Europe's fiscal mess continues to dominate the headlines. Late Wednesday,
stocks sold off sharply after fresh warnings surfaced over the potential impact
of the euro zone's debt crisis on the global economy and banking system. The
markets further dipped Thursday on concerns about French and Spanish bond
yields. Ratings agency Fitch cautioned that U.S. banks could be "greatly
affected" if Europe's debt crisis is not resolved quickly. That news caused
traders to dump bellwether financials such as Bank of America (NYSE: BAC ),
JPMorgan Chase (NYSE: JPM ), Goldman Sachs (NYSE: GS ) and Morgan Stanley (NYSE:
MS ). But it's not just U.S. banks that could begin to feel the wrath of
Europe's debt debacle. If the debt mess prompts the region to roll over into
recession, it could wreak havoc on U.S. companies who rely heavily on revenues
generated from European exports. According to Standard & Poor's, companies in
the S&P 500 Index saw about $1.36 trillion in European sales last year, which is
approximately 30% of all overseas sales. That makes Europe the largest market
for U.S. goods. That number is significant, but it might be even greater, as
many companies don't break down their foreign sales by region. What this means
is that any substantive decline in Europe's ability to buy goods from U.S.
companies almost certainly will have a negative effect on many corporate bottom
lines. So, what stocks are most vulnerable to a debt-induced euro zone
recession? The most obvious answer is companies that have a lot of European
exposure. In a Nov. 8 note , Citigroup Research said that "deeply cyclical"
industries would be most affected, but the note also said defensive sectors were
particularly susceptible to a European slowdown. On the cyclical front, we have
companies like Ford (NYSE: F ) and General Motors (NYSE: GM ). GM recently
reported that its third-quarter net profit dropped 15% due to losses in Europe,
so we're already starting to see companies stuck in European muck. Defensive
giants such as Coco-Cola (NYSE: KO ), Philip Morris (NYSE: PM ) and Kraft Foods
(NYSE: KFT ) all have significant exposure to Europe, and all rely heavily on
sales in Europe, the Middle East and Africa for a significant portion of their
respective revenues. Other companies with heightened exposure to Europe include
gold and copper giant Newmont Mining (NYSE: NEM ), chemical maker DuPont (NYSE:
DD ) and even fast-food behemoth McDonald's (NYSE: MCD ). Tech is vulnerable,
too especially firms like diversified enterprise storage and software giant EMC
Corp. (NYSE: EMC ). To put a twist on a popular phrase, what happens in Europe
doesn't stay in Europe. If a recession hits the euro zone, investors holding
the aforementioned companies might want to duck and cover. (And to protect your
portfolio from Europes problems, check out these two homegrown sectors with
healthy U.S. companies that do all their business domestically.) As of this
writing, Jim Woods did not own a position in any of the aforementioned stocks.
Friday, November 18, 2011
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This Stock Is Literally a Cash Machine
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tdp2664 InvestorPlace Next time you’re in a convenience store, take a close look at the small free-standing ATM near the door. Maybe hang out a little while and “enjoy” a hotdog or bag of chips so you can take a close look at who’s using those machines and how often. You may learn something that can make you some real money. Those little cash machines are currently churning out big profits for shareholders of Cardtronics (NASDAQ: CATM ). If you ever wondered who’s willing to pay the "big fees" for withdrawing money from these machines, you may want to take a long look at the debit card in your wallet. Cash machine companies are offering low-cost or no-fee products to consumers that could knock debit cards off their perch as the leading way to pay for retail transactions. The market for this kind of access to cash is large, profitable and growing, and the biggest player in this part of the "fringe-banking" sector is Cardtronics — our pick for buyers looking for growth in today's market. In the near term we expect investors to push into the stock partially because of all the bad news coming from the big debit card issuers like Bank of America (NYSE: BAC ). Although it seems that the big card issuers are backing away from some of the recent fee increases, they’re actually just pushing those debit card charges into less obvious places . For example, if you need to replace a lost card, BofA will now charge you $20 to get one quickly. We don't expect this kind of thing will fool consumers for very long. Cash is a close second to the most popular way to pay for retail transactions, and if debit cards are cost-prohibitive, ATMs become even more important to consumers. CATM not only operates the largest ATM network in the U.S., it also has products consumers can use for no-fee access to ATMs around the country. These days the adage of "cash is king" has never been truer. The stock popped nicely on third-quarter earnings earlier this month and has since consolidated into a classic pennant formation. In the chart below, you can see what the stock looks like right now and where we would expect prices to go in the near term if we get the breakout to the upside we’re expecting. Our short-term target would net investors 23%, and it could be much more if momentum takes the stock further. Click to Enlarge The technicals and fundamentals for this stock look good, and growth prospects are high in the short term. If you’re looking for a way to turn the missteps and bad news of the traditional banking industry to your advantage you might want to look at CATM, which is steadily emerging as the more attractive alternative for consumer payments. Options Alternatives CATM is a small-cap stock with a thinly traded chain sheet. That isn't a reason not to buy a call option, but it does change how the trade is set up. In a situation like this, we recommend looking at the longer-term expirations and using a limit order to split the bid/ask spread. For example, the March 2012, 25 strike calls traded on Thursday in between the bid/ask at $3.20 per share. This creates a lot of leverage that could seriously ramp up gains if the stock rallies in the short term.
