Archive for March, 2015

Controversial post: Big changes could be coming for air travel

From Mike “Mish” Shedlock at Global Economic Trend Analysis:

Instead of new rules making sure two people are in the cockpit at all times, how about a rule that says no one at all is allowed in the cockpit? This is precisely how I felt after 9/11, and even more so after the disappearance of Malaysia Flight 370 on March 8.

The tragedy of Germanwings Flight 9525 in which a mentally ill co-pilot deliberately flew the plane into a mountain killing all 150 on board is icing on the cake.

And it’s not just two deliberate crashes either. Please consider The Mystery of Flight 9525: a Locked Door, a Silent Pilot and a Secret History of Illness.

Just under 40 minutes into their journey, the plane’s 27-year-old co-pilot, Andreas Lubitz, turned the Airbus A320 into a missile, guiding it into the southern Alps after locking its captain, Patrick Sonderheimer, out of the cockpit.

In the doomed flight’s final minutes, Sonderheimer attempted to force his way through the security door that separates the passengers from the pilots. At one stage he reportedly tried to use an axe. Recordings obtained by crash investigators capture him attempting to remonstrate with Lubitz – whose breathing, according to the microphones in the cockpit, remained sure and steady as the plane made its rapid descent. It was only in the final seconds that there was the sound of screams. Experts said death would have been instant.

As the New York Times revealed early on Thursday, French time, the voice recorder confirmed that Lubitz had locked the captain out of the flight deck and set the plane on its descent.

In November 2013, a flight between Mozambique and Angola crashed in Namibia, killing 33 people. Initial investigations suggested the accident was deliberately caused by the captain shortly after his co-pilot had left the flight deck.

In October 1999, an EgyptAir Boeing 767 went into a rapid descent 30 minutes after taking off from New York, killing 217 people. An investigation suggested that the crash was caused deliberately by the relief first officer, although the evidence was not conclusive.

And in December 1997, more than 100 people were killed when a Boeing 737 flying from Indonesia to Singapore crashed; the pilot, who was said to be suffering from “multiple work-related difficulties”, was suspected of switching off the flight recorders and intentionally putting the plane into a dive.

In an interview with the bestselling German tabloid Bild, the 26-year-old flight attendant, known only as Maria W, said that they had separated “because it became increasingly clear that he had a problem”. She said that he was plagued by nightmares and would wake up and scream “we’re going down”.

Last year he told her: “One day I’m going to do something that will change the whole system, and everyone will know my name and remember.”

A debate now rages about the extent to which companies and regulators can monitor a person’s mental health, especially if they perform a job that carries responsibility for the lives of others. The UN world aviation body has stressed that all pilots must have regular mental and physical checkups. But psychological assessments can be fallible. “If someone dissimulates – that is, they don’t want other people to notice – it’s very, very difficult,” Reiner Kemmler, a psychologist who specialises in training pilots, told Deutschlandfunk public radio.

Debate over Mental Illness

The debate over mental illness, locked doors, emergency overrides, etc., is the wrong debate.

The debate should quickly turn to whether there should be pilots in the plane at all.

Post Pilot-Era

The Globe and Mail hits the nail on the head with its report Aviation is Fast Approaching the Post-Pilot Era.

Every day, dozens of unmanned jet aircraft as big as private business jets take off from airports scattered around the globe. They fly for thousands of kilometres, staying aloft for as long as 36 hours, often changing course to cope with unexpected developments, before returning to land.

To call them drones grossly understates the sophistication, safety and cost-effectiveness of autonomous and remotely piloted aircraft.

Global Hawks, for instance – long-range, sophisticated surveillance jets, controlled from Beale Air Force Base in California but flying from at least six air bases in Japan, Guam and the Middle East – range around the world. They have been flying for 15 years. They have flown to Australia and back from the United States. They fly daily over Afghanistan and Iraq but also over heavily trafficked airspace where they fly high above commercial airliners. They can be programmed to take off, fly a 32-hour mission and land, all without direct human control. Alternatively, pilots half a world away, linked by multiple, secure and redundant satellite data links can “fly” them remotely. And there are thousands of other unmanned aerial vehicles already flying daily – mostly in military service.

Pilotless aircraft aren’t a distant sci-fi concept nor the wishful dreams of bean-counters at big airlines where the nattily-uniformed flight crew is a big cost just waiting to be cut.

And, as many pilots inside cockpits lament, most of the time they do little, if any, “hand flying.” Courses, heights, waypoints, rates of descent are all programmed into flight management computers which then “fly” modern aircraft far more smoothly and achieving far better fuel consumption, than even the most suave of airline captains.

