Raytheon Company (RTN) has received a $125.3 million contract from The Missile Defense Agency (“MDA”) and the U.S. Air Force. As per the contract, the company will be involved in the modernization and addition of a new competence power to an Air Force early warning radar (“EWR”) system. Early warning radar is high-powered mission-critical and […]
Archives for September 2012
September 2012 - Page 12 of 19 - Money Morning - Only the News You Can Profit From
Liberty Interactive (LINTA) - Bull of the Day
We upgrade our recommendation on Liberty Interactive (LINTA) to Outperform following its robust financial results for the second quarter of 2012. Both top- and bottom-line beat the Zacks Consensus Estimates. We believe the TV home shopping business will continue to flourish in the near future as the global macro-economy is expected to gradually stabilize compared […]
The Seven Secrets You Need to Know to Keep Wall Street From Hijacking Your Future
One of the great things about vacation – in addition to all the time I get to spend with my wife and five-year-old son – is that I actually get to peruse the books and watch the movies that I spent the other 51 weeks of the year setting aside.
Don't misunderstand: I don't spend the week away from the office holed up and away from my family. Quite the opposite.
This year, in fact, the three of us rented a house down at the Delaware shore for a week in mid-August, and spent our days swimming, shopping, walking, and playing miniature golf and Skee-Ball. We ate Dough Roller pizza and even had some Dumser's Dairyland ice cream.
My folks said my little boy later described it as "the best vacation ever."
Even so, I did manage to find some "me" time that week.
Late in the week, after my tired-but-happy son conked out in my arms (smiling to the very last), and I'd tucked him in, I found time to watch two films about the U.S. financial crisis that I suspected would be worth talking about here.
Turns out I was right….
The movies in question are "Too Big to Fail" (2011) and "Inside Job" (2010). They both address the same topic – how the 2009 financial crisis nearly brought down the global financial system (a tacit warning that this could easily happen again). But they attack the topic in totally different ways.
The HBO-produced "Too Big to Fail" (TBTF) is based on the superbly executed best-seller of the same name written by journalist Andrew Ross Sorkin. The film adaptation is actually a scripted "docudrama" – with Hollywood actors standing in for the real people they portray (William Hurt does a great Hank Paulson).
The Sony Pictures-filmed "Inside Job" is a straight documentary, narrated by "Bourne Identity" trilogy star Matt Damon. It features interviews with such financial stalwarts as billionaire George Soros, former Fed Chairman Paul A. Volcker and super-economist Nouriel Roubini.
Both efforts were critically acclaimed: "Inside Job" was a hit at film festivals around the globe, while "TBTF" was nominated for 11 Emmy Awards.
What You Need to Know About Wall Street
Both films underscore some valuable lessons for investors – the same ones, in fact, that we consistently convey here. Key among them:
- Wall Street is out for itself, and will vivisect anyone who stands between it and a big profit. That goes without saying, I know. But the thing that doesn't get said is that America's individual-investing middle class is the single-easiest (and single-largest) target for most of Wall Street's profit-making schemes.
Taxmageddon 2013 Hits Dividends Hard - Here's What to Do
Every dividend investor loves the arrival of those quarterly distribution checks. But thanks to "Taxmageddon 2013" those checks could get a whole lot smaller.
As things currently stand – with higher tax brackets, no extension of the Bush-era tax cuts and the addition of new levies on higher-income payers to fund Obamacare – the tax bite on some dividend payments could rise from as little as 15% to as high as 43.4%.
That's dramatically higher than the possible hike in capital gains we discussed in Part One of our series on the 2013 tax outlook, which ran last Friday. By comparison, scheduled tax-law changes will increase taxes on long-term profits from 15% to 23.8% for some taxpayers.
Under the current tax laws, dividends received in 2012 are taxed in one of three ways:
- Qualified dividend income – The concept of "qualified" dividends was created by the original Bush tax cuts. It allows dividends received from domestic U.S. companies and certain foreign corporations to be taxed at the recipient's long-term capital gains rate, which is capped at 15% in 2012.
