The Cooper Companies (COO) delivered a 12.4% earnings surprise in the third quarter of fiscal 2012 (ended July 31) and raised guidance for the year. Moreover, this leading contact lens provider has now surpassed the Zacks Consensus Estimate in three of the last four quarters with an average surprise of 8.8%. Earnings momentum has improved […]
Archives for September 2012
September 2012 - Page 9 of 19 - Money Morning - Only the News You Can Profit From
The Dangerous Standoff in the South China Sea is About to Boil Over
We've been telling you for months about the ongoing territory disputes in the South China Sea – and warning that it wouldn't take much to spark a major confrontation.
Now you see why.
Today, the anniversary of Japan's 1931 occupation of parts of mainland China, an already smoldering territorial dispute between China and Japan is threatening to boil over.
Major Japanese firms have ordered shutdowns of their Mainland China operations, and Japanese expatriates living in that country have been ordered to stay indoors as angry protests sparked by the territory disputes have kicked the anti-Japanese sentiment to its highest level in decades.
We've been telling you for months that this was inevitable.
Last week, Beijing dispatched patrol boats to the five East China Sea islands that are escalating the disagreement between the two Asian heavyweights. Beijing sent the boats to the Senkaku island region as an angry response to Tokyo's plan to buy the mostly barren islands from their private owners.
Over the weekend, well-known Japanese firms such as Honda and Toyota were the focus of demonstrations and violent attacks. And yesterday, a flotilla of around 1,000 Chinese fishing boats was sailing for the islands.
All of this was prompted by Japan's announced plan to purchase the five afore-mentioned islands from their private owners.
Chinese Foreign Ministry spokesman Hong Lei said the government would protect Japanese firms and citizens and called for protesters to obey the law.
"The gravely destructive consequences of Japan's illegal purchase of the … islands are steadily emerging, and the responsibility for this should be born by Japan," Chinese Foreign Ministry spokesman Hong Lei told reporters at a daily news briefing.
This follows last week's warning by China's Foreign Ministry that "if Japan insists on going its own way, it will bear all the serious consequences that follow."
Although the hottest part of this dispute currently centers upon China and Japan – which generated two-way trade of $345 billion last year – many more Pacific-Region nations are involved.
And, as we'll show you in a minute, there will also be consequences for this country, and for U.S. investors who take the time to understand what's at stake.
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When it Comes to QE3, Ben Should Have Tried the Helicopter
At last Thursday's Fed meeting, Ben Bernanke finally played his last card.
With an open-ended promise to buy $40 billion a month in agency-guaranteed mortgage bonds, the Fed Chief turned QE3 into a much larger gift called "QE Infinity."
But the truth is he would have been better off if he had tried the helicopter.
For those who forget the reference, Ben's first foray into national fame came in November 2002, when he delivered his famous "helicopter speech" at the National Economists Club in a Washington, DC Chinese restaurant.
Little did I know that day that I was about to witness history as Bernanke said the risk of deflation was so great that the Fed should drop interest rates to zero and consider using further measures — such as dropping $100 bills from helicopters — to "stimulate" the economy.
Of course, I blotted my Fed copybook for the next decade by asking a snotty question since I objected to his central premise that the risk of deflation was either imminent or would be disastrous when it happened.
The idea that deflation was imminent at the time was simply ridiculous. Consumer price inflation, on official BLS statistics which consistently understate it by about 1%, was 2.5% in 2002, 2.0% in 2003 and 3.3% in 2004.
Even then, Bernanke's economics weren't that well connected with reality.
The Problem with QE1…QE2…QE3 and QE Forever
The reality today is that it just doesn't work.
Bernanke's various "quantitative easing" policies have benefited primarily Wall Street; the mechanism by which they have fed through to the real economy is at best very indirect.
Currently for example, the Fed is now set to buy a total of $85 billion a month in long-term bonds, through the new mortgage bond purchases as well as the remains of his "Operation Twist" strategy.
This is supposed to lower interest rates, which in turn is supposed to support the housing market and produce jobs.
However the principal effect of all this Fed activity is to support stock prices, commodity prices and other asset prices. That's why gold prices went on a tear after QE3 was announced, while interest rates have actually risen.
Traders have seen the limit of what the Fed can do to support the bond market and have begun to wonder whether the Fed's activities will bring inflation. The question is what will happen to the bond market once Fed purchases slow. If the Fed's efforts burst the bond bubble, $85 billion a month is nowhere near enough to begin to reflate it.
Meanwhile, in the real economy-the one where you and I live– not much changes.
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Investing in Natural Gas: These ETFs Hold Clues to a Price Rebound
Analysts and experts love to say the U.S. is "the Saudi Arabia of natural gas."
That statement implies the U.S. is to natural gas as Saudi Arabia is to oil: One of the world's top producers with decades (perhaps longer) worth of reserves of the commodity.
