Category

U.S. Economy

Dodge a Possible Debt Debacle With These Two Stimulus-Plan Safety Plays

U.S. President Barack Obama's $862 billion stimulus plan, passed in great haste after his inauguration, has now revealed its true costs and benefits. It didn't revive the U.S. economy – that bottomed about May 2009, before a dollar of it had been spent. Further, combined with the mad wave of similar "stimulus" outlays across the planet, it has destabilized global bond markets – which may end up being very expensive indeed.

For details of the two stimulus-plan safety plays, read on…

For details of the two stimulus-plan safety plays, read on...

Occidental Petroleum Leads Onshore Oil Hunt as Offshore Drilling Faces Tighter Regulation

Occidental Petroleum Corp. (NYSE: OXY) announced yesterday (Wednesday) it was doubling the capacity estimate for a California oil field discovery as U.S. offshore drilling restrictions fuel onshore interest.

The Los Angeles-based oil explorer has focused on onshore oil production for years and estimates its current discovery near Bakersfield, California holds up to 500 million barrels of oil, valuing it at more than $34 billion at current prices.

"There is a lot of new interest in onshore-production potential in the U.S. and Occidental is at the forefront of that," Brian Youngberg, an analyst with Edward Jones & Co., told Bloomberg.

Occidental, the fourth largest U.S. oil and gas producer, made the announcement at a meeting with investors and analysts Wednesday in New York. Chief Executive Officer Ray R. Irani detailed the company's long-term strategy for profitability.

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What Really Caused the Stock Market 'Flash Crash'

Just when you thought it was safe to get back into U.S. stocks, you think you see a shark.

If you are searching – like the regulatory lifeguards and all the political beach bums – to pinpoint and kill the menacing shark that took a huge bite out of investor confidence when the Dow Jones Industrial Average tanked 1,000 points in a just a few minutes late in the day on May 6, don't bother to scan the horizon looking for the dorsal fin of some lurking predator.

The threat you fear isn't under the water: It is the water.

We're talking about market liquidity.

For the full story of the stock-market flash crash - and for some cautionary steps to take - please read on...

Question of the Week: Readers Respond to Money Morning's "Flash Crash" Query

The May 6 1000-point drop in the Dow Jones Industrial Average triggered a roar of theories on the cause of the "flash crash." Was it a "fat finger" that entered an incorrect trade, leading automated trading systems to hit a high-frenzied sell mode? Did the initial sell-off fuel panic that escalated sales before manual corrections could be implemented?

As the New York Stock Exchange slowed trading, orders were routed to electronic exchanges that were not operating under the same safeguards and some companies' stocks were briefly valued at just pennies.

The exchanges have agreed to revise circuit breakers designed to stop trading during periods of extreme volatility, and to develop standards for handling erroneous trades. Almost all exchanges admitted that the markets' varying policies on halting trading contributed to the roller coaster ride.

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General Motors: On the Road to Recovery, but Moving Slowly

General Motors Corp. just logged its first quarterly profit since 2007. The company also claims to have paid back its government loans "in full," and is rumored to be interested in buying back its financing arm.

But the truth of the matter is that GM isn't as far down the path to recovery as it would like the public to believe. The company's strong first quarter was greatly aided by Toyota Motor Corp.'s (NYSE ADR: TM) highly publicized recalls. Its claims that it has paid back government debt have been greatly exaggerated. And the United Automobile Workers (UAW) union is already pushing for restoration of many of the perks that it lost during the auto industry's near collapse.

General Motors reported first-quarter profit of $865 million as its revenue surged 40% to $31.5 billion. That made for the company's first quarterly profit in three years. GM – a company that took millions in taxpayer money to remain viable and came close to running out of money in 2008 – reported free cash flow of $1 billion.

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We Want to Hear From You: Are U.S. Consumers Finally Willing to Spend Again? Are You?

Recent reports show U.S. consumers are spending again; some are actually even ditching the whole discount mentality in favor of luxury brands, while others are making long-delayed big-ticket purchases.

Individual spending rose for the sixth consecutive month in April, this time by 0.6%, or $36 billion. Personal income was up 0.3%. U.S. gross domestic product climbed at a 3.2% annual rate for the first three months of 2010, and U.S. factory output has risen.

"A lot of manufacturers may be struggling to keep up with demand," Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, told Bloomberg News. "We're seeing clear demand improvements from both consumers and businesses that should provide a strong tailwind for several months at least."

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Stock Market Strategies for the Post-Financial-Crisis 'New World Order'

For many investors, the recent thousand-point plunge by the U.S. stock market was probably the proverbial last straw.

So let me be perfectly clear about the point that I want to make here: Sitting on the sidelines could be the investment mistake of a lifetime. The post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years has created a world of lucrative new profit opportunities – governed by a new set of profit rules.

Let me explain…

To discover the next generation of global-stock-market winners, read on...

A Broad-Based U.S. Recovery is Strengthening the Global Economy Against Europe's Turmoil

Stocks scattered across the capital markets last week like the unwanted children of a terrible divorce, as a blunted rally following a global margin call put a hex on every sector and most commodities – but a U.S. recovery marched on.  

So far in the ten sessions of May, the Dow Jones Industrial Average is down 3.6%, the Nasdaq 100 is -4.7%, the S&P SmallCap 600 is -3.1% and overseas large-caps are down 8.6%.

That's a whole lot of falling, and for what reason? The headlines tell us that investors freaked out over Greek debt, fear of a contagion effect on Spain, speculation that U.S. earnings have peaked, and worry that the great global capital machine will soon seize up for lack of customers and credit.

But headlines don't always tell the whole story.

To take a closer look at why the markets are down, click here.

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We Want to Hear From You: How Has the Market's "Flash Crash" Affected Your Investment Behavior?

Thursday's Dow Jones Industrial Average 1000-point drop triggered a roar of theories on the cause of the "flash crash." Was it a "fat finger" that entered an incorrect trade, leading automated trading systems to hit a high-frenzied sell mode? Did the initial sell-off fuel panic that escalated sales before manual corrections could be implemented?

As the New York Stock Exchange slowed trading, orders were routed to electronic exchanges that were not operating under the same safeguards and some companies' stocks were briefly valued at just pennies.

"I still haven't heard a satisfactory answer as to what happened and what could be done about it," Frank C. Boucher, the head of a Virginia-based financial planning firm, told Bloomberg on Monday – four days after the market's drop.

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The Real Story Behind Last Week's Stock-Market Panic

Thursday's U.S. stock market trading session qualified as a genuine stock-market "panic." They're rare, fortunately, so they're memorable.

You can say you were there.

According to the volume analysts at Lowry Research Corp., this stock market panic was on par with the mini crash of October 1989, when the Dow Jones Industrial Average plunged 6.9% in a single day. But it wasn't on par with the famed session of October 1987, when the Dow plunged 22.6% in a day.

For an in-depth analysis of last week's U.S. stock market panic, please read on...

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