Press Esc to close

Welcome to Money Morning - Only the News You Can Profit From.


How to Rent a Fortune

With a 37% gain in The Blackstone Group LP (NYSE: BX) since late July, we’ve done really well with our targeted investment in real estate.

And with very quick gains of 9% in Brazilian-food processor BRF SA (NYSE ADR: BRFS), 5.2% in South American agricultural play Adecoagro SA (NYSE: AGRO) and 1.6% in high-tech agribusiness player  Neogen Corp. (NasdaqGS: NEOG), we’re doing well with our plays on (pockets of) accelerating U.S. inflation.

Today we’re going to combine the two concepts and employ a very simple formula we believe will add to your profits…

  • Election 2012

  • Coal Stocks See Better Days Ahead If Romney Wins Election 2012 If Mitt Romney wins Election 2012, it'll be a rare piece of positive news for the coal industry, and a boost for beaten down coal stocks.

    During last week's presidential debate, Romney called attention to the stark differences between himself and U.S. President Barack Obama on coal policy.

    "By the way, I like coal," Romney said. "I'm going to make sure we can continue to burn clean coal. People in the coal industry feel like it's getting crushed by your policies."

    That was enough to grab the attention of investors. Just about every coal stock went up at least 4% the day after the debate, and several were up more than 5%.

    It was a much needed shot in the arm for a sector that had been down 29% on the year.

    "It's amazing what 15 words about coal in a presidential debate can do for the stocks," Michael Dudas of Sterne Agee told Reuters. "These stocks have been volatile, but you can't discount what a man running for president said about coal. Call it the Romney rally."

    Coal stocks reacted strongly to Romney's industry-friendly comments because President Obama's energy policies have been tough on a sector already under pressure from cheap natural gas prices.

    That's why Romney, in his campaign speeches, frequently refers to these policies as a "war on coal."

    To continue reading, please click here...
  • These Dividend Stocks Will Be the Real Winners of Election 2012 With Mitt Romney's debate performance last week, Election 2012 has begun to swing Republican on the presidential side.

    According to a recent poll by Rasmussen, in the 11 swing states Romney now leads President Obama by a slim 49% to 47% margin. Collectively, these states hold 146 Electoral College votes, or enough to determine the outcome.

    Yet with two more debates still left on the slate, the truth is the fortunes of both candidates will likely swing back and forth right up to the wire.

    With 27 days until voters head to the polls it's shaping up to be a photo finish.

    For investors, that means next month should be volatile as traders attempt to guess the outcome.

    However, the long-term results are what's really important, not only for the "big picture" economy, but for particular companies and sectors that can be expected to benefit from either an Obama win or a Romney win.

    After all, there are considerable differences between the two candidates' policy prescriptions.

    And as long-term dividend stock investors it is going to be crucial that we take advantage of these differences, repositioning our portfolio when we know the election result so we can optimize its performance through the new administration.

    With the race still in doubt, here are 10 dividend stock suggestions from the Standard and Poor's 500 Index -- five for each candidate. The selections for each candidate can be expected to do better if he wins, and should therefore be bought when the election result is known --or perhaps before the election as a hedge against your least favorite candidate winning!

    If Obama Wins Election 2012, Buy These Dividend Stocks

    The following stocks should benefit should President Obama win re-election:

    • H&R Block (NYSE: HRB). If President Obama wins election 2012, it seems almost certain that taxes will rise, at least for those with incomes above $250,000 and probably for many people poorer than that. In addition, there's likely to be a mass reshuffling of allowances and tax rates, changing the best tax strategies for everyone with any complexity at all in their tax returns.

      This has to be good news for tax preparers, the largest of which is HRB, both directly through their network of offices and indirectly through their TaxCut tax software. HRB has a dividend yield of 4.5%, and a historic dividend payout ratio of 60%.
    • Cliffs Natural Resources (NYSE: CLF). If Obama wins, Ben Bernanke is likely to stay in office as Fed chairman, and be replaced by a like-minded successor when his term of office ends in January 2014. That means interest rates should stay low -- good news for commodity stocks like CLF, an iron ore and coal producer. CLF has been generous on the dividend front, and now pays $2.50 per share, giving it a yield of 6.3%. Its historic payout ratio is about 25%, but that will increase as 2012 has been a tough year.
    To continue reading, please click here...
  • Six Stocks You Should Own If Obama Wins Election 2012 Debates and attack ads aside, the U.S. presidential election remains too close to call -- all the more reason for investors to position themselves to profit whether Mitt Romney or President Barack Obama wins in November.

    As we noted last month when we looked at stocks to own if Romney wins, certain industries tend to perform better under Republican policies, others under Democrats.

