After a brutal September, it was refreshing to see October swoop in with a record-breaking monthly point gain. The Dow Jones Industrial Average scored 9.5% gains in October, rising 1,041.63 points, and the Standard & Poor's 500 Index and the Nasdaq Composite rose 11%. That's the largest monthly point gain in the Dow's history and […]
Archives for November 2011
November 2011 - Page 9 of 9 - Money Morning - Only the News You Can Profit From
Money Morning Global Energy Strategist Dr. Kent Moors talked to Fox Business "Varney & Co." host Stuart Varney about whether or not to invest in wind, solar and natural gas, if government subsidies are a good idea, and the market niche to keep your eye on as an investor. Loading the player …
Fresh evidence of Spain's deepening economic crisis has revived fears about that nation's ability to dig out of its sovereign debt problems, and illustrates why the Eurozone debt crisis is likely to drag on for years.
Spain's gross domestic product (GDP) was flat in the third quarter, the country's central bank said yesterday (Monday). That follows anemic growth of 0.4% in the first quarter and 0.2% in the second quarter.
Even more troubling is the nation's unemployment rate, which rose to 22.6% in September – the highest in the Eurozone.
As one of the PIIGS (Portugal, Ireland, Italy, Greece and Spain), Spain has been trying to wrestle down its high sovereign debt with austerity measures. Unfortunately, those measures are driving the Spanish economy toward recession, which is making it impossible for the government to hit its budget deficit reduction targets.
"It will be very difficult to meet the deficit goals without additional austerity, which might push the economy back into recession," Ben May, a European economist atCapital EconomicsinLondon, told Bloomberg News. May thinks Spanish unemployment could go as high as 25%.
Each of the PIIGS faces the same cycle of futility – economy-killing austerity measures that erode the nations' ability to cope with their debt issues, necessitating even deeper austerity measures.
But without the economic growth to create the wealth to cope with the budget deficits, the Eurozone debt crisis will gobble the PIIGS up one by one.
In Greece's case, its faltering economy led to a series of bailouts from the European Commission (EC), the International Monetary Fund (IMF) and the European Central Bank (ECB), to avoid default.
But the Greek economy is among the Eurozone's smallest. If the other PIIGS, particularly Italy and Spain, descend to where Greece has fallen, there won't be enough money to rescue them.
"Unless European economies outgrow their deficits, the chance of rolling bailouts working is slim to none," said Money Morning Capital Wave Strategist Shah Gilani.
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Now that we're in November, prepare to see retailers gear up for what will be a particularly brutal holiday shopping season.
High unemployment and tight credit will limit the amount of consumer spending dollars available to retailers.
The annual holiday shopping survey by consultant Accenture PLC (NYSE: ACN) reported 88% of shoppers plan to spend the same or less than last holiday season, discouraged from the lack of economic recovery. About 72% of consumers described their holiday shopping as "careful" or "controlled."
"As we approach the 2011 winter holidays – the fourth straight season set against a backdrop of economic uncertainty – Americans remain fixated on finances: their own and that of the nation," wrote Tod Marks, Consumer Reports senior editor and shopping expert. "So it's not surprising that people are even more intent on watching their dollars, shopping on a set budget and, of course, bargain-hunting."
Still, the National Retail Federation estimates this holiday season will see a 2.8% gain in sales in November and December, totaling $465.6 billion – a tiny bump for a sector that waits all year to profit from the holidays.
That means a few companies will manage to emerge from the melee in much better shape than their rivals. Those companies are already preparing for battle.
Retailers Fight for Shoppers
The fight to win shoppers amid modest spending expectations means consumers will be able to enjoy incredibly competitive promotional tactics.
"Knowing their customers are more focused than ever on value, retailers will entice shoppers with promotions that go beyond discounts, whether they're promoting free gifts with purchase, an extended warranty, or stellar customer service," said NRF President and CEO Matthew Shay.
Winning customers won't be easy. The increasingly budget-conscious shoppers have created a new type of consumer this holiday season: "precision" or "surgical" shoppers. These types of buyers go to the store with a mission and exit quickly. They aren't easily distracted by in-store sale items or flashy attention-grabbing gimmicks.
"They will be very targeted about where and what they buy, and will be more inclined to shop around for the best value," said Janet Hoffman, managing director of Accenture's retail practice. "Stores should focus on providing an experience and services that create a sense of extra value in mind for the shopper."
There are many reasons why the Occupy Wall Street movement could fail – a lack of cohesion, too many directions, no leadership, not enough money, and no representation, to name a few.
But what if it "succeeds?"
What would our investing landscape look like and what would we do about it?
I think that's an interesting question, especially since Occupy Wall Street has gained some traction, even taking on a global appeal. And more importantly, there are two other reasons the movement could succeed:
- First, our political system is broken and has deteriorated into little more than a fancy debating society.
- And second, the world's central bankers remain out of control; their bailouts are saving the irresponsible at the expense of the hardworking. Our regulators and Wall Street remain locked in an unholy alliance that has done very little to fix the underlying problems that have resulted from decades of bad fiscal policies, unsound monetary practices, and dysfunctional leadership.
You may remember the 1960s and the many protest movements that were very clearly focused on civil rights and the Vietnam War. You even may have been part of a few.
A lot of people thought they would go away, too. But Tom Hayden and his collection of Students for a Democratic Society didn't. Nor did Abbie Hoffman, Bobby Seale, and others. Their passion and that of thousands who joined in eventually succeeded in changing the course of social consciousness.
OWS could too.
By shunning the hierarchy that is organized politics and corporate America, there is the sort of strength necessary to address the growing disparity and the vanishing opportunities that are the new economic reality for millions of Americans.
I, for one, am hopeful that OWS will find the leadership needed to clearly delineate its goals and mandate change on the strength of the raw unvarnished potential that is now driving it.
I am also hopeful that OWS will succeed in raising the social consciousness to the point that living within our means becomes both an economic and political reality.
But that's just me. You may have entirely different feelings. That we might not agree is irrelevant.
Since OWS began, I've been watching carefully and doing a lot of deep thinking about what things might look like if OWS "wins" – however you define the term.
So here's a look at some of the potential changes that could take place if the movement succeeds: