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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.”

  • U.S. Economy

  • Will Obama's "Soft Money" Fed Lead to Hard Times for the U.S. Economy? For a U.S. president, nominating Fed governors is a little like nominating Supreme Court justices: Since they serve a 14-year term, you have the chance to shape the U.S. Federal Reserve for a decade after your administration ends. What's more - even though Fed governors are subject to confirmation by the U.S. Senate - you're far less likely to have trouble getting them through than you do with the Supremes.

    That's why U.S. President Barack Obama's current chance to nominate three out of the seven Fed governors is legitimate front-page news - and isn't merely the "inside monetary baseball" trivia that occupies much of the daily business section. Probably two of those three governors still will be serving in 2020, long after President Obama has published his memoirs.

    The bottom line: One of President Obama's legacies will be a "soft money" Fed.

    To discover the dangers of a "soft money" Fed, read on... Read More...
  • No Changes to Fed Policy The U.S. Federal Reserve today (Tuesday) kept its benchmark interest rate at a record low level Tuesday and made no changes to the key "extended period" policy pledge.

    In its description of the economy, the Fed noted that "household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit." Also, the housing market has yet to turn a significant corner and the commercial real estate market remains in dire straits.

    "Investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls," the Fed statement said.

  • Bulls Overcome Market Tug of War to Send Stocks off to Strong March Start Stocks rose briskly last week, resulting in a big week for the major market indexes. Weekly and monthly index charts improved, and such major U.S. stocks asThe Boeing Co.(NYSE: BA),Hewlett PackardCo. (NYSE: HPQ),American ExpressCo. (NYSE: AXP),Google Inc.(NASDAQ: GOOG),AppleInc. (AAPL), Goldman SachsGroup Inc. (NYSE: GS) and General Electric Co. (NYSE: GE) emerged from flat-lining or faltering price patterns on decent, if not outstanding, volume.

    Just two weeks ago, every one of the afore-mentioned stocks looked terrible, exhibiting intense apathy amid slow, grinding declines. Then the skies parted, and suddenly the sun is shining on these shares once again.

    That's why U.S. stocks are off to a strong March start - already up 4.1% from the end of February. And don't forget, a year ago at about this time (March 9, 2009), the market reached its nadir: The Standard & Poor's 500 Indexis up 69.98% since that time.

    Here's why the shift seems so abrupt. The markets are now in a tug of war between two forces:

    • On the plus side are good fourth-quarter earnings reports related to an improving economy.
    • On the negative side - as a friend at a major macro hedge fund described it last week - are "frigid winds blowing across the credit icebergs."
    To find out who’s winning the stock-market tug of war, please read on… Read More...
  • Buy, Sell or Hold: JDS Uniphase Corp. (Nasdaq: JDSU) Is Yet Another Rising Star in the Broadband Revolution We keep getting good news with respect to the broadband revolution. If you have not read my prior posts, do not miss this special report on it. These developments are revolutionizing the tech world right now and we are at the very inception of an explosive and highly profitable trend.

    For starters, both the U.S. economy and the global economy are faring much better than most of the market expected. In fact, last Friday we saw February's retail sales blow away even the most optimistic forecasts. Sales excluding autos did particularly well, which is good news for Internet sales.

    We also saw Cisco Systems Inc. (Nasdaq: CSCO) launch its new "super-router” which is many times faster than existing devices. This will speed up network traffic, enabling faster video, teleconferencing and downloading. More traffic means more bandwidth, and that means more infrastructure.

  • What's In Store for U.S. Stocks in Light of Greece's Tragedy? The recent month of February was quite interesting for U.S. stocks, because while the Dow Jones Industrial Average rose 2.6%, it didn't exactly take a direct route to those gains: There were eight separate triple-digit moves in the Dow, both up and down.

    At the root of that volatility were political and economic developments that challenged the rationale for the huge rally out of the March 2009 low. Bulls were basically rethinking their beliefs that the home-price plunge had abated, employment was on the verge of a big turnaround, governments could cut taxes and boost spending without end, and that interest rates would remain at zero for years.

    I had prepared subscribers for much of this turmoil. Back in early November, I highlighted signs of trouble in the market for government debt well before the troubles in Dubai and Greece came to a head. In December, we started a dialogue on what to expect as the U.S. Federal Reserve withdrew liquidity from the economy and lifted interest rates. The upshot was a series of letters detailing why you should expect the first nine months of the year to trade flattish with a lot of volatility.

  • A Year After the Bear-Market Bottom, Investors Must Still Pursue Profits – Without Ignoring Risk With the Standard & Poor's 500 Index up nearly 70% from the post-financial-crash low it set on March 9, 2009, U.S. stocks on Tuesday recorded their second-strongest showing ever for the first 12 months of a bull market.

    But that near-record-setting performance brings to light two key issues.

