Good Buys for This Manic Market

• An opportunistic 5: Where to buy as the world panics

• Chris Mayer’s favorite new China play

• Another Chinese nuclear option starts to emerge: Young Asians tired of making our junk for $1 an hour

• Now’s a great time to visit one country — on the cheap — says Marc Faber

• Rob Parenteau with a surprising forecast: It might soon be time to buy some U.S. stocks

  Friday, a pall hung over the West.

Questions about the validity of the euro… omnipresent concerns over Greece… and now Hungary… and a lousy jobs report helped push the S&P 500 down over 3% Friday to a four-month low.

There is an “all out assault on risk,” our friend Chuck Butler wrote this morning, aligning his thoughts with our Symposium topic this July, at which he’ll be an attendee and speaker. The 10-year note is at 3.2%, and stocks are well into a technical correction.

Rather than fretting about the state of the world, however, the contrarian might rub his hands together and ponder: What’s on sale today?

There is a gigantic opportunity in selling China clean water, for example. Chris Mayer has been on the water beat since visiting China in 2005. After our recent trip there together, his enthusiasm increased.

“Beijing is typical of China’s dry northern plains,” Chris writes, “Water wells sometimes reach half a mile to tap deep aquifers below. Over the last 50 years, about half of the nonrenewable water in northern China’s huge aquifer has gone. Perhaps more pressing is the fact that so much of the water China has left is unfit for human use.

“The city declared its reservoirs unfit for drinking in 1997. It’s only gotten worse since then. Earlier this year, China’s government said that water pollution was far worse than first thought. About 70% of China’s source water is unsafe. China now tops the world in stomach and liver cancer deaths — mostly attributed to consuming polluted water. And polluted water transmits the leading infectious diseases in China, such as diarrhea and hepatitis.

“It’s an awful situation, but the Chinese consumer is increasingly aware of it, especially that growing middle class. This is why water filtration products are selling so well in China. The market is huge.

“The company our Capital & Crisis readers are investing in has a business in China that’s been growing 25% a year for the last five years. It’s been such a success that the company plans to duplicate the model in India, another place with mega water problems.” For the dirty details on this clean water company, check out the latest Capital & Crisis issue — available here for a very reasonable annual subscription.

  While we were in Beijing, the headlines of the People’s Daily announced the 11th employee suicide at Foxconn — the world’s largest electronics supplier — in 2010. Two weeks hence… and two more on-site jumpers at their Shenzhen factory, where they make parts for HP, Dell, Motorola and Apple.

The latest has gained the attention of the worldwide press. According to NY Times coverage this morning, the first, a 19-year-old who had just finished working 286 hours in one month, decided he’d rather jump off the building than work another shift.

The Times notes this epidemic of suicides is a sign of this “generation of workers rejecting the regimented hardships their predecessors endured as the cheap labor army behind China’s economic miracle.”

Not a coincidence: Foxconn announced this morning it’s increasing wages for assembly line workers by almost 70%… to $293 a month.

Honda settled a labor dispute in a Chinese factory on Friday with a similar compensation boost. A new assemblyman there can now make an entire $281 a month, up 24%.

[Beginning with our first book, Financial Reckoning Day, in 2002, we’ve been forecasting rising wages in China as the nation’s middle class gains momentum. On the flip side, we’re expecting declining wages in the West as the two markets approach parity.

Both of those trends appear to be firmly in place. For the time being, however, Chinese companies still maintain a healthy advantage in manufacturing… some 400 of which are now listed on exchanges here in the United States. Among the folks we visited on our trip is a gentleman from South Carolina who’s been operating a fund in China since 2004 helping Chinese companies go public in the U.S.

Forthwith, we’ve arranged a special conference call with several of our contacts in Beijing, tentatively scheduled for June 17, 2010, at 4 p.m. We'll be discussing some unique and limited investment opportunities, so this call will be reserved for a select few. Details are still being worked out… if you like, send us an email to let us know you’re interested.

  “Contrarians,” notes Vancouver returnee Dr. Marc Faber on a similar wavelength this morning, “please note that now is a very good time to visit Thailand.

“I spent a few days in Chiang Mai [where Dr. Faber keeps a home] in mid-May, by which time the demonstrations had become increasingly violent. May is a seasonally weak month for tourism in Thailand, but I was really shocked by how empty the flights to and from Thailand were and by how deserted Bangkok airport was…

“Thailand in mid-May 2010 reminded me of Hong Kong during the severe acute respiratory syndrome (SARS) pandemic in the spring of 2003, when Hong Kong airport looked like a ghost town and hotels and restaurants were largely empty.

“For readers interested in economic and social trends, visiting Thailand now should be a very interesting experience. Airfares to Thailand have been slashed, and I am sure visitors can obtain great hotel bargains. Is the country safe? From my perspective, yes!

“The Red Shirts supported by Thaksin and his group lost the sympathy of most Thais when the demonstrations turned violent and spread around Bangkok and into some other provinces, and when it became increasingly obvious that the violence was well organized and orchestrated by some radical elements, presumably Prime Minister Thaksin’s faction.

“In fact, when I’ve talked with less-privileged people (I don’t like to use the term “lower classes”), who are the main supporters of Thaksin and the Red Shirt movement, my sense is that they now feel ashamed that this violence could happen in the heart of Bangkok and that images of it were broadcast around the world.

