Archives for January 2013

January 2013 - Page 6 of 20 - Money Morning - Only the News You Can Profit From

Recession 2013: Can We Avoid It?

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The U.S. economy is currently two-for-two in its attempts to skirt recession 2013.

The first came after we narrowly avoided a tumble over the fiscal cliff with a down-to-the-wire deal on New Year's Day. The second came Wednesday with the passage of a three-month extension on raising the debt ceiling.

Had we not averted one or the other, the Congressional Budget Office warned on numerous occasions that a recession in 2013.

But we are not out of the woods just yet, even though the odds may have changed.

Stock Market Today Battles the Apple Effect

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The stock market today was proof that one bad apple doesn't spoil the whole bunch.

The Dow was up 55 points by 3:15, the S&P 500 up 1 – but the Nasdaq did slump 20 points, dragged down by Apple Inc. (Nasdaq: AAPL).

Thursday's advance came on the heels of the Dow's 67-point rise Wednesday which was stoked by a vote in the House of Representatives to suspend the U.S. debt ceiling through May 19.

Also propelling gains Wednesday were strong results from tech heavyweights Google INc. (Nasdaq: GOOG), which beat estimates and spiked $38.63 points higher, and International Business Machines Corp. (NYSE: IBM), which rallied 4.4% after posting better-than-expected numbers.

To date, some 75% of the 134 companies in the S&P 500 Index that have reported results have handily beat expectations.

"People are just trying to digest all the earnings reports from the various companies. As long as the economy seems to get better the stock market will do well," Giri Cherukuri, portfolio manager who helps manage $3 billion at Oakbrook Investments LLC in Lisle, Illinois, told Bloomberg.

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Why the Japanese Yen Has Triggered Global Concern

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The Japanese government was criticized for deliberately weakening the Japanese yen by German Chancellor Angela Merkel during a question-and-answer session following a speech at the World Economic Forum in Davos, Switzerland.

"I can't say I'm completely free of worry when I look at Japan right now," Merkel said, according to Bloomberg News.

Michael Meister, a senior member of Merkel's Christian Democratic Union who will be meeting with Japanese officials next month, said in a telephone interview with Bloomberg, "What can Japan's competitors do? Either we're all smart and do nothing, or we follow suit and create a spiral that hurts us all."

"The Japanese economy's real problems are structural and beg structural remedies, not tampering with the exchange rate," Meister continued.

Merkel and Meister are not the only German critics of Japanese Prime Minister Shinzo Abe's program to revive the Japanese economy through weakening the yen.

Germany's Finance Minister Wolfgang Schaeuble raised concerns about excess Japanese liquidity flooding the global capital markets while Bundesbank President Jens Weidmann warned of politicizing the Japanese yen.

Meanwhile, South Korean Finance Minister Bahk Jae Wan said South Korean exporters, which compete directly with Japanese companies in many industries, including cars, electronics and engineering, might be "at risk."

Deng Yuhan, writing for China's Xinhua News, said, "The easing of Japan's monetary policy entails the weakening of its currency, a side effect – if not the purposeful design – that can translate into an artificial and unfair price advantage for Japanese exports."

Deng continued, "It is a safe bet that others would respond with driving their own currencies down, thus igniting a downward race among the world's most heavily traded media of exchange – known in a more dreadful way as currency wars."

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Investing in 2013: Are Chinese Solar Stocks Worth All the Recent Hype?

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Here's something you can safely say about China: They get things done.

That point was driven home to me a few years ago by a former Southern Company nuclear engineer who was consulting on building nuclear reactors in China.

"There are two things you can say about the Chinese way of doing things," he said admiringly, "one, once they decide to build a facility, it gets built and two, they bring it in on time."

He also noted that the builders took great pride in their work and if they say the cement was going to be laid by a certain date, the crew worked overtime and weekends to bring it in on time-all without overtime pay.

And the one thing a command economy like China has going for it is once they site a project, it gets built. There are no environmental impact studies, no legal issues, no historical impact hearings, and no worries about displaced families who may have lived on the land for centuries.

I bring it up because now it looks like the Chinese are back in the renewable energy business leading to a bull stampede into Chinese solar stocks.

China's Renewed Drive Into Green Energy

In early January, government officials announced at a national energy conference that they intend to add 10 gigawatts (GW) of installed solar power capacity this year, up from 7 GW at the end of last year.

The goal for 2013 will put China within easy reach of its stated target of 21 GW of installed solar power capacity by 2015.

That followed an announcement in December that China was going to provide $2 billion in subsidies for the country's solar industry.

And now the green energy community around the world is very excited that at least one major nation is willing to step up and stand behind its renewables industries and offer some incentives.

It is bit of a turnaround for an industry that had fallen on some hard times.

Over the past year in the United States, we saw what happened with some of the best intentioned government-driven green energy programs.

Can anyone say "Solyndra"? Or, "once bitten, twice shy"?

Then Germans pulled their solar and wind tax credits and subsidies. And now with the country's economy headed into recession, it's unlikely the Germans will be back on the renewables bandwagon anytime soon.

So will China's renewed push into renewables create a new boom for solar and wind stocks?

Here's what to expect.

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The Best Currencies to Invest in for 2013

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The best currencies to invest in for 2013 come from Asia, South America, Australia – but not the United States.

The Federal Reserve's misguided insistence on a loose monetary policy, ongoing resistance to government spending cuts, and another increase in the U.S. debt ceiling will all conspire to boost inflationary pressures and restrain the value of the U.S. dollar.