    Here's a look at six stocks that would benefit if President Obama wins Election 2012.

    Health Care Stocks Helped by an Obama Win

    No matter what, one of the top issues will continue to be health care, with a particular focus on the Patient Protection and Affordable Care Act (PPACA) - otherwise known as "Obamacare."

    Unless the Republicans sweep both houses of Congress and win the White House, Obamacare will remain the law of the land.

    Large hospital chains benefit from the survival of Obamacare because it expands health coverage to millions of previously uninsured individuals, including those with pre-existing conditions. That will significantly reduce the burden on hospital emergency rooms, which must now treat these patients even if they can't pay.

    While such major hospital operators as Tenet Healthcare Corp. (NYSE: THC) and Community Health Systems (NYSE: CYH) would get a lift from this, a better choice in this sector is:

    • Health Management Associates Inc. (NYSE: HMA), recent price $8.16 - HMA operates 66 hospitals with more than 10,300 beds, most of them located across the South and in Appalachia, where the current percentage of uninsured patients is among the highest in the country. Increased reimbursements under Obamacare could spark a turnaround in HMA revenues and earnings, which have fallen in four of the last five quarters, slipping from 20 cents a share in the second quarter of 2011 to just 16 cents in Q2 2012. The stock pays no dividend, but offers good growth potential since its current price is well off the five-year high of $11.32 set in April 2011.
    Other winners under Obamacare would be companies that receive large research and/or specialized treatment grants from government agencies. The National Institute of Health (NIH), for instance, could see budget cuts of 5% or more if Romney wins and begins to rein in discretionary federal spending.

    A good bet in this category is:

    To continue reading, please click here...
  • The Ugly Truth About the Promise of the JOBS Act On one level, the JOBS Act is full of promise. On another some of the elements are downright ugly. As Shah explains, its buyer beware. Continue reading... Read More...
  • Tonight's Presidential Debate: Time to Talk Economics Tonight's presidential debate will be the first time incumbent President Barack Obama squares off against GOP challenger Mitt Romney, in a race that's still too close to predict.

    According to a trio of national polls published Monday, the two candidates are running neck-and-neck ahead of tonight's presidential debate. The results show just three percentage points separate the two.

    This first of three sessions focuses on domestic policy. It's divided into six 15-minute segments; the first three focus on the economy, then healthcare, the role of government, and governing.

    While many political analysts say Romney's chances hinge on his performance tonight, President Obama doesn't have enough of a lead to sit comfortably.

    Following are some key issues that each much address and explain in the first debate of Election 2012.

    To continue reading, please click here...
  • Election 2012: Five Tough Questions That Need to be Asked at Tonight's Debate I hate to break it to Ben Affleck, but he is wrong about the election. With just 34 days left until voters head to the polls, the election 2012 race is still completely up for grabs.

    Even still, in a recent interview with the AP, Affleck lumped Romney comfortably in with the likes of such memorable losers as Michael Dukakis, Al Gore and Bob Dole.

    However, a recent a poll released by Rasmussen yesterday would seem to suggest this contest is far from over.

    According to the survey, President Obama only leads Mitt Romney by a razor slim advantage of 48% to 47%--well within the margin of error.

    That makes tonight's presidential debates in Denver all the more critical for both candidates-especially since they will be devoted primarily to the economy and domestic policy.

    Of course, here at Money Morning we have our own ideas on how the economy ought to be run, and a few questions of our own for each of tonight's debaters.

    But we'll bet most of the tough questions will be completely missed by the media, who have an altogether-too-exalted an idea of the candidates' competence.

    With that in mind, here are five questions that should get asked at tonight's debate-but won't.

    Five Questions About the Economy That Beg To Be Answered

    1. Mr. President, Governor, study after study has shown that the healthcare system in this country is absorbing a larger and larger share of our Gross Domestic Product, and will bankrupt us all by 2050. Yet neither of you has any reliable plans to deal with this.
    2. Mr. President, your Obamacare makes matters worse. Governor, your Romneycare in Massachusetts has also run wildly over budget and your Vice President's plan loads most medical cost increases onto individuals who get sick.

      Other countries cope with medical cost inflation better than us; which of their schemes should we adopt?

      To continue reading, please click here...
    3. If Romney Wins Election, Make Sure You Own These Six Stocks With U.S. President Barack Obama holding a narrow lead in the polls over Republican challenger Mitt Romney, investors need to be prepared for a win by either candidate.

      Strangely enough, history has shown that the stock market actually does much better under Democratic presidents than Republican ones - three times better since 1913, according to The New York Times, and more than five times better since 1960.

