How to Tap Into a $30-Trillion Boom

In This Issue: How to Tap Into a $30-Trillion Boom Is Australia Open for Business Again? Utilities for a Risk-Off World The Bridge Street Profit Secret Halfway around the world, a surprising country stands poised to recreate America's historic rise to financial superpower status. It's loaded with so much potential that some are calling it the "greatest opportunity in the history of capitalism." Here's five ways to profit from it. How to Tap Into a $30-Trillion Boom 1/19/2015 What investor doesn't wish they could turn back the clock? Armed with the knowledge you have today, you could invest in every growth opportunity you missed in the past. Unfortunately, you can't go back in time. But you can take advantage of the five opportunities we're going to tell you about in just a moment. They come from a nation that's about to follow the same path America took to financial dominance. Only it's set to make the trip much faster. Welcome to the Next Wall Street Our story starts 14 time zones from Wall Street---on a patch of ground a shade over a quarter-mile long. It's called Bridge Street, and there's nothing remarkable about it---especially the glass-clad building at No. 20, with giant letters that spell Exchange Centre on the faade. People bustle by without giving it a second thought. But they would if they slowed down and realized what was there ... and what it could mean to their financial futures. Because what's in this building will transform Bridge Street into the next Wall Street. We know that sounds ridiculous, but the numbers back it up. You see, Bridge Street---and the country it's in---is set to benefit from a $30-trillion wave of consumer activity that the McKinsey Global Institute calls "the biggest growth opportunity in the history of capitalism." They're talking about the stunning growth of the middle class in emerging nations like India and China. To put it in perspective, $30 trillion is nearly two times our country's gross domestic product (GDP), a measure of the value of every product we produce and service we provide. And here's the critical thing you need to know. China and India just happen to be Bridge Street's closest neighbors. A Bonanza 1,000 Times Bigger Than the Industrial Revolution Forces as large---and as powerful---as this only come around once in an investor's lifetime. The last time was in the mid-1940s, right here in America. After World War II, America's middle class boomed as shoppers snapped up everything from houses to cars to vacations---all at a breakneck pace. This wave of consumers transformed our country. America was thrust from an upstart to the world's economic leader. And the stock market rose in lockstep with Americans' incomes. Today it's set to happen again, but on a far bigger scale---and a long way from Wall Street. Consider: China and India are home to over 2.5 billion people. That's eight times our population. Together, these two giants will tack on an additional 379 million citizens by 2050, or more than America's total population right now. What's more, Boston Consulting Group estimates consumer spending from China and India will triple, to $10 trillion, in the next five years alone. The McKinsey Global Institute says this about what's happening: "The two leading emerging economies are experiencing roughly 10 times the economic acceleration of the Industrial Revolution, on 100 times the scale, resulting in an economic force 1,000 times as big." It's a force that will mint 2.3 billion new middle class citizens in China and India in the next 15 years---and propel emerging nations to spend a stunning $30 trillion a year by 2025. Just imagine what that will do to the countries---and companies---sitting squarely in their path. And none will benefit more than... The Lucky Nation "Down Under" We won't keep you guessing any longer. The country that's poised to win big from all of this is Australia. The emergence of the middle class in China and India is, quite simply, a game changer for the Land Down Under. And the most exciting part for you is it's happening far faster than anyone thought it would. This situation is so loaded with potential we'll go as far as to say... The home of the Australian Stock Exchange---20 Bridge Street in Sydney---will become the next Wall Street. There's simply no other country as perfectly positioned to take advantage of China and India's explosive growth. From feeding their voracious appetite for natural resources to becoming a destination of choice for their tourists---and even real estate investors---Australia has the boom covered from every angle. Even without the tidal wave of money that's going to hit Australia, folks who've already invested in Australian stocks are doing just fine. So much so that Australians are the richest people on the planet, according to Credit Suisse. Last year they grew their wealth by more than $1 billion a day---much of which came from the situation we're telling you about now. That growth minted 43,274 millionaires---in a population that's barely 7% the size of ours. Imagine what will happen when the full force of 2.3 billion new middle-class citizens hits its shores. You won't have to imagine for long. It's happening right now---today. As you read this, billions of dollars are flooding into the Australian economy thanks to Asia's flourishing middle class. And best of all, we've found five ways to bank big gains from this stunning wave of new money. 