With the first quarter of 2011 behind us, there's a lot to take away and learn from – especially when it comes to the direction of oil prices, interest rates and stocks. Granted, we're right now navigating one of the most uncertain periods in modern global history. But if you're a trader or an investor, […]
April 2011 - Money Morning - Only the News You Can Profit From
The mood this weekend at Berkshire Hathaway Inc.'s (NYSE: BRK.A, BRK.B) annual shareholder meeting could be less festive than usual, darkened by a laundry list of concerns that includes mediocre returns and who eventually will succeed iconic Chief Executive Officer Warren Buffett.
Analysts also expect shareholders to question an ethical lapse this year that resulted in the resignation of top executive David Sokol on March 29.
In January Sokol made a $10 million investment in Lubrizol Corporation (NYSE: LZ) — shortly before recommending to Buffett that Berkshire acquire the company. When Berkshire announced on March 14 that it would indeed acquire Lubrizol for $9 billion, Sokol pocketed a $3 million profit.
In the first-ever press conference by the U.S. Federal Reserve, Fed Chairman Ben Bernanke tackled a handful of eager reporter questions about why he continues to think rising inflation does not warrant a change in interest rates.
The Fed announced Wednesday after a two-day meeting of the Federal Open Market Committee (FOMC) that it would keep its record-low interest rates between 0.00% and 0.25% "for an extended period."
Bernanke stressed to reporters that "longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued," and Fed policies would keep "transitory inflation" under control.
Silver is better than gold.
In fact, it's poised to be the "Greatest Trade Ever."
I know that's a big statement. I'm certain that it grabbed your attention. Perhaps you're even considering arguments that would shoot it down.
But I know what I'm saying. And here's the proof.
You can look at silver prices and see that as an investment, silver has been a better performer than gold over the past 10 years. What's more, silver is actually gaining momentum.
And here's the best part: I see three specific – and very powerful – catalysts that should propel silver prices higher and enable this "other" precious metal to further outdistance gold in the months and years to come.
Let me show you what I mean.
The U.S. economy's struggling recovery hit another bump in the road in the first quarter, with brutal winter weather and rising gas prices combining to put the brakes on growth.
According to the U.S. Commerce Department, gross domestic product (GDP) growth slowed to an annual rate of only 1.8%, compared with 3.1% in the last quarter of 2010. The GDP measures all the goods and services produced in the United States.
"The biggest factor was weather. It hurt consumption and construction," Stephen Stanley, chief economist at Pierpont Securities, told Reuters. "Energy hurt consumption as well. Higher gasoline prices took a bigger bite out of people's budget."
The red lines on the chart below represent the trading range of the SPDR S&P 500 Index ETF (NYSE: SPY) yesterday (Wednesday). As you can see, trading remained very concentrated throughout the day, as both bullish and bearish investors traded on the assumption that U.S. Federal Reserve Chairman Ben S. Bernanke would move the markets. […]
Apple Inc. (Nasdaq: AAPL) last year passed Microsoft Corp. (Nasdaq: MSFT) to become the largest technology company by market capitalization. Overall, it's now second only to Exxon MobilCorp. (NYSE: XOM) in size.
But shockingly, even at $323 billion, Apple still looks cheap.
After all, the company still sports a tiny 13-times forward earnings multiple.
According to the International Monetary Fund (IMF) "World Economic Outlook," China's output will surpass that of the United States in 2016 – only five years from now.
But don't worry. The IMF calculation is based on "purchasing power parity" (PPP), which does not reflect real money. It relies on projecting China's stellar growth rates five years into the future. And it relies on Chinese official statistics, which are more than a little questionable.
(In fact, after the media storm that resulted, the IMF apparently even soft-pedaled its prediction that China would leapfrog the United States in just five years; in a subsequent interview, an IMF spokesman reportedly said that, by non-PPP measures, the U.S. economy "will still be 70% larger by 2016." A recent World Bank forecast concluded that China could overtake the United States by 2030.)
This prediction – and the attention it continues to draw – serves a useful purpose, particularly if it's given the scrutiny that it deserves.
For global investors with China-based holdings, it reminds us of that country's long-term potential – and the fact that such potential is always tempered by near-term risk. For the rest of us, it reminds us that China's ascendance is inevitable – in fact, is already happening – and will be with us for a long time, even if that Asian giant isn't immediately going to overwhelm the rest of the world.
And for our elected leaders in Washington, the IMF report – false alarm or not – should serve as a wakeup call to attack and address the many problems that threaten this country's global leadership.
While the first press conference ever held by U.S. Federal Reserve Chairman Ben Bernanke grabbed most of the headlines this afternoon (Wednesday), it was the post-meeting statement issued earlier in the day that grabbed my attention.
In particular, I zeroed in on the part about the policymaking Federal Open Market Committee (FOMC) regularly reviewing "the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability."