with the talk of an Obama bounce. The stock market hasn’t caught on yet though…

Friday’s print of 4th QTR GDP didn’t, on the outside, look as bad as forecast, printing at a negative -3.8% (forecast was -5.5%). But, like I said, and you what you would fully expect me to find, on the inside, this is not a good number folks… Here’s the skinny…

OK, first of all, the print of -3.8% was the worst print / performance in almost 27 years! And it could have been worse… Let me explain… You see, business inventories, the goods that retailers could not sell to consumers and manufacturers, goosed up the GDP number. Inventories moved from a $30 Billion reduction in the 3rd QTR to a buildup of nearly $6 Billion in the 4th QTR. In the strange computation that’s used for GDP, the growth numbers get credit for inventory buildup… However, that’s going to be a HUGE drain on the 1st QTR growth numbers for 2009. When inventories are subtracted from the equation, the negative growth falls to -5.1%, almost at the forecast number.

You have to wonder now, just how long this recession is going to last, as I’m already marking down a negative -5% GDP for the 1st QTR of 2009… If it lasts past May, and I would almost bet the farm that it will, this recession will turn out to be the longest and perhaps the deepest period of economic decline in the U.S. since the Great Depression…

I recall last year at the Orlando Money Show, telling the crowd that we were already in a recession, and hearing some of the snickers… I had a brief conversation with an old colleague, that’s a big shot now in other markets, that we had gone into a recession, and he laughed at me… Well…

So… If the trading theme remains in place during this quarter, the dollar is sure to be on an upswing, as you may recall… The Trading Theme rewards the dollar any time the economic data shows a deeper, darker, more dangerous economy / recession… And… Unfortunately, that’s what we now have!

We also have a recession going on in the European Union… But, folks, let me tell you something… This falls under Chuck’s reasons for a Positive Balance of Payments…

When all this started going down, I mentioned that stimulus packages, or bailouts come a little easier when a country is dealing from a position of strength, and by that, I mean if a country has a surplus. And isn’t adding to deficits that already exist.

One day, this will matter… I may not today, tomorrow, next week, or next month… But eventually, you have to pay the piper… And the only way the U.S. can pay the piper right now is by printing more dollars to pay for the debts… And so, therefore, they would love to pay for them with “cheaper dollars”…

Here’s another reason to strive for a surplus… On Friday, it was announced that Japan had made a loan of $100 Billion to the IMF. Better to have that $100 Billion in the checking account, eh? OH! And the IMF said it wasn’t in danger of running out of money… They said the needed the loan because they Expect to be dealing with BIGGER problems in the future…

Now that gives you a nice warm and fuzzy, eh? NOT! I would rather the IMF say they needed the cash, because they’ve already helped everyone that needed help, rather than to say they EXPECT BIGGER PROBLEMS!

Down under in Australia, where it’s getting to late summer, it looks like the global slowdown is beginning to take its toll here. Kevin Rudd, the prime minister, said the slowing down of global growth was forcing the government into a budget deficit for the first time since 2001-02… The Reserve Bank of Australia (RBA) meets tonight, and will announce afterwards that they cut interest rates again… Probably by 1% or 100 BPS…

There are quite a few Central Banks meeting this week to discuss rates… Here’s a preview…
Sweden’s Riksbank meets on Wednesday and I’m looking for a 50 BPS cut. Thursday sees both the Bank of England (BOE) and European Central Bank (ECB) announce their decisions. ECB President, Trichet, was quite hawkish last week, and has me believing that that ECB will skip a rate cut this month. However, I fully expect the BOE to cut rates by 100 BPS. The “experts” are calling for 50 BPS cut… But as I’ve said all along, the BOE is following the Fed down the road to ZIRP (zero interest rates), so why wait? Go ahead and cut 100 BPS now to .50%, and get it over with!

