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Article Index

It's a Great Time to Buy Tech Stocks... and These Numbers Prove It

By , Defense + Tech Specialist, Money Morning • @Robinson_STI -

On Thursday, an important bit of news came out that you may have missed: The U.S. Commerce Department sharply revised upward its second-quarter GDP estimate.

That revised number proves that, despite recent market turbulence, the U.S. economy remains on solid ground.

And that means now is a great time to take advantage of the buying opportunities the chaos has created - especially in tech stocks. Let's take a look...

The Week's Big Story Isn't in Wall Street's Losses

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

Dow fell below 20

After an "impressive" May jobs report, the Dow Jones Industrial Average (INDEXDJX:.DJI) ended its third consecutive week on a down-note, losing 56.12 points (-0.31%) on Friday while the S&P 500 (INDEXSP:.INX) also fell for the third consecutive week, dropping 3.01 points (0.14%) on the day.

On the week, the Dow lost 161 points or 0.9% to 17,849.46 while the S&P 500 fell 15 points or 0.7% to 2092.83. For the year, the Dow has gained a mere 26 points, far less than 1%, while the S&P 500 has climbed by 33 points or only 1.6%.

The NASDAQ Composite (INDEXNASDAQ:.IXIC) has done much better, ending the week basically flat at 5068.46; it is now up about 7% on the year as social media, biotech and tech stocks continue to rise.

What's Really Going on Inside the Latest GDP Number

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

e-commerce stocks

Sit down before you read this...

It's going to make your head spin and, worse, change the way you think about what's real in America.

Christmas came early this year, for the market that is, by way of a gift from the U.S. Bureau of Economic Analysis.

However, this branch of the U.S. Department of Commerce didn't put its gift under anybody's tree. They put it over all of us.

The gift was headline news that the "third revision" of the third-quarter gross domestic product (GDP) number showed the U.S. economy grew at a whopping 5% annualized rate, not the 3.9% rate posted in the "second revision."

That sounds like good news, right?

Well, here's what's scary...

The Four Most Rigged Economic Indicators

By , Executive Producer, Money Morning -

On August 2, the Bureau of Labor Statistics will report the official unemployment rate. But this number doesn't tell the accurate story of the jobs picture here in the United States.

That's usually the case with government-produced economic indicators. Whatever the government figure will say, it will not truly reflect reality. Simply put, it's a rigged number.

When it comes to cheating the numbers, nobody does it better than Uncle Sam.

U.S. investors rely on accurate government data in order to make investment decisions in various sectors of the economy.

But what if these figures reflected negative headlines on a near-constant basis? It wouldn't instill much confidence. And it certainly would cost a lot of people in Washington their jobs.

That's why Uncle Sam plays games with the numbers and presents a far rosier picture of the world to low-information voters and investors. But we're paying attention here at Money Morning, and that's why we're holding a spotlight on the fuzzy math in Washington.

Counting down, here are the four most rigged government statistics in America today:

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U.S. GDP: America is About to Look Richer - But Don't Be Fooled

By , Associate Editor, Money Morning -

America's about to become more wealthy - on paper, at least.

That's because the way the country's gross domestic product, or U.S. GDP, is measured will change significantly come July 31, enough to boost the closely watched economic barometer by 3%, or $400 billion.

That translates to the equivalent of about $1,500 more worth of goods and services per person in the United States.

The U.S. Commerce Department's Bureau of Economic Analysis claims the changes will allow for more consistent comparisons with data for the economies of other nations.

What the revised U.S. GDP, which will apply retroactively to 1929, will really do is make the country look healthier than it actually is.

What it speaks to in my mind is the oldest of all games: It's administrative whitewash, Money Morning Chief Investment Strategist Keith Fitz-Gerald said. If reality doesn't fit your statistics, you adjust your statistics and say, 'Let's make everybody feel good about what we're doing by readjusting the calculations.'

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The Silver Lining Buried in the "Bad" GDP Number

By , Money Morning -

The markets were shocked last week when the Bureau of Economic Analysis announced that U.S. GDP had declined by 0.1% in the fourth quarter of 2012.
That marked the first time economic output has fallen since the end of the Great Recession.
Or so it seemed...
When I looked more closely at the report, there was a big, shiny silver lining buried in the economic numbers. Incredibly, they reflect a decline in government spending (something I'd argue is good) as a decline in GDP (presumably bad).
Sometimes, the government rigs "official" numbers to hide the bad stuff from the people. On this occasion, the government hid the good stuff.
Take a look...

