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Stock Market Today

Fiscal Cliff 2013 Won't Damage These Stocks

By , Money Morning - • Print | Email

The U.S. economy is scheduled to "fall off" fiscal cliff 2013 on Jan. 2, when $530 billion in tax increases and spending cuts at the federal level will be actuated unless an agreement to avert it can be reached in Washington.

The Congressional Budget Office predicts fiscal cliff 2013 could send the United States into another recession.

But instead of worrying, investors should take this time to prepare.

Despite the magnitude of the fiscal cliff's consequences, there are stocks that will continue to deliver.

To survive the fiscal cliff, investors need to think big.

These Sectors Will Survive Fiscal Cliff 2013

The three sectors that will allow for gains after the fiscal cliff has been crossed are Big Pharma, Big Agriculture and Big Oil.  

What makes stocks in these sectors so appealing is that each is situated to gain from global demographic trends.

Pair that profit potential with high dividend yield and shareholders will find reliable returns.

We found three stocks that can deliver just that.

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Forget the Punch Bowl, With QE3 Ben's Party is Open Bar

By , Money Morning - • Print | Email

Everything changed on September 13. It's the day Ben Bernanke promised not to take away the punch bowl.

Last Thursday, Helicopter Ben announced that the Fed would start buying $40 billion in mortgage-backed securities — for as long as it takes. He also announced the Fed will keep rates between 0-0.25%, until mid-2015.

The goal is to keep supporting the mortgage bond market until the employment level improves "sufficiently."

But given that the last several rounds of multi-hundred billion dollar stimulus didn't accomplish that goal, it's hard to see why they'd expect this time to be any different.

Maybe it's just because Paul Krugman was right: They didn't spend enough the first two times (sarcasm intended). Or then again, maybe that's not really their goal…

Consider this: At Jackson Hole just a few weeks ago Bernanke said that, historically, there has only been limited experience with quantitative easing. Therefore central banks, including the Fed, "have been in the process of learning by doing."

Excuse me, but are you freaking kidding me?…

Did Ben skip all his history classes? Has he ever heard of the demise of Rome or Weimar Germany?

More recently, even Argentina and Zimbabwe have had plenty of experience with quantitative easing. Their zealous over-printing led to major devaluation and/or outright currency collapse.

Couldn't Bernanke have checked in with Cristina Kirchner or Robert Mugabe?

The only real difference, and I'll admit it's a substantial one, is that the U.S. dollar is the reserve currency for the world's central banks. But that won't change the outcome.

Instead it may just delay the day of reckoning. In the meantime, it's very likely going to make the situation much, much worse.

So what's the Fed really up to?

Well, here's what I think…

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When it Comes to QE3, Ben Should Have Tried the Helicopter

By , Money Morning - • Print | Email

At last Thursday's Fed meeting, Ben Bernanke finally played his last card.

With an open-ended promise to buy $40 billion a month in agency-guaranteed mortgage bonds, the Fed Chief turned QE3 into a much larger gift called "QE Infinity."

But the truth is he would have been better off if he had tried the helicopter.

For those who forget the reference, Ben's first foray into national fame came in November 2002, when he delivered his famous "helicopter speech" at the National Economists Club in a Washington, DC Chinese restaurant.

Little did I know that day that I was about to witness history as Bernanke said the risk of deflation was so great that the Fed should drop interest rates to zero and consider using further measures — such as dropping $100 bills from helicopters — to "stimulate" the economy.

Of course, I blotted my Fed copybook for the next decade by asking a snotty question since I objected to his central premise that the risk of deflation was either imminent or would be disastrous when it happened.

The idea that deflation was imminent at the time was simply ridiculous. Consumer price inflation, on official BLS statistics which consistently understate it by about 1%, was 2.5% in 2002, 2.0% in 2003 and 3.3% in 2004.

Even then, Bernanke's economics weren't that well connected with reality.

The Problem with QE1…QE2…QE3 and QE Forever

The reality today is that it just doesn't work.

Bernanke's various "quantitative easing" policies have benefited primarily Wall Street; the mechanism by which they have fed through to the real economy is at best very indirect.

Currently for example, the Fed is now set to buy a total of $85 billion a month in long-term bonds, through the new mortgage bond purchases as well as the remains of his "Operation Twist" strategy.

This is supposed to lower interest rates, which in turn is supposed to support the housing market and produce jobs.

However the principal effect of all this Fed activity is to support stock prices, commodity prices and other asset prices. That's why gold prices went on a tear after QE3 was announced, while interest rates have actually risen.

Traders have seen the limit of what the Fed can do to support the bond market and have begun to wonder whether the Fed's activities will bring inflation. The question is what will happen to the bond market once Fed purchases slow. If the Fed's efforts burst the bond bubble, $85 billion a month is nowhere near enough to begin to reflate it.

Meanwhile, in the real economy-the one where you and I live– not much changes.

