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…
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In the monthly U.S. Treasury report this week, it was announced that China had sold $34.2 billion of Treasuries in December (or allowed short-term ones to run off), making Japan once again the largest holder of U.S. Treasuries.
The battle between China and Japan for the title of largest holder of this dubious asset is not very interesting. What's more interesting is the question of where China is instead opting to invest. After all, $34.2 billion is a fair chunk of change, and China's overall reserves are growing – not shrinking – and now total $2.4 trillion.
The People's Bank of China usually keeps its holdings a carefully guarded secret, much more so than for most central banks – our knowledge of its holdings of Treasuries comes from U.S. data, not from China. We do, however, have some evidence about the Chinese government's investment thinking, thanks to the holdings of China Investment Corp., the country's $200 billion sovereign wealth fund.
To discover the details of China’s global investments, please read on…
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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.
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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:
To find out about the other four factors – as well as three possible profit plays – please read on …
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U.S. President Barack Obama gave the long-suffering U.S. nuclear industry a solid boost this week when he announced $8 billion in government loan guarantees in support of a new nuclear power plant in Georgia.
The move is intended to reduce usage of fossil fuels and meet America's future energy needs. It could also provide new profit opportunities for energy-sector investors.
"I know it has long been assumed that those who champion the environment are opposed to nuclear power," President Obama said in remarks made during a speaking engagement in Lanham, Md. "But the fact is, even though we have not broken ground on a new nuclear power plant in 30 years, nuclear energy remains our largest source of fuel that produces no carbon emissions."
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Looking for an exact date when U.S. Federal Reserve Chairman Ben S. Bernanke and his fellow central bank policymakers will raise interest rates?
Experts refer to this eventuality as Bernanke's "exit strategy" – a financial euphemism for the interest-rate increases that are certain to come … at some point.
That's just it – those experts can't tell you when that exit strategy will begin. I can't tell you that, either (Sorry, loaned my crystal ball to Miss Cleo for her new infomercial).
But what I can give you that the pundits can't is a "Road Map to Higher Interest Rates," which spells out the specific events that should precede the most-heavily anticipated U.S. central bank interest-rate increase in history. Follow it and you should be perfectly positioned to profit when the time comes.
(Remember, a few months ago, I introduced Senior Secured Floating Interest Rate Bonds, or SSFRs, an investment that you'll want to own when interest rates rise.)
So, without further ado…
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In this February 17th Fox Business interview, Keith Fitz-Gerald discusses why he believes Toyota will rebound from its current image crisis and where he thinks the market is going from here. As Money Morning's Chief Investment Strategist, Keith has accurately predicted the market before. For more specific recommendations, check out The Money Map Report, the […]
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The stock markets are rallying, but volume is down. In this interview on Fox Business, Money Morning's Chief Investment Strategist Keith Fitz-Gerald discusses job creation and its effect on economic growth and market performance. For Keith's specific recommendations on how to profit no matter how the markets shake out in coming months, check out The […]
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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 ....
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Question: Please address why the removal of the Glass-Steagall Act in 1999 caused the financial meltdown of 2007 and why its reinstatement is the only way to stop the financially risky behavior allowed after it's removal. Address why we will very likely have another meltdown (probably in 2010) unless reinstated.
Answer: Mr. Scott: While the overturning of what remained of Glass-Steagall did not cause the meltdown, it certainly contributed mightily to the systemic nature of the crisis.
Allowing commercial banks and investment banks to marry created giant operations that became too big to fail and too profitable to break up. Everyone was making money. The overriding problem was not the integration of commercial (deposit-taking and loan-making) banks with investment (capital-markets trading) banks, but the extraordinary migration of all banks into the same products, trading, and risk-taking businesses. I am definitely including the ubiquitous game of mortgage origination, securitization, sales and trading.
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