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This Market Is "Going Vertical" – And so Are These Stocks

In our Aug. 6 Private Briefing report, "It’s the Biggest and the Fastest Growing – Here’s How to Profit," we updated our bullishness on China‘s e-commerce market and gave you two ways to ride along.

We had a lot of confidence in both recommendations. But I have to be honest with you: Even I didn’t expect the stocks would soar like they have in the two seeks since.

  • The Next Phase of the Eurozone Debt Crisis Today (Monday), as we digest what happened in Europe, the obvious question arises: What comes next for the Eurozone debt crisis?

    For starters, the heads of state coming out of the Council of Europe meeting last week pledged to have the new structure by July 9, even though the new stabilization mechanism will take longer to phase in.

    For the first time, there will be a greater accountability (and control) over continent-wide commercial banking and access to some underwriting of debt coverage. It also means that national banking systems will need to relinquish some oversight to the European Central Bank (ECB).

    For months, a number of people (myself included) have insisted that the solution to th e Eurozone debt crisis requires greater financial integration. The shortcoming seemed rather straightforward.

    The EU had ushered in a more centralized monetary system (single currency and all that) but had no centralized fiscal system to parallel it. Simply put, that required adherence to currency rules without any ability to coordinate the credit and fiduciary end of the spectrum.

    Well what came out of the Council in the early hours of Friday will not solve the debt problem in Spain , Italy , Portugal, or Greece. There is no magic short -term fix. But it might just provide the underpinnings for a credit system that may begin to operate.

    The banks are the problem right now.

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  • Eurozone Debt Crisis: Why Cyprus Needed the Fifth Bailout U.S. stocks were rattled Monday as two more countries asked for bailout packages in the ongoing Eurozone debt crisis.

    Shortly after word came that Spain had formally requested a bailout package for its ailing banks, Cyprus chimed in and also asked for aid.

    The Mediterranean country has become the fifth Eurozone nation to hold out its hand for an international rescue. While the smallest of the bunch to seek relief, Cyprus highlights the European Union's increasingly stressed resources as it wrestles with weakening economic conditions.

    The aid request followed Fitch's downgrade Monday of the island's stressed banks to "junk" status. The credit cut means the country has lost it investment status with the trio of the largest and most influential rating agencies.

    Fitch said in a statement, "Cypriot banks will require substantial injections of capital in order to secure confidence in their financial viability."

    Cyprus, saddled with Greek private sector debt, could need as much as 10 billion euros ($12 billion) in bailout funds.

    "Classic contagion, "BBC's chief economics correspondent Hugh Pym said of Cyprus' troubles.

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  • Spain Bailout Package of $77 Billion Will Not be Enough The Spain bailout package has a steep price, but still might not be enough to save the country's banking sector.

    Spanish economy minister Luis de Guindos formally asked Eurozone partners for up to 62 billion euros ($77.4 billion) to recapitalize his country's ailing domestic banks. The financial institutions are weighed down by bad loans to property and construction companies, and by an ongoing Eurozone debt crisis.

    In a letter to the Luxembourg Prime Minister Jean Claude Juncker, who serves as head of the 17-nation Eurozone finance ministers, Guindos explained he wanted to settle on details and conditions of the loan before the next euro group meeting on July 9.

    Juncker acknowledged receipt of the letter and said that the ministers expect to give a go-ahead to the European Commission, the European Central Bank and the European Banking Authority to negotiate terms of the bailout.

    The request was anticipated after the results of two independent audits were released last week. Financial consultants Oliver Wyman and Roland Berger made the first step in a two-part audit of the Spanish banking system.

    Wyman found that worst-case scenario, Spain's banking sector would need a bailout package of between 51 billion euros ($63.6 billion) and 62 billion euros ($77.4 billion). Berger estimated on the lower end with 51.8 billion euros ($64.6 billion).

    The formal request for a Spain bailout has made investors more nervous, and is driving the bond yields higher, making it increasingly likely Spain will need more money to try and resolve its debt crisis.

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  • The Eurozone Crisis is Far From Over The Greek election last weekend has brought us a brief reprieve. The nation and the Eurozone have stepped back from the brink.

    But the larger truth is that little has changed.

    Yes, the Eurozone has survived its latest test, yet there is little indication where it will go from here. Considerable continental support for the common currency remains, and EU officials will soon introduce initiatives to consolidate banking and financial policy in the European Union.

    Still, the problems keep mounting, and there is very little resolve to fix them.

    At this point, a lot of actions (or lack of actions) could still upset the entire apple cart.

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  • Eurozone Bailout Package: What's Next for Greece The question regarding whether or not Greece will stick with the Eurozone got at least a short-term answer after the country's elections Sunday, when the conservative, pro-bailout New Democracy party narrowly won the crucial vote.

    But Greece's trials and tribulations are far from over, and the relief is temporary. Concerns are increasing over the global cost of a Eurozone bailout package as the mounting woes in Spain and Italy persist.

    Citizens of Greece are clamoring for change, but many recognize that the election results are no quick fix. There was no cheering in Greece and global markets reacted cautiously following the vote.

    Borrowing costs across Europe rose with Spain taking the lead. The yield on Spain's 10-year bonds spiked to a euro-era high of 7.18%. A reading above 7% raises a red flag that a nation may be approaching the need for a bailout.

    Italian bonds also sold off on fears that if Spain is in need of a bailout, an Italy bailout package might not be far off. Italian bonds' 10-year yields are around 6%.

    While the Greek election results staved off a calamity, they failed to fix the wider problems facing Greece and its struggling neighbors.

    Moody's Analytics' chief economist Mark Zandi told USA Today, "We dodged a bullet, but they've got more bullets coming."

