Press Esc to close

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

Close

Wednesday's "Earnings Beat" Makes This The Perfect "Bad-Market" Tech Stock

In last week’s Private Briefing report Our Experts Show You the Stocks to Pick in a ‘Stock-Picker’s Market’,” Money Map Press Chief Investment Strategist Keith Fitz-Gerald identified SanDisk Corp.(NasdaqGS: SNDK) as one of three stocks to buy in the face of the stock market sell-off.

And now we see why…

  • Featured Story

    8 Reasons Your Dollar Doesn't Go As Far As it Did 10 Years Ago

    Currency USD black eye
    Patients' hospital expenses have nearly doubled in the past decade. So, too, has the price of college textbooks. And gas prices have more than doubled, while prices of fuel oil and other fuels for home use have climbed a whopping 145%.

    It's been a tough decade on the wallet, thanks to inflation.

    The figures are based on a Yahoo! Finance analysis of items and services tracked by the Bureau of Labor Statistics' Consumer Price Index.

    And the CPI, of course, is based on government stats which, as Money Morning has reported, routinely understate inflation.

    Here are 8 reasons why inflation is pinching you, no matter what the Fed says about low inflation:

    To continue reading, please click here…

    Read More...
  • inflation rate

  • With Unchecked U.S. Spending, It's Time to Hedge Against Inflation USD inflation 2

    Uncontrolled government spending could force the Fed to monetize the government's debt, creating runaway inflation, former Federal Reserve Governor Frederic Mishkin warned in a report.

    If these circumstances were to occur, the Fed would be unable to do much, if anything, to control inflation, Mishkin said in the report, presented at a conference at the University of Chicago Booth School of Business.

    In that case, Mishkin and his co-authors, David Greenlaw, James Hamilton and Peter Hooper, argue that the result could be "a flight from the dollar," according to a summary of the report by noted Fed-watcher Steven K. Beckner writing for MNI.

    The report states, "Countries with high debt loads are vulnerable to an adverse feedback loop in which doubts by lenders lead to higher sovereign interest rates, which in turn make the debt problems more severe ... Countries with debt above 80% of GDP and persistent current-account deficits are vulnerable to a rapid fiscal deterioration as a result of these tipping-point dynamics."

    The authors of the report estimate U.S. net debt, excluding debt held by the Social Security Trust Fund, at about 80% of GDP in 2011, double what it was a few years before. To make matters worse, the United States runs a persistent current account deficit, which is funded by borrowing from other countries.

    This puts the U.S. in a worse spot than Japan which, although its debt is much higher as a percentage of GDP, has a large current account surplus and a high savings rate.

    To continue reading, please click here...

    Read More...
  • Why Veteran Trader Says Inflation in 2013 Is Imminent Currency USD inflated no shadow

    Is a spike in the monetary base - currency in circulation plus bank reserves at the Fed - the first sign of imminent inflation?

    Art Cashin, the well-respected director of floor operations at the New York Stock Exchange for UBS, recently told King World News the increase in the monetary base may well be a sign of impending inflation.

    Monetary base, sometimes called high-powered money, is the basis for the bank lending that drives our economy. When interest rates are normal, banks use their reserves for lending.

    Unfortunately, these are not normal times. The U.S. Federal Reserve and other central banks around the world continue to hold interest rates at zero.

    Zero interest rates mean zero returns. Investors don't get paid for investing. Banks don't get paid enough interest to compensate for the risk of lending money into the economy. Looking at it another way, there is no penalty for doing nothing with your money.

    To continue reading, please click here...

    Read More...
  • Why the Spending Cuts Battle Looks Uglier Than Fiscal Cliff Fight President Barack Obama needs swift approval from the Republican-run Congress to raise the swollen $16.4 trillion debt ceiling next month in order to prevent the U.S. government from a default. But here's where the real battle will go down. Read More...
  • Why Inflation is the Economy's "Iceberg" in 2013 Even though Ben Bernanke's Fed has kept interest rates close to zero, inflation hasn't been a big problem since the 2008 financial crisis.

    Despite what many observers have expected inflation has remained quite tame.

    However in 2013, that may be about to change. One factor that might cause a surge in inflation is the fiscal cliff.

    That's because Bernanke is already buying $1 trillion of Treasury and housing agency bonds each year ($85 billion per month) against a budget deficit that is about the same level.

    That means the inflow of funds to the economy from the Fed and the outflow of money to fund the government's spending are about balanced.

    However, if we go over the fiscal cliff the Federal deficit immediately falls to about $300 billion per annum. At that point, Bernanke would be injecting an extra $700 billion a year into the economy - which would have a corresponding inflationary effect.

    The Case for Higher Inflation

    But that's only part of the inflationary story.

    Central banks around the world are also expanding their money supply. China has become more expansive, the European Central Bank is buying bonds of the continent's dodgier governments and Britain like the United States is monetizing nearly all the debt it creates to fund its budget deficit.

    The big change in 2013 is now in Japan, where the new Abe government has told the Bank of Japan it wants much more buying of government bonds, to push the inflation rate up to 2%.

