Duff & Phelps Corporation (DUF) reported impressive second quarter results, including an earnings surprise of 4.4%. This provider of financial advisory and investment banking services has surprised the Zacks Consensus Estimate in 6 of the last 7 quarters with an average beat of 5.1%. This Zacks #2 Rank (Buy) stock has gained nearly 37% in […]
Archives for September 2012
September 2012 - Page 16 of 19 - Money Morning - Only the News You Can Profit From
Enjoy the Rally While it Lasts, Super Mario Draghi’s Bazooka is a Dud
Not too long ago I mentioned that whatever European Central Bank President "Super Mario" Draghi delivers, it had better be big.
Because the only way he could hope to shore up the beleaguered e uro, wrest control of interest rates from the modern day financial pirates that dominate credit default swaps and break the impasse between skittish investors was with a monetary "bazooka."
We certainly got one yesterday when he announced an unlimited bond purchase program designed to do exactly this.
The S&P 500 shot up 26.13 points while the Dow and Nasdaq both tacked on 216.01 and 62.80 points respectively. European markets also moved sharply higher on the news as well while Spanish and Italian yields tumbled at maturities of every length suggesting traders relaxed their risk aversion stance considerably.
Under Draghi's plan, the ECB will be buying unlimited amounts of short-term sovereign debt while also sterilizing that debt– ostensibly to stave off concerns about hyperinflation and further money printing.
Up to now, the ECB has only purchased troubled EU bank bonds as a buyer of last resort. So this is a big change now that Draghi is talking about stepping up as a sovereign debt buyer, albeit also of last resort.
Draghi noted interestingly that the ECB will retain exclusive decision making on when to engage in purchases, the amounts purchased and when to stop. This effectively puts the politicians on notice that further bickering will not be tolerated.
Further, Draghi did not rule out purchases of Greek, Portuguese and Irish bonds when those countries regain practical access to the bond markets.
There are a couple of things that stand out here…
A Cause for Fear-Not Celebration
First, things are so bad that insiders are using euphemisms to describe Draghi's plan which is officially referred to as a "blueprint" and called "Monetary Outright Transactions."
I don't know about you but if it smells like a duck, walks like a duck and quacks like one, too…odds are pretty good it's a duck.
It doesn't matter whether you are talking quantitative easing or bond purchasing. The fact that things are so bad that central banks – first the BOJ, then the Fed, now the ECB – have to wade in as lenders of last resort should be a cause for fear rather than celebration.
If not now, then a few years from now, when it all comes back to roost.
Here's why.
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August U.S. Jobs Report Critical for President Obama
The August U.S. jobs report is critical on many levels.
Due out tomorrow (Friday) by the U.S. Labor Department, the August report isn't expected to be enough to lower the U.S. unemployment rate.
An uninspiring 120,000 jobs are expected to have been added in August, according to a CNNMoney survey, a notable slowdown in hiring from July's seasonally adjusted 163,000.
July's number was the strongest showing in five months, yet it still was not vigorous enough to keep up with population growth. The unemployment rate actually ticked up a notch to an unhealthy 8.3%.
Here are two reasons tomorrow's U.S. jobs report is a biggie.
August U.S. Jobs Report: What's at Stake?
- President Obama's Obstacle
The employment report comes just weeks before the November presidential election. President Obama and his administration have long been blamed for the stagnant and elevated unemployment level, the lack of job creation and as a result, the slow going economy.
With just three more monthly jobs reports due out prior to the November election, Team Obama could certainly use a boost from better-than-expected numbers. The president is treading at break-even level on jobs and it is very doubtful that the unemployment rate will fall below 8% by then.
"The soft economic environment that we're having is not going to be good for any incumbent. It's a tough sell for anyone in office," Sam Bullard, a Wells Fargo senior economist told CNN Money.
No incumbent president has won re-election with an unemployment rate greater than 7.2% since FDR's rein.
On the other side of things, according to a piece in Business Insider, a top Wall Street source who backs presidential hopeful Mitt Romney said a robust showing in Friday's report bodes well for President Obama. "If the number is good Friday it doubles his [President Obama's] bounce. Maybe triples it. If it comes in really low, it could extinguish it. I don't think there's ever been a more important jobs number, politically, than this one."
If the report nearly meets or matches the expected 120,000, it "won't matter as much" according to the source.
