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Five Things You Need to Know: Data Suggests Stocks Odorvalued, World's Wealthiest 1% Now Nervously Looking Over Their Shoulder, Welcome to "New America", Casinos Replace Steel Industry as Backbone of U.S. Economy, Modern American Labor Profiles in Courage

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What you need to know (and what it means)!

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Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Data Suggests Stocks Odorvalued

Stock sales by America's corporate chieftains exceeded purchases last month by the widest margin since 1987, according to Bloomberg data.

  • Executives including Microsoft's Bill Gates and Google's Eric Schmidt sold $63.18 of shares for every $1 they bought in November, an analysis by Bloomberg of data from the Washington Service showed.
  • Insiders sold $8.4 billion in shares last month, according to data compiled from SEC filings, while buying was nearly $133 million, for a sell-buy ratio of 63.18.
  • That's the highest since at least 1987, Bloomberg said.
  • Meanwhile, do you know what else is the highest since 1987?
  • Corporate buybacks.
  • A corporate buyback occurs when shareholders authorize the company to repurchase stock the company has issued.
  • This reduces the number of shares outstanding in a company, giving each remaining shareholder a larger percentage ownership of the company.
  • Corporate buybacks are often a signal that a company believes its stock is undervalued.
  • Insider sales, however, are often a sign that a corporate insider believes its stock is overvalued.
  • With insider sales at their highest level since 1987, and corporate buybacks at their highest level since 1987, it is clear that stocks are both overvalued and undervalued
  • So, Kevin, quick question. If stocks are simultaneously overvalued and undervalued, then that must mean they are fairly valued, right?
  • What are you, some kind of Pollyanna Permabull? No, that's not right.
  • When stocks are both overvalued and undervalued this creates a condition we call odorvalued.
  • Stocks are odorvalued.


What's that smell?



2. World's Wealthiest 1% Nervously Looking Over Their Shoulder

By now almost everyone is aware that income inequality has reached near record levels in many countries. But income aside, the distribution of the world's wealth has become even more narrowly concentrated than income, according to the New York Times.

  • The distribution of the world's wealth - stocks, bonds, physical assets such as real estate - has become even more narrowly concentrated than income, according to a new report by the World Institute for Development Economics Research of the United Nations University.
  • In 2000, the top 1% of the world's population, about 37 million adults, accounted for about 40% of the world's total net worth, according to the report.
  • The bottom 50% of the population accounted for only about 1% of the world's wealth.
  • The net worth of the world's typical person - someone better off than the bottom half, but worse off than the top half - came in just a little under $2,200.
  • So much of the world's wealth is concentrated in so few hands that if all the world's wealth was distributed evenly, each person would have a net worth of about $20,500, the Financial Times reported.
  • However, if all the world's wealth was distributed based on height, the results would be pretty, pretty different.


3. Welcome to "New America"

Las Vegas Sands (LVS), the world's largest casino company by market value, is competing for a license to build a casino with 5,000 slot machines in Bethlehem, PA at the site of what was once the Bethlehem Steel Corp. plant, Bloomberg reported.

  • Bethlehem, PA is perhaps best known as the site of Bethlehem Steel and steelmaking at the site of the future Las Vegas Sands development dates to 1863.
  • At its peak during World War II, the Bethlehem Steel Corp. had 310,000 workers.
  • The company produced more than a ship a day for the Navy and by 1955 had become the eighth-largest U.S. company.
  • Bethlehem Steel filed bankruptcy in 2002 and closed its books owing 130,000 workers and retirees $6 billion in health care and pensions.
  • Las Vegas Sands estimates that the gaming, shopping and condominium development at the site of the plant bring an initial 1,825 (one thousand, eight hundred and twenty-five!) jobs and generate $10 million in tax revenue.
  • "You see those big blast furnaces and you get such a sense of history and place,'' William Weidner, president of the Las Vegas-based company, told Bloomberg. "That was old America. This is new America.''
  • Next in "New America": Employees refuse dollars, demand compensation in casino chips!


