Archives for March 2010

March 2010 - Page 5 of 11 - Money Morning - Only the News You Can Profit From

The Truth About Inflation...

Question:  It seems to me that a large portion of "capital gains" is actually caused by inflation (depreciation of the value of the dollar) and that the federal tax on capital gains is just another way to unjustly penalize (gouge) those who own property of some sort.  It would seem fair, honest and logical to […]

Read More…

Teva Pharmaceutical Wins Fight in the Generic Drug Market Battle

Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) will buy sought-after German generic producer Ratiopharm for $4.97 billion, continuing a trend of highly competitive merger-and-acquisition (M&A) activity in the pharmaceutical industry. Competitors have pursued Ratiopharm for nine months because of its position as the second biggest generic producer in Germany. It was put up for sale in […]

Read More…

With this Bear-Market Insurance, You Can Keep Riding the Bull

During the last few weeks, the U.S. stock market has recovered from its mid-February swoon and clawed its way to a new high for the year – returning share prices to levels not seen since late 2008.

At this point, based on consideration of its change in value since the money supply inflation began in early 1995, stocks appear to be substantially overvalued, perhaps by as much as 40% to 50%.

However, if our experiences of the late 1990s taught us anything, it's that the stock market can remain overvalued for years – meaning investors who opt out of the market completely risk getting left behind.

Still, given the soaring run-up we've seen since the stock market's March 9, 2009 nadir, I thought this would be an excellent time to review the ways nervous investors can protect themselves – even as they remain invested. That's just good, sound risk management.

And there is a way to achieve both goals – with a type of bear-market "insurance' that's fairly easy to use.

To find out about “bear-market insurance,” please read on…

Read More…

March Madness: A Game Changer for Offices Around the Country

March Madness has become the signature spectacle of the spring season in the United States. The 65-team basketball tournament invades offices, packs local bars, and captivates the attention of sports fans across the country – from the amateur to the most grizzled veteran.

It is also the nation's most lucrative sporting event.

While the Super Bowl holds the crown as the most watched sporting event in America, the rights to the tournament, which are owned by CBS, are said to bring in over $2 billion in revenue. And that figure pales in comparison to the amount of money that gets poured into bracket pools across the country and fills the books of Las Vegas bookies every year.

Read More…

U.S. China Currency Dispute Heating Up

The heated debate between China and the United States over the value of its currency intensified yesterday (Thursday) when a senior Chinese trade official warned that further appreciation of the yuan could put many of its exporters out of business – something China can't afford.

Those remarks came shortly after a key International Monetary Fund (IMF) official flatly stated that the currency is severely undervalued.

China's Vice Commerce Minister Zhong Shan told The Wall Street Journal in an exclusive interview that the profit margins on many Chinese export goods were less than 2% and any further increase in the currency's value would endanger more exporters' survival.

Read More…

How Capital Waves Are Creating the Biggest Profit Opportunities in Today's Markets

Back when oil was trading at a record high of $145 a barrel – and was generally expected to go higher – I concluded that the forces at play were speculative, not fundamental – driven by new institutional money looking to diversify away from too many concentrated equity bets. I argued these forces were temporary, and not entrenched, meaning that oil prices were actually headed for a fall.

The "forces" I was referring to are called "capital waves." Capital waves create some of the biggest trading opportunities in the markets today. Investors who are able to spot capital waves and identify their likely impact have a huge advantage over those who don't.

With oil, for instance, pundits were calling for new highs of $200, $250, $300 and even $500 a barrel. But behind the curtain, there was a major capital wave at play: I knew that oil was being pumped out of the ground like mad, and that shipping rates were exploding because oil was being stored in offshore, idled tankers. I knew that as little as $20 billion had been "re-allocated" out of the equity markets and into this new-asset-class investment for pension fund accounts.

As a speculative frenzy seemed to be enveloping the oil market, I called for oil prices to plummet – to more than a few looks of incredulity or outright guffaws.

When the secondary capital waves took hold, the speculative advance in oil prices first stalled – and then oil prices plunged as capital exited in another wave.

Don't feel bad if you missed this opportunity. That's the important thing to remember about capital waves – they're out there if you know where to look and how to interpret them. In fact, as good as this oil play was, I see even better opportunities ahead.

To learn about the Top Five "capital waves," read on...

Oil Prices on the Rise as OPEC Holds Production Steady

Oil prices yesterday (Wednesday) rose $1.23, or 1.5%, to close at a two-month high of $82.93 on the New York Mercantile Exchange (NYMEX) a fter the Organization of Petroleum Exporting Countries opted to keep its production quotas in place.

However, it may not be much longer before prices take off again, possibly hitting $100 a barrel by the end of the year.

Current prices are "beautiful," Saudi Arabian Oil Minister Ali al-Naimi told reporters before OPEC's meeting.

"The producer is looking at this price, the consumer is looking at the price, the investor is looking at the price, and everybody is saying this is great," he said.

OPEC, which supplies about 40% of the world's oil, set its official cap at 24.845 million barrels per day (bpd) in December 2008 and has kept it there for five straight meetings. In that time oil prices have more than doubled.

Read More…

Are Coal Prices Ready to Burn Hot in 2010?

For most of the past 50 years, since the birth of environmental awareness, coal has been the "black sheep" of the power-production family. Now, thanks to more efficient furnaces, better exhaust-scrubbing systems and other technological advances, coal is regaining favor in the world's energy markets.

However, the biggest factor in coal's recent price surge is steadily increasing demand for the fossil fuel in power generation and steel-making process, abetted by rising costs for other types of fuel, like oil and natural gas.

The question for investors, of course, is will this rising demand continue – and how can you profit if it does?

The answer to the first part of that question is almost certainly, "yes," but solving the second part is a little trickier.

Read More…

Producer Price Index Drop Supports Fed's Position on Keeping Low Interest Rates

The Producer Price Index (PPI) saw its biggest drop in seven months in February, fueling the U.S. Federal Reserve's argument that interest rates can remain low "for an extended period" without yet facing dangerous inflationary pressures.

Wholesale prices were down a seasonally adjusted 0.6% in February, the Labor Department reported today (Wednesday), a day after the Fed's one-day policy meeting where it reiterated the need to encourage economic growth through low interest rates.

The central bank's position to keep the federal funds rate at a record low range of zero to 0.25% since December 2008 has sparked inflation concerns among many investors. However, proof of tame inflation buys the Fed more time in deciding when to continue with its "exit strategy" and pull the trigger on a rate hike. The Fed has remained firm on its stance that there is no evidence of rising inflation due to low interest rates.

Read More…

Will Obama's "Soft Money" Fed Lead to Hard Times for the U.S. Economy?

For a U.S. president, nominating Fed governors is a little like nominating Supreme Court justices: Since they serve a 14-year term, you have the chance to shape the U.S. Federal Reserve for a decade after your administration ends. What's more – even though Fed governors are subject to confirmation by the U.S. Senate – you're far less likely to have trouble getting them through than you do with the Supremes.

That's why U.S. President Barack Obama's current chance to nominate three out of the seven Fed governors is legitimate front-page news – and isn't merely the "inside monetary baseball" trivia that occupies much of the daily business section. Probably two of those three governors still will be serving in 2020, long after President Obama has published his memoirs.

The bottom line: One of President Obama's legacies will be a "soft money" Fed.

To discover the dangers of a "soft money" Fed, read on...