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


With Grocery Prices Soaring, This High-Tech Food Play Belongs on Your Shopping List

Aside from the continued sell-off in U.S. tech stocks, one of yesterday’s top financial news stories was the fact that U.S. inflation is accelerating – and at a pace that’s exceeding forecasts.

And the surge in food prices is one of the big catalysts…

  • Election 2012

  • What Investors Love About the Romney Tax Plan With Election 2012 less than one hundred days away the verbal slingshots between the two candidates have picked up in negativity. Tax returns and tax policies have been the subject of the latest round of insults and political maneuvers.

    The nonpartisan Tax Policy Center released a report claiming Mitt Romney's tax plan would "provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers."

    President Obama responded by calling the Romney tax plan a Robin Hood reversal and dubbed the former governor's plan "Romney Hood."

    Romney responded with a childish quip of his own calling the president's remarks "Obamaloney."

    But if you want to take a step back from the negative tone of campaigning, one tax plan clearly stands out as a winner for investors.

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  • Vice Presidential Nominee Paul Ryan to Make Election a Budget War In naming Rep. Paul Ryan, R-WI, as his vice presidential nominee, Mitt Romney ensured that the 2012 election will be mainly about how the country ultimately deals with its massive budget deficits.

    Romney, the presumptive Republican presidential nominee, made his running mate announcement Saturday morning in Norfolk, VA. The choice of Ryan completes the ticket that will face off against President Barack Obama and Vice President Joe Biden in November.

    Ryan, a seven-term congressman and chairman of the House Budget Committee, in March released a controversial budget proposal - the so-called Ryan Budget Plan -- that now figures to become a central part of the presidential campaign.

    Ryan's Budget Plan would deal harshly with federal spending by making major changes to programs like Medicare, Medicaid and food stamps.

    Republicans who support the plan say the austerity is needed to get the country's huge budget deficits under control. Democrats counter that the Ryan Budget Plan balances the budget on the backs of those who can least afford it.

    So it's not too surprising that both parties are thrilled with Ryan as the VP nominee.

    "I have long supported Paul Ryan's fiscal and entitlement reforms to return our country back on a path of fiscal health," said former Pennsylvania Senator Rick Santorum, a Republican presidential candidate who dropped out of the race in April. "At a time when our country is at an economic crossroads, Congressman Ryan's depth of knowledge on how to tackle these challenges is unparalleled."

    Certainly, Senate Majority Leader Harry Reid, D-NV, based his reaction to the Ryan VP pick on the Ryan Budget Plan.

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  • Election 2012: Reid Has Nothing to Lose in Romney Tax Returns Rant Senate Majority Leader Harry Reid, D-NV, appears to have one sole mission until November: Find a way to get the Mitt Romney tax returns released.

    The tax returns battle began in the primaries when GOP rivals asked the former Massachusetts governor to release the information. Romney has released the past two years' of returns and refuses to share more.

    Now Reid has gone full force in questioning Romney's secrecy, and doesn't appear to have any reason to stop.

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  • Election 2012: Is Mitt Romney a John Kerry Impersonator? Be wary of the rich, slick politician from Massachusetts, he might seem eerily familiar.

    He flip-flops. He's super-rich. And he has nice hair.

    Only this time it's not Sen. John Kerry, D-MA. It's Republican candidate Mitt Romney, the former Governor of Massachusetts.

    The comparisons are so similar Election 2012 pundits now compare it to the 2004 election which pitted Kerry against the incumbent George W. Bush.

    Here's another similarity: Neither one comes off as likable-- not even to their supporters.

    Even still, like Kerry, Romney has been heralded as the candidate most likely to defeat the incumbent even though he hasn't inspired or energized voters.

    That may be why Republicans went through candidates earlier this year like they were Baskin-Robbins flavors of the month.

    In the end, voters finally chose Romney over Rick Santorum, favoring the uncharismatic yet stable candidate over the exciting but controversial one.