I understand that London was smacked by the worst snow storm in years this morning, and that the transport system is in disarray, causing many markets people to stay home, thus causing some real thin volume in the morning session…

But… Even as much as I would like to… I can’t blame the snow and lack of volume for the dollar’s strength this morning… No… As I said at the top of the page, I blame it on the pasting that George Soros laid on the euro last week… And now the euro and other currencies have to pull themselves up by the bootstraps if they want to get back into “the game”…

Well… On Friday, (our little Christine’s birthday, I might add) I mentioned to the boys and girls on the trading desk that Gold was outperforming just about everything! On Friday, Gold ran up to $927… That level looked too good to some holders this morning though, as profit taking has brought Gold back to $914…

You know… My friend, Bill Bonner of The Daily Reckoning fame (www.dailyreckoning.com) has been telling people for 9 years now, that his “trade of the decade” is to sell the DOW and buy Gold… Sure has been one heck of a trade, eh?

With all the countries in the world racing to zero, it makes even more sense to hold Gold, as the Gold is a non-interest bearing investment, but neither is just about anything else these days! And while the news from China scared Treasury holders a bit a couple of weeks ago, the fear is waning, and yields are on their way back down again. OH BOY! You can get about 2.5% for a 10-year Treasury! Like I said, Gold compares with other holdings now that there’s a race to zero… And… There certainly isn’t the same amount of Gold in the markets as there is Treasuries! HA!

Well… Last week, we had a data cupboard that was chock-full-o-data, and none of it was good! We follow up that week of bad data with one that starts off strong and then has an even stronger finish! That’s right, we finish this week up with the January Jobs Jamboree, which I’m afraid will show another 1/2 million unemployed were added during the month. In between now and Friday, we’ll see Personal Income and Spending for Dec. ISM Manufacturing, which has fallen into the abyss in recent months, and with the dollar stronger, has no chance of improving. Pending Home Sales tomorrow, and Vehicle Sales on Wednesday.

With all the dollar strength, you have to make the assumption that the Risk Takers are no where to be found… And with no risk takers, guess what currency is also booking gains? That’s right, Japanese yen… And the beat goes on…

Currencies today 2/2/09 (Groundhog Day): A$.6285, kiwi .50, C$ .8075, euro 1.2770, sterling 1.4110, Swiss .86, rand 10.225, krone 6.9920, SEK 8.3410, forint 233.15, zloty 3.4790, koruna 22.10, yen 89, sing 1.5140, HKD 7.7550, INR 48.93, China 6.8478, pesos 14.49, BRL 2.3575, dollar index 86.27, Oil $40.46, Silver $12.43, and Gold… $912

Source: Groundhog Day 2009

Oil futures rose $2 on Friday after data showed the U.S. economy shrank less than expected in the fourth quarter and after OPEC signalled it may again cut production.

By 1420 GMT, U.S. crude was up $1.34 a barrel at $42.78, after earlier touching $43.44, while London Brent crude had gained $1.70 to $47.10.

“The rally got started on WTI (West Texas Intermediate) when the GDP numbers were released,” Olivier Jakob of consultants Petromatrix said.

Data on Friday showed gross domestic product, which measures total U.S goods and services output, fell 3.8 percent in the fourth quarter, the steepest decline in nearly 27 years. But this was better than the market’s forecast for a 5.4 percent contraction.

Crude was also supported by strong RBOB gasoline and heating oil futures as February refined products contracts approached expiry, a possible workers strike at some U.S. refineries at the weekend, and word that OPEC may act again to cut production.

The producer cartel’s secretary general told Reuters it was willing to cut output further at its meetings in March.

“If the market is unbalanced, yes we will take measures to balance the market,” the Organization of the Petroleum Exporting Countries’ Abdullah al-Badri said at the World Economic Forum in Davos, Switzerland on Friday.

The comments are a strong indication the Organization of the Petroleum Exporting Countries, source of a third of the world’s oil, is willing to go further to stem oil’s $100-a-barrel collapse since June last year.

SHRINKING DEMAND

Oil has fallen nearly 11 percent over the past week but is only down 6.8 percent from December, its smallest monthly percentage fall since June 2008.

On Thursday oil fell 1.7 percent on data showing the U.S. jobless rate rose to a record peak in January, single-family home sales fell in December to their lowest ever and new orders for durable goods tumbled for a fifth straight month.

