Archives for November 2012

November 2012 - Page 16 of 20 - Money Morning - Only the News You Can Profit From

The Morning After: An Energy Shakeout, Then a Move Higher

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As I mentioned yesterday in Oil and Energy Investor ("Something Big Hits the Oil Markets… Starting Tomorrow"), the primary problems today are exactly the same ones we had before the election.

In fact, aside from the Dems picking up a few seats in the Senate, the composition remains the same – one party controlling the White House and the Senate; the other with a majority in the House.

For all the criticism of Congress kicking the can down the street, that's just what the nation as a whole did on Tuesday night.

There will be no possibility of expecting a recovery in an environment of uncertainty about rising taxes and meat cleaver program cuts.

I'm calling this the financial precipice these days because I am tired of saying "fiscal cliff." But it is one of two things that have pushed the energy markets down, along with markets across the board.

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The Stage Has Been Set For Another Credit Crisis

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If you think yesterday's market action was something to worry about, you ain't seen nothing yet.

President Barack Obama getting re-elected sets the stage for another credit crisis.

When the president came into office in 2008 he had a mandate to fix the banking system, which consisted of too-big-to-fail banks holding America and its economy hostage to their greedy schemes.

He swept that mandate under the door of Congress and the Federal Reserve.

The president has no position on the big banks, and it seems he likes it that way.

By lightening up on his already watered-down rhetoric about making banks toe the line, he got campaign money from them. So did Congressmen. That money came from the Federal Reserve.

Now that the president has won a second term, he's not about to fight Congress over their pandering to the big banks, since he's got other things to fight with them over; rather, he's going to advocate a lite-touch going forward to allow banks to continue to strengthen their balance sheets so they can fuel an American recovery.

It seems to be all happening under the cover of darkness. And, it's not going to work.

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How to Find High-Yield Investments in a ZIRP World

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Frankly, thanks to the U.S. Federal Reserve, it's surprising we have not seen a savers revolt in the United States.

We can debate how effective the Fed's Zero Interest Rate Policy (ZIRP) has been, but one thing is unquestionable: Those who rely on income from investments that are cautious and conservative have been brutally punished.

Traditional safe income havens like Federally Insured Certificates of Deposit and Treasury bills offer a minuscule return. It is not possible to retire and live off the interest earned on your savings unless you have several millions stashed away. Even then the return from conservative savings options will not provide a very luxurious retirement.

And according to Fed Chairman Ben Bernanke this condition will exist until at least 2015.

That's why in a ZIRP environment, savers must become investors.

To earn a decent return you have had to consider investments like stocks, bonds and real estate that require a deeper knowledge and risk tolerance than savings-oriented accounts. People with little or no investment experience or knowledge have turned to the stock market to earn the return necessary to fund their lifestyle and living expenses.

That idea might be frightening to life-long savers, but it doesn't have to be. Here's a strategy for finding high-yield investments in the Fed's ZIRP world.

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How an Obama Win Affects Investments

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Now that U.S. President Barack Obama has secured a second term, how will his win affect your investments?

In terms of monetary policy, U.S. Federal Reserve Chairman Ben Bernanke's "grand experiment" with quantitative easing will continue at least until Bernanke's second term expires in 2014. We can expect the Fed to continue to expand its balance sheet through asset purchases-primarily mortgage backed bonds- and to keep overnight interest rates near zero.

The Fed currently expects GDP growth of 3% in 2013. Unemployment is expected to continue to decline through 2013 but the unemployment rate may move in fits and starts as more discouraged workers move back into the labor force as conditions improve.

Unless there is an unexpected improvement in the employment situation and housing prices, investors can expect quantitative easing and zero interest rates to remain in place through 2013.

Here are the other ways a President Obama win will affect your investments.

