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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.”

Sometimes I think Keith has a “crystal ball” in his hip pocket…

  • 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…

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  • National inflation asscociation

  • 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...

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  • 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...

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