Rumor Report: Amazon's New Retail Store

It seems that Amazon (Nasdaq: AMZN  ) is trying to become something it's currently not -- a brick-and-mortar retailer. The e-retailer is rumored to be opening a store in Seattle within the next few months. According to reports by the blog Good Ereader, Amazon's store would sell high-margin items including e-readers, its Kindle Fire tablet, and Amazon-published books. As the Web's largest retailer, this could be the company's worst decision to date.

If the news is true, the Seattle store would go against everything that's made Amazon.com a success: limited overhead costs, minimal employee salaries, and the absence of sales tax. Amazon's made a name for itself by driving shoppers online and out of traditional retail stores. Big box stores like Target (NYSE: TGT  ) are under increasing pressure to compete with Amazon's prices.

Target recently reached out to suppliers for help protecting its stores against "showrooming" -- a trend that has customers viewing products in stores like Target and then buying them elsewhere. To avoid this type of blatant comparison-shopping I think a better plan for Amazon would be to open small-format stores within retailers such as Target.

This is a strategy that's already working well for Apple (Nasdaq: AAPL  ) . The Mac maker's success with smaller format stores inside Best Buy (NYSE: BBY  ) locations led to a more recent partnership between Apple and Target. The tech-titan plans to open 25 Apple mini-stores within select Target locations. From a business standpoint, this strategy could help Amazon test a physical presence within various markets without a significant investment.

I'm a regular shopper on Amazon.com and a loyal shareholder. However, I can't get behind the company throwing cash into a chain of retail stor! es. Its latest earnings report left investors concerned over management's spending habits -- and for good reason, considering Amazon spent almost as much money as it earned for its fourth quarter. Throw physical storefronts into the mix and it could be a recipe for disaster. ???

Final thoughts
Of course, I could be wrong. Before 2001, the idea that Apple would operate its own outlets was unthinkable. Today, Apple's store tops the chart for highest retail sales per square foot, with $5,626. Can Amazon succeed as a brick-and-mortar? I want to hear from you. Share your thoughts with the Fool community in the comments below.? ?

How to Profit From a Stock Market Bubble

LDK Solar Co., Ltd. (NYSE:LDK) announced that the Company has signed an engineering, procurement and construction (EPC) agreement with Guodian Longyuan Zhangye New Energy Limited for a project located in Zhangye City in the Gansu province of China. The first phase of the project commenced this month, and completion is expected by December 31, 2011.

LDK Solar Co., Ltd., together with its subsidiaries, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products; and development of power plant projects.

Cleantech Transit, Inc. (CLNO)

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 (www.phoenixenergy.net). This project could benefit the Company’s manufacturing clients worldwide.

Biomass can be used to make energy-rich gas called biogas. Biogas is quite like natural gas that we use in the kitchen. There is another form of fuel that biomass can be transformed into. Corn and wheat can be transformed into ethanol that is similar to gasoline. Other than this, biodiesel and methanol are other liquid forms of biomass energy. One of the important sources of biomass energy is forests.

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 www.cleantechtransitinc.com

Gannett Co., Inc. (NYSE:GCI) reported third quarter 2011 financial results. Highlights are summarized below: Earnings per diluted share, on a GAAP (generally accepted accounting principles) basis were $0.41 for the third quarter of 2011 compared to $0.42 for the third quarter last year. Earnings per diluted share from continuing operations for the September 2011 year-to-date period were $1.40 compared to $1.63 for 2010. Excluding special items in 2010 and 2011, third quarter earnings per diluted share were $0.44 compared to $0.52 for the same quarter in 2010.

Gannett Co., Inc. operates as a media and marketing solutions company in the United States and internationally.

The Manitowoc Company, Inc. (NYSE:MTW) announced that it will release its third-quarter 2011 financial results on Tuesday, October 25, after the market closes. The third-quarter results will also be discussed by Manitowoc’s management team during a live conference call for security analysts and institutional investors which will be held at 10:00 a.m., Eastern Time, on Wednesday, October 26. Investors, media, and the general public may listen to a live Internet webcast of the conference call at www.manitowoc.com.

The Manitowoc Company, Inc. engages in the manufacture and sale of cranes and related products, and foodservice equipment.

Bernanke Rambles, Gold and Silver Markets Soar

Bernanke said the Fed may expand the balance sheet, may let inflation return, and it could – potentially – instigate a stimulus reform, while a mortgage principal forgiveness “could be helpful”…

Sounds like what we’ve been hearing for months from the Chairman: “maybe we’ll do X, Y, or Z, if things get worse.”

Overall, the Fed blamed the poor housing market for the lack of strength in the economic rebound.

In yesterday’s meeting, Ben Bernanke stated:

"If the situation continues with inflation below target and unemployment declining at a rate which is very, very slow, then our framework, the logic of our framework says, we should be looking for ways to do more. ... We need to adopt policies that will both achieve our inflation objectives and help the economy recover as quickly as feasible. I would say that your question, actually and the earlier question, shows the benefit of explaining this framework, because the framework makes very clear that we need to be thinking about ways to provide further stimulus if we don't get improvement in the pace of recovery and a normalization of inflation."

