A nascent nontraded business development company has cut ties with its outside broker-dealer manager, citing a lack of financial stability at the broker-dealer.
Credit: RSS for Investments
Sabtu, 31 Agustus 2013
BDC baby bonds gain in popularity
In today's low-yield world, individual investors and the advisers who guide them increasingly are open to fresh ideas for generating meaningful income. In fact, this attitude is helping propel a new investment trend: investing in baby bonds issued by business development companies.
Credit: RSS for Investments
Credit: RSS for Investments
Jumat, 30 Agustus 2013
What the QE Taper Will Do To the Market
CNBC Worldhosted Money Morning Chief Investment Strategist Keith Fitz-Gerald this week to discuss the Fed's QE taper.
Printing gobs of money when the current slump is arguably caused by cash overabundance definitely doesn't seem like the rational thing to do.
Even so, Fitz-Gerald believes there's not a central banker in the world with the guts to step away from a QE taper.
See why that is, where Fitz-Gerald believes an eventual QE taper will take this country, and where investors should look for opportunities:
For more on how to play today's uncertain market, check out Private Briefing Editor William Patalon III's take on the Syria crisis in, "Make These Moves Before the U.S. Hits Syria"...
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/N-8unWRaNvc/
Silver Price News Today
Topping silver price news today is how the flight-to-safety trade is back on, as evidenced by recent moves in commodities.
Despite some profit taking Friday, silver prices rose roughly 5% this week and 1% last week. That helped the white metal log a sterling 21.3% gain for August and nearly 30% over the last nine weeks.
Interest in silver, a safe-haven alternative asset, has been freshly stoked amid fears the United States and its allies will launch a military strike against Syria in retaliation for use of chemical weapons in its civil war.
Also giving silver prices a boost this week were bullish comments from industry experts on precious metals.
Here's the silver price news you can't miss:
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Legendary commodities authority Jim Rogers told Reuters Tuesday "stocks are [going to] go down...commodities are [going to] go up." And it's not just Middle East tensions that have Rogers bothered...
He's also worried about the winding down of the U.S Federal Reserve's market-supporting bond purchases, especially the impact a QE tapering will have on emerging markets. Developing countries like India, Indonesia, and Turkey, which have benefited from loose monetary polices by borrowing dollars at rock-bottom rates, have seen their markets and currencies plummet recently over concerns they'll find it hard to close current account deficits as interest rates rise.
Rogers advises to prepare for a "market panic" and "huge mess" by loading up on commodities.
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Citigroup Inc. (NYSE: C) top analyst Tom Fitzpatrick came out with bullish comments on silver and gold this week. Fitzpatrick told King World News Wednesday that the price of gold could experience a 150% super-surge, and silver a whopping 300% jump.
"We still believe that in the next couple of years, we will be looking at a gold price of around $3,500," Fitzpatrick said. He added that as the gold/silver ratio plummets near 30, "this would suggest a silver price above $100."
Fitzpatrick continued, "Silver is still the one that looks like it should outperform. Silver has advanced quite strongly and broken through some important moving averages. So that opens the price of silver up to go and test the breakout point and the 200-day moving average, which have both converged around the $26 area. More importantly, a break above the downward treadlines from the 2011 highs, as well as the converged 55-and-200 week moving averages that stand in the area between $27 and $28, would be extremely bullish. So, above that $27 to $28 area on a weekly closing basis would mark a firm breakout in the price of silver."
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Marc Faber, aka Dr. Doom, was his usual voice of doom and gloom Wednesday in an interview with Hard Assets Investors. But the glass-half-empty guru is optimistic when it comes to precious metals.
"Looking at how debt will continue to increase and how central banks will continue their monetization not only in the U.S. but on a worldwide scale, I assume the price of gold will trend higher. Eventually we will be over $1,921. The question is, will it be this year or in five years? That I don't know. But as I have argued repeatedly, I think that part of your assets should be held in physical gold. I emphasize physical gold," Faber said.
