Archives for February 2011

February 2011 - Page 4 of 8 - Money Morning - Only the News You Can Profit From

Obama Proposes Fannie & Freddie Reforms as Housing Market Continues to Languish

by

Three years after the housing market collapsed, efforts to clean up the financial mess created by Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC) – the government agencies that largely inflated the bubble – remain stuck in limbo as Washington policymakers bicker over the details.

Meanwhile, the market continues to suffer through the aftermath.

The total value of U.S. single-family homes plummeted by roughly $798 billion in the final three months of 2010. For the year, values fell by more than $2 trillion to $22.3 trillion, according to Zillow.com.

More than 27% of all homeowners are now underwater and mortgage rates are swiftly starting to move up – threatening to kill any chance the market has to rebound from the worst disaster in its history.

Read More…

U.S. Consumers' Love-Hate Relationship With the Mobile Computing Era

by

When Verizon Communications Inc. (NYSE: VZ) opened up Apple Inc. (Nasdaq: AAPL) iPhone sales to the phone carrier's existing customers two weeks ago, it sold more iPhones in the first two hours of preorders than it did of any other phone on a launch day. Some analysts estimate there have already been 500,000 total presales.

The sale continued last Thursday, when Apple and Verizon Wireless stores opened their doors at 7 a.m. to allow eager customers to pick up the latest iPhone, as the king of the smartphone market continues to reign.

This zooming interest in the iPhone shows smartphones are no longer just a luxury item for wealthy consumers, or a business tool for busy execs. Social networks, texting and anywhere/anytime access to the Internet have transformed them into a "must-have" device for mainstream consumers.

And smartphones are leaving the PC in the dust.

Read More…

Deutsche Boerse/NYSE Mega-Merger More About Derivatives Than Stocks

by

The merger yesterday (Tuesday) of Germany's Deutsche Boerse AG and NYSE Euronext Group (NYSE: NYX) will create the world's largest financial exchange. But most observers feel the deal is being driven more by the exploding market in derivatives and other exotic instruments than good old-fashioned stock trading.

While the $9.53 billion all-stock deal creates the world's largest trader of equities, it's the chance to exp
and the combined entity's presence in derivatives markets that held the real appeal, according to most observers.

Under the terms of the deal, Deutsche Boerse shareholders will control 60% of the new company, with NYSE shareholders owning 40%. One Deutsche Boerse share will be exchanged for one share of the new company's stock, while each share of NYSE Euronext will be swapped for 0.47 share of new company stock, The Wall Street Journal reported.

Read More…

What Do You Think Of President Obama's Budget Proposal?

by

U.S. President Barack Obama released his fiscal 2012 budget request Monday, 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?

Read More…

Obama Budget Proposal Kicks Off Battle Over Spending Cuts, Tax Increases

by

U.S. President Barack Obama yesterday (Monday) sent to Congress his $3.7 trillion budget request for fiscal year 2012, kicking off a congressional battle to determine a balance of spending cuts and tax increases that could reduce the country's $1.6 trillion deficit.

The Obama budget plan intends to shrink next year's deficit to $1.1 trillion. The Congressional Budget Office (CBO) last month projected 2011's deficit to hit $1.5 trillion, although a new estimate Monday from the Obama administration pushed the total to $1.6 trillion, or 10.9% of gross domestic product (GDP). Next year will be the fourth consecutive year with a budget deficit of more than $1 trillion.

President Obama said his federal budget proposal aimed to "ask Washington to live within its means, while at the same time investing in our future."

"What we've done here is make a down payment, but there's going to be more work that needs to be done, and it's going to require Democrats and Republicans coming together to make it happen," said President Obama.

Read More…

Washington's Debt-Ceiling Debate - A Political Sham

by

I have to tell you that – as a former international merchant banker – I want to laugh out loud when I hear the dire predictions of how the United States will have to default if Congress doesn't raise the nation's debt ceiling.

With a little Wall Street-style creative financing – even when the government's outstanding debt level reaches the official limit of $14.3 trillion sometime around the end of March – there's no reason why the country can't go on borrowing as if nothing has changed.