Todays Gold Price Per Ounce Spot Gold Price Per Gram; Silver Price Per Ounce Spot Rates; Mid Day Investing News
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dow2664 Gold and silver contract price per ounce rates dropped lower in noteworthy fashion. Last session, precious metal gold and silver contract rates closed red across the board. Gold contract closed lower by 54.10 at 1720.20 per troy ounce. Silver contract finished the last session lower by 2.33 at 31.50 per troy ounce. The winds of change blew through however and early morning trends today reveal more positive trend-line movement for precious metal gold and silver prices. Prior to opening bell today, spot gold price per gram and spot silver price per ounce trend-line action moved on the positive side of break-even. It appears that gold’s safe haven appeal remains attractive in the midst of the European debt crisis. The dollar lost strength last session as well which is also helping precious metal acquisitions increase. Overall however, gold wins out in the global marketplace right now due to economic uncertainty. Debt default potentials are high for numerous countries and investors’ fears relevant to these potentials, not to mention the escalating debt crisis in the eurozone, continue to drive investor choice. Safe haven’s like gold remain in favor during times like these. Today, as the trading session reaches the mid-day mark in the U.S., precious metal gold and silver contracts were trending higher. Gold contract for December delivery was green by .45 percent at 1728 per troy ounce and silver contract for December delivery was green by 2.45 percent at 32.27 per troy ounce. Spot gold per gram was trending lower at this pint though. Spot gold was lower by .12 at 55.19 per gram. Spot silver price per ounce was higher by .36 at 31.85. Camillo Zucari
Wal-Mart’s Woes, Boeing’s Wows! — Friday’s IP Market Recap
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tdp2664 InvestorPlace This week on Wall Street saw the world's largest retailer continue a years-long struggle and one of the world's biggest names in aerospace in defense rewrite the history books. Wal-Mart Stores (NYSE: WMT ) watched its third-quarter profits slip to $3.34 billion compared to $3.44 billion in 2010, dampening what could have been a cheerful earnings report Tuesday that included the company's first period of increasing U.S. same-store sales in 10 quarters. The report sent WMT stock down 2.5% of the day, and Wal-Mart limped out down 3.3% on the week at $57.22. The retailer has struggled for years despite the seeming appeal of its lauded deep discounts in a down economy — however, lower-cost companies like Dollar General (NYSE: DG ) and Dollar Tree (NASDAQ: DLTR ) have continued to cut into Wal-Mart's market with great bargains, as has warehouse giant Costco (NASDAQ: COST ). Also problematic for Wal-Mart on the other side of the price line is more trendy retailer Target (NYSE: TGT ). The country's No. 2 retailer took the spotlight from WMT with its third-quarter earnings report, which had the company beating analyst estimates with profits of $555 million, up from $535 million a year ago. Target got a momentary boost on the news but finished the week flat at around $53. Target recently has gone on the aggressive, teaming up with credit card company American Express (NYSE: AXP ) in offering prepaid debit cards — a direct answer to the Green Dot-powered Visa (NYSE: V ) and MasterCard (NYSE: MA ) cards that can be found in Walmart stores. Still, Wal-Mart remains the stronger competitor , with its prices offering consumers much more protection against
Whatever Gold Price Downside Risk Remains Here Is Peanuts Compared to the Triple of Quadruple Upside
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DG365FD46564GFH654FU898 Gold Price Close Today : 1,724.70 Gold Price Close 11-Nov : 1,787.50 Change : -62.80 or -3.5% Silver Price Close Today : 3241.3 Silver Price Close 11-Nov : 3467.1 Change : -225.80 or -6.5% Gold Silver Ratio Today : 53.210 Gold Silver Ratio 11-Nov : 51.556 Change : 1.65 or 3.2% Silver Gold Ratio : 0.01879 Silver Gold Ratio 11-Nov : 0.01940 Change : -0.00060 or -3.1% Dow in Gold Dollars : $ 141.39 Dow in Gold Dollars 11-Nov : $ 140.54 Change : $ 0.84 or 0.6% Dow in Gold Ounces : 6.840 Dow in Gold Ounces 11-Nov : 6.799 Change : 0.04 or 0.6% Dow in Silver Ounces : 363.93 Dow in Silver Ounces 11-Nov : 350.52 Change : 13.41 or 3.8% Dow Industrial : 11,796.16 Dow Industrial 