    But will Romney and Kerry also share an election loss?

  • Mitt Romney's Running Mate: Meet the Candidates Given the ramifications of Election 2012 on the markets and the economy, it's time to evaluate the potential candidates to become Mitt Romney's running mate.

    As we approach the summer political conventions, curiosity is escalating over who will join Mitt Romney in seeking the White House. But the most obvious names and faces aren't necessarily the most likely choices.

    Five favorites for Romney's running mate have emerged, but few of them deliver what Republicans ideally want in a vice president.

    Here's a look at the current favorites, the dark horse candidates, and the candidates most likely to turn down the job despite their impressive resumes.

    Mitt Romney's Running Mate in Election 2012: The Current Favorites

    1. Ohio Senator Rob Portman

    Voters outside of Ohio don't really know this junior senator from this quintessential swing state. But, just in case you didn't know, Ohio and its 18 electoral votes will surely be up for grabs this fall. And that has Republicans buzzing about Portman and his electability.

    Portman provides popularity in the Midwestern trenches, where it will certainly be a dogfight up until Nov. 6. As an Ohio Congressman, Portman consistently won his southern Ohio House district with at least 70% of the vote. In his 2010 senate campaign, he won 57% of the vote and carried a staggering 82 of his state's 88 counties.

    Portman also has received commendation for executive experience and time in Washington on his resume, having served George W. Bush as budget director.

    Still, this executive experience could be his biggest weakness. Portman presided over then-record deficits during the Bush years, which doesn't mesh well with the GOP message of reducing government spending. Nonetheless, Portman provides political cover and popularity in a crucial swing state.

    The only glaring downside for the Republicans would be that his departure from the Senate could lead to the party losing a critical spot come 2016 when Portman's seat is up for reelection.

    Overall: Medium Risk, Medium Reward.

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  • Election 2012: Jobs Picture Won’t Brighten Before November If President Barack Obama is pinning his Election 2012 hopes on better U.S. jobs reports in the months between now and November, he may want to get started on updating his resume.

    The president's re-election bid took a blow on Friday when the U.S. Department of Labor reported the U.S. economy added just 80,000 jobs in June. That was far below analyst expectations of 100,000-125,000, and well short of the 125,000 needed to keep pace with population growth.

    The disappointing U.S. jobs report came on the heels of other bad economic news, including a contraction in manufacturing activity and a decline in household spending.

    "We had confirmation of what all of the other economic indicators have been signaling for some time, and that is a marked deceleration of the U.S. economy," Paul O'Keefe, director of economic research for the consulting firm J.H. Cohn and a former Labor Department official, told The Wall Street Journal. "This is not an outlier month. We've seen a deceleration in job growth since the beginning of the year."

    While the headline unemployment rate held steady at 8.2%, the numbers are clearly going in the wrong direction. The Labor Department said 155,000 people joined the workforce in June -- almost double the number of jobs added.

    An analysis by Hamilton Place Strategies calculated that the economy would need to add 219,000 jobs per month to get unemployment below 8% by Nov. 6.

    Given the recent trend - 68,000 jobs in April, 77,000 in May and now 80,000 in June - it appears more likely the rate stays steady or even inches higher as we approach Election 2012.

    Why U.S. Jobs Reports Won't Get Better

    Unfortunately for President Obama, hiring won't increase significantly any time soon.

    Businesses simply have too many concerns:

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  • GOP Slams President Obama's Taxmageddon Proposal Following a spate of moribund economic news and the looming Taxmageddon that could further derail the sluggish U.S. economy, President Obama called on Congress yesterday (Monday) for help.

    President Obama proposed that Congress pass a one-year extension of the Bush-era tax cuts set to expire at year's end for households earning $250,000 or less. He suggested letting the cuts expire for the wealthiest bunch.

    "We don't need more top-down economics," the president said in an early afternoon press conference at the White House. "We tried that theory...we can't afford to go back to it. That's why I believe it's time for the cuts for the wealthiest Americans, including myself, to expire."