Andreas Lubitz, the co-pilot suspected of deliberately crashing the Germanwings Airbus A320, didn’t seize a control stick and frantically dive the jet into oblivion. Rather, he simply dialled in 100 feet, in place of the assigned 36,000 feet cruising altitude, and the Airbus dipped the nose of the 70-tonne, twin-engined jet and flew it smoothly at a steady 800 kilometres per hour for eight more minutes until it slammed into a mountain. Mr. Lubitz didn’t need to touch anything further, except the lock override switch by his left hand that kept the captain out of the cockpit and doomed everyone on board.

Aviation experts envision an end to the era of pilots – at least pilots in cockpits – just as inevitably as elevator operators became redundant, expensive and far less precise in the operation than computerized systems.

As just as some high-end department stores kept on uniformed elevator operators who did nothing except offer reassurance by their presence to nervous shoppers, the transition to remotely-guided or autonomous aircraft may include a period of pilots present but not required on board airliners.

In many ways, autonomous operation of aircraft is far less of a technological challenge than autonomous or driverless cars – which major manufacturers expect will be sharing the roads with more dangerous human drivers within a few years. For instance, across North America, there are only about 5,000 commercial and military aircraft flying in controlled airspace at one time. That’s far fewer than the number of cars in a small city and they don’t need to dodge pedestrians, other drivers unexpectedly doing stupid things or a host of other variables that make driving far more complex. And aircraft fly pre-determined routes, at heights and speeds that can be far more easily adjusted to avoid collisions between a few hundred well-defined destinations.

David Learmount, an operations and safety expert at Flightglobal and a veteran aviation expert who has flown dozens of aircraft types, predicts pilots won’t be in cockpits in 15 years but in an airline’s operations room, rather like the U.S. Air Force pilots flying Global Hawks from Beale.

“Imagine an airline crew room in 2030,” he says. “The airline has, say, 300 airplanes, but only about 50 pilots. About ten of these will be on duty in the crew room at any one time [with secure links] to any of the fleet that’s airborne. On the rare occasion that something anomalous occurs on an airplane, … they can intervene as effectively as they could have done in the aircraft.”

Cargo flying and transoceanic routes, with no nervous passengers to persuade will likely be the first to make the change. United Parcel Service, the global package and freight giant operates 238 large cargo jet aircraft . In a decade, it expects to be flying pilotless freighter aircraft across the Pacific Ocean. 

Transition Period

People feel safer with a pilot in the aircraft. They shouldn’t. These incidents, like 9/11, Malaysia 370, Germanwings Airbus A320, EgyptAir 767, and deliberate crashes in Namibia and Indonesia, are proof enough.

Fifteen years is too long to wait. There should have been a transition to pilot-less aircraft long ago. It’s a tragedy that someone on the ground or the aircraft itself could not override these deliberate crashes.

Such fatal tragedies are very rare, but why have them at all? Self-driving cars and trucks will be safer than human-driven ones. So will automated ships and planes. If anything, ships and planes should be easier to implement than cars.

So why the delay?


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Tuesday, March 31st, 2015 Invest, News, Wealth Comments Off on Controversial post: Big changes could be coming for air travel

This could be the best news of the year for natural gas

From Dave Forest at Pierce Points:

A very important, although little discussed, news item emerged Friday. It could have major consequences in U.S. natural gas prices.

The announcement in question was that two of the world’s largest private-equity (PE) firms are buying into Mexico. Specifically, supporting the development of key natural gas pipelines in the country.

PE stalwarts BlackRock and First Reserve said they have committed a 45% interest in two Mexican pipeline projects: Los Ramones Phase II North and Los Ramones Phase II South. The price for the investment was not revealed ? but will likely run into the billions of dollars.

That’s because the Los Ramones pipelines are two of the largest pieces of energy infrastructure to be built in Mexico in a long while. Combined, the two pipes will run for 744 kilometres, connecting the northern and central parts of the country ? aiming to link Mexican natural gas buyers with the abundant supply created by shale gas in America.

Plans for the Los Ramones system have been on the books for years now. Spurring natural gas firms in the U.S. to build a number of new pipeline projects the last few years, aimed at carrying nat gas from big shale plays like the Eagle Ford to the Mexican border.

But from there, things have looked somewhat stalled of late. Because nat gas infrastructure on the Mexican side appeared to be developing much slower than in America’s.

But the BlackRock/First Reserve funding of Los Ramones gives a major shot in the arm to this part of the export picture. These billion-dollar firms will now partner with Mexican state petroleum giant Pemex to complete the pipelines ? nearly guaranteeing that sufficient capital and expertise will be available.

The best part for U.S. nat gas producers is that construction on the Los Ramones system is already underway. With full operations expected to commence in mid-2016.