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Allstate Corp. (ALL) - Bull of the Day

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We have upgraded our recommendation on Allstate Corp. (ALL) to Outperform based on significant reduction in catastrophe losses, claims and operating expenses coupled with enhanced premiums that improved the combined ratio, ROE and book value per share so far in 2012. Also, these factors aided the company's second quarter earnings upbeat, substantially outpacing the Zacks […]

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The Real Crooks Are The Ones Who Perpetrated This Scam - Not The Shareholders

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Haters of the big banks cheered when Federal prosecutors decided to sue Bank of America (NYSE: BAC), alleging that they defrauded Fannie Mae and Freddie Mac of at least $1 billion.

But they shouldn't have. Because no matter how satisfying it might be to see justice done after the financial crash of 2008, the truth is the real crooks have already gotten away.

Now four years later, the only people that will suffer will be the bank's unfortunate shareholders, not the bad guys who perpetrated the scams that cost a fortune during the mortgage meltdown.

After all, this wasn't the first lawsuit filed against Bank of America in this mess.

Last year the Federal Housing Finance Agency filed suit against the bank for similar offenses. And in February the bank agreed to a $1 billion settlement of a case brought by the Brooklyn attorney's office claiming fraud on guarantee claims against the Federal Housing Agency.

Also in February, the bank and five other mortgage lenders combined to agree to a $25 billion settlement of claims over mortgage fraud.

Now, according to estimates by Credit Suisse, the final cost to Bank of America of all the lawsuits relating to mortgage fraud during the bubble will come to around $40 billion.

And guess where that will come from?…

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New Carbon Nanotubes Mean Silicon Valley's Days Are Numbered

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We have to come up with a new name for Silicon Valley.

Don't get me wrong. It's not going away. The famous region at the southern end of San Francisco Bay will continue being home to the world's top high-tech companies.

It's just that we won't be able to call it "Silicon Valley" much longer.

After all, the region earned its nickname based on the type of material we use to make semiconductors for a wide range of computers.

And that material is going to have to change.

Of course, silicon still holds a huge lead over other substances in computer chip design. But there's a fundamental problem with silicon chips.

Engineers are running out of room on them.

You see, the Valley runs on a basic rule that has remained unchanged for many decades. It's called Moore's Law, and it states that computing power roughly doubles every two years.

This explains why your smart phone is a better, faster computer than the mainframes NASA had when it made its moon shots in the '60s.

To keep up with Moore's Law, we need to pack ever more transistors – the tiny switches used to control computers – on semiconductors. The current number stands at more than a billion (on an area smaller than a postage stamp). That's impressive. But at some point, the law of physics will limit how many transistors we can place on a piece of silicon.

It's fast getting to the point where we can't physically make transistors any smaller. And once we run out of real estate, the growth in processing power will hit a brick wall, in turn, slowing the entire pace of innovation around the globe.

That's why I'm glad to tell you today about a new computing breakthrough from International Business Machines Inc. (NYSE:IBM). They scored a huge advance that could soon put the tech world light years ahead of where we are today.

This novel new material is made of a very familiar substance…

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How to Profit From Greenland's Rare Earth Metals Bonanza

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Greenland is a treasure trove of rare earth metals.

For millennia nearly all of this massive island was buried more than a mile deep in glacial ice, making its rich mineral resources almost impossible to extract.

But in recent years, Greenland's ice has started to retreat, with summer melts becoming more extensive each year.

That has made Greenland's rare earth metals (as well as a variety of more conventional elements, such as iron, nickel and gold) much more accessible — and mining for them far more economically feasible, particularly in its southern tip.

"This is huge; we could be mining this for the next 100 years," Eric Sondergaard, a geologist with the Australian-owned company Greenland Minerals and Energy, told The New York Times. Greenland Minerals and Energy (OTC: GDLNF) controls the vast Kvanefjeld project, estimated to hold 10.5 million tons of rare earth ore.

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If There's No Winner of Election 2012 Tomorrow, the Market Loses

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By most accounts, Election 2012 is expected to be very close. Long lines of early voters in key swing states including Ohio and Florida, the use of paper ballots in parts of New Jersey that were devastated by Hurricane Sandy, and uncertainty over the implementation of stringent new voter ID laws in several states could […]

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