Archives for June 2010

June 2010 - Page 3 of 11 - Money Morning - Only the News You Can Profit From

George Soros: "We Have Just Entered Act II" of the Global Financial Crisis

George Soros gained global recognition when he co-founded the Quantum Fund with Jim Rogers in 1970. That fund generated an average annual return of more than 30% while he was at the helm.

Soros hasn't quit making timely market calls since: From his $10 billion bet against the British pound sterling in 1992 to his April 2008 prediction that we had not "seen the full effect" of the recession and that the situation was "more serious than the authorities admit or recognize."

In February, Soros called the euro's viability into question, and the currency has plunged some 10% since that time.

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Taipan Daily: If They Don't Own Gold, Don't Trust Their Opinion on Gold

As an asset class, gold stirs the passions. Some folks love it, and others despise it. Be wary of those who will never own gold.

As I write this note to you on Friday, fingers flying over keys like the flickering quotes on my screens, Pink Floyd's "Learning to Fly" is playing on my speakers.

It's an appropriate tune, because gold is once again "learning to fly" now. After one or two scrapped take-off attempts, the yellow precious metal has broken out to fresh all-time highs. (Well… nominal highs at least. To break inflation-adjusted highs – which will happen sooner or later – gold will have to trade above $2,000 per ounce.)

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Hot Stocks: General Electric is Being Powered by China Growth, but Held Back by its Financial Arm

General Electric Company (NYSE: GE) has more than a century of history behind it and it's seen worse times than we're going through right now. It's a global juggernaut, and its foothold in emerging markets – particularly China – makes the company worth looking at.

But at the end of the day, its financial unit is holding GE back, and that isn't likely to change any time soon.

Let me explain.

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United States Fears Economic Stimulus Measures Will Choke on Europe's Drastic Budget Slashing

While U.S. President Barack Obama will be gunning for more economic stimulus measures at this weekend's Group of 20 (G20) meeting in Canada, European lawmakers continue drastic efforts to rein in spending.

The coordination of global efforts to promote economic recovery will be the main issue at the weekend's meeting, which was set to spotlight the value of China's currency before Beijing announced Saturday that it would allow the yuan to appreciate. The United States and Europe's differing views on the most effective strategies to maintain global economic growth and slash bloated government budgets are increasing tensions between leaders.

"There is a need to move toward rebalancing," Stewart M. Patrick, a senior fellow at the Council on Foreign Relations in Washington, told CNN. "But every country has different domestic political demands, and that is what drives decision making."

President Obama is worried that drastic austerity measures in Europe will choke global growth and collapse a fragile recovery.

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The Sovereign Debt Crisis: Bad For Europe, Good For U.S. Stocks

For several months now, we've been talking about the post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years. This new world order has created a world of lucrative new profit opportunities – that are governed by a new set of profit rules.

In terms of that whole new rules/new profit opportunities paradigm, here's one that may surprise you: The ongoing European crisis could end up as a net positive for U.S. stocks.

Let me explain…

To see how Europe's travails can aid U.S. stocks, please read on…

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Don't Give Up on U.S. Stocks Just Yet

There's no denying that bearish investors have made their case in recent weeks. They are legitimately afraid that the economies of the United States and Europe will fade so much in the next few months that they will sink back into recessions punctuated by credit blowups and a resumption of a bear market for U.S. stocks.

Still, the simple fact that there are a few economic boogey-men lurking behind each suspect piece of data doesn't mean that investors should run screaming away from stocks.

In fact, if you take the time to listen to the opposite point of view before you make up your mind about the direction the economy is headed, you might be pleasantly surprised.

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The Midterm Elections: No Panacea for the U.S. Economy

With many of the primaries past, and the November 2010 midterm elections less than five months away, it is worth taking a look at what policy changes we might expect from the next U.S. Congress. Both the political and economic worlds have changed one hell of a lot since the last elections, in 2008.

Thus, even though U.S. President Barack Obama is slated to remain in office until at least 2013, the Congress elected in November will be very different from the one that was elected in November 2008.

For a view of the future after the U.S. midterm elections, please read on...

Question of the Week: Readers Respond to Money Morning's Afghanistan Mineral Wealth Query

The news that there is $1 trillion of Afghanistan mineral wealth hiding in the country's scarred and deserted landscape has global investors calculating how likely it would be for this incredibly poor country to transform itself into a natural-resources powerhouse.

It has also spawned debates about which nations should be given a piece of this vast apparent fortune.

The discovery – and its transformational potential – is mind-boggling: At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's entire economy, estimated at $12 billion. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug-trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.

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We Want to Hear From You: Are You Worried About China's Currency Rise Sparking Inflation?

After months of intense political pressure, China announced Saturday that it would allow its currency to gradually appreciate against the U.S. dollar. China's currency – the yuan – has been pegged to the American greenback since 2008.

"This is going to lead to a transition from export-lead, investment-lead to more of a consumption-lead economy going forward," Jing Ulrich, chair of China equities and commodities at JPMorgan Chase & Co. (NYSE: JPM), told CNBC. "I think the ramifications are profound not just for the next few months but actually for the coming years."

Not surprisingly, U.S. exporters embraced the news as an opportunity to compete against Chinese companies and to reduce the U.S. trade deficit. Foreign nations, including the Untied States, have accused China of undervaluing its currency to give its exporters an advantage in global trade.

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Louisiana Judge Blocks Offshore Drilling Ban

A federal judge in Louisiana today (Tuesday) blocked a White House moratorium on offshore drilling in the Gulf of Mexico, MarketWatch reported. The White House said it would appeal the decision immediately, according to reports.

Louisiana Gov. Bobby Jindal and state Attorney General Buddy Caldwell filed papers Sunday in a New Orleans federal court petitioning for the six-month deepwater oil drilling ban be lifted in 30 days. The papers said that lifting the ban would avoid "turning an environmental disaster into an economic catastrophe."

"Even after the catastrophic events of Sept. 11, the government only shut down the airlines for three days," Caldwell said.

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