Press Esc to close

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


Is Your Vehicle on the "Most Hackable" List?

My first car was a bone-stock 1929 Ford Model A coupe that has been in the family since it was new.

My late grandfather – a machinist on the Lehigh Valley Railroad – drove the car as his everyday vehicle until the late 1940s. My Dad restored the car in his mid-teens and drove it through his high-school years.

And I did the same…

  • Eurozone

  • U.S. Treasury Bonds: The Not-So-Safe "Safe Haven" In the last few weeks, international investors spooked by the budget crisis in Greece and the turmoil in southern Europe have been flocking into the U.S. Treasury bond market as a "safe haven."

    The huge resulting funds flows have pushed the 10-year Treasury bond yield down to 3.16%, very little above its level during the crisis of October 2008. To a rational investor, this is extremely peculiar: After all, what on earth is safe about the "haven" of long-term U.S. Treasury bonds?

    To learn about the potential investment dangers posed by U.S. government debt, please read on... Read More...
  • Borrowing Costs on the Rise as Banks Cope with Contagion Fears LIBOR (London Interbank Offered Rate) - the rate banks pay each other for three-month loans in dollars - yesterday (Tuesday) rose to its highest level since last July.

    The rise in borrowing costs is directly attributable to Europe's debt crisis, which is forcing financial institutions to re-think their peers' creditworthiness.

    The Libor increased to 0.536%, the highest level since July 7, from 0.510% on Monday, the 11th consecutive day it has increased, according to data from the British Bankers' Association (BBA). German and French bonds surged, pushing 10-year yields to record lows, as investors moved into the safest assets.

  • Why the Eurozone Debt Contagion is Telling Us That It's Time to Buy Dividend Stocks, REITS and MLPs With the escalating Eurozone-debt-contagion fears of recent weeks, a significant shift is taking place in the global stock-and-bond markets.

    The powerful bull cycle that grew out of the early March 2009 market lows - the quickest and strongest stock-market rebound of the past 50 years - has been losing some of its youthful verve as it matures. That means we can expect the pace of gains to moderate as asset classes (stocks, bonds, currencies, commodities) begin to differentiate themselves.

    But that doesn't mean the profit opportunities are gone. As that differentiation plays out, such income-oriented plays as high-yielding dividend stocks, real estate investment trusts (REITS) and master-limited partnerships (MLPs) will prove to be major beneficiaries, experiencing a handsome run-up in price. Shrewd investors will move into those investments before their prices increase.

    To see what stock-market sectors hold the most promise, please read on...

  • Money Morning Investment Report Update: German Economy Shows Surprising Strength The German economy - Europe's largest, and one of three markets highlighted in Money Morning's most recent investment-research report - is demonstrating some real muscle.

    Just as we expected it to.

    The country's statistics office, Destatis, said Germany's gross domestic product (GDP) expanded at a better-than-expected rate of 0.2% in the first three months of this year. The results surprised analysts, who had expected a zero-growth first quarter because of bad weather that stymied construction work.

    "The German economy is slowly...
  • Germany's Short-Selling Ban Lacks the Political Muscle to Go Global Hoping to win more public and political support for its involvement in the bailout of Greece, Germany has banned the naked short-selling of European sovereign debt instruments. However, other European governments are refusing to follow suit, highlighting the lack of political will that's needed to regulate the credit default swap (CDS) market.

    German Chancellor Angela Merkel said that the ban would remain in place until the EU comes up with a comprehensive plan for financial reform.

    "This will all remain in place until other rules are established on the European level," she said.

  • What Does Germany's Credit-Default-Swap Ban Mean for You? Germany did something on Tuesday that I've been hoping would happen for three years: It outlawed naked short-selling and speculation on European government bonds with naked credit default swaps.

    The financial institutions that have been profiting from this type of speculation immediately went on the offensive.

    German officials justified the surprise, unilateral move by financial regulator BaFin by stating that the "exceptional volatility" in government debt - if accompanied by massive short-selling and naked CDS trading - could result in excessive price movements that would actually "endanger the stability of the entire financial system."

    To learn about the strategies you should employ because of Germany's move, please read on... Read More...
  • 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 Averageis down 3.6%, theNasdaq100is -4.7%, the S&P SmallCap600is -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.

  • Gold Prices Surge and Will Keep Climbing as Investors Protect Against European Debt Crisis Gold prices yesterday (Wednesday) broke through to a record high, as investors feared the Eurozone bailout plan would debase the euro and escalate inflation.

    Gold for June delivery continued its record-breaking Tuesday climb to hit $1,243.10 an ounce Wednesday. The contract reached an intraday high of $1,249.20 an ounce. Spot gold prices hit $1,244.45 an ounce, up almost 20% in the past three months.

