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Sharpen Your Pencil – And Put These Three Stocks on Your "Shopping List"

Ask any of our gurus for advice on how to survive a stock-market sell-off – or even a whipsaw period like the one we’re navigating now – and you’ll get a surprising answer.

Keep a shopping list ready, they’ll tell you…

  • Featured Story

    European Central Bank Does Nothing – But Markets React in Big Way

    "Maybe next year..." was basically the message sent today (Thursday) from the European Central Bank (ECB).

    The European Central Bank left interest rates unchanged despite slightly lowering its outlook for the ailing Eurozone economy for the remainder of 2013. But, it sees a gradual recovery in 2014.

    The ECB forecasts Eurozone GDP will contract by 0.6% this year, down from its March projection of 0.5%. However, it modified its 2014 estimates, predicting a return to growth at a rate of 1.1%.

    "Euro-area economic activity should stabilize and recover on the course of the year albeit at a subdued pace," ECB President Mario Draghi said at a news conference.

    The region has been stuck in recessionary mode for six consecutive quarters. But Draghi cited improving economic data in May as reasons for not taking immediate action.

    "But we stand ready to act, and we will continue to monitor closely all incoming data," Draghi said at a news conference. He added the ECB would remain "accommodative" for as long as necessary.

    Draghi also staunchly defended the ECB's actions, saying the bank's outright monetary transactions launched last year were "probably the most successfully monetary policy measure undertaken in recent times."

    Draghi said the policy had no negative affect on markets.

    "The ECB hasn't done anything to increase volatility in the markets," Draghi said. "If you think the ECB has done anything comparable to other central banks, we wouldn't agree."

    After today's ECB briefing, the Stoxx Europe 600 Index fell 0.4% to 294.04, setting it on pace to close at the lowest level since late April. Banks suffered some of the steepest losses.

    European bond yields plunged the most in three months, with Portugal taking the worst hit.

    To continue reading, please click here…

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  • ECB

  • Why the ECB's Plan Can't Save Europe So, Thursday was a big deal. Did you get that?

    Markets rallied around the globe, especially European markets and U.S. markets.

    But did you get what really happened?

    I know you saw the rally, and I'm sure it lifted your spirits. It lifted mine for about a day - that is, until I lifted up the ECB's skirt to see if their provocative language would leave Europe's knickers in a twist or not.

    If you're not the kind of person to look at such intimate things too closely, don't worry. I love all that stuff and am driven to know how all the bits and pieces come together or apart. So, I'll tell you what I saw up there.

    Europe's knickers certainly are twisted. So much so that if an ill wind blows, everyone is going to see the naked truth.

    Let me show you what I mean...

    To continue reading, please click here... Read More...
  • Five Predictions Ahead of the ECB Meeting Today Investors hope they don't get another disappointment from the European Central Bank (ECB) meeting today (Thursday) like the one the U.S. Federal Reserve delivered yesterday.

    After the Fed said that the economy has slowed and unemployment remains elevated, but then took no action, investors turned to ECB President Mario Draghi to rescue the euro.

    Yet, many economists think the Eurozone cannot be saved.

    The Eurozone debt crisis has reached a point where further bailouts will only highlight their inadequacy to solve the problem. But, the countries involved in the crisis have come to the point where they expect further stimulus and will panic if none is given.

    We have already seen riots in Spain where the unemployment rate is a Eurozone high of 24.8%, and it's not the only country facing serious unemployment issues. Behind Spain's depressingly high rate is Greece at 22.6%, Portugal at 15.4%, Ireland at 14.8% and France and Italy both with a 10.2% unemployment rate.

    The unemployment rate for the Eurozone reached an all-time high of 11.2% in June. The latest numbers show unemployment increased by 123,000 to a total of 17.8 million. That is 40% higher than the 12.7 million unemployed in the U.S. as of the June jobs report.

    The youth unemployment rate in Spain and Greece has topped 50% and this adds even more pressure for ECB president Mario Draghi to back up his emphatic statement that "the ECB is ready to do what it takes to preserve the euro. And believe me, it will be enough."

    Unfortunately it will not be enough and if anything it will just make matters worse when Greece eventually exits the euro and it begins to collapse.

    To continue reading, please click here... Read More...
  • Gold Prices: How to Climb the "Golden Staircase' When U.K. subscriber John M. wrote in this week, he got right to the point.

    Asked John: "What's happening to gold prices? Why are they dropping?"

