Archives for July 2012

July 2012 - Page 7 of 17 - Money Morning - Only the News You Can Profit From

Future Microsoft Profits Rely on Critical Product Launches this Fall

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There is a first time for everything, as we learned from the dro p in Microsoft profits the company reported yesterday (Thursday) after market close.

Microsoft Corp. (Nasdaq: MSFT) posted its first quarterly loss as a public company – breaking a 26-year record.

Now the company hopes its crop of new products launching this fall will not only boost profits, but edge out the strengthening competition.

"Microsoft is a very strong enterprise player," Tony Ursillo, an analyst at Loomis Sayles & Co. told Bloomberg News following the report. "There was lots of evidence in tonight's report that they are a force to be reckoned with in the enterprise."

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The Best High-Tech IPOs This Year

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A lot of people think the Facebook Inc. (NASDAQ: FB) fiasco means the market for IPOs is dead. Story over, right?

Well, not so fast.

Sure, the IPO market has slowed in the last couple of months, after thousands lost money on Facebook's poorly managed debut in mid-May. But the market remains far from dead.

Even in this kind of weak, choppy climate we see right now, innovation always comes to the top.

America is still brimming with lots of entrepreneurs who want to change the world around them. And help line the pockets of some savvy investors.

Winning IPOs keep the tech sector moving forward. That, in turn builds the base for the next round of startups with big ideas looking to go public someday.

And when you look at the most successful tech IPOs of 2012, you can see, these ideas are big.

Imagine a new system that cuts air pollution at a coal-fired plant while the flame is still burning – providing cleaner output for any type of fuel.

Or consider a platform that gives viewers the ability to watch any TV show they want, anytime, anywhere, on any device, from a laptop to a smart phone, all with one simple login.

And if you can take a known drug and tweak a little bit so it fights depression, well, that will be a godsend for millions of Americans.

I mention these cutting-edge breakthroughs because they represent the tech behind stocks that have gone public this year with big gains for investors.

By the way, I'm calculating the "best" returns based on one simple stat – how much the price has risen since the stock began trading through the market close on Wednesday.

Let's take a look…

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The Real Villain is the One Behind the Curtain in the Libor Scandal

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There's nothing like pulling back the curtain on the fraud that's center stage in the Libor manipulation scandal and finding the levers are really being pulled by central banks.

It's not about the banks doing what they did. The revelation is this: Central banks are the biggest impediment to free markets and the reason capital markets have become casinos.

And until the tyranny of their grip is broken, the majority of public investors are going to rightfully sit on the sidelines and long-term economic growth will be impossible.

The Libor scandal is just a sideshow. There's nothing new there.

Banks manipulated Libor (the London Interbank Offered Rate), the benchmark for over 800 trillion dollars in interest rate-sensitive loans and financial instruments, to jack up profits on trading positions they held.

Bankers scheming, lying and cheating for bigger bonuses at the expense of anyone in their way…that's news?

No, but here's the real inside scoop…

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From Rogues to Riches: How ETFs Are Lining Wall Street's Pockets - While Picking Yours

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Maybe you didn't know that the rogue trader at UBS AG (NYSE: UBS) who lost $2.3 billion last year was trading exchange-traded funds (ETFs)… or that Jerome Kerviel, another rogue trader at Societe Generale SA (PINK ADR: SCGLY) who lost $7.2 billion in 2008, was trading ETFs.

Maybe you didn't know that ETF trading accounts for 35% to 40% of all exchange volume, according to Morningstar Inc. (Nasdaq: MORN).

Maybe you didn't know that the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC), the Financial Stability Board (FSB) and the Bank of England (BOE) are each concerned that ETFs pose potential systemic risks.

Maybe what you don't know can actually hurt you. (… and your finances. Go here to find out how to get some of the best wealth-building investment advice – worth more than $28,000 – for as little as $5 a month.)

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Healthcare Stocks: Mergers Show How Obamacare Will Deliver Profits

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Want proof that healthcare stocks are poised to reap rewards from Obamacare?

Just take a look at this recent blockbuster healthcare merger.

Giant managed care firm WellPoint Inc. (NYSE: WLP) announced July 9 that it would buy Amerigroup Corp. (NYSE: AGP), the country's largest private Medicaid managed care company, for $4.9 billion in cash.

The day acquisition was announced, Amerigroup stock jumped 38%.

Of course, healthcare mergers and acquisitions (M&A) are nothing unusual. But a close look at this deal sheds light on the direction of the next major trend of consolidation within the industry.

In fact, when it narrowly upheld the Affordable Care Act (informally known as Obamacare), the Supreme Court unwittingly set the table for a new wave of M&A in a downtrodden healthcare space –Medicaid.

Government-sponsored programs like Medicaid and Medicare have traditionally been viewed as ho-hum businesses with razor-thin profit margins.

So why is WellPoint jumping with both feet into a business that is typically not a big money maker?

Let's take a closer look…

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How the New Healthcare Tax Affects You

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The Supreme Court recently upheld the Affordable Care Act (ACA), or Obamacare, sparking concern in the United States about the future of healthcare tax.

Even though some people argue the healthcare law is not a tax but instead a penalty, right now it's been ruled the former – and has become one of the key issues in Election 2012.

In a July 12 poll by Quinnipiac University in Connecticut, 55% of American voters said ACA is a tax hike. But it doesn't necessarily mean they are against it.

