Quarterly Report


Is Microsoft Stock a Buy After 2016 Q3 Earnings?

With the Microsoft stock price edging close to its all-time high, the Q3 earnings due out tomorrow (Thursday) will tell us a lot about how much higher shares will go.

Because the company has beat expectations for 10 quarters running, the odds are high Microsoft Corp. (Nasdaq: MSFT) will again beat the Street when it reports tomorrow (Thursday).

Here's why MSFT stock remains a buy, and what investors need to keep an eye on in the Q3 earnings report...


Morgan Stanley Stock Price Moving Today on This One Key Earnings Figure

The Morgan Stanley stock price was moving today on this one major bearish earnings figure: trading revenue.

Shares, however, eked up a modest 0.16% to $25.81 on an earnings beat.

Here are all the details...

Economic Data

What Is an Earnings Recession and Is This One?

First-quarter earnings season got underway in earnest this week and the overall outlook for S&P 500 companies is glum.

That's left investors asking us "what is an earnings recession and is this one?"

Here's everything investors need to know now...

Why the U.S. Economy Will Be Weaker Than Expected in 2012

Anyone who hoped the U.S. economy would get back on track in 2011 was sorely disappointed.

The European sovereign debt crisis and the abysmal failure of policymakers to take effective action undermined any chance we had at a strong recovery.

And what's even worse is that we're in for more of the same in 2012. Indeed, the U.S. economy in 2012 will be even more sluggish than originally thought – and for the same reasons 2011 was a disappointment.

The Organization for Economic Cooperation and Development (OECD) estimates U.S. growth will slow to 2% next year, down from a 3.1% estimate in May. It forecasts growth will pickup to 2.5% in 2013.

Of course, these forecasts are contingent upon Congress finding a way to stimulate the economy and tighten fiscal policy – not an easy balance to achieve. Without such action, U.S. economic growth next year could be as slim as 0.3%, and only hit 1.3% in 2013.

Unfortunately, after a year of failing to reach a debt reduction agreement, there's little chance the government will rise to the occasion next year – especially when most representatives are focused more on reelection than they are resolution.

Furthermore, it's also doubtful that Europe's debt crisis will be contained enough to not severely disrupt the region's biggest nations and cause a credit crunch that ripples through the global economy.

That means another year of major risks.

"Uncertainty remains the watchword for the U.S. economy," said Money Morning Global Investing Strategist Martin Hutchinson. "The risks are still pretty high because no one's sure what the Europe outcome will be."

The likely outcome – U.S. economic growth will fall even lower.

Europe: The Biggest Unknown

The OECD earlier this week reported that Europe's weak monetary union is the main threat to the world economy. The group's 34 member nations, including the United States, will grow 1.9% this year 1.6% next, down from the May predictions of 2.3% and 2.8%.

"Contrary to what was expected earlier this year, the global economy is not out of the woods," Chief Economist Pier Carlo Padoan wrote in the OECD Economic Outlook.

To continue reading, please click here...

The Housing Market is Finally Bottoming – Here's How to Play It

The housing market remains a drag on the economy, but there are indications that it is finally starting to bottom.

Prices have stopped declining, and there is even some sign of life in sales.

Not all the news is good, of course. New home sales dropped still further in August from July, falling to a pathetic 295,000 annual rate compared to the 1 million-plus in the good years. And housing starts fell to an annual level of 571,000 from 601,000 in July – that's 12% below their August 2010 level.

Still, this is to be expected. The new home sector should be the last to turn up. There is a massive overhang of existing homes, both through foreclosures and through suppressed sales from homeowners that are "under water" on their mortgages and can't afford to sell.

With the exception of a very few markets – such as North Dakota (4% unemployment and new jobs appearing from the Bakken oil shale) and the overstuffed bureaucrat haven of Washington and its surrounding suburbs – there should be very few new homes built for the next several years.

To continue reading, please click here...

The No. 1 Way to Profit as the Price of Gold Soars Into Record Territory

On Monday, debt fears on both sides of the Atlantic sent gold above the $1,600 level for the first time ever.

The yellow metal has risen steadily since the start of 2009, when it was trading at a bit less than $900 an ounce.

And gold's advance has accelerated of late. The price of gold increased 21% in the year's first half. And even with the decline to $1,587.30 yesterday (Tuesday), the yellow metal is up 7% since July 1.

Many investors and investment pundits are claiming this gold-plated party is destined to end: When the Eurozone gets its house in order and our elected leaders in Washington finally reach a federal budget accord, these gloom-and-doomers say the price of gold will plummet.

But I say they're wrong.

Gold isn't going to crash. In fact, it isn't even going to hold steady at current levels.

The price of gold is destined to soar during the next six months to nine months.

And I'm going to show you the best way to hitch a ride on this rocket.