"New America" Direct Deposit



4. Casinos Replace Steel Industry as Backbone of U.S. Economy

If there's one useful thing we can take away from stories such as the Las Vegas Sands slot machine development at the site of what was formerly Bethlehem Steel, or the recent string of sad manufacturing reports, or the crises of automakers such as Ford and General Motors, it's this: manufacturing is no longer the backbone of the U.S. economy. Casinos are.

  • It is simply no longer the case that manufacturing is the backbone of the U.S. economy.
  • Although many economists are obsessed with the most recent factory orders report, manufacturing data, or the latest blast furnace statistics, the reality is that since 1990 U.S. manufacturing jobs have declined by more than 20%.
  • Meanwhile, the casino industry work force has increased by an estimated 79%.
  • At this rate, projected forward on a multi-function calculator using some of the weird symbol buttons, the U.S. economy is expected to be exclusively dependent on casino gambling by the year 2009.


5. Modern American Labor Profiles in Courage

In the old days a man went down into the mines for 12 hour shifts seven days a week, laboring with pick and shovel to bring out coal to fuel the manufacturing facilities for other laborers. Some went into the steel mill where the grueling heat produced dangerous working conditions. Today, the job titles may have changed, but the conditions faced by the modern casino laborer are just as harsh.

  • While many of us enjoy the leisure and benefits that today's modern casino laborers produce, few of us have a real understanding of just what it is these courageous folks do.
  • Minyanville recently sat down with a casino laborer to get an idea of a typical day in the life of the new modern American casino laborer.
  • Jerry T. (We agreed to withhold his name for fear of reprisal from his employer) is typical of the modern American casino laborer, toiling at the $2 roulette wheel at the Glistening Palms casino in Atlantic City, NJ for sometimes nine hours at a time, with only Mondays and Tuesdays off, an hour for lunch and four 20 minute breaks per shift.
  • We had the opportunity to sit down with Jerry and ask him about the grueling work conditions faced by the modern American laborer.

Tell us, Jerry, what is the typical, grueling day in the "pit" like at the Glistening Palms casino? The working conditions, I imagine, must be horrendous.
Uh, I... uh, actually, it's pretty good, I guess. I have to stand up a lot. Horrendous?
Yes, how many of your fellow casino laborers have had serious health problems as a result of the harsh working conditions?
Health problems? I think Tom, the pit boss, had, like, surgery for his back last year. But as far as...
This pit boss, Tom, he's exceptionally harsh and demanding and you toil for long hours over the tables each day while he supervises, correct?
Tom? He's from Passaic. His wife makes these great cookies for all of us for the holidays.
Right. So it's not just the horrendous work conditions and the cruel boss, but the long commute into the casino each day, how you walk the 10 miles each day from Northfield to the casino here in...
Walk? I have a Jetta.
Yes, how you push your 1983 Jetta to...
It's a 2005.
How you push your 2005 Jetta with no wheels...
It has wheels.
Yes, how you tow your dilapidated 2005 Jetta from the forced labor camps in Northfield...
I love my car. Labor camps?
Tell us about the filth and squalor of the labor camps where you and your fellow laborers...
What are you talking about? My wife and I bought a condo last year. There are no camps.
There were camps.
There are no camps. There were never camps.
I understand, you can't talk because the cruel pit boss will beat you...
I CAN talk! There IS NO cruel pit boss!
That's why we can't show your face, for fear of reprisals and...
You wouldn't let me show my face!
and why we can't reveal your real name...
I told you my real name.
It's ok, we will protect you.
Jerry Tanner! My name is Jerry Tanner!
Be quiet!
Jerry Tanner! Jerry Tanner! Jerry Tanner!
Shhh, be quiet! Be quiet!
My name is Jerry Tanner! My name is Jerry Tanner! I love my job! I love my job!

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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