Stock Market Today: Markets in the Red Ahead of Jackson Hole

By , Money Morning -

Here are the major headlines in the stock market today.

  • Consumer spending gains most in five months- Consumer spending rose for the first time in three months, increasing 0.4% in July from June but slightly below expectations of 0.5%. This follows no change in June and a slight drop in May. The gain was the best in five months for consumer activity which accounts for roughly 70% of the economy. Even though it was a good monthly gain, U.S. consumers' purchases advanced at a 1.7% annual rate in the second quarter, the smallest increase in a year. "The quarter is getting off to a decent start," Gus Faucher, a senior economist at PNC Financial Services Group Inc. told Bloomberg News. "The consumer's situation is slowly improving, but the job growth isn't there to support really big gains in future spending."
  • Jobless claims remain unchanged- The number of people filing for initial unemployment claims matched last week's upwardly adjusted figure of 374,000. Economists on average expected this week's initial claims to be 370,000 and the data suggests that hiring is not improving. The unemployment rate, which moved up to 8.3% in July, has been stuck above 8% for more than three years, the first time this has happened since the Great Depression.

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Stock Market Today: GDP, Home Sales Fail to Lift Market

By , Money Morning -

Here are the major headlines in the stock market today.

  • GDP revised slightly higher in second quarter- Even though U.S. gross domestic product (GDP) was adjusted to 1.7% from 1.5% during the second quarter, the fact remains that it was depressingly low. Since the U.S. officially exited the recession in mid-2009, GDP growth levels have been stagnant and economists do not expect the rest of 2012 to be any different. The U.S. is projected to grow 2.0% in the third quarter and 1.9% in the final three months of the year. The government will issue its third and final estimate of second quarter GDP in several weeks. "It shows slightly better government spending and consumer spending but overall the data suggest the economy stays in slow growth mode and is not likely to change," Peter Cardillo, chief market economist at Rockwell Global Capital in New York told Reuters." This certainly strengthens the hands of the Fed to aid the economy."
  • Gas prices rise 5 cents nationwide- AAA reported that gas prices will be a nickel higher on average when consumers head to the pump Wednesday, sparked by the destruction of Hurricane Isaac. Prices on average are $3.804, the highest level since May. Today's spike is the biggest one-day move since February 2011 when concerns over Libya caused prices to rise. Some states, particularly those in the Midwest who receive most of their oil or gas from the Gulf, saw the largest increases. Ohio had the largest rise with a 13.9 cent increase, followed by a 13.2 cent rise in Indiana and a 12 cent rise in Michigan.

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Why the Eurozone Debt Crisis Never Really Went Away

By , Associate Editor, Money Morning • @DavidGZeiler -

How many times have we been told the Eurozone debt crisis is resolved, only to have it turn up again like a bad penny?

Last year's string of good news/ bad news on the Eurozone debt crisis had the markets going up and down like a yo-yo until the routine grew so tiresome that most people stopped paying attention.

But while the crisis faded into the background, it never really went way.

Remedies that were sold as solutions haven't solved a thing.

The celebrated bailouts of countries like Portugal, Ireland, and especially Greece have served mainly to postpone real solutions that would be far more painful.

"The Eurozone politicians in their infinite wisdom have concluded that it is easier to prolong the agony than to take their medicine," said Money Morning Chief Investment strategist Keith Fitz-Gerald.

In fact, the Eurozone debt crisis is getting worse.

Collective debt among the 17 member nations is on the rise, having increased from 85.3% of GDP (gross domestic product) in 2010 to 87.2% last year. That's the highest level in the history of the Eurozone.

Unemployment in the Eurozone rose in March to 10.9%, up from 10.8% in February and 9.9% a year ago. Manufacturing also declined last month, as new orders fell for the 11th month in a row.

And the austerity imposed on the troubled PIIGS (Portugal, Ireland, Italy, Greece and Spain) to bring their budget deficits and debts under control have actually made the situation worse.

"It's done no good at all," Fitz-Gerald said of the Eurozone's efforts to deal with the debt crisis. "It's an absolute travesty."

The steep and sudden cuts in spending are pushing most of Europe back into a recession, which will eventually be felt here at home.



