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Strategies & Market Trends : Items affecting stock market picks -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (2041)	6/10/2011 8:35:56 PM
From: russet	Read Replies (1) \| Respond to of 8343

Putting Seeds in the Ground With Vale (NYSE:VALE) 06/09/11 by Matt McAbby oakshirefinancial.com We conclude our series on migration to the countryside this week with a deeper look at the unemployment phenomenon and an examination of a company from the fertilizer sector, whom we believe will profit from continuing high food prices and a general move back to small farms. Our thesis on ex-urbation and the repopulation of the countryside is gathering relevance in the face of recent ‘wildings’ in a number of U.S. cities that show signs they were co-ordinated using social media. From Boston to New York and south to Miami, as well as cities across the Midwest, most prominently Chicago, waves of youth violence have crashed through American urban centers. A Few Questions… Could it be that this is the belated American version of the ‘Arab Spring’ and the Mediterranean upheavals that have struck Greece and Spain? Indeed, is America’s economic and social predicament as dire as those countries’? Will the United States remain immune from large scale demonstrations – even violent ones – while the unemployment rate remains at bloated levels and a hot summer approaches? If you believe Ann Coulter, who just released a new (stridently partisan) book called Demonic, mob violence of the sort witnessed in the Old World will be with us in a matter of time. And while Ms. Coulter will claim that the violence will come as part of a left-liberal political tradition, we say that this, even if true, is of secondary importance. There will likely be large scale demonstrations in the U.S. – many of them violent – due to the labor situation and the conspicuous example provided through the media of uprisings in the Arab world. Unfortunately, both those genuinely frustrated by their job situation and anarchic troublemakers will attempt to use the demonstrations for their own ends. How Bad Will it Get? The extent of the violence will likely mirror the gravity of the unemployment problem. To that end, here’s an unemployment chart we ran previously: The average American worker has been searching for work twice as long now as any of his fellow out-of-work citizens ever did over the last 65 years. Better demonstrating the point, perhaps, is the Labor Force Participation Rate, which has been on a steep decline since the year 2000. Look here: What’s it mean? By definition, the ‘participation rate’ is the ratio of the number of employed citizens over the number of employable citizens. As you can see, that number has been declining steeply since the last recession (2008-09) and is the continuation of a pattern that began in 2000, which strengthens our conviction that the changes we’ve seen of late in the American employment landscape are not cyclical in nature but structural. In our estimation, these jobs are not coming back. The longer the duration of unemployment, the greater the loss of marketable employment skills, and the greater the likelihood of people just giving up. That likely explains why 6.2 million Americans have been out of work for more than six months and more than 4 million haven’t worked for over a year. These are people who have effectively thrown in the towel and are headed for the food stamp rolls. See the Wall Street Journal here for data on the tremendous year-over-year growth in food stamp subsidies. That, too, bodes ill for the prospect of civil unrest. So does a demoralized police force that’s been handcuffed by special interest groups and lack of budgets, training and media support. Where there’s indecisive municipal leadership (which includes chiefs of police), be sure that urban populations will suffer the vices of thieves, extorters and random perpetrators of violence. Hit the Road, Jack All of which brings us back to the trend of folks leaving cities. Here’s some data relating just to a few Midwestern cities that demonstrates the point well. Figures for 2010, show a further loss of 250,000 people from Detroit, 200,000 from Chicago, 80,000 from Cleveland and 40,000 from St. Louis. There’s no question that people are leaving. And they’ll likely continue to do so as large corporations pack up and head to outlying areas (if they remain in the country at all), a phenomenon that has also begun to pick steam in recent years due to heavier urban tax burdens, higher operating costs and other quality of life issues. And the winner is… Recap: as part of this series we’ve highlighted a transport company, several real estate trusts, a group of large commercial agricultural firms and now we turn to a Brazilian Miner that’s about to enter the fertilizer business. The company is Vale (NYSE:VALE), a firm whose stock is up an incredible 81% over the last five years and who’s set to invest $16 billion over the next five to develop its potash capacity. If they’re successful, Vale will seriously dent profits at Potash Corp (NYSE:POT) and Mosaic (NYSE:MOS), both of whom currently do a brisk trade with Brazil.