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We'll Tell You When It's Time to Tap Tesla

A week ago today, in a strategy story aimed at helping you survive and thrive in today’s whipsaw markets, Chief Investment Strategist Keith Fitz-Gerald told us to put Tesla Motors Inc. (Nasdaq: TSLA) on our “watch lists” for a likely future purchase.

“BP, Tesla is a definite ‘shopping list’ stock,” Keith told me back then. “We’ve been nibbling at it here, and have played it successfully several times. But it’s not yet at the point where I’m ready to jump all the way in. I think my rationale behind Tesla remains upbeat. I mean, you’ve got a real winning combination here – a disruptive sales model, a CEO who’s the most innovative guy on the planet, all the capital in the world that can be brought to bear. I don’t give a rat’s [tail] that New Jersey won’t let the company sell its cars there. There are much bigger opportunities. Wait ’til you see what the company does with China.”

  • Fiscal Cliff 2013

  • Expect QE3 After Geithner's Warnings In testimony yesterday (Wednesday) before the House Financial Services Committee, U.S. Secretary of the Treasury Timothy Geithner may have inched us closer to QE3 when he warned that the U.S. economy will be slammed by two major factors: the immediate danger from the Eurozone debt crisis and fiscal cliff 2013 that is fast approaching.

    "The economic recession in Europe is hurting economic growth around the world, and the ongoing financial stress is causing a general tightening of financial conditions, exacerbating the global slowdown," Geithner said in his testimony.

    As much of the revenue for major U.S. corporations such as Ford Motor Co. (NYSE: F), DuPont (NYSE: DD) and Cisco Systems Inc. (Nasdaq: CSCO) comes from Europe, the damage is already being felt by both employees and shareholders. Cisco, down 20.52% for the quarter, recently announced the layoffs of 1,300 workers, about 2% of its global labor force.

    Geithner cited other factors harming the U.S. economy, including the rise in oil prices earlier this year, cuts to government spending and slow rates of income growth.

    Possible adverse developments in the future, particularly the fiscal cliff, led Geithner to warn that, "These potential threats underscore the need for continued progress in repairing the remaining damage from the financial crisis and enacting reforms to make the system stronger for the long run."


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  • Fiscal Cliff 2013: Politicians Playing Chicken with Your Money on the Line Americans are caught in the crossfire as U.S. policy makers continue to battle over "fiscal cliff 2013."

    Republican and Democratic lawmakers remain deadlocked over what to do regarding the expiring tax a nd spending cuts, but its taxpayers' money that's at stake.

    On Dec. 31, if no action is taken, Bush-era tax cuts will run out, thrusting the struggling U.S. economy back to the lofty Clinton-era tax rates. Plus, steep spending cuts will kick in, hitting a broad range of sectors from education to national defense.

    U.S. President Barack Obama and his administration want a tax extension for those making less than $250,000. They are also calling on the top 2% of earners to pa y higher rates on income exceeding $250,000, maintaining it's their duty to do so.

    Republicans, however, want the tax breaks to remain intact for all.

    So it goes, and so it has gone for months. If Democrats get their way and let some $600 billion worth of tax hikes and spending cuts go into effect in January, it will drive the nation back into a recession. But that can be avoided if Republicans back off on their opposition of higher taxes for our nation's wealthiest.

    While the two parties clash, Americans of all tax brackets are stuck in a wait- and- see mode--waiting for action and not seeing much except their nest eggs getting fried.

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  • Fiscal Cliff: Bernanke Urges Congress to Take Action U.S. Federal Reserve Chairman Ben Bernanke on Tuesday once again reiterated Congress' need to prevent the economy from succumbing to the "fiscal cliff" that as of now will hit taxpayers and the country in 2013.

    The fiscal cliff refers to the numerous tax increases and steep spending cuts slated to go into effect Jan. 1, and will throw the already struggling U.S. economy back into a recession.

    In his semi-annual monetary report to the U.S. Senate, the chief voiced his concerns. What was missing though was what Congress should actually do to hammer out a budget deal that would prevent a fiscal cliff.

    "I don't have a specific recommendation, other than to think not just about the individual policies, but of the collective impact. Congress is in charge here," Bernanke said.

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  • How the Fiscal Cliff will Deal a Blow to U.S. Defense Industry The fiscal cliff is taking down more than U.S. taxpayers - it will tear through the U.S. defense industry.

    At the end of this year, current tax policies are set to expire and new ones will go into effect at the start of 2013. What Americans can expect if the policies are not extended is a painful combo of tax increases and spending cuts that will thrust the struggling U.S. economy back into a recession.

    If U.S. lawmakers fail to act, scores of economists agree what we'll get is a $600 billion drag on the already sluggish economy. The tax implications have been widely discussed, but there has been little chatter about the impact on the defense sector, which stands to sorely suffer since it is subjected to half of the proposed spending cuts.

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  • Fiscal Cliff 2013: Global Concern is Growing It's been a couple months since the Congressional Budget Office shared some negative news about the looming "fiscal cliff" - even suggesting a possible 2013 recession - and investors worldwide are starting to take the warning more seriously.

    The fiscal cliff is the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013 unless Congress and the White House take some action to either delay or change them.

    Should these two actions combine, you'll watch $7 trillion be tagged onto the nation's debt over the next decade. This would come out to around $500 billion next year,according toCNN.

