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Stock Market Today

QE3 Not Required: Three Stocks Thriving Without the Fed

By , Contributing Writer, Money Morning - • Print | Email

When U.S. Federal Reserve Chairman Ben Bernanke opened the floodgates of easy money with quantitative easing (QE3), Wall Street staged a party.

But even though the market quickly jumped to five-year highs, stocks fizzled shortly thereafter.

And that leaves investors wondering whether this market has staying power.

"The question now is if investors feel brave enough to continue to buy stocks at such elevated levels," Fawad Razaqzada, market strategist at GFT Markets wrote in a note to investors.

Investors looking for a safer route should focus on companies that can thrive on their own merits — even without an intoxicating shot of QE3.

Companies that make products we have to have – the necessities of life, in other words — tend to be more resistant to market ups and downs.

Let's take a look at three companies that have delivered steady, reliable returns for decades — with or without QE1, QE2, QE3 or, someday, QE99.

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Play Rising Silver Prices With These ETFs

By , Money Morning - • Print | Email

Silver prices hit a six-month high at the end of the last week, closing around $35 per ounce.

In the last month, silver has undergone an 18% rally and year-to-date it is up 24.28%.

Silver and gold, which hit its own six-month highs, provide a nice hedge from inflation resulting from recent central bank action such as the U.S. Federal Reserve's latest stimulus measure, QE3.

"While QE1 and QE2 clearly did little to help the unemployed, their effects on the markets were undeniable," said Money Morning Global Resource Specialist Peter Krauth. "Commodities soared. Since March 2009, Gold is up 97%, silver is up 162%, oil is up 122%, and the Continuous Commodity Index (CCI) is up 55%."

Something metals investors should note: The white metal has been outperforming gold.

After February highs for both metals, gold rebounded sooner than silver did. By mid-May, it was back, while silver took until June to see gains again.

When rumors started earlier this year that QE3 would be announced, silver was just coming off of its low. The rumor mill gave it enough fuel to light a fire under the price, and after the recent Fed announcement silver price gains have outpaced those for gold.

Since Team Bernanke announced QE3 on Sept. 13, silver prices are up 2.7% while gold has gained about 0.6%.

Now that Fed Chairman Ben Bernanke just gave metals a shot in the arm, here's how to play a nice silver price rally with exchange-traded funds (ETFs).

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The QE3 Dangers Bernanke Isn’t Telling You About

By , Contributing Writer, Money Morning - • Print | Email

Hoping the third time is the charm, the U.S. Federal Reserve voted on Sept. 13 to launch another bond-buying program, QE3.

Equity and commodity markets cheered the Fed's move. Stocks rallied and analysts raised precious metals price forecasts.

QE3 differs from the first two rounds in that it is an aggressive open-ended purchase program of $40 billion per month of mortgage-backed securities. The buying is slated to continue until we reach substantial and sustained improvement in the U.S. economy, which won't be a short-term achievement.

The program aims to lower long-term interest rates, stoke consumer demand and bring down the elevated unemployment rate.

But some opponents think the latest stimulus measure from Fed Chairman Ben Bernanke will fail to achieve any of that.

In fact, the QE3 doubters have a lot to say – and anyone with money in the markets right now should pay attention to what could happen.

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Stock Market Today: Beware of this Stock Tumbling on Downgrades

By , Money Morning - • Print | Email

The major headlines in the stock market today include: Housing prices continue to rise, consumer confidence strengthens and these two stocks are sending hints to investors.