This is one of the first big meetings after Fed agreed to publish their minutes and forecasts in order to steer the markets…

Consequently, markets responded in a predictable fashion after Wednesday’s Fed meeting.

The dollar plummeted and stocks erased early losses. 

Least surprisingly of all, data firmly suggests that investors are flooding the precious metals market.

Experts suggest you sprint towards junior miners with full force while you still can…

From Dollar Collapse:

The carrying cost of gold and silve! r bullio n will remain more or less zero, while all manner of “risk-on” strategies and carry trades will generate virtually guaranteed returns. Think back a decade or so and ask your younger, more naive self what the result of open-ended zero interest rates would be. You’d have probably said “that will never happen, but if it did, gold and silver would go parabolic”. You’d be half right. Grab those junior miners with both hands.

Already, we’ve seen the expensive cost of the depleting silver supply…

Considering the direction the economy has taken, it’s plausible that the supply situation will become more severe as days pass.

Here’s an overview of recent market activity within the precious metals realm: 

GOLD
 

SILVER
 
*Images courtesy of Kitco.com.  

 

Why American Eagle Outfitters' Earnings May Not Be So Hot

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on American Eagle Outfitters (NYSE: AEO  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, American Eagle Outfitters generated $89.3 million cash while it booked net income of $187.5 million. That means it turned 2.9% of its revenue into FCF. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. Wh! at does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at American Eagle Outfitters look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 12.0% of operating cash flow coming from questionable sources, American Eagle Outfitters investors should take a close! r look a t the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 8.6% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 56.4% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

• Add American Eagle Outfitters to My Watchlist.

New York Top Investment Pick for Multifamily Investors

A forecast of low vacancy and higher rents is expected to keep investors flocking to New York City in 2012, according to experts. Records indicate that a whopping 80% of households in the city are priced out of homeownership, with areas like Tribeca, Manhattan and SoHo attracting strong attention from developers and investors that have formed, or will form, REITs to handle the large amounts of capital needed to enter the market. Meanwhile, city families looking to reduce costs will move to outer boroughs like Queens and Brooklyn, which is expected to drive down vacancy in those areas as well. For more on this continue reading the following article from National Real Estate Investor.

New York City will maintain one of the tightest vacancy rates in the country this year, with 80 percent of all city households priced out of homeownership.

In sought-after neighborhoods of SoHo and Tribeca, landlords will increase rents to peak levels, while the redevelopment of Lower Manhattan will continue to attract new rental households from other areas. Residents who are newly unemployed or looking to reduce living expenses will venture to the outer boroughs for more affordable housing. As a result, vacancy in Brooklyn and Queens will compress to the lowest level in nearly a decade.

REITs and institutions will expand their portfolios of trophy assets in core neighborhoods, while opportunistic buyers target under-valued properties in the outer boroughs. Developers looking to raise capital will form joint ventures with private-equity funds and acquire redevelopment properties in Manhattan. Additionally, intense competition from REITs will keep cap rates for these assets near 5 percent. The borough’s private investors will target older buildings and reposition properties to capture higher upside over the course of several years. A similar trend will take shape across the East River as investors form syndicates w! ith loca l operators in Brooklyn. Buyers with a penchant for risk will pay cash for underperforming buildings in Bedford/Stuyvesant, Prospect Heights and Bushwick, while long-term hold buyers will target well-occupied properties in Greenpoint and Williamsburg.

2012 Market Outlook

• 2012 NAI Rank: 3, Down 2 Places. New York City surrendered the top spot in the ranking due to uncertainty surrounding Wall Street employment.
• Employment Forecast: After generating 25,000 positions last year, employers will add 68,000 jobs in 2012, an increase of 1.8 percent.
• Construction Forecast: Robust demand and solid rent growth will prompt builders to move off the sidelines and deliver 6,500 units this year.
• Vacancy Forecast: Citywide, vacancy at large, market-rate complexes will tick down 10 basis points in 2012 to 2.3 percent.
• *Rent Forecast: Asking rents will spike 6 percent this year to $3,107 per month, while effective rents will soar 7 percent to $3,052 per month.
• Investment Forecast: As currency exchange rates remain favorable, international investors will purchase institutional-grade assets throughout New York City. To mitigate risk, these buyers will target buildings with public transportation access in neighborhoods with solid rent growth.

JNPR: Three Downgrades; Bulls Concede Uncertainty

Shares of Juniper Networks (JNPR) fell 68 cents, or 3%, today to $21.69 after a offering a disappointing Q1 forecast last night, as analysts debate the seriousness of the malaise in equipment sales the company is grappling with.

The stock received three downgrades today, from Stifel Nicolaus, Auriga USA LLC, and Morgan Keegan.

The commentary from bulls on the stock is cautious, thick with uncertainty and lacking the kind of robust defense offered for Riverbed Technology (RVBD) today.

