Archives for February 2011

February 2011 - Page 2 of 8 - Money Morning - Only the News You Can Profit From

With its DVR Memory Expander, Western Digital Corp. (NYSE: WDC) Brings an End to "Recorder's Remorse"

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The next time Money Morning's Keith Fitz-Gerald is scheduled for another FoxBusiness appearance while you're at work – and you want to record it on your digital-video recorder (DVR), but realize that there's no more memory capacity – don't fret.

You no longer have to erase recorded programs you and other family members have been waiting for weeks for the chance to watch – just so you can squeeze Fitz-Gerald's scheduled "Lightning Round" interview onto your DVR hard drive.

Thanks to an easy-to-install/easy-to-use DVR memory expander, "recorder's remorse" is now a thing of the past.

I'm referring to the "My Book AV DVR Expander," which is made by Western Digital Corp. (NYSE: WDC).

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What the Looming Inflation Tsunami Means for the U.S. Housing Market and Commodities

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A few weeks ago, Money Morning Contributing Editor Martin Hutchinson warned readers about the looming inflation tsunami threatening the United States.

Easy money policies like those of the U.S. Federal Reserve and other central banks have helped raise prices in emerging markets, as well as the United States, and sent the commodities sector surging.

"[W]e can expect inflation to be with us for several years, too," said Hutchinson. "In fact, expect it to get worse for the next three to four years, while Ben S. Bernanke remains at the helm of the nation's central bank."

As inflation threatens to eat away at the value of stocks and bonds and cut into investors' returns, Hutchinson said one of the best investments to make ahead of rising prices actually is a house.

The housing market is at or near its bottom and rates on 30-year mortgages are desirable for buyers. Investors who find the right neighborhood, strike a good deal and don't financially overextend themselves could find a sound housing investment as the best store for their money.

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Apple Inc.'s (Nasdaq: AAPL) "Thunderbolt" Could Ignite Intel Corp. (Nasdaq: INTC)

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After three years of promises, Intel Corp. (Nasdaq: INTC) today (Thursday) is scheduled to formally unveil "Light Peak," a data transfer technology for computers that is 25 times faster than USB 2.0.

It may be no accident that Apple Inc. (Nasdaq: AAPL) is also expected to upgrade its MacBook Pro line of laptops today, with a Light Peak port – re-branded as "Thunderbolt" – said to be a key new feature.

The Light Peak introduction follows another major Intel announcement. Last week the company unveiled plans to build a $5 billion chip manufacturing facility in Chandler, Ariz. Intel said the factory, slated for completion in 2013, will allow it to build faster, more efficient chips.

Light Peak, which Intel would like to establish as new connectivity standard, transmits data at 10 gigabits per second. Intel says it could be ramped up to far higher speeds – up to 100 gigabits per second. That would be 250 times faster than USB 2.0 common on today's PCs.

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Nasdaq Mulls Offer for NYSE in Bid to Survive Flurry of Exchange Mergers

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With a global wave of consolidation sweeping over stock exchange operators, Nasdaq OMX Group Inc. (Nasdaq: NDAQ) is considering a counter-offer for New York Stock Exchange parent NYSE Euronext (NYSE: NYX), buying another exchange or even putting itself up for sale.

The deal-making gathered momentum last week when Deutsche Boerse Group announced a $10.2 billion takeover of NYSE/Euronext. The pressure then grew last week when upstart BATS Global Markets, snapped up rival Chi-X Europe.

Chief Executive Robert Greifeld is leading a team of Nasdaq officials assessing whether it can compete against Deutsche Boerse to buy NYSE, people familiar with the matter told The Wall Street Journal.

If Nasdaq determines it can't put together a stronger bid, the New York company will scour the exchange landscape for another partner or put itself up for sale to ensure it can remain a viable competitor against the combined NYSE/Deutsche Boerse.

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Solar Power Market Emerging as a Sleeper in 2011

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Companies that manufacture solar power equipment had a great year in 2010 thanks to generous government subsidies. While 2011 may turn out to be a year of transition, most solar companies should do well and the long-term prospects for the industry are bright indeed.

Solar power installations worldwide increased 120% in 2010 with 16 gigawatts added, up from 7 gigawatts added in 2009. That brought total capacity to 40 gigawatts, still just 0.2% of the world's electricity generation in 2010. That leaves a lot of room for growth.

The rate of growth will slow in 2011 – the world will install 22.2 gigawatts this year, an increase of 39.3% over 2010, according to projections by IHS iSuppli (NYSE: IHS) – but increasing activity in the United States and China should re-ignite the market.

The European Photovoltaic Industry Association said in a report earlier this month that by 2015 it expects global investment in solar panels to roughly double from $46 billion in 2010.