      Of course, that doesn't mean there won't still be plenty of stock market opportunities if Romney wins the election. It just means investors must be a bit more selective, targeting leading stocks in industries that have a history of prospering under GOP policies, especially those directly affected by planks in the Republican platform.

      Sectors that fall into this category include certain health insurers, medical device makers, energy companies, domestic oil exploration outfits, utilities, transportation firms (especially railroads), and defense contractors.

      Let's take a look.

      To continue reading, please click here...
    4. If President Obama Wins Election 2012, What's Next? With nearly four years under President Barack Obama's reign, America's economic recovery is struggling to pick up speed and unemployment remains above an unhealthy 8%.

      The Obama administration has repeatedly been harshly criticized for bailing out corporate businesses, for the massive national deficit and for the creation of the controversial healthcare bill dubbed Obamacare.

      Yet, with just six weeks left before Americans head to the polls to cast their vote for the 45th president, President Obama has managed to eke out a slight lead.

      In a mid-September interview with "60 Minutes," President Obama defended his term and said he and we need more time with him in office.

      Here's what to expect if President Obama wins Election 2012.

      To continue reading, please click here...
    5. If Romney Wins Election 2012, Here's What's In Store for America While Mitt Romney's political plans are a stark difference from opponent President Barack Obama, they agree on one thing: When it comes to this year's election, "this is a very clear choice for the American people as to what America's future will look like."

      They disagree, however, on what that "clear choice" is.

      That's what Romney said in a "60 Minutes" interview with Scott Pelley that aired yesterday (Sunday), where he detailed his plans to restore America to fiscal health.

      Romney explained he would shrink the size of the government, overhaul entitlement programs and implement individual and corporate tax breaks-all with the help of Congress.

      "I'm going to win this thing," said Romney when asked if he could win the November presidential election. "Washington is broken and I think that flows from the President. I think ultimately that the buck stops with the President."

      If Mitt Romney wins Election 2012, here's what he has planned for you.

      To continue reading, please click here...
    6. What Happens to the Stock Market in an Election Year? With just about six weeks to go until Nov. 6, many investors are wondering how Election 2012 will affect the stock market as a whole and their portfolios in particular.

      There are many theories about what can happen to the stock market following a presidential election - although the performance spread is pretty wide.

      The highest election year return for the Standard & Poor's 500 Index takes us back as far as 1928, when Herbert Hoover beat Al Smith. The S&P 500 returned 43.6%.

      But the heady atmosphere just before the 1929 stock market crash probably had more to do with that high return than Hoover's election-or Smith's loss.

      The lowest return in the 80-year period came in 2008, when now-President Barack Obama beat John McCain. The S&P 500 dropped 37%. Once again, the 2008 financial crisis probably had a greater impact on that result than who won or lost the election.

      So what is likely to happen four years later, with the economy still struggling to recover and the S&P 500 ahead about 15%?

      Let's take a look.

      To continue reading, please click here...
    7. AIG Stock Sale Doesn't Justify Bailout Package The U.S. government, for the first time since 2008, is officially a minority stakeholder in American International Group Inc. (NYSE: AIG), with an $18 billion stock sale that made money for taxpayers.

      The AIG stock sale will reduce the government's stake in the insurance company to about 22% from 53%.

      The U.S. Treasury Department announced Sunday it was selling a large chunk of shares in the bailed-out insurer. The government saved AIG in 2008 and 2009 with a bailout package that totaled around $182 billion.

      Including Monday's sale and money from AIG, the Treasury claims it has recovered a total of $197.4 billion from AIG - a $15 billion profit for taxpayers.

      It's not surprising the government is selling AIG shares. What is unexpected is that such a large chunk of AIG stock will be released into the market at once, instead of spaced out over time.

      One reason to shed the stock faster than planned is to credit U.S. President Barack Obama with taxpayer profit ahead of a tight race for the White House.

      White House Press Secretary Jay Carney said Monday, "We have been committed to exiting those investments as quickly as practicable. What it does demonstrate is an ongoing commitment to recover taxpayer money. It's safe to say the president is pleased with the progress being made as we wind down these investments."

      But even with a multi-billion dollar profit, defending private-sector bailouts is an impossible sell to most voters.

      Click here to continue reading...
    8. National Conventions: It's My Party and I'll Lie If I Want To Now that both the Republican and Democratic national conventions are over, one key question remains: Which side has the best liars?

      If America's two major political parties have anything in common, it's the ability to fold, twist and mutilate the facts of any given subject.

      Almost every speaker at both national conventions did their utmost to uphold this ignoble tradition of American politics.