    The Bush-era tax cuts, set up as a temporary measure, are due to expire on Dec. 31, meaning if they do the majority of Americans will see a steep rise in taxes overnight. A number of other tax increases are also set to take effect, giving the event the ominous Taxmageddon moniker.

    The implications are huge. Families living paycheck to paycheck, or unemployment check to unemployment check, will be even more strapped. The result is an almost certain recession.

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  • WellPoint (NYSE: WLP) Rides the Obamacare Profit Wave Even Higher Merger Monday lived up to its moniker today with news that WellPoint Inc. (NYSE: WLP), one of the largest U.S. health insurers, inked a deal to acquire Amerigroup Corp (NYSE: AGP).

    The $4.9 billion deal would make the Indianapolis-based company the top private manager of Medicaid benefits.

    The strategic move underscores WellPoint's bid to shore up its Medicaid business following the recent Supreme Court decision upholding Obamacare. The combined company will have a Medicaid business presence in 19 states, the largest in the nation.

    The transaction is expected to close in early 2013. Under the terms of the all-cash deal, WellPoint will pay a lofty $92 a share for all outstanding shares of Amerigroup, a nearly 43% premium to the company's closing price prior to announcement.

    WellPoint CEO Angela F. Braly said in a statement, "We believe that this combination will create an industry in the government sector serving Medicaid and Medicare enrollees. This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes."

    WellPoint has been on a buying spree of late. In May, the company purchased contact lens retailer 1-800-Contacts, and last year it picked up CareMore, a provider of managed care for the elderly.

  • Election 2012: Battling for the Youth Vote In the 2008 presidential election, U.S. President Barack Obama won in no small part due to the "youth vote."

    Four years ago, voters under 30 formed about 17% of the electorate and cast twice as many ballots for President Obama as for opponent John McCain. This was in stark contrast to voters over 30 where only half supported the Democratic nominee.

    It was the biggest generation gap in four decades of modern election polling. The election itself had the largest turnout since 1960 -- when another young, charismatic president made it to the White House.

    But Election 2012 may be different.

    This year President Obama could find it much more difficult to inspire the youngest voters with his message of hope. It will be hard for under-30, unemployed voters to believe this president is an "instrument of change" and a "visionary" when jobless numbers remain unusually high.

    The latest unemployment numbers for 20- to 24-year-olds are 9.3% for college graduates and 12.9% overall. What's worse is the newest voters, aged 18-19, have a depressingly high unemployment rate of 23.5%.

    A Reuters/Ipsos poll provided another foreboding statistic for the president: 54% of recent graduates say they think the country is on the wrong track.

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  • Obamacare Ruling: Key Takeaways for Investors and Taxpayers It's time to buy some insurance for your portfolio following Thursday's landmark Obamacare ruling.

    The Supreme Court voted 5-4 in favor of President Obama's controversial healthcare reform law, formally known as the Patient Protection and Affordable Care Act.

    The chief and appellate justices upheld the core of the law which has sweeping political and economic ramifications. Many economists, analysts and healthcare experts warn it's a Pyrrhic victory at best.

    President Obama and his supporters cheered the landmark healthcare decision - as Republicans reached for an aspirin, an antacid or an analgesic.

    While the GOP vows to throw out the law on day one if Mitt Romney wins Election 2012, the ruling does remove some of the dark clouds that have been looming over healthcare stocks. The uncertainty of the law's passage has had many market participants staying away from the sector.

    Obamacare Ruling and the Average Household

    What Obamacare means for the average American working family with an annual household income up to approximately $90,000, is that starting in 2014, they will be able to purchase private insurance through new state insurance markets at prices subsidized according to income level.

    Mammograms, cancer screenings and other preventative healthcare measures will be available without deductibles or co-pays.

    Adult children can remain on parents' health insurance plans until they are 26. Seniors can continue to receive discounts on prescription drugs, and health insurers will continue to pay rebates on premiums not adequately targeted at healthcare services.

