Archives for August 2012

August 2012 - Page 18 of 20 - Money Morning - Only the News You Can Profit From

The Real Impact of Obamacare Taxes

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The Affordable Care Act is going to cost everyone thanks to a slew of Obamacare taxes.

The Affordable Care Act is primarily aimed at decreasing the number of uninsured Americans and reducing the overall costs of health care. Those who think the law won't change much about their healthcare or finances don't realize they'll likely be paying for it.

That's why Republicans are focused on striking down Obamacare should they nab a presidential victory in Election 2012. They claim that the taxes involved to pay for Obamacare will crush the middle class and most U.S. taxpayers, as well as trigger job losses in affected industries.

Republicans also harp on the fact that President Obama said he would not raise taxes.

"This bill was built with smoke and mirrors to hide the impact of the trillions of dollars of new entitlement spending," House Budget Committee Chairman Paul Ryan, R-WI, said in a statement last Tuesday.

Here's a glimpse at what those Obamacare taxes will do to the country.

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The Problem with Renewable Energy is the Price

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I haven't written about renewable energy in recent months for a very specific reason.

The market for sources such as solar, wind, and biofuel has collapsed.

There are two reasons. Both involve price.

First, while crude oil is beginning to move upward, and natural gas prices have increased by about 57% over the past three months, both had fallen to unusually low levels.

That means the primary ally of alternative sourcing – the acceleration in the price of hydrocarbons – has been absent.

Of course, there are environmental, lifestyle, and social considerations that would benefit from renewable energy. Taken by themselves, however, these do not have more than a marginal impact on the energy balance.

Price remains the main ingredient.

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Election 2012: Is Mitt Romney a John Kerry Impersonator?

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Be wary of the rich, slick politician from Massachusetts, he might seem eerily familiar.

He flip-flops. He's super-rich. And he has nice hair.

Only this time it's not Sen. John Kerry, D-MA. It's Republican candidate Mitt Romney, the former Governor of Massachusetts.

The comparisons are so similar Election 2012 pundits now compare it to the 2004 election which pitted Kerry against the incumbent George W. Bush.

Here's another similarity: Neither one comes off as likable– not even to their supporters.

Even still, like Kerry, Romney has been heralded as the candidate most likely to defeat the incumbent even though he hasn't inspired or energized voters.

That may be why Republicans went through candidates earlier this year like they were Baskin-Robbins flavors of the month.

In the end, voters finally chose Romney over Rick Santorum, favoring the uncharismatic yet stable candidate over the exciting but controversial one.

But will Romney and Kerry also share an election loss?

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July's U.S. Jobs Report a "Hammer-Blow" to President Obama's Re-Election Bid

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After three months of weak job creation, a better-than-expected reading in July's U.S. jobs report was welcome, but still isn't anything to get too excited about. Despite the encouraging job gains, the unemployment rate actually ticked up.

The Labor Department reported U.S. payrolls increased by a seasonally adjusted 163,000 jobs in July, better than the 95,000 economists had expected. But, in a separate survey of U.S. households, numbers revealed the unhealthy unemployment rate actually eked up, rising from 8.2% to 8.3%.

"Today's increase in the unemployment rate is a hammer blow to struggling middle-class families," GOP presidential hopeful Mitt Romney said in a statement.

With the November presidential election growing near, the jobs report carries massive political weight.

Not since World War II has an incumbent president attempted re-election with an employment rate over 8%. Since President Obama took office, the unemployment rate has remained elevated and above that key level.

And it's not likely to go down before November.

"We've now gone 42 consecutive months with the unemployment rate above 8 percent," Romney said in a statement. "Middle-class Americans deserve better, and I believe America can do better."

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Bill Gross: "Normal" Economic Growth Impossible Now

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Legendary market maven Bill Gross, the so-called "King of Bonds," said investors will flat-out lose money if they continue employing the "buy and hold" strategies of the past.

In his August Investment Outlook, Gross told investors that "financial repression, QEs of all sorts and sizes" and low interest rates will "dominate the timescape" for decades, maybe longer.

Investors must adjust to the new world order to avoid being the loser in this zero-growth environment, Gross warned.

Ultimately, Gross said, the stock market's historical, inflation-adjusted 6.6% annual growth rate is unsustainable.

Gross, of course, is a bond man.

In March, he launched an ETF version of his popular Pimco Total Return Fund (PTTRX) – the world's biggest mutual fund, with more than $260 billion in assets. The Pimco Total Return ETF (NYSE: BOND) quickly attracted $2.1 billion in total deposits and has outpaced the S&P 500 by more than 5% so far.

But even bonds – both government-backed and corporate – can't escape the realities of a no-growth economy.

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Microsoft Corp. (Nasdaq: MSFT) Revived by New Tech Breakthrough: Here's Why MSFT Is (Finally) a "Buy" Again

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Not long ago, the future of Microsoft Corp. (NASDAQ: MSFT) was slipping through its grasp.

