Saturday, October 13, 2012

Jobless claims plunge to nearly four-year low

NEW YORK (CNNMoney) -- Jobless claims plunged last week to a nearly four-year low, in the latest bit of good news for the U.S. economy.

Initial unemployment claims totaled 348,000 in the week ended Feb. 11, said the U.S. Department of Labor. That's 13,000 less than the week before.

It's also significantly less than the forecast of 365,000 claims, based on a survey of analysts by

The total number of people filing for their second week of unemployment benefits or more also dipped, falling to 3,426,000, a decrease of 100,000 from the prior week.

John Lonski, chief economist for Moody's Capital Markets Group, said signs that the job market is strengthening could be the beginning of a trend.

"The labor market could be going through an important turning point that would lend respectability to the current economic recovery," he said.

Earlier this month, the Labor Department announced that the unemployment rate had dipped to 8.3% in January, as the national economy gained 243,000 jobs.

But Lonski noted that the recovery is still threatened by turmoil overseas -- specifically the European fiscal crisis and unrest in the oil-producing Middle East.

"Unfortunately, the menacing situation in Europe and the world's major exporting region does not want to go away," he said. "If the situation outside the U.S. could stabilize, you would be looking at even bigger gains in employment." 

London Seeks Slice Of China Currency Market

The U.K. and Hong Kong announced a deal Monday to jointly develop the offshore market for China�s currency.

The U.K.�s Chancellor of the Exchequer George Osborne said his visit to the region furthers the continuing dialogue of �establishing London as a new hub for the RMB market, as a compliment to Hong Kong.� He was speaking on the first day of the Asian Financial Forum, before traveling to Beijing and Tokyo.

The finance minister said London is well placed to act as a gateway for Asian banking and investment for Europe and a bridge to the United States.

The joint private-sector forum introduced today will specifically be looking into clearing and settlement systems, market liquidity and the development of new yuan-denominated products. Osborne said it marks another step toward greater capital convertibility.

Hong Kong has been used as a testing ground by China�s central government, as it continues to gradually internationalize its currency. Beijing�s motive is to reduce its dependence on the U.S. dollar as the reserve currency for global trade.

Cross-border trade settled in yuan rose to 2.08 trillion yuan last year, while direct investment settled in yuan came to 110.9 billion yuan, according to the People�s Bank of China.

U.K. Chancellor of the Exchequer George Osborne talks with Li Ka-shing, Greater China's richest man with a net worth of $22 billion.

Angel Investor Contact Details – How to Get Them

In this article I answer the question: Angel Investor Contact Details – How to Get Them? There are two main options when looking to obtain contact details for angel investors. If you’re looking to find contact details for angels, you can either buy a directory of investors with contact details researched by the database provider. Or, you can do the work yourself or hire someone on your staff to do it.

If you’re going to do all of the work yourself or delegate it to a person on your team, you have to consider the cost of this decision. Is it worth assigning a relatively mind-numbing project someone on your team who is capable of completing much more challenging projects? It’s worth wondering whether it may be better to simply pay for an already completed database without putting someone on your team through a long process of finding contacts and researching each investor.

Additionally, what is the opportunity cost? Not only could you make that employee very dissatisfied with this job but also you could be taking him or her away from a much more profitable task that he or she is used to doing, such as contacting these investors or managing a different part of the business.

On the other hand, you could purchase a database and get your team all the leads they have been waiting for. Then, you simply decide which investors you’d like to work with and go through the database contacting each one that you think is a great match for your business. I’ve found that this is often the preferred investment for entrepreneurs and businesses who have more important things to worry about in managing the business than researching and finding investors–a job that could take hundreds of hours.

But… if you want to be able to quickly contact and work with angel investors you will need a angel investor directory in Excel format.

To obtain this resource from our team please visit

- Theo O’Brien

Ford Ends 2011 With a Bang

Here's a cheerful-sounding note from the PR crew at Ford (NYSE: F  ) for the last business day of 2011: The Blue Oval announced on Friday morning that "U.S. sales of the Ford brand this week topped 2 million vehicles for the first time since 2007."

According to the Blue Oval's PR mavens, this makes Ford the "best-selling [automotive] brand in America" and "the first automotive brand to hit the 2 million mark since 2007."

Speaking as a Ford shareholder, I'd say that sounds good. So is it?

A little context is in order
As far as auto sales go, 2007 was a different world, with total U.S. light-vehicle sales over 16 million, a number the industry hasn't come anywhere near since. (When 2011's totals are added up next week, the result is likely to be in the neighborhood of 12.8 million.) And while it was a sales bonanza compared with the economic crisis that would follow in 2008, it was seen at the time as a rough year for Ford, and a tough one for the industry in general:

  • 2.1 million Ford-brand vehicles were sold in 2007, a total that was down almost 14% from 2006 numbers.�
  • Ford also sold about 168,000 Mercury-brand vehicles (remember Mercury?) that year, most or all of which should probably be folded in with the Ford-brand results for a fair comparison, if one should be needed.
  • Ford-brand sales were third in the U.S. pecking order in 2007, behind General Motors' (NYSE: GM  ) Chevrolet and Toyota (NYSE: TM  ) , which was then challenging for the U.S. sales lead. (Remember Toyota? Yes, I'm joking. Sort of.)

Of course, Ford was in deep trouble in 2007, with then-new CEO Alan Mulally just getting started on the daring all-or-nothing turnaround plan that would transform the company (and Detroit). And now? Ford's total U.S. sales may be a smaller number in 2011 than was seen in 2007, but it's a bigger and (more to the point) much more profitable piece of a smaller pie.

So yes, I'd say that's a milestone worth trumpeting. But how does it look in today's context?

The emerging picture as 2011 ends released its December auto-sales forecast earlier this week , and while it's largely consistent with trends we've seen in recent months -- solid incremental year-over-year gains for Ford and GM, more dramatic increases for Chrysler and Hyundai (OTC: HYMTF.PK) -- there are some other themes emerging.

First, while this has been predicted (here and elsewhere) for months, it's looking like Toyota's long sales nightmare might finally be coming to an end. TrueCar predicts that the long-suffering Japanese giant's U.S. sales will be down just 1.7% over last December's. That's a sign that inventory troubles may finally be receding -- and a promising sign of early success for the company's all-new Camry sedan.

That's important: The Camry is perhaps the company's most important model in the United States, and critics greeted the latest iteration with some skepticism. But with a brand-new "Recommended" rating from Consumer Reports issued just this week, the revamped Camry seems to be well on its way to success.

Hard-hit rival Honda (NYSE: HMC  ) , which suffered badly in the wake of flooding in Thailand, may not be so lucky: TrueCar sees Honda's year-over-year sales down almost 16%. Honda, of course, has other problems, with its mainstay Civic compact losing sales ground (and its long-held Consumer Reports recommendation) to strong competition from Hyundai, Ford, and GM. Honda's rushing a refresh of the Civic, but it may be a year before we see it at dealers.

Meanwhile, Ford appears to be on course for a year-over-year increase of about 7%. That's a so-so result, perhaps, but in the light of history -- and the company's relentless push toward even greater profitability -- it's one that could turn out to be better than you'd think.

Finally, while Ford's long-awaited dividend will be back in March, you don't have to wait to put the power of reinvested dividends to work in your portfolio. In a special new report, Motley Fool analysts identify "11 Rock-Solid Dividend Stocks," all great additions to a long-term investor's portfolio. This new report is completely free for Fool readers -- get instant access.

Make Money in Hefty-Dividend Payers the Easy Way

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you're interested in investing in stocks that pay out sizable dividends, the Global X SuperDividend ETF (NYSE: SDIV  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously. Its yield recently topped 8%.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Global X ETF's expense ratio -- its annual fee -- is 0.79%, which is higher than many ETFs', but lower than that of the typical stock mutual fund. It's relatively small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF doesn't have much of a performance record yet, as it's very young. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

The fund is rather small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

What's in it?
Several big dividend payers have performed extremely well over the past year. PDL BioPharma (Nasdaq: PDLI  ) surged 45%, collecting royalties from a slew of medications. Its stock recently yielded 9.3% and the company will remain attractive as long as it's able to add new drugs, since existing ones will eventually have their patents expire. Tobacco concern Vector Group (NYSE: VGR  ) gained 19% and recently yielded 9.1%. It's a profitable company, but it also offers reasons to worry, such as a high payout ratio that suggests its dividend isn't sustainable and a shrinking base of smokers in the U.S., partly due to increased regulations and taxes.

Offshore drilling contractor Seadrill (Nasdaq: SDRL  ) advanced 17% over the past year, and recently yielded 8.2%. It's poised to benefit from increased interest in deepwater drilling, and has been profiting from the high price of oil.

Other dividend payers didn't do as well last year but could improve in the years to come. Health Care REIT Omega Healthcare Investors (NYSE: OHI  ) only gained 2% over the past year, partly over worries about cuts to Medicare that could threaten Omega profits. It recently yielded 7.8%.

The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Learn about the 5 ETFs That Could Soar in 2012. And if you're looking for some great investments beyond ETFs, consider these 12 Dividend Stocks for 2012.

Be Prepared: Don’t Get Caught Short…

There is a fine line between success and failure � and in this market, that fine line is separating stocks from what could be a recovery and additional downside action.

In whatever direction the market chooses, there will inevitably be money making opportunities. However, patience will be key in the following days and weeks as the market attempts to sort itself out. You�ll need to be prepared � and be aware of the possible pitfalls � if you are going to be putting your trading dollars on the line.