That will, of course, impact domestic market performance and cut into real returns on dollar-denominated investments – but it will also provide major opportunities for U.S. investors who can target issues denominated in the strongest foreign currencies.

Unfortunately, that doesn't include most of the world's other major currencies – including the euro, British pound and Japanese yen – since the economies of the underlying nations are also suffering from sluggish economic recoveries and problems with excess debt.

As such, the strongest currencies in 2013 will likely be found to the north and west of the United States, starting with the neighboring Canadian dollar.

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Is There Any Truth to Rumors of a Physical Silver Shortage?

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News that HSBC (NYSE ADR: HBC) has concluded a second large purchase of silver bullion from KGHM Polska Miedź S.A. (OTC: KGHPF), the world's largest silver miner, has sparked speculation that there is a physical silver shortage in the markets.

KGHM issued a press release on Wednesday which read in part,"… on 21 January 2013 a contract was entered into between KGHM Polska Miedź S.A. and HSBC Bank USA N.A., London Branch for silver sales in 2013. The estimated value of the contract is PLN 1,672,260,469.66 [$532.6 million]."

The press release continued, "As a result of entering into this contract, the total estimated value of contracts entered into between KGHM Polska Miedź S.A. and HSBC Bank USA N.A., London Branch over the last 12 months exceeded 10% of the equity of the Company and amounts to PLN 3,654,120,061.59 [$1,163.7 million]."

Coming on top of news earlier this week that the U.S. Mint had temporarily run out of Silver Eagle coins and that the iShares Silver Trust (NYSE: SLV) had added 18.4 million ounces of silver to its holdings, nearly as much as the 20.8 million ounces added during all of 2012.

Together, these events have triggered rumors of a looming silver shortage – is it so?

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Arena Falters on Belviq EU Approval - Analyst Blog

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Arena Pharmaceuticals Inc. (ARNA) recently received ‘The Day 180 List of Outstanding Issues’ from the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP), in relation to its weight loss drug, Belviq. Arena’s shares were down significantly (almost 10%) on the news. Arena needs to discuss the issues with the CHMP before […]

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Betting on the Coming Boom in Natural Gas Prices

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As I write this from Pittsburgh, the temperature has reached the single digits. This is not a big deal for some of you elsewhere – like the Plains States or New England – but it does serve as a reminder of what season this actually is.

There is also something else happening this morning.

Natural gas prices are moving up.

There is still some way to go before these natural gas reached the $4 plus level (still the perceived breakeven point for a number of producers). Still, after testing the low $3 range earlier in the month, the temperatures in the East are certainly bringing gas back into perspective.

Natural gas usage remains sensitive to temperatures and weather conditions during the winter. Last year's unusually warm temperatures depressed gas prices more than usual.

That was because the amount of gas extractions was much above anticipated levels. The combination of lower demand and higher supply translated into a downward price pressures.

But we are in a different environment for gas production than we were a few years ago.

Until 2005, the assumption was that the U.S. would need to import more liquefied natural gas (LNG) to compensate for accelerating declines in conventional domestic production.

LNG overcomes the primary problem faced by natural gas users. Available supply is traditionally limited to where pipelines are running. LNG, on the other hand, cools gas to a liquid, allowing it to be transported by tankers almost anywhere by water, regasified at an import terminal, and then injected into the local pipeline network.

By the middle of last decade, estimates of how much domestic gas need would have to be imported via LNG were as much as 15% and as soon as 2020.

But the ability to exploit unconventional deposits (shale and tight gas, coal bed methane) has dramatically changed the equation.

Four Ways to Play the "New Gold Rush" in Materials

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Who would have thought that the new gold rush would be in material sciences?

We're talking about everything from rare earths that drive precision lasers to the cobalt needed for rechargeable batteries

Not to mention the advanced materials that make computer chips run faster. Or the "smart" materials that are driving the nanotech revolution.

Of course the big news in what I call the Golden Age of Materials Science came less than nine years ago when two scientists discovered graphene.

It's a revolutionary material that will yield flat-screen TVs as thin as Saran Wrap, nanotech supercomputers, and neural implants that combat brain disease. No wonder the two scientists who discovered it won the Nobel Prize.

Now hundreds of scientists have hit the lab to look for new ways to tweak existing molecules — or create whole new synthetic substances. They've already produced a steady stream of breakthroughs.

Today, I want to show you four ways you can profit from all of this radical change.

For most investors, that will mean focusing on the specialty chemicals sector, which is up about 22% in the past six months. That's more than double the market's overall move over the same the period.

Here are four material sciences stocks that have caught my eye thanks to their strong fundamentals and solid charts:

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The 5 Worst CEOs of 2012 and Why They Should Be Fired

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Among others, Mark Zuckerberg of Facebook Inc. (Nasdaq: FB), Brian Dunn of Best Buy Co. Inc. (NYSE: BBY) and Andrew Mason of Groupon Inc. (Nasdaq: GRPN) all had a rough year.

Money Morning's experts picked through the list of disappointing names and came up with the five worst CEOs of 2012.

Here are the finalists, along with our experts' reasons why these weak performers should be given the axe in 2013:

  1. Ben Bernanke, Chairman of the U.S. Federal Reserve – Picked by Chief Investment Strategist Keith Fitz-Gerald:

    Bernanke is the CEO of the biggest private institution on the planet, the Fed.

    Despite overwhelming evidence that the theories and methods he is using have not worked, are not working and have never worked since the dawn of recorded history, he continues to plow ahead with more of the same failed monetary and fiscal policy that got us into this mess.

    In the process, he risks unspeakable damage to the United States and to the global financial system while only kicking the proverbial can down the road.  

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