    • First, despite the numbers that stand as evidence of the market's stunning surge, many still-shell-shocked investors refuse to label this as a true "bull market."
    • And second, no matter how great a market's performance has been, the real question to answer is "where do we go from here ... and how do I position myself to maximize possible returns while mitigating risk as much as possible?"
    Money Morning turned to several experts - including Money Morning Chief Investment Strategist Keith Fitz-Gerald, and respected market researcher Bespoke Investment Group LLC - for some perspective on both these topics.

  • The Dividend Stock Recovery: Get Ready for a High-Yield Bonanza It's been a tough time for income investors lately.

    Ten-year Treasuries pay less than 4%. The Standard & Poor's 500 Index yields just over 2%. Money market fund returns are microscopic, paying an average of just 0.05%. (At that rate, it will take your money one thousand years to double.)

    What should you do?

    Take a look not at the stock market, but inside it. The S&P 500 may yield 2.1%, but many individual stocks are yielding far more. In addition, yields are about to arch higher.

  • Which Stocks and Sectors Will Shine as Market Fear Subsides? A lot of my commentary lately on the markets has been relatively short-term oriented. Today let's take a moment to pan back and consider the weekly perspective, which is rather benign, even positive.

    From this point of view, stocks are broadly recovering from their most oversold condition since March of last year -- and the release of the energy stored up then persisted at near-full strength for three months.

    To find out which stocks are positioned for profit, click here.

  • AIG Could Seek Another Bailout as it Struggles to Return to Profitability American International Group Inc. (NYSE: AIG), the insurance giant that received billions in federal bailout money, on Friday reported an $8.9 billion fourth-quarter loss. AIG dismissed the loss as part of its rebuilding process, but it also acknowledged that it may require even more government financing.

    The loss is not nearly as bad as the previous year's $61.7 billion fourth-quarter stumble - the biggest quarterly loss in corporate history - but at $65.51 a share, it's still much higher than analysts predicted.

    Amid scrutiny, AIG in September 2008 received a $182.3 billion bailout, which gave the government an 80% stake in its business. Since then, AIG's debt pay-off funds have generally come from the sale of its non-core assets. AIG recognizes these "fire-sales" as the best way to pay back its debts while also streamlining its business.

  • 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.

  • It's Time to Tackle Government Pay It's fairly well known that the U.S. public sector is paid more than the private sector. What's less well known is that the gap between federal-employee pay and benefits and private-sector pay and benefits is increasing - by about 18% over the last decade.

    Given the current level of U.S. unemployment and the size of the budget deficit, it would appear that some economies could be made. In short, it's time to tackle government pay.

    After all, if Greece can economize, so can the United States...

    To see why government pay cuts are justified, read on... Read More...
  • Is it Time For Investors to Beware of the Bear? With U.S. stocks down about 5% from their 2009-2010 rally peak, investors basically want to know one thing: Is this just a correction, or are they looking at a potentially long bear market?

    That's no small question. U.S. stocks could be experiencing one of three scenarios at present. They could be:

    • Undergoing a short-term "correction" of its 2009 gains.
    • Beginning a multi-month "pause."
    • Or starting a new bear-market cycle.
    These aren't just arbitrary labels. For instance, a typical "correction" lasts but a month or two, with average declines of 8.5% to 10% on the Standard & Poor's 500 Index. A multi-month pause, by contrast, could last eight to 15 months, and involve an S&P 500 decline of 10% to 18%.

    But a new bear market is an entirely different animal. A bear-market cycle could last as long as two years and could be marked by a decline of 20% or more.

    To learn the warning signs of a new bear market, please read on ... Read More...
  • Latest Report Shows the Jobless Recovery Still Endures Stocks have staged surprise rebounds after seemingly poor payroll reports half a dozen times in the past year. But the one time that there was better-than-expected job news, on Dec. 5, the market tanked. Go figure - it's a great example of how upside down the logic is on Wall Street.

    To help us interpret the jobs report of last week, I turned to my favorite independent labor analysts, Philippa Dunne and Doug Henwood. Here's their view of the latest numbers, which they considered the most positive in months - despite the many problems highlighted by the latest jobs report.

  • 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...
  • How Banks Are "Crowding Out" the U.S. Rebound When U.S. President Barack Obama unveiled the $787 billion "stimulus" bill of extra spending and modest tax cuts last year, it became clear that the U.S. budget deficit was going to eclipse the 10% of gross domestic product (GDP) level for at least one year (and, as we now know, probably three years).

    On those grounds, I opposed the "stimulus" - a position that was a lot less popular then than it has since become. However, as I'll show you below, it now looks as if I was right - and the implications for the U.S. economy are highly worrisome.

    You see, the theory postulated by economist John Maynard Keynes holds that the extra spending stimulates additional output fails to address the question of where the money comes from.

    Government cannot create wealth - it has to borrow it. If, before the stimulus, government finances were in good shape, as was the case in China, then stimulus does indeed stimulate: The modest budget deficit that it causes is easily financed, and the extra spending creates some jobs and maybe some useful infrastructure, depending on how well targeted it is.

    In the United States, however, government finances were in a mess before the stimulus began.

    To find out how banks are blunting the recovery, read on .... Read More...