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Jim Rogers On QE3, Gold, Silver and Oil

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

The U.S. Federal Reserve is ready to launch a third round of quantitative easing, dubbed QE3 or QE Forever – but legendary investor Jim Rogers is shaking his head.

In fact, Rogers said repeating the same program the Fed has already attempted will make policymakers "look like fools again."

In an interview with CNBC before the Fed's announcement, the chairman of Rogers Holdings said he was skeptical that additional stimulus measures could have any meaningful effect on the U.S. economy. He added that despite his reservations, he expected the Fed to unveil QE3.

The iconic financier also lashed out at the new developments in Europe, including a move from Germany last week to funnel taxpayer cash into the European Central Bank's OMT program, their own version of quantitative easing. Rogers maintained they are not addressing the root of the problems plaguing the Eurozone area.

On Europe's move to implement a euro version of QE, Rogers said it affords the Western world "unanimity towards mutual destruction."

Any relief will be temporary, warned Rogers.

"We're all going to pay a horrible price for this in a year or two or three," he said.

As for why the Fed will continue its ineffective stance of zero to 0.25% interest rates through at least mid-2015, and the tossing good money after bad, Rogers advised the reasons are simple.

It's an election year and "Mr. Bernanke wants to keep his job."

That's why Rogers is getting defensive with commodities.

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What QE3 Means for Markets and the U.S. Economy

By , Money Morning - • Print | Email

We finally know that a third round of quantitative easing, or QE3, is here, but it has left investors asking what it means long-term for the markets and the economy.

First, let's look at what QE3 is meant to do.

QE3 is meant to encourage economic growth and improve the U.S. employment picture.

On Sept. 7, the Department of Labor reported that only 96,000 jobs were created in August. Not only was that far below expectations, it was well under the 141,000 increase from July.

In addition, the underlying foundation is even weaker as income is down and more Americans are leaving the labor force. Of the jobs that are being created, most are poorly paying ones in the service sector.

From that, economic growth for the United States slowed to 1.7% in the second quarter, down from 4.1% in the final three months of last year.

This new QE3 – or QE Forever, since it has no expiration date – is the most intense program initiated by the Fed to goose the economy since the crisis.

Noted Julia Coronado, the head economist for North America at BNP Paribas and former Fed economist, "This is definitely a significant shift in FOMC policy. This is a very aggressive commitment to success on its mandates."

Here's what QE3 means for the markets and the U.S. economy.

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Fiscal Cliff Not a Priority for This Do-Nothing Congress

By , Associate Editor, Money Morning • @DavidGZeiler - • Print | Email

With the United States poised to topple over a recession-inducing fiscal cliff in January 2013, you'd think Congress would be frantically working on a solution.

After all, that's what we elected them to do.

The fiscal cliff is political shorthand for the combination of spending cuts and tax increases scheduled to hit Jan. 1, 2013. It's the result of the expiration of the President Bush-era tax cuts combined with $1.2 trillion in automatic reductions in federal spending made last summer as part of the deal to raise the debt ceiling.

But rather than focus on figuring out how to avoid the fiscal cliff, Congress members are focused on figuring out how quickly they can get out of Washington for their next recess.

"Everyone wants to get out of town – fast," a top Senate aide told Reuters.

That would be fine if lawmakers were just finishing a grueling summer session, but they just returned from a five-week recess. The current session will last just two weeks, and then Congress departs for another recess, possibly as long as seven weeks.

And what lawmakers have placed on the agenda for their abbreviated session hardly compares to the flashing-red-lights, sirens-blaring crisis the United States faces with the fiscal cliff.

Instead Republicans and Democrats will spend much of their limited time voting on bills and holding hearings designed to score political points they can use in their re-election campaigns.

The Democrat-controlled Senate plans to vote on jobs bills they know the House Republicans will reject; the GOP-controlled House plans to repeal Obamacare for the umpteenth time, which obviously will get nowhere in the Senate.

"Democrats appear ready to ride out the rest of the year spinning tall tales that the economy is doing fine while doing virtually nothing about the problems we face as a nation," Senate Minority Leader Mitch McConnell, R-KY, told Politico.

Rep. Chris Van Hollen, D-MD, called the GOP moves an "example of Republicans wasting time that should be spent on finding solutions to the country's problems. We're up to zero votes on Obama's jobs bills and more than 30 votes to repeal Obamacare," he told Politico.

Meanwhile, America edges closer to the fiscal cliff with each passing day.

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Facebook Stock Gains, But Rival Threatens Market Share

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

Look out, Facebook: LinkedIn Corp. (NYSE: LNKD) is inching into your territory.

As Facebook stock (Nasdaq: FB) keeps climbing from its all-time low last week of $17.55 a share, business-oriented networking site LinkedIn has introduced some new features that resemble those of Facebook.

LinkedIn last week rolled out a new notification system and launched an update for its iPhone, iPad and Android apps. The updates now inform a member when someone likes or comments on one of their status updates – just like Facebook, the social networking leader.

