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Archives for October 2010

October 2010 - Page 2 of 9 - Money Morning - Only the News You Can Profit From

Question of the Week: Mortgagegate Makes Investors Wary of U.S. Banking Industry

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A potentially crippling crisis is flashing through the banking industry and threatening to derail the already struggling housing market and U.S. economic recovery.

But Gilani said the headlines aren't telling the full story.

Dubbed "Mortgagegate" – a nod to the earlier scandal-ridden crisis touched off by Watergate – this latest crisis involves such big lenders as Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C) and GMAC LLC (NYSE: GMA), which are alleged to have conducted negligent foreclosure practices. 

Money Morning Contributing Editor Shah Gilani warned about the allegedly fraudulent business practices employed by lenders and their hired "robo-signers" that led to thousands of questionably reviewed foreclosure documents.

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We Want to Hear From You: What Are the Top Three Issues You Want To See Addressed After Midterm Elections?

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A tense Congressional tug-of-war will come to an end in less than a week, when the intensely sought-after seats in the U.S. House of Representatives and Senate are filled after the Nov. 2 midterm elections.

The Republican-Democrat contest is the hottest in years. The voter debate is about which candidates will be the most likely to lift the United States out of a morass marked by near-double-digit unemployment, sluggish economic growth and a terrifying $1.29 trillion budget deficit.

As campaigning time wanes, it's clear that an increasing number of seats are vulnerable.

"Let me tell you something," U.S. Vice President Joe Biden wrote Monday. "I've been around campaigns for a long time and I have never seen a midterm election with this many races in play."

Experts described this campaign season as more volatile than most because of a major possible shift in power.

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Foreclosures Hurt Stocks?

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Keith Fitz-Gerald Speaks on Fox Business

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In this Fox Business interview, Money Morning's Chief Investment Strategist Keith Fitz-Gerald outlines post-election profit plays. Loading the player …

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Hot Stocks: Ford Motor Co. (NYSE: F) Takes Pole Position Among Automakers

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Ford Motor Co. (NYSE: F) yesterday (Tuesday) furthered its lead among U.S. automakers, reporting record-breaking third-quarter profits.

The world's most profitable automaker reported record third-quarter net income of $1.69 billion, up 68% over the same period a year ago. The company also said it is paying down debt faster than planned as new models boost its U.S. market share.

Excluding some items, profit was 48 cents a share, beating the 38-cent average of 12 analysts' estimates compiled by Bloomberg. By comparison, the automaker recorded income of $997 million in last year's third quarter and adjusted per-share profit of 26 cents.

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Hot Stocks: Windows Phone 7 Will Give Microsoft a Boost

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Microsoft Corp. (Nasdaq: MSFT) has unveiled a lineup of smartphones that use its revamped Windows Phone 7 mobile-operating system in its boldest move yet to return to prominence in the mobile business.

The new operating system, which it spent two years developing, is the software giant's latest assault on the crowded smartphone market, where it has struggled to gain a foothold.

Microsoft's earlier mobile software was based on the design and interface of Windows desktop operating system. Although those phones showed early promise, the system's growth slowed dramatically as the company was upstaged by competitors like Apple Inc.'s (Nasdaq: AAPL) iPhone and Google Inc.'s (Nasdaq: GOOG) Android software.

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Singapore Moves to Restructure Asia's Stock Exchange Model With Australia Merger

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Singapore Exchange Ltd. (SGX) announced yesterday (Monday) it agreed to buy Australia's main stock exchange, ASX Ltd., for $8.3 billion. The deal came about because both countries seek strength against growing Asian market competition, and Singapore strives to be a more sophisticated global financial center.

In a cash and stock deal, Singapore's stock market operator is offering A$48 (U.S. $47.11) for each ASX share, consisting of A$22 in cash and 3.743 SGX shares per ASX share. The offer is at a 37% premium to what ASX shares traded on Friday.

"The combination of ASX and SGX, offering innovative new products and services to the market, will allow customers to maximize future opportunities, where Asia Pacific takes center stage globally as the source for capital, wealth creation and trading opportunities," SGX Chief Executive Officer Magnus Bocker said in a joint statement.

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Wall Street Bonuses Will Cost Us All in the Long Run

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Wall Street firms may not be reaping the record-breaking revenues of 2004-2007, but they're paying themselves the lofty bonuses of that lavish era – and they're doing it at our expense and with the government's blessing.

Wall Street's pay packages, including bonuses, are set to total 4% more in 2010 than in the already record year of 2009, The Wall Street Journal recently reported.

I yield to nobody in respect for the investment banking business – having served as an investment banker for 27 years – but these salaries and bonuses derive from U.S. Federal Reserve subsidies, and are mostly being taken out of the hide of the rest of us. 

Wall Street's record bonuses come out of bank earnings that have been pretty robust, though not necessarily record-breaking. This is mainly the result of two Fed subsidies:

To find out how you're paying for Wall Street excess and how the economy stands to lose read on...

Buy, Sell or Hold: Intel Corp. (Nasdaq: INTC) Offers the Security and Profit Potential that Few Other Investments Can

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It's not easy to find a safe investment these days. The rulebook has been thrown out and mercantilism reigns supreme between nation states. The world is experiencing significant and rapid changes in currency exchange rates, as policymakers around the world take a beggar thy neighbor approach toward economic security.

There are very few multi-national companies that are not being seriously impacted by these changes.

However, there is one company that should be a safe beacon in these stormy market conditions: Intel Corp. (Nasdaq: INTC).

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Is the U.S. Federal Reserve Setting the Stage for Hyperinflation?

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The U.S. government wants to stimulate growth in the moribund economy by stoking the fires of inflation. But by leaving interest rates low and buying up bonds – a policy known as quantitative easing (QE) – the U.S. Federal Reserve risks debasing the dollar, which could lead to a prolonged period of hyperinflation that would send prices skyrocketing.

After their most recent meeting on Sept. 21, Fed policymakers said low inflation warranted looser monetary policy. Minutes from the meeting said central bankers were prepared to ease policy to boost inflation expectations "before long."

The Fed is seeking ways to boost the U.S. economy after keeping interest rates at record lows and buying in $1.7 trillion of U.S. securities. The next move may be another round of quantitative easing that would expand the Fed's balance sheet even further.

But as it feeds more and more money into the financial system, the central bank may very well be sowing the seeds of hyperinflation.

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