Shrinking demand for fuel has also contributed to the biggest four-month build-up in U.S. crude stockpiles since 1990.

Asia’s outlook was equally bleak. Data showed Japan’s unemployment at a near three-year high and industrial output in the world’s third-biggest oil consumer plunging a record 10 percent last month.

But traders said a possible strike by 30,000 U.S. refinery workers who threatened on Thursday to shutter more than half of the nation’s oil refining capacity could support crude.

In Britain, energy workers staged unofficial walkouts on Friday when anger over the use of foreign workers at an oil refinery spread to other sites across the country.

Contractors at Total’s Lindsey refinery in eastern England began a protest on Wednesday. The dispute spread on Friday, and hundreds walked out at the Grangemouth oil refinery in Scotland run by Ineos Group.

Total and Ineos have both said production has not been affected.

LONDON, Jan 30 (Reuters)

U.S. crude fell $1.23 a barrel to $40.93 by 1500 GMT. London Brent crude was 25 cents down at $44.65 a barrel.

U.S. unemployment rose to a record peak in mid-January, while new orders for long-lasting manufactured goods fell for the fifth month in a row.

The feeble state of the U.S. economy was already illustrated by a larger-than-expected 6.2 million barrel rise in crude oil stocks last week, according to government data on Wednesday.

Stocks at Cushing, Oklahoma, the delivery point for U.S. crude oil futures, rose a further 300,000 barrels.

“U.S. crude has weakened against Brent again. The 300,000 barrel stock build in Cushing and the general crude stock build has caused this,” said Christopher Bellew, a broker at Bache Commodities in London.

“Run cuts and OPEC production cuts may offer some support,” he said.

OPEC Secretary General Abdullah al-Badri, speaking at the World Economic Forum in Davos, Switzerland, said OPEC would not hesitate to act again if the oil price remained low.

The Organization of the Petroleum Exporting Countries has pledged to cut supply by 4.2 million barrels per day since September last year to try to support oil prices, which have dropped more than $100 a barrel since July.

Badri said on Wednesday OPEC was expected to have delivered fully on its pledged supply curbs by the end of this month, but a weak economy would continue to erode demand for fuel.

OPEC next meets on March 15 to decide output policy.

Martin King, analyst with FirstEnergy Capital Corp, said OPEC had done a much better job of cutting supplies from the market than many had expected, setting the stage for a gradual price rebound in the second half of 2009.

“We see the crude market on the cusp of achieving real signs of stability, driven in part by tighter supplies out of OPEC.”

LONDON, Jan 29 (Reuters)

Too many investment myths have gone unchallenged lately. Today I plan to refute them – and explain why financial markets are likely to perform much better than most investors believe in the year ahead.

Let’s begin by examining the four biggest investment myths circulating right now…

Investment Myth #1: The Era of Free Markets is Over

It’s true that many of the apostles of free-market economics have begged Congress for government intervention during the current credit crisis. But nobody is seriously arguing that Uncle Sam should nationalize the economy, set wages and prices, or establish production quotas.

The free market still constitutes the best means of securing prosperity over the long term. (Just ask the Chinese. Three hundred million people there have been lifted out of poverty over the past three decades.) We will find ways to make free markets work better – not abolish them.

Investment Myth #2: The United States Has Lost its Competitive Edge

The reality is the United States continues to lead the world in innovation, technology, higher education, worker training and the ability of the labor force to move from one job to another.

Three months ago, the Swiss-based World Economic Forum released its global competitiveness report and, once again, the United States topped the list. The study further noted that our strong productivity will help us “ride out business-cycle shifts and economic shocks” better than most countries.

Investment Myth #3: The United States is No Longer an Attractive Market for Investment

Yes, the Fed’s move to take interest rates near zero has predictably knocked the dollar for a loop again. But that isn’t deterring foreign investors. Perhaps they know that the biggest bargain of all is inexpensive assets in a cheap currency.

According to the World Bank, the United States attracted more than $2 trillion worth of foreign direct investment last year. Britain, Hong Kong and France – the next three top finishers – each registered less than half as much. The United States remains the economic engine of the world – and smart capital will continue to seek a home here.

