If everything goes as planned, this week will be the busiest for initial public offerings since 2000.
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The holiday was created in honor of the American worker. But this year, there isn't much to celebrate.
Does anyone even remember why Labor Day exists? It dates back to 1894, when President Grover Cleveland made nice with the labor movement after unions clashed with railroads in the Pullman Strike.
Workers went on strike to protest low pay and 16-hour workdays, refusing to continue production and throwing the nation's railways into chaos. A military crackdown led to 13 worker deaths. Congress created Labor Day as an olive branch of sorts for union workers.
Why big money is wrong about European banks.
By Tim Hanson
You should know by now that European banks are on shaky ground. Because of their ownership of troubled European sovereign debt -- bonds they are reportedly marking to model rather than market (i.e., they're making up what they think they're worth) -- they are going to need truckloads of new capital as sovereign defaults by the likes of Greece, Spain, Italy, or Portugal start flowing through the system.
And the sector's recent stock market performance reflects this massive risk. Over the past year, the Bank of Ireland (IRE) is down almost 90%, National Bank of Greece (NBG) is down more than 60%, and Spain's BBVA (BBVA) and Banco Santander (STD) are down more than 25%.
Thus, I found it curious that all of those bank stocks were up sharply, with NBG up more than 30%, on the news that Greece's second- and third-largest banks, Alpha Bank and Eurobank, planned to merge and get new capital from the Qatar Investment Authority, that Middle East state's sovereign wealth
A dismal employment report highlights the obvious: Without more help, a new recession looms.
It was inevitable. After all the gut checks and body blows we've seen this year -- energy price spikes, natural disasters, political brinkmanship -- it was only a matter of time before the job market would be hit. And that's exactly what happened Friday.
The government reported nonfarm payrolls were unchanged in August -- the first time that's happened since the 1940s. Yes, there were some nuances to the report. The private sector added 17,000. And the Verizon strike, which is now over, depressed the result. And the household survey held up OK.
But the haunting takeaway is that the economy, which has been chugging along at "stall speed" all year, is beginning to nosedive. Unless, as I've argued in my last two columns, the U.S. Treasury and the Federal Reserve dish out another dose of stimulus. Here's why.
Politicians and economists had plenty to say after hearing that no new jobs were created in August.
Republicans jumped at the chance to criticize President Barack Obama's economic policies. Presidential candidate Mitt Romney called the news unacceptable. "Americans need a conservative businessman to get this economy moving again, not career politicians," he said in a statement.
A move in crude or stocks can often telegraph a move in the other a few days early, giving investors an invaluable head start.
By Tom Aspray, MoneyShow.com
Many stock investors or traders do not watch the crude oil market as closely as they should. For many years, I’ve compared the chart patterns of the crude oil futures with those of the S&P 500 or the Spyder Trust (SPY).
I have found many instances where crude oil tops or bottoms ahead of the S&P 500. Often, the two markets will show similar chart formations, but one of them will be completed ahead of the other.
Currently, the action in crude oil, as well as the United States Oil Fund (USO), suggests that the short-term rallies are ending. This may create an opportunity in the ProShares UltraShort Oil & Gas ETF (DUG) and also suggests that the stock market is once again ready to turn lower.
This is consistent with the short-term action of the McClellan Oscillator, one of my favorite A/D indicators. The oscillator peaked at +263—an overbought level—on Wednesday, and has now turned lower.
Even if the AT&T deal falls through because of the Justice Department's lawsuit, someone will come for T-Mobile.
By Jeff Reeves, Editor, InvestorPlace.com
We learned this week that Uncle Sam is less than pleased with the AT&T (T) plan to purchase T-Mobile. This changes little for AT&T and Verizon (VZ), of course, since the mobile market already is rapidly becoming a two-horse race. Sprint Nextel (S) hasn’t turned a quarterly profit since early 2007, and T-Mobile has lost some 150,000 subscribers so far in 2011.
In fact, the Justice Department’s move to step in will do little to “save” T-Mobile. In reality, the only thing it will do is ensure someone other than Verizon or AT&T will wind up purchasing the $39 billion wireless carrier.
So who else is in the market to buy T-Mobile? I have a few suitors in mind -- though most would take some accounting acrobatics or gutsy (perhaps crazy) strategic shifts:
Some indicators suggest that maybe, just maybe, the greenback is about to strengthen.
Although stocks haven't really gone anywhere the last few days, big changes are afoot if you know where to look. It's still early, but technical indicators suggest the dollar is poised for a big rebound in the days to come. That'll have big ramifications for a variety of assets including stocks, gold, and commodities.
Why should the greenback rally now? There have been a number of important developments in the eurozone this week, all of which suggest the euro could be headed for a bout of weakness. That, in turn, should boost the dollar.
The first is that European Central Bank President Jean-Claude Trichet indicated in a speech to the European Union Parliament that his recent rate-hiking campaign is about to end. He did not use the keyword "vigilant," which signals an imminent interest-rate increase. And he noted that the risks to the medium-term inflation outlook are under study.
Political risk in China is heating up.
By Tim Hanson
Imagine you own a business in China. Now imagine that the Chinese government starts running high-profile stories in their media about how you're defrauding your customers, enabling the sale of potentially dangerous pharmaceuticals, and slandering respected academics. Would you be concerned?
