Archives for November 2010

November 2010 - Page 6 of 9 - Money Morning - Only the News You Can Profit From

GM Whets Investors' Appetite for IPO With $2 Billion Third Quarter Profit

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General Motors Co. reported a profit for the third straight quarter yesterday (Wednesday) and said it is on a path this year to produce its first annual profit since 2004, gathering critical momentum for its planned initial public offering (IPO) next week.

The world's largest automaker said profits rose to $2.16 billion in the third quarter and revenue rose 20% to $34.1 billion. The company reported earnings per share of $1.20, compared to a loss of 73 cents a share in July through September last year, after it exited bankruptcy reorganization.

"It's a very strong quarter financially," Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan, told Bloomberg News in a telephone interview. "They've taken the excess capacity out of the system and cut costs throughout the organization. Any gain in the overall market is going to be very positive for General Motors, and the market has turned around from 2009."

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When Investing in Latin America, Politics Point the Way to Profits

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Brazil's election win by the Workers Party candidate Dilma Rousseff has cast a dark shadow over the investment prospects of that long-fashionable "BRIC" economy.

And it has underscored an important lesson for investors: In Latin America, the political climate is really the No. 1 factor in determining where to invest for the long run.

In short, when looking to invest in Latin America, let politics be your guide to profits.

To learn which Latin American markets offer the biggest profits, please read on...

Question of the Week: Midterm Elections Leave Investors Wary, Turning to Silver and Gold

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The hotly contested midterm elections ended last week, and now U.S. voters will watch to see if newly elected officials will deliver on promises to lift the nation out of its economic morass.

Many voters made their decisions out of frustration with current economic conditions, such as excessive government spending, ineffective stimulus measures and stubborn unemployment. And given the potential for change in U.S. economic policy, investors will likely be eager to see what the stock-and-bond markets will do in the months to come.

Although there is unlikely to be any quick decision making in Washington, investors will hope for the status quo in at least one area – a continued market rally, which is the norm for midterm election years.

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Hot Stocks: Dell Aims to Double Sales of Service Businesses in Three Years

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After losing a bidding war for a highly-sought-after acquisition target, many companies would pull in their horns and take time to regroup before venturing back into the murky mergers and acquisitions (M&A) pool.

But personal-computer icon Dell Inc. (Nasdaq: DELL), which lost out in a highly-publicized bidding war for 3Par Inc. (NYSE: PAR), is forging ahead with an aggressive multi-billion dollar acquisition plan.

Computer companies are increasingly relying on acquisitions to broaden their product offerings and make inroads on competitors' market share.

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We Want to Hear From You: Are You - And Your Wallet - Seeing Signs of Inflation?

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The U.S. Federal Reserve has made one thing very clear: It views deflation as public enemy No. 1, and it will do everything in its power to keep that ruinous downward spiral in prices from taking hold.

But is the U.S. central bank focused on the wrong threat? And if that's the case, are U.S. policymakers setting the stage for a consumer-crippling inflation spike?

While the Fed last week announced more quantitative easing to pump more money into the U.S. economy – hoping that would encourage lending and spending – a cadre of cash-strapped consumers is worried the stimulus measures will actually ignite long-term inflation.

There is a precedent: The current policy is similar to one taken in 2003 – 2004, when the Fed kept rates near a record low and inflation rose faster than initially predicted.

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Six Ways to Profit as Consumerism Supplants Exports and China Throttles Up GDP Growth

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BEIJING, People's Republic of China – There's something inherently satisfying about waking up on a clear, crisp fall day in this bustling capital city, and seeing this headline atop the lead story in this morning's China Daily newspaper:

"World Bank Sees Change in Growth Pattern"

In essence, the World Bank has finally acknowledged what we've been telling you for several years – that China's accelerating domestic growth is already reducing its once-almost-total reliance on exports.

This is an important validation of our investment strategies and of China's newest economic policies. Investors who see and understand these developments can expect to enjoy some significant long-term successes.

For six ways to profit from this new Beijing policy, please read on...

Newly-Empowered House Republicans Take Aim at Dodd-Frank Financial Reform Bill

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With Republicans taking control of the House of Representatives, much of the Democratic agenda will be challenged in the months ahead. That includes the Dodd-Frank financial reform legislation, which Congressional Republicans have already pledged to weaken.

The financial reform bill passed in June and brought with it increased consumer protection, trading restrictions for big banks, and tighter regulation of financial products. However, the bill still fell short of dramatic Wall Street reform as the lobbying efforts of large financial institutions eroded the legislation's sharper points.

The original bill, for example, would have ended banks' ability to trade derivatives. But the final version was watered down to allow banks to retain certain derivatives trading units to hedge risk.

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United States To Face Attacks on Quantitative Easing Policy at G20 Summit as Currency War Rages On

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The United States will go on the defense at this week's Group of 20 (G20) meeting, having to explain its quantitative easing (QE2) policy to foreign leaders who have criticized the move as a currency war tactic to weaken the dollar and damage other countries' export-driven recoveries.

China, Brazil, Germany and South Africa all have spoken out against the U.S. Federal Reserve's announcement last week that it will buy $600 billion in U.S. Treasuries through June. Finance policymakers from around the globe say the move will depress the dollar and drive capital flows to emerging markets, creating asset bubbles.

Brazil's central bank president Henrique Meirelles said the extra liquidity in the U.S. economy would cause "risks for everyone," and German Finance Minister Wolfgang Schaeuble called the Fed's move "clueless."

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Fed's Easing Spurs Treasury Purchases as Banks Shun Lending 

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Despite the U.S. Federal Reserve's efforts to spur lending by keeping interest rates low and pumping up liquidity with quantitative easing, banks continue to borrow from the government at low rates and reinvest the funds into higher-yielding Treasury bonds.

U.S. commercial banks are buying the most Treasury and agency debt since the Fed began tracking the data in 1950, adding $186.2 billion to their inventories through Oct. 20 bringing the total to $1.62 trillion. At the same time, commercial and industrial loans outstanding have fallen by about $68.5 billion this year to $1.23 trillion, according to central bank data compiled by Bloomberg News.

By tying up their capital in government securities, banks make it more difficult for small businesses to get loans and create jobs, which discourages consumer spending.

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Buy, Sell or Hold: With $44 Billion in Cash and a Focus on Shareholder Value, It's Time to Buy Microsoft Corp. (Nasdaq: MSFT)

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The last time I recommended Microsoft Corp. (Nasdaq: MSFT), Bill Clinton was in the White House. But it's time to take another look at the "cash-flow-engine" that Bill Gates built – and to explain why Microsoft is a "Buy" in today's stock market.

Microsoft is one of the safest investments in the world, but the software giant's stock price has done essentially nothing for the last 10 years. But the company is still a monopoly, has no debt, and continues to generate a torrent of cash.

In fact, Microsoft now has one of the largest cash hordes in the history of capitalism – more than $44 billion, and growing.

So what's different? What's the catalyst that promises to break this giant out of its somnambular state, to make its shares a "Buy?"

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