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November 3
Four Reasons Why Hyperinflation Hasn't Hit the U.S. Economy...Yet
By Keith Fitz-Gerald
Chief Investment Strategist
Money Morning
Everything we know about classic economic theory suggests the U.S. economy should be experiencing Zimbabwe-like hyperinflation right now, thanks to the nearly $2.2 trillion the U.S. Federal Reserve has pumped into the system.
But we're not...yet.
Classic economic theory says that money supply can be used to stimulate the economy and our central bankers seem to agree. That's why they've pumped more than $1 trillion dollars into the economy, engineered countless bailout bonanzas for zombie institutions, put Detroit on life support, and delivered a bunch of financial Band-Aids to the trauma ward – all in a desperate bid to make Americans feel better about the global financial crisis.
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A new way to play gold
The Chinese government has secretly created a new type of government-backed gold investment.
We believe it could pay 500% over the next few years, because a similar government investment has returned 1,084% in recent years.
The details of this situation have never appeared in The Wall Street Journal, The New York Times, or any other mainstream U.S. media.
See the full story here...
Sponsored content
What Investors Should Look for in Today's Fed Statement
By Don Miller
Associate Editor
Money Morning
In its continuing efforts to nurture the fragile economic recovery, the U.S. Federal Reserve is widely expected to leave interest rates at record lows when it concludes its meeting today (Wednesday).
However, observers will be closely examining the details of the language in the statement of the Federal Open Market Committee (FOMC) meeting for hints as to when it plans to change monetary policy.
The overwhelming consensus is that the Fed will hold the federal funds rate steady at near-zero until the second half of next year. But that assumes the economic growth will stay in line with the Fed's current forecast – a weak recovery with subdued inflation and slow growth.
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Investment News Briefs
With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Madoff's Accountant Pleads Guilty; Charles Schwab Launches First ETFs; J&J Lays Off 7,000; Sept. Factory Orders Beat Estimates; Cost-Cutting Boosts Viacom's Profit; iPhone Gets a Chilly Reception in China; October U.S. Auto Sales Grow; Chrysler Profitable At The End of 2011? - Bernie Madoff's longtime accountant pleaded guilty to multiple fraud charges related to his Ponzi scheme. David Friehling's nine-count plea in a New York federal court included securities fraud, investment advisor fraud, making false filings with the Securities and Exchange Commission (SEC) and tax law violations, CNNMoney reported. "I am truly sorry for the suffering of all my victims," Friehling told the court, maintaining that he "committed these crimes as an independent auditor" and was unaware that he was involved in Madoff's scam. Friehling, free on a $2.5 million bond, faces a maximum sentence of 114 years in prison.
- The Charles Schwab Corp. (Nasdaq: SCHW) launched its first four exchange-traded funds (ETF) yesterday (Tuesday), offering free online trades for its nearly 8 million clients. The company's first ETF offerings are: Schwab U.S. Broad Market ETF (NYSE Arca: SCHB), Schwab U.S. Large-Cap ETF (NYSE Arca: SCHX), Schwab U.S. Small-Cap ETF (NYSE Arca: SCHA) and Schwab International Equity ETF (NYSE: SCHF). The broker will offer four more ETFs in December: Schwab U.S. Large-Cap Growth ETF (NYSE Arca: SCHG), Schwab U.S. Large-Cap Value ETF (NYSE Arca: SCHV), Schwab International Small-Cap Equity ETF (NYSE Arca: SCHC) and Schwab Emerging Markets Equity ETF (NYSE Arca: SCHE).
- Johnson & Johnson (NYSE: JNJ) said it would lay off 6% to 7% of its workforce of 117,000, or at least 7,000 people as part of a restructuring plan. The company, which on Oct.13 said its annual sales fell 5%, expects a pre-tax savings of $1.4 billion to $1.7 billion and to incur a charge between $1.1 billion and $1.3 billion. "These types of changes are difficult under any circumstances, and will have a very personal impact on people who have been dedicated to the mission of Johnson & Johnson," said Chairman and Chief Executive Officer William Weldon. "We recognize their contributions to the achievements of our business, and are committed to treating them fairly and with respect throughout this process."
- Factory orders in the United States gained a stronger-than-expected 0.9% in September amid shrinking inventories, the Commerce Department said yesterday (Tuesday). Analysts were expecting a gain of 0.8%, Reuters reported. "It's a solid rise in orders. They are consistent with manufacturing growing again," said James O'Sullivan, chief economist for MF Global Ltd. (NYSE: MF). "Inventories are still falling so there is more room for orders and production to grow."
- Viacom Inc.'s (NYSE: VIA, VIA.B) saw its profit rise 15% in its second quarter, thanks to cost-cutting initiatives designed to offset declining revenue, particularly in its Paramount film division. The media giant reported a net income of $463 million, or 76 cents per share, compared to $401 million, or 65 cents per share in the same period last year. Revenue fell 2.7% to $3.32 billion, and Paramount's revenue slipped 6.5% to $1.2 billion amid continuing erosion of DVD sales, which offset growth of 16% in its worldwide theatrical revenue from summer blockbusters like "G.I. Joe: The Rise of Cobra." Still, it sees demand for television advertising picking up leading into the holiday season. "There is demand out there at the moment," Philippe Dauman, Viacom's president and chief executive officer said in a conference call with analysts. Additionally, prices for the last-minute, fourth quarter ads are up "double-digit" percentages above ads sold in advance.
- Apple Inc.'s (Nasdaq: AAPL) iPhone sold just 5,000 units in the first four days on the market in China, China Unicom Ltd. (NYSE ADR: CHU) said. That pales in comparison to the smartphone's U.S. opening weekend in 2007, in which 146,000 units were sold. Its likely that China's vast gray market had a lot to do with it: In August, The Wall Street Journal said there was an estimated 1.5 million gray market iPhones, citing research firm BDA China Ltd. Unlike China Unicom's iPhones, gray market units include wi-fi capabilities, which were cut in Unicom's version in accordance with Chinese regulations. Still, China Unicom is confident about the future. "We are satisfied with iPhone sales so far, and we aim to have an additional 1 million new 3G subscribers each month in the near future," China Unicom Chairman Chang Xiaobing told Reute rs.
- The post- "Cash for Clunkers" market in the United States so far has been good to automakers: Ford Motor Co.'s (NYSE: F) October year-on-year sales gained 3%. Meanwhile, Nissan Motor Co. Ltd. (OTC ADR: NSANY) said its sales grew 5.6%, General Motors Co. (NYSE: GRM) reported a 5.3% gain and Toyota Motor Corp.'s (NYSE ADR: TM) sales grew 1%.
- Chrysler Group LLC expects to break even in 2010 and be profitable by the end of 2011, three people familiar with the matter told Bloomberg News. Chief Executive Officer Sergio Marchionne may reveal these goals at a presentation before a crowd of 300 that includes 150 financial and auto-industry analysts today (Wednesday), the people said. "We are not bleeding as people think we are," Marchionne said in a presentation last month. Chrysler's U.S. rival Ford Motor Co. (NYSE: F) said on Monday it expects to be "solidly profitable" in 2011.
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November 2
| U.S. Auto Sales (10/09) | November 3
| Factory Orders (10/09) | | | Federal Reserve Board Meets | November 4
| Federal Reserve Issues Policy Statement | | November 5 | Retail Sales for Chain Stores (10/09) | November 6
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