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Taxmageddon 2013: How to Prepare for Looming Tax Law Changes
It's often said the only things certain in life are death and taxes – but this year, even taxes aren't a certainty.
At least not the specifics, thanks to Election 2012 and Taxmageddon 2013. Investors are left with more questions than answers.
Will the so-called Bush tax cuts expire as scheduled – or be extended? Will levies designed to help implement and pay for Obamacare go into effect – or will Republicans finally succeed in repealing the new healthcare program?
Will President Barack Obama view his re-election as a mandate to impose more new taxes to expand social programs, or will a newly-elected President Mitt Romney cut taxes in a bid to encourage renewed economic growth?
That's why it's important for investors to look at the range of possibilities relative to their current financial holdings and take precautionary actions where appropriate.
This special Money Morning series will examine a number of upcoming or proposed changes in tax laws and rates and suggest strategies to minimize their impact on your investments. Or better yet, take advantage of them if possible.
With Taxmageddon, Rates are Set to Rise
As it stands, there are more than two dozen tax-law changes scheduled to take effect in 2013. Some of them target nearly every single taxpayer while others are more narrowly focused on individuals, such as small business stockholders and home sellers.
Of most immediate concern to investors is the scheduled increase in tax rates on capital gains. Currently, the federal government recognizes three types of capital gains:
- Short-term gains – Profits from assets held for less than one full year. These gains are taxed as ordinary income at a rate based on your total personal income, with percentages now ranging from 10% to 35%.
- Ordinary long-term gains – Profits from assets held for more than one year, now taxed at a maximum rate of 15%, regardless of income from other sources. (Note: Individual taxpayers in the 10% and 15% brackets now pay no tax on long-term capital gains but merely include them with other taxable income. However, in 2013 these taxpayers will be subject to a 10% tax on long-term gains.)
- Qualified long-term gains – Profits from assets purchased after the 2000 tax year and held for a minimum of five years. Qualified gains are currently taxed at a maximum 15% rate.
This relatively simple structure will become more complicated in 2013, for several reasons…
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If Only Zuckerberg Chose a Catchier Facebook Ticker Symbol
If only CEO Mark Zuckerberg had used a bit more imagination when cooking up the Facebook Inc. (Nasdaq: FB) ticker symbol, its stock might have fared a little better.
Sound crazy? Maybe, but several studies have shown that clever, pronounceable stock symbols – think Yum! Brands Inc. (NYSE: YUM) and Southwest Airlines (NYSE: LUV) – do better in the market.
The phenomenon is particularly true for IPOs, with the "fun name halo" extending about 10 days out from the stock's first day of trading.
Companies that choose a ticker symbol that doesn't form a pronounceable word – yes, like Facebook (Nasdaq: FB) — often struggle. Generally speaking, the more jumbled the letters, the worse a stock does.
"[Our] research shows that people take mental shortcuts, even when it comes to their investments, when it would seem they would want to be most rational," Professor Daniel Oppenheimer, who co-authored a 2006 Princeton University study of the subject, told Psych Central.
While the academics who have studied this have not conclusively nailed down the cause, most suspect it has to do with something called "fluency," or how easily a person can process information.
People are simply drawn more to a catchy ticker symbol like YUM than a drab one like FB.
"It is possible that [people] are initially more attracted to fluently named stocks, that they pay particular attention to those stocks, or even that they favor those stocks because they have developed an association between easily processed names and success," Adam Alter, Oppenheimer's research partner, told The Wall Street Journal.
The Science Behind Clever Tickers
Naturally, not every stock with a clever ticker symbol outperforms and not every stock with a subpar ticker symbol underperforms. But the broad data show a surprisingly strong relationship between a ticker and how well the stock does.
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Gold Prices Jump Above $1,700, but Hurdle Ahead
Gold prices have made the most out of a short trading week, and today jumped $10.50 to $1,704.50 an ounce at the Comex division of the New York Mercantile Exchange.
Gold, which one year ago today hit a historic high of $1,920 an ounce, came out roaring Tuesday after the Labor Day holiday. Gold closed up 2.55% to reach a more than five-month high of $1,700.
This came from increased investor hopes that the U.S. Federal Reserve will deliver QE3 to give the slowly-recovering economy a much-needed lift.
U.S. Fed Chairman Ben Bernanke's remarks from Friday's Jackson Hole, WY speech served as the gold price catalyst.
"Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," said Bernanke, giving enough of a hint that QE3 was on the way in 2012.
Gold ETFs also started strong in September after a healthy performance in August.
On Tuesday, SPDR Gold Trust (ETF) (NYSE: GLD) holdings, the world's largest gold-backed ETF, increased to 1,293.138 tons. This is the highest level since mid-March.
GLD's price also jumped 1.77% to 163.36.
Stock Market Today: This Tech Stock Rallies to All-Time High
The major headlines in the stock market today include Europe's latest rescue effort, cautious optimism on U.S. jobs, and these big-name stocks leading the rally:
- ECB unveils unlimited bond buying plan– European Central Bank (ECB) President Mario Draghi announced in Frankfurt today (Thursday) that the ECB will embark on a drastic new bond-buying plan. The new program, called "Outright Monetary Transactions," allows the ECB to buy bonds with maturities between one and three years without announcing any limits in advance, as long as the government in question is under a program approved by the Eurozone. The plan is aimed at stabilizing interest rates in the euro area and will require countries such as Spain and Italy to request aid from the ECB to activate the bond purchases.
"Under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area," Draghi said at a press conference. "Governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial-market circumstances and risks to financial stability exist — with strict and effective conditionality. The ECB reserves the right to terminate bond purchases if governments don't fulfill their part of the bargain." The ECB held its benchmark rate at its record low level of 0.75%. Draghi announced that the ECB won't claim the status of a senior creditor if the bonds it buys have to be restructured and that the purchases will be "sterilized" meaning there will be no impact on the monetary supply.
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MW Beats on EPS, Ups FY12 Outlook - Analyst Blog
The Men's Wearhouse Inc (MW), one of the largest specialty retailers of menswear in the United States and Canada, recently reported second-quarter 2012 earnings of $1.15 per share, beating the Zacks Consensus Estimate of $1.12 per share. Results also came above the company’s guidance range of $1.12 – $1.13 and increased 3.6% year-over-year from the […]
Monster Upgraded to Outperform - Analyst Blog
We have recently upgraded our recommendation on Monster Worldwide, Inc. (MWW) to Outperform from Neutral. Headquartered in New York, Monster Worldwide Inc. is an online recruitment firm of Monster.com, the leading career website in the world. Although the company’s global business continues to remain weak and uncertain, management continues to focus on new […]
Bulletproof Money Will Be a Thief's Worst Nightmare - and Help Drive the Mobile Wave
Imagine checking in at the airport, buying a cup of coffee at a local café, even paying for your clothes or groceries at the store's register… all with a quick wireless scan of your smartphone.
It's all possible today, thanks to a new type of tech called Near Field Communications (NFC).
No coins to fumble with. No waiting while the store's machine dials up your bank. No receipts to sign and then stuff into your pocket. The spread of NFC technology is a win-win for the customer and the merchant alike.
With NFC, your phone becomes your wallet. It's able to "talk" to any vendor, bank, brokerage, or credit card firm you like. This technology is set to take the world by storm.
In as little as a decade, billions of people around the world will convert to digital currency as their means of paying for the things they need every day.
There's just one thing slowing it all down right now – mobile security.
Using mobile phones as de facto wallets alarms some people. They fear that if your phone gets stolen, thieves could gain access to every bank, brokerage, or store account you have.
But that's about to change…
Making Digital Money Bulletproof
Indeed, much to the chagrin of thieves and con artists, mobile security will hasten the advent of bulletproof digital money used around the world.
I had the chance to talk about this with Michael Saylor, author of the best-selling new book "Mobile Wave: How Mobile Intelligence Will Change Everything." Saylor, who also serves as CEO of MicroStrategy Inc. (NASDAQgs:MSTR), told me alarmists are missing the big picture:
"I think the most important thing to be said about mobile security, and maybe mobile identity, is there are one million organizations in the world that have obsolete, ineffective identification systems now. Most of these things – passports, credit cards, driver's license, even things we think are reasonably secure, aren't. And many things aren't secure at all.
"I think that it's now possible to create a mobile identity system that runs on a smartphone which is anywhere from 100 times to 10,000 times as secure. Not only are they more secure, it's impossible to counterfeit and impossible to forge."
In fact, there are three key security features Saylor believes will make mobile commerce the standard of safe business transactions in just a few years.
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