    Not helping matters is that we've unofficially hit the middle of summer; the clock is ticking louder for the fiscal cliff as expectations for political stagnation instead of a resolution have increased ahead of Election 2012.

    A recent Morgan Stanley (NYSE: MS) survey highlighted the fiscal cliff concerns.

    According to MarketWatch, 65% of global investors - 71% of U.S. respondents - believe that "the fiscal cliff will cause significant uncertainty in markets for the rest of the year, but think policy makers will ultimately agree to extend most or all of the expiring stimulus and tax measures."

    But only 24% of global investors believe the risks surrounding it are overblown.

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  • Fiscal Cliff 2013: IMF Warns of Global Impact Worries over the looming "fiscal cliff" are spreading, and implications of the scheduled tax increases have become a growing global concern.

    The fiscal cliff is the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013, unless Congress and the White House change or at least delay them.

    Everyone has an opinion on the matter, and this week the International Monetary Fund added its two cents.

    The IMF issued a fresh report Tuesday warning that failure to avoid the fiscal cliff in 2013 could put the brakes on the U.S. growth rate, pushing it under 1%. Such a slowdown poses great risk to economies worldwide.

    The IMF said the global implications for early 2013 are a negative growth rate with "significant negative repercussions on an already fragile world economy."

    "It is critical to remove the uncertainty created by the "fiscal cliff" well as promptly raise the debt ceiling, pursing a pace of deficit reduction that does not sap the economic recovery," the IMF said in its annual health check of the U.S. economy.

    Under current fiscal cliff terms, the proposed spending cuts and tax increases would minimize the deficit by approximately 4% of GDP in 2013.

    Lawmakers should, the IMF counseled, replace the fiscal cliff with a program of small deficit reductions in the short-term with a longer term fiscal sustainability program.

    Christine Lagarde, IMF Managing Director, said at a press conference Tuesday that a small deficit reduction means cuts amounting to 1% of GDP next year. The downside risks to the U.S. economy as well as worldwide financial systems have deepened, she noted.

    "We believe that fiscal consolidation is necessary but not just any fiscal consolidation. It has to be sensible and certainly not excessive," said Lagarde.

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  • Fiscal Cliff 2013: How Investors Can Prepare Late science fiction writer Ray Bradbury wasn't referring to investors when he said, "you've got to jump off cliffs all the time and build your wings on the way down," but he might as well have been referring to the upcoming fiscal cliff in 2013.

    The fiscal cliff is a real crisis looming at year's end. The fragile U.S. economy could face an unparalleled fiscal punch of as much as $720 billion if the scheduled changes go through as planned. They include the Bush-era tax cuts set to expire Dec. 31 and billions of dollars in programmed federal spending cuts.

    U.S. Federal Reserve Chairman Ben Bernanke has warned that shocks from such changes will most likely cause the economy to contract, causing a recession.

    And without cooperation from Congress, there's no alternate route for the U.S. economy to take.

    Ernie Gross, Ph.D., MacAllister Chair and professor of economics at Creighton University, told Forbes, "The fiscal cliff is an almost 100% certainty."

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  • What is the "Fiscal Cliff"? Now that we've explored the dangerous repercussions of the looming Taxmageddon, investors have another important question: What is the "fiscal cliff"?

    Fiscal cliff anxiety has increased since May 22 when the Congressional Budget Office spread some gloom and doom by citing a potential 2013 recession.

    As we reach 2012's midpoint, we still have November's presidential election and a ticking clock for Congress and the president to reach an agreement on policy issues by year's end.

    The likelihood of this doesn't look good. That's why now's the time to prepare for the potential effect from the fiscal cliff.

    What is the Fiscal Cliff?

    You can thank Federal Reserve ChairmanBen Bernankefor coining the phrase.

    Fiscal cliff refers to the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013 unless Congress and the White House agree and take some action to either delay or change them.

    Should these two actions marry, you'll watch $7 trillion tagged onto the nation's debt over the next decade, or about $500 billion next year, according to CNN.

    How will investors be impacted?

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  • How I Learned to Stop Worrying and Love the Fiscal Cliff Taking a header off the "fiscal cliff" might be the best thing that could happen to the United States.

    It sounds crazy, given all the dire predictions economists are making about the "Taxmageddon" that will arrive on Jan. 1, 2013.

    While true, no one is talking about what would happen to the economy after the fiscal cliff crisis of 2013.

    If Congress fails to act and allows all the bad things to happen - the expiration of the Bush-era tax cuts and the payroll tax cut, as well as the enforced spending cuts (sequestration) agreed to in the budget deal last year - the federal budget deficit would start shrinking dramatically.

    And the fiscal discipline, while brutal in the short run, would jump-start the economy by early 2014.

    It's all in a recent Congressional Budget Office (CBO) report, "Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013."

    The CBO ran projections based on two scenarios.

    One looks at what would happen if Congress does nothing and lets the country go over the fiscal cliff. The other scenario looks at what would happen if Congress dodges the fiscal cliff by extending most, if not all, of the current policies.

    Choosing to take a leap off of the fiscal cliff--as has been widely reported-- would slam an already faltering U.S. economy. The CBO report says GDP would shrink by 1.3% in the first half of 2013, pushing the country back into a recession.

    On the other hand, extending current policies would push GDP up 5.3% in the first half of 2013.

    That may sound great, but a funny thing happens after those first six months.

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