Archives for July 2012

July 2012 - Page 9 of 17 - Money Morning - Only the News You Can Profit From

Bernanke Keeps the Stock Market Waiting for QE3

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Strong earnings reports could only lift the stock market today up so much as U.S. Federal Reserve Chairman Ben Bernanke would not give in to the cries for more stimulus.

Speaking to the Senate Banking Committee Bernanke gave his semi-annual monetary policy testimony and predicted slow growth for the U.S. economy. Bernanke said that reducing unemployment is going to be "frustratingly slow."

Bernanke repeated the Fed's mantra that if conditions deteriorate they will take appropriate measures when necessary. Some are beginning to wonder if QE3 will ever happen and how much worse things have to get before we see it.

The chairman did specify that if the labor market doesn't improve the central bank is prepared to act to boost growth.

Bernanke also commented that the looming "fiscal cliff" and the possibility that Europe's debt crisis will worsen remain significant risks.

He mentioned the Libor manipulation scandal and called the rate-setting system "structurally flawed." However he offered no explanation as to why the Fed didn't become more involved when it learned in 2008 that Barclays Plc (NYSE: BCS) was reporting false numbers.

Bernanke will speak again tomorrow morning before the House Financial Services Committee.


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Goldman Sachs Stock (NYSE: GS) Won't Rebound on These Earnings

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Goldman Sachs Group (NYSE: GS) handily beat second-quarter earnings and revenue when it reported numbers today (Tuesday) before market open – but that's not too hard to do since expectations had slipped drastically over the past couple months.

The investment banking giant's earnings per share came in at $1.78, blowing away analysts' estimates of $1.18. Revenue came in at $6.63 billion, better than the expected $6.28 billion.

A couple months ago these numbers would have actually disappointed.

In the last two months, expectations for the quarter had dwindled. The average earnings per share forecasts dropped to the current $1.18 per share from $2.16 in June and $2.87 in May. Looking back to the same quarter a year ago, earnings were $1.85 per share and revenue was $7.28 billion (8.9% better than the current quarter's revenue).

"During the second quarter, market conditions deteriorated and activity levels for both corporate and investing clients were lower given continued instability in Europe and concerns about global growth," Goldman Chairman and CEO Lloyd Blankfein said in a statement.

The weak economic environment will keep weighing on Goldman through the year.

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What Stocks to Buy Now

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What Stocks to Buy Now

Money Morning's Shah Gilani appeared on Fox Business' "Varney and Co." this morning (Tuesday) to discuss the slow growing U.S. economy and its effect on the stock market.

Host Stuart Varney asked Gilani if there are any stocks worth buying given the recent economic indicators and 1.5% growth rate in the U.S. Gilani didn't disappoint and offered a couple of stocks to buy now – one of which he is picking up himself.

You can see all of Gilani's analysis in the accompanying video.

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Cutting-Edge "Maple Seed" Drones are About to Reshape High-Tech Surveillance

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Fact is, maple seeds make great auto-rotating craft — just let them go and watch them fly. In nature they begin rotating almost from the instant they fall from a tree. They work so well that NASA engineers have studied them.

Some of you may have heard of Lockheed Martin's Samarai in the past.

The company released details last year, but only posted the video to the Web last month. You can watch it in action on YouTube by clicking here.

Lockheed Martin execs says this new approach could save the U.S. government tons of money.

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It's Simple...It's the Fraud, Stupid

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Here's the thing: "You can't fix stupid."

That's a great line by the very funny comedian Ron White. Really, he is hilarious.

He strings out some funny lines about what stupid people do, and as you're laughing your head off, he tags you with his famous punch line to the punch line you're already laughing at, by explaining a sad but funny reality: "You can't fix stupid. Stupid is forever."

Here's another thing (it's my takeoff on you can't fix stupid): You can't fix fraud.

People do stupid things because, well, they're stupid. And people commit fraud, well, because they're crooks. Maybe they don't start out contemplating how to commit fraud. Maybe they do. But, in the end, they do it, it's done, and it can't be undone.

So, that's why we need regulations, stupid.

I'm not calling you stupid. That is, unless you are stupid enough to think that by simply expecting people to always do the right thing, they will, in fact, always do the right thing.

You see, here's the thing: That's stupid.

The reason I'm pro regulation is because, without regulations, people will do stupid things. They will also commit fraud.

Why? It's about the money, stupid. Some people will do anything for money.

When I say we need more regulation, not less, I don't mean we need more stupid regulations.

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Recession 2013: Retail Sales Figures are the Latest Sign of a Slowing Economy

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For the third consecutive month, retail sales fell as demand waned for everything from cars and electronics to building material, another telling sign that the U.S. economy may be slipping back into a recession.

The Commerce Department reported Monday that retail sales dipped 0.5% in June, much less than analysts' forecasts of a 0.2% rise. The decline marked the first time retail sales had fallen for three straight months since late 2008, near the height of the Great Recession.

Most noticeable in the rash of declining sales was the 0.6% drop in motor vehicles and parts, an area that was widely expected to show an uptick.

Also showing a sharp slump were receipts for electronics and appliances which fell 0.8%. Sales of building materials sagged 1.6%, and receipts at gasoline stations dried up some 1.8% even while gasoline price fell during the month.

