Libbey Inc. (LBY) has been showing considerable strength following its outstanding second quarter 2012 results, which included an earnings surprise of 108.5%. Shares of this glass tableware manufacturer hit a new 52-week high on September 18, shortly after announcing some cost reduction measures. With attractive valuation metrics, including a price-to-sales (P/S) ratio as low as […]
Archives for September 2012
September 2012 - Page 7 of 19 - Money Morning - Only the News You Can Profit From
Forget the Punch Bowl, With QE3 Ben's Party is Open Bar
Everything changed on September 13. It's the day Ben Bernanke promised not to take away the punch bowl.
Last Thursday, Helicopter Ben announced that the Fed would start buying $40 billion in mortgage-backed securities — for as long as it takes. He also announced the Fed will keep rates between 0-0.25%, until mid-2015.
The goal is to keep supporting the mortgage bond market until the employment level improves "sufficiently."
But given that the last several rounds of multi-hundred billion dollar stimulus didn't accomplish that goal, it's hard to see why they'd expect this time to be any different.
Maybe it's just because Paul Krugman was right: They didn't spend enough the first two times (sarcasm intended). Or then again, maybe that's not really their goal…
Consider this: At Jackson Hole just a few weeks ago Bernanke said that, historically, there has only been limited experience with quantitative easing. Therefore central banks, including the Fed, "have been in the process of learning by doing."
Excuse me, but are you freaking kidding me?…
Did Ben skip all his history classes? Has he ever heard of the demise of Rome or Weimar Germany?
More recently, even Argentina and Zimbabwe have had plenty of experience with quantitative easing. Their zealous over-printing led to major devaluation and/or outright currency collapse.
Couldn't Bernanke have checked in with Cristina Kirchner or Robert Mugabe?
The only real difference, and I'll admit it's a substantial one, is that the U.S. dollar is the reserve currency for the world's central banks. But that won't change the outcome.
Instead it may just delay the day of reckoning. In the meantime, it's very likely going to make the situation much, much worse.
So what's the Fed really up to?
Well, here's what I think…
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You Can Drill All You Want, Oil Prices Are Still Headed Higher
Today I want to focus again on oil prices. It seems that some TV pundits have never heard (with apologies to Alexander Pope) that a little knowledge is a dangerous thing.
Some people on Wall Street believe that by scaring the individual investor they stand to make a greater profit for themselves.
Over the summer, there was a report issued by Credit Suisse that said that oil could hit $50 a barrel. We've also seen predictions on CNBC saying $40 a barrel. Others think that oil prices could fall even go further.
What I am telling you now is that these views do not reflect the actual market or the new reality we find ourselves in today.
A lot of this sentiment stems from the idea that we have now increased our supplies here in the United States. Some political candidates even said that they guaranteed "$2.50" per gallon gasoline if they were elected.
"Drill, baby, drill" has become something of a national catchphrase.
The problem is that prices are not just reflective of new supplies, either too much or too little. By focusing only on how much is there, these analysts provide a fundamentally distorted view of the oil market.
Yes, the rise of new sources has altered the picture. But so has the rise in demand globally and at a rate much faster than anticipated.
In fact, the impact of unconventional oil (like our huge sources of shale oil) is now projected to be less than expected, even with additional volume coming on line.
And one report issued last week reflects that fundamental view and explains why oil prices are set to rise, not fall in this age of expanded unconventional oil and gas.
The Fundamentals Are What Matter to Oil Prices
I want to introduce you to a company called Bernstein Research.
They are regarded as the top energy research company in the world by their institutional investors. They're in 40 countries. They win awards every year for having the best analysts in the sectors they cover.
And they are very successful in their forward focus because they emphasize the fundamentals.
Last week, Bernstein Research released a detailed report reflecting the position I have been holding for some time-oil prices are headed higher.
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While Facebook Struggles, These Rivals Steal Market Share
As Facebook (Nasdaq: FB) continues to struggle with growth and mobile strategies, its rivals keep moving forward in both areas.
GREE, Japan's $4.7 billion online media behemoth and rival to Facebook and its gaming counterpart Zynga Inc. (Nasdaq: ZNGA), moved further into Facebook's territory Monday with the purchase of social gaming company App Ant Studios.
GREE already enjoys a prominent position in social media. It's quickly gaining on other social networks, namely Facebook, since the bulk of its users already access the site via mobile devices – an arena in which Facebook lags.
With a strong focus on selling virtual goods, and with a variety of other superior services and mobile games, GREE is vying for sustained growth by expanding beyond its home turf -and is succeeding.
"GREE strives to build the world's leading global mobile gaming ecosystem. The acquisition of App Ant Studio will help GREE reach its goal of having 1 billion users worldwide as it expands its robust portfolio of games on GREE Platform," a company statement read. GREE gushes the new Platform will deliver exclusive social gaming experiences, in addition to offering developers access to a rising and engaged worldwide audience.
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What's Really Ahead for Oil Prices
One thing investors need to know: Don't be fooled by the market’s knee-jerk reaction to headlines – especially when it comes to oil prices. There are some powerful geopolitical factors at play in the oil market. Pair that with the fact that supply/demand factors with oil are often misstated, and understanding the long-term direction of […]
Fiscal Cliff 2013: The Biggest Threat To Your Profits?
Fund managers aren't taking any chances with fiscal cliff 2013 – they're making sure their portfolios are ready now.