Wearing the crown as the world's largest gas producer has been both a gift and a curse for the U.S. A gift in that exploding production of the fuel at various shale plays throughout the country has created an economic benefit in the form of hundreds of thousands direct and indirect jobs. Not to mention, natural gas stands as perhaps the most viable avenue for the U.S. to significantly reduce its dependence on foreign oil.
That is the good news.
However, a burden has been endured by those who are investing in natural gas, looking to profit from the U.S. gas boom. Combine record production with the facts that demand has been tepid and natural gas is not yet widely used as a transportation fuel, and prices have plunged.
There are signs, faint as they may be, that natural gas is rebounding. Anyone interested in investing in natural gas can use some familiar ETFs to finally profit from that trend.
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Jim Rogers On QE3, Gold, Silver and Oil
The U.S. Federal Reserve is ready to launch a third round of quantitative easing, dubbed QE3 or QE Forever – but legendary investor Jim Rogers is shaking his head.
In fact, Rogers said repeating the same program the Fed has already attempted will make policymakers "look like fools again."
In an interview with CNBC before the Fed's announcement, the chairman of Rogers Holdings said he was skeptical that additional stimulus measures could have any meaningful effect on the U.S. economy. He added that despite his reservations, he expected the Fed to unveil QE3.
The iconic financier also lashed out at the new developments in Europe, including a move from Germany last week to funnel taxpayer cash into the European Central Bank's OMT program, their own version of quantitative easing. Rogers maintained they are not addressing the root of the problems plaguing the Eurozone area.
On Europe's move to implement a euro version of QE, Rogers said it affords the Western world "unanimity towards mutual destruction."
Any relief will be temporary, warned Rogers.
"We're all going to pay a horrible price for this in a year or two or three," he said.
As for why the Fed will continue its ineffective stance of zero to 0.25% interest rates through at least mid-2015, and the tossing good money after bad, Rogers advised the reasons are simple.
It's an election year and "Mr. Bernanke wants to keep his job."
That's why Rogers is getting defensive with commodities.
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If You're Worried About Stock Market Crash 2013, Buy These
The market has surged in recent action, but these gains haven't eradicated the chances of a stock market crash in 2013.
Global markets are up on news that central banks will deliver more stimulus measures, such as QE3 in the United States.
Even though stimulus measures trigger market rallies, they're actually admissions that economies are so weak they need government assistance.
As Federal Reserve Chairman Ben Bernanke recently stated, the economic conditions in the United States, particularly high unemployment, should be of "grave concern" to all.
Legendary investor Jim Rogers declared in an interview that, "In America, we have had recessions every 4 to 6 years at the beginning of the republic. 2013 is going to be a mess. It always has been, there's no reason it won't be this time too. Be careful…"
In order to heed Rogers' warning, investors should consider adding the following stocks to their portfolios.
What QE3 Means for Markets and the U.S. Economy
We finally know that a third round of quantitative easing, or QE3, is here, but it has left investors asking what it means long-term for the markets and the economy.
First, let's look at what QE3 is meant to do.
QE3 is meant to encourage economic growth and improve the U.S. employment picture.
On Sept. 7, the Department of Labor reported that only 96,000 jobs were created in August. Not only was that far below expectations, it was well under the 141,000 increase from July.
In addition, the underlying foundation is even weaker as income is down and more Americans are leaving the labor force. Of the jobs that are being created, most are poorly paying ones in the service sector.
From that, economic growth for the United States slowed to 1.7% in the second quarter, down from 4.1% in the final three months of last year.
This new QE3 – or QE Forever, since it has no expiration date – is the most intense program initiated by the Fed to goose the economy since the crisis.
Noted Julia Coronado, the head economist for North America at BNP Paribas and former Fed economist, "This is definitely a significant shift in FOMC policy. This is a very aggressive commitment to success on its mandates."
Stock Market Today: These Stocks Are Still on a Hot Streak
The major headlines in the stock market today include Europe putting a stop to the QE3 rally, another negative manufacturing report and a couple of stocks continuing to soar.
- QE3 rally halted– After last week's Federal Reserve inspired surge where each U.S. market gained at least 2%, stocks opened lower Monday. The selling pressure might not last long though as investors are ready to profit off of the Fed's latest moves. "It looks like we need to take a small breather after the sizable rally that we've had," Randy Frederick, managing director of active trading and derivatives at Charles Schwab Corp., told Bloomberg News. "There's the potential for a small pull-back, but I think we will move back into the bull territory later in the week unless there's an unexpected negative news event."
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Embraer Delivers Jet to Belavia - Analyst Blog
Last week, Embraer S.A. (ERJ), the largest Brazilian aircraft manufacturer, made a delivery of its EMBRAER 175 jet to Belavia, the 100% state-owned flag-carrier of Belarus. The aircraft delivered is leased from Air Lease Corporation of Los Angeles and will fly on European routes from Minsk International airport in Belarus. The aircraft manufacturer is still […]