- Qualified dividends from funds – As an extension of the individual preference, qualified dividend income received by mutual funds and exchange-traded funds (ETFs), and passed on to fund shareholders, is also taxed at the individual's maximum long-term capital gains rate of 15%.
- Ordinary dividend income – Non-qualified dividends are taxed as ordinary income to the recipient, meaning they will be taxed at marginal rates ranging from 10% to 35% in 2012.
In 2013, however, three things will – or at least could – substantially boost tax rates on dividends.
The Potential Consequences of Taxmageddon 2013
First, unless Congress acts before the end of the year to extend the Bush tax preferences, the concept of "qualified" dividends will disappear for both individual stock owners and holders of fund and ETF shares. That means all dividend income will again be taxed at ordinary income-tax rates.
Second, marginal tax rates for all individuals except those in the current 15% bracket (couples earning between $17,400 and $70,700 in 2012) will be increased in 2013. The lowest bracket will jump from 10% to 15%, and all other brackets will increase by 3% except for the top bracket (individuals or couples earning $388,350 or more), which will rise from 35% to 39.6%.
AIG Stock Sale Doesn't Justify Bailout Package
The U.S. government, for the first time since 2008, is officially a minority stakeholder in American International Group Inc. (NYSE: AIG), with an $18 billion stock sale that made money for taxpayers.
The AIG stock sale will reduce the government's stake in the insurance company to about 22% from 53%.
The U.S. Treasury Department announced Sunday it was selling a large chunk of shares in the bailed-out insurer. The government saved AIG in 2008 and 2009 with a bailout package that totaled around $182 billion.
Including Monday's sale and money from AIG, the Treasury claims it has recovered a total of $197.4 billion from AIG – a $15 billion profit for taxpayers.
It's not surprising the government is selling AIG shares. What is unexpected is that such a large chunk of AIG stock will be released into the market at once, instead of spaced out over time.
One reason to shed the stock faster than planned is to credit U.S. President Barack Obama with taxpayer profit ahead of a tight race for the White House.
White House Press Secretary Jay Carney said Monday, "We have been committed to exiting those investments as quickly as practicable. What it does demonstrate is an ongoing commitment to recover taxpayer money. It's safe to say the president is pleased with the progress being made as we wind down these investments."
But even with a multi-billion dollar profit, defending private-sector bailouts is an impossible sell to most voters.
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Facebook CEO Interview Sparks Stock Rally, But it Won't Last
Facebook Inc. (Nasdaq: FB) CEO Mark Zuckerberg addressed the public and press yesterday (Tuesday) evening in his first interview since the social networking firm went public this spring, and he was a man on a mission.
Zuckerberg aimed to show shareholders, analysts, employees and members that Facebook has not lost its swagger.
Speaking at the TechCrunch conference in San Francisco, 28-year-old Zuckerberg, who has been harshly criticized for his lack of prowess as a CEO, appeared relaxed in his usual casual attire.
While Zuckerberg's speech sparked some excitement and lit a fuel under Facebook's floundering stock, sending shares up 3% in extended trading Tuesday and another 6% by 1 p.m. Wednesday, the rally will be short-lived.
"I certainly wouldn't buy this stock tomorrow," Simon Baker, founder of Baker Asset Management, told CNBC. "It's still an expensive stock-it trades at 30 times next year earnings. In fact, I'd sell the pop."
When Facebook debuted on the Nasdaq May 18, it became the first U.S. company to go public with a value of more than $100 billion. Since the epic IPO, it has lost more than half of its capitalization as investors agonize about waning growth, employee defection, lack of presence in the mobile arena, fading traffic and Zuckerberg's capability at the helm.
That's why CNBC's "Fast Money" regular and president of Metropolitan Capital Karen Finerman shared Baker's skepticism over Facebook stock.
Regarding Zuckerberg's comments about the Facebook mobile strategy, Finerman said, "Unless you think Zuckerberg can monetize mobile and no one else can-I would prefer to be in a stock that trades at a lower valuation."
