Archives for October 2010

October 2010 - Page 4 of 9 - Money Morning - Only the News You Can Profit From

Intel Corp. Invests $8 Billion to Lead the Next Generation of the Semiconductor Industry

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Intel Corp. (Nasdaq: INTC) announced Tuesday that it would invest up to $8 billion in U.S. manufacturing with the goal of keeping its position as a semiconductor industry trailblazer and beat rivals in creating the next generation of silicon chips.

The world's biggest chipmaker will build a new factory in Oregon and upgrade four existing plants in Arizona and Oregon. The move emphasizes Intel's position as the biggest manufacturer of microprocessors and its ability to keep up with the semiconductor world's rapid and expensive pace.

The upgraded Intel plants will produce the company's most technologically advanced chips and support its move to 22-nanometer production. This next generation of chip production reduces the line widths on circuits, which lowers costs and improves capability. Currently chips are made with a 32-nanometer process.

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What We Can Learn From The Stock Market Genius That Wall Street Loves to Ignore

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Mathematician Benoit B. Mandelbrot, the inventor of fractal geometry, died Oct. 14.

As mathematicians go, Mandelbrot was very likely the best of the last half-century. And that brilliance extended to the financial markets. In fact, his groundbreaking insights into the operations of the stock market could have been used to avert the 2008 crash – had those insights only been heeded.

But Mandelbrot – for all his stock market genius – has been largely ignored by Wall Street.

As investors, let's not make the same mistake.

To understand how to profit from Mandelbrot's insights, please read on…

To understand how to profit from Mandelbrot's insights, please read on...

Could the Government Seize Your Gold? Rules to Consider, Steps to Take

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Could the government seize your gold?

It's a question that's being asked with increasing frequency these days. The United States is struggling with a post-financial-crisis economy that can't seem to get healthy, which has led to a ballooning budget deficit and a staggering national debt.

And don't expect any structural improvements to the country's finances. Near-term stock-market bulls are awaiting an all-but-guaranteed round of "quantitative easing" (known as "QE2") – which will inject money into the U.S. financial system, though it will only add to shortfall even as it weakens the U.S. dollar.

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Question of the Week: Investors Prepare for State and Local Governments' Tight Budgets

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It's been 25 years since state and local governments across the United States were in such bad shape – and the budgetary pain is far from over.

The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.

"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.

A study released last week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.

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We Want to Hear From You: Will "Mortgagegate" Affect You?

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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.

Question of the Week
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 reported last week about the allegedly fraudulent business practices employed by lenders and their hired "robo-signers" that led to thousands of questionably reviewed foreclosure documents.

But Gilani warned that the headlines aren't telling the full story.

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Investment Banking Earnings Highlight Wall Street’s New Vulnerabilities

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The collapse of The Bear Stearns Cos. and Lehman Brothers Holdings Inc. (OTC: LEHMQ), the forced takeover of Merrill Lynch and the decisions by Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) to get commercial-banking licenses seemed to signal that the investment-banking business model was dead.

Since then, however, Goldman Sachs, in particular, has posted an astonishing run of profitability, earning gigantic sums even while the rest of the U.S. economy languished.

But now it may be time for those Wall Street heavyweights to pay the piper: Heavyweights Goldman Sachs and Morgan Stanley are posting their third-quarter results this week. U.S. investment banks are looking at their worst quarter since just after the Lehman collapse. And analysts are slashing revenue forecasts just as the top players in this closely watched and often-vilified sector are getting ready to announce bonuses.

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Investment Bank Earnings Preview: Giants Goldman Sachs and Morgan Stanley To See Revenue Decline

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Citigroup Inc. (NYSE: C) spurred a big run in financial stocks yesterday (Monday) after the commercial-banking giant beat Wall Street estimates by reporting a huge surge in quarterly profits.

Don't expect the same exuberant response to U.S. investment bank earnings reports.

Indeed, Wall Street analysts are expecting a very different set of results from the U.S. investment-banking sector, when giants Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) report their third-quarter results this week. Goldman reports today (Tuesday) and Morgan Stanley tomorrow (Wednesday).

Analysts started reducing profit forecasts on the U.S. investment-banking sector back during the summer – and with good reason: Uncertainty about the strength of the economic recovery – and worries about the Bush tax cuts and the midterm elections – have led to a major drop-off in such important businesses as fixed-income trading.

Dealmaking volume – thanks to the spike in mergers and acquisitions – enjoyed an advance in August. And fees from bond underwriting could at least partly offset drop-offs in the equity-underwriting and advisory businesses.

But it won't be enough: As a result, analysts are forecasting an overall decline in investment-banking revenue from last year's third quarter.

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Look to Emerging Markets as the Federal Reserve Diminishes the Dollar

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The main thrust of the past two months has been the renewed collapse of the U.S. dollar.

The dollar has been on a one-way elevator ride to the ground floor since August, when U.S. Federal Reserve Chairman Ben S. Bernanke first warned that quantitative easing was on the horizon.

Most recently, the minutes of the Federal Open Market Committee's (FOMC) last meeting telegraphed further monetary stimulus.

"In light of the considerable uncertainty about the current trajectory for the economy, some members saw merit in accumulating further information before reaching a decision about providing additional monetary stimulus," the minutes read. "In addition, members wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus. Several members noted that unless the pace of economic recovery strengthened or underlying inflation moved back toward a level consistent with the Committee's mandate, they would consider it appropriate to take action soon."

Concerns about inflation being too low almost guarantees additional quantitative easing unless the recovery gets a big shot in the arm before the next meeting in early November.

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Defense Suppliers Compete for a Piece of India’s Multibillion-Dollar Military Revamp

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The Boeing Co. (NYSE: BA) is in talks with India for a $5.8 billion military aircraft deal as the country triples its defense budget, leading defense suppliers to compete for a piece of the multibillion-dollar action.

India is negotiating with Boeing over the purchase of 10 C-17 Globemaster III aircraft, which would be the largest defense order from India for Boeing, the second-largest U.S. defense contractor. India's Finance Minister Pranab Mukherjee said in February the government would spend $33 billion on defense in the fiscal year starting April 1.

The Asian country's "defense procurement budget is quite huge," Laxman Kumar Behera, a research fellow at the Institute for Defense Studies and Analyses in New Delhi, told Bloomberg. "The U.S. arms industry has become quite interested in the Indian defense market."

Boeing expects to bid for as much as $31 billion of military contracts in the next 10 years as India looks to replace aging Russian-made equipment.

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As the Rescue of the Chilean Miners Shows, this South American Country is Superbly Managed and an Enticing Investment

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The efficient, well-managed rescue of the 33 Chilean miners was an affecting spectacle for the world. It also should remind us that Chile is a well-run country, and that in an era when commodities are ever more important to the global economy, it is becoming an essential part of investors' portfolios.

To find out how investors can cash in on this emerging economic powerhouse read on…

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