Archives for April 2010

April 2010 - Page 6 of 10 - Money Morning - Only the News You Can Profit From

Chinese Real Estate: Four Ways to Profit From the Biggest Urban Migration in History

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SHANGHAI, The People's Republic of China – Given what you may have heard about Chinese property values in recent months, it may surprise you to learn that Chinese real estate investors are extremely value oriented.

And so are the institutional investors I've run into during my latest investment-research visit to this country. These institutional players want to lock up some valuable land parcels before 2020. That's the date by which 500 million Chinese citizens are expected to have moved into China's cities as part of the greatest urban migration ever recorded.

You can do the math: We're talking about a group that's 1.6 times the entire U.S. population … moving from China's countryside to its cities in the next 10 years.

To discover four ways to profit from this massive migration, read on...

Congress May Double Taxes on Private Equity Firms in Search for New Revenues

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Democrats in Congress, seeking new sources of revenue after passing President Barack Obama's $940 billion health-care reform measure, may double tax rates on executives at private-equity firms.

The U.S. Senate has taken up a House proposal to levy a new tax on executives who make long-term investments, including venture capitalists, managers of real- estate partnerships, hedge-fund and private-equity managers, Bloomberg News reported.

The proposal, expected to raise $24.6 billion over a decade, eliminates a tax provision which allows money managers at privately held partnerships to treat most of the revenue they bring in as capital gains.

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Low Stock Market Volume: It's Even Weaker Than You Think

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Conventional investing wisdom tells us that when stocks rally on low stock market volume, traders perceive that lack of widespread participation as an indicator of the market's future vulnerability.

And as torrid as this rally in U.S. stock prices has been, the lack of trading volume has been a consistent cause for concern.

Unfortunately for market bulls, even this well-chronicled concern doesn't tell the whole story. That's because U.S. stock market volume is even worse – actually, much worse – than anyone realizes. And this ultra-low stock market volume should be sending up some serious red flags for investors.

To find out how Wall Street is artificially inflating stock-market volume, read on ...

Hot Stocks: A Quick Turnaround and Global Expansion Plans Giving Starbucks Stock a Jolt

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A massive Asian expansion and a heated debate over gun rights are just a few of the things going on at Starbucks Corp. (Nasdaq: SBUX) these days. But despite the tension that's percolating in the world's largest purveyor of designer coffees, Starbucks is in the midst of an impressive turnaround.

Years of rapidly adding new stores forced the company into a stark retrenchment when the economy soured. One thousand of the trendy coffee shops were closed and many more employees let go. Starbucks stock plunged more than 80% from its 2007 peak of about $40 a share to under $8 a share in November 2008.

But the company's restructuring – which shaved roughly $600 million in costs – and an improved economy have provided a refreshing jolt. Starbucks in January reported its first quarter of same-store sales growth since the end of 2008. And its share price has bounced back to a respectable $24.84 a share as of yesterday's (Wednesday) close.

The days of reckless overexpansion and troubling closures are have come to an end, insists Starbucks Chief Executive Officer Howard Schultz.

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JPMorgan Posts Big Gains but Financial Reform Threatens Profitability

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JPMorgan Chase & Co. (NYSE: JPM) posted a 55% rise in first-quarter net income led by fixed-income trading and investment banking. But to ensure its profits remain in tact, the bank continues to fight against proposed financial reform.

JPMorgan, the second-largest U.S. bank by assets, beat analysts' estimates with net income of $3.33 billion, or 74 cents a share. Estimates averaged 64 cents a share.

Investment banking brought in $2.47 billion, 74% of total net income. The area is usually a strong contributor to profits, kicking in 57% in the previous quarter and 75% in the first quarter of 2009.

JPMorgan claims the results are a strong indication of global financial economic improvement.

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Financial Reform: Three Ways to Fix Wall Street

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The financial-reform bill introduced by U.S. Sen. Christopher J. Dodd, D-CT, seems likely to pass both houses without all that much alteration.

And that should immediately raise our suspicions. After all, the U.S. financial-services business has a very effective lobby, so if there isn't huge opposition to the legislation, it probably won't achieve all that much.

It won't fix Wall Street.

But there's another issue here: It's also not clear to me that we know just what we want the financial-reform initiative to achieve. By that, I mean: What banking-sector reforms would we implement in an ideal world, to reduce the danger from the sector while preserving the essentials of a free market?

To see Martin Hutchinson's blueprint for fixing Wall Street, please read on...

Hot Stocks: The iPad Proves It's Not What Apple Sells, It's How Apple Sells It

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Apple Inc.'s (Nasdaq: AAPL) iPad has lived up to the hype, garnering rave reviews and meeting sales expectations. That success is particularly impressive because previous attempts by other companies to launch similar products were met with abject failure.

Because they make up less than 1% of the personal-computer market, few observers realize that so-called tablets have been around for about twenty years now.

The first models offered detachable keyboards, pen-based applications, and were priced in the thousands. A few contributed to companies declaring bankruptcy shortly after their debuts. Most were as pricey as a laptop but without nearly as much memory or competitive features – "underpowered and overpriced" were the usual complaints.

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Question of the Week: Overlooked Problems Will Kill the U.S. Bull Market

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The U.S. stock market has staged one of its most powerful rallies in history, zooming nearly 70% in the 12 months that followed the March 9, 2009 market low. U.S. stocks soared another 5% during the first three months of 2010 – its best first quarter in a dozen years. But where do we go from here?

Between the New York Stock Exchange continuously reaching new highs, the Dow Jones Industrial Average rising up along its eight-day average, and a rebounding retail sector, there's reason to celebrate what appears to be a market recovery offering investors profit opportunities.

"You can't bury your head in the sand and ignore what's happening," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "If you did that, you've missed a 60%-plus rally in the [Standard & Poor's 500 Index] since early last March. You cannot fail to acknowledge what's happening" in the markets, even though top traders understand that cheap money from the government bailout – and not a well-rounded economic recovery – is most likely behind the torrid run-up in U.S. share prices.

Money Morning Question of the Week: Is this a true bull market? A year from now, are U.S. stocks – as measured by the Standard & Poor's 500 Index – trading higher, lower, or at the same level as they are today?

What follows are some of the most well thought-out responses we received (as well as a previous comment regarding the bull vs. bear market argument posted on our Web site) with many agreeing this bull market is too good to be true.

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We Want to Hear From You: Are You Confident in the U.S. Employment Outlook?

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The U.S. unemployment rate held steady at 9.7% for the third straight month in March as the world's largest economy added jobs at the fastest pace in three years – the most-certain sign yet that the worst job market in a generation is finally improving, economists say.

Factories, retailers and hospitals stepped up their hiring, and the overall employment market got a boost thanks to hiring related to the U.S. Census. Overall, the economy added 162,000 jobs for the month, with about a third of those gains coming from the Census. The private sector added 123,000 jobs, the most since May 2007. And the outlook ahead is good, since about 700,000 Census workers will be hired for the formal U.S. population count this spring.

"This recovery is for real," Chris Rupkey, an economist at The Bank of Tokyo Mitsubishi UFJ Ltd., said in a statement.

Still, there are causes for concern.

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