Zuckerberg Shines Light on the Future of Facebook
In the half hour interview, Zuckerberg touched on all areas of concern.
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Fed Meeting Today: Are You Ready for QE3?
Investors have prepared for the Federal Open Market Committee (FOMC) meeting today and tomorrow to end with the announcement of a third round of quantitative easing (QE3) – and that's a good bet to make.
Today's Fed meeting will likely end with more of the same information we've been hearing for months from U.S. Federal Reserve Chairman Ben Bernanke. It's been a year and a half since Bernanke first announced that short-term interest rates would remain near zero "for an extended period." That language will likely stay the same tomorrow, and the policy timelines could be drawn out even longer.
There is also no doubt that QE3 or some other meaningful economic stimulus measure is on its way.
Maury Harris, an analyst with UBS, declared in a recent note to clients that, "We now anticipate an announcement of another round of quantitative easing at the FOMC meeting on September 13th. We expect the easing will take the form of a six-month program of at least $500 billion, primarily focused on Treasuries."
Harris also added that, "We also expect the FOMC extends their rate guidance into 2015."
FSLR's Power Deal with PG&E Corp. - Analyst Blog
First Solar Inc. (FSLR) has entered into a purchase power agreement with Pacific Gas and Electric Company (PG&E), a subsidiary of PG&E Corporation (PCG). As per the contract, the former will sell 72 megawatts AC of solar electricity from its two power plants to the latter. The delivery term for the purchase power agreements is […]
Honeywell Int'l - Growth & Income
Honeywell International Inc. (HON) reported solid second quarter results on July 18, which marked its 12th straight quarter with a positive earnings surprise. Strong earnings momentum helped this diversified technology and manufacturing company achieve a Zacks #2 Rank (Buy) on September 8. In addition, the company has been consistently paying a quarterly dividend that affirms […]
Forget Osteoarthritis, This New Breakthrough Promises to End the Pain
A team of researchers at Harvard University just reported a fantastic new medical breakthrough – in the form of a hydrogel.
The compound is made mostly of water, but it's almost unbelievably tough, strong, and resilient. It can stretch to more than 20 times its original length.
Not only that, but it can actually heal itself, too. Given time to relax between stretches, the bonds in the compound are able to "re-zip," self-repairing any cuts or breaks.
Think about the major impact this could have on medicine.
As some experts quickly pointed out, the new gel could be used to engineer human tissue. No doubt, that would be huge. We could someday use a version for skin grafts for burn victims, or to grow tissue for other needs, like organ transplants.
But I'm more excited about a much more immediate use for the hydrogel – one that could benefit the nearly 30 million Americans who suffer from osteoarthritis.
This is a painful condition in which cartilage wears out around the joints such as the knees and elbows. The risk of osteoarthritis onset grows with age, particularly for people over the age of 45.
That's why so many seniors have bad knees, elbows, or shoulders that are stiff and seem to hurt all time. Many take pain relievers every day, but even the strongest over-the-counter drugs can't get rid of all the pain all the time.
And it's not just seniors who hurt – torn cartilage is a leading form of sports injury across all age groups.
Right now there is no cure. Finding one could save the country a small fortune. Experts estimate that osteoarthritis costs us more than $186 billion a year in medical care, drugs, and lost wages.
We're talking about nearly $2 trillion a decade – and that's just here in the U.S.
Not only that, but this is clearly a growth market. The "graying of America" promises to greatly increase the number of these arthritis cases.
As I see it, in the very near future, doctors will be able to go in and actually remove the bad or torn cartilage that's causing you pain. They'll replace it with a hydrogel that is much stronger and more resilient than the original organic substance with which you were born.
In the Era of Radical Change, we will continue to see a steady stream of advances like this – breakthroughs that will help us live longer and healthier lives.
Hey, longevity is good. But quality of life is vital.
What's the point of living to 100 if your knees hurt so bad you can barely walk? Or your shoulder floods with you so much pain you can't pick up your grandkids?
But this new compound promises to change all that. It could even help a century-old man take up long-distance running again…
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