Projections say that Mexican demand from this system could draw up to seven billion cubic feet per day of exports from America ? equal to nearly 10% of total current production across the country. Those are the sorts of numbers that could start to move prices. Energy investors should be marking this project completion date in their calendars.


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Tuesday, March 31st, 2015 Invest, News, Wealth Comments Off on This could be the best news of the year for natural gas

The must-have items for surviving a real crisis

Back in 2003, a blackout in the northeastern United States caused millions of people to lose power and water for days. 

At the time, it was the second-largest blackout in world history. For most involved, it was a dangerous and uncomfortable time. In the worst cases, the outage proved lethal – contributing to at least 11 fatalities.

Unexpected, disruptive events – like when your credit card stops working – are a fact of life. It is never a question of “if”… it is only a matter of “when.” There’s no good reason to be at the mercy of these unexpected, but inevitable, events.

In this essay – excerpted from his book The Doctor’s Protocol Field Manual – Doc Eifrig shares two of the six most critical items that should be in your home to protect you and your family during a crisis…

From Dr. David Eifrig, MD, MBA, editor, Retirement Millionaire:

1. Water. Water tops the list because it is most critical to your survivability. The human body can last for weeks without food, but only a few days without water. You should keep at least one gallon of water per person per day in reserve for drinking purposes. If you live in an arid climate, you may want to store up to three gallons of water per person per day. Use the formula below to calculate the total amount of water you need.

How to Calculate Water Needed

__________ x _________ x ________ = ______________

(No. of people) (No. of gallons) (No. of days) (Total gallons needed)

So if you have four people in your family… and plan for one gallon of drinking water per day for each person… and you plan to keep a seven-day supply… you’ll need to store at least 28 gallons of water (4 x 1 x 7 = 28).

Five-gallon “water cooler” jugs may be the easiest and most economical way to stock up. One-gallon jugs may fit better into available shelving. Using the example from above, 6 five-gallon jugs of water would give you 30 gallons, meeting your minimum needs with two extra gallons to spare.

Please note: It’s fine to store water in your garage. But don’t put plastic containers directly on cement floors. Most people don’t realize storing plastic water bottles on concrete can start a chemical reaction and contaminate the water. To be safe, store them on plywood or another nonporous membrane.

Original, unopened water containers are best for long-term storage. While they may have six-month “best before” dates, water does not “go bad.” The issue to be aware of is contamination. Water containers that you have refilled yourself are more apt to contain microbes.

If you choose to fill your own water jugs, sanitize them first. Use a ratio of one teaspoon of bleach to one gallon of water. Shake the bleached gallon of water in one container for 10 seconds and let sit for a minute; repeat about three times. Rinse with drinking water and let dry before filling with the water you intend to store.

Be careful not to contaminate the inside of the lid with your hands. Rinse the lids with the bleach-and-water mixture before putting them back on the bottles.

With both water and food storage, the best practice is to rotate the stored items into your regular consumption patterns. Even though water lasts longer than six months, it would be best to consume the stored water and restock twice per year.

If you know a crisis may be coming (like an approaching hurricane), do what I do and fill up every tub or basin you have with water before the storm hits. Leave one sink empty for washing and drainage.

The average bathtub can hold about 60 gallons. Don’t forget about laundry-room sinks and tubs. (They’re usually quite deep.) I even start my washing machine and then turn it off once the basin fills. This adds another 10-20 gallons of ready water.

The water that fills these basins is the same water that comes out of your kitchen tap. As long as the basins are clean, this water is safe to drink. But I prefer to save the washing-machine water for washing and sanitation.

If you’ve exhausted your supply of stored drinking water and still need more, you’ve got options. Most people forget that their hot water heaters are water reserves.

The average water heater contains about 40 gallons of water. It’s the same water that comes out of your kitchen faucet. Attach a garden hose to the bottom release valve to tap into this emergency water backup.

Tap water collected after a power outage occurs may not be safe to drink. Drinking contaminated water can make you very ill, very quickly. Use the following techniques to stay safe:

  • Boil Water: Bringing water to a boil for three minutes will make it safe to drink (after it cools). But don’t let it boil for more than three minutes. After that, valuable clean water starts to evaporate.
  • Sterilization: Add two to four drops of chlorine bleach per quart of water. Let it sit for 30 minutes. Smell the water. It should smell like chlorine. If it doesn’t, repeat the process. Wait another 30 minutes before drinking.
  • Solar Water Disinfection: If you cannot do either of the methods above, you can utilize the sun’s ultraviolet radiation to make water safe to drink. CAUTION: You must follow these exact instructions. Failure to do so will result in unsafe drinking water!
    • Use CLEAR, PLASTIC containers no larger than two liters
    • Remove exterior labels
    • Fill with clear, particle-filtered water (cannot be murky)
    • Expose bottled water to direct sunlight for six hours.