    For an answer, I speed-dialed Real Asset Returns Editor Peter Krauth - our resident expert on mining and precious metals.

    Peter is based in Canada, which keeps him close to the natural-resource companies that proliferate north of the border. He gave me a detailed and insightful answer to John M.'s question.

    And he recommended three ways to profit - including an ETF he says is perfect for first-time gold investors.

    To explain what's happened with the "yellow metal" - and to project where gold prices will go next - Peter invented a pricing theory that he christened the "Golden Staircase."

    "The bottom line, Bill, is that the price of gold has simply entered a consolidation phase - much like it has done numerous times since it entered this secular bull market back in 2001," he told me.

    Gold futures were at $1,662.40 an ounce yesterday - well off the yellow metal's high. Here's why.

    "If you think back, when gold hit its all-time high of $1,900 last August, we were in the midst of wild speculation that the U.S. government wouldn't resolve its debt-ceiling crisis," Peter explained. "A deal in Congress was reached in time, but Standard & Poor's went on to downgrade the nation's credit rating for the first time in history. Since then, there's been considerable apathy towards gold by the general investing public, pushing its price down about 13%. What's more, government-calculated inflation looks benign, taking away from gold's luster."

    And here's where it gets interesting.

    To continue reading, please click here... Read More...
  • Buy, Sell or Hold: Buy the Dips in Gold (NYSE: GLD) SPDR Gold Trust (NYSE: GLD) experienced a major pullback on Leap Day this week, dropping almost exactly 100 points on the day.

    This happened while the European Central Bank (ECB) offered its second tranche of three-year Long Term Recapitalization Operations (LTRO).

    The sell-off in gold on Wednesday is a related sign that liquidity is currently in demand.

    But you only have to look at gold's big move up since the start of 2012 to know this stage of the move was unsustainable short-term.

    It's why investors shouldn't be surprised by the pullback, and should use this latest move down to increase their long-term exposure to gold.

    This dip is a buying event and nothing more.

    The pullback in the price of gold also hit equities along with bonds and some other commodities.

    Even so, it appears that the ECB has provided enough liquidity to fight off the near-term fears.

    Once these funds begin to work their way through the system, I believe they will be bullish for commodity prices.

    Over time, banks will eventually put that capital to work, with an eye toward generating a positive rate of return on it. One of those avenues will undoubtedly be gold.

    Here's why, along with a bit of background.

    To continue to reading, please click here... Read More...
  • The ECB's Long Term Refinancing Operation (LTRO) is Bullish for Stocks If you listen to the talking heads, there is no end in sight to the Euro crisis.

    Even with the European Central Bank's (ECB) recent Long Term Refinancing Operation (LTRO), Greece is still making all the headlines.

    As of late last week, a possible new deal has been made in Greece. However, the finance ministers that are responsible for the deal are not sure it will be enough to release the second bailout of Greece.

    The ECB has been demanding that debt it bought at a discount be honored at full par value. It is now reported that the ECB will sell these debts at cost, and allow the debt to be retired.

    This is a huge first step in the process of getting Greek debt levels low enough to be sustainable.

    Yet, we are still well into the second year of this crisis and the market is growing tired of endless European emergency meetings.

    It reminds me of the period around January 2009.

    The reality is Europe needs to go through a hard, brutal adjustment period, where the weak states that cannot handle being in the European Union (EU) leave.

    While a New Greek deal has been announced, few people believe it will be the last deal, or the best deal. That is, if it is even ratified in the end.

    "It's up to the Greek government to provide concrete actions through legislation and other actions to convince its European partners that a second program can be made to work," EU Economic and Monetary Affairs Commissioner Olli Rehn said.

    The rolling bailout process appears to be set up to happen this spring, as the ECB pumps fresh liquidity into its banks for unlimited dollar amounts. The drain on the balance sheets of Euro banks appears to be ending.

    The ironic angle few people are tracking is that U.S. banks have been helping to drive Europe's big banks into this crisis.

    Setting the Stage for the Second LTRO

    Let me explain.

    U.S. banks have loaned money to European banks via our money market accounts for periods between seven and 270 days on average.

    So when you left cash in your money market account, a significant portion of that cash was actually being invested in unsecured loans to European banks in a search for higher yield.

    These funds were typically rolled over at the current market rates, allowing Euro banks access to shorter-term liquidity. However, that began to change in July 2011 when U.S. banks started shortening the terms of the funds or flat out began to repatriate them.