  • Housing prices boost stocks– The S&P Case-Shiller national home price index which measures 80% of the U.S. housing market rose 1.6% in July from the previous month. Prices reached levels not seen since the summer of 2003, before the housing market reached its peak. The index is up 1.2% from a year earlier and July marked the third straight month that prices improved in all 20 markets the index covers. Year-over-year 16 of the 20 cities saw rising prices led by Phoenix with a 17% increase. "All in all, we are more optimistic about housing," David Blitzer, chairman of the S&P index committee, said in a statement. "Stronger housing numbers are a positive factor for other measures including consumer confidence."
  • Consumer confidence rises on job hopes– The consumer confidence index rose to 70.3 in September from August's 61.3 level. The index is at its highest level since February as consumers become optimistic towards jobs and the economy. The expectations index rose to 83.7 from 71.1 and the number of people who expect more jobs in the future increased to 18.5% from 15.8%. "That was a pretty strong reading," Eric Viloria, senior currency strategist at Forex.Com in New York told Reuters. "As confidence increases, that could be a good thing for personal consumption and spending moving forward, which also helps the economy because consumption makes a large portion of GDP."

In the stock market today here's one winner that's continuing a six-month hot streak, and one loser that could be on the verge of a rocky year.

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Recession 2013 Doesn't Have to Kill Your Profits

By , Money Morning - • Print | Email

With 2013 just a few months away and the U.S. on the brink of recession, now's the perfect time to prepare your portfolio with recession-proof stocks.

One way to determine how to profit during Recession 2013 is to check out what has outperformed over the past five years. During that period, the United States and other nations entered into and emerged from The Great Recession.

A key element for surviving a recession is that companies must adapt to the changing marketplace, both in the United States and abroad.

There are three companies that have proven to excel in this area, both geographically and commercially, with new product and service lines.

Plus, they're all up about 70% – 80% over the past five years, pay dividends and are likely to increase those payouts.

Let's take a look at these recession-proof stock winners.

Investing in Gold: Why the "Golden Cross" is a Big Deal

By , Contributing Writer, Money Morning - • Print | Email

Investing in gold and silver already offered staggering profit potential, and the opportunities just got even brighter.

Gold this week reached a "golden cross" and silver is perched to traverse one in a matter a days, following successive weeks of bullish trends in both precious metals' markets.

A golden cross occurs when the current price of a commodity (or an equity) and the shorter term moving averages "cross" or rise above the longer term 200-day moving average.

After 18 months of tepid and sometimes lower price movement, gold and silver have formed a large foundational base while enjoying two of the longest and strongest bull markets in history, according to research from Business Insider.

Now the golden cross has delivered technical support for higher moves for both metals.

"We're going to see new highs in both gold and silver in the first half of the New Year," said Money Morning Global Resources Specialist Peter Krauth. "I don't see anything that will keep this from happening."

Here's why Krauth is so bullish on gold and silver.

Silver Prices: Much More To This Rise Than a QE3 Rally

By , Money Morning - • Print | Email

Silver prices had a volatile week, which started with a down day Monday closing at $34.25.

The week was poised to be somewhat "quiet" after the previous one was full of central bank news from the United States and Europe.

But living up to its reputation for swings, silver turned and hit a six-month high on Tuesday at $35.10.

And just when we thought it was time for a slight breather from monetary action, the Bank of Japan announced Wednesday that it would expand its stimulus program with 10 trillion yen ($126 billion).

Japanese silver investors were more excited than other traders about the news, driving up silver prices by 2.9%. The United States was less so as Decembersilver futures on the COMEX fell $0.103 to $34.615 an ounce on the news before closing up 1.5% for the day.

On Thursday, December silver rose 0.27% to $34.68.

So what can we expect next from this fickle metal with its great year?

In a Scotiabank note this week, analysts wrote of silver, "We remain bullish … and see this as a healthy consolidation after a strong rally."

Here's why the silver bull party is still going strong.

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Stock Market Today: Will These Fear Factors Kill the Rally?

By , Money Morning - • Print | Email

The major headlines in the stock market today include: Stocks try to hold on to a third straight week of gains, manufacturing slumps to three-year lows, jobless claims remain depressing, and these two stocks deserve a closer look.

