Archives for 2012

January 2012 - Page 181 of 185 - Money Morning - Only the News You Can Profit From

All You Need to Know About Iran, $200 Oil, and $6.00 Gas

by

If you're unsettled by the thought of gasoline at $4.00 a gallon, brace yourself.

With tensions between Iran and the West quickly escalating, we could see gas jump to $6.00 a gallon at the pump in a matter of months.

Make no mistake about it: If Iran were to follow through on its threats to close the Strait of Hormuz, oil prices would surge as high as $200 a barrel in matter of days.

But that's just the beginning…

A wider Iranian war could throw the entire region into chaos — making $100 oil seem like a bargain.

None of this is hyperbole. In fact, these dangers are likely according to of one of world's leading energy analysts, Dr. Kent Moors.

Dr. Moors is an advisor to six of the world's top 10 oil companies, including natural gas producers throughout Russia, the Caspian Basin, the Persian Gulf and North Africa. He also consults for high-level officials from the U.S., Russian, Kazakh, Bahamian, Iraqi and Kurdish governments on all things energy related.

In short, Kent's insights are invaluable.

That's why we've given Dr. Moors a chance to address all of the concerns swirling around the energy market today.

In the interview that follows you'll learn what you really need to know about Iran, the global oil market, and most importantly, what you can do to profit…

Dr. Kent Moors on the Brewing Crisis in the Gulf

Q) Dr. Moors, how serious are the recent developments in Iran?

Moors: This is the most serious U.S.-Iranian crisis since the fall of the Shah in 1979. There's a very dangerous situation inside Iran that is only being accentuated by the oil market problems that have resulted from Western sanctions.

First off, on the Strait of Hormuz: This is the most significant oil choke point in the world. Some 35% of the world's seaborne oil shipments and at least 18% of daily global crude shipments pass through this narrow channel in the Persian Gulf. And while the Iranian Revolutionary Guard Navy is not large enough to blockade the Strait of Hormuz for any length of time, it could disrupt traffic.

Q) What effect would closing the Straits of Hormuz have on oil and gas prices?

Moors: Closing the strait would result in a rise in crude oil prices of between $20 and $40 a barrel in a matter of hours. Any interruption beyond 72 hours would push prices to between $150 and $200 a barrel.

As far as gas prices are concerned, the basic rule of thumb is that each $1.00 rise in a barrel of oil results in a 3.2-cent rise in a gallon of gasoline. So $200 oil would equal $6.00-plus gasoline.

Q) Why is this crisis unfolding right now?

Moors: Three major elements are causing Iran to become belligerent:

To continue reading, please click here...

Why You Should Ignore the Coming Debt Ceiling Debate

by

Under the guise of yet another debt ceiling debate, Republicans and Democrats will spend much of the week demonizing each other on the Washington stage.

But don't be fooled. This so-called debate will be nothing more than a planned-in-advance sideshow to supply each side with 2012 election campaign fodder.

The deal put in place on Aug. 2 essentially guaranteed that the limit on the U.S. national debt would be raised to $16.4 trillion in January. That means any sound and fury that emanates from Washington this week over raising the debt limit will signify nothing.

"It's pro-forma. They already made a deal to raise the debt ceiling last time around," said Shah Gilani, Money Morning Capital Waves Strategist and author of the Wall Street Insights & Indictments newsletter. "The President has to ask for the increase — which makes it look like he caused it — and the Republicans get to display anger that "here we are again.' But it's a game they agreed to earlier."

The deal in August intentionally split the debt ceiling increase into three separate requests to set up these faux debates for public consumption.

U.S. President Barack Obama did his part on Thursday by making a formal request for the $1.2 trillion increase in the debt limit.

That was the cue for Republicans in the House of Representatives to draft a "resolution of disapproval" which they will debate and vote on this week. And given that the GOP has a majority in the House, the resolution is guaranteed to pass.

