We are maintaining our recommendation on Weatherford International (WFT) at Underperform. Operating results in the third quarter were challenging, and several one-time or transitory issues impacted the results. The company expects its poor-margin Iraqi contract to hurt operations and shrink the average output in 2012. It has not resolved its material weakness related to income […]
Archives for January 2013
January 2013 - Page 13 of 20 - Money Morning - Only the News You Can Profit From
Three Reasons Why the Energy "Experts" are Wrong
Last week, another batch of oversimplifications attempted to explain a significant decline in energy stocks.
Excuses ranged from declining demand to shale oil and gas gluts. Others pointed toward a general market Armageddon.
But you and I know better than to believe this hype.
Last week the S&P closed at a five-year high, NYMEX West Texas Intermediate (WTI) crude oil futures closed higher than in any session since September 18, while the spread between WTI and London's Brent benchmark rate is the narrowest it has been since September 14.
We recognize that the harbingers of doom are right only if markets and economies completely collapse. Once again, we know that is not going to happen.
None of this means we are simply off to the races. But they do indicate how the half-baked approaches used by some "experts" are not reflecting reality.
Their arguments are wrong for three very basic reasons. And once you learn them, you stand to profit from the biggest energy trend in decades.
The Great Rotation Makes Stocks a Generational Buy
The greatest investing mistake you'll ever make is the one you may be about to make.
If you're not gearing up to get fully invested in 2013 and reap what will be generational rewards, you have no one to blame but yourself.
This is what you've been waiting for. This is your time. Here's how to do it and why.
We've probably reached the end of a 30-year bond market bull stampede. I was there at the beginning and fondly remember my trading desk gorging itself on fixed income.
Back then we filled our blotters with Ginny Maes, Treasuries and municipals, anything that had a double- digit yield. And back in 1982 there was plenty of income to be had.
But we weren't buying for yield, we were buying for capital appreciation. As interest rates fell our book of bonds got more and more profitable. I played that hand for 30 years.
But it's over. It's too late to get into bonds now.
Even if you got into bonds in the past couple of years and made some money, which I doubt, it's not worth getting in now with yields at record lows.
And if I'm wrong and there's life left in the bond rally, how much lower could rates go? The risk- reward parameters that govern good investments just aren't there.
What's likely to happen, and may have already started last week, is being called the "Great Rotation." The Great Rotation is an investment shift out of bonds and into equities.
U.S. Debt Ceiling Deadline Prompts This Stern Warning from Obama
The U.S. debt ceiling deadline lies just a few weeks away, raising the prospect of the nation defaulting on loans, seeing its credit rating downgraded and being plunged into a recession.
And there's no sign U.S. President Barack Obama or congressional Republicans are ready to budge on their positions on what to do about the debt ceiling.
President Obama once again made his case for raising the debt ceiling during a White House press conference today (Monday) and faulted Republicans for what he portrayed as a misguided position.
"They will not collect a ransom in exchange for not crashing the American economy," President Obama said. "The full faith and credit of the United States of America is not a bargaining chip."
If the GOP lawmakers refuse to increase the U.S. debt ceiling – they're holding out for dollar-for-dollar spending cuts – the president said markets could "go haywire," government payments including Social Security and military personnel checks would be delayed and the economy would slide into recession.
"It would be a self-inflicted wound on the economy," President Obama said. "It would slow down our growth and tip us into recession. To even entertain the idea of this happening is irresponsible. It's absurd."
Why U.S. Auto Companies Are Betting Big on China for 2013 Sales
A combination of hard work and good fortune will pay off for U.S. auto companies in China in 2013, with Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) both expected to book record sales.
Both U.S. auto companies set sales records in 2012. Sales of Ford vehicles in China rose 21% year over year to 626,616.
GM, which is neck-and neck with Volkswagen AG (VLKAY) for the title of auto sales leader in China, reported combined sales from its joint ventures of 2.85 million vehicles, a year-over-year increase of 11.7% over 2011.
Both Ford and GM have built factories in China, and both U.S. auto companies plan to continue expanding there in 2013.
Ford plans to introduce 15 new models in China and double its production capacity to 1.2 million vehicles by 2015. The company also plans to double its network of dealerships in the country.
GM, in the middle of a five-year plan to invest $7 billion in China, has plans to add a third factory and increase production to 2 million vehicles annually by 2015. GM has set a goal of selling 5 million vehicles a year in China by 2015.
GM also plans to add 400 dealerships in China next year, which would give it 4,200 in all.
Here's what U.S. auto companies see in this foreign market.
To continue reading, please click here...
Can the Japanese Economy End Deflation With These Steps?
Japan's newly elected Prime Minister Shinzo Abe is taking aggressive measures in an attempt to end the deflationary spiral that has plagued the Japanese economy for more than twenty years.
The return of Abe's Liberal Democratic Party (LDP) to power in a landslide election victory last month is seen as a mandate to do whatever it takes to revive the flagging Japanese economy.
