Where to Invest When Estonia Has Better Debt Outlook Than U.S.

Apr 25, 2011, 5:14 pm EDT

The U.S. markets ended last week strong following the announcement that the U.S. debt rating could be cut. However, the forces that are pushing investors into international stocks persist. U.S. debt is still out of control, growth rates are still higher abroad and the U.S. dollar continues to make investing in stocks priced in non-dollar currencies the better choice. Uncertainty Sends Investors Into Global Stocks

The U.S. dollar is now approaching its lowest level in 30 months thanks in part to S&P’s decision last week to lower its outlook on U.S. debt. S&P effectively gave the United States two years to get its fiscal house in order and enact meaningful change or be downgraded.

Naturally, President Obama was not too happy about this decision and quickly dispatched Treasury Secretary Tim Geithner to CNBC in an attempt to do damage control. Interestingly, Geithner said that there was “no risk” that the United States’ AAA credit rating would be downgraded. Read 

Fed’s Monetary Malfeasance Creating Catastrophic Bubble

Apr 25, 2011, 3:43 pm EDT

The silent investment story of the year is the collapse of the U.S. dollar against the Swiss franc, Canadian dollar and Swedish krona. The dollar’s decline has been breathtaking, and the fault, as always, lies with the Fed.

Chairman Ben Bernanke assures gullible citizens that he is not “printing the money.” But take a gander at my chart — Adjusted Monetary Base (high-powered money) and Excess Reserves. Parabolic curve comes quickly to mind.

For the Fed chairman to B.S. the citizenry with his “we’re not printing the money” is cause for Mr. Bernanke to look for another line of work. Let me be clear: The Fed’s monetary malfeasance has caused yet another catastrophic bubble. Read 

South Africa the Next Emerging Market Powerhouse?

Apr 23, 2011, 2:00 pm EDT

Part of the reason why China is seeing inflation is massive economic growth enjoyed by the nation. The growth in China, as well as the growth of the BRIC economies, was the subject of a recent summit held in Sanya, China’s southernmost city in the Hainan province.

The BRIC nations — Brazil, Russia, India, China — have all become important and powerful economic forces. Together, they’ve soared past the original predictions of Goldman Sachs executive Jim O’Neill, the man who coined the acronym BRIC, regarding what influence these countries were going to have.

Interestingly, the BRIC summit was actually a BRICS summit, as it included South Africa. The inclusion of another country here in the same breath as the original BRIC nations is significant, because it’s transformed the group into a truly global entity. South Africa is largely seen as a gateway for BRIC trade and investments into the resource-rich nations of Africa. Read 

Politics May Push Feds to Bail on GM Stake

Apr 21, 2011, 12:57 pm EDT

The Treasury Department reportedly is gearing up to dump “a significant share” of its General Motors (NYSE:GM) stock as early as this summer. 

The immediate impact is that taxpayers will lose a hefty share of the more than $50 billion the Obama administration poured into the company two years ago to keep it afloat. Longer term, a Chinese state-owned automaker could emerge winning a bigger stake in a premier American brand.

Published reports earlier this week said the Treasury Department has yet to contact GM about a sale date, but such a sale could happen this summer of early fall. Read 

Why a Credit Downgrade Is Good For America

Apr 19, 2011, 1:40 pm EDT

On Monday, Standard & Poor’s downgraded the U.S.’s credit outlook from stable to negative  — while maintaining the U.S.’s AAA rating.  This is great news for America and the rest of the world.

By putting a bit of pressure on American policymakers, S&P is reminding us that any country’s credit can and should be analyzed objectively.  S&P’s announcement suggests that it should have no problem downgrading countries with problems. The U.S. federal budget deficit is expected to be about 11% of GDP and our national debt is 100% of GDP. Countries with those kinds of numbers are going to get negative views from the ratings agencies.

Ratings agencies have taken a beating when it comes to credibility after pitching in to nearly destroying the global economy during the years preceeding the financial crisis.  After all, these agencies competed for billions in fees from investment banks seeking their AAA-imprimatur on bundles of toxic mortgage backed securities.  Now those ratings agencies are trying to get the public to forget about that and believe them again. Read 

Defense Stocks Teeter on Budget Ax’s Edge

Apr 18, 2011, 12:16 pm EDT

Before Monday’s broad market selloff, shares of major U.S. defense contractors had shown some bounce after taking a hit on the prospects of staggering cuts in defense spending.

Investors initially responded to President Obama’s threat last week to carve $400 billion from the defense budget over the next 12 years by selling off big defense names like Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC), Orbital Sciences (NYSE:ORB), Raytheon (NYSE:RTN) and General Dynamics (NYSE:GD)

But by Friday, stocks were bouncing back, as investors perhaps remembered that gridlock in Washington is a far more likely outcome 18 months before a presidential election.   Read 

1 212 213 214 215 216