Personal Finance

Move Over Smart Car – China’s $600.00 – 258 MPG VW

China’s New “Little Car” 

This is not a joke and they do sell for $600.00. They won’t be able to make them fast enough–good just to run around town. Here’s a car that will get you back and forth to work on the cheap…$600 for the car.

Only  a one seater however – Talk about cheap transportation…. Volkswagen’s $600 car gets 258 mpg. It looks like Ford, Chrysler and GM missed the boat again!

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This $600.00 car is no toy and is ready to be released in China next year. The single seater aero car totes VW (Volkswagen) branding too. Volkswagen did a lot of very highly protected testing of this car in Germany, but it was not announced until now where the car would make its first appearance. 

Volkswageb did a lot of very highly protected testing of this car in Germany, but it was not announced until now where the care would make its first appearance. The car was introduced at the VW stockholders meeting as the most economical car in the world. The initial objective of the prototype was to prove that 1 liter of fuel could deliver 100 kilometers of travel. And the Spartan interior doesn’t sacrifice safety.

ATT000162

The areo design prived essential to getting the desired result. The body is 3.37 meters long, just 1.25 meters wide and a little over a meter high. The prototype was made completely of carbon fiber and is not painted to save weight.

The power plant is a one cylinder diesel, positioned ahead of the rear axle and combined with an automatic shift controlled by a knob in the interior. Further Safety was not compromised as the impact and roll-over protection is comparable  GT racing cars.The Most Economic Car in the World will be on sale next year: Better than Electric Car at 258 miles/gallon, this is a single-seat car. From conception to production took 3 years and the company is headquartered in Hamburg , Germany .

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  • The will be selling the car for 4000 Yaun, the equivalent of US $600.00.
  • Gas Tank  capacity is 1.7 gallons
  • Top Speed is 74.6 Miles an hour
  • Fuel efficiency is 258 miles per gallon
  • Travel distance with a full tank is 404 miles

6 Provocative Predictions for 2013… and Beyond

Someday, someone will fund an academic study identifying the crevice in the human brain that craves year-end predictions for the coming 12 months. Wherever it resides, it is undeniably strong and far more prevalent among the populace than the craving for news about, say, the “fiscal cliff” or the New York Jets’ quarterback saga.

Within the finance sector, such predictions abound. “Macro surprises” from Morgan Stanley, “13 outliers for ’13” from Deutsche Bank, and the ever popular “outrageous predictions” from Denmark’s Saxo Bank. And you know what? These institutions are, umn, lily-white, every last one of them.

Saxo, for instance, describes its predictions as an “annual exercise in rooting out relatively extreme market and political events for which the probability is perhaps low, if still vastly underappreciated.” In other words, they’re “thought experiments.” They do a nice job of covering their backsides, however.

Then again, they have depositors and clients and shareholders to please. Actually predicting the German stock market will plunge 33% next year — the lead item on Saxo’s list — might discomfort one or more of those constituencies. So they’re obligated to couch their predictions in the abstract.

We, on the other hand, suffer no such conflicts of interest. We rise and fall, live and die on the trust you place in our research… a liberating state, especially given the amount of rope you’ve shown you’re willing to give us.

With that rope firmly in mind, we bring you the following six provocative predictions for 2013… and beyond.

These are not thought experiments to be touted in a late-December press release and posted on Zero Hedge, then quickly forgotten. These are themes that we fully expect to develop during the next 12 months. Let’s begin!

Psychological Stages of a Bubble Market1. The “mother of all financial bubbles” will burst… but not before blowing up even bigger! Money manager and Vancouver Symposium favorite Barry Ritholtz recently bored himself silly with a spreadsheet: It showed a monthly survey of economists by Bloomberg going back to 2002, revealing their “expert” guesses about the 10-year Treasury yield over the following six months.

“In the history of finance,” Barry quips, “we cannot find a more one-sided opinion about a freely traded double-auction market.” Ninety-seven percent of the time a majority of economists predicted higher yields. On three occasions, including last May, the consensus was unanimous: The average forecast was for a yield of 2.4%. Oops… It turned out to be 1.7%. Just a little bit off.

The most recent survey? Ninety-four percent of economists surveyed expect higher rates by next May… and their average guess is 1.93%.

We’ll take the other side of that trade. Indeed, as we told the subscribers of Apogee Advisory last October, “We think the 30-year bull market has one more blowoff phase before the end. You need to act accordingly.”