Silver Price News Today: Demand Still HOT
Frenzied demand for physical silver and tight supplies of refined silver forced the U.S. Mint to ration sales this year and also caused long lines at dealers the world over.
The Mint reports that demand for its one-ounce American Eagle silver bullion coins remains "brisk," with sales up 47% compared to a year earlier. If present demand continues, the Mint says it's on track for record sales in 2013.
"Fundamental demands for physical silver and technical analysis have made a good case for higher silver down the road," J.W. Haugen, COO of Texas-based Provident Metals, told Money Morning.
Additionally, silver ETF holdings reached a record high of 644 million ounces as of August 21, representing about 83% of 2012 mine supply.
Finally, as equity investors brace for a rocky month ahead, precious metals investors embrace September.
You see, although September is historically the worst month for stocks, it's the best month for precious metals.
Over the past 23 years, average spot gold monthly returns have been around 3% in September. The next highest month is November, which doesn't even hit 2%.
Find out how you can position your portfolio for silver profits here: How to Buy Physical Silver
Related Articles:
- King World News:
Gold Poised to Super Surge 150% & Silver a Staggering 300% - Reuters:
Prepare for Market Panic: Jim Rogers - Hard Assets Investors:
Marc Faber: Gold Will Hit New Record High Even Though Markets Manipulated by Fed
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/ohY07UpEk2Y/
Keith Fitz-Gerald: How To Invest In Today's Volatile Market
Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on CNBC World to caution investors on how to invest in today's volatile market.
Fed action - or inaction - makes for roiling markets in the days ahead. Fitz-Gerald suspects Federal Reserve Chairman Ben Bernanke "won't have the guts to take his foot off the gas" by September.
Watch as Fitz-Gerald positions investors on how to invest in this precarious time, including opportunities out there right now that can pan out well on the other side of the volatility:
//For more on how to play today's uncertain market, check out Private Briefing Editor William Patalon III's take on the Syria crisis in, "Make These Moves Before the U.S. Hits Syria" here...
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/eRwqssK-qe0/
The 10 Numbers You Need to Know This Week
Here are some of the numbers that are shaping the world this week... and why they matter to you:
$42 billion in net income was reported by all U.S. banks in the second quarter of 2013. This is the second consecutive earnings record posted.
34% is the increase in profit margin Wal-Mart is thought to derive from keeping employee wages at an average of $8.81 per hour. This is, in effect, a tremendous taxpayer subsidy, as full-time employees are pushed toward public assistance to make up for the shortfall. The White House estimates that underpaid Wal-Mart employees cost the taxpayers $5,815 per employee per year of employment. The "Wal-Mart Syndrome" has produced a very real drag effect on the economy, as disposable income dries up on a massive scale.
7,000% represents the increase, over the last five years, in access to emails, phone calls, and Skype conversations reported internally by the U.K.'s biggest spy agency, the Government Communications Headquarters. The amount of material being analyzed and processed has increased by 3,000% over the same time. These revelations come from materials "stolen" by National Security Agency (NSA) leaker Edward Snowden. The GCHQ is thought to spy on Americans' private communications in order to allow the U.S. NSA to deny that they are spying on Americans. The GCHQ, the NSA, and intelligence services in Canada, Australia, and New Zealand freely share collected information with one another. With friends like these, our Bill Patalon wonders what bona fide could enemies do?
40% is, according to the Institute for Policy Studies, the percentage of America's highest-paid CEOs who eventually ended up being fired, paying fines, or accepting government bailout money. The Institute went on to say that executives for the largest companies made about 350 times as much pay as the average worker in 2012. That's an average of $7,000 per hour. On the other hand, as Money Morning tech specialist Michael Robinson has reported, there are plenty of CEOs who are conduits to investor profits.
$46,000 is the theoretical price of one ounce of gold if all U.S. debt were required to be backed by gold. $7,931 is the theoretical price of one ounce of gold if merely the entire U.S. money supply were required to be backed by gold. But gold price jumps are far from only theoretical.
