Archives for June 2012

June 2012 - Page 3 of 16 - Money Morning - Only the News You Can Profit From

How to Trade the Obamacare Ruling

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During a visit today (Wednesday) to Fox Business' "Varney & Co." program, Money Morning's Keith Fitz-Gerald tackled the issues surrounding the Obamacare ruling and how investors can trade the news.

Since the U.S. Supreme Court is scheduled to announce its Obamacare ruling tomorrow, we wanted to share with you this Q&A session with Keith on what you need to know about the decision.

Keith also shared what he thinks of Facebook stock as the market is flooded with analyst opinions from the underwriting firms.

You can see all of Keith's analysis in the video below.

Q, from "Varney & Co." host Stuart Varney: The Obamacare ruling is imminent. Will insurance companies tank if it's repealed, and how would you trade that?

A, Keith Fitz-Gerald: I can see this going two ways…

1)If it's upheld, insurance companies will make bank, but businesses offering services to small and mid-cap companies that are likely to be hamstrung are going to do better. That includes Paychex Inc. (Nasdaq: PAYX) or Express Scripts (Nasdaq: ESRX), for instance. Both will help small companies spend their healthcare dollars more efficiently.

2)If struck down, big insurance companies will have to retool and restructure as they are the ones that hold the biggest stake in this debate. It's a little late to make that bet today, but when the ruling is announced we'll have some clarity and can make a decision then.

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Analysts Weigh in on Facebook Stock as Quiet Period Ends

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Investors who want more analyst opinion on the Facebook stock price now have a lot more reading to do.

Today (Wednesday) marked the end of a 40-day quiet period for dozens of analysts who work for the 33 underwriters of the Facebook (Nasdaq: FB) initial public offering. That means these analysts now have released their first opinions and outlooks for shares of the social networking behemoth.

In an effort not to artificially inflate the stock price of a "hot" IPO, major Wall Street firms are prohibited for the first 40 days following a stock's debut from issuing analyst reports on stocks they underwrite. Smaller banks that are part of such an offering usually follow suit.

The universal opinion prior to Wednesday's Facebook releases was that the majority of analysts would "like" FB shares, and predict a 20% rally or more could be expected over the next 12-month period.

That was mainly the case among its lead underwriters, although some were bearish, bringing the average price target down. Price targets for analysts who provided them Wednesday ranged from $25 to $45, with the average $37.71.

But investors should consider the source before acting on the first analyst opinion they see. Some may be more interested in getting attention than guiding investors in the right direction.


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Stock Market Today: Europe Waits as Housing Rebounds

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The stock market today (Wednesday) climbed slightly this morning as investors waited on the much anticipated European Union summit to begin.

The two-day meeting, which involves the leaders of all 27 EU nations, starts Thursday and many are hoping for signs of deeper integration and building blocks for a new foundation of EU policies.

"What is at stake is not only the economic integration, it is also the overall economic confidence in the euro area, and indeed, our commitment to the European project," said European Commission President Jose Barroso, in a speech Tuesday. "This is why we need to be bold and define the way forward."

After Cyprus became the fifth country to seek a bailout following Greece, Ireland, Portugal and Spain, investors have become more and more pessimistic as to what can be accomplished at the summit. German Chancellor Angela Merkel stiffly opposed the idea of common Eurozone bonds proposed by Italian Prime Minister Mario Monti and preferred by Spain and France as well.

At a meeting of lawmakers from her Free Democratic coalition partners in Berlin on Tuesday, Merkel made her opinion clear.

"I don't see total debt liability as long as I live," said Merkel, a day after calling the idea of euro bonds "economically wrong and counterproductive," according to people who attended the closed-door session.

As investors awaited the summit, economic reports on durable goods orders and pending home sales spurred the markets forward today.

Orders for durable goods climbed 1.1%, the first rise in three months and far ahead of economists' expectations of a 0.5% increase. Pending home sales matched a two-year high.

The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 5.9% to 101.1. The index level matched the two-year high reached in March, while the gain was the largest since October 2011.

These reports could keep the momentum going for a housing recovery, following positive home prices and new home sales reports earlier this week.

