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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • DOLLAR DOWN, BUT STILL IN DEMAND - By Charles Payne 2 comments
    Aug 26, 2014 10:35 AM

    Are you one of those people that's been spooked out of this rally because you don't like the President's policies or the Federal Reserve? Well, I don't like them either, but I do enjoy eating, and I do want to send my kids to college. Also, I would like to travel the world one day.

    Over this past weekend, I guarantee that a lot of people passed away. Sadly, all they left their heirs was a garage filled with two years' worth of canned food and three years' worth of bottled water… plus a few gold coins they paid $1,800 an ounce for. Those that passed away loved their children and grandchildren, and wanted to make sure that their offspring would survive a worst-case scenario. It was admirable, but most of us live in the matrix… the world where worthless money can buy you stuff. Still, how long will it be this way? I'm not sure, but for now, I want to make sure I can live the best life possible. I have a feeling that that's the same goal of most Americans and the quandary for those that know history always repeats itself.

    Let's have an honest conversation about paper money, the Federal Reserve and the future. A lot of financial experts have been warning of doom because of money printing at the Fed. Riding high after the 2008-09 crash, they have been looking for the next leg lower. Would-be investors that listened have missed 11,000 Dow points and are down big on their gold purchases. The good news is that all will be forgiven as long as the market crashes one day, even if time and opportunity squandered could never be recaptured.

    Superman to the Rescue

    The biggest economic news yesterday was the selling of Action Comics #1 on eBay for $3.5 million. The comic book made its debut in June 1938 and only cost a dime at the time. Tangible assets, including comic books, have always been a great hedge against inflation. But why do we get inflation? The printing of paper money that doesn't have backing is the main driver of inflation. This is a lesson that's been learned the hard way throughout history, including American history. In 1775, American colonies authorized the printing of the Continental. The currency was an unmitigated disaster and the worst-case textbook example of perils of printing money without any backing.

    US ContinentalAmount PrintedNeed to Buy $1.00 Goods
    1776$19 million$1.00
    1778$31 million$6.00
    1779$226 million$40.00

    Eventually, the US redeemed the Continental at 1/100 its original value in the aftermath a new term was coined to underscore when something was valueless or unbelievable: "Not worth a Continental." This chart isn't the old Continential… it's the current US dollar which has lost 96% of its original value.

    There are more and more calls going back on the gold standard to add validity and real value to the US dollar. I know the dollar is doomed, but the real, real deal is that right now, I prefer having a pocket filled with them. So, here's the conundrum, should people wait for the worst-case scenario and only buy gold and silver, as well as former missile silos converted into condominiums? Here's the irony: people that sell gold and silver and missile silo homes accept payment in worthless paper money, so what's the right approach?

    Last night, I spoke to Steve Forbes about this on my show, Making Money with Charles Payne. You can watch the clip here: http://fxn.ws/1tEX8qy.

    Today's Session

    After dipping into negative territory during the night, the major indices have reversed and are preparing to open in the green this morning. We had a few companies that reported after the close yesterday and before the open today:

    CompanyTickerEPS (Actual)EPS (EST)EPS 1-Year AgoRev (Actual $M)Rev (Est $M)Rev Y/Y %
    Best BuyBBY0.440.310.32$ 8,896.00$ 8,984.06-4.0%
    DSWDSW0.370.320.97$ 587.10$ 563.664.4%
    Sanderson Farms*SAFM3.303.862.95$ 768.40$ 766.634.0%
    ScotiabankBNS1.401.411.30$ 6,487.00$ 5,916.9117.6%
    Tech DataTECD1.120.770.73$ 6,841.80$ 6,682.578.1%
    Trina SolarTSL0.140.15-0.47$ 519.40$ 554.3517.9%

    * In Model Portfolio

    There are streams of economic data being released today. One of the most notable items out this morning was the durable goods report from the Census Bureau. Durable Goods came in at a record jump of 22.6%, primarily thanks to an increase of aircraft orders as other components of the durable goods report came in below consensus. The news will be mitigated, however, because of a huge revision to the June data.

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  • PhaTz
    , contributor
    Comments (5) | Send Message
     
    I don't think it can be overstated that once you have tasted the cool-aide US$ and it tastes good and you have drunk from that picture for you whole life, that nothing else will do.

     

    What is it that gives the US$ that flavor to savor ? What aspect of the color of that drink appeals to so many ?

     

    First and foremost the world see's America as a Technological power house. We have a culture of innovation. Sadly that is changing. Investment by the largest block investors are moving to China and money for innovation and short term business loans is getting tighter.

     

    That being said, people of come to expect, no demand something new, better, faster, less expensive and of greater value. The new flavor of cool-aide :-) to savor is going to be a computing revolution.

     

    In an article I wrote, I talk about a new technology which when implemented will change computing as we know it. Von Neumann won't be hip anymore and memory densities on SoC dies will rival Spinning, Flash, and DDR memory subsystems as we know them. This new technology will replace the old.

     

    Additionally, I know people like the new Mio drink because you no longer need a pitcher just a glass and some water. The new cool aid you can put in your pocket and carry with you. The same is true of this memory products industry transforming capabilities. The size of a 1U Rack Mount Server is 17.7" W x 1.75" H x 28" D. The size of this new server with this new memory will be the size of a credit card.

     

    People are drinking the new Mio Cool-aide.. yet many love the old stuff until it becomes so economically infeasible to continue drinking it. In less than 5 years time this new memory technology will increase the processing capabilities by a minimum of 3 orders of magnitude. Complex 3 dimensional networking connectivity will not be an issue at this time so swarm computing will replace everything we know about SaaS and DCaaS technologies.

     

    For every row of 10 Data center cabinet with 400 1U servers, 1 cabinet will replace these and be at minimum 1,000 times more powerful. This will bring in what is known as Exascale computing. 1 x 10^18 crunches per second. America changes and you have heard it first here.. from this guy..

     

    linkedin.com/today/pos...
    26 Aug, 11:23 AM Reply Like
  • PhaTz
    , contributor
    Comments (5) | Send Message
     
    Adding the link.. It didn't seem to work .. http://linkd.in/YWHkoD
    26 Aug, 06:43 PM Reply Like
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