90 is the number of days that Chinese developer Broad Sustainable Buildings says it will need to complete the world's tallest building, to be called Sky City - a 2,750-foot, super-tall skyscraper using their patented pre-fab process. The cost is projected to come in at $628 million. In December 2012, Broad constructed a proof-of-concept 30-story hotel, completely furnished, in just 15 days, or 360 hours. In comparison, Dubai's 2,722 Burj Khalifa, the world's current tallest building, took about 2,200 days and $1.5 billion. Some say that China is building immense ghost cities in a failed bid to boost GDP. But the truth is that China is playing a very, very long game - and the China-shorters don't want you to know.
47 days remain until October 15, 2013, when the United States is forecast to hit its "debt ceiling" and will be forced to suspend debt service unless a bargain is struck. For most of the United States' existence, the debt ceiling vote was considered a mere formality, and not raising it was rarely, if ever, considered. In recent years, politicians have shown a great willingness to walk the country up to the brink of default for political gain. The possible impact of a United States default on payments is thought to be catastrophic to the global economy. Besides, the U.S. debt may be at a tipping point already.
3.5% is the proposed sales tax sought by the city of Denver, CO, on newly legal recreational marijuana. This is on top of an existing 25% excise tax on the drug. The proposed sales tax is being put to Denver voters on a citywide ballot in November. The modest tax, if approved, is expected to bring in an additional $3.4 million in revenue for Denver, which will go toward law enforcement and public health programs. Statewide, Colorado expects, conservatively, revenue hikes of around $650 million from legal, recreational marijuana. And there's upside for investors, too.
390,000 represents the total number of repossessed homes that were kept off the REO markets in 2012. Fanny Mae owns the largest chunk of that, or 114,000 homes. Just 39,000, 10% of the total number of homes in REO inventory, were listed for sale, with the remaining 90% of inventory withheld to keep home prices from crashing. But, consumer advocacy group America's Watchdog warned that if all REO properties were suddenly released to the markets, we would see bank failures and a 20% nosedive in home prices. This would contribute to a recession. On the other hand, a continued tight housing supply could prolong the housing slump. Money MorningCapital Wave Strategist Shah Gilani called the nature of the recovery into question just the other day. Here's how it went down.
180 is the number of minutes trading on the NASDAQ was frozen late last week. Officials say the outage was triggered by a "bug" in software that caused communications problems between the ARCA exchange and the NASDAQ system. The problem led to a processor overload and eventually halted all trade on the $4.5 trillion exchange. But there's more here than a simple bug. Shah Gilani explains why you shouldn't take their explanations at face value.
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/EFaARP7zXFw/
Muni Bonds: Beware This Major Flaw in Moody's Rating System
The fallout from Detroit's bankruptcy filing has investors - and even ratings agencies - questioning the validity of the bond rating system.
Now investors need to know if it can be fixed in a way that actually helps those investing in general obligation (GO) bonds.
In June, Detroit Emergency Manager Kevyn Orr sent the financial equivalent of a nuclear blast through the muni bond markets when he stated that holders of Detroit's GO bonds - whose holdings total roughly $600 million - will be lumped together with other unsecured creditors who collectively account for $11 billion in city obligations.
Historically, GO bonds were seen as the safest form of municipal debt. That's because historically municipalities would raise taxes, cut services - do anything - rather than force losses on bondholders.
"The bottom line is, Orr said that these bonds are unsecured, which potentially forces a loss on these investments," explains Money Morning Chief Investment Strategist Keith Fitz-Gerald. "If that's the case, then here we go: those formerly secured debts are in fact no safer than junk bonds. Which means, all of a sudden, in the blink of an eye, all the ratings on municipalities everywhere are suspect."
Already under pressure from having misjudged the entire financial crisis, ratings agency Moody's Corp. (NYSE: MCO) has proposed changes on how they will rate local governments' GO bonds thanks to Orr's not-so-subtle push.
