September 2010 Archives - 2/9 - Money Morning - Only the News You Can Profit From
Four Emerging Markets Making Waves Around the World
I'm focused like a laser beam on emerging markets this year, because there is much more at play than just relative strength. This is where the economic growth in the world is occurring.
I hope you are participating. And if you're not, don't worry – there's still time to get in and make a profit before the mainstream catches on.
Let's take a look at a few of my favorite plays right now, beginning with Singapore and Thailand – two economies I told investors to keep an eye on earlier this month.
Will the Mid-Term Elections Drive the Market Into High Gear?
The past five days added more hues to the emerging snapshot of U.S. economic growth that is sluggish and top-heavy, but still rolling forward — kind of like a tank that can't get out of first gear. New data shows that U.S. GDP is back to 70% of its pre-recession strength, but jobs have recovered only 9%. It's this disconnect between output and employment that has made the current "recovery" seem so anemic.
That was fine for investors, who bid up risky assets in the past week just as they had the previous three weeks. The S&P 500 rose 2%, the Nasdaq 100 rose 3.5%, overseas large caps rose 3.3%, and emerging markets rose 2.5%. Gold rose 1.7%, silver rose 3%, crude oil rose 2.1%, and even bonds rose 1.5%. Among the overseas markets we care most about, ishares MSCI Thailand Index Fund (NYSE: THD) rose 5.6%, Wisdom Tree India Earnings Fund (NYSE: EPI) rose 3.3%, and ishares MSCI Singapore Index Fund (NYSE: EWS) rose 2.4%.
Buy, Sell or Hold: It's Time to Park Harley-Davidson Inc. (NYSE: HOG)
Harley-Davidson Inc. (NYSE: HOG) may well be the ultimate U.S. corporate icon.
The company's motorcycles are certainly American cultural icons: Big, squat, slathered in chrome, they're essentially functional pieces of fine art. Each motorcycle emits a deep, staccato bark at idle, a signature sound that prompted aficionados to christen Harley bikes as "hogs."
The fact that "Hogs" have been owned and ridden by such celebrities as Elvis Presley, Malcolm Forbes Sr., Jay Leno, Mickey Rourke, Tina Turner, Arnold Schwarzenegger and Elizabeth Taylor helped imbue the Harley brand with an aura of desirability and exclusivity.
Little wonder the company has historically generated 5% of its revenue just from the licensing of its logo alone.
Five Ways to Play a Rebound in Semiconductor Stocks
What a difference a year makes – or, for that matter, even a mere quarter.
Back in September 2009, most analysts were anticipating a surge in 2010 semiconductor sales that would reflect the upcoming economic recovery. After all, semiconductors are used in virtually every device consumers deem essential these days – from smart phones and notebook computers to coffee makers and gaming consoles. Yet the industry had been mired in a three-year slump that saw global semiconductor sales plunge 9.6% in 2009 alone.
By April of this year, the numbers seemed to confirm those expectations. First-quarter worldwide sales had soared 58.3% to $69.2 billion from the prior year quarter's $43.7 billion, according to the Semiconductor Industry Association (SIA), the sector's leading U.S. trade group.
Surging Coffee Prices Trigger Consumer Pain, Investor Gain
The famous coffee chain announced Wednesday it would make "targeted price adjustments on certain beverages in certain markets," according to a press release on its Web site.
Starbucks said it tried to hold off on the change, but the continuing climb of green Arabica coffee bean prices – along with the costs of sugar and cocoa – forced the company to offset rising expenses.
Investing in Cotton: The New "King" of the Commodities Sector
Gold is grabbing the headlines setting daily record highs. Silver is setting an-even-more-torrid pace. Wheat and coffee – American breakfast table staples – are surging due to bad weather around the world.
But there's another commodity that's up big: It's surged as much as 55% in the last 12 months to reach its highest price level in 15 years. And there's plenty more to come: Global demand far outstrips supply, creating an imbalance that won't be solved anytime soon.
I'm talking about cotton, the "new" king of the commodities sector.
"We have an extremely bullish situation," Mississippi State University Prof. Emeritus O.A. Cleveland said during a recent Ag Market Network conference call. Cleveland, a noted agricultural market economist, said prices could climb another 30% or more due to the ongoing supply/demand imbalances in play worldwide.
Money Morning Mailbag: GOP Announces "Pledge to America" as Voters Question Obama's Economy
Republicans this week outlined their plan for reform in one-page summary entitled "A Pledge to America." Republicans today hope their pledge will do for them what the "Contract with America" did for Republicans in 1994 when the GOP gained 54 House seats and regained control of Congress for the first time in 40 years.
The proposal's goals include immediately canceling any unused funds from last year's $787 billion stimulus program, permanently extending the Bush tax cuts, repealing the new healthcare law, cutting $100 billion in discretionary spending, and freezing the size of the "nonsecurity" federal work force. It also calls to end government control of Fannie Mae and Freddie Mac.
The plan comes at a time when many Americans are questioning the economic policies put forth by the Obama administration. With the unemployment rate stuck near 10%, President Obama two weeks ago announced a new six-year infrastructure plan, which says will create a "substantial" number of jobs and improve the country's transportation system.
Four Reasons to Invest in ETFs – And Five Ways to Get Started
A mere 15 years ago, selecting the right exchange-traded fund (ETF) was no big challenge. That's because the first ETF wasn't introduced until 1993, and the second didn't follow until 1995. Since then, however, the growth rate among these versatile investment vehicles has been exponential – so fast, in fact, that the monitoring firm Morningstar now tracks the performance of 854 ETFs, with new funds being added almost weekly.
So, from this mushrooming roster of new ETFs – now covering virtually every market sector, both domestic and international – how do you select the right one (or, more likely, ones) for your portfolio?
If you're not already familiar with ETFs, here are four reasons why you should consider adding some balance to your portfolio.
Big Banks May Be Forced to Buy Back Bad Mortgage Loans
Major U.S. banks are under pressure from government officials, as well as groups of investors and insurers, to repurchase or modify bad mortgage loans they pooled into securities and sold to unwitting buyers.
In the latest effort, a group of investors with roughly $500 billion invested in 2,300 mortgage securities is trying to force the large banks that originated or are now servicing faulty subprime-mortgage loans to repurchase or modify them, The Wall Street Journal reported.
Some investors "had no idea that their money was being invested in mortgage-backed securities," Dallas-based attorney Talcott Franklin told The Journal. "And yet somehow these people are now the ones being punished, and that's just not right."