5 Companies at the Heart of the Boom Today we'd like to give you a unique opportunity to get in on these five extraordinary companies with no risk and no obligation whatsoever. We've put everything you need to know---names, ticker symbols, prices to buy under and much more---in a just-released special report. It's called "Five Ways to Profit From the Next Wall Street," and it's yours free just for taking our Australian Edge advisory for a no-risk 90-day test drive. A chance to cash in on something as transformational as Asia's 2.3 billion newly minted middle-class citizens is truly a once-in-an-investor's-lifetime opportunity. But we have to tell you something here: things are moving quickly---and you're in danger of missing out on maximum gains. That's especially true when you consider that as you read this you can buy the stocks in our new free report at a 14% discount, thanks to the weaker Australian dollar. And if the Aussie buck just ekes its way back to par with our dollar---where it was just a few short years ago---you'd pick up a cool 14% on the exchange alone. But this could all end any day now. And we'd hate to see you miss out. Click here to get your copy of this exclusive new report now. It could be the best investment move you make in 2015. Editor's note: The simple truth is this: no other country on the planet offers you the chance to invest in companies with such dependable cash flows, solid management and track records of success. The five picks in our new report are all strong, reliable organizations that can deliver investing's ultimate win-win: rising share prices and generous dividends. And with the current "14% off sale" on Australian stocks, there's never been a better time for you to get in. That's why we've rushed out this new special report today. Don't miss this chance try out a different way of investing. Claim your copy now. Five Triple-Digit Winners You're missing out on a once-in-a-lifetime investment opportunity—all because of where you live. You see, 14 times zones away from Manhattan, an economic force 100 times greater than the Industrial Revolution has created the next Wall Street. I'm not exaggerating. Things are moving so quickly there, it's led a prestigious research firm to call it "the biggest growth opportunity in the history of capitalism." And I've found five stunning, under-the-radar ways to bank triple-digit gains as the growth hits critical mass. Get the details here before it's too late. Is Australia Open for Business Again? 1/16/2015 By Ari Charney Despite the decline in the resource sector, Australia just enjoyed its second month in a row in which job creation blew past expectations. According to the Australian Bureau of Statistics (ABS), the country's economy added 37,400 jobs in December, compared to economists' consensus forecast of just 5,000. Thanks to that performance, the unemployment rate dropped a tenth of a percentage point, to 6.1%, a further incremental improvement from the cycle high of 6.3% hit back in October. And the labor force participation rate rose by a tenth of a point, to 64.8%, up from October's cycle low of 64.6%. December also marked the third consecutive month of employment growth, with the number of jobs created in each of the past three months exceeding the monthly average over the trailing five-year period by a meaningful margin. Westpac notes overall employment grew by 1.9% for full-year 2014. Also of note, the sizable gain first reported for November actually improved following the customary review of the initial numbers, with the revised figure at 45,000 jobs. That brings the two-month tally to 82,400 jobs, the strongest two-month period of job creation in eight years, according to Bloomberg. Equally important, job creation in two of the past three months was driven by full-time jobs. Full-time jobs are generally considered to be of higher quality, owing to better pay and benefits, as well as greater stability. In December, the economy added 41,500 full-time jobs, while part-time jobs declined by 4,100. For full-year 2014, Westpac says the creation of full-time jobs (up 1.9%) was slightly ahead of part-time jobs (up 1.8%). The one less-promising detail in the report is that the number of hours worked, which can presage future employment demand, fell by 0.5% month over month. Although the jobs report suggests a meaningful transition could finally be underway in Australia's economy, that's yet to flow through to consumer sentiment. In December, consumer