First, avoid going all-in on the short side. It has been very tempting to sell short momentum stocks in this environment. Many of these names became overextended during the summer months and became attractive short opportunities during the August correction.

However, shorts have been absolutely decimated twice in October as equities have fought for higher ground:

At the very beginning of the month, stocks staged a spectacular 3 p.m rally, igniting a short-covering frenzy that pulled the market from the drink of disaster (red circle). Yesterday�s action was very similar � a sharp drop at the open that eventually led to a significant rally during the last hour of trading (blue circle).

Even with stop orders in place, it is doubtful that a trader would have been able to cover at his desired price. All in all, it appears that way too much money is headed to the short side as the market approaches major areas of support and resistance. It would be wise to seek additional confirmation at these important levels before betting too heavily on the long or short side.

Next, it�s becoming obvious that when it comes to market sentiment, Europe is in the driver�s seat. Yesterday�s price action is proof enough of this. Just the whiff of European bailout rumors was all it took to march stocks back toward resistance in just 12 minutes of non-stop buying. Unfortunately, this tells us that continued negative Eurozone news could have the opposite effect.

As I�ve written a few times before, I want to see this market shrug off bad news out of Europe and move higher. An event like this would be a true mark of a change in sentiment for the better. For now, I believe many traders are still waiting for the other shoe to drop.

Until this mentality is squashed, an honest attempt at a recovery in equity prices might have to wait…

10 Direxion ETFs Boosting Their Multipliers

Big changes are coming to the Direxion Shares ETF lineup. The company’s board of trustees approved realignment to the names and investment strategies for 10 leveraged funds.

The funds’ new investment objectives will seek daily results — before fees and expenses — of 300% leverage or 300% inverse performance of the fund’s target index. The funds previously sought daily results of 200% leverage or 200% inverse.

The changes will be effective Dec. 1, 2011 and apply to the following Direxion funds:

Current Fund Name/New Fund Name

Daily BRIC Bull 2X Shares/Daily BRIC Bull 3X Shares (NYSE:BRIL)
Daily BRIC Bear 2X Shares/Daily BRIC Bear 3X Shares (NYSE:BRIS)
Daily India Bull 2X Shares/Daily India Bull 3X Shares (NYSE:INDL)
Daily India Bear 2X Shares/Daily India Bear 3X Shares (NYSE:INDZ)
Daily Gold Miners Bull 2X Shares/Daily Gold Miners Bull 3X Shares (NYSE:NUGT)
Daily Gold Miners Bear 2X Shares/Daily Gold Miners Bear 3X Shares (NYSE:DUST)
Daily Natural Gas Related Bull 2X Shares/Daily Natural Gas Related Bull 3X Shares (NYSE:GASL) Daily Natural Gas Related Bear 2X Shares/Daily Natural Gas Related Bear 3X Shares (NYSE:GASX)
Daily Retail Bull 2X Shares/ Daily Retail Bull 3X Shares (NYSE:RETL)
Daily Retail Bear 2X Shares/ Daily Retail Bear 3X Shares (NYSE:RETS)

Each of the funds’ ticker symbols and expense ratios will remain the same.

The Boston, Mass.-based investment firm manages around $7.5 billion in ETF assets.

This article is brought to you by ETFguide is the information leader on exchange-traded funds because of its vendor-neutral approach and its progressive reporting style. Unique features include an ETF bookstore, a monthly email newsletter and subscription-based ETF portfolios.

2010 Q4 Earnings: Wells Fargo Reports Strong Jump in Profits

Wells Fargo said Wednesday that it had net income of $3.4 billion, or $0.61 per share, in the fourth quarter of 2010 vs. $2.8 billion, or $0.08 per share, a year ago.

(Earnings per share for the fourth quarter of 2009 were reduced by $0.47 for the combined dividends and deemed dividend upon redemption and full repayment of TARP preferred stock, according to the company.)

Wells’ quarterly earnings performance met analysts’ expectations, as did its revenue: Sales were $21.5 billion, down from $22.7 billion in the same period of 2009 but up from $20.9 billion in the third quarter of 2010.

“In 2010, Wells Fargo saw solid growth in a variety of businesses, with record net income for the full year as well as the fourth quarter,” said Chairman and CEO John Stumpf, in a press release.

Its shares were trading down, along with the broader markets, about 2% to $31.75 mid-day Wednesday.

Financial Advisors, Retail

In terms of its advisor headcount, released separately from its earnings report, Wells Fargo says it has 15,188 financial advisors – an increase of 100 from the previous quarter and an addition of 227 from the same year-ago quarter. This keeps it in the No. 3 slot, behind Morgan Stanley with about 18,100 FAs and Merrill Lynch with roughly 15,300.

Its FAs have$1.2 trillion in assets under management, up from $1.1 trillion in the third quarter of 2010.

The unit also has 4,386 licensed bankers, down nearly 200 from the third quarter.

Wells Fargo’s wealth, brokerage and retirement unit reported net income of $197 million in the fourth quarter, up $213 million from the same period of 2009, when results were affected by an auction rate securities settlement.

Revenue for the unit was $3.0 billion, up 15% from the fourth quarter of 2009.

During the period, “higher asset-based revenues, brokerage transactional revenue and net interest income were partially offset by lower securities gains and other fees in the brokerage business,” the company said in a press release. Also, the total provision for credit losses increased $20 million from fourth quarter 2009.

Non-interest expense was up 2% from fourth-quarter 2009 due to growth in broker commissions and primarily driven by higher production levels, Wells Fargo says.

Client assets of $1.2 trillion were up 6% from the fourth quarter 2009, and managed-account assets increased $38 billion, or 20%, from the fourth-quarter 2009 “driven by strong market gains and solid net flows,” according to the company.

Investment management and trust asset-based revenue rose 6% year over year.

Also, the bank said it converted the brokerage platform for its integration of Wachovia during the weekend of Jan. 15.

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

These Dow Winners Beat the Late Day Sell-Off

Most people look forward to the weekend. But the stock market seemed to get more and more scared near the close of trading today, perhaps as investors wait to see what might come out of Europe. The weekend has tended to be a popular time for European governments and policy makers to consider big moves �and, with speculation that Spain could be preparing severe fiscal measures as part of a request for eurozone bailout money, investors seemed to want to protect their gains from earlier in the month. By the close, the Dow Jones Industrials (INDEX: ^DJI  ) gave up what had been a 65-point gain earlier in the day, to finish down 17 points.

But a few of the Dow's component stocks managed to break the trend and stay higher. McDonald's (NYSE: MCD  ) finished up 0.6%, after having announced last night that it would increase its dividend by 10%, to $0.77 per share. The move marks the latest in a 10-year string of double-digit percentage dividend increases, showing that the fast-food giant has become increasingly committed to sharing its success with its shareholders.

ExxonMobil (NYSE: XOM  ) picked up 0.4%, nearing a new four-year high, as oil prices recovered somewhat from their recent swoon. The company said yesterday that it would buy up Denbury Resources' (NYSE: DNR  ) assets in the Bakken shale area in western North Dakota and eastern Montana. The $1.6 billion deal gives ExxonMobil a roughly 50% bigger stake in the Bakken, which has transformed North Dakota into a booming energy powerhouse.

Finally, General Electric (NYSE: GE  ) rose about half a percent, and hit a new four-year high. The company didn't have any market-moving news today, but most of the conglomerate's businesses have had powerful recoveries since the financial crisis hobbled GE. Despite concerns about its jet engine division, GE has demonstrated, once again, its ability to endure, even though challenging conditions.

Be a winner �
If a stock can rise even when the market falls, it makes you feel good inside. But don't get cocky; be sure you know about any storm clouds on the horizon. General Electric is doing well, but even it has challenges it needs to overcome. Find out how the company will get the job done in the Fool's premium report on GE. It's yours easily; just click here to get started.

The No. 1 Problem of the Chinese Economy

China�s Central Economic Work Conference concluded on Wednesday.  The gathering, which brought together all of Beijing�s stakeholders on the matter, was the last major economic policy meeting before next year�s 18th Communist Party Congress, and observers were looking for evidence of a major shift away from the central government�s efforts to restrain growth.

China�s goal next year, we were told, will be �making progress while maintaining stability.�  �Stability,� according to the Conference statement, �means to maintain basically steady macro-economic policy, relatively fast economic growth, stable consumer prices and social stability.�

The statement was more pro-growth than last year�s, but most observers just ignored Beijing�s bland words.  As Zhou Hao of ANZ in Shanghai told Reuters, �We should not read too much into what the government has said, but pay more attention to what it will do.�

What Beijing has in fact been doing is taking steps to stimulate the economy.  In November, the People�s Bank of China, the central bank, cut the reserve requirement ratio for 20 co-operative banks by a half point.  The limited move was followed this month by half-point reductions in the ratio for both large and small banks.  Not surprisingly, bank loans in November were up from forecasts, confirming that an easing policy is now in effect.

Yet the change is only minor.  The oft-quoted Fan Gang, director of China�s National Economic Research Institute, yesterday called the current slowdown a �healthy correction.�  Fan, who sometimes acts as the State Council�s unofficial spokesman, also warned us not to expect any big stimulus program.  As he indicated, Beijing�s policymakers are satisfied with their general direction.  In the words of Tim Condon of ING Bank in Singapore, decision-makers �are just staying the course.�

Should the course be changed?  The Chinese economy was indeed racing too fast earlier this year, but now it is growing in low single digits or even contracting.  These days, nothing�exports, consumption, industrial orders, property prices�is headed in the right direction.  And the problems will inevitably get worse as the rest of the world stumbles.