Back then, the factor we cited was the pending demise of money market funds. We figured on a time horizon of three years. But now that we see such an overwhelming consensus for higher yields and lower prices, we’ll double down: We’ll see a Black Swan emerging early next year — another debt-ceiling crisis (even if the “fiscal cliff” issue is resolved) or more likely another euro-scare. Hot money will flood back into the “safety” of Treasuries. The 10-year yield will plunge below its 1.4% record set last July. It might even go all the way down to 1%.

But that would be the final blowoff that would signal the beginning of a major bear market in bonds. In other words, we think interest rates will rise substantially over the next few years…but not quite yet.

“At some point,” Barry says, “the bond bears are going to be right.” We’re confident that point will arrive before the end of the decade.

2. Boomers’ retirements are about to be crushed (again) in junk bonds and the wrong dividend stocks. First, they lost their shirts in the tech bust. Then they lost their pants in the housing bust. And in 2013, the baby boomer cohort is about to be stripped of its skivvies…thanks to the Fed’s zero-interest rate policy. Because intermediate-term Treasurys and CDs yield close to nothing, savers have been trying to get some yield on their savings wherever they can find it. In this context, junk bonds seem appealing. They offer yields that are at least greater than zero, which is why many investors have been flooding into the junk bond market.

Bad call.

Understand the Fed’s priorities: Saving and investing is their mortal enemy. “They want spending and speculating,” says our macro strategist Dan Amoss, “and are willing to risk the entire monetary system in the process.” Result: “Investors are taking foolish risks; they’ve bid up junk bonds and dividend stocks, pushing yields down in the process.”

If only investing were as simple as buying risky assets when interest rates are stuck at zero. Ask the average Japanese investor how that’s worked for them the last 20 years.

“The 2012 rallies in almost every stock and bond will not last,” declares Dan. “When investors bid up junk bonds and stocks in a zero interest rate environment, they are simply pulling future returns into the present.”

When interest rates start rising again, junk bond prices could plummet.

3. The World’s Fastest-Growing Economies in 2013: Forget the BRICs. If it’s emerging markets with explosive potential you’re looking for, the globe-trotting Chris Mayer has identified three. He’s visited all of them — the first two in 2012.

  • Mongolia. “The story is very simple,” says Chris. “You have a tiny economy of just under 3 million people. And they are sitting on enormous reserves of natural resources. The top 10 deposits alone are worth an estimated $3 trillion. It’s a decade-long story. I think a good analogy is Kazakhstan, which is culturally similar — an old Soviet-style economy that opened up and created an enormous boom, thanks to resources. The stock exchange went up 2,400% in six years from 2002; apartment prices rose 800%-plus and land prices in Almaty rose 8,000%.”
  • Myanmar, or if you prefer, Burma. “If I could put all of my money in Myanmar, I would,” says globe-trotter and Asia bull Jim Rogers. “Another great story,” says Chris. “Fifty years of isolation and dictatorial rule and it is finally starting to thaw. There is no reason why Myanmar can’t approach the development of its neighbors such as Thailand, given time, investment and a commitment to freer markets. I think it will be one of the fastest-growing economies in Asia…” Hard to invest there, but a great story to watch.
  • United Arab Emirates. Chris concedes this one might come as a surprise. “The economy went through a giant bust, but its place as the money center for the Middle East is secure, thanks to low taxes, privacy protection and location. It has the region’s biggest marine port and airport and is home to the highest number of foreign businesses… Best of all, the market is cheap after an epic bubble, but the underlying economy is still growing rapidly.”

 

Check in tomorrow to see my final three provocative predictions! (Ed Note: Final 3 HERE)

Regards,

Addison Wiggin
for The Daily Reckoning

Addison Wiggin

Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times MagazineThe EconomistWorthThe New York TimesThe Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.

 