Investment Myth #4: U.S. Financial Markets Will Take Decades to Recover

In the more than 200-year history of equity investing in the United States, stocks have never taken decades to recover. Those who argue they have always omit dividends. Dr. Jeremy Siegel of the Wharton School points out that even if you invested a regular amount in the Dow every month beginning at the market peak in 1929, within four years you would still have outperformed someone who invested the same amount each month in T-bills. (The key is regular investment and reinvested stock dividends.)

The Nikkei 225 in Japan, of course, is still down more than 70% from its peak in 1989. Could the United States be headed for the same long, deflationary spiral? That’s extremely unlikely. The Japanese real estate and equity bubble was much bigger, government action there was clumsy and ineffective, and the banks were not cleaned up quickly or efficiently. Congress and the Federal Reserve are being much more proactive here.

It’s true that the economy is in for a few rough quarters. Understandably, the media is focused on the bad news. We all know that hundreds of thousands of jobs have been lost. Venerable names in banking and finance are no more. American automobile manufacturers are begging Congress for a lifeline. Residential real estate and the stock and corporate bond markets have all taken it on the chin.

But there are reasons for optimism, too. Oil has plunged from $147 a barrel to less than $40. Low interest rates will ultimately make it cheaper for businesses and consumers to borrow. A cheap greenback boosts exports and makes U.S. assets inexpensive to foreign buyers. And fundamental valuations on stocks are the cheapest they’ve been in 17 years.

Make no mistake, 2009 is going to be a tough year for the economy. But the financial markets – always looking forward – have already discounted this and could surprise you in the year ahead.

So don’t get waylaid by the gloom-and-doomers. There are always attractive investment opportunities out there and right now is no exception.

We’ll be highlighting dozens of new ideas – here and in our Oxford Club Communiqué – in the weeks just ahead.

Let’s buck the trend together – and look forward to a happy, healthy and prosperous New Year!

Source:The 4 Biggest Investment Myths of 2008

“Once the global economy emerges from the current financial crisis, which it will, the countries that do well on our index are those that are best prepared to bounce back and perform well in the longer term,” Jennifer Blanke, director of the WEF’s global competitiveness network told The Financial Times.

And the United States is at the top. That’s the good news.

The bad news is that the safety of U.S. banks dropped to 40th this year from 26th in the WEF’s 2007 – 2008 report.

“Despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, the country’s many other strengths continue to make it a very productive environment,” the report said of the United States.

But such a fall in the rankings for bank safety is a bit frightening for U.S. banking customers already spooked by the collapse of investment bank such as Lehman Brothers Holdings Inc. (OTC: LEHMQ) and regional banks such as IndyMac Bancorp Inc. (OTC: IDMC).

Summing a Country’s Competitive Balance Sheet

The WEF analyzes 110 economic indicators in 12 different categories for each of 134 countries to come up with its overall GCI ranking. One of those 12 areas is financial market sophistication, which is made up of factors such as “venture capital availability,” “strength of investor protection” and even “regulation of securities exchanges.”

But perhaps the most important factor in this category is the soundness of banks.

Confidence in a nation’s banks is what keeps citizens from stuffing dollars under a mattress. Banks need deposit assets to keep the wheels of U.S. industry turning, as deposit assets are used to fund the short-term credit markets that are so vital to the daily operations of many corporations.

And it’s an area where the United States ranks a disappointing 40.

Coming in behind such well-developed nations as Canada, which tops the list, or even Hong Kong in the 11th spot, might not seem so bad. But even the small African nation of Namibia ranks in at 17, illustrating the United States has some definite room for improvement.

While there are plenty of surprises at the type of the bank safety list, there aren’t many such surprises at the bottom. Algeria comes in dead last with Libya just above it.

Of the “BRIC” nations – Brazil, Russia, India and China – most moved up the list this year against better-developed nations. China landed in the top 30 for the first time as it moved up four spots to reach 30, but China’s banking system is still near the bottom of the list at 108. India, however, slipped two spots to 50 from 48 due to a widening budget deficit. India’s banks also slipped, falling to 51 from 46.