The last time the global economy tumbled, Chinese leaders took action, decisively and quickly.  In July 2008, the Politburo adopted measures intended to boost exports and in November of that year the State Council announced its massive stimulus plan.  This time, Chinese leaders seem tentative.

There are three possible reasons for their relative inaction.  First, they can be underestimating the severity of the situation.  That�s unlikely, however.  Chinese leaders can be accused of many things, but obliviousness�at least when it comes to their economy�is not one of them.

Second, they may realize that, despite the accelerating downturn, there is not much they can do.  In response to the last downturn, they increased the country�s money supply beyond reasonable levels, thereby making monetary policy ineffective, and applied too much fiscal stimulus, burdening banks and lower-tier governments.  They can implement another round of stimulus, but that would only make current problems�principally inflation and the property bubbles�only worse and buy them at most 24 months.  As Fan Gang implied, perhaps they have decided that now is the time to take the medicine.

Third, Chinese leaders may be prevented from acting effectively by the country�s once-in-a-decade political transition, which formally begins next fall and continues for perhaps two years.  Unlike 2008, when the Communist Party and central government moved fast, the current paralysis at the apex of Beijing means that technocrats can now adopt only modest and inadequate steps.

Friday, October 12, 2012

Top Stocks For 2012-2-7-7

Crown Crafts Inc. (Nasdaq:CRWS) will present at the Midwest IDEAS Investor Conference on Wednesday, August 31, 2011, at the University of Chicago’s Gleacher Center in Chicago, Illinois. Management is scheduled to present at 8:00 a.m. CDT (9:00 a.m. EDT). The presentation will be webcast live and may be accessed at the conference website,, or in the investor relations section of the company’s website,

Crown Crafts, Inc., through its subsidiaries, offers infant and toddler products primarily in the United States. Its products include crib and toddler bedding, blankets, nursery accessories, room d�cor, burp cloths, bathing accessories, disposable placemats, toilet seat covers and changing mats, and other soft goods, as well as disposable and reusable bibs, and floor mats.

Hawthorn Bancshares, Inc (Nasdaq:HWBK) reported consolidated financial results for the Company for the second quarter ended June 30, 2011. Net income for the quarter was $1.4 million, compared to $0.8 million for the second quarter of 2010. Hawthorn earned $0.19 per diluted common share for the three months ended June 30, 2011, versus $0.06 for the second quarter of 2010 after deducting accrued dividends and accretion of $0.5 million on preferred stock issued to the U.S. Treasury under the Capital Purchase Program.

Hawthorn Bancshares, Inc. operates as the holding company of Union State Bancshares, Inc., which provides general banking and trust products and services.

China Housing and Land Development, Inc. (Nasdaq:CHLN) announced its financial results for the quarter ended June 30, 2011.Total revenue in the second quarter of 2011 decreased 10.2% to $20.3 million from $22.6 million in the first quarter of 2011 and decreased 44.7% from $36.6 million in the second quarter of 2010. Total gross floor area (”GFA”) sales were 12,769 sq. meters during the second quarter of 2011, compared to 28,438 sq. meters in the first quarter of 2011 and 46,459 sq. meters in the second quarter of 2010.

China Housing & Land Development, Inc., through its subsidiaries, engages in the acquisition, development, management, and sale of commercial and residential real estate properties primarily in the People’s Republic of China.

Cleantech Transit, Inc. (CLNO)

Biomass energy is renewable source of energy that is found in plants. Plants take energy from the sun in the process of photosynthesis and use it to produce and grow biomass. Biomass is a known product or material that is found in most living things. It can be animal material, bacteria, or plant materials. The oldest example that we have of biomass energy today is wood, which we can burn to produce heat and to create steam which therefore, produces energy. To obtain a large amount of biomass energy, these plants such as wood are burned in internal combustion engines or broilers and this releases the energy that the plant holds.

Cleantech Transit Inc. was founded to capitalize on technology advances and manufacturing opportunities in the growing clean energy public transportation sector. The Company has expanded its focus to invest directly in specific green projects. Recognizing the many economic and operational advances of converting wood waste into renewable sources of energy, Cleantech has selected to invest in Phoenix Energy ( This project could benefit the Company’s manufacturing clients worldwide.

Cleantech Transit, Inc. (CLNO) is pleased to announce it has met its funding requirement to secure the Company’s ability to earn in 25% of the 500KW Merced Project.

The Company is in the final stages of closing its initial interest in the Merced Project and is currently working on completing the necessary documentation and expects closing the transaction soon. As previously announced Cleantech has the option to earn up to 40% of the Merced Project and the Company plans to continue to work towards increasing its interest in the Merced Project as they move ahead.

For more information about Cleantech Transit, Inc. visit its website

Inflation: Good for Entrepreneurs, Good for Business Confidence?

Let’s keep this between you and me, but until yesterday I’ve never read Keynes’ Essays in Persuasion.

As we discussed before, fewer businesses are opening in this recession (and previous recessions) and they are more likely to fail (click to enlarge):

I was talking about this, the concept of “business confidence” and inflation with my friend JW Mason, who pointed out to me that entrepreneurs benefit from inflation and suffer from de/disinflation, as they are net debtors. Established companies, sitting on cash reserves, as well as financial firms, sitting on worthless mortgage debt, have a vested interest in fighting inflation; new businesses, the kind that drive innovation and employment, have the opposite incentives (click to enlarge).

You wouldn’t necessarily want to take out a loan to open a business in a field where prices are falling – now would you want to do that in an economy where prices are falling or not increasing as fast or as steady as they used to be?

I was like “Woah did you just think of that right now?” and he said no, Keynes wrote that like 80 years ago. Oh.

Keynes, “The Social Consequences of Changes in the Value of Money” (1923), Essays in Persuasion:

Now it follows from this, not merely that the actual occurrence of price changes profits some classes and injures others…but that a general fear of falling prices may inhibit the productive process altogether. For if prices are expected to fall, not enough risk-takers can be found who are willing to carry a speculative “bull” position, and this means that entrepreneurs will be reluctant to embark on lengthy productive processes involving a money outlay long in advance of money recoupment,-whence unemployment. The fact of falling prices injures entrepreneurs; consequently the fear of falling prices causes them to protect themselves by curtailing their operations; yet it is upon the aggregate of their individual estimations of the risk, and their willingness to run the risk, that the activity of production and of employment mainly depends.

The Deflation which causes falling prices means Impoverishment to labour and to enterprise by leading entrepreneurs to restrict production, in their endeavour to avoid loss to themselves; and is therefore disastrous to employment…These results are not so marked as those emphasised above, because borrowers are in a better position to protect themselves from the worst effects of Deflation than lenders are to protect themselves from those of Inflation, and because labour is in a better position to protect itself from overexertion in good times than from underemployment in bad times.

Thus Inflation is unjust and Deflation is inexpedient. Of the two perhaps Deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier.

So efforts to actually get a functional inflation target are going to do more for business interests than putting a thousand JP Morgan executives into the Obama administration. But that’s only if we define business interests as new businesses creating jobs, innovation and opportunity, not businesses trying to safeguard cash reserves.

Where is the research on this linkage between new businesses, entrepreneurs, and inflation?

Best & Worst ETFs And Mutual Funds: Mid-Cap Blend

The mid-cap blend style ranks eighth out of the twelve fund styles as detailed in my style roadmap. It gets my Dangerous rating, which is based on aggregation of ratings of 20 ETFs and 270 mutual funds in the mid-cap blend style as of May 1,2012.

Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the style. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the worst ETFs and mutual funds, which allocate too much value to Neutral-or-worse-rated stocks.

Investors should use a predictive rating based on (1) stocks ratings of the holdings and (2) the all-in expenses of each ETF and mutual fund. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed here.

Investors should not buy any mid-cap blend ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this style, you should buy a basket of Attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a long history of not paying off.

Figure 1: ETFs with the Best & Worst Ratings - Top 5

* Best ETFs exclude ETFs with less NAV's less than 100 million.

Sources: New Constructs, LLC and company filings

Figure 2: Mutual Funds with the Best & Worst Ratings - Top 5

* Best mutual funds exclude funds with NAV's less than 100 million.

Sources: New Constructs, LLC and company filings

Vanguard Mid-Cap ETF (VO) is my top-rated mid-cap blend ETF and Westport Funds: Westport Select Cap Fund (WPSCX) is my top-rated mid-cap blend mutual fund. Both earn my Neutral rating.

SPDR DJ Wilshire Mid Cap ETF (EMM) is my worst-rated mid-cap blend ETF and earns my Dangerous rating. Lord Abbett Securities Trust: Lord Abbett Value Opportunities Fund (LVOAX) is my worst-rated mid-cap blend mutual fund and earns my Most Dangerous rating.

Figure 3 shows that 467 out of the 2523 stocks (over 26% of the total net assets) held by mid-cap blend ETFs and mutual funds get an Attractive-or-better rating. However, none of the 20 mid-cap blend ETFs and none of the 270 mid-cap blend mutual funds get an Attractive-or-better rating.

The takeaways are: mutual fund managers allocate too much capital to low-quality stocks and mid-cap blend ETFs hold poor quality stocks.

Figure 3: Mid-cap Blend Style Landscape For ETFs, Mutual Funds & Stocks

Sources: New Constructs, LLC and company filings

As detailed in "Cheap Funds Dupe Investors", the fund industry offers many cheap funds but very few funds with high-quality stocks, or with what I call good portfolio management.