Bullish!

Brent Bracelin, Pacific Crest: Reiterates an Outperform rating and a $24 price target, though he warns there’s also the potential for downside to $17. He writes that he’s “hanging on to hope of a second-half [2012] recovery.”? “We are maintaining our Outperform rating despite meaningful near-term downside risk. We see potential for a 2H rebound driven by a robust arsenal of new products. [...] Clearly the degree of caution around Q1 has overshadowed many if not most of the key metrics from Q4, which are now less relevant. The bull thesis now hinges on a recovery in service-provider router orders in the second half.” About that recovery, Bracelin admits there is “limited visibility.” Bracelin cut his estimate for this year’s results to $4.43 billion in revenue and $1 per share in profit, down from a prior estimate of $4.52 billion and $1.20 per share.

Tim Long, BMO Capital Markets: Reiterates an Outperform rating, while cutting his price target to $24 from $25. “On the bright side, we believe that the backlog has increased by $200+ million over the last two quarters, which should help results in 2Q and/or 3Q. The T4000 is just starting to ship, and there could be some pent-up demand. Services and Enterprise both performed well the last few quarters, and look solid into 2012.” Long cut! his 201 2 EPS estimate to 89 cents from $1.05.

Bearish!

Sanjiv Wadhwani, Stifel Nicolaus: Cut his rating to Hold from Buy. The outlook “leaves us with little to defend our Buy thesis.” “Q4 product gross margins declined 3.4% to 64.2%. Product gross margins have declined in each of the last three quarters from 70.6% in Q1 to 64.2% in Q4. This brings into question whether there is pricing pressure in the market (from Cisco and Huawei) and whether the margin profile of the routing industry has permanently changed. In fact, Cisco on numerous occasions has suggested that it will not walk away from deals where pricing becomes an issue, and has guided for routing gross margins to decline over the next 3 years.” He cut his 2012 forecast to $4.3 billion and 79 cents from a prior $5 billion and $1.45.

Sandeep Shyamsukha, Auriga: Cut his rating to Hold from Buy, and trimmed his price target from $26 to $23. Juniper could “bounce back” in the latter part of this year on carrier spending by Verizon Communications (VZ) and AT&T (T), but that’s not sufficient to buy the stock. “While we continue to like JNPR��s positioning in routers, we would wait for more clarity on service provider spending and/or new product momentum before becoming more constructive on the stock.” Shyamsukha cut his estimate for this year to $4.33 billion and 98 cents from a prior $4.73 billion and $1.30.

What to Watch for on the Dow Today

The last several years gave investors a breakneck ride. Keeping that in mind, investors, now more than ever, need to keep as up-to-date as possible in order to make the right moves at the right time. In that spirit, let's take a look at some of the key storylines that should drive movement on the Dow Jones Industrial Average (INDEX: ^DJI  ) today.

Where's the action?

• Today marks the first trading day since credit rating agency S&P downgraded the credit ratings of France and eight other sovereign nations. The actions now leave Germany as the only eurozone country with an AAA credit rating. The downgrades also led S&P to downgrade the credit rating of the EU bailout fund EFSF, short for the European Financial Stability Facility. This certainly leaves policy makers in Europe in an increasingly precarious situation in their attempts to resolve Europe's lingering debt crisis. More news will surely follow.
• Both Wells Fargo (NYSE: WFC  ) and Citigroup (NYSE: C  ) report their earnings today. For Wells Fargo, analysts expect the firm to earn $0.72 per share for the quarter on revenue of $20.1 billion. This compares to $0.61 per share in the same quarter last year. For Citi, analysts expect $0.49 from quarterly revenue of $18.5 billion. During the same quarter last year, Citi produced earnings of $0.77 per share.
• China recently released economic growth figures from its fourth quarter. In the last quarter of 2011, the Chinese economy grew at an 8.9% rate. Although this does represent a decline from previous growth figures, a near-9% growth rate still seems pretty healthy.

Foolish bottom line
At the Fool, we advocate investing for the long term. In that light, investors always need to take day-to-day news events with a grain of salt.! Don't l et seemingly unrelated news events distract you from your actual goal -- to grow your personal savings over time. And while it always pays to stay informed, you'll probably end up better over time if you simply focus on your primary goals and tune out the rest of the noise.

While investing for the long term makes sense for any number of reasons, some opportunities are better than others right now. The Motley Fool recently compiled a report detailing its top stock for 2012, handpicked by our chief investment officer. Better yet, we've made it available to our readers for free, so click here to access your free copy today while you still can.

Buy, Sell or Hold: Campbell Soup Co. (NYSE: CPB) Looks to Profit From its Recent Overseas Expansion

Some quick thoughts on a fairly interesting start to this week.

The Dodd Financial Reform Plan

It’s out, all 1,300 plus pages. That’s the Chris Dodd blueprint for financial peace in our time. Why oh why do these guys not embrace brevity. Could it be that there are some devils hiding in all of the details? There is a plethora of comment in the blogosphere so I’ll try and not add to a surfeit of opinion.

