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The Fiscal Cliff

Fiscal Cliff Deal: The President's Latest Counter Offer

Equity and commodity prices rallied in Europe and Asia while the U.S. dollar and Treasury bond prices fell as U.S. President Barack Obama and Republican House Speaker John Boehner have made progress on a fiscal cliff deal.

On Friday afternoon, Speaker Boehner called the White House with an offer to raise taxes on Americans earnings more than $1 million, altering his position on no tax increases for anyone.

With that concession in hand, the president devised a counteroffer, which was presented to the Republicans late Monday. The president's new proposal reduces tax increases from $1.6 trillion over ten years to $1.2 trillion, offset by $1.2 trillion in spending cuts.

But Republicans are questioning the president's math.

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Election in Japan: Will a New Government Revive Growth?

Following three-and-a-half years of government marked by scandal, incompetence and hesitation in the face of a natural disaster, voters in Sunday's election in Japan voted in a new party.

Japanese voters turned their backs on the Democratic Party of Japan (DPJ) and returned the Liberal Democratic Party (LDP) to power in a landslide victory.

The LDP, which ruled Japan continuously for more than 50 years, has been chastened by its time in opposition and returns to power with a renewed vigor and strengthened belief in its core values.

Sunday's election, which had been characterized as a referendum on the future of nuclear power in Japan, actually turned out to be a vote in favor of competence and experience in governing.

Voters handed the LDP/Komei coalition a veto-proof majority of 325 seats in the Lower House of the Diet.

Under Japan's parliamentary system, if a bill passed by the Lower House is rejected by the Upper House, it can be resubmitted to the Lower House and become law if approved by a two-thirds majority. That means even the most radical LDP policies can become law over the objections of the opposition.

That's a good thing because LDP president Shinzo Abe, who will be the next prime minister, has some pretty radical ideas for dealing with Japan's economic malaise.

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Fiscal Cliff Deal: Boehner Takes a Huge Step

U.S. House of Representatives Speaker John Boehner, lead negotiator for the Republicans, took the first step late Friday in making a fiscal cliff deal when he agreed to accept a tax hike for the wealthiest Americans (those making more than $1 million).

Boehner also agreed to a one-year increase to the debt ceiling.

In return, the GOP wants U.S. President Barack Obama to implement steep cuts to entitlement spending, including Social Security, Medicare and Medicaid.

"Boehner has now accepted the premise of higher rates. So now we're just arguing over details. I think it's a significant step," Greg Valliere, chief political strategist at Potomac Research Group told Reuters.

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Stocks to Buy Now: Bet on these Three Casino Stocks for 2013

Rather than being suckered by the glamour and neon lights at casinos, savvy investors looking for stocks to buy now are putting the odds on their side and betting on "the house."

That's because casino stocks are promising big returns for shareholders.

Plus, the gaming industry is still in the early stages of what should be a sustained recovery from the financial crisis that had lightened gamblers' wallets.

But identifying the best casino stocks to buy now involves more than a weekend jaunt to Vegas.

Due diligence on gaming stocks now requires a look at gambling's biggest hotspot – Macau, a former Portuguese colony that is now a special administrative region under Chinese rule.

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Facebook Stock Fails to Rally as Lockup Ends

Facebook stock (Nasdaq: FB) fell more than 5% Friday as some 156 million shares held by early insiders and employees were freed from a lockup period.

It marked the fourth time a torrent of the social networking giant's shares were let loose for trading since the company's hugely hyped initial public offering (IPO) on May 18 at $38 a share.

The reaction to the sizable release of shares has been mixed.

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Five U.S. Natural Gas Companies Set to Soar from an Export Boom

A U.S. Energy Department study released Dec. 5 has intensified the debate on what America should do with its abundance of natural gas – which could lead to huge opportunities for natural gas companies.

You see, critics of exporting natural gas have argued that exporting the resource to global markets would hurt the U.S. economy by raising natural gas and oil prices.

But last week's NERA Economic Consulting study, done at the DOE's request, showed the United States would get a positive economic boost from exporting liquefied natural gas (LNG), even under all possible scenarios in which exports are envisioned.

"Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased," the study found. "In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports."

The study could increase the chances of the Energy Department approving permits for natural gas companies to build LNG export facilities. Only one company has ever been approved to build an LNG export terminal, and at least 15 more LNG export projects are waiting for the green light.

Here's why companies are vying for a piece of the LNG export market.

How LNG Leads to Profits

LNG is simply natural gas in liquid form, and when it is liquefied the cooling process actually reduces the space LNG occupies by more than 600 times.

That makes transporting LNG on tankers much easier than moving natural gas through pipelines. It also allows companies to sell natural gas overseas, where natural gas prices at $11.83/MMBTU are about 3.5 times higher than U.S prices at $3.4/MMBTU.

