1) With all our humanitarian efforts, I would like to know how I can cash in on the "MRE" (meals ready to eat) manufacturing companies. I’ve identified the companies and their divisions that produce these products, but I can seem to find a related stock that is traded. Can you help?
• Ameriqual Group llc - Evanville, IN
• Wornick Co. – Mcallen, TX
• Sopakco Packaging – Mullins, SC
• Unaka Co
Thanks — Warren (Jacksonville, FL)
Job well done in coming up with that list of companies that manufacture MRE’s. However, I had the same trouble as you — I couldn’t find a tradable stock. What I did find, however, is that Humanitarian Daily Rations (or HDR’s as they are called) consist of things such as bean salad, brown rice with lentils, crackers, peanut butter, jelly, flat bread, raisins, fruit bars, biscuits, and shortbread. An accessory packet with red and black pepper, salt, sugar, matches, a moist towelette (alcohol-free), a napkin, and a spoon are included as well. Many publicly traded companies produce those items, including some of the biggest corporate names in the U.S. like Kraft (KFT) and ConAgra (CAG).
2) Do you see signs of an economic downturn in 2006 or hyperinflation? Do you think there will be major tax changes by congress? — D.G.
If consumers decide to tighten their belts there could very well be an economic downturn in 2006. Some anecdotal signs already suggest that this may be occurring. Consumer credit unexpectedly fell in September and savings started to improve. Both would indicate that consumers are throttling back and if that continues it would be a negative development for the economy.
As for a hyperinflation, you can forget about it. Monetary growth has been tepid the past few years despite all the Fed’s best attempts to boost it. In fact, the dollar’s recent strength suggests just the opposite: that inflation is under control.
Insofar as tax changes are concerned, a number are things are being discussed, such as the elimination of the mortgage interest deduction and doing away with the Alternative Minimum Tax. Unfortunately, I wouldn’t expect to see any beneficial changes to occur anytime soon (like more tax reductions) because there is too much concern over the deficit. Ironically, deficit reduction may end up hurting the economy a lot more than it is expected to help.
3) Will the market crash two months after Greenspan retires, as it apparently did two months after he took over in '87? Do you think any major changes will happen when he leaves as Fed Chairman? — JP
Since Word War II there have been seven hand-offs to new Fed chairmen. Greenspan-to-Bernanke will be the eighth. In three of those seven changes the stock market was higher six months later, and in three of them stocks were lower six months down the road. In one, stocks were flat.
The 1987 crash appears to be an aberration as most of the moves were only around 10 percent in either direction. (The 1987 crash was more than 40 percent, peak to trough.) In other words history shows that these transitions tend to be non-events. My guess for the Greenspan-to-Bernanke handover is that the market will be eight percent lower six months after.
4) What do you think of Southern Peru Copper Corp (PCU)? — Fred
Southern Peru Copper (PCU) was one of my favorite stocks in the late 1990s, but that was when copper prices were 60 cents per pound and the dollar was very strong. At nearly $60 per share and with copper prices having increased three-fold, it’s hard to get excited about it. Moreover, with copper expected to move to oversupply next year, I wouldn’t touch this stock unless it came down significantly.
5) With the market dropping every day it seems, should I put my little bit of an investment in a safer place, and what would that be at this point in time? I have a little bit of money in annuities. Thank You. — J. Tucker
Well, the market hasn’t really gone anywhere in the past two years, but interest rates have. Short-term rates are the highest in over four years, making simple money market accounts or six month T-Bills look extremely attractive.
Mike Norman is the founder and publisher of the Economic Contrarian Update and a frequent guest on the Business Block.