This method works as long as the container is made of plastic (not glass), is clear (not blue or some other color), and is low volume. (Ultraviolet radiation cannot penetrate dense concentrations of water.)

For more detailed info on why and how solar water disinfection (so-called “sodis”) works, visit http://www.sodis.ch/index_EN.

So far, we’ve only discussed potable or “drinking” water. Don’t forget, water is important for washing and sanitation as well. You can reuse cooking water for other purposes. I cover these issues in detail in Step No. 3 of my “Doctor’s Protocol – PROTECT” report.

2. Power/Light. It’s helpful to have some form of backup power. This may range from heavy AC generators to small DC batteries. It all depends on the amount of power you would use during an extended outage.

The right gasoline-powered generator can provide all the electricity you need to maintain everyday living. You can power your lights, refrigerator, water heater, electric stoves, etc. Of course, this requires a great deal of fuel. When confronted with an outage of unknown duration, it’s wise to conserve fuel by using the generator for bare necessities only.

If you are going to use a generator, keep the following basics in mind:

  • NEVER RUN A GENERATOR INSIDE THE HOUSE OR GARAGE. Generators emit lethal fumes. These machines always require good ventilation.
  • If you want to power your entire house with a generator, you’ll need to install a transfer switch. This allows you to switch from normal electrical-grid power to your generator. A decent transfer switch costs around $500. Expect to pay a few hundred more to have it installed.
  • 10-25 gallons of gasoline will provide one to two days of normal “on the grid” usage.
  • Gasoline will degrade over time. So always add fuel stabilizer to stored gas.
  • Store your gasoline in five-gallon cans. Keep the cans in a cool, safe place like a shed.
  • Unplug all unnecessary appliances. Even when not turned on, devices like televisions, computers, and radios still draw electricity. (I do this when I travel for extended periods of time, too.)

There are several types and sizes of backup generators. They may be stationary or portable… They may run on gasoline, diesel fuel, propane, or natural gas… And they provide various wattages of electric power. Most people elect to go with portable, gasoline-powered generators. They tend to provide the greatest flexibility and power for the lowest cost. Still, there are many choices here…

You must first determine how much wattage you require. A 5,000-watt generator should suffice for most homes. The nonprofit product-review company Consumer Reports provides a free wattage calculator. You can access it here: http://is.gd/WKpHgl.

In the 5,000-watt category, units range from $500 to $3,000. Like any product, higher price does not necessarily equate to highest quality…

The Troy-Bilt XP 7000 30477 gasoline generator earned top honors from Consumer Reports in 2012. It put out up to 7,000 watts for 15 hours on its nine-gallon tank. The unit costs $900.

But the best value may be the Generac GP5500 5939. It came in a close third to a model that costs $2,800. But the Generac costs only around $700 and has almost identical functionality and longevity as the second-place model. Unless you know you need a 7,000-watt output, this 5,500-watt generator is your best buy.

Always keep flashlights and extra batteries on hand. When storing flashlights, store them with the batteries removed. Connected batteries lose charge faster and may corrode.

Store your alkaline and lithium batteries at room temperature, out of direct sunlight, and in a dry area… NOT in the refrigerator. Moisture from inside the fridge can reduce shelf life and performance. Alkaline batteries should have about a seven-year shelf life as they only lose about 1% per year at room temperature. Lithium batteries may last up to 15 years on the shelf.

Nickel batteries can be frozen, but they still lose about 10% a month in the freezer. These are often your rechargeable type battery. A solid emergency flashlight should have a metal casing, adjustable beam, be brightly colored (easier to find in low-light conditions), have a lanyard, and contain a spare light bulb in its base. Larger flashlights that utilize C- or D-size batteries can flood more light into a dark space. Newer light-emitting diode (LED) flashlights put out a ton of light and can run on smaller AA-size batteries.

Lithium batteries beat alkaline batteries in terms of shelf life (15 years versus seven years) and power output. But they are also more expensive. Energy-intensive devices like cameras and mp3 players need the extra power lithium batteries provide. Most flashlights do just fine with alkaline.

Consumer Reports ranks “Energizer Ultimate” lithium batteries as the best for both power output and longevity… but they’re more than twice as expensive as their closest alkaline competitors.

Whatever you choose to use for batteries, follow the same rotation system. Stock up on batteries, then draw replacements from your stockpile. Again, FIFO rules the day: “First in, first out.”

Plastic glow sticks are another source of light. They contain two liquid chemicals that emit light when they come into contact. Snapping the glow stick starts this reaction.

