Archives for June 2010

June 2010 - Page 2 of 11 - Money Morning - Only the News You Can Profit From

Money Morning Midyear Forecast: The U.S. Economy is Headed For a Second-Half Slowdown

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Most textbook economists say that the U.S. economy is engaged in a broad-based recovery. But while there's a consensus that there's no "double-dip" recession on the horizon, the evidence suggests the nation's economy is headed for a slowdown in the second half of 2010.

The reason: In a market that derives 70% of its growth from consumer spending, the last half of this year will be all about those consumers – and about the economy's inability to generate enough jobs to keep the nation's cash registers ringing.

If you add to that concern the end of the various government stimulus efforts, possible fallout from the Eurozone debt contagion, and oil in the Gulf of Mexico defiling the shores of four states, you end up with an economic outlook that's clouded with uncertainty.

And that uncertainty will continue to stifle hiring and will result in another round of consumer belt-tightening – and a continued economic malaise.

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Buy, Sell or Hold: Enbridge Energy Partners, L.P. (NYSE: EEP) Brings Some Stability to a Volatile Market

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It seems like every week there's a new development that forces investors to rethink their investment strategies.

This week we will see the initial consequences of the weekend's all-important Group of 20 (G20) meeting. A lot of very important issues are up for debate among the world's top 20 countries, as are policies that will shape the intensity and distribution of global growth in the months and years ahead.

The meeting will be fraught with controversy as each economy is proceeding at its own distinct pace of growth and faces its own set of challenges.

China, which recently showed a superlative 50% year-over-year increase in exports, has run out of excuses to justify its undervalued currency. The country also is facing strong inflationary pressures, which include labor strikes by workers demanding higher pay.

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Can Bulls Lift a Market Threatened By Uncertainty Surrounding U.S. Stimulus Measures?

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Stocks spilled the past week like water over a broken dam as investors priced in more evidence that consumers, businesses and home-buyers have gone on strike despite U.S. stimulus measures and record-cheap interest rates that have put mortgages, car loans and store-credit costs at 100-year lows. In the five-day span, the Dow Jones Industrial Average fell 2.5% and the Standard & Poor's 500 Index sank 3.6%; Nasdaq and Russell 2000 Index all fell 3.2%.

Catalyst for the latest spasm of selling came from disappointing news on durable goods sales and initial jobless claims, and weak earnings news or outlooks from consumer-facing companies Bed Bath & Beyond Inc. (Nasdaq: BBBY), Darden Restaurants, Inc. (NYSE: DRI), Lennar Corp. (NYSE: LEN) and Nike, Inc. (NYSE: NKE). 

All of the major U.S. and global indexes are now below their 200-day averages for the first time since early June.

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GOP Takes Hardline on Federal Deficit By Killing Unemployment Benefits Extension

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Drawing a line in the sand over the federal deficit, Senate Republicans on Thursday killed a spending bill that included an extension of unemployment benefits and increased taxes on bonuses paid to executives at private equity firms.

The collapse of the comprehensive legislation spells the end of assistance for a total of 1.3 million unemployed Americans who were scheduled to lose their benefits at the end of last week. It also will leave a number of states with large budget holes they had expected to fill with federal cash to help with Medicaid.

Even though lawmakers voted 57-41 in favor of the measure, Democrats failed to secure the 60 votes needed to end a GOP-led filibuster. The legislators split along party lines with the exception of Sen. Ben Nelson, D-NE, who voted with the Republicans. Senate Majority Leader Harry Reid, D-NV, said this third vote on the matter would be the last, and that the Senate needed to move on to legislation cutting taxes for small businesses.

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Washington Reaches Financial Reform Deal That Packs Lighter Punch Than Wall Street Had Feared

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The biggest Wall Street regulation overhaul since the Great Depression was approved after 20-hour House-Senate negotiations ended this morning (Friday). The legislation brings a dramatic shift in financial reform, but comes down easier on financial institutions than initially planned.

The bill, named the Dodd-Frank Act after Sen. Christopher J. Dodd, D-CT, and Rep. Barney Frank, D-MA, brings sweeping reforms to consumer protection, trading restrictions for big banks, and the regulation of financial products.

"It establishes the greatest consumer financial protections in American history. It prevents financial firms from taking risks that will threaten the economy. And it provides the government with significant new tools to better protect taxpayers from the damage of future financial crises," U.S. Treasury Secretary Timothy F. Geithner said in a statement.

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Free Report: The New Global Power Broker in Oil

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Uganda has found oil, and lots of it. But it lacks the ability to turn crude into needed oil products, like gasoline, diesel, jet fuel, and low-sulfur heating oil. Unless it can develop a local way to process the oil coming out of the ground, it must rely upon exporting that production as raw material […]

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Money Morning Mailbag: Will Elections and a Resignation Open the Door for U.S. Budget Changes?

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Administration officials announced this week that the White House Budget Director Peter Orszag plans to leave U.S. President Barack Obama's Cabinet before work on the next U.S. budget begins, which could be some time in the next few weeks. Orszag would be the first member of President Obama's Cabinet to exit.

The U.S. budget is under scrutiny as the budget deficit is forecast to hit $1.6 trillion by 2011. A President-appointed panel is currently working on budget reduction plans to be presented in a report due in December.

Orszag's strategies as former head of the Congressional Budget Office (CBO) supported a stop to deficit spending, but once he was placed in the budget driver's seat, making significant cuts was nearly impossible with recovery progress slow and unemployment high. Orszag instead ended up helping outline the $787 billion stimulus package in 2009.

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How to Profit From Europe's Stealthy Resurgence

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European countries – both inside and outside the Eurozone – are slashing their budget deficits.

Greece, Portugal and Spain – three of the so-called "PIGS" – have to do so, of course. But Germany – generally reckoned to be in excellent shape – is also cutting its deficit, as is France, which hasn't run a budget surplus in 40 years. Britain, too, with no need to protect the euro (it's not a Eurozone member) just introduced a budget that cut the deficit by $140 billion over four years.

U.S. President Barack Obama and other Keynesians warn that Europe may push its own economy – or even the global economy – back into recession.

But here's the surprising reality: Europe may gain from its fiscal pain – and its deficit-trimming actions offer the best hope for a lengthy recovery.

To see which European countries are expected to rebound - and which ones to invest in - please read on...

Why Investors Must Keep an Eye on Spain

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Greece is not the big story of Europe anymore – just a smoke screen.

The big story is Spain and the United Kingdom, and the news is getting worse.

In the past week, Spanish officials acknowledged to reporters that the country's banks and companies were having difficulty obtaining credit. The credible website EuroIntelligence reported that Spain is now effectively cut off from international capital markets, which is a major new development.

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