Beyond Europe and housing, here are some companies making headlines in the stock market today.

Facebook (Nasdaq: FB) stock can now receive opinions and analysis for the first time since its IPO from the 33 underwriters who handled the offering, as the "quiet period" ends today. This period is a 40-day timeframe following an IPO that prohibits the firms involved to publish recommendations.

So far there are mixed reports from many of the larger firms.

Goldman Sachs (NYSE: GS) initiated its coverage with a "Buy" rating and a $42 price target for the next twelve months, Royal Bank of Canada (NYSE: RY) offered an "Overweight" rating and a $40 price target, and Morgan Stanley (NYSE: MS) also offered an "Overweight" rating and a $38 target equal to the IPO price.

On the less positive side were Bank of America (NYSE: BAC) and Citigroup (NYSE: C), who both offered a "Neutral" weighting and price targets of $38 and $35, respectively.

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While Banks Crumble, The Next Leg Up For Gold Prices Draws Near

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Something's afoot in the world of high stakes finance.

The Basel Committee for Bank Supervision (BCBS) is about to decide something crucial to bankers, sovereign nations, and gold investors alike.

As part of the Bank of International Settlements (BIS), the BCBS is reviewing the upcoming new Basel III rules. That may sound arcane to you but I promise it's not.

Though rarely discussed in the mainstream press, the all-important Bank of International Settlements is essentially a global central bank to the world's central banks.

Its goal is ostensibly to provide global stability to the monetary and financial systems.

And in a surprise twist that only a few years ago would have been considered preposterous, the BCBS is entertaining whether gold should qualify as a full-fledged Tier 1 capital asset.

Currently, the precious metal is relinquished to a Tier 3 status, deserving no more than a 50% weighting at that.

Here's why that distinction is important and potentially astonishing.

Achieving Tier 1 status would credit gold with the recognition it's been denied ever since Nixon closed the gold window on August 15, 1971.

In essence, it would mark the official recognition that gold is real money.

But that's not the only reason gold is gaining respect. Other factors are brewing that will set the stage for the next leg up in gold prices.

As Banks Teeter, Gold Gains Respect

One of them is the crumbling state of world's banks. Once unwavering, the trust in these financial ivory towers is precarious at best.

In the last couple of months alone, Greek depositors have withdrawn billions of euros in deposits, as the fear of a "Grexit" looms large.

Not to be outdone, Spain banks have been emasculated by the Iberian nation's own bursting real estate bubble. After denying for weeks that a bailout would be required, officials finally caved to a "Spailout", giving Spain's banking system a 100 billion euro rescue package.

This phenomenon is not exclusive to the Eurozone either.

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Four Recession-Proof Stocks for 2012 and Beyond

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Despite the efforts of Federal Reserve Chairman Ben Bernanke and his cohorts, it looks like gridlock in Congress will push us into a recession in 2013, if not sooner.

In case you haven't been paying attention, "Taxmageddon," and election-year politics have driven the economy to the edge of a "fiscal cliff." This means the start of next year, unless drastic measures are taken in Washington, is looking precarious for investors.

Just look at what recent U.S. economic reports have told us.

"The Chicago Fed's activity index came in at -0.45 Monday morning, while recent weekly unemployment data have been weak and the Michigan consumer confidence is down," said Money Morning Global Investing Strategist Martin Hutchinson. "Given that first-quarter GDP growth was already under 2%, it looks as though the U.S. economy has stalled. Accordingly, we need to ask: how will our investments do in a recession?"

That's why it's time to update our portfolios with recession-proof stocks.

Not All Stocks Can Handle What's Ahead

Tough economic and market conditions saddle most companies with operational and financial problems that aren't easily overcome.

Businesses are usually forced to cut spending and lay off employees. And there are some expenses a company can't eliminate, such as payroll, rent and taxes.

A recession hits the wallets of customers, too, who typically reign in their spending as they scramble to stay afloat.

That becomes a double whammy for corporations.

Orders for new products slow to a trickle. Some customers slow payments or may not pay their bills at all, crippling cash flows.

Still, there are certain businesses that flourish in the adversity of a recession — making them safe harbors for your investment dollars during bad market conditions.