I do want to direct you to one rather brilliant thought that John Carney offered Monday. John recounts the serial Fed failures that occurred during the crisis. He goes on to point out that it makes little sense for that institution to be given expanded oversight of non-bank financial institutions given past performance. As he notes, about all we will accomplish is to spread bad policy further into the financial system.

Spreading the Fed’s authority risks making this problem of market homogenization even worse. Hedge funds and insurance companies escaped the financial crisis intact, largely because they weren’t subject to the same regulators whose views on prudence so damaged the banks. Subjecting a broader range of financial firms to the Fed’s market views will create more systemic risk, leaving more firms in vulnerable if the Fed gets it wrong again.

The new powers being proposed for the Fed would allow it to order financial firms to “reduce risk.” Which is to say, the Fed’s view of risk will even more directly control the financial system. The Fed will be able to impose its views of risk on a broader range of financial firms. But that is exactly what regulators thought they were doing when they incentivized banks to buy up mortgage backed securities through sliding-scale capital requirements.

In shor! t, the r egulators’ views of prudent banking got us into this mess. Allowing the Fed to fail upward is just a recipe for another—likely worse—crisis.

Carney is dead right. Let’s not bet the ranch on the Fed or any other regulator for that matter getting it right every time. One lesson to take away from all of this is that the technocratic class failed badly. Limiting their reach isn’t a bad idea at all.

Krugman Declares War on China

PaulKrugman let the Chinese have it with both barrels Sunday. He suggested – no, he did a bit more than suggest – that the time had come to call the Chinese to account over their management of the renminbi/dollar exchange rate. He didn’t mess around with his prescription for curing the problem if the Chinese don’t listen to us.

But if sweet reason won’t work, what’s the alternative? In 1971 the United States dealt with a similar but much less severe problem of foreign undervaluation by imposing a temporary 10 percent surcharge on imports, which was removed a few months later after Germany, Japan and other nations raised the dollar value of their currencies. At this point, it’s hard to see China changing its policies unless faced with the threat of similar action — except that this time the surcharge would have to be much larger, say 25 percent.

I don’t propose this turn to policy hardball lightly. But Chinese currency policy is adding materially to the world’s economic problems at a time when those problems are already very severe. It’s time to take a stand.

The guy has a point but it seems to me that he has gone around the bend on this one. Yeah, we need to see an end to their game but now probably isn’t the time to be sending seismic shocks through a pretty fragile global economy. The problem isn’t going to yield to overnight solutions or drac! onian th reats. It can be worked out if all involved maintain an even keel.

Why people continue to suggest that this loose cannon would be an appropriate candidate for Treasury Secretary or a position with the Fed is a mystery to me.

Real Estate

If you think that residential real estate is on the mend and the worst is behind us, here is a sobering slap in the face for you. Diana Olick points out that things are getting worse faster than the feds fixes can mend them. Check out her blog for a reality check (that’s a good but accidental pun on her blog — Realty Check).

And just to rub a little salt into the wound, Calculated Risk has these comments from Chris Thornburg on the $2.3 billion gift that Congress gave the home builders.

[Christopher Thornberg] said the net operating loss carryback extension and expansion will do nothing to mend the housing market.

“Of course not. They’re not building any homes; there’s still too many of them kicking around,” Christopher Thornberg, a principal at Beacon Economics in Los Angeles, told SNL. “Permits, starts are still flat; they’re still at a bottom. It’s a bailout. It’s a bailout for builders. It’s a bailout for Robert Toll. They’re bailing out Robert Toll. Repeat after me, they are bailing out Robert Toll. What’s wrong with this picture?”

When asked whether there were any positives to come out of the net operating loss carryback extension and expansion, Thornberg said, “No, no, no, no, no, no, no. No. Nothing. There’s nothing to build; there’s an oversupply. If anything, they’re making it worse because they’re encouraging construction when we need to burn off our existing supply first.”

There’s a lot more in the CR post. It will dispel any notion you may have that responsible responses to our problems have or will emana! te from Washington.

Health Care

Finally, here’sMegan McArdle admitting that she has no idea which way the vote on ObamaCare is going to go, but that’s only the beginning of the beginning on this issue. She suggests that the fate of the bill will possibly be the same as the one that befell the Medicare Catastrophic Coverage Act of 1988. If you missed that one, the furor over it caused it to be repealed in 1989. She poses an interesting question as to what might transpire if things do proceed down that road.

That seems like the not-unlikely follow up, either from terrified Dems or a brand-spanking new Republican Congress. Would Obama dare veto it? When there’s no longer an unpopular Democratic Congress to hide behind? One hopes, for the good of the country. But while so far the president has been enthusiastically urging members to lean into the strike zone and take one for the team, I’ve seen little indication that he’s willing to risk his own job.

Let me know if you think we can get any of this sorted out properly. Believe it or not, I do, but I’ve been wrong about so much for the past couple of years that if I were you I wouldn’t put much faith at all in my opinion.

