Archives for January 2011

January 2011 - Page 9 of 10 - Money Morning - Only the News You Can Profit From

Plan to Cut the U.S. Federal Budget Deficit Draws Strong Response From Money Morning Readers

Today's lead story in Money Morning – "An Open Letter to Washington: How to Slash the Federal Budget Deficit and Save the U.S. Economy" – is generating the strongest response of anything we've published in recent months. In that piece – essentially a political/economic commentary – Money Morning's Martin Hutchinson outlines a broad five-part plan for attacking both the federal budget deficit and the soaring national debt.

The commentary, written in the form of an "open letter" to U.S. President Barack Obama and members of the U.S. Congress, has already been widely syndicated and is generating scads of comments and e-mail responses.

We even urged readers who agree with all or most of it to say so by forwarding it to their elected representative in Washington.

It's no surprise that the column has generated such strong interest. As a former international merchant banker and financial advisor, Hutchinson has an engaging way of highlighting the top issues in the global marketplace. But given all this interest, I thought I would take a few moments to share with readers some of the questions and comments – as well as some of the criticisms – that we received.

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2011 China Outlook: The Red Dragon Takes Its Next Step Forward

If the United States has a growth problem, China has just the opposite. The world's second-largest economy is set to grow 9-10% this year, building on its strong rebound from the global financial crisis.

Furthermore, Beijing is determined to accelerate China's transition toward a more domestically based economy, while stabilizing prices and cutting government waste.

So in addition to strong growth numbers, investors can expect more disciplined and responsible economic development.

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An Open Letter to Washington: How to Slash the Federal Budget Deficit and Save the U.S. Economy

Dear Mr. President and members of Congress:

With your policymaking actions of November and December, you have given the U.S. economy a short-term boost of adrenaline.

But these short-term gains carry a long-term cost. In the wake of the biggest financial crisis since the Great Depression, the U.S. federal government is looking at running $8 trillion in deficits over the next 10 years. If that forecast becomes a reality, the already-onerous national debt would soar to more than $20 trillion.

Given that outlook, without additional action on your part, the U.S. economy faces a precarious future and won't return to full health.

Despite these daunting prospects, there are five clear steps you can take that would revitalize the U.S. economy. These moves will help reduce unemployment, and will keep inflation at bay. But, most importantly, by effectively slashing the federal budget deficit as well as the national debt, this plan will ultimately enable the U.S. economy to regain its former competitiveness.

Success, of course, is in the details.

To understand how we can still save the U.S. economy, please read on...

2011 Investing Strategies: Readers Turn to Silver, Avoid U.S. Dollar in the New Year

After a year of rocky economic recovery and a mixed bag of U.S. data, market strategists are waxing optimistic about the profit prospects in 2011.

"There is still an awful lot of pain out there for sure, but if you get this creeping confidence to accelerate a little bit, it's surprising how fast things can turn," Sandy Lincoln, chief investment strategist at M&I Investment Management, told MarketWatch.

A year plagued by Europe's debt contagion, the May 6 market "flash crash" and constant fears of a double-dip recession caused many investors to keep money parked on the sidelines.

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We Want To Hear From You: Are You Bullish or Bearish About U.S. Stocks in 2011?

U.S. stocks have been on the march. Last year's market rally drove stocks up to levels not seen for two years – and many prognosticators believe that higher highs are still to come.

The U.S. Standard & Poor's 500 Index posted its best December performance in 19 years, and that bullish sentiment carried into the first trading day of 2011.

On Monday – the first trading day of the New Year – the S&P 500 rose more than 1.1% to close at 1,271.89. It traded as high as 1,276.17, a 52-week high and its high-water mark for the last two years.

The Dow Jones Industrial Average advanced 93.24 points, or 0.81%, to close at 11,670.75. It traded as high as 11,711.47 – the blue-chip index's highest close since August 2008 and its biggest jump since early December.