In this play's next scene, the Democratic-controlled Senate rejects the resolution, which allows President Obama's requested debt ceiling increase to take effect by default – just as all sides envisioned back in August.

And even if a few rebellious Democratic Senators vote with their Republican colleagues, President Obama can veto the resolution. With the odds of Congress overriding a veto near zero, the debt ceiling increase is pretty much a lock.

But the show must go on.

To continue reading, please click here...

If You're Out of Work Blame Your Cell Phone

by

Times are tough out there.

We would like to blame China, incompetent politicians, Federal Reserve Chairman Ben Bernanke, the banking system, or some unseen forces for this phenomenon.

But in reality, the answer is no further than our pockets. The real culprit is your cell phone.

The arrival of these gadgets changed everything…

That's because before the cell phone boom, it was very difficult to run an efficient international outsourcing operation. Until then, there were no means of communicating between different offices other than fax, telex, and the balky international telephone system.

Consequently, these communication barriers made manufacturing products overseas cumbersome and expensive.

And since there were relatively few outsourcing operations at the time, there was also an acute shortage of skilled employees in poor countries, making a difficult situation even worse.

As for competition, there wasn't much. That meant the jobs of workers in rich countries were still relatively secure.

But not for long.

Starting in 1995, the Internet and the modern telecommunications revolution changed everything.

The Race to the Bottom

Suddenly, these same barriers began to come down. The job market was changed forever.
Now it was possible to communicate on a real-time basis with factory or service operations in poor countries all across the globe. Outsourcing had been born.

At about the same time, the retail behemoth Wal-Mart Stores Inc. (NYSE: WMT) discovered a China and the price advantage it could gain by manufacturing goods overseas. Wal-Mart's new world began to take shape.

Goods could now be designed by Wal-Mart, made to Wal-Mart's specifications and delivered to Wal-Mart stores in just a few weeks, enabling the retail giant to keep up with trends in fast-moving markets.

The rest, as they say, is history.

There was only one problem. This sea of change wasn't self-limiting.

To continue reading, please click here…

To continue reading, please click here...

Why Weak Earnings Today Could Turn the Bulls Loose Tomorrow

by

Everybody is hoping for a swell earnings season on the assumption that it will help the markets move higher.

However, if history is any guide, weaker earnings may be just what the doctor ordered.

Here's why.

Obviously we don't want a disastrous set of numbers, but downbeat earnings and guidance actually creates the possibility of more positive surprises that will encourage money to move into the markets instead of away from them.

Think of it this way: When things shift from good to bad there's a distinct aversion to risk and assets flee like they did following the "dot.bomb" blowup in early 2000 and at the onset of the financial crisis in 2007.

But when they go from bad to less-bad, it's human nature to assume things are improving. And that sentiment brings out the bargain hunter in all of us while also drawing money into the markets. That was the case in mid-2002 and just after March 2009, when people were hoping for something – anything really – to get the juices flowing again.

Winning the Expectations Game

Wall Street understands this psychology better than you might imagine. That's why m anipulating earnings and analyst expectations is a science in and of itself.

Everybody denies it happens, but ask nearly any seasoned Wall Streeter and you'll get a sideways glance and a knowing smile.

The wall that supposedly separates the research, investment banking, brokerage and trading functions of any given firm is a plumber's worse nightmare, depending on your perspective.

Former analyst Stephen McClellan notes in his book "Full of Bull" that this is how the game is played.

He says that's why it's important to do what Wall Street does rather than what it says as a means of securing your personal profits.

I couldn't agree more.

Having spent more than 20 years closely involved with the markets, I've learned that Wall Street's blinders, miscues, set-ups and secrets are often more telling than the "telling" itself.

Consider what's happening right now.

According to Standard & Poor's, analysts have raised projections for 366 companies while lowering those associated with another 534 companies. In other words, lowered expectations out number rising expectations by almost 2:1. Bespoke Investment Group notes that all ten S&P sectors have had more negative revisions than positive.