    Gold's reputation as a "safe haven" investment causes the metal's price to move inversely to investor confidence, which has been rattled by the Greece debt crisis and last week's 1000-point plunge in the Dow Jones Industrial Average.

  • Does the EU Bailout Signal the Euro's Demise? Does the European Union (EU) bailout signal an end for the euro currency?

    Investment icon Jim Rogers and lauded economist Nouriel Roubini think so.

    And they may be right.

    Eurozone governments were forced to spring into action on Sunday to defend the besieged euro. The currency has come under tremendous pressure as investors wonder if Greece's fiscal crisis will spread to other heavily indebted nations.

    Greece's deficit-to-gross domestic product (GDP) ratio is a staggering 13.6%, but Greece is No. 2 on the list of over-spenders. No. 1 is Ireland, whose deficit-to-GDP ratio is 14.3%. Spain comes in third at 11.2%; and Portugal is fourth at 9.4%.

    The euro in the past six months has dropped by about 17% against the dollar, as investors rushed to ditch the currency.

  • How the Greece Bailout Turned Gold Into a 'Must-Have' Investment With so much uncertainty in the U.S. stock market - not to mention the debt-contagion concerns emanating from Greece and other European Union (EU) countries - it's more important than ever for investors to hold "hard assets," such as gold and other commodities.

    In my view, what's happening in Europe is particularly important for investors to be aware of and understand. The so-called " shock-and-awe" bailout strategy undertaken by the EU and the International Monetary Fund (IMF) - which establishes a $1 trillion rescue package for member-countries facing financial crisis - will not be the answer.

    To see how gold and other hard assets are becoming "must-have" investments, please read on... Read More...
  • Taipan Daily: Trillion Shmillion – Europe's "Common Currency" Is Still Doomed As far as the euro goes, the trillion-dollar "shock and awe" program was a shocking disappointment. Here's why.

    "... while Europeans no longer fear foreign armies, they are starting to fear foreign bondholders. Europe's existence as a "lifestyle superpower' has depended on an ample supply of credit... "
    - Gideon Rachman, Financial Times

    "...this is just another example of a short-term, leveraged solution, that merely adds to the burden of future problems..."
    - Marc Ostwald, Monument Securities

  • Could the British General Election's 'Hung Parliament' Lead to a Resurgent U.K. Economy? In the depths of the Depression-ridden 1930s, two years after a British General Election that yielded a "hung parliament" - came the formation of a coalition government that resulted in one of the strongest decades the British economy has ever enjoyed.

    Seventy-nine years later, in the throes of another global downturn - with another "hung parliament" and yesterday's (Tuesday's) resignation of Britain's prime minister paving the way - could history be repeating itself?

    To find out how Britain's election results could nurture an economic rebound, please read on... Read More...
  • The Eurozone Bailout Plan Puts a $962 Billion Price Tag on Saving the Euro – But Is It Finally Enough? European Union (EU) finance ministers yesterday (Monday) announced a $962 billion (750 billion euros) Eurozone bailout package that rallied global markets with a drastic new attempt to prevent a euro collapse and contain the Greek debt crisis.

    European policy makers agreed to the massive effort in a 14-hour meeting Sunday, trying to beat the start of Asian markets. The aid plan will include $77 billion (60 billion euros) from a European Union emergency fund (the first lifeline to be tapped for aid), $562 billion (440 billion euros) from Eurozone governments, and $320 billion... Read More...
  • Despite Spiraling Contagion Fears, Spain Debt Worries Are Overblown It had a huge housing boom, and is now dealing with the fallout. It has a left-of-center government and a big budget deficit, but relatively low debt in relation to its gross domestic product (GDP). And it has a worrisome current account deficit.

    I'm talking, of course, about Spain, which investors clearly fear will be the next domino to fall as a result of the Greek debt contagion.

    I disagree.

    To see why Spain will shrug off the Greek contagion, please read on... Read More...
  • Taipan Daily: Could Continent-Wide Bank Runs Collapse the Eurozone? The eurozone's woes are giving us a preview of what could eventually happen in the United States (but not before Europe is engulfed first). As fears of sovereign debt crisis mount, the debt "contagion" spreads. It is not just Greece that has investors afraid, but Portugal. And Spain... and Italy... and so on.

    The problem is classic, and long ago highlighted by Austrian economics. Building up a lot of debt, to make a slightly crass analogy, is like putting on a bunch of weight. It's hard work getting the debt off - the same as it is taking weight off.

    The way to lose weight is to eat right and exercise. The way to get out of debt is to cut back on spending and increase productivity.