Archives for January 2013

January 2013 - Page 5 of 20 - Money Morning - Only the News You Can Profit From

Eichengreen: Eurozone Debt Crisis To "Heat Up Again in 2013"

Contradicting optimism at the World Economic Forum in Davos, Switzerland, that the worst of the Eurozone debt crisis is over, U.S. economist Barry Eichengreen warned that it would "heat up again in 2013."

While the pledge of European Central Bank (ECB) head Mario Draghi to buy short-term debt from struggling EU members has eased worries of an imminent Eurozone meltdown, Eichengreen contends it hasn't fixed the problem.

"None of the underlying problems have been solved. There is no economic growth in Europe. Germany itself is on the verge of recession," Eichengreen told The Associated Press while attending the Davos conference.

One flash point in particular, he said, is the lack of progress toward a banking and fiscal union.

"The banking union doesn't exist. There's less consensus on completing it than we thought last year, so the markets are going to lose patience at some point and the crisis will be back," said Eichengreen, who has written books on international finance, the European Union and the Great Depression.

Negative developments in the Eurozone debt crisis typically drag down U.S. markets, as the EU
is a chief U.S trading partner. Fresh problems in 2013 would be bad news for U.S. stocks.

Efforts of EU leaders to tame the Eurozone debt crisis succeeded in calming European stock markets in the later part of 2012, and have given some bond market relief to such debt-plagued nations as Greece, Ireland, Italy and Spain.

But as Money Morning Global Investing Strategist Martin Hutchinson pointed out in December, the bond market isn't always the best judge of a nation's fiscal health.

"Don't be fooled by those bond yields," Hutchinson said. "In 2006, after all, they were trading Greek bonds at less than 0.5% yield above German bonds. So much for rational markets."

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Is the Obama Stock Market Rally the Real Deal?

At first glance, there can be no doubt that U.S. President Barack Obama has been good for the stock market.

The Standard & Poor's 500 Index has rallied by nearly 700 points – just shy of 86% – since the president's first Inauguration on Jan. 20, 2009.

This is the best stock market performance for a presidential first term since World War II, even beating the 79.2% rally during President Bill Clinton's first term in the White House, from January 1993 to January 1997.

In fact, the only time stocks rallied more during a presidential first term was during Franklin Roosevelt's first term from March 4, 1933, to Jan. 20, 1937, when the Dow Jones Industrial Average rose 245% off of Depression-era lows.

In a very broad sense, the condition of the stock market at the start of President Obama's first term in 2009 can be compared to the stock market in 1933. In both cases, stock prices had collapsed and were trading at generational lows when both presidents took office. In both cases, share prices rallied substantially off of the bottom as economic conditions improved.

But all this really proves is that the first leg of any rally is usually the strongest and most profitable.

As the S&P 500 is at a five-year high and is zeroing in on the 1,500 level for the third time in its history, one has to wonder if the Obama Rally is sustainable or are we just reverting to the mean?

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8 Commodities You Should Be Investing In

Morgan Stanley (NYSE: MS), in its newly released Commodity Manual, just delivered good news for anyone investing in commodities in 2013.

The report gives a bullish outlook in 2013 and 2014 for eight of 14 commodities it evaluated. Estimated two-year gains range from 3.05% to 17.3%.

Money Morning Global Resources Specialist Peter Krauth agrees most commodities will perform well. In fact, he projects even higher growth than Morgan Stanley's outlook.

"With central banks on their virtually uninterrupted fiat money-printing spree bound to continue for the next few years, hard assets remain a great place to be," Krauth says. "That being said, some commodities will undoubtedly do better than others."

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IPO Calendar 2013: Two Real Estate Winners Come to Market

With the stock market reaching five-year highs, the IPO market in 2013 is expected to be more robust than last year.

In fact, strong IPO performance at the end of 2012 has given hope that the IPOs of 2013 will take off after hitting the market.

"To me, it feels like a meaningful shift in the market," said Tom Murphy, a partner and head of the securities-capital and markets group at law firm McDermott Will & Emery. "With those companies [that had great IPOs], all in very different industries, getting out at the top of their ranges, and above, is a really strong signal."

If you want to be an IPO investor with hopes of getting the hot deals, it pays to keep your eye on the new issue calendar and watch for small deals that make sense as long-term investments.

In the next two weeks there are two deals scheduled that may be of interest to you.

Let's take a look.

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Investing in Gold: Don't Ignore this Central Bank Buying Frenzy

Anyone investing in gold should recall that before the financial crisis in 2008 central banks were dumping the yellow metal – when it was trading for less than half of where gold prices are today.

But that certainly has changed in recent years.

In 2012, the world's central banks added the most gold to their reserves since 1964. Net official gold purchases added up to 536 metric tons, a gain of 17.4% from the previous year according to a report from Thomson Reuters GFMS. The estimate from the World Gold Council for such purchases is similar at 500 metric tons.