In the past LinkedIn only sent notifications if someone sent a member a message or extended an invitation to become a connection.

In a statement, the company gushed, "You'll never miss a comment or update to an engaging discussion about a news article or trending topic on LinkedIn."

LinkedIn's head of mobile products Joff Redfern said in an interview that the update will also let a member peruse company pages and job postings on smartphones and tablets. According to Redfern, users requested the feature so they could covertly browse for jobs while at work.

The latest moves highlight how LinkedIn is morphing from a headhunting and career-networking site into something bigger. Facebook big.

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Profit from Rising Silver Prices with These Three Picks

By , Money Morning - • Print | Email

Silver prices rose Friday after the August U.S. jobs report release, inching toward $34 an ounce.

The gain followed silver's rise to a five-month high during trading Thursday.

Silver is the best performer for precious metals with its 16% increase in 2012, reported Reuters. This compares to gold's 8% percent rise.

For silver and gold, recent price increases have come from greater expectations for additional monetary easing from the European Central Bank and the U.S. Federal Reserve. On Thursday, the ECB added some fodder for this with its "outright monetary transaction" (OMT) program.

Next up for additional rising could come from the Federal Open Market Committee (FOMC) meeting next week. Look for a statement on Sept. 13 whether or not there will be plans for QE3.

With QE2 in 2011, silver rose to almost $50 an ounce.

Investment demand should also increase for the metal thanks to the effect of global monetary easing.

Brad Cooke, chairman and chief executive of Endeavour Silver Corp.said to MarketWatch that it will "take off again as we see more monetary inflation/economic stimulus programs by governments in America, Europe and China."

He sees silver hitting the $40 mark within the next months before it falls off again.

But for silver, there's more than just monetary easing affecting its prices.

Editors Note: Here's all the info you need to buy physical silver. [ppopup id="70925"]Click here[/ppopup].

Paul Mladjenovic, author of "Precious Metals Investing for Dummies," said to MarketWatch that "Oversized short positions in the silver futures, continued industrial demand in Asia, investment demand in the U.S. and the new applications for silver in areas such as solar power, [radio-frequency identification] technology and other new developments" are all a net positive for silver's price outlook."

He expects silver prices to "zigzag upward toward $100" an ounce by 2014.

To continue reading, please click here...

Profit from Rising Silver Prices with These Three Picks

By , Money Morning - • Print | Email

Silver prices rose Friday after the August U.S. jobs report release, inching toward $34 an ounce.

The gain followed silver's rise to a five-month high during trading Thursday.

Silver is the best performer for precious metals with its 16% increase in 2012, reported Reuters. This compares to gold's 8% percent rise.

For silver and gold, recent price increases have come from greater expectations for additional monetary easing from the European Central Bank and the U.S. Federal Reserve. On Thursday, the ECB added some fodder for this with its "outright monetary transaction" (OMT) program.

Next up for additional rising could come from the Federal Open Market Committee (FOMC) meeting next week. Look for a statement on Sept. 13 whether or not there will be plans for QE3.

With QE2 in 2011, silver rose to almost $50 an ounce.

Investment demand should also increase for the metal thanks to the effect of global monetary easing.

Brad Cooke, chairman and chief executive of Endeavour Silver Corp.said to MarketWatch that it will "take off again as we see more monetary inflation/economic stimulus programs by governments in America, Europe and China."

He sees silver hitting the $40 mark within the next months before it falls off again.

But for silver, there's more than just monetary easing affecting its prices.

Editors Note: Here's all the info you need to buy physical silver. [ppopup id="70925"]Click here[/ppopup].

Paul Mladjenovic, author of "Precious Metals Investing for Dummies," said to MarketWatch that "Oversized short positions in the silver futures, continued industrial demand in Asia, investment demand in the U.S. and the new applications for silver in areas such as solar power, [radio-frequency identification] technology and other new developments" are all a net positive for silver's price outlook."

He expects silver prices to "zigzag upward toward $100" an ounce by 2014.

To continue reading, please click here...

Stock Market Today: Markets Slide as Manufacturing Shrinks

By , Money Morning - • Print | Email

Here are the major headlines in the stock market today.

  • Manufacturing declines for third straight month – The Institute for Supply Management's factory index contracted to 49.6 last month from 49.8 in July, its lowest level since July 2009. Economists are worried that the looming fiscal cliff could deter businesses from spending in the upcoming months. "As I look at this and try to find some rays of sunshine, it's quite difficult," Bradley Holcomb, chairman of the ISM survey, told Bloomberg News on a conference call. "I would characterize this as a sobering picture of U.S. manufacturing right now without any clear signs of immediate improvement."
  • Construction spending falls – Construction spending fell 0.9% in July to a seasonally adjusted annual rate of $834 billion, the Commerce Department said Tuesday. Economists had expected a 0.5% gain. Private residential construction fell 1.6%, private non-residential construction fell 0.9% and public construction spending fell 0.4%. Compared with July 2011 spending is up 9.3%.

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