    And just as Bernanke's money creation increases inflation internationally, Japan's new monetary push creation will likely increase inflation here in the United States.

    To continue reading, please click here... Read More...
  • Real Unemployment Rate Could Give Obama Heartburn in November A quirk in how the U.S. government calculates the unemployment rate has made the data look better than it is, some Wall Street experts are saying.

    But in a stroke of bad luck for President Barack Obama, that same quirk will mask real improvements to the U.S. unemployment rate over the summer and into the fall, damaging his chances for re-election.

    The official Bureau of Labor Statistics (BLS) unemployment rate has fallen from 8.9% in October to 8.3% in January. The number for February, released today (Friday), held steady at 8.3%.

    "We think that the improvement over the last few months dramatically overstates the underlying improvement," Andrew Tilton, an economist at Goldman Sachs, told Reuters. "You will not see that rate of improvement going forward."

    Click here to continue reading...

    Read More...
  • Steak, Hamburger and Dog Food: How the Government Lies About the Real Inflation Rate More experts are saying what most Americans have suspected for years - the real inflation rate is much higher than the government is willing to admit.

    Officially, the U.S. Bureau of Labor Statistics (BLS) says the inflation rate, or Consumer Price Index (CPI), for 2011 was 3%.

    But a report issued last week by the non-profit group American Institute for Economic Research (AIER) says the U.S. inflation rate for 2011 is far higher - 8%.

    AIER used criteria based only on common daily expenditures to more accurately reflect how inflation affects consumers. Their index excluded less-frequently purchased items, like automobiles.

    Economic consultant John Williams, an outspoken critic of the government's economic statistics, contends things are even worse.

    Using the government's old methodology from 1980 - before politicians started to monkey with the formula - he calculates the real inflation rate is north of 10%.

    That's more than triple the government's figure.

    Among the few in government who see this as a problem is Republican presidential candidate Rep. Ron Paul, R-TX.

    "You know this argument that the prices are going up about 2%, nobody believes it," Paul bluntly told U.S. Federal Reserve Chairman Ben Bernanke during a hearing last week. "People on fixed incomes - they're really hurting, the middle class is really hurting because their inflation rate is very much higher than the government tries to tell them and that's why they lose trust in government."

    Changes to the Real Inflation Rate

    Over the years, the government has made a series of adjustments to how it calculates the CPI, ostensibly to make it more accurate.

    However, critics like Williams say the inflation rate formula has been changed to serve political ends.

    Read More...
  • Not Much of a Debate: Inflation is Part of the Plan Forget about lost decades. Forecasts that we'll be turning Japanese couldn't be further from the truth.

    Here's why.

    It's simple, really. Deflation is not in the interest of anybody in power, so it's very unlikely to happen.

    The U.S. Federal Reserve's policy move to target inflation last week just re-emphasizes this point.

    That's not to say deflation is a bad thing for everybody.

    For savers and those living on fixed incomes, deflation would be a very good thing indeed.

    Their income would gradually increase in real terms, and their savings would become steadily more valuable. Holders of Treasury bonds would also gain mightily from deflation.

    However, the very people who would gain from deflation are not in power.

    The People's Bank of China can't vote in the U.S. (yet!), Ron Paul is not president, and there is not an organized and powerful savers' political movement. After all, this is not Germany or Japan!

    Meanwhile, in the real world, the U.S. government is spending far more than it takes in, and its debt is rising to dangerous levels. This has been happening on a bipartisan basis since at least 2001.

    The Tea Party may have elected a Congress committed to reducing spending, but none of the battles of 2011 actually reduced spending - they just slowed the rate of growth somewhat.

    Since much of the debt is borrowed long-term at low interest rates, the best way to reduce its burden on future generations is to encourage inflation.

    Savers may lose out on the deal, but to those in Washington, the idea of inflating our way out of debt is irresistible.

    Of course, sometimes we can depend on an independent central bank to resist this temptation. But at present, Fed Chairman Ben Bernanke is committed to near-zero interest rates in his fight against deflation.

    Now you don't have to be a conspiracy theorist to realize that, if the power structure is committed to at least moderate inflation, inflation is what you are going to get.

    In fact, it is already brewing.

    To continue reading, please click here...

    Read More...
  • China's Inflation Higher Than Target Rate, Could Be a Sign It's Time to Tame Rapid Growth China's inflation rate rose 3.1% in May from a year earlier, exceeding the government's 3% target rate for 2010 and stirring speculation on whether or not Beijing will attempt to slow the nation's rapid growth pace.

    The consumer price index climb was the fastest in 19 months and was higher than the 2.8% rate in April. The National Bureau of Statistics also posted increases in industrial production, retail sales, and property prices, which contributed to analysts wondering whether or not China will make moves to tame growth to avoid higher inflation.

    "Officials seem confident that price pressures will ease later this year, attributing much of the recent positive trend to base effects, but there are plenty of reasons to think that inflation can keep moving higher," Royal Bank of Canada (NYSE: RY) economist Brian Jackson told The Wall Street Journal.

    Read More...