The report adds more fodder to the lingering hope that the Federal Reserve could launch another round of quantitative easing.

The dismal commerce numbers also add to the recent wave of weak economic data.

On Monday, the International Monetary Fund (IMF) cut is forecast for global economic growth and urged European policy makers to take more aggressive measures to curtail their crisis, while cautioning that China's economy is at risk for taking a hard fall.

Meanwhile, Reuters reported a poll released on Monday that revealed American companies have tempered any plans to hire workers, while a growing number of firms believe the mess in Europe is hurting sales. The poll showed nearly half (47%) of companies polled believe their sales have suffered thanks to the Eurozone debt crisis.

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Stock Market Today: Sales and Earnings Fears Push the Market Lower

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After another Friday rally the stock market is back in the red today.

Weak retail sales and earnings worries are leading the markets lower. In June retail sales decreased unexpectedly 0.5% compared to the 0.2% increase analysts had forecast.

The poor sales numbers are part of an ongoing sluggish trend. Recent manufacturing and labor reports provide further evidence that the U.S. economy is slowing.

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Facebook (Nasdaq: FB) Banking App A Glimpse of Things to Come

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Facebook Inc. (Nasdaq: FB) may have found another way to get its 900 million users to spend even more time on the social networking site – online banking.

According to a CNN Money report, Facebook has been working with Australia's Commonwealth Bank to create an online banking app, although the company has not made a lot of noise about the project.

Facebook began beta-testing the banking app in March, and it's expected to go live sometime later this year.

With so many people already connected via Facebook, offering a banking option may just be a logical next step. And if it succeeds, the Facebook banking app could change how people conduct transactions online.

The new Facebook app would not only allow users to conduct secure transactions with their bank, but also would enable payments to third parties and Facebook friends.

So members of the social media network who adopt the Facebook banking app will be able to pay their household bills and balance their checkbook in addition to the usual Facebook activities like uploading photos and updating their status.

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How to Buy Gold in Today's Troubled World

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Gold turned in a fairly tarnished performance during the second quarter, falling $80 an ounce, or 4.76%, during the April-June period.

Even still, most precious metals analysts see strong potential for gold prices in the second half of 2012 given the continued sluggishness in the global economy and increasing uncertainty about the Eurozone debt crisis.

Some are suggesting that gold prices could top their previous 2012 high of $1,795.10 an ounce set back in February.

Given that, the big question for investors is how to buy gold in a renewed bull market for the shiny metal.

The answer largely depends on your expectations.

If you expect renewed economic disruptions in Europe and elsewhere, growing tensions in Syria, Iraq, Egypt and the rest of the Middle East, and increasing political discord in the U.S. before and after the election, you'll likely want to take the traditional approach – holding the physical metal itself.

Purists feel this is the only true hedge against global turmoil and declining values in the dollar and other fiat currencies.

How to Buy Physical Gold

For smaller investors, this typically means buying gold bullion bars, rounds (unadorned coin-shaped pieces) or minted gold bullion coins.

Bullion bars – produced primarily by private mints like Engelhard, Johnson Matthey PLC (LON: JMAT) and Credit Suisse Group AC (NYSE ADR: CS) – come in an assortment of sizes to suit the needs and means of every investor.

The smallest bars weigh just one gram, priced this week at about $52.75, while the largest is 400 ounces and was going this week for around $645,000.

Gold rounds are produced by the same private refiners, as well as some government mints, and are also available in a variety of sizes, typically ranging from one-tenth of an ounce to five ounces. Prices range from as little as $15 per round over the spot price of gold at the time of the order for smaller pieces to $40 over the spot for larger specialty pieces.

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A Best Friend, A High-Stakes Bet and My Favorite Investing Lesson From Baseball

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One of the messages that we've repeated to you over and over here at Money Morning is to never listen to a Wall Street analyst.
Here's a story that illustrates why we continue to harp on this key lesson. It's about baseball, a best friend and a high stakes bet. It's my of favorite baseball story.

As a young teen growing up in a Pittsburgh suburb in the early 1970s, I was a die-hard fan of Steelers football and Pirates baseball teams.

I never lost that ardor for the Pittsburgh black and gold – not even after my Dad accepted a career transfer to Baltimore in 1974. I will happily admit that, during my decades as a Maryland resident, I turned into a big fan of the Baltimore Orioles, too.

But to this day, whenever Pittsburgh and Baltimore face one another, my allegiance is clear.

In 1979, when the Pirates and Orioles were set to square off in the World Series, I was a freshman at Penn State. And my best friend Harry was an apprentice machinist at a small manufacturing firm near Baltimore.

Harry wasn't much of a baseball fan – didn't follow the game, and didn't know much about it.

As he told me later – years after the story I'm about to relate played out: "All I knew about baseball was that you are a smart guy – a college guy – and that you liked the Pirates."

Actually, it wasn't just that I liked the Pirates. I was bonkers about them. I had Bucco fever.

As the pennant race heated up, and the team swept through the playoffs and into the World Series, I must've babbled about "my team" all the time.

It was a fan's view … not a rational one.

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