Archives for November 2010

November 2010 - Page 7 of 9 - Money Morning - Only the News You Can Profit From

China's Urban Migration Catapults Copper Prices to New Heights

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The next phase of China's economic plan is fueling a relentless appetite for electricity, spiking demand for copper. That has moved investors to drive up the price of the metal, as well as the stocks of companies that mine it.

Copper has risen 14% this year, with contracts traded on the London Metal Exchange tripling since December 2008. The Bloomberg index of world mining stocks this year has climbed 16% to the highest level since Aug. 1, 2008, driven by miners like Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), and Ivanhoe Mines Ltd. (NYSE: IVN)

"Copper is red gold," Jeremy Gray, global head of resources at Standard Chartered PLC in Hong Kong told Bloomberg News. "We're on the verge of the biggest commodities bull market we have ever see."

Gray predicts the metal could rise by 50% to $12,000 a metric ton in the next six to 12 months.

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Stock Market Faces Critical Test This Week

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Stocks rose gently like heat waves off a radiator over the past week, as traders guessed, assessed and processed the results of the midterm elections and the Federal Reserve's decision to try to light a fire under the U.S. economy by buying a $75-billion pile of fresh, new Treasury bonds every 30 days for the next eight months.

The major indexes rose 3.5% amid a set of sessions when banks finally found footing, as they were the best performing group, up 1%. Laggards were industrials and utilities, ending flat. Breadth was positive, favoring advancers by 2-1. And the number of new highs swelled to 1,200 while new lows also rose, to 80.

Click here to read why the market is at a critical juncture...

Republican Victory and Fed Easing Means It's Time to Shift From Commodities to U.S. Stocks

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The U.S. economic and investment world has changed fundamentally in the last 48 hours from two key events:

  • The massive Republican victory in Tuesday's midterm elections.
  • And the $600 billion worth of bond purchases by the U.S. Federal Reserve.

These two events have changed the trajectory of the U.S. economy, probably for the next two years.

As investors, we'd better adapt to them – and fast.

For specific investment moves to make, please read on...

Money Morning Mailbag: Tobin Tax a Healthy Solution to Wall Street Greed

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Last week Money Morning Contributing Editor Martin Hutchinson presented an open letter to U.S. President Barack Obama and members of Congress regarding passage of a Tobin tax.

The simple solution of a Tobin tax handles three of the U.S. government's biggest challenges: It resolves the controversy over expiring Bush tax cuts, helps reduce the federal budget deficit, and offers more regulation over controversial Wall Street profits.

Hutchinson said a Tobin tax – a tax on financial transactions – is the one tax increase that would not damage the already fragile U.S. economy.

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Seven Ways to Profit from the GOP's Pledge to Sustain Defense Spending

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Investors typically hate it when a stock bombs, but there are also times when bombs can make for good investments – and right now could be one of them.

With the Republicans seizing control of the U.S. House of Representatives and making gains in the Senate in Tuesday's mid-term elections, it now seems far more likely that the GOP will be able to honor its pledge not to cut defense outlays as it seeks to rein in discretionary government spending.

For the near term, that means the proposed 2011 U.S. defense budget of $708 billion should get through Congress relatively unscathed. It's also likely there will be less pressure to cut military spending in the budget battles for upcoming years – and that could bode well for most of the major U.S. defense contractors.

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Find Solace in Emerging Market Stocks Amid U.S. Economic Turmoil

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Maybe you've noticed that many of the stocks rising through the ranks of the broader market lately have a foreign accent.

The Claymore/AlphaShares China Small Cap exchange-traded fund (ETF) (NYSE: HAO), MV MarketVectors Indonesia Index ETF (IDX), and the PowerShares Emerging Markets Sovereign Debt ETF (NYSE: PCY) are just a few of the ETFs I've recommended in the past that are leading the market higher.

Similarly, Swiss instrument maker Mettler-Toledo International Inc. (NYSE: MTD) and Chilean fertilizer maker Sociedad Quimica y Minera (NYSE: SQM) have helped carry our Strategic Advantage "StrataGem" portfolio higher.

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Fed's "QE2" Could Fuel Inflation in U.S. & Deflation in Europe

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The U. S. Federal Reserve's latest round of quantitative easing (QE2) may further escalate the currency war
by producing a crippling bout of deflation in Europe and conversely, another period of inflation on the domestic front.

The diverse results are possible because further Fed purchases of debt are likely to re-ignite economic growth and increase prices in the United States, while a surging Euro will make it more difficult for European countries to pay off debt.

Fed purchases of Treasuries to stimulate the U.S. economy could send the euro rising against the dollar, sparking deflation in Europe, Nobel Prize-winning economist Robert Mundell told Bloomberg News.

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Republican Midterm Election Victories Could Crush Stocks and Bonds Before Sending Them Higher

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Markets have rallied on the belief that resounding Republican victories in yesterday's (Tuesday's) midterm elections will reset Washington agendas and lead to more business-friendly policies.

However, market participants may be surprised to find that the successful pursuit of three major Republican principles could initially sink stocks and bonds before creating a base from which they might rally later in 2011.

Indeed, following the adage "buy the rumor, sell the news" might be the best strategy for investors right now.

To find out more about how Tuesday's elections will impact the stock market, read on…

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Question of the Week: Readers Eager for U.S. Economy Overhaul After Midterm Elections

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A tense Congressional tug-of-war carried on before midterm elections this week as Republicans and Democrats fiercely campaigned for seats in the U.S. House of Representatives and Senate.

This Republican-Democrat contest was the hottest in years as voters debated over which candidates would 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.

Although Republicans were poised to take control of Congress, a significant number of seats remained vulnerable until the very end.

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Sorry Wall Street – Asia is the New King of the Global IPO Market

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The United States – and Wall Street – is surrendering its mantle as the global center for intial public stock offerings (IPOs).

In fact, unprecedented demand for IPOs in Asia has reduced the U.S. share of the global IPO market to an all-time low.

With another $10 billion in IPO deals expected to be completed by the end of this year, the total amount raised worldwide for all of 2010 will approach $145 billion.

With $76 billion raised – including $22.1 billion from Agricultural Bank of China Ltd., alone – China topped the field by raising the most money of any single country.

No U.S. company raised more than $700 million.

This says a lot about the respective outlooks for the two countries' economies. And it also tells us a great deal about how we should be investing our money.

Let me explain.

To understand how to profit from this dramatic trend, please read on...