Investors need to tread carefully when considering mid-cap blend ETFs and mutual funds, as none of the ETFs or mutual funds in the mid-cap blend style allocate enough value to Attractive-or-better-rated stocks to earn an Attractive rating. Focus on individual stocks instead.

ITT Educational Services Inc. (ESI) is one of my favorite stocks held by mid-cap blend ETFs and mutual funds and earns my Very Attractive rating. ESI has a strong, consistent business model, generating a return on invested capital (ROIC) of 155% last year and has maintained an ROIC above 144% for the last 8 years. ESI's current stock price of $66.02 implies that the company's cash flows will permanently drop by 70%, a rather unlikely decline for a company with a history of stable profits.

Rowan Companies, Inc. (RDC) is one of my least favorite stocks held by mid-cap blend ETFs and mutual funds and earns my Very Dangerous rating. RDC has misleading earnings, which means that it's reported earnings are positive and rising while its economic earnings are negative and declining. RDC's 1% ROIC is in the bottom quintile of Russell 3000 companies.

Figures 4 and 5 show the rating landscape of all mid-cap blend ETFs and mutual funds.

Figure 4: Separating the Best ETFs From the Worst Funds

Sources: New Constructs, LLC and company filings

Figure 5: Separating the Best Mutual Funds From the Worst Funds

Sources: New Constructs, LLC and company filings

Review my full list of ratings and rankings along with free reports on all 20 ETFs and 270 mutual funds in the mid-cap blend style on my website.

Disclosure: I own ESI. I receive no compensation to write about any specific stock, sector, style or theme.

Disclosure: I am long ESI.

Does Small-cap Performance Predict Another Correction?

After Monday’s disappointing open, the indexes slowly climbed back out of trouble to close with a respectable loss. Stocks also sought new ground Tuesday — yet they had trouble holding onto gains from earlier in the day. Still, two days of down action after an entire week of positive price movement is not necessarily a bad thing.

That’s the good news. For now, the market appears to be more inclined to shrug off negative speculation out of the Eurozone. Bad housing data here in the U.S. also had little effect on stock prices earlier this week. This is not to say that any additional negative news is priced into stocks — quite the opposite, actually. It’s all too obvious that any concrete evidence showing an imminent Greek default could tank stocks worldwide. Market participants will need to continue to hammer out the probability of a sovereign debt collapse, recession stateside, etc. The back-and-forth in stock prices will reflect this continued battle for the time being…

The bad news, however, is that market undercurrents are telling a different story. The Russell 2000 has completely decoupled from the major indexes since Friday, posting a three-day loss of more than 2.5%, while the Nasdaq and S&P near losses of approximately 0.5%.

The Russell 2000 (green line) has failed to keep pace with the major indexes recently

Also, you should not be fooled by the performance of the Nasdaq — this index is propped up by large tech firms that have recently outperformed the market (Apple, Amazon, and Microsoft, to name a few). You should not be looking to this exchange to gather trading information on true small-cap stocks.

The fact remains that smaller stocks are hemorrhaging — and this shows us that investors’ risk appetite is simply non-existent. The Russell had managed to make up lost ground during last week’s rally. But now, the market’s back the same old tricks. Jittery action like this is frustrating — and (as I probably don’t have to tell you) incredibly difficult to trade.

If you are trading in this difficult market, I recommend taking smaller position sizes. Be prepared for false moves — but keep your stops tight. Capital preservation is key when the markets are in flux. Forget “home runs” for now. Instead, focus on small, short-term positions that do not require you to chase price extremes. There is little to no follow-through in this market. Take profits early and often or risk losing them entirely.

You should also keep an eye on the economic calendar.

Coffee N’ Doughnuts: Davidson Upgrades DNKN and SBUX

D.A. Davidson analyst Bart Glenn upgraded Dunkin’ Brands (DNKN) and Starbucks (SBUX) today.

He raised his rating on Dunkin’ to Neutral from Underperform, arguing that the stock’s recent slide has made it more fairly valued. Glenn expects comparable store sales to increase at a pace greater than 4% in the fourth quarter, and end in 2012 and 2013. He also doesn’t think Green Mountain Coffee Roasters’ (GMCR) K-cups have cannibalized coffee sales since Dunkin’ started offering its coffee in the cups.

As for Starbucks, Glenn raised his rating to Buy from Neutral and sees the company as one of the best large cap consumer growth companies out there.

“Given the scarcity of large cap consumer growth companies, we anticipate the valuation will continue to expand. Other leading large cap consumer stocks trade at relatively similar 2013 valuationsdespite offering much less attractive growth profiles. We believe Starbucks offers compelling global growth and the business is more defensive than some investors appreciate.”

Facebook, Google Risk Invasion of Privacy From Regulators

Internet giants may be cruising for a privacy bruising.

The disclosure that Google has been exploiting a loophole in the Safari Web browser—allowing it to track Mac and iPhone users' browsing activity—is more evidence that the online ad industry is falling short when it comes to policing itself on privacy.

Enlarge Image

Close Bloomberg News

Google Chief Executive Larry Page

That risks more than users' trust. It raises the chance that a regulatory hammer one day comes down on their multibillion-dollar profit party.

That could be somewhat similar to what happened to banks. Light-touch regulation led them to get carried away, and they now face much tighter controls. Such an outcome also could threaten the likes of Google and Facebook if they push the limits on privacy too far.

Just last month, the search giant said it plans to combine nearly all the information it has on its users across its properties like Google search, Gmail and YouTube. That will make it harder for users to remain anonymous and easier for Google to target ads at them.

Facebook recently agreed to a pact with the Federal Trade Commission over changes the social network had made so that users' profile information was public by default. It has since given users more control over what is displayed.

For an idea of what might befall the Internet industry if it isn't careful, look at privacy regulations being proposed in Europe. The European Commission wants to prevent companies from sharing users' information unless users explicitly allow them to. Such a rule could hamstring the online ad industry if it were rolled out in the U.S. Today, users typically have to "opt out" of being tracked via online "cookies" rather than "opt in."

Already there have been calls for more regulation in the U.S. The FTC has called for a "do not track" system to protect users' browser activity from outside snooping. The Obama administration wants a "Privacy Bill of Rights." Lawmakers introduced more than a dozen privacy bills in Congress last year.

More self-discipline would be a good start. Issues that arise are often from Web developers being cavalier on privacy concerns when building their websites or apps. Recently, a mobile app developer was found to be accessing the address-book information of iPhone users. Apple responded this past week, saying it will require that apps seek user permission before accessing such data.

At least one app on Facebook has in the past collected not just the information of users that give them permission, but the information of "friends" that haven't. This helps those apps build an audience, but it can cost Facebook the trust of users.

With few rules, the Internet still operates somewhat like the Wild West when it comes to privacy. And many companies continue to treat the issue as peripheral. If few are closing their Gmail accounts, or taking down their Facebook profiles, then protests about privacy from a minority of users can be safely overlooked.

If Internet companies don't get it together to police themselves, the risk is that a Wyatt Earp shows up to lay down the law in a heavy-handed fashion.

—Rolfe Winkler

Write to Rolfe Winkler at

Skittish investors hold stocks lower

NEW YORK (CNNMoney) -- Stocks pared losses on Monday, but all three indexes still closed lower as worries that Spain may need a full-blown bailout sparked a global sell-off.

"There seems to be a pattern whereby markets sell hard into the close of European markets and then see some relief," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "Despite the comeback, Europe will continue to waffle the markets. It's all predicated on whether anything will be done to triage Spain's duress."

U.S. stocks remained under pressure as markets closed. The Dow Jones industrial average (INDU) sank 101 points, or 0.8%, after earlier shedding more than 220 points earlier. The S&P 500 (SPX) dropped 12 points, or 0.9%, and the Nasdaq (COMP) lost 35 points, or 1.2%.

The selling was widespread, with oil prices tumbling 4% and copper prices skidding 3.3%. The euro weakened further, falling as low as $1.207.

Investors flocked to traditional safe havens, such as U.S. Treasuries, where the 10-year yield hit a fresh record low of 1.395%. The German 10-year yield also fell to a record low of 1.127%.

Fears over the debt crisis plaguing Europe pushed the yield on the 10-year Spanish bond up to a euro-area record high of 7.565% -- a level that flashes the first bailout signals and one that Spain's leaders have said is unsustainable.

Securities regulators in Spain and Italy both instituted temporary short-selling bans Monday to try to stop the heavy selling in European markets.

Eurozone finance ministers finalized initial bailout terms for Spanish banks last week, but observers fear that may not be enough. Spain's regional economies are also showing signs of struggle, with Valencia said to have requested emergency funding last Friday.

The Bank of Spain also reported that the nation's economy contracted by 0.4% in the second quarter -- that's the third quarterly contraction and shows the eurozone's fourth-largest economy could be mired in recession for some time.

While Europe continued to dominate trading Monday, investors also had some corporate earnings to contend with. But analysts say Europe's debt problems will show up there, as well.

Fear & Greed Index

"Eurozone news is beginning to manifest itself in the earnings seasons, since we're seeing the erosion of profits, with the dollar gaining strength," said Quincy Krosby, market strategist for Prudential Financial.

While nearly all companies that have reported so far have topped earnings expectations, analysts' forecasts were very low to begin with. In addition, just 45% of companies that have reported have topped revenue expectations, the lowest percentage since the first quarter of 2009, according to FactSet.