    In addition, insurers will no longer be able to deny coverage to adults with a pre-existing medical condition and must stop or limit the practice of discriminatory pricing based on gender, age and current health status.

    Furthermore, healthcare providers will gravitate away from the conventional fee-for-service approach toward systems that coordinate care.

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  • Election 2012: President Obama at the Mercy of U.S. Economy U.S. President Barack Obama's chances for re-election in 2012 are increasingly tied to the fate of the U.S. economy, poll results show.

    Meanwhile, presumptive Republican nominee Mitt Romney hasn't gotten as much benefit from the weak economy as one would expect - a sign of his inability to connect with voters.

    The past month has not been kind to the U.S. economy - or President Obama's standing in the polls.

    The barrage of bad news has included:

    "The economy is going through a rough patch, and that more than anything is going to determine President Obama's future," said Ipsos pollster Chris Jackson in comments on a Reuters/Ipsos poll taken in early June. "People's unhappiness with the economy carries over pretty directly to the president's numbers, and we see those weakening."

    In that poll, President Obama's job approval rating slipped from 50% in May to 47%, and those saying the country is on the wrong track jumped 6 points to 68%.

    Meanwhile, Romney gained 6 percentage points in the head-to-head matchup, making the Election 2012 race a statistical dead heat (Obama 45%, Romney 44%).

    Although President Obama's argument that he inherited economic problems too severe to fix in three years resonates with his liberal base, the moderates and independents likely to decide who sits in the Oval Office next year aren't so sure.

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  • Romneynomics: What You Can Expect if Mitt Romney Wins the Election Yesterday I wrote about what to expect if President Obama wins a second term in office. Today it's Mitt Romney's turn.

    I'd like to look at Romneynomics - the policies that are likely headed down the pike if the underdog Mitt Romney wins in November.

    As for the horserace, I think it is President Obama's to lose.

    But last Friday's weak employment report indicates again that the economy could slow enough to push Romney ahead.

    As with an Obama victory, I think the election will be a close one even if Romney emerges the winner. That means the Republicans will not have an overwhelming majority in Congress.

    On the other hand, the Republicans might just get the four seats they need to win the Senate; if Romney wins I assume they will accomplish this. That would give them theoretical control of both the presidency and Congress, but with only small majorities.

    The Top Priorities of Romneynomics

    As with an Obama win, the first order of business will be to sort out the "fiscal cliff" that comes along with expiration of the Bush tax cuts and the automatic expenditure cuts that will also occur at the end of the year.

    With Romney set to inhabit the White House, I expect the solution to this to involve genuine spending cuts--perhaps along the lines of the budget presented by Rep. Paul Ryan (R.-WI).

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  • Obamanomics: What You Can Expect if President Obama Wins the Election Now that we are left with a two-horse race for president, the markets are going to begin to handicap the November results.

    However, when the markets begin to handicap the race it will be about a lot more than just picking the eventual winner.

    Instead, everything will revolve around the policies and consequences that come along with the winner.

    The difference in approach promises to be stark with "Obamanomics" on the left and "Romneynomics" on the right.

    Each one comes with its own set of consequences, though.

    Today I'm going to look at "Obamanomics II," or the policies we will get if President Obama is re-elected.

    But those on the left shouldn't despair...In my next piece, it's Romney's turn.

    As for the horserace itself, it's too close to call, with neither side having much chance of winning a big victory.

    President Obama Has the Edge

    Even still at the moment, President Obama appears to be ahead. Apart from his modest lead in the polls, my former home state of Virginia appears to be swinging definitively toward the Democrats.

    Yes, Republican Bob McDonnell did win the Virginia governorship handily in 2009, but he was a very good candidate. Moreover, turnout in gubernatorial elections is normally low. Thus I believe the latest polls showing Obama with a 7% lead in Virginia are accurate, and without Virginia Romney has a very difficult path to the presidency.

