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Investors sell stocks and buy gold after Spain's central bank bails out regional bank and euro loses value.
By Alix Steel, TheStreet
Gold prices Monday were rising as investors opted for the safety of the precious metal and sold out of stocks to buy gold.
Gold for June delivery was adding $11.60 to $1,187.30 an ounce at the Comex division of the New York Mercantile Exchange. Gold has traded as high as $1,119.10 and as low as $1,176.80. The U.S. dollar index was rising 1.16% to $86.36 while the euro was slumping 1.80% to $1.23 against the dollar. The gold spot price Monday was adding over $6, according to Kitco's gold index.
Gold prices were rallying as European debt fears flared and the euro headed toward its four-year low. Over the weekend, Spain's central bank bailed out the regional savings bank CajaSur, the second bank Spain has bailed out since March 2009.
John Auther highlights the problems with the markets -- and potential solutions -- in his new book.
The abstract is pure genius; I can't wait to read the book. To me, a genius is anyone who can take complex subjects, boil them down and explain them in such simple language that even I can understand them.
He outlines the problems with the markets as:
The amendment proposed by Sen. Blanche Lincoln would benefit foreign banks, such as Deutsche Bank and UBS.
The amendment would force banks to spin off their derivatives trading operations.
As hated as our banks are in this country, as hated as they are by the politicians, even they seem to realize that if you can't offer corporate clients a slate of swaps and derivatives, they will go elsewhere. Every major client needs that flexibility.
The satellite radio stock is on a tear in 2010, and has the fundamentals to back it up
I’m not a real believer in true “penny stocks,” since unknown companies with unknown fundamentals don’t jive with my growth investment strategy.
But I will say that there are a number of cheap stocks out there -- less than $2 or $3 a share -- that have enough Wall Street coverage to be legit, and have shown me enough punch that they would be worth any investor’s cash.
While most of these stock picks tend to be tiny, with a market cap of only a few hundred million dollars, one big penny stock stands out to me right now as a great opportunity: Sirius XM Radio (SIRI). Shares are less than $2 as of this morning’s open and are a great buy at this valuation. Here’s why:
Although the market was up and down it ended down for the week
Value Line Index -- Contains 1700 stocks so it's much broader than the S&P 500 or the very narrow Dow 30 -- This week the Index was down
- Down by 5.50% for the week
- Had 2 up days and 3 down days
- Had 2 up weeks and 3 down weeks
- Had 3 up months and 2 down months
- Closed Friday below its 20, 50 and 100 day moving averages
- Barchart technical sell signal of 64% -- 2 buy, 1 hold and 10 sells
Barchart Market Momentum -- Contains approximately 6000 stocks -- Percentage of stocks closing above their Daily Moving Averages for various time frames -- More than 50% bullish -- Less than 50% bearish -- Very bearish this week
After a hellish couple of weeks, some perspective on the recent stock market decline.
It's been a tough couple of weeks for stocks. From its April high, the S&P 500 lost more than 13.4% as it dropped into Friday's low. The index also sliced through its 200-day moving average -- which is seen as the demarcation line between bull and bear markets.
So, was that it? Will the European debt crisis, financial regulatory reform, and the oil slicked Gulf of Mexico all combine in some king of unholy alliance to detail the global economic recovery and send stocks careening into the abyss?
It's tempting to get caught up in the excitement and emotion of the dramatic stock market selloff we've just witnessed. And it's easy to throw your hands up and declare the end of the bull market that started last March. But has all the recent volatility really marked the birth of a new bear cycle for stocks? I don't think so. And here's why.
A new study shows that a lesser-used valuation metric might have value
The stock investing world is filled with well-known valuation metrics -- the price/earnings ratio, price/book ratio, free cash flow yield, price/sales ratio, and numerous other variables have been used by successful investors to find winning stocks.
A new study shows, however, that a much less popular valuation metric -- the gross profits-to-assets ratio -- may be one of the better predictors of future stock performance.
The study, entitled “The Other Side of Value: Good Growth and the Gross Profitability Premium”, was performed by Robert Novy-Marx of the University of Chicago and National Bureau of Economic Research. (Thanks to The Stingy Investor and CXO Advisory Group for highlighting the research.) In it, Novy-Marx finds that the gross profits/assets ratio is actually a better predictor of future returns than more widely used earnings- and cash flow-based valuation metrics.
Americans have bought into the message that bottled water is healthier and better than tap water.
Consider this: In 1976, Americans were drinking an average of 1.5 gallons of bottled water a year. Now, we're up to at least 30 gallons a year, according to National Public Radio.