Stocks End An Ugly Day a Little Uglier

Headlines out of Europe once again dominated trading on Monday, and the headlines got worse as the day wore on. Towards the end of the day, a report came out of Dow Jones Newswires suggesting that the EU finance ministers couldn’t agree to raise the ceiling of the European bailout fund to 500 billion Euros.

That added to pessimism fueled by ECB President Mario Draghi’s negative sentiment about the European economy, and the region’s prospects should the union break up.

The Dow ended the day down 100 points at 11,766. The S&P 500 dropped 14.3 points to 1,205.4. Financials fell hard and Bank of America (BAC) ended at $4.99.

Rydex/SGI Advisor Confidence Index Dipped Slightly in February

Advisor confidence in the U.S. economy and stock market fell slightly in February, declining 2.4% from the previous month, according to the Rydex/SGI Advisor Confidence Index released Tuesday.

Of the index’s four measures, the most notable changes were the declines in the six-month and 12-month outlooks for the economy, both of which turned decidedly negative from January. Advisors’ view of the stock market was down less significantly, while the current economic outlook was viewed positively.

Rydex/SGI Advisor Confidence Index Results for February:

• Current economic outlook, +2.06%
• Six-month economic outlook, -2.17%
• 12-month economic outlook, -7.80%
• Stock market outlook, -1.43%

While the majority of the advisors surveyed said they were little concerned about the bond bubble bursting in 2011, more than half indicated they were reducing their fixed-income holdings. 

“In terms of the big picture, the environment is more supportive of equities over fixed income,” said Kenny Landgraf of Kenjol Capital Management LLC.

In comparison with advisors, U.S. consumers are more positive about the economy and their own income prospects. The consumer confidence index as measured by the Conference Board moved ahead for the fifth consecutive month in February, climbing to a three-year high. The index, released Feb. 22, now stands at 70.4 (1985=100), up from 64.8 in January.

Comments From Advisors Participating in the Rydex/SGI Survey:

Ken Graves, Capital Research:  “U.S. government bonds have been hit somewhat hard but they have likely not gotten their full due yet. There is more downside to come. We may see some short-term rebound in government bond prices but it will be a brief to intermediate term situation. Job growth will continue to hamper the speed of recovery.”

Rob Siegmann, Financial Management Group:  “Those who use bonds in the context of a diversified portfolio, for safety and diversification, they will continue to provide an anchor during tough times. For equities, our firm remains optimistic, as we have been for the past 25 months."           

James Dailey, TEAM Financial Managers: “Long-term valuations suggest equity markets have re-entered an explicitly speculative phase.”

Rydex/SGI AdvisorBenchmarking is a research and analysis center focused on the registered investment advisor (RIA) marketplace. Every year through its survey web site, www.AdvisorBenchmarking.com, the firm conducts surveys of advisors, covering a variety of business management and investment management practices.

Read about the growing use of ETFs as reported in February by Rydex/SGI at AdvisorOne.com.

Obama¡¯s Mortgage Plan Announcement Disappoints

President Barack Obama announced during his State of the Union address that struggling homeowners would be able to save $3,000 a year through a new refinancing plan paid for by a fee levied on banks. The president said this bank tax would act as a way for banks to repay the debt they owe to taxpayers for being bailed out, but analysts say the proposal will never be passed by Republicans who oppose a bank tax and government intervention in general. Also of concern to analysts was the announcement of a new investigation unit that will continue to scrutinize lending practices, which is expected to put more pressure on banks that may be shifted to borrowers in the form of higher lending costs. For more on this continue reading the following article from TheStreet.

President Obama in his State of the Union address on Tuesday proposed a plan that would allow every "responsible homeowner" a chance to save $3,000 a year on their mortgage by refinancing at historically low interest rates.

The President did not elaborate on the details of the plan except to say that a "small fee" on the largest financial institutions will help fund the plan and "give banks that were rescued by taxpayers a chance to repay a deficit of trust."

According to a New York Times report, the new plan will be directed at borrowers whose mortgage exceeds the value of their homes . The report quotes a senior administration official who says the program could benefit 2 to 3 million homeowners with mortgages not guaranteed by the government and will cost no more than $10 billion.

"This sounds an awful lot like the FHA short-refi program announced in 2010 that is 1,499,500 short of its 1.5mm goal," tweeted Neil Barofsky, former inspector general for TARP and a senior fellow at NYU School of Law.

Analysts reacting to the announcement are also calling the plan "dead on arrival."

FBR Capital analyst Edward Mills said in! a note Wednesday morning that the plan was unlikely to get congressional approval, "as Congressional Republicans are opposed to additional intervention in the mortgage market and are philosophically opposed to a bank tax."

KBW analysts believe the plan might look something like an extension of the current HARP plan to include private mortgages. Still, they too seem to doubt the likelihood of the plan getting approval and called the proposal to pay for refinancing package with a bank tax a "poison pill."