Central banks are forecast by GFMS to purchase 280 metric tons in the first half of 2013 alone.

That's good news for anyone investing in gold.

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Investing in 2013: Finally Time for the Copper ETF?

A huge opportunity for copper investing in 2013 could be on the market soon – that is, unless half of the "red metal" industry gets its way.

A group of copper consumers is accusing the U.S. Securities and Exchange Commission (SEC) of being "arbitrary and capricious" when last month it approved the JPMorgan XF Physical Copper Trust, the first-ever U.S. copper exchange-traded fund (ETF) backed by the metal itself. The fund had a two-year wait for the green light.

The trust initially plans to hold 61,800 metric tons of copper in warehouses worldwide. That is equivalent to about 27% of the copper held in London Metal Exchange's (LME) global network of warehouses.

This strategy of holding physical metal is similar to many of the precious metals ETFs on the market, such as the SPDR Gold Trust (NYSE: GLD).

But now many in the copper industry, including fabricators who account for about half of U.S. copper demand, claim the SEC had insufficient evidence to conclude the product would not affect the metal's supply, according to the Financial Times.

The group says the fund would "obviously drive up the price of copper available for immediate delivery and create shortages of such supply," and would remove as much as 30% of the copper available for immediate delivery.

Sen. Carl Levin, D-MI, also disapproved, saying it would be a "blow to American businesses and consumers" and "allow speculators to create a squeeze on the market."

But the SEC disagrees.

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Tenet Raised to Outperform - Analyst Blog

On Jan 22, 2013, we upgraded Tenet Healthcare Corporation (THC) to Outperform from Neutral based on increasing operating revenues and growth through acquisitions. Moreover, the recent strategic plans of this health care services company are expected to generate growth, enhance capital structure and boost shareholder value. Why the Upgrade? Tenet Healthcare has been consistently growing […]

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The Apple Sell-Off is Just Beginning

I've made the case several times that Apple Inc. (Nasdaq: AAPL) was over-cooked, most recently last fall when the company was flirting with $700 a share.

Each time I did I was taken to the woodshed by the legions of Apple fans who couldn't reconcile their passion with their profits.

iHere we go again…

Following earnings that "beat" and revenue that fell short, the company dropped $48 billion, or roughly 10%, in afterhours trading on Wednesday. And still more on Thursday in early trading.

I think this is just the beginning of a protracted sell- off and my argument really isn't that fancy. In fact, it comes down to two very simple points:

Four Sensational Facts About Gold Investing That You Might Not Know

Our ever-popular Periodic Table of Commodity Returns has been updated through 2012.

Investor Alert readers love this chart as it shows a decade of results across 14 different commodities, providing strikingly rich information in a very familiar format.

Last year, 11 commodities rose in value, with wheat rising as the top crop after seeing a significant decline in 2011. It was a similar rags-to-riches story for the next few leaders, including lead, zinc, natural gas and platinum, which all climbed double digits in 2012 after falling in 2011.

Only three commodities declined over the year: Crude oil fell by 7% after rising 8% the previous year. Nickel declined for the second year in a row. In 2012, the metal lost 9% and in 2011, nickel fell another 24%.

Coal was the worst-performing commodity in 2012, falling nearly 17%. Coal's been going through a rough spell lately; in fact, the commodity has not been king for five years (although it did record a 31 % increase in 2010).

As you can see from the table, commodities often have wide price fluctuations from year to year given the many factors affecting supply and demand, such as government policies, union strikes, and currency volatility.

That's why when it comes to commodities and commodity producers, many investors "leave the driving" to active money managers who understand these specialized assets and the global trends affecting them.

Take gold and gold companies, for example. After investing in the mining industry for decades, we've taken note of several facts about gold that continue to surprise our investors. Here are four of the latest:

French Internet Tax Should Have U.S. Web Giants Very Worried

A proposed French Internet tax is just the latest sign of an increasing desire among the major European Union economies to do more to force the big U.S. tech companies to pay their "fair share" of taxes.

The French Internet tax, an option proposed in a 150-page report released last week, would attempt to tax the collection of personal data. It's directed at such U.S. tech titans as Google Inc. (Nasdaq: GOOG), Amazon.com Inc. (Nasdaq: AMZN), Facebook Inc. (NYSE: FB) and Apple Inc. (Nasdaq: AAPL).

All four companies collect massive amounts of personal data. Google collects information via its free search engine; Facebook, through the activities of users on its social network. Amazon and Apple collect credit card data and customer habits via their retail operations.

"We want to work to ensure that Europe is not a tax haven for a certain number of Internet giants," France's digital economy minister, Fleur Pellerin, told reporters in Paris last Friday.

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