Archives for August 2012

August 2012 - Page 16 of 20 - Money Morning - Only the News You Can Profit From

Standard Chartered Bank Scandal Triggers U.S. Regulator Fight

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Fresh on the heels of the Libor rate fixing controversy come reports that have once again rattled the respectable British banking industry, with the latest controversy involving Standard Chartered Bank.

New York state regulators Monday accused Standard Chartered Bank, a U.K.-based multinational operating in more than 70 countries, of money laundering. The allegations claim the bank covered up about $250 billion of illegal transactions with Iranian clients.

"In short, SCB operated as a rouge institution," Benjamin Lawsky, head of New York State's recently created financial regulator, said in a legal order issued Monday night.

Standard maintains the claims are inaccurate, and that 99.9% of its dealings with Tehran complied with regulations. The bank will faceoff with regulators next week.

But now other U.S. regulators say they don't think Standard Chartered Bank's wrongdoing was nearly as egregious as originally reported.

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This New Technology Is Going To Make Your Computer Obsolete

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A new technology called 3D computing is about to make every high-tech device on the planet obsolete.

That includes your tablet, smartphone… and yes the computer you're probably reading this on," says veteran technology analyst Michael Robinson.

"It's a fundamental redesign of computing power that has been 50 years in the making."

Robinson says it's very rare that a new technology truly represents a "sea change" across so many industries and applications. The last of this enormity, according to Robinson, was the advent of the transistor in the late 1950s – the basis of modern electronics and undoubtedly the greatest invention of the 20th century.

He also believes that when the 3D computing breakthrough makes its debut, it will deliver a bonanza payday for early investors.

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The Biggest "Energy Crisis" Nobody Is Talking About

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An increasingly serious problem is threatening world energy markets.

As an advisor to 16 world governments on energy policy, I've seen many energy related problems come and go. Yet this may be the most disturbing crisis I've seen. And it's being completely ignored by the media.

It has to do with a ratio we used to call the Energy Profit Ratio (EPR). But today it's known as Energy Returned on Energy Invested, or EROEI.

EROEI is fast becoming critical.

Look at this.

As you'll see, this is likely to impact you, as well as anyone else who buys gas to drive a car… or relies on fuel for their living.

Here's why:

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Stronger, Faster and Smarter, Our Bionic Future Has Arrived

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Get ready for bionic humans.

They'll be faster, stronger, and much smarter than we are today. They'll wear exoskeletons made of smart materials, complete with onboard computing.

Part of their enhanced IQs may come from implants in their eyes that automatically access the wireless Web.

Not only that, these connected people will be largely free from disease and hunger, too. The human race will have plenty of food, water, and medicine to go around in a world teeming with an estimated 10 billion people by the end of this century.

Hard to believe, I know.

But my source is one of the world's foremost experts on the future of high tech and how it will affect mankind…

I was lucky to get a chance to chat with Vivek Wadhwa for nearly half an hour by phone last week. After all, Wadhwa is in high demand these days for his writings and lectures about the future.

He holds posts at both Duke and Stanford universities. But in tech circles, he is arguably best known as the Vice President of Academics and Innovation at Singularity University.

It's a school based in Silicon Valley focused on the impact of radical new tech. Some of the nation's great thinkers and entrepreneurs go there to gain new insights.

Wadhwa is also a trusted advisor to several governments, and his columns have appeared in the New York Times, Wall Street Journal, and Washington Post.

I think you'll like what he had to tell me…

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Dividend Stocks: Don't Fall For These High Yield Traps

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Buying stocks with high dividend yields is an excellent way to invest. But it's not fool-proof.

In fact, if you shop by yield and yield alone, you're playing dangerous game. It's called picking up nickels in front of a steamroller.

Admittedly, it may work for a while, but eventually I can assure you the steamroller will prevail.

That's why in today's low-growth environment, it's critical to know which dividend stocks NOT to buy.

Avoid the real duds and the dividends alone will be enough to bail you out of minor mistakes. Find yourself on the wrong side of the fence, and your high-yield investment could end up being pretty costly.

Success comes from understanding the difference between the two. Here are three ways to separate the winners from the losers.

Avoid Stocks that are "On the Clock"

First, at all costs, investors need to avoid dividend stocks where the source of income will dry up in a few years, and the dividend payout doesn't add up to the amount you're paying for the stock.

You wouldn't think there would be any of those, but there are! Investors fall for them because of their high yields.

Here are a few examples where one day the well will suddenly go dry leaving investors with empty cups.

Great Northern Iron Ore Properties (NYSE:GNI): GNI yields a monster 17% and has a P/E of 4 times. In business since 1906, it looks very attractive-on the outside. However, on the inside its main asset is a lease on iron ore deposit-bearing land in the Mesabi range which runs out in 2015. With three years left on the lease, investors can only earn 51% (3×17) of their money back. I just want to know where's the other 49% is? There are some residual assets, but not enough.