  • Stocks try to rally– It has been over a week since QE3 was announced and the markets recently have been sluggish. After a strong rally leading up to the announcement of QE3, stocks cooled off this week amid the continuing global uncertainty. Today's trading session opened with all three major indexes rising higher as they try to start September with three straight weeks of gains. If the markets hold on to their early gains it will be a solid start to the month. The bullish trend is threatened though as anxieties increase over the looming fiscal cliff and the ongoing trend of lousy economic data.

  • Jobless claims troubling again– The labor market and unemployment are the main reasons the U.S. Federal Reserve cited in their decision to implement QE3. Yesterday's (Thursday) initial jobless claims back up that move but economists will want to see improved numbers in the near future if QE3 is ever going to be considered successful for the economy. Last week's jobless claims fell to 382,000 from the previous week's 385,000 but still missed economists' projections for initial claims around 375,000. Another troubling sign is that the four-week average which is considered a less volatile figure rose by 2,000 to 377,750, the highest level since June. "Businesses clearly remain reluctant to aggressively boost their workforces amid the current risks associated with the soft economy and significant uncertainty surrounding fiscal policy next year," Jim Baird, chief investment strategist at Plante Moran Financial Advisors told MarketWatch.

  • Markit shows manufacturing weakest in 3 years – Manufacturing measured by the Markit Purchasing Managers Index remained at 51.5 in September. That was also the average for the third quarter and well below the 54.2 measure for last quarter. A reading above 50 indicates expansion but this number was not encouraging as it was the lowest quarterly average since the third quarter of 2009. "I don't think the economy is going anywhere fast. The jobs market is still very difficult and manufacturing, which was a key pillar of the recovery is beginning to crack," Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania told Reuters.

In the stock market, these two companies have started the day off strong:

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QE3 Is Strong Medicine for Dr. Copper

By , Contributing Writer, Money Morning - • Print | Email

With QE3, Ben Bernanke just gave Dr. Copper a shot in the arm that should carry prices to new highs.

In fact, shortly after the U.S. Federal Reserve announced its decision to launch a third round of bond buying, copper rallied to $3.84 a pound on the Comex division of the New York Mercantile Exchange, up from around $3.35 in mid-August.

But that is only part of the story…

As "the only metal with a Ph.D. in economics' because of its widespread use in industrial applications copper is an excellent bellwether for the state of global economic activity.

And right now copper is predicting a major global rebound.

"Investors' expectations for global economic growth in the fourth quarter are rising and Dr. Copper is rallying," Andrew Rosenberger, senior portfolio manager at Brinker Capital told MarketWatch.

"Copper and other assets which are linked to global growth are taking the approach of rally now, ask questions later," he said.

For investors, there are lots of reasons to like copper right now.

Let's take a look…

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The Best Dividend-Paying Stocks to Buy Now

By , Money Morning - • Print | Email

Some investors fail to realize that successful investing is a matter of continuous performance, not instantaneous performance.

That's why we like dividend-paying stocks.

Over time, dividends and reinvestment can account for 85%-90% of total stock market returns.

In some cases, the dividends are so steady and increase so much that you actually make more in dividends than you paid to buy the stocks that produce them.

And as inflation concerns grow following QE3, investors need to make sure they are protected.

Money Morning's Global Investing Strategist Martin Hutchinson says dividend-paying stocks offer that protection.

"Do you know what the ultimate investment protection is? It's not gold, and it's certainly not Treasuries. It's dividend stocks," said Hutchinson.

But before you go hunting for the best dividend-paying stocks, let's set some ground rules for evaluating which ones are most valuable.

First, a good cutoff is a stock with a yield close to 3%, preferably higher, and a payout ratio less than 60%. Any higher payout ratio would indicate that the company cannot sustain the dividends, manage debt and grow at the same time.

Second, look for companies that have price/earnings ratios less than 25 and a solid history of paying and increasing dividends.

This establishes a solid benchmark for dividend stocks and their fundamentals. Sometimes a dividend stock can look great because it has a 10% yield, but you have to look at the other numbers to decide if it's a worthy investment.

To avoid those high-yield traps, check out this list of some of the best dividend-paying stocks to buy right now.

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