      When the media called several GOP speakers on their political lies, a pollster for GOP candidate Mitt Romney, Neil Newhouse, responded with what may have been the most truthful words spoken by any political figure over the past two weeks:

      "We're not going to let our campaign be dictated by fact-checkers."

      The Democrats, of course, gleefully pointed this out at their national convention a few days later even while committing transgressions of their own.

      Hypocrisy, thy name is politics.

      Since the American voter deserves better in Election 2012, here's a more accurate look at some the truth-challenged rhetoric uttered by the people who want us to trust them with running the country:

      To continue reading, please click here...
    9. August U.S. Jobs Report Critical for President Obama The August U.S. jobs report is critical on many levels.

      Due out tomorrow (Friday) by the U.S. Labor Department, the August report isn't expected to be enough to lower the U.S. unemployment rate.

      An uninspiring 120,000 jobs are expected to have been added in August, according to a CNNMoney survey, a notable slowdown in hiring from July's seasonally adjusted 163,000.

      July's number was the strongest showing in five months, yet it still was not vigorous enough to keep up with population growth. The unemployment rate actually ticked up a notch to an unhealthy 8.3%.

      Here are two reasons tomorrow's U.S. jobs report is a biggie.

      August U.S. Jobs Report: What's at Stake?

      • President Obama's Obstacle

        The employment report comes just weeks before the November presidential election. President Obama and his administration have long been blamed for the stagnant and elevated unemployment level, the lack of job creation and as a result, the slow going economy.

        With just three more monthly jobs reports due out prior to the November election, Team Obama could certainly use a boost from better-than-expected numbers. The president is treading at break-even level on jobs and it is very doubtful that the unemployment rate will fall below 8% by then.

        "The soft economic environment that we're having is not going to be good for any incumbent. It's a tough sell for anyone in office," Sam Bullard, a Wells Fargo senior economist told CNN Money.

        No incumbent president has won re-election with an unemployment rate greater than 7.2% since FDR's rein.

        On the other side of things, according to a piece in Business Insider, a top Wall Street source who backs presidential hopeful Mitt Romney said a robust showing in Friday's report bodes well for President Obama. "If the number is good Friday it doubles his [President Obama's] bounce. Maybe triples it. If it comes in really low, it could extinguish it. I don't think there's ever been a more important jobs number, politically, than this one."

        If the report nearly meets or matches the expected 120,000, it "won't matter as much" according to the source.
      To continue reading, please click here...
    10. Election 2012: Why the GOP Is Really Talking About the Gold Standard One of the most surprising proposals from the Republican National Convention was that the GOP platform for Election 2012 includes a commission analyzing a return to the gold standard.

      Ever since the United States went off the gold standard in 1971 the U.S. monetary base has grown to its current level of roughly $2.56 trillion. With this increase has come an even more alarming rise in the federal deficit. Currently the U.S. has around $222 trillion in unfunded liabilities.

      That's why many, most notably Rep. Ron Paul, R-TX, have called for a return to the gold standard and a compete audit of the Federal Reserve.

      But as opponents are quick to point out, it is impractical, impossible, and highly unlikely that America's enormous monetary supply would be backed by gold.

      Some on the left, such as Paul Krugman of The New York Times, called the return to the gold standard "an almost comically (and cosmically) bad idea."

      So why would the GOP bring it up?

      Experts have theorized that the inclusion of a gold standard commission on the GOP party's platform is just a way to encourage Ron Paul supporters to join the Romney camp.

      Within the GOP there are worries that these devoted "Paulites" will not vote for Romney unless more of Paul's agenda is taken seriously. The move to "audit the Fed" and a return to the gold standard are two ideas Paul supporters care most about.

      But there's more to the gold standard proposal than pleasing Paulites.

      To continue reading, please click here...
    11. Election 2012: Obama's Odds Are Pretty Good if You Ask Mr. Market If you want to know who's going to win Election 2012, just ask Mr. Market. He has a knack for picking presidential winners.

      As it happens, stock market performance in the years and months leading up to a presidential election is one of the most reliable indicators of who will win and who will lose.

      And the way things look at the moment, Mr. Market really likes the President Barack Obama reelection odds.
      Obama Reelection odds
      "It's suggesting that Obama's got a better chance than people think," Jeff Hirsch of Stock Trader's Almanac told Yahoo's Breakout last week. "Incumbent victories are accompanied by much larger gains in the stock market. The Dow Jones has been up significantly higher in election years when incumbents win. And it looks like the track that we're on here."

      Hirsch's data shows that since 1901, election years in which the incumbent wins enjoy a Dow Jones Industrial Average rise of 6% by August and 12% by Election Day.

      So far this year, the Dow is up nearly 8.5% -- comfortably in re-election territory for President Obama.

      To continue reading, please click here....