The Bright Side to Global Debt Fears

I've been analyzing gold miners and other natural-resources investments for a long time. Now, when I'm analyzing precious-metals-related investments for a Money Morning column, or for the subscribers of my "Global Resource Alert" trading service, there are certain financial indices that I like to study. And I especially like to see how each of these indices behaves against one another.

price of gold

One of the most valuable – and telling – of these relationships is the one that compares the price of gold to the U.S. Standard & Poor's 500 Index. To make this comparison, I use two exchange-traded funds (ETFs) as "proxies" – stand-ins – for each of these investments. The SPDR Gold Trust (NYSE: GLD) represents the price of gold and the SPDR S&P 500 (NYSE: SPY) serves as a proxy for the broad stock market.

If we look at what has happened over the past six years, the trend is undeniable: Thanks to the U.S. Federal Reserve – first because of aggressive rate-cutting by former Fed Chairman Alan Greenspan, and then due to the massive debt expansion engineered by successor and current Fed honcho Ben S. Bernanke – gold is in a clear uptrend.

To continue reading, please click here ...

China's Economy Continues to Ascend – But Watch Out for Speed Bumps

Everyone knows that China's economy is hot. The only question is whether it may be a little too hot.

China posted yet another quarter of stellar economic growth in the first quarter of 2011, with its gross domestic product (GDP) growing 9.7%. However, analysts are worried about some of the side effects that have accompanied that growth- namely soaring inflation and the emergence of speculative bubbles.

Inflation in China hit a 32-month high in March, and the country's real estate market is beyond scorching.

Policymakers in Beijing insist they have the situation under control, and they've been trying to rein in liquidity and curb speculation to prove it. That's why China's economy, accustomed to double-digit growth, is only expected to grow 8% to 9% this year.

Read More…

Investment Strategies: Why Dividends, Inverse Funds, "Glocal" Stocks, Commodities and Emerging Economies Are the Places to Be

After a wild first quarter that included unrest in Egypt, Libya and Saudi Arabia, a spike in oil and gasoline prices, an apparent acceleration of inflation and continued global debt fears, investors need to embrace investment strategies and investment choices that will provide returns even as they manage risk, says Money Morning Chief Investment Strategist Keith Fitz-Gerald.

"In many ways, we are truly entering uncharted territory," Fitz-Gerald said.Money Morning Quarterly Report

In a wide-ranging interview with Executive Editor William Patalon III that represents the latest installment of Money Morning's "Quarterly Report" series for the 2011 second quarter, Fitz-Gerald talked about the first quarter and provided a detailed look at what he sees ahead. For instance, Fitz-Gerald said that:

  • Despite the bull market in U.S. stocks, the U.S. economy and accompanying financial system isn't as strong as it looks, noting that "there are still massive cracks in the system."
  • Investors should make sure to watch the U.S. Federal Reserve, since its decision to continue or to end its current monetary-policy strategies could determine where U.S. stock prices go from here.
  • Prices will continue their general upward trajectory, which is why he ultimately sees oil at $150 a barrel, gold at $2,500 an ounce and silver crossing the $50-an-ounce threshold.

Fitz-Gerald also detailed some of the investment strategies investors needed to consider, including the use of "inverse funds," dividend-paying stocks, and so-called "glocal" stock plays. "Glocal" stocks are the term Fitz-Gerald uses to describe large, U.S.-based multinational corporations whose global operations include a local presence – especially in the crucial markets of China and Greater Asia. Most of these companies are publicly traded, and have their shares listed on the Standard & Poor's 500 Index today.

What follows is an edited transcript of the question-and-answer session that Patalon hosted with Fitz-Gerald.

Emerging Markets Forecast: Which Ones to Hold, and Which Ones to Fold

Late last year, as part of Money Morning's "Outlook 2011" economic-forecast series, I suggested investing in emerging markets that were relatively cheaply priced, and whose economies seem poised to do well in 2011.

My favorite recommendation, Chile, gave a mediocre performance, down 3.2% on the year.

On the other hand, I recommended Russia at several different points last year. That's not a market that I normally favor. But I'd been suggesting that low Price/Earnings (P/E) ratios and a commodity or energy orientation in an economy would be the keys to finding successful emerging markets in 2011.

Currently, the Russian market is up 19.2% in dollar terms, the best performance of any market except Hungary (which also satisfied my "low P/E" criterion, as it is recovering from a very deep recession).

In this installment of the current Money Morning "Quarterly Report" series, let's take a tour of the world's emerging-market economies. We'll study their most recent performance, and we'll identify the best investment candidates for the months to come.

We separate the potential winners from losers. Read on to see which is which…

Read More…

A Slowing U.S. Economic Recovery Faces Strong Headwinds in 2011

The U.S. economic recovery has been heading upward, but high unemployment and rising energy prices will weigh heavily on consumers and slow U.S. growth.

Many economists don't think the U.S. economy will maintain the 3.1% growth rate it established in 2010's fourth quarter. The International Monetary Fund (IMF) says that while global growth this year will continue at a rate of 4.8%, advanced regions like the United States will grow at a slower rate than emerging economies.

The IMF lowered its 2011 U.S. outlook to 2.8% from 3%, citing a weak real estate market and a high jobless rate as the biggest factors.

Read More…