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Category: Money Morning

Don’t Bet Against a Surging U.S. Dollar – Money Morning

Ben Gersten 0 Comments

In the midst of a brewing currency war, Japan’s out-of-control monetary policy has caused the yen to fall to an almost five-year low against the U.S. dollar.

With an economy one-third the size of that of the United States, Japan has committed itself to a fiscal program that’s almost double the U.S. Federal Reserve‘s current $85- billion a month stimulus.

Like any other war, this battle of monetary-easing measures won’t end well, but fortunately for Americans, it’s looking more and more likely that the dollar will emerge victorious.

“Right now, the U.S. dollar is the ‘cleanest dirty shirt in the laundry,’ so I’d buy it,” said Money Morning Capital Waves Strategist Shah Gilani.

The dollar now stands at 101.93 against the yen, the first time it’s broken the 100 mark since 2009, and is up 26.6% in the past six months.

Many experts are now predicting the dollar’s climb has just begun and some analysts see the dollar hitting 105 yen this summer and possibly 110 by the end of the year.

“The turn in yen has been dramatic and has proven the importance of momentum when a multi-year cycle turns,” Nomura currency expert Jens Nordvig wrote in a note to clients. “A similar dynamic could be in store for the dollar. In the scheme of things, the USD REER [Real Effective Exchange Rates] is still trading close to multi-decade lows. Once the turn is evident, we believe momentum could be powerful.”

Here’s why the U.S. dollar’s run is just beginning.

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Silver Prices: The Best is Yet to Come – Money Morning

Diane Alter 0 Comments

It’s hard not to get a bit nostalgic about silver prices.

I find myself reminiscing about April 2011 when the white metal ended the month at a sterling $48.70 an ounce after hitting an all-time intraday high of $49.51. That record surpassed the previous high of $49.45 set three decades earlier when the Texan Hunt brothers set out to corner the silver market.

Since the 2011 peak, the S&P has roared higher by some 50%, while the value of silver has tumbled 53%. That’s not nearly as bad as the drop silver experienced between its Hunt brothers induced high on Jan 1, 1980 through its low on June 21, 1982, when silver fell a devastating 90%.

Those declines are a reminder of just how volatile the metal’s price can be. But with great risk comes great reward, and we see record-breaking gains ahead…

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Energy Among the Best Investments from Ira Sohn Conference – Money Morning

Diane Alter 0 Comments

There was definite energy spin this week at the 18th Ira Sohn Investment Conference at New York’s Lincoln Center. In fact, at this an annual gathering of some of the world’s influential money managers and investors, energy was applauded as one of the best investments to make now.

Some 3,000 guests paid as much as $100,000 (proceeds benefit pediatric cancer resesarch) to hear what 17 of Wall Street’s lucrative members had to say about the stock market. Each had some 15 minutes to share their picks, pans and opinion.

Clearly, energy was a favorite, as Barron’s outlined in its Ira Sohn coverage this week.

Here’s a roundup of what these money managers consider to be the best investments in the industry.

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Buy, Sell or Hold: Is Lennar’s Big Move Just a Sign of Another Housing Bubble? – Money Morning

David Mamos 0 Comments

All you have to do is look at a price chart of Lennar Corp (NYSE: LEN) to see the proof that the U.S. housing market is on the mend.

Since January 2012, shares of the Miami, Fl.-based new homebuilder have more than doubled.

In fact, since the industry nearly collapsed six years ago, new-home construction for builders like Lennar is now clearly on an upswing.

According to the March 2013 report from the U.S. Commerce Department, new home construction was on pace for more than one million units for the first time since the gaudy days of June 2008. 

Much of this home-buying fervor can be attributed to a few important points: 

    1. A pent-up demand that has built up over the last six years,

    2. Low inventories,

    3. And an outrageously low interest rate environment thanks to the Federal Reserve.

The question now is whether or not the “Housing Bubble 2.0” still has legs, making Lennar Corp. a smart new buy with plenty of room to run.

Is Lennar Still a Buy?

Of course, evaluating Lennar on its own merits is a fine exercise in due-diligence.  

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Three “Abenomics-Proof” Investments – Keith Fitz-Gerald- Money Morning

Keith Fitz-Gerald 0 Comments

The Japanese Topix Index is up more than 40% this year (and nearly 71% since July 2012) thanks in large part to Prime Minister Shinzo Abe’s unlimited stimulus initiative known euphemistically as “Abenomics.”

The argument behind this spending is a classic one, at least in economic terms: stimulate the economy to produce higher inflation, weaken the currency and aid the exporters.

But like Fed Chairman Ben Bernake’s spending here and Draghi’s spending in Europe, it’s ultimately going to fail.