11-Nov : 12,152.93 Change : -356.77 or -2.9% S&P 500 : 1,215.65 S&P 500 11-Nov : 1,263.73 Change : -48.08 or -3.8% US Dollar Index : 78.081 US Dollar Index 11-Nov : 76.906 Change : 1.175 or 1.5% Platinum Price Close Today : 1,593.30 Platinum Price Close 11-Nov : 1,643.20 Change : -49.90 or -3.0% Palladium Price Close Today : 606.10 Palladium Price Close 11-Nov : 660.95 Change : -54.85 or -8.3% The GOLD PRICE failed in its second try at $1,800. Reached for it on Monday, but fell back to $1,760 – $1,765 and traded sideways through Wednesday. Once it broke $1,740 on Thursday, gold tumbled all the way to $1,711. Can’t interpret that as anything but a breakdown. This should be the second and final leg down we’ve been waiting for. How far will it run? Support remains at $1,705, and below that at $1,675. The GOLD PRICE caught this week at the 50 dma (1,715.80) but next week might reach $1,675. If that holds not, then look at $1,600, $1,536, and $1,475. Today the GOLD PRICE gained $4.90 to close Comex at $1,724.70, a flat wee bounce after falling $54.00 yesterday. In view of the unsolved European crisis and the ripeness of this gold correction, I am ready to start buying by averaging down. Buy some at $1,705, $1,675, $1,605, etc. BECAUSE I DO NOT KNOW WHERE THIS WILL START BUT I AM CONFIDENT GOLD REMAINS IN A BULL MARKET WITH FAR MORE UPSIDE. Whatever 10% or even 20% downside risk remains here is peanuts compared to the triple or quadruple upside. The SILVER PRICE was taken to the same woodshed as gold. Once it broke 3350c on Thursday, silver never stopped until it hit 3088c. Today it rebounded, but not with anything more than a dead cat bounce to 3250c. To gainsay this breakdown, silver would have to close above 3250c then rapidly above 3400c. Down below several landing zones appear possible. 3000c is one, then 2850, and finally 2600c. Lower prices are possible, but not likely. I expect to see most of the metals’ downside in the next two weeks, if not sooner. DON’T MISS THIS: Right now, when every timid heart, including your own, is trembling, audacity and a cool head will pay off. Now is the time to buy, not when all the silly media cheerleaders have discovered a strong upward trend and prices are running away to the upside. GOLD SILVER RATIO swappers should mark that my commentary yesterday contained an error. I meant to recommend you swap silver for GOLD, not vice versa. Ratio is rising, which means silver is growing cheaper against gold, and we always swap from the dear metal into the cheap. If you swapped silver for gold in the spring at any level lower than 42:1, you can swap gold for silver now and realize gains in silver ounces above 28.5%. Me, I would scoop those ounces off the table and into my lap. SWAPPERS who swapped higher than 42:1 keep on waiting for a 57.5:1 ratio, which may come soon. Delude not thyself, neither listen to siren voices blaring that the precious metals bull market has ended. It has not, and will run to yet greater heights in the next 3-10 years. I don’t know what happened and can’t find out yet, but my commentary for 17 November was not sent out or posted to the website (there was none for 16 November). Whenever they’re not posted at www.the-moneychanger.com you can also check at www.goldprice.org , where they are also posted. The week was not kind to the little things, or to anything else, except the US dollar index. Ever-volatile silver and palladium took the deepest wounds, but stocks didn’t lag far behind. Never mind the two bank-owned shills who seized power in Greece and Italy, markets are not satisfied. That fear and uncertainty is churning all markets, and will until some real solution is brought forth. By the way, “real solution” includes not “haircuts” for the banks, but “eviscerations.” A debt jubilee. Debt is so huge that it can’t be paid without perpetual debt slavery. This crisis snowball is fast rolling down hill, and soon will speed out of control, I fear. Before I say anything, I want y’all to know I’m tearing the tops off the charts and reading out whatever they say, good or bad. If y’all don’t like it, don’t shoot the messenger. Stocks this week fell down out of an even-sided triangle at 11,950 and gives the Dow an initial target of 11,250, below the 50 day moving average (11,523 today). Now looks as if the Dow will NOT make any final push up after all. All this is a breakdown after a Jaws of Death has formed, a most reliable top formation. Bad vibes. Bad karma. Bad