    If we believe the presidential election will be close, then it follows that Congress and the Senate elections must be close, too.

    If Obama wins in November, the most likely outcome must be that the Democrats will hang on to the Senate, while the Republican House majority survives, albeit much smaller than at present.

    With this combination, the president's more extreme wishes (or those of his team) will be restrained. But as a newly re-elected figure he will nevertheless have more power to get what he wants than he does currently.

    Whatever the congressional numbers may be, the president's first task will be to face the "fiscal cliff" of January 2013, when the Bush tax cuts and temporary payroll tax cuts expire and automatic spending "sequestration" comes into effect.

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  • Election 2012: President Obama Can't Solve High Oil Prices with Trading Regulations The Obama administration lost its bid to get the Buffett Rule (which would have increased taxes for those earning $1 million or more) passed, so on Tuesday it shifted focus to another battle: Slowing the rise in oil prices.

    U.S. President Barack Obama's proposed solution to painfully high prices is to limit speculation in oil markets.

    The new bids that the president proposed seek more money ($52 million) for market enforcement and monitoring activities, call for loftier penalties for market manipulation, and require oil traders to put up more of their own cash for transactions.

    At a White House press conference Tuesday President Obama said, "None of these will bring gas prices down overnight. But they will prevent market manipulation, and help protect consumers."

    The move is in stark contrast with Republicans, who have been lobbying for more domestic drilling to help alleviate the near record-high gas prices. Paying more at the pump takes a bite out of consumer spending and has the potential to stall the slow-going economic recovery.

    The maneuver, however, may be focused more on political strategy than consumer interest.

    It is extremely doubtful that House Republicans will pass any measure that aims to implement more limits on Wall Street while the GOP looks to reduce regulation of the financial sector.

    House Speaker John Boehner, R-OH, called it a political ploy and disparaged President Obama for not using the means already at his disposal to deal with the oil situation.

    "The president has all the tools available to him if he believed that the oil market is being manipulated," Boehner said. "Where's his Federal Trade Commission? Where is the SEC? He's got agencies there. So instead of just another political gimmick, why doesn't he put his administration to work to get to the bottom of it?"

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  • Election 2012: The Real Reason President Obama Wants the Buffett Rule A new report from the White House today argues that making America's richest (those making over $1 million) pay a tax rate of at least 30% is more a basic issue of "tax fairness" than a way to generate lots of new revenue to the debt-saddled U.S. government.

    The tax proposal is dubbed the Buffett Rule, named for its main backer, billionaire Warren Buffett, who says it is unfair that he pays a lower effective tax rate than his secretary. The Buffett Rule ensures millionaires and billionaires do not pay lower percentages of their income than middle-class citizens.

    U.S. President Barack Obama, on a campaign fund raising trip, spoke in favor of the Buffett Rule yesterday (Tuesday) in Florida. Democrats are now working on a bill that would incorporate the Buffett Rule into the current tax code, with support from the White House.

    The proposal is set for a vote next week in the Senate, and the president has made it a principal element of his plan for deficit reduction.

    The White House says the Buffett Rule would make it more difficult for the nation's wealthiest to lower their tax bills and would ultimately make the tax code fairer for everyone.

    Critics, however, say it is nothing more than a political ploy in the months leading up to the 2012 presidential election.

    The Buffett Rule: Key Campaign Tool in Election 2012

    The Buffett Rule is a key theme in President Obama's re-election campaign.

    Republicans object to the Buffet Rule as a punitive tax hike on rich that will have little impact on the federal deficit. If the GOP succeeds in blocking passage of the Buffett Rule, the president can paint the Republicans as advocates of an unfair tax policy that benefits only the country's most prosperous citizens.

    White House officials acknowledged Monday that the controversial Buffett Rule would yield just $47 billion in additional tax revenue over a decade. That amounts to a paltry 0.6% of the $7 trillion in federal deficits projected for that 10-year period.

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