The debt-ceiling debate is something you're going to hear a lot about in the days and weeks to come. The Obama administration just yesterday (Monday) introduced its fiscal 2012 budget proposal – a spending plan that's certain to ignite a firestorm of debate between Democrats and Republicans. And those arguments about next year's spending plan will absolutely feed into a heated showdown over the federal debt ceiling.

But the two sides are arguing about the wrong thing: It's the country's debt load – not the debt ceiling – that has to be addressed. And I can prove it to you.

Like a consumer who's in over his head, Uncle Sam has several alternatives available before his creditors arrive to repossess his vehicles and cut up his credit card. By highlighting some of the "debt dodges" that are available, I will show you that the dire near-term predictions aren't anything to fear. Long-term, however, this country really does need to slash its debt-load. But that requires a real commitment, not political maneuvering.

To see through this "political theater," please read on...

Cisco Systems Inc. (Nasdaq: CSCO): The Story That Wall Street Missed

by

It was another good week for U.S. stocks, despite the whipsaw-trading that resulted from alternating good news/bad news/good news developments on the earnings and geopolitical fronts throughout the week. The Dow Jones Industrial Average rose 1.5% for the week, while the Standard & Poor's 500 Index advanced 1.4%. The tech-laden Nasdaq Composite Index only managed to edge up by 0.7%, having been held back by Cisco Systems Inc. (Nasdaq: CSCO).

Although the Nasdaq lagged its U.S. stock-market counterparts, the 0.7% advance it put together last week did follow a 1.5% advance the week before. What's more, the U.S. high-tech sector has actually been the third-best-performing sector so far this year, with a 7.75% year-to-date gain that trails only energy and industrials.

According to MarketWatch.com, of the 76 technology companies that are part of the S&P 500, 64 companies, or 84.2%, have reported their fourth-quarter earnings. The results: A total of 52, or 81.3%, have surprised to the upside. Four firms have reported earnings that were right in line with expectations. And eight, or 12.5%, have disappointed (surprised to the downside).

Cisco was the biggest of those disappointments. But there's a much bigger story here than meets the eye.
And perhaps a much bigger profit opportunity….

For a full analysis of the "story behind the story," please read on…

Read More…

Global Investing: Five Foreign Revenue Stocks That Will Boost Your Profits

by

"Globalization" has become one of the top financial buzzwords in recent years – and with good reason. The economies of many developing-market countries have achieved an important critical mass, meaning they're now growing a lot faster than much more-"mature" counterparts as the United States, Europe and Japan.

The upshot: Investors who ignore these opportunities in favor of a "U.S.-only" investment regimen face a future marked by lackluster returns.

In fact, the U.S. stock market ranked just 42nd in the world in terms of performance in 2010, despite posting a 12.78% return that was well above its historical average, according to results compiled by Bespoke Investment Group (BIG). Germany did a little better, leading the G-7 nations with a 16.06% return, but Great Britain managed just 9.00%. Japanese-stock-market investors suffered a loss of 3.01%, while those in Greece endured a 35.62% freefall.

Read More…

Buy, Sell or Hold: Soaring Food Prices Signal Sell for Sysco Corp. (NYSE: SYY)

by

The high cost of food and energy is eating away at companies like Sysco Corp. (NYSE: SYY), the country's largest commercial food distributor.

Indeed, inflation has soaked up the dollar's purchasing power, forcing millions of Americans to slash discretionary spending. Furthermore, the U.S. Federal Reserve, through its lax monetary policy, has been exporting inflation to the rest of world. The resultant price increases in commodities have hit the wallets – not to mention the bellies – of many consumers, including those in the United States.

Making matters worse, global weather patterns last year shifted from El Nino into a La Nina pattern. This has caused rain patterns around the world to change, affecting crop yields in Russia, Australia, and China.

That's why the price of soft commodities used in the preparation of foods has risen exponentially over the past year. It's also why you should sell Sysco.

Read More…