Related: Spain and Italy ban short selling

World markets: European stocks closed deep in the red. Britain's FTSE 100 (UKX) lost 2.1%, the DAX (DAX) in Germany fell 3.2% and France's CAC 40 (CAC40) dropped 2.7%.

Spain's IBEX 35 slid 1.1% Monday. Italy's benchmark FTSE MIB index fell 3%, while borrowing costs spiked. The 10-year Italian yield rose to 6.3% from 6.166% late Friday.

Asian markets ended sharply lower. The Shanghai Composite (SHCOMP) fell 1.3%, the Hang Seng (HSI) in Hong Kong tumbled 3% and Japan's Nikkei (N225) dropped 1.9%.

Companies: McDonald's (MCD, Fortune 500) shares slipped after the fast-food restaurateur missed earnings and revenue expectations, citing a slowing global economy.

Hasbro's (HAS) stock rose after the toymaker reported second-quarter earnings beat analyst expectations. But the gains were limited as the company's revenue dropped 11% and missed Wall Street's forecast.

Shares of Halliburton (HAL, Fortune 500) edged higher after the oil and natural gas services company posted better-than-expected earnings as strong drilling activity in international markets offset a slowdown in North America.

Later this week, UPS (UPS, Fortune 500), AT&T (T, Fortune 500), Ford (F, Fortune 500), Apple (AAPL, Fortune 500) and Amazon (AMZN, Fortune 500) are slated to open their books. Facebook (FB) is also set to report its first quarterly earnings as a public company.

Related: China oil giant buys into North America

Shares of Nexen (NXY) jumped more than 50% after China's state-owned oil producer CNOOC (CEO) agreed to buy the Canadian oil and gas producer for $15.1 billion.

Shares of GenOn (GEN) and NRG Energy (NRG, Fortune 500) climbed after NRG agreed to buy the Houston-based wholesale power provider in an all-stock deal worth about $1.7 billion.

RailAmerica's (RA) stock was higher after Genesee & Wyoming agreed to buy the company for $1.39 billion in cash.

-- CNN producer Isa Soares contributed 

Thursday, October 11, 2012

8 Reasons Europe’s Crisis is Spreading

The behavior of financial markets�along with�world events indicate that Europe’s financial crisis is (unfortunately) spreading. This is not a scare tactic, but an honest evaluation of the facts. Let’s analyze some of the reasons behind this.

1. Europe’s banks are undercapitalized. Last week, European banks in France and elsewhere needed an emergency cash infusion from a coalition of world central banks. The International Monetary Fund, in its “Global Financial Stability Report,” estimates $408 billion in banks’ risk exposure to toxic government debt from countries like Greece, Ireland and Portugal. Because Europe’s crisis is moving so rapidly, even IMF is having trouble estimating the true liabilities for European banks. Just last month, IMF said it would take only $272 billion to cover banks’ capital shortfall.

2. Banks still aren’t properly managing risk. The global banking system is a mess because banks are deficient at underwriting and managing financial risk. The fact that European banks are overexposed to toxic sovereign debt is proof enough. Furthermore, UBS (NYSE:UBS) is the latest poster child for incompetence when it comes to supervising its traders. It’s never a good time to announce $2.3 billion in losses from bunk trades, but doing it during the middle of a credit crisis is surreal. How many other banks are at jeopardy for this same kind of nonsense?

3. Credit downgrades. We don’t advocate putting implicit faith in credit ratings because history has taught us they are nothing more than financial opinions — and frequently, not very accurate ones. Still, a gander at the latest downgrading trend is troublesome. Intuitive observers will note this is not an isolated phenomenon, but a global trend. Sovereign debt from Greece and Portugal, after several downgrades, is now rated junk. Ireland has been downgraded, Italy was downgraded this week, and Japanese, along with U.S. debt, was lowered in August. The pace at which government debt is being downgrade is accelerating and reversing this trend won’t be easy.

4. Too many cooks in the kitchen. One of Europe’s problems in solving its crisis is bureaucracy. Between the Economic and Monetary Union, European Banking Authority and EU finance ministers, everyone has an opinion on how to fix things, but nobody can execute. Layered on top of this melting pot, are individual countries within the euro zone, each with its own distinct set of financial regulators with their own viewpoints. It’s a conglomeration of confusion.

5. Poor enforcement track record. Financial regulators are prodigious at inventing new rules but much less proficient at enforcing them. In many ways, Europe’s crisis is just like the U.S.’ — a colossal failure by regulators to regulate. Rules are of no protection if they are selectively enforced or not enforced at all.

6. Over-concentration of financial power. The Oscar-winning documentary film “Inside Job” was too angry of a film for me and badly missed at articulating the fourth-grade antics of Wall Street’s elite. Nonetheless, it explained how the U.S. financial services industry became too large too fast. What’s changed since then? More assets and power have been concentrated in fewer surviving firms, which has increased everyone’s risk should one of these institutions fail. The problem of “too big to fail” still hasn’t be solved domestically or internationally.

7. Squandering public funds. Instead of letting troubled financial institutions or governments fail, regulators and quasi-regulators have thrown (and continue to throw) trillions of dollars trying to save them. In the U.S. it was a $700 billion bailout, and in Europe it’s already topped $1 trillion. These headline bailout figures, which are being funded largely by taxpayers, probably are much higher than reported. While financial bailouts in the name of saving humanity or even a country are excellent devices for delaying the inevitable reckoning day, they don’t completely stop its arrival. Furthermore, the financial liabilities associated with massive financial bailouts already have begun destabilizing the financial condition of world governments previously determined as “strong.”

8. Global flood into “safe-haven” investments. Regardless of whether you believe in gold as an investment or not, its substantial rise has been fueled, in part, by the failure of governments to prudently manage their finances. As a result, money is flowing out of stocks and into assets deemed “safe” like U.S. Treasuries, gold, precious metals and Swiss francs. As a side note, I grudgingly use the deceitful phrase “safe-haven” because it suggests a false sense of security. In reality, no single investment security or asset class is technically “safe,” no matter what persuasive marketers argue. Everything is subject to rises and falls at any given moment.

This article is brought to you by ETFguide is the information leader on exchange-traded funds because of its vendor-neutral approach and its progressive reporting style. Unique features include an ETF bookstore, a monthly e-mail newsletter and subscription-based ETF portfolios.

Dow Drops 250? So What; Arends: The market is a bit cheaper Thursday after its second steepest fall of the year, but still far too pricey.

I went down to McDonald's today to get a Big Mac. On the door it said they were having a promotion: All hamburgers were on sale. Naturally I turned around and left. I'm not eating there anymore! On the contrary, I went home and threw out all the hamburger we had in the freezer as well. If hamburger's on sale it can't be any good.

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If you think this sounds nuts, you're right. But it's the way people react when the stock market falls. "Oh, it's falling, I'd better sell." Wall Street took a tumble today. The Dow Jones Industrial Average lost 251 points. Yikes! It was the second worst day of the year.

So what? So not very much. If you had to sell your stocks it's a problem. If you don't, it isn't. The sell-off means only one thing: Stocks are a bit cheaper than they were the day before.

Is this the time to buy? Cheaper doesn't mean cheap. U.S. equities are still on the pricey side. The dividend yield on the Standard & Poor's 500 index is barely above 2%. That's chickenfeed. Stocks traded for about 21 times their average earnings for the past ten years, according to data compiled by Yale finance professor Robert Shiller. (That's a very good long-term measure of whether the stock market's a good value).

At these levels the market isn't a bubble, but it's expensive by historic norms. Over time the stock market has traded on an average rating of 16 times ten-year earnings. I'm greedy. I like cheap stocks and cheap hamburger. To be downright cheap, the Standard & Poor's 500 would have to be around 1000 or below. There are - as always cheap individual stocks out there and reasonable bargains, but the market overall is hardly a deal.

If you want really cheap, take a look overseas. European and Japanese stocks are, in many cases, trading at very good valuations. The French market has a dividend yield of 4.5%. Spain is 7%. Japan is only 2.4%, but that's huge by the standards of that market.

Sure, they may get even cheaper. I never try to time the market. Reasonable value is reasonable value.

The problem with Europe is that many of the banks are bust, and when you buy an index fund you get a whole bunch of them in your portfolio along with the good stuff. But you can avoid that through stock selection.

Global Grain Panic: Trading Opportunities For This Record Hot Summer And Historic Drought

What is Causing this Historic Summer Drought?

First of all, while there have been dozens of profitable trading opportunities these last few weeks due to the Midwest drought, I also have to express my sympathies to millions of Midwest and Plain States grain farmers and ranchers.

Click to enlarge.

The drought (red) across many Midwestern and Plain States, not only threatens corn and soybean crops, but may impact fall planting for wheat if rains do not arrive by October. In addition for the second consecutive year, ranchers in Texas to Kansas will be battling an ominous situation of record grain prices and an inability to feed livestock effectively. This could put the nation's livestock industry on its ear, but spur higher demand for other products.

Source: High Plains Climate Center

While there are many factors causing this summer's drought. Some of the most important criteria have to do with thinning Sea Ice over the arctic. This lowers the temperature difference between the Gulf Stream and the northern latitudes and results in greater "blocking pattern"--in which weather patterns stay bottled up and do not change. Global warming, increased solar flares and the brush fires over Colorado are also contributing factors, in my opinion.


Sea Ice Changes -- The low Sea Ice is changing the ocean currents around Alaska and the Arctic and helping to feed this summer's drought.

