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 | August 1, 2011, 08:00 EST |  |   |
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U.S. stock index futures were pointing to a higheropening on Monday as President Obama and Congressional leaders reacheda debt deal. The deal still has to be approved by both houses ofCongress and the president has to sign it, though. China high speed train wreck highlights politicalproblems for government. The talk of social unrest, incomeinequality, and other issues in China has been in the public domain fora long time. But now, something different may have happened. As theresponse to the recent high speed train accident, it seems as if a newlevel of problems may be on the way. According to The Wall Street Journal, China's "contemporary rulersdiscovered that the provinces have never been closer, not only toBeijing but to each other. Rarely before have Chinese felt soconnected, so e-empowered as they have in the outpouring of grief andoutrage over a tragedy on a high-speed railway line that was meant tobe a symbol of modernity and centralized power but has instead becomean emblem of political vulnerability. The point was apparent to allwhen one of those far-away emperors, Premier Wen Jiabao, was forced topay homage in the provinces at the scene of the accident." We've been skeptical on China for so long we don't even talk about itanymore, since no one seems to care, and since we don't have any moneythere. But, this is an interesting conclusion from The Journal:"China's high-speed rail system is an apt metaphor for the country'shurtling economy over the past decade: a colossal investment project,born of the state, steeped in corruption, built for maximum velocity,and imposed paternalistically on a public that is at once amazed andskeptical. The rail system has married foreign technology with nationalambition in a network billed as the biggest and most advanced in theworld, in a country whose per capita income ranks below that ofJamaica." What's the bottom line? According to The Journal: "The train crash aweek ago in eastern China sent several carriages plummeting off aviaduct, killing 40 people and injuring more than 190. It hastransformed a symbol of Beijing's pride into an emblem of incompetenceand imperious governance. The accident, and the government's bungledhandling of the aftermath, has triggered national outrage, much ofwhich has been expressed on Internet microblogging sites watchedanxiously by Communist cadres." It's nice to know that the U.S. doesn't have the monopoly on politicalcorruption, irrational expectations, and a total disconnect between theruling class and those of us who actually work for a living, pay taxes,and try to do the right thing. Cold comfort, to be sure, but realnontheless. California Amazon.com affiliates feel pain ofInternet tax law. Entrepeneurs are moving out of Californiadue to the Internet tax law recently passed and the consequences.According to Silicon Valley.com: "It wasn't the Great Recession thatkilled Nick Loper's business. It was a flick of Jerry Brown's wrist."The article continued: "When the governor signed the state's newonline-sales tax law last month, Seattle-based Amazon and otherout-of-state Web retailers immediately severed ties with thousands ofCalifornia affiliates, arguing the move would put them beyond the reachof the state's taxman. Among the victims: ShoesRUs, Loper's comparisonshopping website for shoes, confronting the Livermore entrepreneur witha life-changing reboot." The bottom line? Mr. Loper had a profitable business for six years. Nowhe's moving to Nevada to restart his business. Peak oil or funny accounting? According toThe Wall Street Journal: "Most European major oil companies posted asurge in quarterly profits, but their results were overshadowed by atrend that continues to trouble Wall Street and corporate boardrooms:Nearly every major oil company reported year-to-year oil-and-gas outputdeclines, often in the double-digits." |
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| The Wall Street mantra for decades was"buy stocks and hold them for the long term." For now, it may be, hopeyou bought some stocks late Friday and see what happens to them by theclose on Monday. That's where our seasonal strategy comes in handy. On Friday, at 11:20Central, we posted our monthly recommendation: buy at the close andhold SPY until the close of the market on August 2. That's a fivecalendar day holding period, which has proven over time to delivergains to stockholders with only a portion of the risk. To be sure, there is no guarantee that the system will work every time.But the facts are pretty good that over time, the results will be justabout as good, or perhaps better than buying and holding stocks for theso called "long term." The system was developed by Norman Fosback, andhas been recently featured in Mark Hulbert's column on Marketwatch.com.We're not too proud to use it, because it works.  | Market Moves |
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