Archives for June 2013

June 2013 - Page 7 of 16 - Money Morning - Only the News You Can Profit From

Today's Fed Meeting and Gold Prices

Over the last several years, the move in gold prices have been more and more in sync with market perceptions of what actions will be taken by the world's major central banks.

For example, today's Fed meeting and its anticipated outcome has kept gold prices under pressure lately, with gold on Tuesday falling 1.2%.

The past few years has seen the Federal Reserve, European Central Bank and, most recently, the Bank of Japan flood the world's financial markets with money through bond purchases and other operations.

As this occurred, the price of gold floated higher on the sea of liquidity.

Gold soared 70% from the end of December 2008 to June 2011 through the first two rounds of QE (quantitative easing). Then after the announcement of the launch of QE3 last September, gold climbed to over $1,770 an ounce on the back of the Fed announcing open-ended purchases of bonds.

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Why the Fed's QE Policy is Bullish for Oil Prices

Most investors have followed what the Fed's QE policy has done to gold, but few realize its impact on oil prices.

Recently, I talked about how crude was beginning to occupy a position as a store of market value ("Why Oil Is Becoming the New 'Gold Standard," May 20, 2013). The development has been a direct consequence of the flight from holding gold.

That flight may be tapering and a new floor established for the next major spike by the metal.

The problem is there is no agreement on which direction that move will be…

These days, a sudden improvement in gold prices may only extend as far as hedge funds and institutional investors covering shorts.

Nonetheless, there is an interesting parallel developing between the plight of gold and crude oil prices.

Why This Tech Blue Chip is Poised to Double

The world's largest semiconductor firm's stock has become one of high tech's biggest value traps, which isn't a great place to be for stockholders.

But things are changing and tech investors – all investors — should take heed.

First let's look at what it means to be a value trap.

On the value side, Intel Corp. (Nasdaq: INTC) has been and continues to be one of the world's most respected chip firms. And it has the kind of profit margins most hardware companies can only dream about.

Not only that, but last year it invested more than $10 billion in research and development, an amount that was seven times that of second-place spender Qualcomm Inc. (NasdaqGS: QCOM).

Intel's very existence is a testament to high tech's exponential growth. After all, it was an Intel co-founder who came up with Moore's Law, which basically says computing power doubles about every two years.

This is an outfit with a long list of technical firsts that is leading the charge into nanoscale and 3D semiconductors. The transistor gates inside its new Ivy Bridge chips measure a mere 22nm long. At that size you could fit 4,000 of them across the width of a human hair.

Here's the trap…

The big-cap leader's legacy and technical chops haven't translated into stock profits.

Over the past five years, not counting its 3.9% dividend, the stock has returned a scant 9%, almost exactly half that of the S&P 500.

So, you have a great company that's still a solid industry player that can't seem to get out of its own way when trying to unlock that value.

But this sleeping giant is about to awaken — and double the value of its stock.

Play a Spending Surge with these Two Electronics Stocks to Buy Now

The stock market has a tendency to focus on the very short-term and this can often create bargains with superior potential for long-term investors when their looking for stocks to buy now.

This appears to be what is happening right now with the electronic contract manufacturers.

I know it sounds like a mouthful, but this industry is worth a closer look for investors.

You see, the electronic manufacturing services industry has been sadly drifting along with the global economy. Demand for electronics has been held down by a lack of spending at both the consumer and corporate levels.

This combination of weak current business conditions and bright prospects for future growth has created some opportunities for investors to buy selected companies at bargain prices.

And now's the time to scoop them up.

That's because the industry is showing some signs of recovery as demand for some devices, most notably smartphones and tablets, is beginning to increase.

It's not just the mobile wave that'll push this industry into profit territory.

New opportunities will open up for contract manufacturers as the auto industry continues to add electronic features to cars and wireless companies turn toward smart antennas over the next few years. Both industries expect huge sales growth this year. For example vehicle sales are on track to reach about 15 million units this year – a 44% gain from 2009.

To play these areas of growth, here are two electronics stocks to buy now that will benefit as electronic contract manufacturers reap the rewards of increased consumer and business spending.

Nigeria is Caught in A Deadly Oil Catch-22

Nigeria generates more than 14% of its GDP from oil exports. Those exports account for 98% of the country's export earnings, and close to 83% of federal government revenue. Nigeria may more than 22 billion barrels in proven reserves, according to the United States Energy Information Administration. Nigeria is the tenth-most oil rich nation on Earth, with 159 oil fields and about 1,481 oil wells in operation.

The numbers look more than promising. On paper, this country should be a prime destination for investment dollars and oil development. So why is Nigeria's natural petroleum wealth on the verge of destroying a large part of the country?

This is a troubling situation in which there's no clear bad guy. The Nigerian federal government, multinational oil companies, and disadvantaged locals are all bad actors in some way.

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7 Reasons This Housing Market Recovery is Genuine

The housing market recovery is for real this time.
Coming after the housing market crash, the recovery is welcome news to those in the industry – and bodes well for the economy as a whole.

"It almost seems too good to be true," Lawrence Yun, the chief economist at the National Association of Realtors, told Money Morning.

The latest confirmation of the market's rebound is the new survey of home builder confidence from Wells Fargo Bank and the National Association of Home Builders, which climbed to its highest level since 2006.

And housing starts were up 6.8% in May and 28.1% year to date, the U.S. Census Bureau said.

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Federal Reserve FOMC Meeting Schedule 2013-2014

As a service to Money Morning readers, we are providing the Federal Reserve FOMC meeting schedule.

The U.S. Federal Reserve's Federal Open Market Committee (FOMC) is a 12-member board within the Federal Reserve system that meets eight times a year to set policy.

In addition to the regularly scheduled meetings, the FOMC can call other meetings as needed. The minutes of a regularly scheduled FOMC meeting are released three weeks after the date of the policy decision.

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What's So "Open" About the Federal Open Market Committee?

Don't you just love how some things are named?

Like the Federal Reserve System, for instance. It's a central bank that was conceived in the private study of a private hunting lodge on a private island by a bunch of private bankers who didn't want to use the word "bank" in its name to fool taxpayers who thought it was a "system" to safeguard the public… from the very bankers who conceived it.

I don't know about you, but the feeling of safety I have is just overwhelming… NOT.

Then there's the Federal Open Market Committee (FOMC). That's a committee of top plotters that meets in private to discuss what's going on in "free" markets so they can figure out how to manipulate them.

The Open Market Committee, or the Old Boys Club (they have a woman on the committee, but she's just a token "dove" who plays "Follow the Beard"), meets today and Wednesday to check on how their manipulations have stopped unruly free markets from sinking the banks that secretly run the Fed (you know it's not a secret, but there are a whole lot of taxpayers who don't).

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Court Outlaws Taking Advantage of Unpaid Interns

Last week, a federal judge in New York ruled that Fox Searchlight Pictures, Inc. broke state minimum wage laws and federal labor law when it didn't pay its interns, Eric Glatt and Alexander Footman, for their work on the production of the film Black Swan.

Glatt was an unpaid accounting clerk for Fox Searchlight. His responsibilities included such mundane tasks as filing, getting signatures, and handling petty cash.

The work provided little educational value for Glatt, but good value to Fox Searchlight, since these tasks needed to be done.

And therein lays the rub.

The court found that Fox Searchlight failed the criteria employers must meet in order to have unpaid interns. If not met, interns must be paid minimum wage or better.

These criteria are meted out in a 6-part test the Labor Department issued as guidelines for employers:

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