confidence fell to its lowest level since late 2011, according to surveys conducted by the Westpac-Melbourne Institute. But sentiment can be a lagging indicator, so the next survey could see a small pop, assuming the statisticians at the ABS have gotten their act together after last summer's embarrassing retraction. Meanwhile, a rise in job vacancies appears to lend credence to recent employment reports, though, of course, the ABS is gathering the data in both instances. Nevertheless, the ABS reports that job vacancies rose by 2.6% during the quarter that ended on Nov. 30, following a quarter in which they declined by 0.4%. Job advertisements, another measure of employment demand, increased for the seventh consecutive month in December, with a strong month-over-month rise of 1.8%, based on data gathered by the Australia and New Zealand Banking Group. So while the ABS' summer flub undermined its credibility, there's enough evidence out there to suggest the sudden surge in jobs is "broadly believable," as CIMB Securities senior economist Shane Lee put it in an interview with Bloomberg. So which sectors are driving job creation? Job vacancies data seem to underscore what some jokers have apparently dubbed the economy's "mining to dining" transition. Vacancies for accommodation and food service jobs rose 35.8% during the quarter, followed by education and training (up 31.8%), and other services (up 33.3%), a category that encompasses a number of personal services ranging from repair and maintenance to household staff. And it's also important to give the housing boom its due. "It is reasonable to assume that the housing market accounted for a healthy portion of job growth in recent months, together with the education and healthcare sectors," CommSec chief economist Craig James told The Sydney Morning Herald. Regardless, the employment data's upside surprise has afforded the Reserve Bank of Australia greater flexibility on the timing of its next rate cut. Based on futures data aggregated by Bloomberg, a majority of traders are betting the central bank will cut its short-term cash rate by at least a quarter point at its April meeting, while a still-substantial 40.6% believe a rate cut could happen as soon as the March meeting. The RBA has held its benchmark cash rate at an all-time low of 2.5% since August 2013. This article originally appeared in the Down Under Digest column. Never miss an issue. Sign up to receive Down Under Digest by email. The Last Time This Happened, People Got Filthy Rich The chance to profit from a force as large—and as powerful—as the emergence of a new middle class only comes around once in an investor's lifetime. And it's happening half a world away from here. Right now. Today! Here are five ways to make a fortune from it. Utilities for a Risk-Off World 1/15/2015 By Richard Stavros One of the writers for The Wall Street Journal's popular "Heard on the Street" column recently wondered whether utilities' outstanding performance last year--the Dow Jones Utilities Average gained nearly 26% in 2014--could be repeated this year. To be sure, it's rare for utilities to put up these kinds of numbers in the short term. Instead, they tend to produce modest, but steady gains over time, while doing a superior job of holding their value during downturns. But in the period since the Global Financial Crisis, utilities have rewarded income investors with two individual calendar years during which they beat the broad market by sizable margins--2011 and 2014. And we believe there are a number of factors that could lead the sector to have another strong year. If utilities sustain their recent performance through 2015, it will be at least partly due to their safe-haven status amid global economic uncertainty. But while utilities have enjoyed an enviable run, classic value-investing analysis indicates there are still many undervalued opportunities, which we'll review below. Of course, it was no coincidence that utilities produced their best gains last year during the fourth quarter, when the collapse in crude oil prices, prompted by concerns about global growth, caused a flight to safety toward utilities, treasuries and corporate bonds. And the strengthening U.S. dollar has also made almost all U.S. fixed-income investments especially attractive to Europeans and other overseas investors who are trying to preserve wealth in the face of deflationary conditions. Further, investors were anticipating stimulus programs in Asia and Europe that will likely push rates even lower. In fact, rates on government debt around the world have crashed in the last few days, making U.S. investments that much more alluring. However, even U.S. treasury yields are on the decline as the whole world simultaneously pursues a risk-off approach. According to Bloomberg, "Investors are paying European governments and Japan to keep their money for years, turning the debt world on its head and underscoring the deepening gloom over global