juju. Today the Dow gained 25.43 (measly 0.22%) to close at 11,796.16. S&P, on the other hand, dropped 0.48 (0.004%) to 1,215.65, while the Nasdaq Composite and Nasdaq 100 both closed slightly lower. That argument signals bewilderment in the market, and bewildered markets don’t rally, generally. Stocks — somebody (not I) might be able to pick winners in the next 4 years, but there’ won’t be many. Most will be mauled by the bear. US DOLLAR INDEX dropped 20.1 basis points today (0.26%) to 78.081, but look, folks, it jumped in one week 117.5 basis points 1.5%. Money fleeing Europe is driving it, and will drive it. It is rallying, and could reach 83.15. The Japanese Nice Government Men will have to tame the rambunctious yen, and right soon. Without exports, Japan will become an island of unsalable parked cars. They’ve hit it twice since the earthquake, but every time it comes right back — lots of scared money out there looking for a refuge. They must hit it again soon. Today at 129.98c/Y100 (Y76.93/$1). The world is so scared of the Euro that it has gapped down twice in the last two weeks and will continue to fall toward 1.2000. Closed today 1.3515, up 0.39%. We have a beautiful glowing red-orange fall sunset here this evening, better than fine wine. Y’all enjoy your weekend! Argentum et aurum comparenda sunt — – Gold and silver must be bought. – Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold’s primary trend is up, targeting at least $3,130.00; silver’s primary is up targeting 16:1 gold/silver ratio or $195.66; stocks’ primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don’t intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.
Think Defensively in a Chutes and Ladders Economy
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tdp2664 InvestorPlace It could have been worse — and for a while Thursday, it was. At one point in mid-afternoon, the Dow was off 229 points. However, in the last half-hour of trade, stocks bounced back a bit as investors clung to the hope that somehow the U.S. economy can skirt recession in 2012, even if Europe slides into an abyss. Today, the market continues to waffle — a sight all too familiar given recent volatility. It would seem as if hope and fear are the two major factors driving the market as of late. Truth be told, that same hope has propped up a bunch of markets recently, not just stocks. Just look at the oil price. Until Thursday, crude was climbing relentlessly, crossing $100 a barrel Wednesday. It reminds me of May 2008, when oil traders were jubilating over $147 a barrel and salivating at the prospect of $200 (promised in a famous Goldman Sachs forecast). The economy was already in trouble then. Within four months, the financial crisis exploded to dimensions unprecedented since the Great Depression. By February 2009, West Texas Intermediate was changing hands at $34. I’m not saying we’re looking at a replay of those events now. However, it seems clear to me that too many U.S. investors are naively ignoring the storm on the other side the Atlantic. On Thursday, yields on both Italian and Spanish 10-year bonds traded, for a time, above 7%. Although they are now below this major threshold, in a world where the United States and Germany are paying just 2% on similar maturities, a 7% yield is still shocking for one major European sovereign, let alone two. And France might not be far behind! I continue to believe that the current relief rally for stocks, which began Oct. 4, will carry into December, lifting the S&P 500 Index as high as 1,300 or slightly above. Given the looming risks, it’s imperative these days to “think defense first” when making your investment moves. That doesn’t mean you have to avoid stocks entirely. But you should confine your new purchases to stocks that offer strong defensive characteristics — such as a generous (and preferably increasing) dividend. One to consider right now: Baxter International (NYSE: BAX ). On Tuesday, the Chicago-based medical supplier raised its dividend 8% — a nice, solid number reflecting strong confidence by management in the company’s 2012 earnings outlook. Besides throwing off $534 million of cash dividends, BAX has bought back $1.41 billion worth of stock year to date (through Sept. 30). Indeed, I expect dividends and buybacks to take up essentially all of Baxter’s free cash flow in 2011. This is an outfit that believes in sharing the wealth with its owners!
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