Archives for February 2013

February 2013 - Page 4 of 17 - Money Morning - Only the News You Can Profit From

How to Make a Fortune If the Currency Wars Go Atomic

There's a lot of talk about currency wars these days, but very little understanding about what that means for specific countries, economic growth, inflation, and your pocketbook.

Let's fix that.

First of all, there has been no declaration of any currency war. And there likely won't be.

That's because open currency warfare could quickly lead to a mushrooming global crisis.

But that doesn't mean countries aren't already engaged in currency battles; they are. They almost always are.

Here's an over-simplified explanation about how currency wars affect you.

Does the Heinz Deal Mean Warren Buffett Has Become a Doomsday Prepper?

At first sight, Warren Buffett's deal with the Brazilian-led private equity firm 3G Capital to purchase H.J. Heinz Company (NYSE:HNZ) looks strange.

At $28 billion the famed ketchup maker is valued at a rich 23 times earnings, and Buffett won't even control the management, which is to be left to 3G. Given Warren's long and storied history, something doesn't make sense.

But maybe he's become a doomsday prepper.

In the age of Ben Bernanke, canned baked beans and the like seem to make as the ideal investment. Or maybe Buffett feels that the dollar is about to be wiped out by hyperinflation.

Of course, in those circumstances, you would normally buy gold, but maybe Buffett believes that the crash will be so severe that the economy as a whole will break down.

In that case, you'd want guns and ammunition. Buffett's holding company Berkshire Hathaway (NYSE:BRK-A and BRK-B) does not own a gun manufacturer, but a subsidiary manufactures shoes under license from Browning Arms Company, so no doubt a deal could be done.

However, an even more strategic asset in such an event would be imperishable canned food, and you can certainly imagine a gigantic stockpile of Heinz 57 varieties being accumulated in warehouses around Omaha, maybe accompanied by a lake of ketchup, allowing Buffett to corner the market in baked beans and condiments.

Forget the Doom-and-Gloom, Now Is a Time to Be Bullish

A little girl named Carol Anne became famous for saying "They're h-e-r-e" in the 1982 movie Poltergeist.

She was talking about the "TV people," and they ended up being from way out of town.

Well, we have our equivalent digital denizens, and they're also returning in force. Except ours are largely from the investment shadows, awaiting the next opportunity to brandish heavy fear tactics to convince you the energy market is about to collapse…again.

It makes me want to shout, "They're b-a-a-c-k!"

It is enough to prompt a recall of that old saw about market analysts.

You know, the one that says they have correctly predicted eight of the last three recessions.

At issue this time is the latest financial obstacle the market must overcome: the sequestration scheduled to hit a week from today. Now the draconian cuts will occur automatically, although it will also take some time for them to have any impact.

Most will not result in anything significant for at least a month.

Of course, the markets are not going to wait that long. For the past two days, the first wave of nail biting started. It will get worse as our darling Congressmen return from their well-earned (satire here folks, satire) vacation to play politics instead of reaching an agreement.

After this, we will get back to business. We can ignore those talking heads for one major reason.

A developing and accelerating economic recovery waits on the other side.

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DISH Again Charged by Fox - Analyst Blog

DISH Network Corporation’s (DISH) popular hopper device again came under huge criticism as News Corp. (NWSA) owned Fox network appealed before the federal court in Los Angeles to stop the former to offer PrimeTime Anytime service facilities like live and recorded TV shows on smartphones and tablets to its customers via second-generation Hopper set top […]

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"Safe" Stocks You Need to Dump Right Now

Many investors have one or two "safe" stocks they own that, for whatever reason, have become sentimental favorites they never consider selling.

These companies typically are household names, large, and considered by almost everyone – even fund managers – to be safe investments.

That means even if you're not holding such stocks in your personal portfolio, you may own mutual funds that own them, or they could lurk somewhere in your 401(k).

Many "safe" stocks are really hidden time bombs, ready to blow a big hole in your portfolio at any moment.