Moody's suggests doubling the weight of pension debt in the rating criteria from 10% to 20%. It reduced the "economic factors" weighting from 40% to 30%. It also introduced a scorecard for U.S. local governments to boost the transparency of the rating process.
Moody's stated that increasing the emphasis on pension debt will recognize that both pensioners and debt holders have "enforceable claims on the resources of local governments."
But Moody's also stated the modifications likely won't affect a vast majority of the 8,200 local governments that it rates, which begs the question...
How much can investors rely on Moody's rating system?
[Editor's Note: Detroit is more than a sideshow. What's at stake there is bigger than most investors realize. Check out what Money Morning Capital Wave Strategist Shah Gilani has to say in "This Could Shake Muni Bonds to the Core."]
Bond ratings are supposed to reflect whether or not the issuer will be able to meet payment obligations, but Detroit's bondholders could be left with mere pennies on the dollar - a risk they didn't realize they were taking.
Here's what Moody's is missing - and how you can avoid ratings pitfalls but enjoy bonds' high yield...
Investing in Bonds: What to Do About Ratings
"If there's one thing we've learned from the Detroit failure, it's that the ratings system is absolute crap," says Fitz-Gerald. "Moody's has perpetually underestimated the impact of the most out-of-control aspect of most municipal spending: employee wage levels and pension obligations."
In the past, the wage levels (debt and pension) were at around 10% consideration; upping it to 20% doesn't have Fitz-Gerald convinced the rating system's accuracy will improve.
"I think the percentage should be higher because the municipalities are paying arguably huge pensions," he says. "As long as that's part of the ratings criteria, it seems to me pensions should have a higher weighting when it comes to ratings."
At the same time, Fitz-Gerald still sees the ratings as something investors must consider.
No matter how the agencies ultimately account for municipal liabilities, there is no way around the system's flaws. According to Fitz-Gerald, Detroit's muni ratings are going to be like "the proverbial canary in a coal mine."
So where does that leave those investing in muni bonds?
Fitz-Gerald is all for investing in the muni market - with a few caveats...
Bond Investing Guide
We'll show you how to play municipal bonds post-Detroit disaster – just go here for 2013's best bond picks and strategies.
Investing in Muni Bonds Today
Right now, investors can nab many munis at bargain prices. Detroit's bankruptcy thoroughly spooked investors and the muni bond prices plunged.
"I am against conventional wisdom on munis at the moment," says Fitz-Gerald. "They have been beaten down so far that the income is extremely appealing... assuming investors manage the risks appropriately."
That means check the ratings system, but be aware of its limitations. Take a look at the track record, stability, and management tenure before even beginning to consider individual bonds.
"If you're going to pick individual bonds, you want to stick with areas that are generally prosperous and growing, versus areas that are failing," Fitz-Gerald explains. "For example, I wouldn't buy any muni bonds in California right now; on the other hand, as an extreme example, some tiny town in the middle of North Dakota situated in the fracking boom might be a pretty good bet."
Finally, investors absolutely cannot approach blindly when investing in muni bonds, as they might have in the past. Therefore, make sure you're aware of what it is you want to achieve, and the losses you're willing to sustain. This is part of having a carefully planned and structured portfolio.
"The return of your money is much more important than the return on your money in today's market," Fitz-Gerald points out.
Check out Keith's bond picks - and how to play them for big gains - in his piece, "This Is Now Your No. 1 Choice for Big Gains," here...
Related Articles:
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/3Wn-r-RaDp4/
The "Smart Money" Is Buying Hard-Hit Gold Stocks Now
Part of the recent move up in gold prices to more than $1,400 an ounce and the uptick in gold stocks is a response to the crisis in Syria.
However, there is a lot more occurring just beneath the surface than geopolitics.
But investors would never get that sense from Wall Street, which is still in the midst of its perennial "hate gold" campaign.
Take, for instance, the hullabaloo over the liquidation by hedge fund manager John Paulson of a large part of his position in SPDR Gold Trust (NYSE: GLD).
