Economy

Stay updated with the latest economic news and analysis from around the world. Our comprehensive coverage includes expert insights, market trends, and forecasts to help you make informed decisions.

News For Investors: Stock Market Action Just Temporary, the Party Will Soon Be Over

2 5642

investors-news-release

In a sense, it is difficult to imagine the stock marketgoing up on bad economic news, but that’s the way it is. The stock market and Wall Street compose a system that only serves itself and its participants. I’d never fight the Federal Reserve in terms of investment strategy, but the stock market betting on a third round of quantitative easing (QE3) illustrates the real problems that the U.S. economy and the eurozone are facing. It is an age of austerity, and there’s very little economic growth to be had.

There are lots of near-term beneficiaries of the current hype; gold and silver stocks are soaring, and it’s a well-deserved turnaround in the precious metals sector. The near-term action in the stock market is good, but it’s even better for gold stocks. The U.S. dollar is under pressure, but that’s what the Federal Reserve wants: increasing money supply, artificially low interest rates, and a weaker U.S. dollar. It’s all in the name of economic growth; but at the end of the day, the business cycle still wants to play itself out and the subprime mortgage-induced bubble is still a force to be reckoned with. Economic growth, as we used to know it, is now a thing of the past.

Intel Corporation (NASDAQ/INTC) is a benchmark stock that I follow regularly, and the company’s third-quarter revenue warning was significant. The company cut its third-quarter revenue expectation to $12.9–$13.5 billion, down materially from the previous range of $13.8–$14.8 billion. The company cited weak economic growth in the U.S. economy and the eurozone, which has consumers holding onto their wallets, for the cut. Tellingly, the company withdrew all other quarterly and full-year expectations. This is definitely not good for both Intel and the stock market.

So while the stock market may still be ticking higher and the Federal Reserve will likely appease Wall Street, the underlying economic data is still weak, and this is why I feel that the stock market will soon top itself out. (See “The Fed Can’t Help the U.S. Economy Anymore.”)

It is likely that 2013 will be a very difficult year; economic growth over the rate of inflation is highly unlikely.

Corporations have pulled out all the stops to keep their earnings afloat, and they’ve done a good job of it over the last couple of years. But with little in the way of economic growth in the U.S., no economic growth in Europe, and declining economic growth in Asia, American corporations are about to feel a blow to revenues. Intel is the perfect example. Earnings in the third quarter can still beat consensus, but that’s only because these expectations have already come way down. The most important number this upcoming earnings season is revenue and we could be in for a nasty surprise.

I want to be bullish going into 2013, but it’s difficult, given minimal economic growth. I had a more positive outlook just a little while ago, but Intel’s news is like a canary in the coal mine. Stock market investors need to be extremely cautious going forward. I repeat my view that a conservative investment stance is warranted, and there’s no reason for long-term investors to be buyers in this market.

To become a subscriber, subscribe to our free newsletter services. Our service is free for all.

World Markets: Is the Stock Market Ready to Rally?

0 5233

All year anxious investors have faced a wall of worry including:

  • The endless European debt crisis,
  • Collapse of commodity prices (including crude oil),
  • Middle-East instability (Iranian nuclear threat, Syrian civil war, religious radicalization of Egypt)
  • Increased tax burden and job-killing effect of Obamacare
  • U.S. presidential election and  the impending “fiscal cliff” in 2013, promising automatic spending cuts and tax increases
  • Record-low U.S Treasury bond yields and an 18-week low in the Economic Cycle Research Institute’s Weekly Leading Index may signal a new U.S. recession
  • Chinese economic growth may be weak for “several years”
  • U.S. employment report for June was weak

Bottom line: I’m feeling more bullish.

Read More…

Continue reading

What Happens To Debt After You Die?

0 2584

Death is inescapable, there is no way to escape from it. Similarly, you can’t run away from few kinds of Debts – and these debts are like “once a person is owing money, and die;  someone has to pay for it”. For example co-singers who sign onto student loans are held accountable for the money being loaned to be paid back as well.

This infographic from Total Bankruptcy tells you the same story with many angles – it can help you to have an idea about what happens to your debt when you die.

The Eurozone Crisis

0 2083

The eurozone is in deep debt turmoil. The debt crisis that has hit almost all 17 member states is spiraling out of hand; there is single solution in sight. In fact, the euro skeptics brigade is increasing by the day; most believe that eurozone may not survive as a single unit beyond this year.

The Economist has an interesting interactive feature on the current status of the debt crisis in the eurozone.

The Economist says that: “GDP rose in most countries during 2011, though there were marked differences in performance. Germany’s economy grew by a sprightly 3% according to its statistics office. The countries nearby with which Germany trades most heavily also fared well—though signs of incipient recession were visible towards the end of the year. By contrast GDP in Greece and Portugal has crashed under the weight of austerity. Greece’s economy may have contracted by as much as 6% in 2011. And the crisis is sapping the strength of even the so-called “core” euro-zone countries, such as Germany and France. The strains of the euro area’s sovereign-debt crisis make a recession in the early part of 2012 likely.”