That's in stark contrast to two years ago when analysts were positive at the onset of 2010 for roughly 80% of the market with the exception of healthcare and utilities. Both were viewed as little more than bastard children and cast as negative performers.

As you might expect, many investors bailed out of the latter while rushing into the former. But that turned out to be a mistake — healthcare and utilities were the best performing sectors in 2011.

This doesn't always happen, but it's well documented that Wall Street often says one thing and does another. You'd think at this stage of the game things would be different, but they're not.

To continue reading, please click here...

The Four Hottest Trends from the 2012 Consumer Electronics Show

by

The 2012 Consumer Electronics Show (CES) in Las Vegas, NV wraps up today (Friday) after setting the stage for this year's hottest tech trends.

The 3,100 companies in attendance have launched about 20,000 new products since the tradeshow opened on Jan. 10. They range from everyday items like new smartphones to crowd-wowing flying cameras.

Besides companies using the venue to introduce consumers to their hottest new products, this year's Consumer Electronics Show highlighted the materials and capabilities that will dominate the tech world in 2012 and for years to come. The prototypes and early models that debuted this year are the first versions of technology destined to change not only our consumer experiences, but eventually redesign our households and even our nation's military strategies.

Here are four of the most important trends from the 2012 Consumer Electronics Show setting the stage for the future of tech:

Shaping the Future of Tech

1. Gorilla Glass: This game-changing material by Corning Inc. (NYSE: GLW) is lightweight, damage-resistant, and dominating new products that rely on thinner glass for optimal use.

"The Gorilla Glass breakthrough is important because we are moving to a touch-screen world," said Money Morning Defense and Technology Specialist Michael Robinson. "Thinner glass is integral to technology that will greatly enrich the user experience of smartphones, ultrabooks, TVs, and ATMs. The thinner the glass, not only the smaller the electronics, but the more responsive and accurate the screens become."

Robinson has detailed industry-defining innovations like Gorilla Glass in his Money Morning series, The Era of Radical Change.

While Gorilla Glass was showcased in smartphones and laptops at the Consumer Electronics Show, Robinson said the material's importance goes beyond these everyday items.

"We are moving to the Japanese model in which a wide range of products typically sold in stores now come to consumers through vending machines located everywhere," Robinson said. "You'll control them with a smartphone or with touch screens depending on consumer preference. I predict a flood of new vending machines will hit the U.S. in the next five years that will need tough glass to deal with thousands of consumer purchases a day."

2. Ultrabooks: With traditional laptop sales plummeting, and tablets last year's hottest CES export, companies have combined a computer's operating capacity and a tablet's size to create ultrabooks, the latest phase in personal computing.

To continue reading, please click here...

Emerging Markets Forecast 2012: Forget the BRICs! Here Are the Best Emerging Markets of 2012

by

Don't let the headlines fool you, there's lots of money to be made in global investing in 2012.

You're just going to have to be careful – more so than in years past – because right now the line drawn between successful markets and markets that are in danger of collapse is treacherously thin.

Take the fashionable growth markets, the BRICs – Brazil, Russia, India and China – for example.

It's been 10 years since Goldman Sachs Group's Chairman of Asset Management Jim O'Neill coined the BRIC acronym. His recommendation was certainly effective – one of the best of all time, even. But today, all four BRIC countries face problems, and their troubles illustrate the dangers of following investment fashions.

Read More…

JPMorgan Chase (NYSE: JPM) Earnings: Don't Be Misled by Sagging Banking Sector

by

As the grim bank earnings roll in over the next couple of weeks, beginning with JPMorgan Chase & Co. (NYSE: JPM) tomorrow (Friday) morning, don't fall into the trap of thinking the financial sector's woes in the last quarter reflect a sinking U.S. economy.

