Is a Second U.S. Stimulus Package Headed Our Way?
Is the recent market softness something to be worried about?
Not if U.S. President Barack Obama & Co. comes through with a second stimulus package – as I’m expecting.
Let me explain …
There are a few reasons to suspect that the softness we’ve been seeing will continue for a week or so. Small-cap stocks – which continue to drag along like road kill caught on the rear bumper of the market – are our main cause of concern at the moment.
Trade Gap Unexpectedly Widens on Surge of Oil and Auto Parts Imports
The trade deficit in the U.S. grew by an unexpectedly large 18.2% in September, the most in a decade, reflecting rising demand for imported oil and imports from China.
The gap grew to $36.5 billion, the highest level since January, from a revised $30.8 billion in August, the Commerce Department said today (Friday). Imports jumped the most in 16 years, overcoming a gain in exports.
U.S. exports and imports were at the highest levels since December 2008, in a sign that the U.S. economy is recovering. Imports grew 5.8% in September, the biggest monthly gain since March 1993, while exports rose 2.9%.
Eurozone Emerges From Recession, but Recovery's Obstacles Will Prove Challenging
The Eurozone economy officially emerged from recession in the third quarter, but the uneven growth throughout the region and the lingering dangers of high unemployment continue to pose a threat to the recovery.
Comprised of the 16 nations that use the euro currency, the Eurozone saw its economy expand by 0.4% in the third quarter from the previous three-month period, Eurostat reported. However, the economy continued to shrink year-over-year, dropping 4.1% after a 2.8% annualized drop in the second quarter. The greater 27-nation EU economy grew by 0.2% on a quarterly basis.
Is Mexico the "New" China?
[Editor's Note: Money Morning Chief Investment Strategist Keith Fitz-Gerald's new book - "Fiscal Hangover" - will be published on Monday.]
When it comes to global manufacturing, Mexico is quickly emerging as the "new" China.
According to corporate consultant AlixPartners, Mexico has leapfrogged China to be ranked as the cheapest country in the world for companies looking to manufacture products for the U.S. market. India is now No. 2, followed by China and then Brazil.
Investment News Briefs
Intel Pays AMD $1.25 Billion to Settle Multi-Year Lawsuit; WalMart Forecasts Bleak Holiday Sales on Surging Unemployment News; FHA Capital Reserves Lowest in History; Commercial Paper Market Falls For Second Week in Row; Better Ad Market Helps Disney Profit, Sales Grow; British Airways, Iberia to Merge; Barofsky: TARP Will Be a Loss For Taxpayers; Activision Sees Sales of $310 Million on First Day of Game’s Release
U.S. and China Seek Middle Ground on Currency Dispute Ahead of Obama Visit
The currency dispute between the United States and China has often reached a fevered pitch over the past decade, but both nations have softened their stance ahead of U.S. President Barack Obama's visit next week.
However, analysts remain uncertain as to whether or not China and the United States are serious about making policy adjustments, or are simply trying to ensure that Obama's first trip to the nation as president goes smoothly.
In a rare tweaking of policy language, the People's Bank of China (BOC) signaled on Wednesday that it might take other major currencies – not just dollar – into account when guiding its exchange rate.
Investment News Briefs
WSJ: Motorola to Sell Network Business; Macy's Shares Fall After Forecast Misses Estimates; China's Prices Fall, Trade Surplus Grows; Gold Price Records Continue; iPhone Posts Strong Sales After Debut on Second U.K. Carrier; Britain's Central Bank Open to More Asset Purchases; Geithner: U.S. Wants Strong Dollar, Lower Deficit; AIG CEO Threatens to Leave Amid Pay Frustration; H-P Buys 3Com for $2.7 Billion in Cash
The 10 Rules for Successful Investing
[Editor's Note: This essay is adapted from "Fiscal Hangover," which will be published on Monday (Nov. 16).]
With all the financial woes in the global economy, the worst thing an investor can do is to "freeze up." With all the ups and downs in the market, it's all too easy for investors to allow their emotions to take control. That's when the smallest mistakes turn into the biggest mistakes.
There's one antidote for this problem … remembering a few basic rules. Just embrace the 10 ideas that follow and you'll be in line to make some serious money in the months ahead.
U.S. Sen. Christopher Dodd's Plan for Financial Reform as Ambitious as it is Antagonistic
U.S. Sen. Christopher Dodd, D-CT, on Tuesday released an 1,136-page draft bill for sweeping financial regulatory reform that will create several new protection agencies, increase regulation of credit agencies and derivatives, and alter the role played by the U.S. Federal Reserve in the financial system.
And that's just the beginning what will be a long and contentious battle to get the bill past the Senate, the House of Representatives and the Obama administration. Lobbyists, large banks, and the heads of government regulators, such as the Federal Deposit Insurance Corp. (FDIC) Chairwoman Sheila Bair, will have their say on the proposal as well.
Still, Dodd's bill, which he worked closely with U.S. Rep. and Chairman of the House Financial Services Committee Barney Frank, D-MA, to draft, is an important first step in the push for financial regulatory reform, which in recent months had been overshadowed by the Obama administration's push for healthcare reform.