The New Shining Light in the U.S. Economy
Wednesday, October 24th, 2007
By Michael Lombardi, MBA for Profit Confidential
One part of the U.S. economy is in obvious big trouble: The housing market and all industries related to it. New home builders, contractors, home improvement stores, mortgage brokers and lenders — they are all feeling the pinch.
All we read about in the newspapers today is negativity on housing. Home foreclosure rates are jumping at triple-digit percentage rates, the mortgage lenders have tightened their lending criteria and, for the first time since the Great Depression, the median price of a house in the U.S. will decline this year.
Yesterday, as the Dow Jones Industrial Average put in a good performance, gaining 109 points for the session, the Dow Jones U.S. Home Construction Index got quietly pummeled again — 2.75% in one day! I wrote an article only a couple of weeks ago entitled “Housing Prices Headed to 2003 Level.” I may need to update that in the weeks to come again to “Housing Prices Headed to 2002 Level.”
Three years ago, I became bearish on the U.S. housing stocks. I’d still avoid them like the plague today. By the time the housing bust is over in the U.S., we will see some major American homebuilders declare bankruptcy.
So what’s the shining light in the U.S. economy?
It’s the manufacturing sector. Yes, after decades of seeing manufacturing plants close in the U.S. as American companies shifted production to lower wage countries like China, India, Mexico (and Canada to a degree), the jobs are coming back home.
- Michael's face turned red when I said these eight words:
Economic Trigger Guarantees Dow Jones Goes to 30,000?
I went into Michael Lombardi's office and told him I expect the Dow Jones Industrials to double from here.
He immediately showed me the door.
While my boss has good reasons to believe the market is headed lower, I have proof the market will double first before it tanks.
This is a presentation you don't want to miss...
Click here to see it now!
Big American manufacturers are reassessing their foreign operations in light of a drastically falling U.S. dollar. And that’s where I see the bright light in the economy — companies with foreign operations that can get their American manufacturing plants running again, thus reducing their cost base.
As an economy, we all gain when manufacturing opens up again as jobs are created. As an investor, the silver lining is in finding those companies that suffered when the American dollar was highly valued and the fortunes of which return as the greenback continues to fall against other world currencies, making American manufacturing costs cheap again.
This is an entirely free service. No credit card required.
We hate spam as much as you do.