10 Things To Know Before The Opening Bell

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  1. Asian markets were higher in overnight trading, with the Japanese Nikkei rising 0.7 percent and the Shanghai Composite gaining 0.4 percent. European stocks are mixed – France and Spain are down slightly while Germany and Italy are advancing. In the United States, futures point to a positive open.
  2. The Bank of England voted to leave interest rates unchanged at 0.5 percent and the size of its asset purchase program unchanged at £375 billion, as expected. Markets may not expect much change in policy until incoming Governor Mark Carney starts this summer.
  3. At 7:45 AM ET, the ECB announces its monthly interest rate decision. The central bank is expected to leave the benchmark refinancing rate unchanged at 0.75 percent due to strength in recent economic data. At 8:30 AM, ECB President Mario Draghi will deliver a press conference and take questions from reporters. Follow the release and the presser LIVE on Business Insider >
  4. New local-currency loans in China unexpectedly fell to ¥454.3 billion ($73 billion) in December from ¥522.9 billion the month before. Economists expected new loans to increase to ¥550 billion, and the new numbers could raise concerns about the Chinese recovery.
  5. China’s trade surplus soared in December on the back of a surge in exports. The surplus expanded to $31.62 billion from $19.63 billion, surpassing expectations of a slight rise to $20 billion. Exports rose 14.1 percent versus expectations of a 5 percent gain. Imports were up 5 percent, more than the 3.5 percent expansion that was expected.
  6. French industrial production rose 0.5 percent in November after contracting 0.6 percent the month before. Economists had expected a smaller 0.1 percent advance. Manufacturing production rose 0.2 percent versus expectations of a 0.2 percent decline.
  7. The Greek unemployment rate rose to a new record of 26.8 percent in October from 26.2 percent the month before. Youth unemployment also rose to a new record of 56.6 percent. 2013 is expected to be a sixth year of recession for Greece.
  8. Stock exchange operator BATS admitted that a system issue caused hundreds of thousands of transactions over the past four years to be executed at non-best prices that may have violated securities rules. BATS said the net drain on investors was about $500 thousand.
  9. In the United States, weekly jobless claims figures are due out at 8:30 AM ET. Economists estimate 365 thousand initial claims were filed last week, down from 372 thousand the previous week.
  10. Due out at 10 AM ET in the United States are Wholesale Inventories data for the month of November. Economists predict inventories expanded 0.2 percent, down from a 0.6 percent growth rate the month before. Follow the releases LIVE on Business Insider >

BI Intelligence, a new subscription research service from Business Insider, provides in-depth insight, data, and analysis of the mobile industry. Access all reports, research updates, presentations, data and chart libraries plus much more with your free trial.

Click here to start your subscription>>

 

 

The Dawn of a New Era

There is a major battle between the bulls and the bears. No matter how you look at it, both sides have very valid arguments for their existence.

When everyone was screaming doom and gloom at the beginning of 2012, I called for the S&P to rise to 1500 before the year was over. While we’re still not quite there yet, we’re awfully close: The S&P 500 finished up 7.10 points at 1,466.47 on Friday, its highest close since December 2007.

I am not here to tell you I was right, when so many experts were wrong. I am not here to tell you again that the Equedia Select Portfolio has outperformed the top hedge funds, mutual funds, and every benchmark index last year.

I am here to tell you why the market has performed the way it has, so that you can use it to your advantage. And the answer is very simple…

Asset Price Inflation

Inflated asset prices create optimism. The more something is worth, the wealthier and happier we feel. It doesn’t matter if our worth is all relative to our purchasing power; the more money we make, the better we feel. It’s all about perception.

That is why the Fed and central banks around the world are uncontrollably injecting more currency into the world than man has ever known. They want to make people feel good. And what better way to do that than to inflate the price of assets?

Asset price inflation is an economic phenomenon denoting a rise in price of assets, as opposed to ordinary goods and services. Typical assets are financial instruments such as bonds, shares, and their derivatives, as well as real estate and other capital goods.

The Fed’s goal isn’t to raise the price of food or energy, or other consumer goods; their goal is to raise the price of assets. Of course, their actions have other unintended consequences (see America’s Gold Wiped Out.)

Remember a few weeks ago when I explained what happens to the price of money, or interest rate, when money is printed? In short, interest rate drops. This leads to lower bond-yields, which in turn should alter how investors value equities relative to the fixed-income market.  When long-term bond yields can’t keep up with inflation, and thus is losing value, fixed-income investors have to eventually rebalance their asset mix towards equities in order to maintain their current allocation (see The Dramatic Drop).   

By incentivizing fund flows into the equity market, stocks rise. This boosts wealth and should make consumers, who now feel richer, spend more.

That’s why a few years ago, I told my readers not to worry about the stock market; especially if they’re worried about inflation.   

The Age of Central Banks

With the stock market now nearing the 2007 highs, I would say the Fed’s plan has worked. I am not saying there won’t be any consequences, but the trillion dollar injections have thus far led the markets to more than a double since the lows of early 2009.

If you looked only to the stock market as our economic gauge, then the Fed has done a pretty good job thus far.

While the dynamics of the capital markets are much different than they were in 2008, the stock charts are showing that 2008 was just a minor blip in the market…for now.

Our history has been written by unforgettable economic events; from the Great Depression to the Nixon Shock, from the Tech Bubble to the Housing Bubble. This is the dawn of a new era: The Age of Central Banks.