For brighter light, place the glow stick in boiling water. This speeds up the chemical reaction and produces brighter light output. It also reduces glow stick life. The opposite is true as well… placing activated glow sticks in ice slows the reaction and allows more time for illumination. Glow sticks can stay illuminated for several minutes to several hours, depending on the type. Check the labeling.

Candles may be used for lighting, but be mindful of the high risk of unintended fire. Always keep in mind the following candle safety tips:

  • Never let a burning candle out of your sight. Always extinguish candles when exiting a room or going to sleep
  • Keep candles away from all flammable objects like curtains, furniture, books, paintings, etc.
  • Trim candlewicks to one-quarter inch before burning. Crooked and long wicks cause uneven burning and dripping… an easy way to spread fire.
  • Keep candles away from drafts, vents, and air currents.
  • Never use a candle for light when fueling equipment like a kerosene lantern or gas generator.
  • Be sure to have a charged fire extinguisher ready at all times.

If you have gas appliances, gas may flow, but electronic ignition switches will not work. Keep matches and/or a portable propane lighter ready to light the gas.

Unplug electronics not plugged into a surge protector. When the power comes back on, it may surge and damage this equipment. Keep one light switched “on” so you know when the power comes back online.

Some devices are “hand-crank” and require only “elbow grease” to function. This includes hand-crank flashlights and radios. You can even buy small hand-crank power generators (like the K-Tor Pocket Socket) that can recharge smart phones and tablet computers. These represent the ultimate “failsafe” in a no-power environment. The K-Tor unit sells for about $60 on Amazon.com.

I keep in my car a “shakable” flashlight that provides 1.5 minutes of light for about three minutes of shaking. The motion from driving keeps it charged.

Solar panels are another potential energy source, but their effectiveness is limited. Winter months, overcast days, night hours, and size constraints all limit solar power generation. They are also expensive. I do not recommend using solar power as your primary backup.

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig Jr., MD, MBA

Crux note: Whether you’re concerned about the potential of a crisis or not, Doc believes everyone should be prepared.

In The Doctor’s Protocol Field Manual, he gives readers dozens of potentially life-saving secrets, such as the safest (and most dangerous) seats on any airplane… what to do if you are in a public area and someone starts shooting… the award-winning $20 device that can give you hundreds of gallons of clean drinking water… a completely safe device that will thwart almost any burglar… the best way to prevent a serious injury in a car crash… and much, much more.

Right now, you can get your copy of The Doctor’s Protocol Field Manual and a one-year subscription to Doc’s flagship Retirement Millionaire newsletter – a $128 value – for just $39. That’s a savings of nearly 70%. Claim your copy right here.


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Tuesday, March 31st, 2015 Invest, News, Wealth Comments Off on The must-have items for surviving a real crisis

Good news for drinkers: The world’s biggest distiller is about to make a big change

From Bloomberg: 

Drinkers will soon find out just how good Guinness is for them as Diageo Plc plans to display nutritional information on its Smirnoff vodka, Tanqueray gin and the iconic Irish stout.

The world’s biggest distiller will disclose alcoholic content and nutritional information per serving on its responsible drinking website or on product packaging as soon as possible, the London-based company said Thursday in an e-mailed statement. Diageo, which operates in more than 180 countries, is working with regulators globally and has already gained approval for a label on its products in the U.S. from the Alcohol and Tobacco Tax and Trade Bureau, it said.

“Consumers are increasingly discerning about what’s in their glass,” Diageo Chief Executive Officer Ivan Menezes said in the statement. “We are committed to ensuring our consumers have the best possible information from which to make informed choices.”

In the European Union, alcoholic drinks are exempt from regulations to provide nutritional information on labels, Diageo said. Other foods are required to provide the information per 100 milliliter (3.5 ounce) portions, which Diageo said don’t reflect the way alcohol is consumed. It’s working with the EU to establish a standard alcohol unit across the 28 member states.

“This is a hugely positive step,” Ian Duncan, a member of the European Parliament’s environment, public health and food safety committee, said in the statement. It will be a “major improvement on the confusing current system, where there are different measurements of alcohol units across the EU.”

Diageo said it is the first company to voluntarily disclose nutritional information on alcoholic drinks. The move “is a smart one that is out-in-front of the trend for packaged food and beverage products to disclose more about what is inside the product,” said Kenneth Shea, an analyst at Bloomberg Intelligence in New Jersey.


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Tuesday, March 31st, 2015 Invest, News, Wealth Comments Off on Good news for drinkers: The world’s biggest distiller is about to make a big change

No joke: Two simple words could boost your income by 49%

From Brian Hunt and Ben Morris, DailyWealth Trader: 

It’s one of the most powerful forces for bigger investment returns…

It’s a godsend for people interested in large investment income streams…

It’s a powerful, two-word term: “tax-free.”