    This shift by American banks caused European banks to lose access to what they were using for near-term liquidity. European banks were using short-term loans to make longer-term loans to their clients.

    The process of paying back their short-term funding, while still holding onto longer term loans has stretched their balance sheets even more.

    This reversal of funding caused an expansion of the leverage at the banks, as they have loans outstanding but have to pay back the source of them.

    As result of this liquidity crunch, the ECB rolled out a program to allow banks to recapitalize themselves.

    It's called the LTRO (Long-Term Refinancing Operation). (To continue reading, please click here...)

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  • The Markets or the Mattress: I Know Where My Money is Going The next 1,000 points on the Dow Jones Industrial Average in either direction are going to be determined by what happens in two cities thousands of miles from our own shores...
    Athens and Berlin.

    What's more, the risks associated with Europe's redemption, or its failure, are more concentrated now than they were before the crisis began.

    There are two reasons: a) Europe won't help itself and b) Wall Street may still have $1 trillion or more in exposure to European problems.

    What makes me crazy right now is that European chatter is what's driving the markets.

    Every sound bite from Europe is critical these days. Not because there is anything relevant in the political babbling from financial ministers tasked with fixing this mess, but rather that there is a cascade of events that could take us in either direction.

    Fix this mess and the markets will take off for a 1,000 point gain that will leave anybody who is on the sidelines hopelessly behind.

    Fail and the markets could tank.

    It certainly fits the pattern established in recent months. News leaks suggesting solutions have brought on rallies, while negative leaks have caused a ripple effect that has quickly dumped stocks into the hopper.

    Yet, it's not really the numbers that matter at the moment - even with the Fed rumored to be considering another $1 trillion stimulus and reports that the European Central Bank (ECB) and International Monetary Fund (IMF) may be seeking as much as $600 billion each.

    No. The market swings we are seeing are all about confidence or, more specifically, the near complete lack thereof.

    The Mattress vs. The Markets

    A recent report from TrimTabs shows that checking and savings accounts attracted eight-times the money that stock, bond and mutual funds did from January to November 2011.

    That is a whopping $889 billion that went under "the mattresses" versus only $109 billion that went into the markets.

    In fact, CNBC is reporting that the pace of money headed for plain-Jane savings and checking accounts from September to November accelerated to nearly 13-times the average monthly flow rate of the preceding nine months from September to November.

    What's significant about this is that the money has headed for the sidelines when the markets have rallied. Usually it's the other way around. Normally money floods into the markets when they move higher.

    The other notable thing here is that, generally speaking, up days this year have had thinner volume than down days. This means that most investors just can't handle the swings. In other words, every time the markets dip, they're packing it in.

    Pessimism is the Breeding Ground of Opportunity

    Bottom line: Investors are making a gigantic mistake - especially those with a longer-term perspective.

    To continue reading, please click here...

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  • ECB Held Hostage By Europe's Sovereign Debt Crisis European Central Bank (ECB) President Jean-Claude Trichet earlier this year resisted pressure to intervene when Greece's budget deficit spurred investor concerns about the viability of the Eurozone and its single currency, the euro. But a bond market sell-off forced Trichet's hand and the ECB began purchasing government debt.

    Now budget deficits in Ireland, Italy, Portugal, and Spain - the remainder of the so-called "PIIGS" - have again forced Trichet and the ECB out of their comfort zone. After signaling last month that the ECB could start limiting access to its funds, the central bank yesterday (Thursday) said it would delay its withdrawal of emergency liquidity measures.

    "Uncertainty is elevated," Trichet told reporters after meeting with the ECB's Governing Council. "We have tensions and we have to take them into account."

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  • As QE2 Looms, Is the Fed Focusing on the Wrong Things? U.S. Federal Reserve Chairman Ben S. Bernanke is looking forward to 1932.

    That's not a misprint. Actually, Bernanke is looking forward to a point when the challenges facing today's U.S. economy mirror the problems of that particular Great Depression-era year. And he wants that to happen for a very simple reason.

    He knows how to solve those problems.

    Unfortunately, "1932" isn't likely to arrive. And the preparations the Fed is making in the meantime are likely to deepen the United States' economic woes.

    Let me show you what I mean...

    To see where the central bank has gone wrong, please read on... Read More...
  • QE2: How New Quantitative Easing Will Launch Emerging-Market Stocks In Wall Street circles, it's known as "QE2" - for "Quantitative Easing - Round 2."

