Fellow Investor, The banks win again, as yesterday's Fed vote on interchange rules gave the banks more than expected. If you don't know, interchange fees are also called "swipe" fees. It's the money retailers pay when consumers swipe their bank cards. The Rate had been $0.44, which is the highest in the world. The Fed had threatened to drop the rate to $0.12, but yesterday compromised on a $0.21 interchange fee. We could have seen this coming. The Fed, the Obama administration, the Bush administration before, the Basel bankers -- every regulatory body on the planet seems to talk tough and then cave when it comes to the treatment of corporate America (in general) and the banks (specifically). On the one hand, it makes sense. Corporate America drives the economy, and also contributes to political campaigns. But on the other hand, it's definitely, disconcerting to see continued favorable treatment, especially of the banks. Both the Bush and Obama administrations opted for status quo during the financial crisis. They propped up the banks instead of dissolving them. I argued at the time, and still do, that Bank of America (NYSE:BAC) and Citigroup (NYSE:C) should have been broken up. (Of course, the pieces would have been picked up by other banks, making them bigger and more powerful, but sometimes you have to start somewhere.) The Bush administration was taking its cues from former Goldman CEO Hank Paulson. And the Obama administration followed former Fed guy Tim Geithner. So it's no surprise that they sided with the banks and the opportunity for real reform is lost. Don't be surprised to see other financial regulation initiatives watered down or abandoned altogether. *****Of course, this raises the question: if banks will inevitably receive favorable treatment, shouldn't they be considered good investments? I have very mixed feelings about this. If the equation were that simple, I'd say yes. But the fact is, the big banks aren't the picture of health (they're more like the picture of Dorian Gray). The perpetually weak U.S. economy makes the big banks risky, and I sure wouldn't want to own them if growth flatlines. (For the record, I've recommended stable regional banks paying healthy dividends in the High Yield Wealth advisory service). *****Marvin R. wrote :Assuming future inflation in the U.S. economy, what are your long term views on i) foreign oil producers and ii) foreign and domestic electric utilities? Are these good inflation hedges? Oil producers are a good inflation play, whether they are foreign or domestic. I prefer domestic, because I don't want to be victimized by government intervention. It seems to me that oil will be an increasingly valuable commodity. I can even imagine that exports could be curtailed at some point to meet a country's own demand. That's one reason I like the Bakken producers so much. Utilities, on the other hand, are not good inflation hedges. They are capital intensive and must borrow frequently. Higher interest rates as a result of inflation do not help them. Special opportunity, article continues below.
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| *****Tom M. wrote: I've been a subscriber to various [other newsletter publisher] products for over a year. He has so many newsletters and individuals writing with differing opinions, that it's always possible for him to quote whoever correctly called a given stock move stating this his service was 100% right. The problem rest with those of us who might have followed the other individual that did exactly the opposite and lost. All of [his] emails, commentaries, videos, etc are almost to the point of being silly and ignored although I keep listening hoping to learn something about how to shelter what savings I have from the crash I see coming. I listened to your video and have studied your writings. What I don't understand is how you say this is not a buy and hold market. That profits should be quickly taken in a matter of days then at the same time say that you only offer one purchase offer a month. I can't resolve how both of these statements can be true at the same time. While I'm interested in finding one individual who is successful and I can trust, I along with scores of others, are sick to death of being inundated with offer and offer to purchase this service, then later told to get the really good advice, we have to purchase yet another service from the same provider; and then learning that the very best advice comes from yet another service we need to purchase. It really is frustrating so I hope you can understand my reluctance to get involved in anything else. I'm not trying to be a smart ass. I really would like to know why I should concentrate on your service rather than someone else's Thanks for the note, Tom. I can understand your frustration. And I'll try and help. Like most companies, Wyatt Investment Research offers different products, because investors have different needs. Nike (NYSE:NKE) makes running shoes and basketball shoes. I offer a dividend advisory service and a trading service. What's more, I have different analysts who contribute, and their perspectives sometimes differ. Frankly, I think a healthy debate about what's going in the economy and stock market is a good thing. After all, there's more than one way to skin a cat... Also, my company advertises each product based on its merits. No one will be 100% right all the time. I realize this does put the onus on the subscriber to find the service that fits his/her needs. Every service I offer I have has a full money-back guarantee policy. This is specifically designed so you can "test drive" a service and see if it's right for you. *****On that note, I will remind you that the 50% off Independence Sale for TradeMaster Daily Stock Alerts is in full swing. Get your discount and get the new Special Investment Report called Top 5 Gold and Silver Trades for Summer 2011. One $3 silver stock in there that could move as high as $5, for a 63% gain. You can get the details HERE. *****Barry S. wrote: I can't believe you said Greece's only option is austerity. Austerity in Greece will lead to default ultimately. Just too much debt to ever repay. Not the technical default of spreading out payments for decades being agreed to by European banks right now. But real cancellation of large amounts of debt. Greece would be better off if they did it a year ago (see Iceland). Now it is getting pushed off into the future again. By the way, Greece has defaulted many times in the past. The US will face the same issues. Our debt is bigger (as a percent of GDP when you include Social Security and Medicare calculated like the Fed requires companies to account for debts) than Greece's. Bernanke's printing press has staved off the inevitable for now. Our socialist spenders (Congress) have doomed us. Iceland certainly serves as an example of what happens when a country takes its medicine. In Greece's case, default would have already happened if it were not an EU member. (And it wouldn't have become an EU member if Goldman Sachs (NYSE:GS) hadn't helped it cook its books.) But since Germany and France are already its biggest creditors, they are helping force the bailout/austerity. But default is part of the Greek bailout plan. Of course, they are calling it debt restructuring. It still means creditors will not get all their money back. Fitch ratings agency has even adopted the term "disorderly default" to clarify the situation. And yes, the U.S. does face seemingly insurmountable debt issues, when you take future social security and Medicare obligations into account. Part of me would like to see the U.S. default just as a little payback to the Chinese, but I know it won't happen... *****As always, feel free to write me anytime at ianwyatt@wyattresearch.com Until tomorrow,
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