Sure the short-term effects are great…a wildly enthusiastic stock market that’s trading at the highest levels seen in 4.5 years, a relaxation of risk and fresh strength in export focused companies that are showing stronger results on a devalued Yen. No question, I’ll take a bull market any day.

It’s the hangover I’m worried about – nobody knows how long this run will last.

This is especially problematic because most investors don’t have the discipline needed to trade in and, of course, out when the party stops.

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These Gas Tax Hikes Will Make Driving A Lot More Expensive- Money Morning

David Zeiler 0 Comments

Americans worried about how rising oil prices might affect prices at the pump are about to get blindsided by looming gas tax hikes that almost guarantee higher gasoline prices.

And it’s not just state governments looking to shake down American motorists.

Alarmingly, the International Monetary Fund (IMF) has called for the U.S. government to increase the current federal gasoline tax of $0.184 per gallon by a whopping $1.40.

In a March 26 speech, IMF Deputy Director David Lipton said the gas tax hike would pay for social programs around the world as well as to save the environment.

“The time has come for subsidy reform and carbon taxation,” Lipton said.

This federal gas tax hike, if imposed, would add $14 to a typical 10-gallon fill-up and hundreds of dollars to the annual cost of driving.

Fortunately for U.S. drivers, few in Washington support the IMF proposal.

“Higher gas prices hit those who can least afford it the most as American families are forced to pay a larger percentage of their income on higher energy prices,” Rep. Fred Upton, R-MI, chairman of the House Energy and Commerce Committee, told Fox Business. “Drivers across the country are already struggling to pay up to $4.00 a gallon for gas, and further price increases at the pump could be devastating to low- and middle-class families and disastrous to our economic recovery.”

Now if only state legislatures felt the same way…

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Distressed Debt Investing Now a Favorite Move for Hedge Funds – Money Morning

Guest Editorial 0 Comments

Regulators have demanded that banks stop engaging in so much risky behavior – chiefly, distressed debt investing. And the banks have begun to curtail this type of investing.

But this has led to an unprecedented – though not unpredictable – situation: It seems the hedge funds are picking up the slack.

The distressed debt that banks are leaving behind is getting bought up, in a big way, by credit hedge funds. Fully $108 billion worth of distressed debt investments is being picked up by these groups.

Hedge funds are not as big as the large banks, with assets running “only” into the mid-hundreds of billions. But the more moves they make, the bigger they become.

Hedge funds, money-market funds and REITs – engines of shadow-banking – have exploded recently, in terms of capital and headcount. And top talent – for top dollar – has been leaving companies like Deutsche Bank AG (NYSE: DB) and Barclays Plc (NYSE: BCS) for the greener, riskier pastures of BlueCrest Capital Management and Pine River Capital Management.

Hedge funds are less regulated than banks, because they cater to a savvier investor with different goals than someone who has a run-of-the-mill checking, savings or retirement account. Grandma is not opening up a Christmas Club account for you with the likes of Carl Icahn – yet.

This freer atmosphere makes hedge funds the natural place to turn once you begin to rule out banks. They’ve become “shadow banks,” and they’ve been getting into some pretty interesting areas.

Their investment in bankruptcy claims and distressed debt is of particular note.

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Has the Great Gold Crash Divorced Bullion from Futures Prices? Money Morning

Peter Krauth 0 Comments

In mid-April, a black swan crash-landed on the gold market.

Over just two trading days, gold futures prices shed 13%, falling from $1,575 to $1,375.

That $200 cliff dive was the largest two-day drop in 33 years.

Gold prices already had been in steady consolidation mode for 18 months. But the magnitude and swiftness of this dramatic move were rare…to the point of suspicion.

How did markets react? Unlike almost anyone expected.

What caused such a landslide, and who may be behind it? More importantly, what are the implications for the precious metals markets moving forward?

The conclusions will surprise you — and help you invest more wisely.

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Best Investments 2013: How the Mining Mess Will Send Platinum Soaring – Money Morning

Tony Daltorio 0 Comments

Thanks to the hit gold prices took in mid-April, other precious metals also got caught in the downdraft – but some still look to be among the best investments of 2013.

Take platinum, for example.

It is currently trading at about $1,500 an ounce, well off its 52-week high of $1,734 an ounce. During the height of the selloff last month, it touched a low of $1,381 an ounce.

Investors sold it along with all other precious metals, even though the fundamentals for platinum may be better than ever.

While platinum’s long-term outlook is bright, a short-term price catalyst is about to take place, as early as this week.

The world’s biggest platinum producer, ANGLO American Platinum (Amplats), could take a significant amount of platinum off the market. The restructuring could cost 14,000 jobs and close two South African mines.

It’ll also help drive a supply deficit that will only expand in the years ahead, making platinum one of the best investments to make now before prices soar.

No wonder Sprott Holdings’ Rick Rule bought $280 million worth of platinum and palladium earlier this year…

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