Source: NOAA

Benefiting from this Summer's drought. Which Commodities or Stock Industries to trade

This summer's drought shows all signs of lasting into August. If one goes back and looks at history, many of the worst droughts ever (1936, 1955, 1980, 1983, 1988) last a minimum of 8 weeks. This would take us into at least early August.

We have already seen corn prices rally 50% on this drought and soybean prices 45% since the South American drought last January expanded and now in the U.S.

The ETF (Down Jones-Agi Agriculture Total Return--ETN (JJA) has rallied some 25% since the end of June and a further rise in price can be expected as well as in the ETF-Teucrium (CORN). It is the soybean ETF (SOYB) that could lead the way over the next 3-5 weeks, though it is a little late to get in now, I still expect higher prices.

While corn prices may still have another 5-8% upside, I am a bit worried that the government will act to restrict Ethanol usage (at some point). Hence, though corn may still rally, we have had a decent move and it may be time to take some profits.

Source: Google Finance.

Why Soybeans may lead all agricultural commodities into August

Corn prices have soared as we forecast, but it is the soybean market that still has significant explosive upside potential in coming weeks, if this U.S. drought persists through August. Why?

1) South American drought last winter has shrunk world soybean supplies to dangerous levels

2) Indian Monsoon faltering in western areas means oilseeds, groundnuts and some soybeans are suffering

3) U.S. soybean yields could fall to as low as 30-32 bu/acre with near record heat and dryness across the Midwest and South. This could continue to create a world panic that the U.S (the world for that matter), may run out of soybeans.

4) River levels along the Mississippi are running dangerously low. This threatens the export market for now as it tightens the pipeline further. But could be a bearish factor later, once the "bull" weather market ends.

Water levels (above) are getting to the minimum stage necessary for transporting many goods along the southern Mississippi.

Source: NOAA

So what might happen down the road if soybeans climb to unprecedented levels of $18-$20/bushel? One has to consider that the U.S. might employ a 1971 Nixon-type or 1980-81 Carter-type embargo to certain countries in order to ease the world supply fear. If this were to happen, soybean prices could come crashing down. So the best way to play soybean futures is by being long futures and long puts against it or having a bull spread on (long Nov soybeans, short next July or Nov 2013) in which by next summer, soybean prices could fall dramatically as world supply fears ease. For the next few weeks, however, a major squeeze in prices may still occur. However, given such fear in the market place and the fact prices have rallied so much already, unless you already have been on this soybean train ride for a while, it may make sense just to sit back and look into other investment alternatives.

More Big Summer Heat----Which Sectors of the Economy Would be Affected?

Without going into too much detail, consistent with our advice more than a month ago, certain beverage companies (especially beer companies) due well during summer heat waves. Fertilizer companies also benefit, such as CF Industries (CF), while the poultry industry suffers when corn prices go too high. Take Tyson Foods (TSN) as one example; its price has fallen some 20% since late June as the drought has intensified. By this winter and probably 2013, I expect a rebound in world corn stocks brought on by improved crops in South American and the U.S. next year. Hence, when corn prices peak (within the next month or so), TSN would be a buy. Look into some "cool weather" clothes companies, and google some articles such as this.

How about natural gas stocks? They have been beaten down for years, but this summer's heat wave is slowly eating into stocks and prices have reached $3.00 like we suggested. Mutual Funds such as Fidelity's Select Natural Gas (FSNGX) is probably a safe way to play the potential longer term rise in prices, as opposed to (UNG). The charts are looking better for FBR Gas Utility Index Investor (GASFX). The hot weather has helped this company break resistance with a modest 5% rise since this heat and drought began.

The U.S. is Not the Only Country Having Weather issues

I am not going to list the dozens, if not hundreds of investment opportunities from this drought, but if this summer's crazy weather - and for that matter, the entire year's - does not put some Global Warming deniers to rest, nothing will. This year's weather only proves what a multi-trillion dollar effect "weather" has on the global economy. Last winter Argentina/Brazilian soybean and corn farmers got socked, and now, it is not just the U.S., but western India faces a possible multi-billion loss as well to sugar cane, cotton and oilseeds.

The Indian drought, if it continues, may be another "thorn in the rose" for gold bulls looking for another run up in prices later this year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

U.S. Moves Forward on Free Trade

Since the Senate began debating legislation to impose new import duties on Chinese goods on Monday, much has been made of the possibility of resurgent protectionism in the U.S. However, free trade took a big step forward Wednesday, when the House of Representatives Ways and Means Committee advanced three long-dormant free trade agreements to the full House. All the FTAs are expected to pass next week.

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Economically, this bifurcated policy (for free trade on one hand, against it on the other) makes little sense. (Then again, protectionism altogether doesn't make a great deal of economic sense in our view.) But politics is a world in which economic sense is, well, hard to locate sometimes. And in politics, how you appear to your base is key. So it could very well be the debate over China is political cover for senators -- knowing full well it's unlikely to pass the House. This permits them to vote in favor of the administration's renegotiated (and long-stalled) FTAs while appearing "balanced" on trade to their bases.If these deals -- bilateral trade agreements with South Korea, Panama and Colombia -- are ratified as expected, it would wrap up years of uncertainty and false starts since they were signed in 2006 and 2007. They've faced obstacles from both parties in Congress and the current administration. The most recent came this past May, when President Obama announced he would finally submit the deals to Congress, provided Congress agreed to renew the controversial Trade Adjustment Assistance Program. Created nearly 50 years ago, this program provides retraining and other federal benefits to workers whose jobs were moved offshore (or, perhaps more likely, made redundant by technological and productivity gains). A core plank in the Democratic platform, it risked becoming a victim of budget cuts due to opposition from House Republicans; tethering Trade Adjustment Assistance to the free trade deals, which have strong House support, increased its chances of passing. This is but one example of how these trade pacts have been treated as political currency.Last month, the Senate passed a pared-back Trade Adjustment Assistance Program, and House leaders said they agreed to its terms in principle, which cleared the way for the president to submit the three trade pacts to Congress. If all goes as the administration hopes, the agreements will be ratified in time for a formal signing ceremony to take place with South Korean President Lee Myung Bak's state visit next week -- a fitting, poignant coda.

Ratification would be far from a merely symbolic victory: these agreements have tangible economic benefits. For example, the White House estimates they would increase U.S. exports by $13 billion annually. Interestingly, many South Korean, Panamanian and Colombian goods have been duty free in the U.S., but our exports to those nations have faced significant barriers, from tariffs to South Korea's ban on American beef. These trade pacts level the playing field for American producers. U.S. service providers will also gain greater inroads in those countries. And freeing trade with these nations will increase imports -- giving American consumers greater choice -- and lower the price of some goods already available here.

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These trade pacts also improve the U.S.'s place at the global trade table. In its most recent report on the ease of doing business in different countries, the World Bank ranked the U.S. at 20th place in terms of international trade. The UK, Germany and South Korea are but a few of the countries ranked higher, and trade in these nations has only gotten freer since the June 2010 data forming the basis of the World Bank's report. This summer alone, while American politicians dithered, China inked a 70-billion-euros trade deal with Germany and a 1.4-billion-euro pact with the UK. Free trade deals between the EU and South Korea and Canada and Colombia also took effect.

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As trade in other countries gets freer while the U.S. stalls, it becomes a less attractive trading partner. The EU/South Korea and Canada/Colombia deals put this comparative disadvantage in sharp relief: Until the U.S.'s trade pacts take effect, South Korea and Colombia have incentives to trade with Europe and Canada instead. That's a lot of economic activity potentially bypassing the U.S. It appears likely to us politicians will ultimately put their dalliances with protectionism aside and instead make trade freer. But the road to an economically sensible position is a long, twisty one when you're inside the Beltway.

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Begging China: Yes, It Has Come To This

When is the last time you heard politicians complain about China? About its human rights record, its currency manipulation or how it is quickly buying and taking control of natural resources in Africa and everywhere else. Sure there are a few taking shots but most of them are staying rather quiet. Why? Believe me, it has nothing to do with China behaving any differently (and in many ways, I would argue they shouldn’t have to but that is for another day). It could also be caused by the fact that our politicians have many other things to worry about. It might be a small part of the story but there is more.

Is China About To Take Control?

We all knew that China was eventually going to dominate the world. In terms of culture and military power, China is making some progress but where the big progress is being made is in economical terms. For one, the actual economy is now the world’s second power and while its GDP per capita still lags severely many countries, as a whole, China is becoming a critical part of the world economy. Even more important however is how China’s huge cash and short-term holdings are quickly becoming a life saver. The US government continues to accumulate huge deficits and its growing debt is being financed in big part by the Chinese. Would they ever stop buying US debt? It’s highly unlikely but even reducing those holdings slightly could have a dramatic impact on interest rates in the US and thus the entire US & world economy. Everyone knows it but there are few benefits to openly admitting this fact simply because there is little we can do for now (except reduce benefits).

(Click charts to expand)

As For Europe

Another huge benefit to China is that its cash reserves can be used to gain both political and financial power by buying assets around the world. Italy is said to be trying to convince the Chinese government to buy its government bonds? Why? Because after Greece, Poertgual and a few smaller countries, Spain and Italy will be the ones under severe pressure. As you can imagine, we are not talking about a few million dollars. The Italian government is looking for the Chinese to buy “significant” quantities of Italian bonds. These negotiations are being done with high level officials and you can be sure that China will only do this deal if it makes sense financially but also if it can gain some kind of power.