In the second quarter of this year, Paulson cut his position in GLD from 21.8 million shares to 10.2 million shares. At first glance, he seemed to have lost faith in gold and was getting out.
But, there's more to that story...
The Financial Times reported that Paulson offset much of the sale of GLD by purchasing gold swaps on the over-the-counter (OTC) market.
Part of the reason may be cost. GLD has a management fee of 0.4%. The FT reported that with gold forward curve flattening, there's little cost to holding gold derivatives.
Another reason may be less transparency, making it easier to make a major move. In the OTC derivatives market, not everyone can figure out exactly what Paulson is doing with regard to investing in gold.
Editor's Note: This chart, with a few simple lines, illustrates a major reason to be investing in gold now - take a look here.
The real underreported action, however, may not be in the gold market, but in gold stocks.
More Smart Money Investing in Gold Stocks
Li Ka-shing, 85, is one of Hong Kong's richest businessmen. Bloomberg estimates his net worth to be about $27 billion.
He is also known as one of the world's savviest investors, buying assets on the cheap.
And he recently made a major move into gold stocks.
One of his companies, Cheung Kong Holdings Limited (CHEUY), recently formed a 50/50 joint venture with Canadian Imperial Bank of Commerce (NYSE: CM) called CEF Holdings. They want to invest into beaten-down mining stocks and particularly gold equities.
The CEO of the joint venture, Warren Gilman, told Bloomberg, "Long term, gold is a good place to be."
He added that gold's drop in price this year "is great" because his firm can now make quality long-term investments into certain gold stocks on the cheap.
Gilman said to Bloomberg, "It's tougher and tougher to find economic gold deposits in safe jurisdictions. You [will] see mine supply struggling to keep up with demand long term. That's a great recipe for higher prices in the longer term."
The bullishness of Li Ka-shing and CIBC echoes thoughts expressed recently by Money Morning Chief Investment Strategist Keith Fitz-Gerald.
Fitz-Gerald said, "I could very easily make the argument that gold miners are unloved, undervalued and probably the worst investment of the year. But, we know from history that's precisely the best time to buy. History shows you want to buy when there's blood in the streets."
Gold Stocks Rebound
For individual investors who have fewer resources than Gilman to research specific gold-mining companies, an ETF such as the Market Vectors Gold Miners ETF (NYSEArca: GDX) is a good option for investing in gold stocks.
Since hitting bottom in early July, GDX has soared about 30%. This caught some investors' attention, and now inflows into the fund are up.
But it has more upside potential for investors - and if it dips again, that would be an even better time to follow Li Ka-shing and others into gold stocks.
More support for investing in gold stocks now is the gold-stocks-to-gold ratio flagged by Money Morning Global Resource Specialist Peter Krauth. Krauth said this indicator is flashing the best buy signal in a dozen years.
In fact, Krauth found four bullish gold-price indicators all flashing buy signals now. Take a look...
Related Articles:
- Money Morning:
Why Gold Mining Stocks Are a Buy Now - Money Morning:
Today's Gold Convergence Is Your Best Buy Signal Yet - ETF Trends:
Paulson Slashes GLD Stake - Financial Times:
Paulson's Faith in Gold Unshaken Despite ETF Sale - Bloomberg:
Li Ka Shing -Backed CEF Seeking to Make Gold Investments - ETF Trends:
A Double for Popular Gold Miners ETF? Maybe
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/qc_rSWjYyeI/
Obamacare Facts: Our New Healthcare Has Created Hundreds of Jobs… For Lobbyists
One of the real Obamacare facts we've shared with you is how the Affordable Care Act will influence private employers to cut hours and jobs across the nation.
There is one group of workers, however, that is still raking in new job opportunities at a stunning rate, thanks to Obamacare.
I'm talking about lobbyists.
Since Congress passed Obamacare, lobbyists have been in high demand by Fortune 500 companies.
