Archives for May 2012

May 2012 - Page 13 of 15 - Money Morning - Only the News You Can Profit From

Food Prices: Here's the Real Story

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The United Nations on Thursday reported food prices eased in April after steadily rising in 2012's first quarter.

However, global soybean price increases remained a top concern at the U.N. Food and Agriculture Organization (FAO).

In a conversation with Reuters, FAO economist and grain analyst Abdolreza Abbassian explained:

"We expect global food prices to remain under downward pressure this year unless there are any unexpected shocks to the supply side, such as unfavorable weather. For such reasons, it is very hard to predict for sure in what direction prices will move.

The only real area that could trigger food price increases would be soybeans which we see in tight supply, then pushing up corn prices as a result."

But Abbassian understates the most important issue in the food markets.

You see, Abbassian implies that food prices remain "somewhat" susceptible to outside volatility in the currency and energy markets.

In fact, this view is focusing on the short-term. It's ignoring the sector's most pressing long-term concerns

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April's U.S. Jobs Report a Far Cry from Where We Need to Be

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Expectations ahead of April's U.S. jobs report were that it could deliver some good news about the U.S. economy. A robust number would have alleviated worries the economy is faltering the third year into a tepid recovery. But that is not what we got. The jobs report, released before the bell Friday, showed a net […]

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Facebook IPO Price Range Values Company Near $100 Billion

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A Facebook IPO price range has been set, valuing the company at approximately $85 to $95 billon, The Wall Street Journal reports.

Facebook has set a range for its initial public offering of $28 to $35 per share. At that price level, the social network giant would raise just over $10 billion.

Those lofty numbers would put Facebook on the path to becoming the most valuable Internet company in the United States.

The price range is surprisingly lower than what many industry analysts had expected. The consensus was closer to $40 per share.

Greencrest Capital Management analyst Max Wolf told MSNBC that Facebook most likely subdued the price range for the storied IPO due to recently passive mood surrounding the markets.

"It feels to me that as market sentiment gets less bright, people are getting more nervous," said Wolf.

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Uranium Prices Report: Uranium to Double on "Nuclear Renaissance"

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Uranium stocks got hammered in the wake of the Fukushima disaster.

But now uranium mining stocks have finally begun to bounce back… just like we told you they would.

After getting pummeled last year, shares of Cameco Corp. (NYSE: CCJ) – the world's second-largest uranium miner – are up 32%.

Meanwhile, smaller American competitors Uranium Resources Inc. (Nasdaq: URRE) and Uranium Energy Corp. (AMEX: UEC) are each up about 30%. And the Global X Uranium ETF (NYSE: URA) is up 25%.

But that's just the beginning...

Innovation Investing: Now is the Time to Buy ABB Ltd. (NYSE:ABB)

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As investors, we constantly hear that the markets are forward looking. There is a good reason for that.

The future is precisely where smart investors need to be focused these days.

It doesn't matter whether you are investing for income or for growth, it is what's over the horizon that matters most.

One of those horizons is the "New Energy Age".

It's a place where technology is having an enormous impact on how we generate, distribute and consume energy on every level.

And the companies that embrace this paradigm shift are creating a whole new approach to the markets I call Innovation Investing.

One of the poster children for Innovation Investing is ABB (NYSE: ABB). A go-to player in every major market, including the United States, ABB is a must for any long-term investor.

The Story Behind ABB (NYSE: ABB)

The Switzerland-based company is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact.

For some that may sound "green" but for most of its customers, it's about improving efficiencies and the bottom line.

This is a company that is not only a major global player in all the major markets in the world– developed and developing–but it does almost everything in the energy business. And usually it is on a scale that few others can match.

Plus, ABB kicks off a nice dividend yield that's approaching 4%.

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The Fate of the Eurozone Hangs on Sunday's French Elections

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It now looks as though Nicolas Sarkozy's days are numbered. In the balance lies the fate of the Eurozone itself.

It appears Socialist Francois Hollande will win the French election runoff on Sunday and that June's legislative elections will give the Socialists a powerful position in France's parliament.

Added to these developments is the good chance that both the major existing parties in Greece's parliament, which had jointly agreed to the bailout deal, will be voted out of office on Sunday as well and replaced by a motley set of far-lefties.

So while the Eurozone has been quiet this week, the calm is deceptive with the elections on Sunday.

Meanwhile, most of the worry in the Eurozone centers on Spain – which is quite foolish.

Spain recently elected a center-right government with a large majority, which is clearing up the mess left by its predecessors. The country does have a 25% unemployment rate, but that's a function of Spanish labor law and excessive welfare payments, both of which the current government is addressing.

Spain's budget deficit is also smaller than France's, as is its debt level. In fact, Spain's debt and deficit burdens are lower than both Britain and the United States. Spain is not the issue.

Considerable Danger in the Eurozone

As for Greece, it is a shambles.

The truth is it should have been chucked out of the Eurozone two years ago, when it was first revealed that its governments had been consistently lying about its budget numbers.

Had that happened, the new drachma would have sunk to about a third of its former value, and Greek living standards would have reduced by half, all without anything but market forces to be blamed.