Should We Be Scared?

Honestly, I’m not sure how to feel about all of this. China has generally been acting well but we knew how things worked when the US seemed in control of things. How different will things be when the Chinese are in power? Difficult to say.

Top Stocks For 2011-12-15-16 Stock Report!

Tuesday July 28, 2009

Cardiome Pharma Corp. (NASDAQ: CRME) today announced that it has earned a US$15 million milestone payment from its collaboration with Merck & Co., Inc., through an affiliate. The milestone was triggered by the submission, by Merck, of a Marketing Authorisation Application (MAA) to the European Medicines Agency (EMEA) seeking marketing approval for vernakalant (iv) in the European Union.

MakeMusic, Inc. (NASDAQ: MMUS) announced today the release of SmartMusic(R) 2010, a free update for all current subscribers of SmartMusic, the music learning software for band, orchestra and choir. A guided tour, demonstrating what’s new in SmartMusic 2010, can be viewed at the SmartMusic website.

Purple Communications((TM)), Inc. (Nasdaq: PRPL), one of the nation’s leading providers of text and video relay and on-site interpreting services today announced that Kelby Brick, Vice President of Regulatory and Strategy Policy will address one of the more pertinent issues in the Deaf and Hard-of-Hearing community — the ability to access the nations telecommunication infrastructure with the same ease as their hearing counterparts — or functional equivalency. Brick will address attendees at the Telecommunications for the Deaf and Hard of Hearing, Inc., (TDI), Professional/Motivational Luncheon on Friday, July 31, 2009 from 11:45 a.m. to 1:15 p.m. at the Mayflower Renaissance Hotel in downtown Washington, DC. Those interested in attending should visit TDI’s website, for additional information. Tickets for the luncheon are $50 per person and must be purchased at by Tuesday, July 28, 2009.

Infosys today announced that SABMiller, one of the world’s largest brewers, has selected Infosys Technologies (NASDAQ: INFY) to evaluate and improve the effectiveness of its in-store shopper marketing campaigns. SABMiller has chosen Infosys to conduct in-store projects leveraging the Infosys ShoppingTrip360 solution to analyze shopper and shelf activity around their beverage brands, helping improve the uptake of SABMiller products.

Alternative Asset Management Acquisition Corp. (NYSE Amex: AMV) announced that it has convened and then adjourned, without conducting any business, its Special Meeting of Warrantholders and its Special Meeting of Stockholders to vote on, among other things, the proposed warrant redemption and the transaction with Great American Group, LLC . The Special Meeting of Warrantholders and the Special Meeting of Stockholders will reconvene at 10:00 a.m. and 10:30 a.m. Eastern Time, respectively, on Thursday, July 30, 2009 at the offices of Ellenoff Grossman & Schole LLP, 150 East 42(nd) Street, 11(th) Floor, New York, New York.

Indiana Community Bancorp (Nasdaq: INCB), the holding company of Indiana Bank and Trust Company of Columbus, Indiana (the “Bank”), today announced a net loss for the second quarter of $2.8 million or $(0.93) diluted loss per common share compared to net income of $273,000 or $0.08 diluted earnings per common share for the second quarter of 2008. Year-to-date net loss was $2.4 million or $(0.89) diluted loss per common share compared to net income of $1.7 million or $0.50 diluted earnings per common share a year earlier. The second quarter was negatively impacted due to a $6.8 million provision for loan losses and the recognition of a $475,000 charge related to an FDIC special assessment which applies to all banks that have insured deposits. The Company increased the provision for loan losses due to an increase in net charge offs for the second quarter to $5.6 million and to increase the overall allowance for loan losses in light of the challenging economic cycle. Retail deposit growth remained strong for 2009 as retail deposits increased $71.5 million for the year. Retail deposits increased $29.9 million for the second quarter after increasing $41.6 million during the first quarter. As of June 30, 2009, shareholders’ equity was $88.9 million. The Company’s total risk based capital ratio was 13.16% which exceeded the threshold of 10.0% defined by the regulators as well capitalized. The Company’s tangible common equity to assets ratio was 6.76% at June 30, 2009. Executive Vice President and CFO Mark Gorski stated, “2009 has proven to be very challenging financially for our Company and for our customers. Despite these challenging times, our total capital of $88.9 million remains in excess of industry defined levels for well capitalized banks.” Chairman and CEO John Keach, Jr. added, “The actions taken this quarter and the resulting net loss, while not what we had hoped, will continue to protect and, in the long term, enhance our franchise value. Our capital levels remain strong and growth in retail deposits continues to strengthen our Company.”

Source: E-Gate System from

SunPower Q3 Misses, Year View Light, CFO To Step Down

Shares of solar energy technology provider SunPower (SPWRA) are down 26 cents, or 3%, at $8.50 in late trading after the company this afternoon reported Q3 revenue below analysts’ estimates, forecast the year’s revenue and profit below consensus, and said its chief financial officer will step down as the company enters a broad reorganization effort to shave operating expenses.

Revenue in the three months ending in September rose 28%, year over year, to $705.4 million, yielding EPS, excluding some costs, of 16 cents a share.

Analysts on average were expecting $713 million and six cents per share.

For the year, the company sees revenue in a range of $2.4 billion to $2.45 billion, and profit in a range from a net loss of 5 cents a share to a net profit of 20 cents. Analysts have been modeling $2.79 billion and 73 cents a share.� On a GAAP basis, the company expects to lose $5.65 to $5.90 per share.

CEO Tom Werner said the Q4 view reflects “slower than anticipated demand growth.”

In a separate release, the company said it had commenced a reorganization “to align its businesses and cost structure with expected market conditions in 2012 and beyond.” Chief Financial Officer Dennis Arriola will leave the company in March to “pursue other opportunities,” Werner said, and he thanked Arriola for establishing “high quality standards” and building “a strong set of leaders around him.”

The re-org will reduce operating expenses by 10% in 2012, SunPower said.

Rubio Denies Interest in Vice President Nod

The pundits keep tossing Florida Sen. Marco Rubio‘s name out as a possible Republican vice presidential candidate, and Rubio keeps telling them no.

Rubio’s latest denial came in an interview with MSNBC. He answered the question with what sounded like a pretty clear denial.

“I’m not going to be the vice presidential nominee, but I’m always flattered when people bring it up, I think they mean it as a compliment.”

Still, Andrea Mitchell, Rubio’s interviewer, pushed the issue, wondering if he could accomplish more as vice president than as a senator. His response? “That’s debatable.”

And probably wise. More often than not, the vice presidency is ceremonial (Dick Cheney excluded), only coming into play when there are ties to break in the Senate. As a senator, he would have more opportunity to directly influence the Senate.

Still, some people say that Rubio is playing it coy and cool until the primary process wraps up. They point out that his political action committee has spent money to vet his past and moved up the publication date of his autobiography to this summer. Unfortunately, we will have to wait until the presidential nomination is confirmed before we know what Rubio will do next.

– Benjamin Nanamaker, InvestorPlace Money & Politics Editor

The opinions contained in this column are solely those of the writer.

Want to share your own views on money, politics and the 2012 elections? Drop us a line at and we might reprint your views in our InvestorPolitics blog! Please include your name, city and state of residence. All letters submitted to this address will be considered for publication.

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A Fool Looks Back

Apple (Nasdaq: AAPL  ) became just the second company to command a market cap greater than $600 billion on Tuesday.

It didn't last. Whether it was the market recoiling in horror or simply a correction in Apple shares that many argue is long overdue, the stock staged a retreat even as the rest of the market began to regain its winning ways through middle of the week.

The irony here is that $600 billion isn't necessarily an outrageous price tag for Apple, as the company would be trading at just 14 times this fiscal year's projected profitability.

However, the tech bellwether will continue to be volatile as the market tries to balance the company's buoyant fundamentals with its historical market cap.

Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.

  • Adobe (Nasdaq: ADBE  ) will be buying back $2 billion worth of stock over the next three years. It's not just lip service. The desktop-publishing software leader just completed a $1.6 billion repurchase. In short, this is no Photoshop trick.
  • Sirius XM Radio (Nasdaq: SIRI  ) began streaming NHL games last week. The service kicked off with the Stanley Cup playoffs that began on Wednesday, but the new streaming deal will also cover regular-season games next year. The satellite-radio giant is hoping that more of its receiver-based subscribers will pay up for Internet streaming.
  • Barnes & Noble (NYSE: BKS  ) and (Nasdaq: AMZN  ) appear to be working on new e-readers that feature glowing front-lit illumination without sacrificing the E Ink screens that have made the Nook and Kindle so popular. Who needs one of those attachable lights? Reading is about to get even more enlightening. �

Moving on
Now that you've had a glimpse of the past, let's delve into the future. A new report details the latest Rule-Breaking multibagger that has earned Fool co-Founder David Gardner's attention. The report is free, and you're closer to it than you might think. Check it out now.

Top 10 Biggest Gifts to Charity Fell in 2010

For the second straight year, big charitable donations are down from both individuals and their foundations. According to a report in The Chronicle of Philanthropy, the 10 largest gifts from Americans to charitable organizations fell from $2.7 billion in 2009 to $1.3 billion in 2010. The drop from 2008 to 2009 was far more precipitous: donations for 2008 totaled $8 billion.

The Chronicle editor Stacy Palmer explained to AdvisorOne that there’s a “quirkiness” about the end-of-year cutoff when calculating the amount of charitable donations. Since giving is made up of a mix of donors who prefer to see the results of their actions, thus making their gifts while they are alive, and others who choose to leave bequests in their wills, she added, “it could be many, many years until we see [those funds from the latter group] going to charity.”

Last year missed being the worst for giving by the wealthiest Americans, but not by much: in the 13 years since The Chronicle began tracking wealthy donors’ gifts, the total fell below $1.4 billion only once before, in 2003, when it was $1.2 billion.

Such low levels of giving come when Warren Buffett (left) and Bill and Melinda Gates have embarked on a mission to convince their billionaire peers to pledge to donate at least half their net worth to charity. “Given that Gates and Buffett have been making this push on the Giving Pledge,” said Palmer, “the gifts [for 2010] were really quite small. So if their goal is to [get the money into circulation,] then people will have to give more quickly and more generously. ... It seems that it’s not going to be a year where there are many very big gifts.”

Four of those who signed the pledge are among those who made the biggest gifts in 2010: oil tycoon T. Boone Pickens, who pledged $100 million to Oklahoma State University; Facebook founder Mark Zuckerberg, who pledged that amount to improve the public schools in Newark, N.J.; and Irwin and Joan Jacobs, who pledged $75 million to the University of California at San Diego.

In these hard times, when so many need so much, wealthy donors are putting their money into bricks and mortar—“safe causes,” as Palmer terms them. Nearly half of the wealthiest donors gave funds to build new campus buildings or to expand university campuses. Zuckerberg and Pickens, however, did otherwise; Pickens’ gift is earmarked for scholarships, and Newark faces serious poverty issues; Zuckerberg’s donation will do much to help the city’s struggling schools.

The Chronicle also found that the wealthiest are not as quick to give as those who are less wealthy but still affluent.

Wednesday, October 10, 2012

Forex: EUR/USD – Another weekly slump – NASDAQ

Currency NewsForex: EUR/USD � Another weekly slump
NASDAQ (C�rdoba) – The Euro was the worst performer among majors in the market for the second week in a row. EUR/USD fell 270 pips after plummeting 520 pips on the previous week. The pair reversed sharply on Friday and tumbled from 1.4340 and …
Daily Forex Summary on USD, Euro, GBP, JPY, AUD, CAD and NZDInternational Business Times
Forex – GBP/USD down at the end of US sessionBenzinga
Forex: Dollar rallies on risk-off
ForexLive -Forex Hound -Forex Pros
all 479 news articles »

{forex} – Google News

The Top-Earning Women In Music

see photosGetty Images

Click for full photo gallery: The Top-Earning Women In Music

Alicia Keys gave birth to her first child in October 2010, but she barely skipped a beat in the year that followed. In 2011, the �Empire State of Mind� songstress co-directed a short film called Five, co-produced the Broadway debut of Stick Fly, grossed nearly $700,000 per night for a string of live concerts, and still was able to contribute time to Keep A Child Alive, the charity she cofounded.

�A lot of times, people make far more money than they could probably ever even think about what to do with,� she told FORBES this fall. �If you have the opportunity to be able to encourage someone to do something great for somebody else � I think that�s the right way to do business.�

Keys did plenty of business last year�$10 million in earnings, by our estimates�placing her among the ten highest-earning women in music. Yet she finished far behind this year�s Cash Queen.

That title belongs to Lady Gaga, who led the pack with a staggering $90 million total boosted by strong album sales, endorsements and an extremely lucrative world tour. Gaga�s total was more than the combined earnings of No. 2 Taylor Swift ($45 million) and No. 3 Katy Perry ($44 million), both of whom also benefitted from heavy touring and popular albums.

The earnings estimates were compiled with the help of data from Pollstar, RIAA and others, as well as extensive interviews with industry insiders including lawyers, managers, concert promoters, agents and, in some cases, the musicians themselves. The totals encompass all pretax income earned from May 2010 to May 2011, before subtracting agent and manager fees.

Among the top ten earners, there were both newcomers and veterans. Soul sensation Adele pulled in $18 million�a number that only captures a few months of sales for her breakout album 21, making her a likely candidate to return to the top ten next year. Celine Dion may not be quite as popular as her British counterpart, but she banked $19 million on the strength of a wildly popular run in Las Vegas, where her nightly gross ticket sales exceeded $2.3 million.

Yet there remains something of a pay gap in music�s upper echelon. Just five of the women on this list were among the overall 25 highest paid musicians, a list that included 13 male solo acts and 7 bands (only one of those acts, The Black Eyed Peas, had a female member). The time demands of motherhood are commonly listed as a reason for the inequality, but according to Lori Landew, an entertainment attorney at Fox Rothschild in Philadelphia, there�s more to it than that.

�Women artists seem to be less likely to diversify their holdings and to build multi-tier enterprises to take advantage of their success and celebrity,� she says. �What remains unclear, however, is whether this is because these women have less of an entrepreneurial spirit than their male counterparts, which I doubt, or whether they are simply presented with fewer opportunities.�

Landew believes that male artists are approached more for such ventures, as well as movie roles and lucrative endorsement deals. The latter two options, she adds, become even more unattainable to female stars as they age, especially compared to men. Still, bright spots abound.

�There are several notable exceptions,� she says. �One need only look at Oprah or Madonna to know that it doesn�t take a Y chromosome to be a successful entertainment visionary or entrepreneur.�

Another terrific example: The aforementioned Keys, who out-earned entrepreneurial super-producer husband Swizz Beatz by $3.5 million last year.

Darden Restaurants Continues Fine Dining Dominance With Newest Acquisition

Darden Restaurants (DRI) announced its acquisition of Yard House. The parent company of Red Lobster, Olive Garden, and other chains, bought Yard House for $585 million. Darden bought the upscale restaurant chain from TSG Consumer Partners LLC. The newly acquired company will become a part of Darden's Specialty Restaurant Group, consisting of Bahama Breeze, Seasons 52, Eddie V's, and The Capital Grille. The acquisition will give Darden a total of eight different restaurant concepts.

Yard House has 39 restaurants in 13 states. From the official press release," Yard House, which launched its first restaurant in 1996, offers contemporary American cuisine with chef-inspired recipes and ethnic flavors along with a wide range of draft beers and other beverages in a stylish and energetic setting."

The list of states with Yard House restaurants is:

· Arizona

· California

· Colorado

· Florida

· Georgia

· Hawaii

· Illinois

· Kansas

· Massachusetts

· Nevada

· New York

· Texas

· Virginia

Along with the 39 restaurants open, Yard House has deals to open six more locations through 2013. These new restaurants include expanding into four brand new states: North Carolina, Washington, Ohio, and Oregon. The company is very specific about locations, with the majority in large cities near sports stadiums or huge malls.

The deal represents another great opportunity for Darden to take a regional upscale brand and turn it into a national powerhouse. The average volume is $8.4 million at a Yard House restaurant. Darden Specialty Restaurant Group will welcome the addition of another chain that will make the Darden unit have over $1 billion in annual sales. By the end of 2013, Yard House will have 45 restaurants. Taking the average per unit, this brings annual sales to $378 million.

Full year sales by restaurant group:

  • Olive Garden: $3.58 billion
  • Red Lobster: $2.67 billion
  • Longhorn Steakhouse: $1.12 billion
  • Specialty Restaurant Group: $623 million

The new acquisition puts the Specialty Restaurant Group on pace for $1.01 billion in 2013 sales. In the company's five year plan, they had a goal of $1 billion in sales for their specialty unit. Now less than a year after that goal was laid out, it seems it will be happening very soon. Darden's five year plan was to have 2425 restaurants open, compared to 1894 at the time of the 2011 plan. This acquisition continues to strengthen the expansion plans.

Darden's earnings per share for the fiscal year will be negatively impacted by $0.03-$0.05 because of the acquisition. The newly acquired restaurant chain will impact earnings per share after fiscal 2013. Earnings per share were originally forecasted at $3.87-$4.01. New unofficial guidance would then place earnings per share at $3.82-$3.96. New price to earnings ratio for forward earnings are 12.5 to 13.0.

Taking the company's five year plan of 2016 earnings per share of $5.85-$7.35, you can see where shares might trade in four years. The midpoint range of that wide guidance is $6.60. Taking a price to earnings ratio of 13, multiplied by earnings per share would set up a price target of $85.80. This would set up for a 71% gain in share price in four years. However, with the new acquisition and increased expansion, Darden may be able to hit on the higher side of guidance. Earnings per share of $7.35 in 2016 would bring shares to $95.50, representing a four year gain of 91%. The gains do not include the 4% in dividend payments each year. Taking in aggressive expansion and growth on top of generous yields could make this a four year 100% gainer.

Darden also announced it would be lowering its share buyback amounts. The company lowered its previously announced $200 million in buybacks down to $50 million for the fiscal year.

Darden is growing through acquisitions. After building out and reaching close to full potential of Olive Garden and Red Lobster chains, the company saw the need to add to its portfolios. Darden is becoming what YUM Brands (YUM) is to fast food, in the sit down dining experience. I discussed the possibility of publicly traded companies stocking up on several restaurant concepts in an article about Buffalo Wild Wings (BWLD) actively shopping for new concepts to expand on.

I recommended buying shares of Darden after discussing their international expansion and growth through acquisitions in a previous article. A well laid out five year plan discussed how the Specialty Restaurant Group would be the fast growing segment. Shares will likely fall Friday morning on news of the acquisition. This could set up for the perfect time to buy into this well run sit down restaurant powerhouse.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DRI over the next 72 hours.