Fund Performances

According to Goldman’s David Kostin, 2012 was a strong year for stock returns but a poor year for managers:   

Nearly two-thirds of US equity mutual funds lagged their benchmarks. Their analysis of $1.3 trillion in US equity mutual fund assets reveals that 65% of large-cap core, 51% of large-cap growth, 80% of large-cap value, and 67% of small-cap mutual funds underperformed their respective benchmarks including the S&P 500, the Russell 1000 Growth, Russell 1000 Value, and Russell 2000. As I mentioned last week, hedge funds also underperformed.

How is it possible that during a bull market year, so many experts got it wrong?

Because experts are trained to analyze economic data, balance sheets and so on. They’re not trained to predict political decisions nor predict computer algorithms.

We are in an era of manipulation. That is why so many experts got it wrong. They’re not reading between the lines, they’re simply reading.

The artificial inflating of asset prices above levels justified by sluggish fundamentals, have triggered the world into believing things are great. And the fact the Fed is continuing to show an aggressive “all-in” approach is good news for all types of markets.

But remember, there is a limit to how far and how long prices can deviate from fundamentals. This is particularly the case when central banks, acting without the support of other government entities, do not have enough tools to ensure strong and sustainable economic outcomes; there just isn’t a proven theory on how this can be achieved through central bank intervention.  

There are plenty of books on how to trade using technical charting, value investing, and so on. Perhaps there should be a book on how to trade manipulation.

As I mentioned last week, there is a lot to be bullish about.

Technically, the markets look great. Low interest rates continue to push more individuals out of cash and bonds and into more risky investments, fuelling the market higher. We also have an additional and artificial $85 billion per month of liquidity being injected on an on-going basis until fundamentals get better.  

But as I also mentioned last week, not everything is pretty.

From a bearish point of view, we’ll have yet another debt ceiling debate fiasco, combined with potentially more negative news coming from China and/or Europe. Also, while earnings are projected to be higher in 2013, there is a big question of how this will be achieved; given that higher earnings in both 2011 and 2012 were as a result of a lot of cost-cutting (see The Next Fire Sale). Can these companies continue to cut costs? If so, at what expense? Lastly, the economy is still growing at a sluggish pace and unemployment still remains a major concern. 

How this all plays out will be dictated a lot by government policy, none of which we can control or predict. In the meantime, should markets hold up, I believe more investors will participate in 2013 leading to a stronger retail market.  

Conformity is part of human nature. Retail investors still like to chase and will invest more when things are moving up. With the stock market now up significantly over the last few years, perhaps now the retail market will participate.  

That leads me to how we protect ourselves.

I’ve talked about owning farmland and other high-valued, rare assets in past letters. Unfortunately, most cannot afford, nor have the time capacity, to purchase such wealth protection assets.

So what can the regular Joe do?

Gold and Silver

It seems like the obvious answer, yet I still receive questions about this every day.

The upside fundamentals of gold and silver are all there. Its wealth preservation metrics cannot be matched by any manmade financial instrument. I’ve mentioned this in so many Letters over the past five years. 

Gold has continually gone up in price for more than 13 years straight, and its value has been in an upward trend since the beginning of time. How many stocks can say that?

The retail investor will eventually get screwed by chasing the gains of the overall stock market. But that’s human nature; no one wants to be the first, and no one wants to be the last.

Eventually, the retail market will catch onto gold’s incredible rise. They will jump on the band wagon, as they do with all stocks and investments. The retail market, although easily spooked, is the strongest price-setter; bidding up things to ridiculous prices just to get a piece of the action. When the retail market participates, manipulation in the gold and silver market will be forced away and shorts in the sector will scramble to cover, sending prices even higher. I can’t say when this will occur, but I believe it will.

I purchased more physical silver this week when prices dipped below $30. There’s a lot of questions on buying bullion, bars, and coins; how to store it, where to buy it, how to insure it…

For me, much of the gold and silver I buy in the form of physical bullion, bars, or coins, I keep in a safe; away from manipulators, agencies, and the financial markets. How you insure it is up to you.  

Don’t get me wrong, I still own gold and silver in the form of liquid financial instruments via stocks, ETF’s, and funds, but I keep a small portion of my physical gold and silver close by my side.

I also buy bullion for my son, as part of his future education plan. I am confident that silver will double its value in 10 years, so I buy silver bullion for him in addition to other education savings plans. And when I say a double in value, I mean a real double; not just a double based on inflation.

Let me show you what I mean, based on the US government’s CPI inflation calculator…

Silver vs. Dollar 

Let’s say 10 years ago, a house costs $100,000.

In 2002, silver was just above $4 per ounce.  

If you bought that house with silver ounces 10 years ago, it would cost you 25,000 ounces ($100,000/$4/oz = 25,000 oz).

If you wanted to buy that same house with today’s dollars, it would cost $164,092 — an increase of 64%. Simply put, it means you lost 39% of your purchasing power in 10 years, based on the CPI inflation calculator.

Silver is now trading around $30 per ounce, an increase of nearly 565% in the last 10 years.

Guess how many silver ounces it would take to buy that house now with today’s silver? Only 5470 ounces.

If you held your money in currency, you would have lost more than 39% of its value. To buy that same house with today’s dollars, you would need more money.  

However, if you held silver, you would not only need less silver, but you will have enough silver to buy more than four houses, with lots of silver to spare.

It’s clear that if you saved the $100,000 and didn’t touch it for ten years, you would’ve lost a lot of money. If you bought silver instead, your 25,000 ounces of silver would now be worth $750,000 in today’s currency.  

These numbers are real. And the data includes only the last 10 years. How much will silver, or gold, be worth 10 years from now when you consider that central banks are printing more money than ever, literally. 

I am using silver as an example because everyone can afford it, but the same concept works with gold.

The math couldn’t be simpler. I can’t tell you what to do. But I can tell you what I am doing.

I just bought more physical silver.

Until next week,

Ivan Lo

Equedia Weekly  

407

Gartman: Very Bullish The Economy

“the most promising economic circumstances in a long time”

Gartman Bullish On The Fed, US Oil Production & Buying Gold With Yen

balls rocket blastoff 1225791 oDennis Gartman is about as raging a bull as you can find these days. At a time when many investors remain beaten down in the volatile “risk-on/risk-off” aftermath of the crash of 2008, and uncertain about how high taxes will go in 2013, the editor of The Gartman Letter looks at rising crude and natural gas production in the U.S. and sees the makings of the most promising economic circumstances in a long time.

Gartman told IndexUniverse.com Managing Editor Olly Ludwig that he’s not exactly pleased about President Obama’s re-election, but that doesn’t mean he’s wallowing in pessimism about the goings on in Washington, D.C. He reckons that while it may take time and great effort, Democrats and Republicans will do the right thing and cut spending, even as the “leftist” president goes ahead and raises taxes on the wealthiest Americans.

In all his optimism, Gartman is also bullish on gold, but not in the way you might expect. He’s not buying gold because he thinks the economy is going to the dogs and that the Federal Reserve is unhinged. Rather, he says that Ben Bernanke’s Fed is doing a fine job, and that investors should buy gold with a weakening Japanese yen. What’s more, Gartman even has his name on a quartet of funds now in registration that will allow investors to own gold in yen, British pounds and euros. – via  IndexUniverse.com

Ludwig: Could gold end lower this year?

Gartman: No. It ended last year at $1,566 an ounce. The odds of it closing unchanged on the year, I think, are zero.

Ludwig: I ask because you don’t see gold going through the roof these days, in spite of what the Fed is doing to keep bond yields so low. It has been falling and is now around $1,700.

Gartman: Well, the Fed is buying $40 billion to $45 billion worth of securities every month, but we forget that they’re also allowing about $35 billion to $40 billion—if not more—to mature off on the back end. So the monetary base has actually not grown at all in the course of the last year.

Ludwig: So what is your general overview of how the Fed is performing?

Gartman: I think the Fed has done yeomen’s work since the autumn of 2008. Publicly, they’re very clear about buying securities on a regular basis; privately, they’re circumspect and quiet about allowing them to mature off. I think they have expanded all that they’ve wanted to. And I think they have done the right thing heretofore.

Ludwig: How might the Fed slowly extricate itself without causing some kind of a crash in the market because of a quick hike up in rates and what have you? I’m guessing you don’t buy that some nightmare scenario will happen.

Gartman: No, I just disagree completely with the nightmare scenario. I’ve only been in the markets for 40 years but I’ve heard nightmare scenarios for every one of those years. But the worst fears never seem to come to fruition. The better hopes almost always seem to come to fruition. And perhaps I’m naive in that respect. But those who have bet upon collapse have made very bad bets for a protracted period of time.

I think that the Fed has said that they intend to keep the overnight Fed funds rate low for a long period of time—into 2015. It’s probably ill-advised, but I’m not surprised that they’ve made that statement.

…..read page 2 HERE