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


Sharpen Your Pencil – And Put These Three Stocks on Your "Shopping List"

Ask any of our gurus for advice on how to survive a stock-market sell-off – or even a whipsaw period like the one we’re navigating now – and you’ll get a surprising answer.

Keep a shopping list ready, they’ll tell you…

  • Inflation

  • China Draws Plan to Reduce Risk While Continuing Economic Growth Chinese Premier Wen Jiabao on Friday pledged to maintain economic growth of at least 8% in 2010, while gradually drawing down government spending and taking measures to guard against inflation and potentially devastating asset bubbles.

    The remarks came during Wen's annual report to the National People's Congress in Beijing - which is the equivalent of the United States' State of the Union speech - and they highlight the central government's determination to promote responsible levels of growth.

    The call for 8% annual economic growth is the same goal that has been maintained since 2005 - and one that was easily passed last year with the implementation of a sprawling $586 billion stimulus package.

  • Six Ways to Profit as Brazil's Economy Takes Off In many ways, Brazil offers some of the best prospects among emerging markets and deserves to be a core holding in any international portfolio.

    Brazil's economy had only a shallow recession and is now recovering nicely. Its market has been one of the best performing since Dec. 31, 2008, and both inflation and the budget deficit remain under control.

    Yet one can be only moderately bullish - and I'll explain why.

    To find out how to profit from Brazil's bullish prospects, read on...

  • Australia Increases Rates, Canada Stays Steady as Both Cast Wary Eyes Toward Inflation Canada and Australia, two resource-rich nations that are recovering quickly from the global recession, yesterday (Tuesday) reaffirmed interest rate policies as both promised to remain vigilant about rising inflation.

    The Reserve Bank of Australia (RBA) raised its cash rate target by a quarter of a percentage point to 4.00%, while the Bank of Canada (BOC) kept its benchmark interest rate at record lows. Both central banks said inflation and economic output have been higher than policymakers expected.

    The target rate for overnight loans between commercial banks in Canada will remain at 0.25%, the same level it's been since April 2009, exactly in line with predictions by 22 economists surveyed by Bloomberg News. The central bank also repeated a pledge to leave it unchanged through June unless the current inflation outlook shifts.

  • Weak Job Market and Low Inflation Stall Fed's "Exit Strategy" Any speculation that U.S. Federal Reserve Chairman Ben Bernanke had his finger on the "exit strategy" trigger has been silenced.

    Bernanke yesterday (Wednesday) faced the House Financial Services Committee to instill public confidence in the Fed's ability to exercise a smooth exit strategy and quell continued fears of a tightening monetary policy.

    The Federal Open Market Committee (FOMC) "continues to anticipate that economic conditions -- including low rates of resource utilization, subdued inflation trends, and stable inflation expectations -- are likely to warrant exceptionally low levels of the Federal Funds rate for an extended period," he said.

  • The Essential Eight: The Only Economic Indicators Investors Need to Know Housing starts. PPI. Same-store sales. Weekly jobless claims. Philly Fed. Lagging indicators. Core CPI. Industrial production.

    When it comes to economic indicators, the list is almost endless. One economic indicator follows another, filling an entire calendar - weekly, monthly, quarterly, annually. But on the specific day an indicator is announced, it seems to be the biggest deal going: Commentators comment, pundits pontificate, analysts and economics analyze, predict and forecast, and financial markets around the world react - often violently.

    The next day brings a new batch of indicator reports. Yesterday is forgotten as the frenetic cycle plays itself out all over again.

    Given this pattern, it's not surprising that the economic-indicator game seems confusing - and perhaps even pointless. In the eyes of many investors, the only thing these indicators seem to "indicate" about the economy is that it can be highly confusing and extremely difficult to predict.

  • How the Looming "Debt Bomb" Will Crush the Dollar The U.S. dollar has staged a short term rally against other currencies. But the U.S. is already gripped by hidden inflation and must refinance a mountain of short-term debt in just months.

    Here's how to protect - and grow - your money, even as the debt bomb explodes... Read More...
  • The Five Factors That Could Rescue U.S. Stocks When the stock market is enduring as much trouble as it has been lately, it pays to remember that there are still many positive catalysts that are in place and working to buoy securities prices.

    Let's take a few moments to consider the top candidates:

    • A Friendly Fed: The current U.S. Federal Reserve under Chairman Ben S. Bernanke is the most accommodative in history and is likely to keep short-term interest rates at or near zero for the remainder of this year. Occasionally there will be rumblings of an increase - as there was in The Wall Street Journal last Monday, but they are likely just smoke screens.
    To find out about the other four factors - as well as three possible profit plays - please read on ... Read More...
  • Europe-China Connection Could Rattle Stocks I was watching the Asia Edge show on Bloomberg television Wednesday night when the lovely and smart Susan Li broke in breathlessly on her guest with news about China's consumer inflation numbers. Inflation was reported up just a touch in January, which was considered good news because if it was higher it would have made Chinese banking authorities more anxious to clamp down on interest rates and if it was lower it would have raised the awful specter of deflation.

    The Shanghai stock market ended a fraction higher, so it was a bit anticlimactic. But the key thing to know is that the Chinese market still appears to be in a downtrend and that bodes ill for the rest of the emerging markets. The 50-day moving average of iShares FTSE/Xinhua China 25 Index (NYSE: FXI) has turned emphatically negative, as has the slightly longer 100-day average. The index fund also is already beneath its 200-day average, which tends to distinguish bull cycles from bear cycles.