Money Morning Global Energy Strategist Dr. Kent Moors says the export of LNG from the U.S. to global markets "is the single most significant change in the energy market for the next several decades."

"American operating companies recognize the LNG market will provide a major outlet for surplus production," said Moors. "Last week while I was in Moscow, Russian natural gas giant Gazprom again gave an estimate. They now believe that the U.S. will account for 9-12% of the world's LNG flow before 2020 from 0% today."

Natural Gas Companies to Watch

Some U.S. natural gas companies are ahead of competitors in setting up LNG-export facilities.

Investors who want to profit from LNG exports should keep an eye on these:

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After Hostess Brands, Who is the Next to Go?

The bankruptcy of Hostess Brands is just the latest example of once-famous U.S. companies that have gone out of business.

History's dustbin is full of familiar brands that are now extinct, including Studebaker, Woolworth's and Braniff.

Analysts blame changing consumer tastes for the plunging sales of Wonder Bread and Twinkies that led to Hostess Brands' demise.

Most companies fail because management keeps trying to sell the same products, using the same marketing and business model, long after the products have hit the skids.

So which famous brands might not be around much longer?

The Next Hostess: Four U.S. Brands That Could Disappear

Here are four U.S. brands that have fallen so far behind the competition they are in danger of disappearing in the near future.

1. Sears Holdings Corp. (NASDAQ: SHLD)
Sears has a proud history of pioneering markets and once dominated retail with its catalogs.

But in 2005, a buyout of Sears and discount retailer Kmart by fund manager Eddie Lampert spawned a spate of management missteps.

Sears and Kmart, with more than 3,000 stores in the United States, have been unable to compete against other low-cost retail chains like Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT).

Sears sales have been on a downward spiral for years. In fact, Sears has posted 23 straight quarters of declining same-store sales.

Meanwhile, Lampert has shown himself to be remarkably tone-deaf.

He recently bought a $40 million home north of Miami about the same time Sears decided to sell 1,200 stores and close another 173.

In 2011, Sears' American Customer Satisfaction Index score was 76 out of 100. Only Wal-Mart received a lower score.

Stockholders have shown their dissatisfaction with Sears. Shares have declined from about $180 to the low $40's.

2. RadioShack Corp. (NYSE: RSH)
At a time when more Americans are doing more of their shopping online, RSH clings to its traditional, brick-and-mortar retail store model.

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Gold Prices: Where to Now After the Sell Off

After the final Federal Open Market Committee (FOMC) meeting decision of the year Wednesday, gold prices got good news: the Fed will institute a new bond-buying program. February Comex gold increased $8.30 (0.5%) Wednesday and settled at $1,717.90 an ounce. And then the sell-off started. Gold fell 1.2% in the next session to $1,696.80, for […]

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FOMC Meeting: What the Fed Policy Changes Mean For You

The Federal Open Market Committee (FOMC) meeting ended yesterday (Wednesday) with two important changes to Fed monetary policy.

First, the central bank said it would increase the amount of quantitative easing by replacing Operation Twist, which ends Dec. 31, with outright purchases of long-dated Treasury bonds.

Under Operation Twist, every month the Fed sold $45 billion in short-term Treasury bonds and notes and bought $45 billion of long-term Treasury bonds in an effort to keep long-term interest rates low.

Because the Fed funded its purchase of long-term bonds with the sale of short-term bonds and notes, no new money was created.

However, outright purchases of long-term bonds will create new money-$45 billion every month-and, by concentrating its buying at the long end of the yield curve, the Fed should be able to keep long-term interest rates low.

The Fed also said it will continue to purchase $40 billion of mortgage-backed securities each month, creating a total of $85 billion in new money from these operations monthly.

That means QE4 is here.

Starting in January, the Fed will be more than doubling the amount of money it is pumping into the economy. Happy New Year!

Second, the Fed set unemployment and inflation "thresholds," instead of setting a date for when the central bank expects to be able to raise interest rates. What this means is that the Fed will not raise interest rates unless unemployment is 6.5% or less or inflation is more than 2.5%.

By setting thresholds where monetary policy might change, the Fed is attempting to improve its communications with the public.

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How to Prepare for the Fiscal Cliff

Fiscal cliff negotiations continued Thursday, but with Republicans not budging on their staunch opposition to raising taxes, and Democrats refusing any deal that doesn't include higher taxes, hopes for a compromise by year's end have waned.

Investors are worried, and rightly so.

In fact, the Wells Fargo/Gallup Investor and Retirement Optimism Index turned in a score of -8 in November, down from double-digit positive readings in early 2012. That means investors polled are back to being as pessimistic about the investing climate as they were a year ago when Washington was battling over the debt ceiling.

About 70% of investors polled said the fiscal cliff was already slowing the economy, and feared a deep recession would hit in 2013 if the economy fell off the cliff.

With no deal in sight, here's how investors can prepare for falling off the fiscal cliff.

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