growth." On Jan. 14, the yield on the five-year German government bond fell to a record-low close of negative 0.016%, according to Tradeweb. The yield on the five-year government bond in Finland fell below zero for the first time on record, to negative 0.08%. In Switzerland, the seven-year government bond yield tumbled below zero for the first time ever, to negative 0.027%. U.S. treasury yields have also dropped due to heavy buying by global investors. On Jan. 14, the benchmark U.S. 10-year Treasury note fell to 1.833%, the lowest level since May 2013. The yield on the 30-year Treasury bond dropped to 2.450%, the lowest closing level on record. When treasuries fall, utilities tend to outperform. Indeed, boutique research house Wolfe Research told the WSJ that since 1980 utilities have tended to beat the market over the 12-month period after the yield on the 10-year fell by more than 1 percentage point. Furthermore, the voracious appetite for fixed-income will continue to push yields down on investment-grade corporate debt, which will make utilities that much more attractive. Chart A: Corporate Bond and Treasury Yields See Heavy Declines Source: YCharts Meanwhile, with the prospect of slower global growth and the absence of inflation, many analysts expect the Federal Reserve to make only a modest move when it finally raises rates later this year. And if current conditions persist, a small increase in short-term rates may have little effect on market dynamics or equity-income investments. There's also concern that slowing global growth could be a drag on the U.S. recovery, a risk that the Fed noted last year. And while the strong dollar is a plus for overseas investors, it could lead to price deflation at home, which could harm the recovery.A strong dollar also makes U.S. products less competitive overseas, and more and more companies are deriving a majority of their earnings from global markets. Put all these factors together, and 2015 is shaping up to be another year in which utilities are highly sought-after investments. A New Valuation for a New World Some analysts believe that macroeconomic changes, such as the historically low interest rates that have prevailed since the Global Financial Crisis, warrant a higher valuation for utilities. For instance, Credit Suisse analyst Dan Eggers has been arguing that 17 is the new 12.5--a reference to utility sector price-to-earnings (P/E) ratios. In a research note published a few years ago, Eggers wrote, "Japan's decades of ultra-low interest rates saw its utilities eventually rise in price to the point where yields were just 0.5 to 1.5 percentage points higher than 10-year Japanese bonds. U.S. utility yields remain 2.1 percentage points higher than the 10-year Treasury yield," Eggers observed at the time. Certainly, utility yields have been consistently higher than the yield on the 10-year Treasury over the last few years, but I would argue that this new dynamic will persist only as long as central banks around the world continue to stimulate their economies--or putting it another way, as long as weak global growth continues. To be sure, there are very few U.S. utilities trading near a P/E of 12.5. But I believe a higher benchmark valuation--perhaps as high as the P/E of 17 that Eggers advocated--is warranted based on utilities' ability to provide income in environments of heightened volatility, weak growth and historically low interest rates. And I am in the process of developing various valuation models that will provide subscribers with insights into which utilities will likely perform best in what could be a volatile year for equities. In the meantime, for subscribers of Utility Forecaster, the full article shows which utilities are still significantly undervalued. This article originally appeared in the Utility & Income column. Never miss an issue. Sign up to receive Utility & Income by email. I've Pinpointed the Next Wall Street Fourteen time zones from Manhattan, an economic force 100 times larger than the Industrial Revolution is about to transform one country's stock exchange into the next Wall Street. When these one billion consumers hit their stride, they promise to unleash over $30 trillion into the world markets. I've found five companies in this remote island nation that stand to benefit the most. If you're looking for a safe, exciting way to bank triple-digit gains, you need to act now! Click here to get their names. You are receiving this email at benjamart.ss.stock@blogger.com as part of your subscription to Investing Daily's Stocks To Watch, published by Investing Daily. To ensure delivery directly to your inbox, please add postoffice@investingdaily.com to your address book today. Email Preferences | About Us | Premium Services | Contact Us | Privacy Policy Copyright 2015 Investing Daily. All rights reserved. Investing Daily, a division of Capitol Information Group, Inc. 7600A Leesburg Pike West Building, Suite 300 Falls Church, VA 22043-2004 U.S.A.