While bank earnings are usually a good barometer for the nation's economy, many of the factors weighing down financials, such as tougher regulations and the Eurozone debt crisis, aren't necessarily a reflection on U.S. economic activity.

In fact, according to the U.S. Federal Reserve's Beige Book report, released Wednesday, the overall economy at the end of last year continued to improve slowly but steadily.

Friday the 13th for the Financials

Analysts have been consistently lowering earnings expectations for all the big banks in recent weeks.

"Friday the 13th will live up to its name when it comes to bank earnings," Mike Mayo, an analyst with independent research firm CLSA in New York, told Bloomberg News. "You're going to see all sorts of revenue and margin pressure and the results will be underwhelming."

The consensus estimate for JPMorgan, the nation's biggest bank by assets and a bellwether for the industry, has slid from $0.97 per share to $0.94 per share in the past month; three months ago the estimate was $1.11 per share.

That puts JPMorgan's earnings below the $1.02 per share of the previous quarter and well below the $1.13 of the year-ago quarter. JPMorgan's revenue is expected to drop 20.8% from first-quarter 2011.

And as disappointing as that sounds, JP Morgan will be one of the strongest performers this bleak bank earnings season, which follows a year in which some bank stocks fell more than 40%.

As the other major U.S. banks report earnings next week – Citigroup Inc. (NYSE: C) and Wells Fargo & Company (NYSE: WFC) on Tuesday, Goldman Sachs Group Inc. (NYSE: GS) on Wednesday and Bank of America Corp. (NYSE: BAC) and Morgan Stanley (NYSE: MS) on Thursday — the din of negativity will be hard to ignore.

To continue reading, please click here…

Read More…

What Anti-Capitalism Talk Will Do to U.S. Markets

by

Recent attacks on Republican presidential hopeful Mitt Romney and his private equity background at Bain Capital have triggered more criticism for candidate Newt Gingrich and his "capitalism bashing" stance. Money Morning Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." program Thursday to discuss what these capitalism debates mean for the U.S. election […]

Read More…

3D Chips Will Deliver an Era of Radical Change

by

Forget about the "Tablet Wars." That's yesterday's news.

The same thing goes for the long-predicted "Death of the PC."

You see, the mainstream media has unleashed a torrent of technology predictions for 2012. They're all a mile wide and an inch deep.

No one seems to get the big picture.

The single most important computing trend that will unfold this year is getting almost no buzz. And yet…

This is the year when the technology sector will enter a whole new dimension. It's called 3D computing.

Make No Mistake About it… This is Huge

Now, I'm not talking about wearing funny glasses while you watch TV.

This is the year Intel Corp. (NASDAQ: INTC) plans to hit the market with 3D chips.

This doesn't just put the storied Silicon Valley leader ahead of its competition; it also symbolizes the breakthroughs that will drive the "Era of Radical Change."

Fasten your seat belts folks. As I discussed yesterday, the world is speeding up.

As you are no doubt aware, all manner of computers keep getting smaller – and faster. Like clockwork, chips pack twice as much punch every two years.

Take a look at a cell phone from the early 1990s. You couldn't make a decent call on one and it was nearly as big as a brick.

Today, a smart phone fits in the palm of your hand. It surfs the Web, plays video, and can even pilot an unmanned drone half a world away.

Smaller, Faster, More Powerful than Ever

It's all because of Moore's Law. An Intel co-founder, Gordon Moore predicted that every two years computing power would double. Moore realized high-tech engineers would keep finding new ways to make transistors smaller.

But let's not resort to geek speak. Just remember that the size of all electronics is governed by how many of these little devices we can put on a single chip.

Just like loading up your wallet, when it comes to chips more is better – much better.

Except that every few years the "experts" warn us that we're about to hit a brick wall and our electronics just can't get any smaller.

That's because in the past we could only put all of this key information on a flat surface. At some point you just run out of real estate − unless you can go vertical.

To continue reading, please click here...