That's because global money managers view the looming fiscal cliff as the biggest current threat to investors' profits.
A new Bank of America Merrill Lynch Fund Managers survey this month revealed anxieties about the approaching and almost imminent fiscal cliff, which the country will go over Jan. 1 if Congress doesn't act, now for the first time in 18 months trump fears about the Eurozone sovereign debt crisis.
At the forefront are worries over trillions of dollars of spending cuts set to kick in at the start of next year that will threaten our national security, millions of jobs, and government-funded programs. Those colossal cuts will coincide with the expiration of Bush-era tax cuts which will amount to the biggest ever tax increase on American taxpayers.
The double whammy now has 35% of fund managers citing the fiscal cliff as the biggest danger to investments.
On the flip side, angst over the European debt mess as the top investment worry has waned to 33% from 48%. The drop follows the recent announcement of further support from the European Central Bank and its launch of outright monetary transactions (OMT), or bond buying, to reduce the cost of buying for bordering Eurozone countries.
The figures are from a Sept. 7-13 BofA survey of 253 managers who invest some $681 billion for clients.
Uncertainty surrounding Election 2012 has made the fiscal cliff effect a bigger threat.
"The upcoming election is putting these fears into sharper focus," noted Michael Hartnett, chief investment strategist at Bofa Merrill Lynch Global Research.
But instead of living in fear, you can feel safer by following the same preparation as some of the biggest global money managers.
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The QE3 Impact on Oil
The U.S. Federal Reserve's announcement that it's delivering another round of quantitative easing, or QE3, has triggered a staggering commodities rally. While analysts raise price targets for gold and silver, will the same happen with oil prices? Money Morning's Dr. Kent Moors joined Bloomberg today (Wednesday) to talk about the short-term and long-term price projections […]
Stock Market Today: Housing and Japan Stimulus Carry Stocks
The major headlines in the stock market today include: Japan extends its stimulus purchases, there's another sign the housing market is slowly improving, and watch out for this one stock that is taking a beating.
- Japan makes it a crowd- The Bank of Japan has joined the European Central Bank and the U.S. Federal Reserve in what has become a trio of new stimulus measures. The Bank of Japan decided to increase its asset purchases by 10 trillion yen ($126 billion) in hopes of energizing its struggling economy. All of these stimulus plans have helped bring the euro to a five-month high against the U.S. dollar, push gold to a seven-month high and boost all three major U.S. exchanges to multi-year highs. "The macro events are so large and meaningful coming out Europe, the U.S. and now Japan that they are like a large tide that is moving all boats," Lawrence Creatura, who helps oversee $356 billion as a fund manager at Federated Investors Inc. (NYSE: FII), told Bloomberg News.
- Housing market continues slow improvement- Both housing starts and existing home sales maintained the recent upbeat trend in housing numbers. In August housing starts increased to a seasonally-adjusted annual rate of 750,000 units. This is a 2.3% increase from July and a 29.1% rise from the same period a year ago. Economists had expected 765,000 new units but the number is still a move in the right direction. "Another step forward on a very long staircase," John Tashjian, Principal, Centurion Real Estate Partners in New York told Reuters. "We continue to see positive signs emerging from the housing market, suggesting that the entire market, not just individual submarkets, are stabilizing and steadying themselves for future growth." Existing home sales jumped to two-year highs in August as record low interest rates continue to encourage buyers. Last month sales of previously owned homes rose 7.8% from July to a 4.82 million annual rate. The median existing home price gained 9.5% year-over-year to $187,400.
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QE3 Delivers Fresh Ammo for Both Romney and Obama
U.S. Federal Reserve Chairman Ben Bernanke never intended his latest stimulus program, QE3, to become an issue in the 2012 presidential election, but he had to know what would happen.
"We have tried very, very hard, and I think we've been successful…to be nonpartisan and apolitical," Bernanke said at a news conference Thursday after the official Fed announcement of QE3. "We make our decisions based entirely on the state of the economy….So we just don't take those [political] factors into account. And we think that's the best way to maintain our independence and maintain the trust of the public."
In case you missed it, the Fed's third round of quantitative easing entails the purchase of $40 billion of mortgage-backed securities each month until unemployment shows a marked improvement.
In other words, for as long as it takes.
But with QE3 arriving less than 60 days before a bitterly contested presidential election, the Fed move was bound to get caught up in the campaign.
Both sides reacted immediately, with Republicans criticizing QE3 as unnecessary while Democrats applauded.
A few Republicans even accused Bernanke of timing QE3 intentionally to boost President Obama's re-election chances.
For the record, Bernanke is himself a Republican, appointed chairman of the Federal Reserve by President George W. Bush in 2006 and re-appointed by President Obama in 2010.
But with the Fed becoming a GOP bogeyman in recent years (thanks largely to the attacks from Rep. Ron Paul, R-TX), QE3 was bound to become weaponized in this year's increasingly acrimonious campaign.
Don't be fooled when each political party throws out the following QE3-fueled lines to get your vote.
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AAMRQ Slashes 4,400 Jobs - Analyst Blog
American Airlines, a subsidiary of parent company, AMR Corporation (AAMRQ) has sent layoff notices to 11,000 employees, of which they expect roughly 40% or 4,400 workers to lose their jobs. The layoff warnings were send mainly to mechanics and ground workers, including 3,000 in the Dallas-Fort Worth area, 3,000 in Tulsa, Okla, 1,200 in Miami, […]