Now hundreds of billions of euros have been poured into the country, and its ungrateful electorate is determined to elect every nut-job it can rake up. The whole Greek rescue project has been a complete waste of time and money, and should be ended forthwith.

Fortunately, throwing Greece out of the Eurozone will not destroy the euro – after all, nobody was relying on the strength of the Greek economy in their calculations of the euro's value.

However, France is a different matter entirely.

Unlike Greece, if France gets into serious trouble, the remaining "solid" euro economies led by Germany are not big enough to save it.

And, led by Hollande, France looks to be in considerable danger.

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The Case for Higher Gold Prices

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Gold prices had gold bugs giddy in the fall of 2011. In September, the luminous yellow metal touched an intraday high of $1,920 a troy ounce, putting the precious metal up roughly 35% for the year.

At the time it seemed like investors, traders and even the guy at the corner store were all buying, hoarding, and lusting for gold.

But the stellar gains were short lived, and by the end of the year gold prices had fallen by nearly 20%.

Part of the striking decline in gold was due to the fact that the "smart" money that had once been amongst gold's biggest cheerleaders, sold it.

Some booked profits, some sold it to reflect gains in portfolios, others were forced to sell to meet margin requirements, and others wanted to start the New Year with a clean slate.

Gold Prices in 2012

Enter 2012, and gold prices enjoyed a lustrous January, rising some 10%, helped in particular by Chinese New Year celebrations.

Gold has since languished as investors became more willing to take on added risk, delving more into equities. While gold prices foundered, the Dow rose 8% in the first quarter, the S&P 500 gained 12%, and the Nasdaq enjoyed a nearly 19% gain.

And more recently, not even gold's best friend, Federal Reserve Chairman Ben Bernanke, offered up much help.

Following the commencement of the two-day FOMC meeting last week, gold experienced a volatile day, but managed to end virtually flat from the previous trading session. The Fed left interest rates steady and extinguished hopes for immediate further monetary loosening measures.

Without a promise of more quantitative easing, long gold holders headed for the exits.

Nonetheless, many sophisticated gold traders are poised to pounce on gold with every dip.

Among them is the storied and accomplished commodities investor Jim Rogers.

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Chesapeake Energy (NYSE: CHK) CEO Aubrey McClendon Must Go

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There have been a number of calls in recent days for Chesapeake Energy (NYSE: CHK) CEO Aubrey McClendon to resign in the wake of two highly questionable schemes.

The first, revealed two weeks ago, is that McClendon took roughly$1.1 billion in personal loans against his stake in Chesapeake wells.

If that wasn't enough to shake confidence, Reuters reported yesterday (Wednesday) McClendon ran a lucrative business on the side.

But not just any side business. McClendon was running a $200 million hedge fund that traded in the same commodities Chesapeake produces.

This is a serious conflict of interest to say the least, because one has to ask just whom McClendon was looking out for at all times: his shareholders or himself?

The answer should be easy to discern.

The reactions have included calls for more responsibility to shareholders.

"An executive's first responsibility is to shareholders and the betterment of their investment," said Carl Holland, who ran the trading-compliance department at former U.S. oil major Texaco. "Personal trading in the commodity around which the CEO's business is based would be a clear no. We would never have tolerated that, ever."

There have also been brutal rants by private investors slamming the fact that McClendon recently hired PR spin doctor George Sard, who has represented a number of fallen, humiliated high-profile clients. They include the Madoff brothers, Eliot Spitzer, former Lehman Brothers CEO Dick Fuld, and executives at Enron and Fannie and Freddie Mac.

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LinkedIn’s (NYSE: LNKD) First-Quarter Earnings Preview

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There is a lot riding on LinkedIn's (NYSE: LNKD) first-quarter earnings report due out today (Thursday).

LinkedIn is expected to report earnings of 9 cents per share on revenue of $179 million. In the same period a year ago, the company broke even with revenue of $94 million.

The question is if the ever-growing and hugely successful professional networking service can sustain the brisk growth that has not only had job seekers and industry experts flocking to the site, but also sent its shares soaring. LinkedIn's stock has climbed nearly 70% this year.

LinkedIn did report commendable fourth-quarter numbers and enjoyed significant revenue growth across all segments. But a prior stellar quarter does not portend the same in a subsequent one.

If first-quarter results are a letdown, shares could plummet.

A Look at LinkedIn (NYSE: LNKD)

The Mountain View, CA-based company has enjoyed explosive expansion in its membership. LinkedIn ended 2011 with some 145 million members, up from 90 million at 2010's end.

LinkedIn is becoming a Facebook-type site for career-minded professionals. Helped no doubt by the high and stagnant unemployment rate, the Website drew more than 100 million monthly visitors in January for the first time, research firm comScore Inc. reported.

MarketWatch notes that as more and more employers, headhunters and job seekers congregate to the site, using it as a digital rolodex, LinkedIn benefits from the fees it charges companies, recruiting services and people who opt to pay for additional access to the members.

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The Facebook IPO: What's Next

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We may be just two weeks away from the Facebook IPO. Retail investors waiting to get their hands on Facebook stock can do so May 18, according to a report from The Wall Street Journal. It's not final – dates commonly change with IPO debuts. Facebook is still in the process of finalizing its regulatory […]

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