Meanwhile, the analysts seemed more concerned about the creation of a mortgage investigation unit in the Justice Department as the more significant development for banks.

The announcement comes at a time when banks and states are working towards a settlement on faulty foreclosure practices. Banks have been seeking a broad release from future claims from states in exchange for making reductions to principals on loans. But New York Attorney General Eric Schniderman and California AG Kamal Harris are among those who have insisted that they have the flexibility to continue investigating claims against banks mortgage practices.

"While investors had been expecting some good news in the form of a mortgage settlement and the ability to put the issue in the past, this announcement suggests that investigations into banks' practices related to securitizing residential mortgages is unlikely to end any time soon, " KBW analysts wrote.

The SPDR Select Sector Financials ETF was down 0.6% Wednesday morning. Bank of America, JPMorgan Chase, Wells Fargo and Citigroup, who are engaged in mortgage settlement negotiations, all saw their shares dip by more than 1% in early trading.

Housing Market: Here Are 9 Industry Insiders That Think the Rebound Is for Real

David Crowe, chief economist at the National Association of Home Builders (NAHB), has released a bullish forecast regarding the 2012 Housing market.

He estimates new home sales will increase from 304,000?in 2011 to 360,000 in 2012. Additionally, housing starts will increase by 17% to 709k. Single family homes will also increase by 17% to 501k. Total starts will hit 709k. Crowe also anticipates new home sales will significantly increase in 2013, reports CalculatedRisk.

Of course, NAHB's forecast isn't the only one that matters. Analysts from Merrill Lynch, John Burns, Wells Fargo, Goldman Sachs, Moody's, and Fannie Mae have released forecasts of their own.

Using a table from Calculated Risk, we see the forecast range. Merrill Lynch comes in as the least optimistic for New Home Sales in 2012, predicting 304,000. On the other hand, Moody's anticipates 530,000 new home sales.

For single family home starts, Merrill Lynch again comes in as the most pessimistic of the lot at 427k. Moody's is most optimistic at 687k single family starts.

Business section: Investing ideas
So, which housing stocks are worth a closer look?

For ideas, we collected data on insider transactions and identified a list of housing stocks that have seen significant insider buying over the last six months.

Theoretically, insiders know more about their companies than anyone else. So if they're using their own cash to buy the shares of their employers, you better pay close attention.

Insider executives are optimistic on the outlook of these companies. They seem to think the rebound is for real -- do you agree? (Click here to access free, interactive tools to analyze these ideas.)

1. PulteGroup (NYSE: PHM  ) : Engages in homebuilding and financial services businesses primarily in the United States. Over the last six months, insiders were net buyers of 93,802 shares, which represents about 0.03% of the company's 3! 36.42M s hare float.

2. KB Home (NYSE: KBH  ) : Operates as a homebuilding and financial services company in the United States. Over the last six months, insiders were net buyers of 36,000 shares, which represents about 0.05% of the company's 65.47M share float.

3. Beazer Homes: Designs, builds, and sells single-family and multi-family homes in the United States. Over the last six months, insiders were net buyers of 88,300 shares, which represents about 0.14% of the company's 62.67M share float.

4. Armstrong World Industries: Engages in the design, manufacture, and sale of flooring products and ceiling systems in the Americas, Europe, and the Pacific Rim. Over the last six months, insiders were net buyers of 16,000 shares, which represents about 0.08% of the company's 20.65M share float.

5. Headwaters (NYSE: HW  ) : Provides products, technologies, and services in the building products, construction material, and energy industries primarily in the United States and Canada. Over the last six months, insiders were net buyers of 293,818 shares, which represents about 0.5% of the company's 59.04M share float.

6. Texas Industries: Engages in the production and supply of heavy construction materials in the United States. Over the last six months, insiders were net buyers of 2,744,380 shares, which represents about 20.15% of the company's 13.62M share float.

7. Two Harbors Investment (NYSE: TWO  ) : Operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS) and related investments. Over the last six months, insiders were net buyers of 121,000 shares, which represents about 0.09% of the company's 139.68M share float.

8. ARMOUR Residential REIT ( NYSE: ARR  ) : Over the last six months, insiders were net buyers of 200,000 shares, which represents about 0.25% of the company's 81.27M share float.

9. Campus Crest Communities: Focuses on building, owning, and managing student housing properties in the United States. Over the last six months, insiders were net buyers of 12,525 shares, which represents about 0.04% of the company's 30.58M share float.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Insider data sourced from Yahoo! Finance.

Monotype Imaging Holdings Earnings Preview

Investors are on the edge of their collective seat, hoping that Monotype Imaging Holdings (Nasdaq: TYPE  ) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings Thursday. Monotype Imaging Holdings is a global provider of text imaging solutions. The company's technologies and fonts enable the display and printing of high-quality digital text.