Interestingly, 48% agreed with the U.S. Supreme Court decision to uphold the law, while 49% believe that the U.S. Congress should repeal it.

In addition, 55% of American voters said a presidential candidate's position on health care is "extremely important" or "very important" to their November vote. Those who think Obamacare breaks the president's promise of not raising taxes could be lured to a GOP presidential vote.

Peter Brown, assistant director of the Quinnipiac University Polling Institute, said in a press release, "President Barack Obama has worked mightily to avoid the 'T' word, but most American voters say the ACA is in effect a tax hike. The big question is whether the Republicans can sell the idea to voters that the president's Affordable Care Act breaks his promise not to raise taxes on those who make less than $250,000. That's why what voters believe on this issue matters."

Whether it is a tax or a penalty, either way people are going to have to pay.

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What to Look for in the Facebook Earnings Report

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The most highly anticipated earnings report this month will come July 26 when Facebook (Nasdaq: FB) releases its first results as a public company.

While the event won't garner the same kind of fanfare Facebook enjoyed leading up to its IPO, the projected numbers are already attracting a great deal of negative attention, and Facebook stock has fallen in the midst of some dreary expectations.

According to data from Bloomberg News, Facebook is forecast to report revenue of $1.16 billion, while profit is expected to have fallen 10% to 11 cents a share amid a slowdown in sales. The whisper number is for earnings of 12 cents a share.

Predictions for the company have been slashed in recent weeks as concerns of a slowdown in sales and user defections have increased.

Those cuts have weighed on Facebook stock. Shares on Tuesday slipped for the sixth consecutive day, eked out a small gain Wednesday, and were lower again today (Thursday).

"People are concerned about the growth profile. More risk is being reflected in the lower stock price," Benjamin Schachter, an analyst at Macquarie Securities USA Inc., told Bloomberg.


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Tech Stocks Carry the Stock Market Today

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The stock market is trying to hold on to gains for a third consecutive day as tech stocks lead today's charge.

Investors are trying to brush off jobless claims that increased from last week and existing home sales that fell to an eight-month low.

After financials held the earnings spotlight for a week tech stocks are starting to take over. For the most part they are keeping up the positive trend set by banks.

Intel Corp. ( Nasdaq: INTC) reported second-quarter results after Tuesday's close that beat market expectations and offered strong full-year guidance. Intel stock rose more than 3% in trading yesterday but is down slightly today.

International Business Machines Corp. (NYSE: IBM) reported after yesterday's closing bell and blew past the average earnings per share estimate of $3.42 when it announced EPS of $3.51.
Yet, revenue for the second quarter fell 3% from last year to $25.8 billion, missing analysts' forecasts of $26.3 billion.

The company cited the debt crisis in Europe as one of the main factors bringing sales down but issued a positive outlook for the remainder of the year. IBM raised its 2012 profit outlook by 10 cents, to $15.10, ahead of Wall Street's median forecast of $15.06.

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QE3 is on Its Way - Here's How to Prepare

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Federal Reserve Chairman Ben Bernanke spoke to the U.S. Senate Tuesday and yesterday (Wednesday) in his two-day biannual meeting with Congress – and failed to make any promise to institute more stimulus measures.

He did leave the door open for the Fed to do something – even if it won't commit to what that will be.

The markets rallied, although investors were disappointed that the Fed chief couldn't deliver a bigger commitment.

But make no mistake – quantitative easing, or QE3, is coming.

That is assured for one simple reason.

The U.S. government can find few buyers for its debt at current low interest rates. And as Bernanke has stated publicly, low interest rates will remain in place until at least 2014.

That means the Fed will have to continue its role of financing the budget deficit of the U.S. government through the inflation of its balance sheet.

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You Don't Want to Miss This Opportunity

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I recently spoke at FreedomFest in Vegas along with the world's best and brightest minds, such as Steve Forbes, Senator Rand Paul, and Whole Foods CEO John Mackey.

I discussed the growing global demand for resources and gold to a crowd of 2,000.

Half of the group was attending for the first time, which demonstrates to me a growing curiosity to learn about macro trends shaping the world and affecting our investments.

Among investors these days, coming across a fellow commodity bull is about as rare as finding a positive story in the media, especially when you look at the results of metals and natural resources during the first half of 2012.

Only four commodities on our periodic table pulled off a positive return.

Wheat grew the most, rising 13 percent, followed by single-digit rises from corn, gold and copper. On the negative side, coal lost more than 19 percent, followed by crude oil (-14.1 percent), nickel (-13.6 percent) and lead (-12.3 percent).

A Clear Tipping Point for Resources

Fears of slowing global growth and how it will affect commodities have caused many investors to dig their heels in the ground and resist owning natural resources. Perpetuating this negative investor sentiment is the constant 24/7 news cycle punctuated with pessimism.

During a natural resources conference, Jeremy Grantham of GMO pounded the table for an investment in resources, but you wouldn't know it by reading the headline of the CNN piece that covered the topic.

In its article called, "Our planet will truly be toast," CNN discussed Grantham's comments on a global commodities shortage, saying he was "bearish on human resources…but bullish on natural resources investments."

His argument focused on the swelling population in China, and the fact that the world had experienced a "great paradigm shift" around 2000, when commodity prices, which were negative for decades, "abruptly reversed course." He told the crowd, "in the long run, you can't afford to miss this opportunity." We agree.

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