When it comes to your business, your job, your investments, or anything related to wealth building, taxes are a gigantic factor in your end result.

For example, if you earn $1,000 in taxable income, and you’re in the 33% tax bracket, you’ll pay $330 in taxes to the government… and keep $670. If that income was tax-free, you’d keep all $1,000.

Since $330 is 49% of $670, you end up with 49% more money (and that’s just in the first year).

That’s why, when it comes to earning income on a chunk of savings, we love municipal bonds…

Municipal bonds, or “munis,” are loans made to state and city governments. To encourage folks to invest in government projects, interest received from munis is exempt from federal income tax and, in some cases, state and local income taxes.

Whenever you’re looking for an income investment, you should have a look at municipal-bond yields. If they’re similar to another, taxable payout – and the risk in the investments is about the same – you’ll always want to opt for the munis. You might even choose municipal bonds over another investment that has a higher, taxable yield.

Take the Nuveen Municipal Opportunity Fund (NIO), for example. Muni funds like NIO are a great way to buy a diversified basket of muni bonds. NIO holds about 370 different municipal bonds… and it pays a 6.1% yield. If you’re in the 33% tax bracket, that’s like earning 9% on a taxable investment. That’s far better than almost any other investment with even a 7% or 8% yield.

And right now, some muni funds, like NIO, are trading at huge discounts. You see, NIO is what’s called a “closed-end” fund. Most funds, like mutual funds and exchange-traded funds, have an unlimited number of shares to issue. If folks buy more shares, the funds simply buy more assets and sell more shares. These “open-end” funds always trade near the value of their assets.

But closed-end funds are different… They have a fixed number of shares. If lots of folks buy them at the same time, they’ll trade at a premium to the fund’s asset value. If lots of folks sell them at the same time, the shares can trade at a discount. A 10% discount is like buying a dollar bill for $0.90.

For instance, NIO trades at a 9.3% discount to the value of its assets (its “Net Asset Value” or “NAV”). It has only traded with this big of a discount 7% of the time in the last five years. The chart below shows NIO’s share price (the black line) and the discount to its NAV (the blue line) over the last five years.

The reason NIO, and funds like it, are such a great buy today is the improving U.S. economy. This means municipalities will have more tax revenue to pay bondholders… But it also means that the U.S. central bank, the Federal Reserve, is more likely to raise interest rates.

As you may know, higher rates mean bond prices could fall… It’s a risk with buying municipal bonds today. But since lots of investors are already expecting this to happen, they’ve sold their bonds in advance of any action by the Federal Reserve.

This selling has caused an especially big discount… giving us a cushion for our trade. It means shares of NIO could rise even if the value of its bonds stays the same… or even if it falls a bit.

“Tax-free” is one of the most powerful phrases in the investment world… It’s a way to boost your income with no added risk. Take a look at closed-end muni funds, like NIO, trading at a big discount today.

Regards,

Brian Hunt and Ben Morris

P.S. Our friend and colleague Dr. David Eifrig has been urging readers to buy closed-end muni funds for more than four years now. In that time, his readers have been able to collect generous yields of tax-free income every month – plus capital gains of as much as 45%. And his two favorite muni funds are still considered “buys” today. For a limited time, you can access Doc’s muni-fund recommendations – along with his new Big Book of Retirement Secrets – for just $5. Find out how right here.


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Tuesday, March 31st, 2015 Invest, News, Wealth Comments Off on No joke: Two simple words could boost your income by 49%

This indicator has predicted every major market plunge in the past 30 years. What it’s saying now…

From Tom McClellan’s Chart in Focus:

Before each of the really ugly bear markets of the past 30 years, there has been an important signal from housing data well ahead of time. We do not have such a signal now, and so that portends more upside in the months ahead for stock prices.

In fact, the past 3 months have seen a pretty substantial upsurge, especially in the Northeast and South regions of the USA as tracked by the Census Department. That takes the seasonally adjusted annual rate of new home sales to its highest level since February 2008. Generally speaking, seeing this home sales data make higher highs has been good news for the long-term path of stock prices. It is when the two diverge that problems start to develop.

That does not mean there is no room for worry, though. The real-time data shown above are saying that everything is wonderful for home sales. But our leading indicator for such data says that we could have problems in the months ahead.

Lumber futures prices act as a great leading indication for home sales, home prices, and even interest rates. In this next chart, I am comparing lumber prices to that same Census data series on new home sales, but with one key adjustment. I have shifted the lumber price plot forward by 12 months to help reveal how the home sales data tend to follow in the same footsteps a year later.