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The Singapore Stock Market is the World's Biggest Bargain

By , Money Morning -

Having spent three years there as a child, I have happy memories of Singapore.

In those days, most of the locals lived in "atap" palm-frond-roofed huts and bathed by standpipes.

Today's Singapore is completely unrecognizable to me.

It is a modern country that is now among the world's richest. There is barely a palm-frond roof to be found anywhere.

Singapore is also ranked first on the World Bank's Doing Business list (the U.S. is fourth), second on the Heritage Foundation's Index of Economic Freedom (the U.S. is 10th ) and fifth on Transparency International's Corruption Perceptions Index (the United States is 24th).

So why is the Singapore stock market trading on an 8.3 times P/E ratio, according to the Financial Times?

The Upside of the Singapore Stock Market

After all, its economy is in fine shape, and is growing faster than any of the major Western economies.

In fact, with its GDP per capita estimated at $50,700, Singapore is now richer than the United States.

It's all proof that as the world's leading trade entrepot, Singapore is aggressively moving up the global value chain as its citizens become richer and better educated.

And unlike the U.S., Singapore's recovery from the 2008-09 recession was rapid, with 14% growth in 2010.

Since then, it has entered a mini-recession, with GDP declining at a 2.5% annual rate in the fourth quarter of 2011. Still, overall growth in 2011 was a solid 4.8%, and the country is expected to grow by another 3.1% in 2012, according to the analysts at The Economist.

Inflation is a moderate problem, running around 5%, although it is expected to decline.

Yet the most impressive statistic about Singapore is its current account surplus of 18.4% of GDP; the budget is also in modest surplus, as it is most years.

With a GDP of only $266 billion in 2011, Singapore is a relatively small economy. But its exalted position in wealth, economic freedom and clean government and business make it a country that is a highly attractive place to invest in.

That's why its current modest P/E ratio is so surprising.

The recession has affected bank earnings (Singapore is a center of private banking, with excellent secrecy laws) but its industrial companies appear to be doing well, so patient investors should find themselves very well rewarded indeed, as the market enjoys an upward re-rating.



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Don't Let the Third-Quarter GDP Revision Sour You On Stocks

By , Contributing Writer, Money Morning -

There has been a lot of hand wringing and tongue clucking about the latest revision to U.S. gross domestic product (GDP). But the reality is that the third-quarter U.S. GDP data isn't as important as most people think.

In fact, there are plenty of reasons to remain bullish on stocks.

The second read on third-quarter GDP growth came in at 2.5%. That is nothing like the 9% growth of China, the 8% of Singapore or the 5% growth of Thailand. It's not even like the 4% growth that we expect from of a full-strength U.S. economy.

However, forward indications of economic growth suggest the economy is stabilizing.

Read More…

Slow GDP Growth Sets Stage for Fed's Next Round of Quantitative Easing

By , Contributing Writer, Money Morning -

The U.S. economy continued to struggle to grow in the third quarter, most likely giving government officials enough cover to pump more liquidity into the financial system to stimulate hiring.

Gross domestic product (GDP), the value of all goods and services produced, increased by 2% in the third quarter, the Commerce Department reported Friday. Economists polled by Dow Jones Newswires were expecting GDP to rise by 2.1% in the July to September period, The Wall Street Journal reported.

The gain was slightly more than the second quarter's 1.7% growth but not enough to revive a moribund job market, according to most economists.

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De-Coupling Back in Vogue as Emerging Economies Outshine the U.S.

By , Contributing Writer, Money Morning -

While the U.S. economy is struggling to break its slump, growth remains strong in other places around the world - so strong, in fact, that analysts are breaking out a term that's spend much of the past two years on the shelf: De-coupling.

U.S. gross domestic product (GDP) will meandered along with a meager 1.7% expansion in the second quarter and is expected to grow by less than 2% for the full year.

Meanwhile, Brazil's GDP is on pace to expand by 7.5%, India's economy is projected to grow by 8.5% and China's economy is expected to grow by 9.5% this year.

Emerging market economies are moving ahead at such a brisk rate that their combined GDP will be bigger than developed countries by 2015, according to the World Bank.

Now, the biggest Wall Street firms - including Goldman Sachs Group Inc. (NYSE: GS) Credit Suisse Group AG (NYSE ADR: CS) and Bank of America (NYSE: BAC) - are betting that the global economy has de-coupled from the United States, and will shake off any slowdown in the world's largest economy.

Read More…