    Read more about the Europe-China connection...
  • Despite India's Optimism, There May Be a Better Time to Buy The Indian government announced Monday that the country's economy was expected to expand by 7.2% during the fiscal year that ends next month.

    Agriculture - which had been expected to be a major drag on the economy because of a poor monsoon season - contracted a mere 0.2%. That is a truly stellar performance, showing that India - like China - has emerged almost unscathed from the global economic meltdown. It would pretty well justify the Bombay Stock Exchange Ltd.'s rich Price/Earnings multiple of 20 and would make Indian stocks a "Buy" even at these levels.

    Unfortunately, when looked at closely, the picture is not quite so rosy.

    Is India a "Buy" now -- or later? Read on to find out... Read More...
  • Will Copper Become the "New Gold?" The Statue of Liberty is one of the most recognizable American icons in the world.

    And as she towers 305 feet above Ellis Island, what's Lady Liberty wearing? Copper - 60,000 pounds of it.

    Clearly, copper's big in art. It's also a key metal that keeps the world economy humming. Copper consumption has grown at an average annual rate of 4% since 1900. China and India - which some analysts describe as the combined market of "Chindia" - where one of every three human beings resides, needs loads of this element to meet its modernization requirements for electricity and infrastructure.

    Copper is also used in today's currency, where most U.S. coins are actually 92% copper, and 8% nickel.

    But there's no denying that, given the choice, nearly everyone prefers gold. It's valuable, it's seductive and it's mystical.

    Ancient kings fought wars to amass it. Yet, for thousands of years, its most enduring role has arguably been in the form of money - as a store of value.

    That's because fiat-paper-currency experiments have never lasted, and always ended badly.

    Increasingly, followers of the Austrian School of Economics are nostalgic for gold to regain its former glory, perhaps "backing" a new international currency.

    But despite gold's much longer history as true money, some believe that copper - the much humbler metal - could be positioning itself to upstage gold.

    To find out more about the forces that will transform copper into the "New Gold," read on... Read More...
  • Obama's Budget Adds $1 Trillion in Taxes, Balloons Federal Deficit President Barack Obama yesterday (Monday) unveiled a $3.8 trillion budget proposal that includes big tax increases on individuals and businesses, and expands the federal deficit by more than $5.5 trillion by the end of the decade, including a record $1.6 trillion next year.

    The budget blueprint for the fiscal year that begins Oct. 1 reflects the administration's struggle to find a balance between containing the spiraling federal deficit with the need to boost the economy and create jobs - both of which figure to be political bombshells in the upcoming 2010 elections.

    "We're trying to accomplish a soft landing in terms of our fiscal trajectory," Peter Orszag, director of the White House Office of Management and Budget, said at a press briefing.

    But the budget is certain to add fuel to the debate over the size and scope of government. As expected, Republicans railed against the administration's big spending programs and tax increases. Read More...
  • Fed Gambles on Low Inflation and a Stable Housing Market The so-called "exit strategy" has yet to enter the picture.

    U.S. Federal Reserve policymakers yesterday (Wednesday) announced that the benchmark Federal Funds rate would remain in its record-low range of 0.00% to 0.25% for an "extended period." And policymakers also said that the nation's central bank would continue with its plan to wind down its purchases of agency debt and mortgage-backed securities.

    The term "exit strategy" is a financial euphemism for boosting interest rates. By keeping short-term interest rates at what many experts say are artificially low levels, the Fed is betting that inflation will remain subdued in the short and medium-term and that the beleaguered U.S. housing market will be able to stage its recovery without crutches.

  • My Confrontation With Ben Bernanke: The One Question He Refused to Answer The Secret Service agents watched me warily as I approached U.S. Federal Reserve Chairman Ben Bernanke.

    I didn't waste any time. After introducing myself, I showed him a copy of the talk he gave at the American Economic Association (AEA) meetings in January 2007. I circled all the times he used the words "panic," "crisis," and "stress" in his speech, entitled "Central Banking and Bank Supervision of the United States."

    A total of 36 occasions.

    I asked him point-blank: "Did you know in advance that a financial crisis was headed our way?"

    He looked nervous. I could tell he was uncomfortable with my question. He looked at me stoically and smiled.

    And he refused to answer.

    But there was no doubt in my mind what the correct answer was. I think he was worried about his job if he said, "Yes."

  • Can Bernanke Tune Out Political Pressure as the FOMC Again Ponders Policy Changes? When U.S. Federal Reserve Chairman Ben S. Bernanke emerges from the central bank's monthly policymaking meeting at around 2:15 p.m. today (Wednesday), it's a near certainty that he'll reaffirm his pledge to keep interest rates "exceptionally low" for an "extended period" of time.

    Bernanke has kept the benchmark Federal Funds rate at a record low range of 0.00%-0.25% since December 2008, and that's not likely to change as a result of today's meeting of the central bank's Federal Open Market Committee (FOMC).

    At some point, however, Bernanke will have to tighten credit and raise interest rates in order to soak up all the excess liquidity and curb inflation in the U.S. economy. But the question remains: When that time comes, will Bernanke have the fortitude to do so?

    There's no simple answer. And for good reason: With the country mired in its worst financial crisis in most Americans' lifetimes, the central bank's decisions now are as political in focus as they are economic. Read More...
  • The Five Reasons Gold Will Hit $5,000 Let me get right to the point. Gold's going to $5,000 an ounce.

    I know that sounds preposterous to most people. In fact, some of you probably think I'm crazy.

    But for a whole host of reasons, $5,000 may well end up being a conservative estimate.

    So before you start posting comments that I've gone bonkers, hear me out...

    For more on gold’s looming "superspike," read on...