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Investing in Nanotechnology: FEI Co. (Nasdaq: FEIC) is the Top "Picks and Shovels" Play

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The word "nanotechnology" gets thrown around a lot but it still remains a fuzzy concept for most people.

From a self-aware, self-assembling grey goo that takes over the world in a Michael Crichton book, to Apple's (Nasdaq: AAPL) Nano music player or Tata Motor's (NYSE ADR: TTM) Nano car, it's hard to get a clear picture of what nanotech really is.

But as global World Economic Forum member and emerging tech guru Dr. Tim Harper explains, "Nanotechnology is to the 21st Century what chemistry was to the 20th Century."

Like plastics, computers, and the Internet before it, nanotechnology will change the world in ways that we can't even imagine now. That's how powerful the nano-world will become.

That's why every long-term growth investor needs to consider investing in nanotechnology. In terms of scale, the potential for investors is simply enormous.

That's why one company, FEI Co. (Nasdaq: FEIC) is on my list of "buys" as the top "picks and shovels" play.

The Miracle of Nanotechnology

So what exactly is nanotech?

It's a way of working with objects and materials at the atomic level, one molecule at time.

That means that in the near future, we will be able to custom design structures literally from the ground up, molecule by molecule, creating a quantum leap forward in medicine, materials, electronics, food, and fuels – practically everything we know of.

In fact, one of the biggest sectors where nanotech continues to have a huge impact is in drug development and drug delivery.

Recent nanotech developments include: cancer treatments without chemotherapy or radiation, long-dose treatment of diabetes with a single monthly injection, long-release or on-demand blood pressure medications, and textiles to build skin, bone or organs from you own cells.

Developments like these will invariably lead to big money

A recent report by Cientifica, a leading global emerging technology consulting firm predicts:

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Fiscal Cliff 2013: How Investors Can Prepare

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Late science fiction writer Ray Bradbury wasn't referring to investors when he said, "you've got to jump off cliffs all the time and build your wings on the way down," but he might as well have been referring to the upcoming fiscal cliff in 2013.

The fiscal cliff is a real crisis looming at year's end. The fragile U.S. economy could face an unparalleled fiscal punch of as much as $720 billion if the scheduled changes go through as planned. They include the Bush-era tax cuts set to expire Dec. 31 and billions of dollars in programmed federal spending cuts.

U.S. Federal Reserve Chairman Ben Bernanke has warned that shocks from such changes will most likely cause the economy to contract, causing a recession.

And without cooperation from Congress, there's no alternate route for the U.S. economy to take.

Ernie Gross, Ph.D., MacAllister Chair and professor of economics at Creighton University, told Forbes, "The fiscal cliff is an almost 100% certainty."

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Stock Market Today: A Brief Bounce and a 135% Winner

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The stock market today is recovering from yet another ugly trading session as investors prepare for the European Union summit later this week. Yesterday all three major U.S. stock indexes were down more than 1%. Sending the markets slightly higher today was a modestly encouraging home prices report. Home prices, measured by the S&P/Case Shiller […]

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Eurozone Debt Crisis: Why Cyprus Needed the Fifth Bailout

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U.S. stocks were rattled Monday as two more countries asked for bailout packages in the ongoing Eurozone debt crisis.

Shortly after word came that Spain had formally requested a bailout package for its ailing banks, Cyprus chimed in and also asked for aid.

The Mediterranean country has become the fifth Eurozone nation to hold out its hand for an international rescue. While the smallest of the bunch to seek relief, Cyprus highlights the European Union's increasingly stressed resources as it wrestles with weakening economic conditions.

The aid request followed Fitch's downgrade Monday of the island's stressed banks to "junk" status. The credit cut means the country has lost it investment status with the trio of the largest and most influential rating agencies.

Fitch said in a statement, "Cypriot banks will require substantial injections of capital in order to secure confidence in their financial viability."

Cyprus, saddled with Greek private sector debt, could need as much as 10 billion euros ($12 billion) in bailout funds.

"Classic contagion, "BBC's chief economics correspondent Hugh Pym said of Cyprus' troubles.

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