Then it introduced Kinect.

Today, the tech giant is using Kinect to win big on a breakthrough that will literally touch millions of lives.

It is one of the reasons why Microsoft's stock has gained more than 20% this year.

What is Kinect?

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No Need for Vacation When You Can Fight Over the Fiscal Cliff

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Republicans are not willing to let Democrats go over the fiscal cliff and take all of us with them – at least, not without a good fight.

Just the sound of it – going off the cliff – echoes disaster. But that is where we're heading if Congress doesn't act to extend the Bush tax cuts or avoid the automatic spending cuts that will go into effect Jan. 1.

Little can be expected to be resolved over the next month as Congress takes off for its annual five-week August recess.

However, House Speaker John Boehner (R-Ohio) vowed Wednesday to call the House back into session to cement approval if Senate takes action to prevent fiscal cliff. The GOP has made its commitment to averting the fiscal cliff crystal clear and is encouraging the Democrats to work out some kind of agreement.

"If the Senate follows the House in passing legislation to stop the entire tax hike-including the small business tax hike-in a manner that requires House approval before it can be sent to the president, it is our commitment that the House will reconvene immediately to ensure the measure is enacted at the earliest opportunity. But, in order to avert the threat to our economy, the Senate must join the House in acting to stop the entire tax increase," Boehner and three other House GOP leaders wrote in a letter to Senate Majority Leader Harry Reid (D-NV).

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Options Trading: How to Read an Options Listing

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Ahh, the options listing… Trust me, it isn't as bad as it looks.

It starts with understanding a rather long set of symbols that looks something like this:

GOOG120317P600000

This code is simply the ticker symbol for your option. And once you break it down, you'll find that it holds a wealth of information, including all the "standardized" terms we talked about in this article.

The first three or four letters are just the stock ticker for the specific underlying stock, in this case, Google Inc. (NasdaqGS: GOOG):

GOOG120317P600000

The next two digits tell you the year the option expires. This is necessary because long-term options last as far out as 30 months, so you may need to know what year is in play. In this case, the Google option is a 2012 contract:

GOOG120317P600000

The next four digits reveal the month and the standard expiration date. The expiration date does not vary. It's always the third Saturday of the month. And the last trading day is always the last trading day before that Saturday, usually the third Friday (unless you run up against a holiday). In this case, you've got a March contract (03). And the third Saturday of March 2012 is the 17th.

GOOG120317P600000

Now you'll see either a C or a P, to tell you what kind of option you're dealing with – a call or a put. This one happens to be a put:

GOOG120317P600000

After that comes the fixed strike price, which is 600:

GOOG120317P600000

Finally, any fractional portion of the strike is shown at the end. This comes up only as the result of a stock split, where a previous strike is broken down to become a strike not divisible by 100:

GOOG120317P600000

Now that you're a pro, let's take it a step further.

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What 700 Million People in the Dark Says About Investing in India

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For years now I've preferred China over India.

When invariably asked to compare the two as investments, my answer has always been the same.

Somewhat tongue -in-cheek, I'd point out "that India has trouble keeping the lights on from one end of the country to the other."

Little did I know that those comments made in jest would actually become reality.

Earlier this week, a massive power blackout left more than 700 million people without power in India as not one, but three, regional electrical grids failed.

If that isn't a glaring sign that India isn't ready for prime-time I don't know what I can say to make you see the light – pun absolutely intended.

Don't get me wrong. There are clearly a few select Indian companies worth the risk.

But as a whole, the scope of this power failure suggests India has a long way to go before it achieves the global superpower status it seeks and a dominant position in your portfolio.

India Needs to Put its Own House in Order

Not that this will stop India from trying.

It's now the 8th largest military spender in the world, having tripled defense spending in the past 10 years. It's no secret India desperately wants to have a permanent seat on the United Nations Security Council.

And, it's making great strides in international diplomacy that it believes will pay off later in increased foreign recognition and direct investment.

But as this embarrassing power failure demonstrates, India would be better off getting its own house in order first before it steps onto the world stage.

Many investors take issue with these views. They cite the fact that India is the second-largest English-speaking nation in the world, that 58% of its economy is consumption-based, that it has huge numbers of tech-savvy and well-educated people.

I don't dispute any of that.

However, on the other side of the ledger is a laundry list of reasons for investors to be wary.

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Stock Market Crash 2013: What the "Hindenburg Omen" Tells Us

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Should you be worried about a stock market crash in 2013… or even sooner?

Certainly, there's plenty of unsettling news to worry about.

You know what I'm talking about…the persistent Eurozone debt crisis, Taxmageddon, the fiscal cliff, high unemployment. The list goes on and on.

But now, there's one more reason to fasten your seat belt.

On the heels of a sharp stock market decline on July 24, a highly accurate technical indicator called the "Hindenburg Omen" started ringing warning bells.

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