And as Money Morning Chief Investment Strategist Keith Fitz-Gerald points out, even the most stable, veteran companies can morph into portfolio-destroying dogs.

"Just because you think a stock is safe doesn't mean that the markets will treat it that way," Fitz-Gerald said.

What's more, he said, is that "the very definition of safe has changed," noting how the massive leverage common on Wall Street can unravel a company almost overnight, as happened with Lehman Brothers at the height of the 2008 financial crisis.

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With Unchecked U.S. Spending, It's Time to Hedge Against Inflation

Uncontrolled government spending could force the Fed to monetize the government's debt, creating runaway inflation, former Federal Reserve Governor Frederic Mishkin warned in a report.

If these circumstances were to occur, the Fed would be unable to do much, if anything, to control inflation, Mishkin said in the report, presented at a conference at the University of Chicago Booth School of Business.

In that case, Mishkin and his co-authors, David Greenlaw, James Hamilton and Peter Hooper, argue that the result could be "a flight from the dollar," according to a summary of the report by noted Fed-watcher Steven K. Beckner writing for MNI.

The report states, "Countries with high debt loads are vulnerable to an adverse feedback loop in which doubts by lenders lead to higher sovereign interest rates, which in turn make the debt problems more severe … Countries with debt above 80% of GDP and persistent current-account deficits are vulnerable to a rapid fiscal deterioration as a result of these tipping-point dynamics."

The authors of the report estimate U.S. net debt, excluding debt held by the Social Security Trust Fund, at about 80% of GDP in 2011, double what it was a few years before. To make matters worse, the United States runs a persistent current account deficit, which is funded by borrowing from other countries.

This puts the U.S. in a worse spot than Japan which, although its debt is much higher as a percentage of GDP, has a large current account surplus and a high savings rate.

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How to Prepare for Recession 2013

Restoration of the payroll tax and higher gas prices have put the squeeze on consumers, prompting nearly half of Americans to cut spending.

Is the combination of higher taxes and higher gas prices enough to bring on a recession in 2013?

Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared Friday on FOX Business Network's "Varney & Co." to talk about the potential for an economic slowdown.

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Why Oil Refiners Are Among the Best Energy Stocks to Buy Now

Shale oil production continues its upward path, increasing overall U.S. oil production and making specific groups of energy stocks among the best to buy right now.

In fact, the U.S. Energy Information Agency (EIA) reported last month that domestic oil production surpassed the 7 million barrel a day level, the highest point in nearly 20 years. Production this year, the EIA says, will rise by another 14%.

This is obviously good news for the companies producing that oil, and it gets even better. Many industries outside the energy sector, including chemicals and railroads, have benefited from the shale boom.

But there is one subsector in the energy industry that has reaped the rewards of plentiful oil from the Bakken and other areas more than any other, and that's the refining industry.

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Stock Market Today: Finally Some Gains After Two-Day Slump

After two days of losses, the stock market today (Friday) reversed the slide and opened higher, thanks to better-than-expected earnings from Hewlett-Packard Co. (NYSE: HPQ) and American International Group Inc. (NYSE: AIG)

Shortly before 1 p.m. on Wall Street, the Dow Jones Industrial Average was up 114 points to 13,994.62, the Standard & Poor's 500 Index added 10.6 to 1,513.02 and the Nasdaq advanced 25 to 3,156.34.

While all three indexes are on track for their worst week of the year, the Dow is still up some 6% since the start of 2013, the S&P 500 has gained 5% and the Nasdaq has tacked on almost 4% despite giving back all of February's gains during the two-day selloff.

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How to Invest in Graphene as This "Miracle Material" Changes the World

Want to know why everyone is asking how to invest in graphene?

For starters: It's one of the strongest materials ever known.

It's also as light as a feather. And completely flexible.

Plus, it's not just going to change the latest inventions in the defense industry; it'll be used in everyday life.

For example, imagine charging your mobile phone or tablet in just 30 seconds.

Or pulling up your electric car to a charging station and having a full charge in under a minute.

Here's how graphene makes this future a possibility.



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