One of the first policies likely to be put into place is the passage of a massive supplementary budget for fiscal 2012 (the year ending March 31, 2013). Depending upon how you count it, the budget ranges from 10 trillion yen ($112 billion) to 20 trillion yen ($224 billion).
Observers have expressed concern over the size of the stimulus and what impact it might have on Japan's sovereign credit rating and on the Japanese government bond (JGB) market, plus what it could do to the U.S. economy.
Let's take a look.
Arm Twisting the Bank of Japan
The supplementary budget is nothing but good, old-fashioned pork barrel spending; the kind of money politics the LDP was known for when they governed Japan for more than 50 years.
What is new and different about Prime Minister Abe's approach to reviving the Japanese economy is his strong arm tactics against the Bank of Japan (BoJ), Japan's central bank.
BoJ independence was enshrined in law only in 1999. Abe has run roughshod over the intent of the law by demanding that retiring BoJ Governor Masaaki Shirakawa sign a written document agreeing to do whatever is necessary-generally considered to be "unlimited easing"-to achieve an inflation target of 2% over the medium-term.
At its last Monetary Policy Committee (the equivalent of the Federal Reserve's Open Market Committee) meeting, which took place just after Abe's landslide election victory, the BoJ agreed to review its policy goals and come back in January with updated policy recommendations. The next Monetary Policy Committee meeting takes place over two days on Jan. 21 and 22.
Press reports indicate that the BoJ will roll over and do pretty much whatever Abe wants – and here's why.
Play the Bakken Oil Boom Like Buffett
Many investors have heard of the Bakken oil field in North Dakota and Montana, but most are unaware of how important this formation is becoming to the U.S. economy.
More germane to investors is the fact that there is still a lot of money to be made from Bakken oil in the months and years ahead.
Just ask Warren Buffett.
He spotted the potential of Bakken oil well ahead of most and bought a non-energy company that would benefit greatly from the boom. Three years ago he bought Burlington Northern Santa Fe (BNSF) Railway Co. for $26 billion.
That railroad is now one of the main beneficiaries of the Bakken oil boom. (And people thought he just had always wanted to own a train set!)
"We're the 1,000-pound gorilla in the oil markets," BNSF CEO Matt Rose told Bloomberg News. "Crude by rail is going to be really strong for us. It's been a real benefit to us to replace some of that lost coal business."
The Bakken oil formation isn't just an investing opportunity; it's transforming the U.S. energy landscape.
To continue reading, please click here...
Mystery Facebook Event: Five Things that Could Happen
With little to go on, speculation has run rampant as to what will be announced at tomorrow's (Tuesday's) mystery Facebook event, with new gadgets and M&A activity topping the list.
The social networking giant sent reporters an invitation last week that simply said to "come and see what we're building" on Jan. 15.
The initial buzz ignited quite a rally in Facebook stock, sending shares up more than 9% last week after the invitations went out. Since the start of 2013, FB shares have been on a tear, up some 20% year-to-date.
Cantor Fitzgerald just made Facebook Inc. (Nasdaq: FB) one of its "highest conviction calls" for 2013. Plus, JPMorgan Chase & Co. (NYSE: JPM) elevated FB shares as a "top large-cap pick" for the Internet sector. Both firms are upbeat on the traction Facebook is making in the mobile arena.
While some are excited about Tuesday's secretive event, others are not expecting much. In that camp is Wedbush analyst Michael Pachter, who has closely been following the company since before its initial public offering.
"I have low expectations," Pachter told MarketWatch, citing the proximity to Q4 earnings, which the company will announce Jan. 30 after the close.
On the other hand, Topeka Capital's Victor Anthony is more expectant and believes the announcement could be "meaningful."
Here are five things that could happen at Tuesday's Facebook event.
Q4 Earnings Season: 12 Stocks Likely to Disappoint
The Q4 earnings season has started off on an unexpectedly good note.
Both Alcoa Inc. (NYSE: AA) and Wells Fargo & Co. (NYSE: WFC) last week reported fourth-quarter earnings that beat estimates.
But before you get too excited about the rest of Q4 earnings season, keep in mind not all companies will be able to beat projections. Some industries were hit harder than others by uncertainty around fiscal cliff tax hikes and spending cuts, as both consumers and businesses reined in spending.
To prepare investors for the underperformers of Q4 earnings season, Bank of America has identified 12 stocks it thinks will disappoint. Each has a "Sell" rating and missed earnings estimates on revenue or profit last quarter.
To continue reading, please click here...
Bull of the Day: Haemonetics - Bull of the Day
2013 is considered a landmark year for Haemonetics (HAE) based on several key growth factors, including entry in the $1.2 billion whole blood collection market with the acquisition of the transfusion medicine business of Pall Corp. We are also optimistic about the expected limited market release of the paperless phlebotomy offering by the end of […]