What analysts say:

• Buy, sell, or hold?: Analysts strongly back Monotype Imaging Holdings, with five of six rating it a buy and the remainder rating it a hold. Analysts don't like Monotype Imaging Holdings as much as competitor Bitstream overall. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $31.6 million in revenue this quarter. That would represent a rise of 7.3% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.20 per share.

What our community says:
CAPS All-Stars are in strong support of the stock, with 92.9% assigning it an "outperform" rating. The majority of the Fools agree with the All-Stars, with 62.5% giving it an "outperform" rating. Fools are impressed with Monotype Imaging Holdings, though the message boards have been quiet lately with only six posts in the past 30 days. Monotype Imaging Holdings' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Monotype Imaging Holdings' profit has risen year-over-year by an average of 50.5% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Margins illustrate how efficiently a company captur! es porti ons of sales dollars. Monotype Imaging Holdings' gross margins, which reflect the total sales revenue that the company retains after costs decreased year-over-year in the last two quarters. See how Monotype Imaging Holdings has been doing for the last four quarters:

Quarter	Q3	Q2	Q1	Q4
Gross Margin	89.2%	87.9%	90.6%	90.5%
Operating Margin	31.2%	31.2%	32.0%	34.7%
Net Margin	19.5%	18.0%	18.3%	20.9%

We can help you keep tabs on your companies with My Watchlist, our free, personalized service. Add Monotype Imaging Holdings now.

Pharmacyclics: Oncology blockbuster?

Pharmacyclics (PCYC) has been on our radar screen for more than a year, since we first met the company��s enthusiastic head of research, Joseph Buggy, in October, 2010 at the BIO Investor conference in San Francisco.

Based in Sunnyvale, CA, PCYC is specifically focused on developing small molecule drugs for the treatment of cancer and immune-mediated diseases.

Pharmacyclics is currently developing PCI-32765 for the treatment of diffuse large B-cell lymphoma, mantle cell lymphoma,? and multiple myeloma.

Indeed, the company then made headlines at ASCO oncology conference last June with the most exciting data presented at the conference, specifically its BTK inhibitor PCI-32765 for the treatment of B-cell malignancies.
PCYC received sound affirmation of its value with a major corporate collaboration announced ahead of ASH in December, that brought Johnson & Johnson��s Jansenn Biotech.

Signing this type of deal with a huge global player like J&J/Janssen also gives PCYC a strong, well established, and clearly experienced ally for the eventual commercialization, marketing and launch of the drug.

It is worth emphasizing that we believe PCYC is advancing one of the most exciting assets in the hem/oncology space. PCI-32765 clearly has blockbuster potential.

The combination of robust clinical data in difficult-to- treat tumor types, exceptional tolerability, and once-daily oral administration produce a formidable combination of attributes for any cancer drug candidate. ?

After meeting with senior management last week in San Francisco, it is clear to us that the PCYC CEO and team understand the difference between a quick sell and creating long-term, exponential shareholder value.

In the current hot biotech M&A environm! ent, PCY C could have easily been acquired at a premium.

However, CEO Robert Duggan knows that the value of PCI-32765 for PCYC shareholders, confirmed and supported by the Janssen collaboration, over time will dwarf that of any quick takeout.

Mr. Duggan, by the way, is more likely than most to have shareholder value at the top of his list, since the CEO owns almost 25% of the company.

We are recommending purchase of PCYC up to $18 with a 24 month target of $30. ?

Introducing the 24/7 Wall St. Wire

NiSource Inc. (NYSE:NI) looks to be tendering some of its debt.? The company announced a tender offer after yesterday’s close for up to $300 million of its 7.875% Notes due 2010. That’s not so unusual. The company is offering note holders exactly $1,000 for each $1,000 of principal. In fact, if note holders don’t deliver their notes by April 14th, they will receive only $970 for each $1,000 of principal.? NiSource noted that the aggregate principal amount outstanding on the Notes is $932.43 million. The company’s shares are trading up slightly in early action this morning.

Paul Ausick
April 1, 2009

22 Signs That We're on the Verge of a Devastating Global Recession

2012 is shaping up to be a very tough year for the global economy. All over the world there are signs that economic activity is significantly slowing down. Many of these signs are detailed later on in this article. 

But most people don't understand what is happening because they don't put all of the pieces together. If you just look at one or two pieces of data, it may not seem that impressive. But when you examine all of the pieces of evidence that we are on the verge of a devastating global recession all at once, it paints a very frightening picture. 

Asia is slowing down, Europe is slowing down and there are lots of trouble signs for the U.S. economy. It has gotten to a point where the global debt crisis is almost ready to boil over, and nobody is quite sure what is going to happen next. The last global recession was absolutely nightmarish, and we should all hope that we don't see another one like that any time soon. Unfortunately, things do not look good at this point.

The following are 22 signs that we are on the verge of a devastating global recession....

#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.

#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.

#3 Sears recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.

#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will bemore than 5,000 more store closings in 2012.

#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial industry will lose approximately 150,000 jobs over the next 12 to 18 months.