Lumber futures prices bottomed in 2009, and it took another year for that upturn to work its way into the housing market because of this lag. We are now at the 1-year anniversary of an important peak in lumber prices, and the path since then has been aggressively downward for lumber prices. This implies that we should see a corresponding slope change for new home sales.

The magnitude of that slope change is not as easily modeled. This leading indication picks up the changes in direction for home sales most of the time, but the magnitude of the housing response to lumber’s movements can be affected by other factors such as fed actions, household demographics, special tax credits, etc. That said, it is hard to imagine that the large downward movement we have seen in lumber prices over the past 12 months would not result in a significant response in the new home sales data.

If and when we see such a response in the new home data, then we can start worrying about a potential divergence relative to the DJIA in the top chart. For now, we do not have such a divergence evident, and so on that basis there is less reason to worry about a major bear market for stock prices.


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Tuesday, March 31st, 2015 Invest, News, Wealth Comments Off on This indicator has predicted every major market plunge in the past 30 years. What it’s saying now…

Cornerstone Metals (TSXV: CCC) Increases Non-Brokered Private Placement

Vancouver, British Columbia – March 30, 2015 (Newsfile Corp.) (Investorideas.com Mining stocks newswire) Cornerstone Metals Inc. (TSXV: CCC) (“Cornerstone” or the “Company”) announces that it has increased a non-brokered private placement, previously announced on February 23, 2015, from up to 5,000,000 units to up to 6,250,000 units, at a price of $0.02 per unit, for gross proceeds of up to $125,000.

Tuesday, March 31st, 2015 News Comments Off on Cornerstone Metals (TSXV: CCC) Increases Non-Brokered Private Placement

Mining Stocks News: SilverCrest (TSX: SVL) (NYSE MKT: SVLC) Announces Surface Drilling Results at Santa Elena Mine

Vancouver, BC – March 30, 2015 (Investorideas.com Mining Stocks Newswire) SilverCrest Mines Inc. (TSX:SVL) ( NYSE MKT: SVLC) is pleased to announce results of the exploration and resource expansion drilling program completed in late 2014 at the 100% owned Santa Elena Mine in Sonora, Mexico.

Tuesday, March 31st, 2015 News Comments Off on Mining Stocks News: SilverCrest (TSX: SVL) (NYSE MKT: SVLC) Announces Surface Drilling Results at Santa Elena Mine

This indicator has predicted every major market downturn in the past 30 years. What it’s saying now…

From Tom McClellan’s Chart in Focus:

Before each of the really ugly bear markets of the past 30 years, there has been an important signal from housing data well ahead of time. We do not have such a signal now, and so that portends more upside in the months ahead for stock prices.

In fact, the past 3 months have seen a pretty substantial upsurge, especially in the Northeast and South regions of the USA as tracked by the Census Department. That takes the seasonally adjusted annual rate of new home sales to its highest level since February 2008. Generally speaking, seeing this home sales data make higher highs has been good news for the long-term path of stock prices. It is when the two diverge that problems start to develop.

That does not mean there is no room for worry, though. The real-time data shown above are saying that everything is wonderful for home sales. But our leading indicator for such data says that we could have problems in the months ahead.

Lumber futures prices act as a great leading indication for home sales, home prices, and even interest rates. In this next chart, I am comparing lumber prices to that same Census data series on new home sales, but with one key adjustment. I have shifted the lumber price plot forward by 12 months to help reveal how the home sales data tend to follow in the same footsteps a year later.

Lumber futures prices bottomed in 2009, and it took another year for that upturn to work its way into the housing market because of this lag. We are now at the 1-year anniversary of an important peak in lumber prices, and the path since then has been aggressively downward for lumber prices. This implies that we should see a corresponding slope change for new home sales.

The magnitude of that slope change is not as easily modeled. This leading indication picks up the changes in direction for home sales most of the time, but the magnitude of the housing response to lumber’s movements can be affected by other factors such as fed actions, household demographics, special tax credits, etc. That said, it is hard to imagine that the large downward movement we have seen in lumber prices over the past 12 months would not result in a significant response in the new home sales data.

If and when we see such a response in the new home data, then we can start worrying about a potential divergence relative to the DJIA in the top chart. For now, we do not have such a divergence evident, and so on that basis there is less reason to worry about a major bear market for stock prices.


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Sunday, March 29th, 2015 Invest, News, Wealth Comments Off on This indicator has predicted every major market downturn in the past 30 years. What it’s saying now…

This is the single mission of the Federal Reserve today

From Bill Bonner in The Bill Bonner Letter:

In the U.S., older voters control both political parties. They control most major corporations. They dominate all major industries. They have their pensions… their health care programs… their stocks… their bonds… their place in the sun.

