Bonds, IOU's, Going Busted
Research for Online Investors

by John Dalt

7/10/09

The U.S. Treasury auctioned $73 billion in bonds this week and interest rates were down on the short term, but up on the 30-year bonds.  The softness in the stock market likely diverted money to the “safe haven” bond market.  We own TBT in the SwingTrader; low rates cannot last for long.  With trillions in government debt, and annual deficits over a trillion a year for as long as Oh! Bama is in the White House, would you loan the U.S. money for 30-years at less than 5% interest?

The Chinese tried to sell $5.1 billion in bonds this week, they failed.  It seems their citizens do not trust them either.  Of course, the Chinese do not print money to buy their bonds so they had to rely on an “honest” market.

If you are thinking of buying California I.O.U.’s, be careful. Banks have threatened to quit taking them, so the government has decided they can be sold as securities. Remember what happened to bondholders of Chrysler and GM, rather than moving to the front of the line, they were shafted in favor of the union.  The “greater good” may apply again.

June auto sales in China rose 47.7%, GM’s China sales increased 38%.  In the U.S., Ford (F) is picking up market share and may soon pass GM as the largest domestic automaker.  Ford’s share price is reflecting the new market reality.  The share price is trading close to 52 week highs, you may be able to get some on a dip in the general market.  Ford set it’s high in May, and brushed against it yesterday.

Following up our story on China arresting the negotiators for Rio Tinto, they are now accused of spying.  That certainly adds a new dimension to making a sales call.

Retail same store sales in the U.S. declined 4.9% in June.  This was the tenth month of declines.

The International Monetary Fund (IMF) projected global growth of 2.5% for 2010. The IMF forecasts 0.8% growth for the U.S. Britain is printing money and increasing government deficits like the U.S. and expects an increase of 0.2% China is expected to grow at 8.5%, India grows 6.5%, Brazil grows 2.5%, and Germany shrinks 0.6%  With current government policies we are no longer the world economic leader, pathetic.

The problem with believing these numbers is the same as investing in China.  They are predicted to grow by 8.5% next year, based on the information provided to the IMF from China.  However, their exports dropped 21% in June.  I am always cautious investing in Chinese companies.  It is hard to get comfortable with a partner (Chi-coms) that control the books, and arrest negotiators for spying.

Check out our new addition to Investor Resources, “Dividend Stocks, Pick the Best”.  With the current discussion in Washington you may want to reread the article on “Carbon Dioxide Emissions Plummet".

We have not had any pictures with our posts this week.  Our e-mail service has installed a new program, with a glitch.  They have promised to have it fixed soon.

Oh! Bama went to Italy this week, and apologized for the U.S., again.  The market is heading lower as business and investors realize we have a hard slog in front of us, and the government is adding more impediments to the economy recovering.  More borrowing, more debt, more five year plans, and more regulations.

We have just picked up our first subscriber in Congress; I cannot divulge his name but welcome.  I hope our posts add to the discussion.  Pass ‘em around.

Our quote today:
“While the State exists, there can be no freedom.  When there is freedom there will be no state.”
----- Lenin

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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