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The People's Bank may raise interest rates at least twice more this year.
While the world's largest companies can seem boring, they are historically cheap and may catch up to their small- and mid-cap counterparts in the months ahead.
By Don Dion, TheStreet
Although mega caps such as these are often viewed as boring, this slice of the marketplace could prove attractive in the months ahead.
For one, companies in this mega-cap segment appear noticeably cheap. This week, both the Economist and Barron's cited an analyst report from Morgan Stanley that noted that, relative to the broader market, mega-cap companies are currently at their cheapest levels in a quarter century.
The sell-offs in silver, oil and stocks are necessary for markets to go higher on the basis of reality.
Looks like total end-of-the-world alert time. Let's spin it: Commodities prices are collapsing because there is a sudden cessation in demand, brought about by skyrocketing commodities prices. Because gasoline (which is going down now) had gone up so much, the consumer doesn't have enough left to spend. And because food prices (which are going to plummet) went up so much, households don't have enough left from their paychecks to buy anything.
When we see the prices of the big metals come down, something that the Chinese government has been waiting for so it can stop tightening its economy, then we have to sell stocks, because the Chinese government is tightening.
Housing prices, which are being kept down by aggressive selling of foreclosed homes, as the most recent existing-home sales numbers tell you, will keep going down because the foreclosed homes are weighing on pricing. Of course, the fact that even with all of the foreclosed homes being sold pricing is only off about 5% doesn't matter. Housing is crashing!
This week's corrections have turned the outlook for the markets almost upside down, at least in the short term. A big rally will be needed soon to get the uptrend back on track.
The top executive at Philip Morris International tells shareholders that smokes aren't so addictive.
Perhaps it was this person that Philip Morris International's (PM) chief executive was thinking about recently when he said that it's "not that hard to quit" cigarettes. Louis Camilleri was asked about the issue at the company's annual shareholder meeting. A nurse said that one of her patients told her it was harder to quit cigarettes than crack, cocaine or methamphetamine.
Camilleri acknowledged that cigarettes are harmful and addictive. "Whilst it is addictive, it is not that hard to quit," he told the nurse. "There are more previous smokers in America today than current smokers."
But this time it might succeed. Private equity and eBay, which still owns 30% of Skype, could sell.
When I wake up in the morning and check news for the companies I own, I worry. I don't worry that my companies missed their quarterly guidance by a few pennies – running a business is an art, and things don't usually work out in a precise, linear fashion. The companies that have a "deliver the quarter" culture often just play their financial statements as a musical instrument.
No, I am not worried about that. What worries me is that a company in my portfolio will pull a "Microsoft" – announce a stupendous, "transformative" acquisition, like the $48 billion takeover of Yahoo that Microsoft announced in 2008, but that Yahoo's management was too ... (fill in the blank) to accept. (I spent some time looking at Yahoo last week. Its stock is at $18, almost half the price that Microsoft offered, and I find the company only mildly undervalued if you give a significant value to the assets alibaba.com and Alibaba Group that Yahoo acquired in 2006 and which were not worth nearly as much in 2008.)
The new First Trust NASDAQ Global Auto Index Fund offers investors a way to tap the growth in the global car industry.
By Don Dion, TheStreet
The industry's rapid growth and expansion has resulted in products designed to reach corners of the marketplace. Despite this wide selection, there are still areas that have remained largely untouched by ETFs.
The car industry has traditionally been one such category. Despite the fact that the industry's resurgence has been one of the major success stories in the global economic revival, there is no pure-play ETF option available, leaving auto enthusiasts to struggle to capture the strength of car makers and parts suppliers.
Reverse splits aren't always the kiss of death.
By Dan Caplinger
Sirius XM Radio (SIRI) fought against it for years -- and won. Fellow Fool Rich Munarriz thinks YRC Worldwide (YCRW) needs it bad. And now that Citigroup (C) has finally succumbed to its allure, the question remains: Will the big bank's reverse split spell disaster for the company's stock?
As fellow Fool Cindy Johnson explains here, many think the answer is a definite yes. But judging from its first day of trading after its 1-for-10 reverse split took effect, Citi investors are answering with a resounding "I don't know." Having closed at $4.52 last Friday, the stock finished at $44.16 yesterday, amounting to a 2.3% loss on an up day for the market. But longer term, shareholders must wonder whether it would be better to get out now before any more damage gets done.
Why reverse splits are scary
It's been a while since the go-go days of the 1990s, when stock splits seemed to be a dime a dozen. But back then, companies paid close attention to their share prices, making sure that investors who were used to dealing in 100-share lots wouldn't find their stock too expensive as it grew in value. To remedy the situation, when a stock's price got too high, the company would split its shares. The split would have no effect on the value of current investors' positions -- they'd have more shares at a lower price each -- but it would make those 100-share lots cheaper for new investors.