    The U.S. Federal Reserve and the Bank of England (BOE) are moving rapidly towards it, and the Bank of Japan (BOJ) has pledged to enact it.

    That Bank of Japan pledge ignited a $23.50 spike in the price of gold on Tuesday. But that's nothing compared to what would happen after a Fed move. An additional easing by the U.S. central bank would cause gold and commodity prices to spike - and emerging-market stock markets to soar.

    We should be prepared for this eventuality.

    To see how you can profit from "QE2," please read on... Read More...
  • Money Morning Mailbag: Jaded Investors Cast Wary Eye On Scope of Bank Stress Tests The results of Europe's bank stress tests are due July 23. But the question remains whether the tests will shed enough light on the banking sector to restore investor confidence.

    "All these stress tests mean that we are peeling away layers of the onions, but chances are we are not going to get the full clarity that we as investors deserve," Neil Dwane, chief investment officer for Europe at equities specialist firm RCM, told The New York Times.

    Readers who are already on guard from Wall Street manipulation and stalled financial reform have pulled back from volatile markets and are skeptical about the effectiveness of bank stress tests:

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  • Banks and Investors Both Rattled by European Debt Concerns European debt concerns continued to weigh on investor sentiment today (Thursday) as rumors circulated that the European Central Bank (ECB) was planning an intervention into the continent's banking sector.

    The ECB is buying government bonds and increased its lending to banks, but that has done little to alleviate concern that the nearly-$1 trillion (750 billion euros) Eurozone bailout package announced last month won't be enough to prevent a collapse in the banking industry.

    The ECB said on Monday that European banks will have to write off more loans this year than they did in 2009. The region's banks are expected to write off some $237 billion (195 billion euros) in bad debt by 2011.

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  • Global Recovery Gaining Momentum, but Obstacles Remain The Organization for Economic Cooperation and Development (OECD) announced yesterday (Wednesday) that it has lifted its economic growth outlook, but warned that governments must enforce strict fiscal policies to sustain the global recovery and balance global expansion.

    The OECD reported that the combined economy of its 31 members would grow 2.7% this year and 2.8% in 2011. Troubles of debt-plagued developed economies will be offset by the rapid economic growth of emerging markets. The numbers have been revised upward from November predictions of 1.9% growth in 2010 and 2.5% growth in 2011.

    The OECD estimated global gross domestic product (GDP) would rise 4.6% this year and 4.5% in 2011, up from the previous expectation of 3.4% and 3.7%, respectively.

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  • Is Europe on the Verge of a Liquidity Crisis? The euro's recent struggles have done more than bring the currency's viability into question. They've put the European Central Bank (ECB) on a collision course with a liquidity crisis.

    The ECB is running low on dollars, and that problem could escalate when the U.S. Federal Reserve closes swap lines that were temporarily reinstated as the Greek debt crisis escalated. Additionally, more deposits are being yanked from the central bank as holders question whether or not the ECB has enough juice to stop a classic bank panic.

    The euro yesterday (Wednesday) remained at a near four-year low against the dollar, tumbling 0.5% to $1.2306. The beleaguered currency dropped against the yen and British pound, as well.

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  • Gold Prices Surge and Will Keep Climbing as Investors Protect Against European Debt Crisis Gold prices yesterday (Wednesday) broke through to a record high, as investors feared the Eurozone bailout plan would debase the euro and escalate inflation.

    Gold for June delivery continued its record-breaking Tuesday climb to hit $1,243.10 an ounce Wednesday. The contract reached an intraday high of $1,249.20 an ounce. Spot gold prices hit $1,244.45 an ounce, up almost 20% in the past three months.

    Gold's reputation as a "safe haven" investment causes the metal's price to move inversely to investor confidence, which has been rattled by the Greece debt crisis and last week's 1000-point plunge in the Dow Jones Industrial Average.

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  • Taipan Daily: Trillion Shmillion – Europe's "Common Currency" Is Still Doomed As far as the euro goes, the trillion-dollar "shock and awe" program was a shocking disappointment. Here's why.

    "... while Europeans no longer fear foreign armies, they are starting to fear foreign bondholders. Europe's existence as a "lifestyle superpower' has depended on an ample supply of credit... "
    - Gideon Rachman, Financial Times

    "...this is just another example of a short-term, leveraged solution, that merely adds to the burden of future problems..."
    - Marc Ostwald, Monument Securities

    Read More...