Meanwhile, Brazil was the biggest mover with an eight-spot jump to 64 on the overall list, and also tops the United States when it comes to the soundness of its banks with its 24th spot on the banking safety list. Oil revenues gave Russia a gain of seven to move to 51 from 58 the year prior, but Russia’s banks clocked in at 107 on the soundness rankings.

Slipping Bank Titans?

The United States wasn’t the only nation to find its ranking slipping in the bank safety category. The United Kingdom made a stunning plunge from 4th in the 2007 – 2008 survey, to 44th in the current one, after the emergency nationalization of banks such as Northern Rock PLC (PINK: NHRKF).

Even Switzerland, synonymous with banking to many, was hit hard by the global banking crisis, as it slipped from its top spot in last year’s banking soundness rankings to 16th this year. Swiss giants such as UBS AG (UBS) got caught with over-exposure to U.S. subprime mortgage-backed securities that necessitated government intervention while #2 rival Credit Suisse Group AG (ADR: CS) was forced to raise fresh capital.

Nations from Sweden to the United Kingdom to the Netherlands have all introduced government-sponsored packages to help support ailing domestic banks and avoid the fate of nearly bankrupt Iceland and Pakistan.

The United States $700 billion bailout package is by far the largest, but even that might not be enough to return the domestic banking industry back to safety.

The U.S. financial landscape has been changed forever as firms such, as Lehman Brothers – old enough to have weathered the Great Depression – toppled under the crushing weight of a credit market. The strong – Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) – have bought out the weak.

Bank of America bought both mortgage lender Countrywide Financial Corp. (CFC) and former standalone investment bank Merrill Lynch & Co. Inc. (MER). JPMorgan bought both regional bank Washington Mutual Inc. (OTC: WAMUQ) and the failed Bear Stearns Cos. Inc. Wells Fargo is buying Wachovia Corp. (WB).

But in the wake of such massive acquisitions, the United States is left with huge nationwide banking complexes dangerously close to the 10% regulator’s cap any one bank is allowed to have of domestic market share.

And with 117 financial firms on the Federal Deposit Insurance Corp.’s (FDIC) “Problem List” at the end of the second quarter, more bank acquisitions and rescues could be on the way. The FDIC’s list for the third quarter won’t be published until November.

The FDIC’s coffers have already taken a hit from the rescue of IndyMac and with the recent bailout law raising the cap for FDIC-insured deposits, it doesn’t seem like much of a stretch to imagine the nation’s banking insurance coming up short if one of the largest banks were to fail.

Bank Safety Plays

The FDIC doesn’t publish the names of the banks on its watch list, but luckily there are some simple ways to help ensure your banking deposits are safe. Here are three quick and easy steps from Money Morning Investment Director Keith Fitz-Gerald that you can take to determine if your bank is safe or not:

1. Click over to Bankrate.com’s Safe & Sound ratings page. There you can plug in your bank’s name and see how it scores on the basis of 22 objective measures designed to gauge the capital adequacy, asset quality, profitability and liquidity of thousands of banks. “If your bank doesn’t make the cut with a higher rating, then switch to one that does,” says Fitz-Gerald.

1. Use the FDIC’s electronic deposit insurance estimator to see if your assets are covered in full. With the recent signing of the bailout legislation into law, the FDIC now covers accounts up to $250,000 at any one bank in any single account or $250,000 per co-owner for joint accounts. Traditional and Roth IRAs, SEPS and other retirement accounts on deposit at an FDIC-insured bank or savings institutions are insured up to $250,000 separately from any other deposits you may have at the same institution. “But remember,” said Fitz-Gerald, “this is mainly deposit accounts and doesn’t include stocks, bonds, mutual funds or life insurance policies.”

1. Double-check your ownership. If a portion of your assets is uninsured, getting full coverage may just be a matter of changing ownership or spreading out your accounts to different banks. “Like most things the government doesn’t make this easy, so that means more paperwork,” Fitz-Gerald said.

Source: Global Credit Crisis Takes a Toll on Former Titans of Banking