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Who Needs Confidence When You’ve Got Greed?

By Stansberry Research Interview Series
Wednesday, September 6, 2006

Joe America is getting worried...
 
The Consumer Confidence levels for August were published last Tuesday. And they weren’t looking good. General consumer confidence decreased from 107 to 99 month-over-month. The percentage of American consumers feeling that economic conditions are “good” dropped while the percentage of consumers forecasting a worsening of conditions increased.
 
But don’t confuse a lack of confidence in the economy for the inability to spend more than you make.
 
Consumer spending rose to its highest 2006 levels last month, with the personal spending growth rate of July doubling that of June. If there’s one thing the U.S. consumer has proven time and time again in the last 16 months, it’s his ability to buy things when he’s worried, depressed, and broke: July’s increase in spending outpaced the gain in incomes. Thus, U.S. consumer savings rates remained negative for the 16th month straight.
 
Insiders at gaming stocks are certainly forecasting a continuation of consumer spending. In fact, they’re betting millions upon millions of dollars of their own money on it.
 
 
First, it was director Neil Barsky at International Game Technology (IGT). In June, Barsky bought more than $33 million worth of IGT stock for Alson Capital Partners, an investing firm he runs.
 
The following month, it was Michael Gaughan, CEO of Boyd Gaming (BYD). Gaughan bought $35 million worth of BYD stock in late July.
 
The in August, Jack Binion, chairman of the International branch of Wynn Resorts (WYNN) bought $19 million worth of his company’s stock just weeks before Wynn opened its new casino resort in Macau China, the Monte Carlo of Asia.
 
And now, Craig Nielson, CEO of Ameristar Casinos (ASCA) just bought $2.8 million worth of his company’s stock.
 
Consumer discretionary and gaming/casino stocks have been at the top of insider bull lists for weeks now. And while Wall Street and the Government may be expressing concerns of a potential economic slowdown, it is clear corporate insiders are betting that the Herculean spending efforts of the U.S. consumer will continue for the remainder of 2006.
 
Too bad Bernanke’s not a betting man.
 
Good trading
 
Graham




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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%