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Will the Year of the Snake Bring Another Stock Market Crash?
The Chinese New Year officially began Feb. 10, bringing us the year of the snake – which some investors consider a very bad omen.
Not only does the year of the snake have the worst stock market returns of all zodiac signs, but some of the darkest moments in U.S. history have come during that zodiac year.
Art Cashin, director of floor operations at UBS AG (NYSE: UBS), appeared on CNBC's "Squawk on the Street" Monday and even listed the year of the snake as one reason investors should be cautious about stocks.
And there's plenty of history to back up Cashin's statement.
Will the Government Start Taking 401(k) Money?
With Washington battling over what to do about its $16.4 trillion debt pile, rumors are swirling that the government will start taking 401(k) money to cure its fiscal ills.
There's plenty to take.
A study published by the Investment Company Institute in 2012 stated that U.S. retirement assets at the mid-point of the year totaled somewhere in the neighborhood of $18.5 trillion.
If you look specifically at what most Americans take advantage of – IRAs and 401(k) plans – they have amassed $3.5 trillion and $5.1 trillion, respectively.
These large sums of untaxed money are proving to be very tempting to an administration looking for revenue to help rein in our whopping national debt.
"The government is spending money like a drunken sailor, and they need to get their meat hooks into any cash stock pile they can," Money Morning Chief Investment Strategist Keith Fitz-Gerald explained in the accompanying video on why the government could start taking 401(k) money.
Berlusconi is Back, and So Is the Eurozone Debt Crisis
Since the beginning of the year, the markets have been behaving as if the Eurozone debt crisis has been magically solved.
Yields on Spanish and Italian debt are trading more than 1% lower than at their peak, while world stock markets have soared close to all-time highs.
Unfortunately, you can expect that all of this euphoria will fade when the Italian elections take place on February 23-24.
Why?…It's summed up in two words: Silvio Berlusconi.
That's because until recently a win by the former Prime Minister wasn't seen as very likely. Not long ago, The EU establishment believed they had the Italian elections completely wired.
The socialist "Democratic party" led by Pier Luigi Bersani was expected to win and be supported by a coalition of center parties led by the EU's favorite, Mario Monti, imposed as prime minister in November 2011.
Both of these candidates were safely pro-euro, and prepared to put Italy through a fair amount of "austerity" to keep it, provided the handouts kept flowing from Germany and the European Central Bank. The status quo wouldn't be threatened.
Meanwhile, the two anti-euro candidates were supposed to be comedians.
One is an actual comedian named Beppe Grillo, leading an eccentric "Five Star Movement," while the other is the aforementioned Silvio Berlusconi, who is currently under indictment for sex with under-age prostitutes and therefore (in the eyes of the EU bureaucracy) not seen as a serious threat.
At best it was thought Berlusconi and Grillo might get as much as 30% of the vote between them, but it wouldn't give them any significant power.
Well, let's just say things have changed.
A Defeat for the Eurozone?
According to the latest polls, Berlusconi's party would get 30% of the vote on its own, while Grillo's would earn a solid 15%. Not bad for a couple of comedians.
As for the establishment picks, Bersani's party still leads with about 34%, while Monti's supporters trail with around 12%.
That suggests a very close vote, or possibly (if as sometimes happens, voters are falsely claiming to opinion pollsters that they support the "respectable" parties) even a Berlusconi victory, provided he could come to a satisfactory arrangement with Grillo.
But here's where it gets slippery for the EU: Anything but a solid Bersani/Monti majority is bad news for the euro, or at least for Italy's participation in it.
Italy's budget is in fact quite close to balanced (Berlusconi had repaired much of the damage done by his leftist predecessors) which means an Italian exit from the euro — getting cut off from EU handouts and austerity programs — would be pretty painless.
However, if Italy left the euro, it's likely that Spain, Greece, Portugal and very likely France would also be forced out.
But a Berlusconi return to power is not the threat faced by the euro these days.
Can "Perceptual Computing" Help Intel Get Its Groove Back?
When you peruse the tech-dominated headlines these days, a lot of the talk is about how smartphones and tablets are taking over for notebooks and laptops – which had taken over for desktop PCs.
But with the confusing mix of keyboards, track pads, touch-screens, and even voice and gesture commands that are in use today, there are at least as many different ways to interact with all those computing devices as there are different devices themselves.
But Intel Corp. (Nasdaq: INTC) is pioneering a new type of technology the chip-giant says will bring order to this interface confusion.
And it refers to this invention as "perceptual computing."
No doubt, this is Intel's latest attempt to regain its relevance in a world that is going mobile at an accelerating rate – a transition that has transformed the once-dominant firm into a veritable also-ran. And most of these earlier attempts amounted to almost nothing at all.
But I believe perceptual computing is different – and, in fact, could have two important results.
Should Investors Dump Facebook Stock for LinkedIn?
LinkedIn Corp. (Nasdaq: LNKD) just reported fourth-quarter earnings that blew away Wall Street estimates, a nice addition to its already impressive resume — and one that is making LNKD much more attractive than Facebook stock.