Companies like Delta Airlines, UPS, BP America, and Coca-Cola hire lobbyists to help navigate the bill. These lobbyists will remain in high demand until at least 2020 - when some portions of the law will finally be implemented - to help change requirements and seek exemptions.
This grand lobbying push isn't new in Washington, D.C. We've seen a similar lobbyist rollout with previous legislation like the Dodd-Frank Act.
But the Obamacare lobbying highlights a growing trend in Washington. It highlights another "revolving door" that exists: the one between the halls of Congress and the boardrooms of corporations looking to game the system...
Obamacare Facts: Healthcare Is Lobbying on Steroids
According to OpenSecrets, hundreds of former congressional representatives and senators are currently lobbyists or senior advisors to companies, helping to influence the very government on which they once served.
It wasn't always this way.
In 1974, only 3% of retired or defeated congressmen became lobbyists.
Then in 2009 U.S. President Barack Obama said his administration would reduce the influence of lobbyists in Washington.
A funny thing happened...
His policies' lack of bite fueled an increase in what has long been a favorite pastime for Washington elite, particularly members of Congress.
Now, according to author Mark Leibovich, about 50% of former senators are lobbyists, in addition to 42% of former congressmen.
That means the people scoring cozy, high-paying spots at some of the premier K Street firms are congressional staffers, legislators, and regulators - all who helped craft legislation like Obamacare.
Former Rep. Earl Pomeroy, D-ND, for example, was a critical voice on healthcare and tax issues as a member of the House Ways and Means Committee. Pomeroy and his former Chief of Staff Bob Siggins joined lobbyist shop Alston & Bird in 2011, after his district-race defeat to Rep. Rick Berg, R-ND.
And it's not just acting members of Congress who voted to serve their constituents - it's also staff members who worked for these lawmakers...
Avenue Solutions, a K Street firm, hired Yvette Fontenot, who worked on the staff of the Senate Finance Committee and U.S. Department of Health and Human Services' Office of Health Reform. The Finance Committee wrote key tax provisions of the law, whereas the Office of Health Reform will be responsible for the law's implementation. Fontenot now lobbies on behalf of the Blue Cross Blue Shield Association and the National Electrical Manufacturers Association, according to reports.
There are many more stories of former lawmakers and public servants who turned influence into a six- and even seven-figure salary. The average pay raise is 1,452% for such opportunities, according to Republic Report. That's how Obamacare has created a windfall for some.
These facts about Obamacare lobbying point to an accelerating trend in American business, one that has distorted the free market and invited greater amounts of regulation into the lives of every American...
Obamacare and the Rise of the Fifth Rail
Lobbying spending in 2012 by U.S. corporations was near record levels at $3.31 billion and is expected to be even higher in 2013.
I like to call this the "Rise of the Fifth Rail" in competition among rivals.
You see, in more traditional free markets, companies and competitors go head to head on the "four P's": price, product quality, promotion, and place (market access).
But over the last decade, we've seen companies competing on a fifth "P": public policy.
Companies are using Washington insiders as a competitive tool, by paying lobbyists to influence and circumvent laws. This has distorted the markets and driven fair competition into the ground. It has also hollowed out the American free market from the inside.
Using public influence over private sectors is the hallmark of corporatism and fascism. And over time, if unchecked, this system will stifle innovation, hinder competitors who can't afford K Street's services, and drive a greater divide between the rich and the poor. The poor will never have the means to influence change.
This is how the facts about Obamacare show us how much structural decay there is in markets and competition.
Bottom line: Corporate influence is alive and well, and the playing field isn't being leveled in favor of ordinary Americans.
This is just another of the disappointing facts about Obamacare. Go here for the full list.
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/U88QTp5ppnQ/
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A rare Gundlach fund opens up
The carnage in the taxable bond closed-end funds is giving advisers another opportunity to invest in a tightly controlled mutual fund co-managed by bond guru Jeffrey Gundlach.
Credit: RSS for Investments
Credit: RSS for Investments
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