I'm guessing you would be, and rightfully so. Companies that attract the wrath of the government in China don't tend to do so well, whether we're talking about Google (GOOG) refusing to play ball on Internet censorship, or Sanlu Group putting melamine in its milk. Google has left the market and given up significant market share, while Sanlu went effectively bankrupt -- and there are many more examples.
This is the worst-case scenario facing Baidu (BIDU) owners today. Following the aforementioned barrage of criticism on China's government-run CCTV last week, Baidu ultimately took to the airwaves itself and, effectively admitting guilt, apologized.
Given the rally in precious metals, investors should treat their gold, silver and platinum heirlooms like bullion.
By Joe Mont, TheStreet
Spiking gold prices over the past few years have been a boon for many Americans, and not just those who invest in bullion, coins and mining companies.
The average person has seen their jewelry collection evolve from fashion to asset. The growing presence of shops and websites offering to buy unwanted gold jewelry is a testimony to how in demand and profitable the precious metal has become. Though less headline-grabbing, silver and platinum have also become even more valuable commodities; from January 2000 to January 2010, the price of gold quadrupled and the prices of silver and platinum more than tripled.
That entails an overlooked risk for many folks. When even a tiny earring clasp is worth enough to pay for dinner at a high-end restaurant, even a modest jewelry box can be worth thousands, ounce by ounce. And yet many fail to recognize the full value of what they own.
A short-term pullback would be a good chance to jump in on these broad-based sector ETFs and ETNs.
By Tom Aspray, MoneyShow.com
Commodity markets dropped along with stocks in early August, as concerns over the health of the economy reached a fever pitch after the debt downgrade.
As stocks have rebounded from the August lows, the major commodity indices, as well as the commodity ETFs and ETNs, have been even stronger. The charts indicate that the correction from the May highs has been quite normal, and there is strong evidence now that the lows are in place.
This suggests that global economies—especially the emerging markets—may be in better shape than most think. The broad-based commodity ETFs and ETNs are now testing strong resistance, so a near-term setback looks likely, but this should be a good buying opportunity.
On Wall Street, you'd be hard-pressed to find similar continuity in leadership, long-term vision and constant questing for the next big thing.
Exxon Mobil (XOM) was all over the news Wednesday, thanks to a joint venture to hunt for oil in the frozen north of Russia. Some pundits questioned whether Exxon will succeed in navigating the risky terrain of Soviet-style politics, to say nothing of the difficulty of drilling in Siberia. Others said Exxon could have just forged its most profitable partnership in history.
However the Exxon deal in Russia plays out in the years ahead, investors should take note of one very important fact: Exxon has been building this deal for years, with an eye on the long term and a refusal to let its current dominance and $350 billion market capitalization overshadow the need for future successes.
Sadly, such discipline in vision is rare in corporate America these days.
Bank of America is raising capital through new deals, but its mortgage nightmares won't go away.
Hints of more cheap cash from the Federal Reserve help stocks, commodities, and other risky assets push higher. But can it last?
Investors have sure been doing a lot of Fed watching lately. With the economy on a knife's edge, dancing between tepid halting growth and a new recession, the people want to see more stimulus on top of the central bank's recent promise to hold interest rates near zero through 2013. So every hint and every wink from Federal Reserve officials is being closely examined as investors worship at the altar of cheap money.
And based on recent market movements, traders seem to think some additional policy easing is likely at the next Fed meeting in three weeks and that whatever measures are announced will be enough to get the economy revved up again. Sure, precious metals have been on the move over the last few days. But I think the real story has been the rebound in industrial commodities like crude oil and copper.
Fed chairman Bernanke raised expectations by extending the upcoming meeting by a day to allow a "fuller discussion" of the merits and costs of additional stimulus measures. Based on public comments by other Fed members, that discussion seems headed for a positive outcome. Here's why and a look at how investors should prepare.
John Paulson is having a tough year, but we can learn from his mistakes.
"Watch the downside, the upside will take care of itself. That's been a very important guiding philosophy for me. Our goal is to preserve principal, not to lose money. Our investors will forgive us if our returns don't beat the S&P in a given year, but we are not forgiven if we have significant drawdowns."
– John Paulson, 2007
It's been a horrendous August for John Paulson, the hedge fund manager who rose to prominence after earning billions of dollars for himself and his investors betting against subprime securities. As of Aug. 19, one of his flagship funds was down 22% for the month, and 39% year to date.
Here are three lessons ordinary investors can learn from Paulson's experience:
One investment firm is selling securities backed by subprime mortgages. Seriously?
Springleaf Financial plans to sell $242 million in residential mortgage-backed securities backed by subprime loans, The Wall Street Journal reports. Oh, good. I was just about to take a blowtorch to my savings account. This is a much safer way to burn money.
The attraction of these bonds is the yield, priced Wednesday at 4%. And get this: They are rated AAA by Standard & Poor's, so they're a better bet than the U.S. government. S&P is apparently just fine with bonds tied to loans to homeowners with below-average credit scores and almost zero home equity.
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[BRIEFING.COM] The S&P 500 trades flat with one hour remaining in the session. It has been a busy day on the economic front with the release of the GDP report for the second quarter and the latest policy statement from the Fed.
Tomorrow's session will also feature a handful of data points, but neither weekly initial claims (Briefing.com consensus 310K) nor the Chicago PMI report (consensus 61.8) are expected to be met with a noteworthy reaction.
However, on Friday, the ... More
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