LinkedIn earned 35 cents a share, nearly triple the 12 cents earned in the same quarter a year ago. Net income soared 60% to $11.5 million, up from $6.9 million. Revenue jumped 81% to $304 million up from $168 million. Analysts were looking for 19 cents on revenue of $280 million.
U.S. markets accounted for 62%, or $189 million, of Q4 revenue. That was down 2% from the previous quarter. But international growth was robust, kicking in $114.6 million to LinkedIn's bottom-line.
CEO Jeff Weiner called 2012 a "transformative year."
"We have exceeded our own expectations by a wide margin," CFO Steve Sordello said during a conference call.
Shares surged $12.11, or some 10%, to $136.20 after hours Thursday following the report. The rally continued Friday with shares climbing another $26, or almost 21%, hitting an all-time high of $150.25 intraday.
Since its May 2011 initial public offering at $45, shares have more than tripled.
Why Gas Prices Will Continue to Climb
The average price of gas in the United States is still below the 2012 average of $3.63 for a gallon of regular, but that won't be true for long.
Gas prices have risen every day for three weeks, and motorists are starting to wonder when the surge will end.
Nationwide, the average price for a gallon of regular gas is up 26.3 cents, or about 8%, this year to $3.55, the highest level since the end of October.
And the 17.4-cent spike in the average price of gas between Jan. 28 and Feb. 4 was the largest weekly increase in almost two years.
Unfortunately, it's unlikely gas prices will drop anytime soon.
As Insiders Head For the Exits, Do They Know Something "We" Don't Know?
Whenever the markets begin to look toppy like they do now, I turn to short-term indicators to help me figure out "what's next" for the markets. It complements the fundamental analysis I rely on for the big picture.
Some people – lots of people, in fact – will tell you that this is a wasted exercise. Predicting the markets, they say, can't be done. I disagree if for no other reason that if that were true, guys like Jim Rogers, Warren Buffett, Steve Jobs, Richard Branson and Carlos Slim wouldn't be the legends they are today.
As I see it, learning to "read" the markets and anticipate its twists and turns is absolutely possible.
But let me qualify my statement. My goal is not necessarily to be "right."
Any savvy trader will tell you the objective is to get enough of a read – right or wrong -so that you can use the appropriate tactics needed to be profitable.
For example, the markets have one heckuva run and flirted with new highs in recent trading. To the casual investor, it appears that things are good because the economy is gradually recovering.
2013 Tax Changes: These 5 Deductions and Loopholes Might Get Slashed
Americans are still adjusting to the effects of the payroll tax increase, but these proposed 2013 tax changes could pack an even bigger financial hit.
That's because Washington is desperate for additional revenue streams.
To solve the problem, U.S. President Barack Obama and others have suggested closing some loopholes and altering deductions in order to reduce the budget deficit and avoid some of the automatic spending cuts.
Unfortunately, you probably benefit from some of these tax breaks right now.
Here's a breakdown of five tax deductions and loopholes that could be in danger.
Find the Best Stocks to Buy Now as M&A Activity Heats Up
The return of major deal making in 2013 could deliver huge profits to investors who know the right stocks to buy now.
After the financial crisis, deal making – once quite common a decade ago – came to a near halt. But corporate mergers, takeovers and LBOs started heating up at the end of last year.
The last three months of 2012 saw the highest three-month deal totals and highest deal spending in the past two years, with the year ending on a high note.
According to FactSet Research Systems Inc., "U.S. M&A activity went up in December, increasing by 20.2% with 918 announcements compared to 764 in November, the second largest increase in 2012."
The trend is expected to accelerate further this year.
Standard & Poor's predicts a whopping $1 trillion in mergers will be announced in 2013. That would be an 11% increase over last year and would mark the first time mergers would hit the $1 trillion mark since the Great Recession.
LBO volume is also expected to trend higher this year. LBO volume dipped in 2012 to $98 billion, down from $111 billion in 2011.
In fact, Dell Inc.'s (Nasdaq: DELL) announcement Tuesday that it agreed to a leveraged buyout (LBO) with Silver Lake Partners stoked plenty of talk about the best stocks to buy ahead of increased M&A activity in 2013.
Dell's $24.4 billion LBO wasn't the only activity fueling 2013 deal talks.
Also announced was a $16 billion deal between John Malone's Liberty Global (Nasdaq: LBYTA) and U.K. television and Internet provider Virgin Media (Nasdaq: VMED). In addition, rumors swirled Tuesday that Hewlett-Packard Co. (NYSE: HPQ) is considering breaking up the company.
The Silver Lining Buried in the "Bad" GDP Number
The markets were hit with an unexpected twist last week. On Wednesday the Bureau of Economic Analysis shocked markets by announcing that U.S. Gross Domestic Product had declined by 0.1% in the fourth quarter.
That marked the first time economic output had fallen since the end of the Great Recession.
But the report wasn't all doom and gloom by any stretch of the imagination.
In fact, when you look at the report more closely there was a silver lining buried in the numbers: the decline was entirely caused by weakness in government spending and inventories.
Those are areas where bad is really good.