Naturally, they want the benefits and rewards they believe they have been promised. More than that, they don’t want the sun to move!

This puts central-bank policies in a new light. They are intended not to create an open, entrepreneurial, and growth-oriented economy. Instead, they are meant to protect today’s wealth distribution, including today’s asset values. This can only be done by keeping the credit expansion going; it is the only way to keep the promises alive.

Central bankers are confronted with a dreadful reality. They know that markets don’t fear death. Markets can take their lumps and bounce back. Some people win. Some lose. Businesses are born; businesses die. Markets don’t care. They reward the winners, punish the losers, and move on.

But people care. And they control government. Government controls its central banks (even though they are said to be “independent”). Particular governments have particular supporters and they are almost always people who want to hold on to what they’ve got – retirees, “old and fat” businesses, Wall Street, the rich. Government’s role is to protect today’s claims on capital, even on capital that doesn’t yet exist.

Wall Street and crony businesses – by means of campaign contribution, job offers, speaking fees, and the like – has paid good money for this service. The old have voted for it. The government, and its central bank, will do all they can to provide it. And not merely because their clients want it; politicians and bureaucrats have their own power and wealth to think about, too. Nobody wants to lose what he has… or die.

If it came to a choice – save the free market economy or save the government – central bankers, who are essentially high-level bureaucrats, will choose to save the government.

That was the lesson of Zimbabwe 10 years ago. The government had made promises it couldn’t afford. Things were getting out of whack. Rather than let the economy adapt and adjust, the central bank fed it huge quantities of new money to finance government spending. In the end, the economy fell to pieces; the government of Robert Mugabe survived.

Likewise, developed governments have made huge spending commitments, none more extravagantly – as calculated by the fiscal gap – than the U.S. For the moment, central bankers claim to believe that extraordinarily low interest rates are just the ticket. Somehow (it has never really been explained), low rates are meant to overcome the natural forces of humans, markets, and economies. They will make old people act like young people, make overpriced markets act like cheap ones, and sluggish economies, deeply in debt, act like ones without a care in the world.

You never know, of course. But if this doesn’t work, the feds will continue to act like nurses to an old, deeply indebted society, rather than like midwives to a new one.

When the Crisis Comes

When another crisis comes – it could be as simple as a bear market – the Fed and other central bankers can be expected to act like the Bank of Zimbabwe. That is, they will protect the government at all costs, the economy be damned.

What effect, precisely, this will have on asset prices, I don’t know. Zimbabwe’s stocks were briefly among the world’s top performers – at least in Zimbabwean currency. In the end, though, with the economy in tatters, its companies were worth considerably less than they had been when the economy was still functioning properly.

So investors in U.S. stocks must be counting on central bank management to overcome the tidal forces of demography, debt, and market cycles. They are likely to be disappointed. Nowhere in the history books is there an example of it.

Central banks have not been attempting to manage an economy for very long. But there is no experience we know of that shows us that interest rates set by a group of bank industry insiders are better than those discovered by honest outcry in an open market. All of our theories tell us it is unlikely.

Nor has any central bank ever succeeded in solving the problem of too much debt, except by somehow letting debtors default or inflating away the bad debt. As far as the effect of demography, as far as we know, the authorities can do nothing about it. (Obviously, they can affect populations, but they cannot change the economic or social effects of demography.)

But people come to think what they must think when they must think it. Or as the old-timers on Wall Street put it: Markets make opinions.

A man, thrown suddenly into deep water, believes it is time to learn how to swim. A person appointed to a central bank in the 21st century cannot hold 19th-century views. He is in too deep. Notably, he is the guardian of a world economy with $200 trillion in debt. This is also a world, he believes, that cannot backtrack. New debt must be engaged in order to pay the old debt. A credit contraction may be a normal and natural thing, but not on his watch!

A central banker today has but a single mission – to save the system; that is how he will get his picture on Time magazine. But to save it from what? From old people, and the debts and obligations incurred on their behalf.

Regards,

Bill Bonner

Crux note: Bestselling author Nassim Taleb called Bill’s newest book, Hormegeddon, “a must, must read” and suggested to “buy two copies, one for yourself, another for the nearest policy maker.” In Hormegeddon, Bill lays out a blueprint for protecting yourself from the government’s reckless spending. If you’re concerned about protecting yourself, your family, and your finances, you can’t afford to miss this offer.

Right now, you can receive a copy of Hormegeddon and a subscription to Bill’s new monthly publication, The Bill Bonner Letter, for a fraction of the normal retail price. Click here for all the details.


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Sunday, March 29th, 2015 Invest, News, Wealth Comments Off on This is the single mission of the Federal Reserve today

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