Water -- free for everyone from the tap -- has become a huge, glorious cash cow for corporate America. And companies from Coca-Cola (KO) to Clorox (CLX) want to make sure it stays that way.
As the recession slowly fades, more companies are upping their dividend payments.
At least nine companies have raised their dividends this week, reports Dow Jones. Tiffany & Co. (TIF) raised its dividend for the second time this year, while Unum Group (UNM) and Safeway (SWY) also rolled out increases.
That brings the total number of companies upping dividends this year to about 123, while two have cut their dividends. That compares favorably to last year, when only 79 companies raised dividends while 63 cut them, Dow Jones reports.
The euro debt crisis has changed the game for companies like Norway's Statoil.
As I wrote in my May 21 post, as hard as it is, I think investors should try not to get caught up in panic selling during this market drop.
But that doesn't mean they shouldn't sell anything. The euro debt crisis will depress growth in Europe, lowering global demand for commodities such as oil and local demand for commodities such as natural gas. That means the crisis has changed the fundamentals of Statoil for the worse.
With prices of the yellow metal at a two-week low, this gold fund will deliver big profits if the slide continues
Back in February, gold took a big hit when the Federal Reserve announced it was lifting the discount rate. After pushing briefly above $1,200 an ounce at the beginning of December 2009, the safe-haven metal slumped over 12% in two months to a low of around $1,050.
Here we are about three months removed from that low, and we're right back where we started price-wise -- or at least, we were until gold spiraled downward this week to mark a two-week low.
So everyone is asking the question, "Is gold going lower, or is it going higher?" Well the real question investors should ask isn't about the long-term fate of the commodity but rather how they can play the volatility in the short-term. And the answer to that is bank on a brief correction via the ProShares UltraShort Gold (GLL) ETF. Here's why:
Is just investor confidence crumbling or is the economy crumbling too?
My yardstick for measuring the economy is the monthly report for the
Conference Board's Leading Economic Index published just yesterday. Now comes the bad news. The Index has been positive every month since October 2009. This was the first month that Index reversed itself. The following components were negative, beginning with the largest:
The newly passed financial reform bill includes plans for the derivatives market that could create huge costs for the banking industry and the economy.
By Lauren Tara LaCapra, TheStreet
Bank investors are freaking out, and with good reason: The companies they own have gotten hammered recently and may see up to 36% in additional losses in the weeks ahead, according to one estimate.
The bad news? Financial reform may slash revenue by at least 25%, profits by as much as 75% and force the industry to raise $200 billion in fresh capital. The good news? Things may not turn out quite as bad as those dire, doomsday predictions. The recovery will offset some of the downside, the capital burden may not be placed on shareholders, and bank stocks have already taken a big hit.
The outcome depends on lawmakers. Let's break it down.
With no country driving global growth and the US reining in banks, stocks and economies worldwide will struggle to gain momentum.
Are we headed for a double-dip recession?
On the "Today Show," Matt Lauer asked me whether it’s going to happen in light of unemployment claims and problems in Europe. Three weeks ago I would have said the odds don't favor it, maybe 25% chance, which is why I thought the Dow ($INDU) could stay north of 10,000.
But now it has to be considered a 35% chance, which is why we could see the Dow at 9,500. As Europe dithers, that odds of a double-dip recession will go up by the week. It’s that important.
Consumers aren't happy with the new look of Starbucks' low-priced brand Seattle's Best Coffee.
Starbucks (SBUX) made a splash recently with news that it would be focusing on its Seattle's Best Coffee brand in the coming months as a way to broaden its appeal to consumers who prefer a milder cup of java -- and a lower price point.
Unfortunately, it appears the coffee giant was too busy crunching numbers and not busy enough working on how to present the Seattle's Best brand. A recently redesigned logo is getting panned by the public, with a whopping 68% of consumers saying Starbucks should try again, a recent survey has found.
Derisive comments from bloggers about the logo include "Seattle's Best Blood Bank," among others.
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JPMorgan Chase shareholders opted for the devil they knew over the ruckus they feared might result from a slap to the chairman and CEO.
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[BRIEFING.COM] The major averages continue to hover near their recent levels while the 10-yr yield has climbed back above 2.00%.
The consumer staples sector is among today's outperformers as Mondelez International (MDLZ 31.90, +0.90) trades higher by 2.9% after reporting earnings and revenue in line with analyst expectations.
Elsewhere, the discretionary sector has been supported by retailers even as Target (TGT 68.69, -2.57) trades lower by 3.6% ... More
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