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Yuan Hits 18-Year High as Brazil's New President Joins U.S. Call to Fix Trade Imbalances

Brazil's new President Dilma Rousseff joined the chorus of foreign policymakers calling for the Chinese government to allow the yuan to appreciate against other currencies and improve trade imbalances.

Rousseff will raise the issue in April during a visit to the Asian nation for a meeting of the so-called BRIC economies, which also include Russia and India, Trade Minister Fernando Pimentel told Bloomberg News on Monday.

Meanwhile, several events seemed to signal China's government is prepared to loosen the strings it has kept on the currency.

The yuan yesterday (Tuesday) hit an 18-year high against the U.S. dollar, as the greenback sank to 6.6251 yuan.

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Intel Corp. (Nasdaq: INTC) and AMD (Nasdaq: AMD) Betting Big on Combination Chips

The Consumer Electronics Show (CES) kicks off tomorrow (Wednesday) night with a keynote address from Microsoft Corp. (Nasdaq: MSFT) Chief Executive Officer Steve Balmer. But the big attraction at the Las Vegas conference will be the so-called "combination chips" expected to be unveiled by Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices Inc. (Nasdaq: AMD).

The highly-anticipated chips could deliver one of the biggest advances in years for the
technology that powers laptop and desktop computers, according to a report in The Wall Street Journal.

The new chips are designed to incorporate the microprocessors that calculate formulas and run the software on most personal computers with the more obscure graphics processing units (GPU) – the devices responsible for rendering images in video games and movies and converting audio files for listening.

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Three New Year's Resolutions That Will Bolster Your Investment Portfolio in 2011

If everyone kept their New Year's resolutions, most of America would be thin, fit and rich.

That's because the three most popular resolutions tend to involve dieting, working out and improving the family finances.

Most of those promises tend to fall by the wayside before each New Year gets too far along.

But 2011 can be different – at least in terms of your finances … that is, if you embrace the three easy-to-follow resolutions that I'm about to reveal.

In fact, if you follow these, your investing future will be much, much richer.

For the three New Year's resolutions that will make you financially fit this year, please read on…

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Goldman Sachs (NYSE: GS) $450 Million Investment Fuels Facebook IPO Speculation

Goldman Sachs Group Inc. (NYSE: GS) invested $450 million in Facebook, valuing the popular social networking site at $50 billion and heightening speculation on whether or not Facebook will go public this year.

The deal, announced in a report in The New York Times Sunday night, makes Facebook worth more than Internet-related companies like eBay Inc. (Nasdaq: EBAY), Yahoo! Inc. (Nasdaq: YHOO) and Time Warner Inc. (NYSE: TWX). It'll give the company a competitive edge in the tech arena and allow it to pursue more acquisitions.

Digital Sky Technologies, a Russian investment firm that has already put about half a billion dollars into Facebook, also invested an additional $50 million in the deal. Goldman has the right to sell up to $75 million of its stake to Digital Sky. Digital Sky started its involvement in the social networker in 2009 with a $200 million investment and now has about a 10% stake through stock purchases from Facebook employees.

The deal highlights the booming popularity of social media sites like Facebook, Twitter and Groupon – all of which are gaining increased attention from investors. Facebook jumped ahead of Google Inc. (Nasdaq: GOOG) as the most-visited Web site in 2010, according to Internet research firm Experian Hitwise.

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Investing Strategies 2011: Moves to Make After U.S. Stocks Hit a Two-Year High on the First Trading Day of the New Year

U.S. stocks soared on the first trading session of the New Year yesterday (Monday), and major market indices hit two-year highs after upbeat reports on construction and manufacturing boosted optimism for a continued U.S. economic recovery.

The jump in stock prices represents a continuation of investor bullishness that led to the U.S. Standard & Poor's 500 Index posting its best December performance in 19 years.

"The optimism at the end of 2010 continues into 2011," Kevin Giddis, a fixed-income expert at Morgan Keegan, wrote in a research note. "Investors, including me, hope that 2011 will be a better year for earnings, confidence, housing and jobs."

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