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GlaxoSmithKline, plc (GSK) - Bear of the Day

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GlaxoSmithKline, plc's (GSK) second quarter earnings of $0.79 per ADS were below the Zacks Consensus Estimate of $0.84. Earnings fell 2.5% year over year. Revenues fell 7.3% y/y to $10.2 billion, missing the Zacks Consensus Estimate of $10.4 billion. Glaxo expects 2012 revenues to remain flat y/y (at CER). Earlier, Glaxo was expecting revenues to […]

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CEC Lags, Outlook Trimmed - Analyst Blog

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CEC Entertainment Inc.(CEC) reported earnings of 23 cents per share in the second quarter of 2012, lagging the Zacks Consensus Estimate of 37 cents. Reported earnings were also below the prior-year earnings of 34 cents per share. Total revenue also tumbled 2.0% year over year to $182.4 million in the second quarter, primarily due to […]

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U.S. Food Prices 2013: Jeremy Grantham Warns of Coming "Dystopia"

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The U.S. Department of Agriculture (USDA) on July 25 issued a report warning every American that U.S. food prices in 2013 will rise 3%-4% — but that jump is just the start of a frightening long-term trend.

The warm weather in the winter months gave farmers hope for a great crop production this year, but a crippling U.S. drought now covers around 60% of the continental United States. The water shortage has killed crops, pushed corn prices higher, and will eventually make its way to your local store shelves.

But according to famed analyst Jeremy Grantham, the looming U.S. food price increase in 2013 is just the beginning, and the reasons go far beyond the current drought.

Grantham, the founder of Boston-based institutional money manager GMO LLC, in his July 2012 quarterly letter to investors wrote a report entitled, "Welcome to Dystopia! Entering a long-term and politically dangerous food crisis."

Grantham explained that rising U.S. food prices have more to do with soaring population growth than this summer's water shortage.

"We are five years into a severe global food crisis," Grantham wrote, "that is very unlikely to go away."

Editor's Note: Food isn't alone — shortages of energy and natural resources are inevitable, and the latest data we uncovered is startling.

U.S. Food Prices Rise with Population

Grantham explained that as the world's population rises, global demand for resources will rise exponentially; it's a mathematical certainty.

"The general assumption is that we need to increase food production by 60% to 100% by 2050 to feed at least a modest sufficiency of calories to all 9 billion+ people, plus to deliver much more meat to the rapidly increasing middle classes of the developing world," wrote Grantham.

Even today, the average American is responsible for 32 metric tons worth of food, water, minerals, and energy from the environment every single year – and that's just one person.

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What the iCrime Wave Says About Apple (Nasdaq: AAPL)

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the office.

Instead they came from a trip to the mall.

As always, Lynch was interested in what people were buying there.

However, according to a recent article in The Wall Street Journal by Rolfe Winkler there's a new twist to this theory: these days it also pays to keep an eye not on what consumers are buying, but what criminals are stealing.

As Winkler claims we're suddenly in the grips of an "iCrime Wave". Not surprisingly, the products mentioned are those from Apple Inc. (Nasdaq: AAPL).

What's also interesting is what's not mentioned.

There are no crimes associated with Samsung, the world's largest mobile phone company who partners with Google Inc. (Nasdaq: GOOG) in the Galaxy Nexus.

There is no report of the criminal element targeting the Blackberry from Research-in-Motion Ltd. (Nasdaq: RIMM), even though it was the first smartphone.

And no Lumias are certainly mentioned from the partnership of Nokia Corp. (NYSE: NOK) and Microsoft Corp. (Nasdaq: MSFT).

As Israel Ganot, the founder of Gazelle, an electronics recycler, notes, "There is insatiable demand for iPhones outside the U.S., mostly in emerging markets."

That is certainly the case in China, where more than 20 fake Apple stores have been busted.

Meanwhile, there no reports of stores anywhere that traffic in fake Research-in-Motion or Nokia products.

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The Real Story Behind the Knight Capital Trading Fiasco

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Oh, you are going to love this.

That whole Knight Capital fiasco last Wednesday, when a software glitch caused them to flood the market with thousands of unintended orders, it ain't exactly what you think it is.

Sure, they tripped over themselves in the dark pool where they were trying to compete.

But somewhat interestingly (okay, a LOT interestingly), the competitor that drove them to "upgrade" their trading software, which malfunctioned and caused them to actually bid-up share prices erroneously and then buy them at inflated prices, was none other than, wait for it…

The New York Stock Exchange.

That's not the whole story, or even the good part. Oh, it gets better. A lot better

Knight claimed a $440 million trading loss on Wednesday resulted from their computer glitches and sunk the company (at least for now; I'll get to that).

Well, according to Nasdaq (this was on its site: nasdaq.com), it wasn't a trading loss at all. Knight paid Goldman Sachs a $440 million fee (commission?) to take the errant shares Knight had bought on Wednesday morning off its hands.

Now, I don't know what Goldman did with those shares, but my guess is they held most of them and sold them on Friday when the market soared a few hundred points. Of course, that's not a "prop" trade. Knight is a customer of Goldman's (it is now…).

But who cares?

Goldman Sachs ripped a customer for a $440 million fee, virtually bankrupting it in the process, flipped the shares it bought from Knight to "help" them (and first of all, probably overly hedged itself… as in enough to be net short… the large stake it holds in Knight's convertible preferred) for a tidy profit, and then probably shorted the stock (before "helping" them, and themselves to their little fee) before the stock collapsed, then probably gave it its "lifeline" (that's a guess, and I'm being sarcastic, but it's possible). And maybe we'll find out where that lifeline Knight got on Friday really came from) before buying a ton of Knight's shares back on Friday before hearing (of course… before) that several big firms were looking at buying Knight.

What's my point in the above LONG sentence? Who cares! That's all business as usual at the Golden Vampire Sachs.

That's after-the-fact stuff.

What's more interesting is why all this happened in the first place.

Here's what you probably don't know…

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