Archives for February 2011

February 2011 - Page 5 of 8 - Money Morning - Only the News You Can Profit From

High-Speed Rail Initiative Stoked by Obama Budget

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U.S. President Barack Obama is poised to submit his fiscal 2012 budget on Monday, and one of its outlays will be $8 billion for high-speed rail development.

Obama first outlined his vision for an expansive high-speed rail network in 2009. The initiative promised to create jobs, lower carbon emissions, increase efficiency, and improve commerce.

Since then, Republican opposition has worked hard to derail the project, which it deems an unaffordable waste of taxpayer funds. But just when it appeared his critics had taken control of the debate, the President redoubled his commitment to the project, calling for $53 billion to be spent on high-speed rail projects over the next six years.

Obama said in his State of the Union Address that he wants 80% of Americans to have access to high-speed rail by 2025.

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Eurozone Debt Crisis, U.S. Economic Policy Not Likely to Cause Currency Collapse

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The Eurozone debt crisis and U.S. economic policy continue to draw speculation over how these countries will overcome growing mountains of debt – and how the incessant borrowing will affect the euro and U.S. dollar.

More bad news came from Europe yesterday (Thursday) when the European Central Bank (ECB) had to intervene in Eurozone bond markets to buy Portugese debt. The country's 10-year bond yields hit a new euro-era record of more than 7.6%.

Portugal has already instituted pay cuts and tax hikes to pay down its debt, but recessionary concerns are casting doubt over Portugal's economic recovery. The Eurozone government's inability to agree on rescue tactics for its weaker governments is also making investors lose faith in the euro.

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Deadbeat States: Make No Mistake... Muni-Bond Defaults Are Headed Our Way

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Let's make one thing perfectly clear: Wall Street analyst Meredith Whitney is not crying wolf. Whitney – who gained fame for correctly predicting the U.S. banking implosion that presaged a global credit crisis – is now warning us about defaults in the $2.9 trillion municipal bond market.

Whitney is being savaged for this latest prognostication, mostly by institutional money managers who resent the way that she's roiled the traditionally sleepy "muni" market.

That's as unfair as it is ugly . It's unfair, because she's correct: muni-bond defaults are headed our way. And it's ugly because the naysayers – vested Wall Street interests that are only trying to protect their playground – are obscuring the truth.

And with this dissembling, the Whitney-bashers are keeping disadvantaged individual investors from understanding the disaster at hand, and are likely dissuading these bondholders from avoiding the locomotive that's steaming head-on at their portfolios.

Make no mistake: The so-called "deadbeat states" problem is real, and muni-bond defaults are almost certainly unavoidable.

For our take on the current muni-bond controversy, please read on...

The Coca-Cola Co.'s (NYSE: KO) Personal Approach Puts the Fizz Back In Its Stock

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The Coca-Cola Co. (NYSE: KO) is taking an innovative approach to product development and renewing its home base markets as it looks to reassert its dominance in the soft-drink market. Coke, the world's largest manufacturer, marketer and distributor of non-alcoholic beverages, on Wednesday posted solid fourth-quarter growth on increased sales around the globe and took […]

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Hedging Strategies: Tight Trailing Stops and Inverse Funds

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The Dow Jones Industrial Average has soared 26% since early July and some 84.59% from its March 2009 bear-market lows. And that has Money Morning Chief Investment Strategist Keith Fitz-Gerald more than a little concerned.

Does that mean it's time to cash out?

Not necessarily.

But it is time to take some well-advised precautions – which can be achieved with some simple hedging strategies, according to this market veteran who's seen it all before.

"Back in early July, the Dow was trading at less than 9,700 … now that it's north of 12,000, we're climbing into thin air," Fitz-Gerald said in an interview. "Don't get me wrong. I'll take higher markets any day, because it means that all boats are floating on a rising tide. But I'm leery that there's a monster lurking underneath the surface. And you should be, too."

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Global Food Prices: Five Reasons to Buy Rice Futures

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The world is finally waking up to the fact that global grain prices are destined to head higher – much higher.

Nasty weather in key agricultural markets around the world has savaged the global grain crop, meaning worldwide supplies can't help but be squeezed. Australia, for instance, is experiencing additional flooding in areas that were already battered by the torrential rains of November, December and January.

And as if the supply-related increase in agricultural commodities wasn't enough, there's also the U.S. dollar – and the so-called "race to the bottom" – to contend with. Make no mistake: The endless devaluations in the greenback are having a worldwide impact on agricultural commodity prices. Since commodities are priced in dollars, these devaluations translate into higher prices for grains and other food-related commodities.

Short supplies and rising prices are bad enough, but concerns about these first two realities are creating an additional catalyst that completes a trifecta for higher agricultural commodity prices.

And that third catalyst is panic buying – especially with rice, which is a basic table staple in Asian markets. For instance, The Saudi Gazette last week reported that Bangladesh recently tripled its rice-import target and Indonesia just purchased 820,000 tons of Thai rice, nearly five times the volume initially sought.

"This is only the start of the panic buying," Ker Chung Yang, a commodities analyst at Singapore-based Phillip Futures, said in The Gazette report. "I expect we'll have more countries coming in and buying grain."

For global investors, there are five reasons why it's definitely time to buy rice futures.

To understand those five reasons - and to see how to profit - please read on...

Under the Weather: Winter Storms Hit Cities and Businesses in the Wallet

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The unusual ferocity of winter storms this year, as well as where and how often they have struck, has put as much strain on some corporate and municipal budgets as heavy snow on a roof.

Whether it's climate change, a freak weather pattern or mere coincidence, no one denies the impact that severe weather has had on the United States in recent years – or the past several months, for that matter.

Extreme weather has affected every corner of the world. Historic floods in December and January in Queensland, Australia destroyed or damaged more than 30,000 homes. Bad weather in the United Kingdom caused insurance claims to double from last year, as colder temperatures caused pipes to burst and icier roads contributed to an increase in auto accidents

The United States has been affected, as well.

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2011 Oil Prices Prompting Energy Consumption Concerns Among Readers

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With oil prices moving higher, consumers are already fretting about how much it's going to cost them to fill their tanks. And given the current outlook, that cost is going to head even higher – meaning there's no relief in sight.

The political mayhem in Egypt is the latest oil-price catalyst to appear, and is yet another candidate to help push 2011 oil prices closer to the predicted $150-a-barrel level. Analysts worry that Egypt's chaos could disrupt the millions of barrels of oil that pass through the Suez Canal.

Traders' main unease is that the political unrest in Egypt is something that could occur in neighboring countries – especially those with a much bigger influence on the global oil exporting market.

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