Until recently, most of the growth in solar power installations was coming from Europe, led by Germany. In fact, Germany alone consumed almost half of the world's solar panels in 2010. Europe as a whole accounted for more than 80% of the global solar panel market, $65 billion worth of business.

Of course, that pattern figures to start shifting in 2011.

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The Commodities Boom of 2011: Coal Will Be the New Gold

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The run-up in commodities prices has been a long one. And it shows no signs of abating.

As a Money Morning reader, you know that we predicted this run-up. Back in October 2007, for instance, we told readers to buy gold – when it was trading at $770 an ounce. Those of you who followed our advice have done quite well.

But now it's time to make a new prediction.

The run-up in commodities prices isn't going to end. But it is going to change.

You see, commodities are going to break into two distinct groups: Traditional inflation hedges, such as gold, and big industrial commodities, such as coal.

Going forward, the industrial path will be the one that investors will want to travel for maximum profit. Here's the No. 1 way to play what we're calling "the commodities boom of 2011."

To see the single-best commodities play for 2011, please read on…

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President Obama's Budget Proposal Too Heavy on the Spending

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U.S. President Barack Obama released his fiscal 2012 budget request last week, igniting a partisan debate that's certain to escalate in the days and weeks to come.

The details will take months to hammer out, but the outcome is clear: American households can expect a lengthy dose of austerity.

The one question still to be answered is this: Just who will be hit the hardest?

In his spending plan, President Obama calls for an end to tax breaks for wealthier individuals, families, and businesses and the eradication of some programs that were designed to help financially strapped Americans. He also proposed billion-dollar cuts in education spending, housing programs and infrastructure projects.

But President Obama's proposed cuts aren't nearly as deep as critics have been calling for.

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Oil Prices Surge to Two-Year High on Middle East Turmoil

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Protests in the Middle East drove oil prices to a two-year high yesterday (Tuesday) as anti-government violence spread in Libya, threatening the nation's oil industry and raising the possibility the contagion could soon affect larger producers in the region.

Oil jumped more than $7 a barrel, breaching $98 for the April contract of West Texas Intermediate (WTI) crude on the New York Mercantile Exchange. Meanwhile, Brent crude climbed as much as 2.7% to $108.57 on the ICE Futures Europe Exchange.

"Oil is being bought on the risk that this contagion will spread through the Middle East," Jonathan Barratt, managing director of Commodity Broking Services in Sydney, told Bloomberg News by telephone. "This effect is a knee-jerk reaction to the fact that this could spread."

Libya is the latest chapter in a saga of unrest that began in Tunisia in January and has raced through North Africa and the Middle East in recent weeks.

Iran added to the tension in the region yesterday by entering two of its naval ships into Egypt's Suez Canal headed toward the Mediterranean. Israel considers the presence of Iranian warships sailing through the canal "a provocation," Foreign Ministry spokesman Yigal Palmor told Bloomberg.

Fears of massive disruptions in the market have oil traders on edge and the energy markets are now braced for an even sharper run-up, according to Dr. Kent Moors, a noted energy expert and editor of the Oil and Energy Investor.

"That traders do not regard this as a short-term problem is seen in the futures contract curve. We have an escalating and contango market, one in which each month further out has a higher price than earlier months," said Moors. "The volatility will now kick in big time, and that will further unnerve the trading environment."

Libya's importance as an oil producer is more symbolic than anything else.

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Is Your Household Spending More This Year?

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After crippling economic turmoil over the past few years, many U.S. households worked hard to tighten budgets, slash excessive spending, and live within their means.

But there are signs that consumers are starting to open their wallets again, and U.S. consumer spending – which makes up 70% of the economy – could help sustain the cautious economic recovery.

U.S. consumer confidence in February hit its highest level in three years, bolstered by economic optimism and salary increases, spurring hope that 2011 could be a year of increased household spending.

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Buy, Sell or Hold: Brigham Exploration Co. (Nasdaq: BEXP) is in the Midst of a Blue-Sky Breakout

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Brigham Exploration Co. (Nasdaq: BEXP) – the oil and gas exploration company that we recommended as a "Buy" on Jan. 24 – has moved up by 27% in the last few weeks.

And it's not done yet.

Brigham shot as high as $32.98 on Friday after closing Jan. 24 at $25.33. In the past week alone, the stock is up nearly 11%.

Indeed, this has turned into a blue-sky break out – a phenomenon that occurs when there are high expectations for long-term organic growth.

It's possible that the sharp move up in Brigham's share price will lead to a correction, but when it is a blue-sky break out, the run could last a while.

So let's take any money we have left on the sidelines and look at any smaller, short-term dips as opportunities to increase our stake in Brigham.

Here's why.

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