“In any event, the image of Thailand as the ‘land of smiles’ has been badly tarnished, and this is being resented as a loss of face by the generally very peaceful, hospitable and friendly population.”

  Back in the States, despite Friday’s ugly jobs report, profitability among U.S. companies is sky-high.

“When costs fall,” notes resident economist Rob Parenteau, “but prices do not, markups on products rise, profit margins rise and profits tend to grow. Profits are the signal to entrepreneurs and investors to advance production, to reinvest cash in capital equipment and to take more risks.

“Despite Friday’s employment report, we remain convinced that the U.S. economy will grow closer to a 4% real GDP pace or higher in 2010, despite the eurozone derailment, which investors still do not entirely understand.

“Despite the volatility, believe it or not, we are starting to lick our chops for a tactical bull play in the U.S. equity market. The basis for the call is that we rarely see serious bear markets develop when profitability is so robustly on the mend. We are not advising pulling the trigger quite yet, but stay tuned.”

Heh, the world is turning upside down. Labor’s getting more expensive in China. Domestic consumption for all the economies of the world combined surpassed U.S. consumption for the first time. And yet profits are soaring for domestic U.S.-based companies. Hmmmn… interesting times.

  The Canadian jobs report on Friday beat national expectations. Canadian quants claimed job growth of 25,000 in May, about 65% better than forecast.

“Virtually all employment gains have been in full time,” the Canadian government reports, noting that the transportation and warehousing industry added the most jobs during the month. No census goosing of the figures to be found here.

  The U.S. debt crisis couldn’t be much more mainstream than a Drudge headline:

We noted last week the national debt cruised right on by $13 trillion, roughly the annual economic output of the U.S. Some 22 million people saw this headline in the last 24 hours, the Drudge site claims.

Yet having been wringing our own hands over deficits, debt and interest for many years, we have to wonder: How many of the 22 million readers care? How many even know what GDP is?

Kudos to Mr. Drudge for the attempt, all the same.

  Gold’s holding up just fine amid all the world’s crises. The spot price perked up $20 since Friday on a slightly weaker dollar, to $1,225 as we write.

  Stocks opened up higher in the U.S. this morning. Even among the mainstream, there were some contrarians picking up bargains following Friday’s mess. Some decent data out on German factory production helped put a positive spin on the open too.

  Also helping stocks today — for the first time in several weeks — is BP. The company’s new doodad, a lower marine riser package (LMRP) containment cap, is reportedly capturing most of the oil still leaking. What to do with the gazillions of gallons floating in the Gulf and broken pipe… still working on that.

So time to buy BP?

“Might be a little too soon,” Bill Bonner hazards a guess. “Our guess is that estimates of the damage are going to balloon even higher as more and more lawyers begin to see that thanks to BP, they can win the lottery without buying a ticket.

“There are billions in lawsuits coming up, and the attorneys around the Gulf are slicker than an oil spill. The English don’t realize what they’re up against…an Alabama lawyer in a seersucker suit… talking to an Alabama jury… about how a British billion-dollar company destroyed their lives and livelihood.”

  “I must say, I’m not encouraged by BP’s decision to cut the riser pipe,” a reader writes of the oil spill fiasco. “And now have even more, up to 20%, flowing out? The U.S. Army should elect to take over, and have the U.S. Army Corps of Engineers have a go?

“BP is flubbing it all up. Just think of how many dollars are going to waste, in all that brown stuff.”

The 5: Are the Army Corps of Engineers even allowed back in Louisiana yet? Given their track record with levies, we’ll take our chances with BP.

  “I wanted to react to Friday’s reader comments about those despicable Canadians and their devilish seal hunt,” a reader writes from Montreal, reacting to a note we shared Friday depicting a reader that is boycotting our Investment Symposium in Vancouver, B.C.

“For one thing, we have at some point stopped the seal hunt, but there are always consequences to every action. The seals overmultiplied, since they have no natural predators, and it endangered a lot of our fish stocks. So the culling is actually a necessity, believe or not.

“And there is also a small part of me that would not feel very good telling the Inuit that they cannot hunt seals as they have done for millennia. But not feeling the right to tell people how to live is probably now a Canadian trait. I hear it used to be like that in the south too?”

  “I am a dual citizen and have lived in Vancouver since 1970,” another adds, “after two tours in Vietnam and being a decorated USN fighter pilot. I have sadly watched what has happened to my native country (my family came to the U.S. on the second ship to arrive in Plymouth — before there were 13 colonies). There are more things ‘American’ in Canada than remain south of the border.

“One of the best events in Vancouver is the annual Agora Financial Symposium. I find that a meeting of such scope and integrity fits amazingly well in our dynamic city, province and country. Try it, you’ll like it.”

The 5: Thanks, that’s quite an endorsement. If you’re coming this year, please make it a point to say hello.

If you haven’t made travel plans yet, it’s not too late to join us. Yet. At last count, 46 seats remain.

Vancouver in July is hard to beat. Details here.

Addison Wiggin

The 5 Min. Forecast

P.S. “The Walgreen June $31 put,” Steve Sarnoff writes this morning, “triggered 05-27-10 at $60, traded 06-07-10 at $170, +183% in 11 days.

“This marks our seventh multiplier this year,” he adds proudly, “and the 151st in my 128 months as OHL editor.”

If you’re trading options during these manic times, you can’t find a much better source of trading ideas than those Steve issues every Sunday night. For more on the service, please read the following.