Emerson Electric, Baker Hughes and PNC Financial are well positioned for growth as the global economic recovery takes hold.
By Stephanie Link, TheStreet
Global economies and equity markets have improved significantly from their March 2009 lows. Manufacturing activity continues to improve, the global banking system has strengthened and corporate earnings have recovered significantly.
Simply put, the last three years of easy global fiscal and monetary policy (including the Federal Reserve's massive QE2 program in the United States) not only rescued the world economies from one of the most severe recessions, but have provided the stimulus for growth. Commodities have surged, GDP has recovered and the consumer has remained resilient.
Of course, all is not perfect. China continues to try to slow its economy, European debt remains problematic and Japan has endured an incredible personal and economic tragedy. But a recovery is evident, and I see three stocks that should benefit as economic growth continues to pick up.
Slow profit growth is a worry one leader of Indonesia's telecom sector.
After April's rough patch, retailers have regained their footing, utilities are hopping and we are finally getting credit for Friday's terrific jobs number.
But the reports I am getting now about May do not indicate that things are slowing any further. And some of my auto, retail and industrial contacts say things are pretty darned good again. I know that it shouldn't fluctuate like this, but it does seem like the world's still humming.
Two of the best gauges I have -- the S&P Retail Index and the utilities -- are flashing out-and-out green after worrying me for a bit. The utilities, ones like Exelon (EXC) and FirstEnergy (FE), took huge hits not that long ago, when it looked like things were turning down again. Now they are hopping.
With growth slowing and inflation rising, we face a repeat of the difficult economic environment of the 1970s. Stocks will suffer as a result.
Speculative commodities like silver, gold, and crude oil have been on a flyer lately on big concerns over inflation. This, it was believed, would be caused by robust global growth as well as supply disruptions. Ultra-loose monetary policy from the Federal Reserve was also a contributor.
But things are changing now as the economy shows signs of slowing. We now face a rising threat of stagflation -- or high inflation with stagnant growth.
What's more, the problem is global. China is battling inflation, with consumer prices rising at a 5.3% annual rate. Britain's inflation rate is expected to hit 5% this year even as GDP growth stalls. And Europe is under pressure with growth slowing. This is a dangerous situation since there are no easy solutions or quick fixes for stagflation. Morgan Stanley warned clients that equities would "fall significantly" in this scenario -- one that looks increasingly likely.
It's the second hike in 2 months, signaling an industrywide trend.
No matter where you go these days for a burger, be prepared to pay more. Wendy’s/Arby’s Group (WEN) is the latest fast-food chain to announce it will raise prices on select menu items to cover the rising cost of beef and other food commodities.
It’s the second time in as many months that Wendy’s said it will raise menu prices, and a sign that more increases could be cooking.
An industrial giant is the highest flier, and a tech icon is the biggest dud.
By Jeff Reeves, editor of InvestorPlace.com.
A lot of folks don’t put a lot of credence in the Dow Jones index. They think it’s an antiquated group of 30 blue chips that reads less like a list of stocks to watch and more like a list of stocks past their prime.
Take General Electric (GE), which first joined the index in 1896 – and adjusted for splits is barely above where it traded back in 1996. To many investors, GE is the perfect example of an outdated, under-performing stock in the Dow Jones.
But not all the 30 components are sleepy blue chips. Here's one fast moving winner that has doubled the index so far in 2011 - and the biggest dog of the Dow that is deeply in the red:
Will Dunder Mifflin hire the Oracle of Omaha to lead its Scranton office?
We'll soon find out how the Oracle of Omaha fares in Scranton. Buffett will guest star in the May 19 season finale of "The Office," The Hollywood Reporter notes. He will be interviewing for the opening created by Michael Scott's departure.
Buffett will have plenty of company on the set. The finale has a number of guest stars lined up, including Ricky Gervais, Jim Carrey, Ray Romano and James Spader.
Buffett has a good relationship with "The Office" folks. At Berkshire Hathaway's (BRK.A) recent shareholder meeting, investors watched a tape of Steve Carell and other "Office" actors, The New York Times reports. In the video, Carell's Michael Scott says Berkshire Hathaway is best known for producing all of Anne Hathaway's movies.
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[BRIEFING.COM] Stocks entered the weekend on a mixed note as the S&P 500 shed 0.1% while the Dow ended with a gain of 0.1%.
The major averages began the day on a lower note as nine of ten sectors saw losses of more than 0.5%.
The consumer staples sector was the lone exception as the group spent the entire day in positive territory thanks to the relative strength of Dow component Procter & Gamble (PG 81.89, +3.19). The second-largest staple stock advanced ... More
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