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  • Eurozone Debt Crisis: The Greek Elections are a Make or Break Moment What happens this Sunday, June 17 , may be the trigger for a final resolution of the Eurozone debt crisis.

    Now I understand that you probably don't follow Greek elections. But this is one you'll want to keep an eye on. At the moment, it dwarfs the contest between Mitt Romney and President Barack Obama.

    In fact, come Monday it will be what every banker, politician and trader is talking about.

    In the balance is the very fate of the Eurozone.
    The
    ripple effects could be enough to actually bring the EU down.

    That's the first part of the story. Admittedly, it's not a very pleasant one.

    The second part concerns your portfolio, since the solutions will involve more money-printing and, in the long run, more inflation.

    But you needn't worry. We've already read the central banker's playbook for you.

    In this case, the message is clear. Don't buy Europe. But do buy hard assets -- whether gold, oil, or other commodities.

    These safe-havens are one of the best ways to hedge yourself against these characters and their money printing schemes.

    Now that you know why Sunday is so important, here is how it will likely play out-in both the short term and in the long run.

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  • Why an Italy Bailout Package is on the Way With news of the Spain bailout package still fresh, and Greece's crucial elections on Sunday, the next event in the Eurozone debt crisis is already brewing.

    An Italy bailout package is likely to be the next costly move in the spiraling contagion.

    Italy on Thursday held its first bond auction since European finance ministers came to Spain's rescue, willing to give the ailing country up to 100 billion euro ($126 billion) to shore up its beleaguered banks.

    The auction raised a heap of concerns.

    Italy's borrowing costs soared following a Treasury sale of 4.5 billion euros of debt, including 3 billion euros of its 3-year benchmark bond that yields a lofty 5.3%. That was the highest yield since December and an increase of nearly 1.4 percentage points from the last sale just a month ago.

    In addition, Fitch Ratings reported May 23 that foreign ownership of Italian debt slipped from 50% in 2008 to a current 32%.

    "I think Italy could well be a problem, because its current government isn't very good and has no legitimacy, having been imposed by the EU - and it hasn't cut spending as it needs to," said Money Morning Global Investing Strategist Martin Hutchinson. "I'd put it a few weeks away though - market's focused on Greece and Spain at present."

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  • Why the Spain Bailout Package Won't Work The pricey Spain bailout package convinced markets it could fix the Eurozone debt crisis for only a moment Monday, before reality set in that the plan was far from ideal.

    Following the announcement of a $126 billion (100 billion euro) bank rescue package, markets rose briefly. But the relief was short-lived as investors hastily refocused and remembered that the struggling Eurozone still faces a number of key obstacles.

    The Dow Jones Industrial Average lost 142.97 points, or 1.14%, to close at 12,411.23.

    Spain's bailout package was assembled swiftly as EU officials attempt to stave off suppositions about the country's sickly banks with crucial Greek elections just a few days away.

    But it falls short of resolving what the Eurozone as a whole is up against.

    Banking analysts at Societe Generale summed up in a note to clients, "The plan looks like a classic Eurozone fudge."

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  • Eurozone Debt Crisis: Why the Next Three Months are Crucial Many people wonder how much longer the Eurozone can survive as it struggles to deal with its plaguing debt crisis.

    Well, billionaire investor George Soros has the answer.

    On Saturday, in a thorough and enlightening speech made at the Festival of Economics in Trento, Italy, Soros gave the region a deadline for resolving its debt debacle.

    "In my judgment the authorities have a three months' window during which they could still correct their mistakes and... Read More...
  • Eurozone Debt Crisis: What to Expect if Greece Dumps the Euro The only certain thing if Greece leaves the Eurozone is the uncertainty that will certainly follow.

    Unable to form a coalition government during May elections, Greece has been forced to hold a second vote on June 17.

    In the balance is the future of the Eurozone itself as a "Grexit" looms large.

    So much is riding on the outcome that U.S. President Barack Obama and other leaders of the G-8 have conveyed their optimism that Greece will remain in the Eurozone when they convened for a summit on Saturday aimed at keeping Europe's economic woes from stretching around the globe.

    "All of us are absolutely committed to making sure that growth and stability and social consolidation are part of an overall package," President Obama said.

    But many other principals and economic experts are not as committed and believe a Greek exit would be the best move in the long run.

    The question is what impact its departure will have beyond its own ailing borders if Greece renounces its debt and leaves the Eurozone.

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  • The Gloss is Coming Off the Eurozone Europe, Europe, Europe...

    I know, you're sick of hearing about problems in the Eurozone.

    But the problem with Europe is that it won't go away. And if it does go away, we'll have even bigger problems. What a mess.

    Of course, I'm talking about the Euro-currency zone and the European Union, not Europe itself.

    I love Europe. I love every country in Europe. I love the different cultures. I love the different languages. I love the different societal models. I love the history of Europe.

    And no doubt all the Europeans love all the same things about their Europe - except maybe some of their history.

    But even more than loving Europe, Europeans love their own countries. Why? Because they have different cultures, languages, societal models, and differing views of their history. Vive la diffrence!

    So, whose bright idea was it to gloss over (with shiny promises and, later, a shiny new currency) thousands of years of differences and shove all Europeans into a funnel in the hopes that they'd all come out the other end as one homogeneous mass of humanity?

    Oh, that would be the bankers and financiers who wanted a United States of Europe so that the free flow of goods and services payable with a common currency would make everyone better off, and make themselves better, better off, by a lot of betters.

    And now, what a surprise! There are differences all across Europe about, well, Europe and what it has become and where it has to go to get out of the mess it's created for itself.

    How that's going to end is playing out right before our eyes.

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