#6 Investors are pulling money out of the stock market at a rapid pace right now.  In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row.  Are there some people out there that are quietly repositioning their money for tough times ahead?....

Investors yanked money out of U.S. equity mutual funds for a ninth-consecutive week despite a bullish 2012 outlook from Wall Street and a December rally that’s carried over into the New Year.

#7 There are signs that the Chinese economy is seriously slowing down.  The following comes from a recent article in the Guardian....

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the "stall speed" that historically led to recession.

#8 The Bank of Japan says that the economic recovery in that country "has paused".

#9 Manufacturing activity in the euro zone has fallen for five months in a row.

#10 Germany's economy actually contracted during the 4th quarter of 2011.  At this point many economists believe that Germany is already experiencing a recession.

#11 According to a recent article by Bloomberg, it is being projected that the French economy is heading into a recession....

The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.

#12 There are a multitude of statistics that indicate that the UK economy is definitely slowing down.

#13 In the UK, the average price of a gallon of gasoline has risen to an astoundin! g $ 9.67.

#14 It is being reported that the Spanish economy contracted during the 4th quarter of 2011.

#15 Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012....

The Italian government predicts GDP will contract 0.4pc next year, but many economists fear the figure is optimistic.

"We can say without mincing words that we have already slipped into recession," said Intesa Sanpaolo analyst Paolo Mameli. "We expect GDP to keep contracting for the next 3-4 quarters."

#17 Italy's youth unemployment rate has hit the highest level ever.

#18 The unemployment rate in Greece for those under the age of 24 is now at39 percent.

#19 Greece is already experiencing a full-blown economic depression.  About a third of the country is now living in poverty and extreme medicine shortagesare being reported.  Things have gotten so bad that entire families are being ripped apart.  According to the Daily Mail, hundreds of Greek children are being abandoned because the economy has gotten so bad that their parents simply cannot afford to take care of them anymore.  The note that one mother left with her child was absolutely heartbreaking....

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: 'I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.'

#20 In Greece, large nu! mbers of people are simply giving up on life.  Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.

#21 In many European countries, the money supply continues to contract rapidly.  The following comes from a recent article in the Telegraph....

Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. "This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery," said Mr Ward.

#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012.  At a time when credit is becoming much tighter, this is going to be quite a challenge.  The following list compiled by Bloomberg shows the amount of debt that some large nations must roll over in 2012....

Japan: 3,000 billion
U.S.: 2,783 billion
Italy: 428 billion
France: 367 billion
Germany: 285 billion
Canada: 221 billion
Brazil: 169 billion
U.K.: 165 billion
China: 121 billion
India: 57 billion
Russia: 13 billion

Keep in mind that those numbers do not include any new borrowing.  Those are just old debts that must be refinanced.

As I mentioned at the top of this article, things do not look good.

The last thing that we need is another devastating global recession.

As I wrote about yesterday, the U.S. economy is in the midst of!  a nightmarish long-term decline.  The last major global recession helped to significantly accelerate that decline.

So what will happen if this next global recession is worse than the last one?

Sadly, the people that will get hurt the most by another recession will not be the wealthy.

The people that will get hurt the most will be the poor and the middle class.

So what should all of us be doing about this?

We should use the time during this "calm before the storm" to prepare for the hard times that are coming.

As always, let us hope for the best and let us prepare for the worst.

But things certainly do not look promising for the global economy in 2012.

*Post courtesy of the Economic Collapse Blog.

 

More Tips on Following the Insiders

This article is brought to you by LearningMarkets.com.

As I mentioned in the last article, insider trading information can be useful but it can also be overstated or over-relied on. Used prudently, it may alert you to increased risk in stocks you already own and could even be used to find stocks and options to add to a watchlist as a potential investment.

I suggest that insider trading information be used in two ways.

1. Monitoring insider sentiment in stocks you own.

If insiders are suddenly buying a stock you own it may indicate that there is some very positive sentiment inside the company. That may change your risk control behavior by encouraging you to leave the position uncovered or to add to the position within your portfolio. Before making a decision based on insider trading you should consider who is buying and how much they are acquiring.

For example, if an officer like the CFO is buying that may be much more relevant than a director. Similarly, if an officer or director is buying very large quantities of stock that may be something that deserves attention. The stock YHOO experienced significant insider buying by Carl Icahn in his effort to increase his strategic influence on the company’s management in late November of 2008. The stock (YHOO) has rallied since.

2. Using insider buying to find stocks for investment.

The filtering process to find stocks that you do not already own with high insider buying is daunting if it could not be automated. Fortunately there are both free and pay services that do an excellent job at filtering and reporting the data for you. In the video, I will cover three services that I recommend for this kind of research.

Insider buying should not be the only qualification you use to decide on a company to buy. It is merely an alert that something interesting might ! be happe ning. Doing fundamental analysis and making sure a potential investment conforms to your portfolio diversification strategy is still critical.

This is part two of a series on insider trading. You can find the first article and video here.

---

John Jagerson is a contributor to LearningMarkets.com. To learn more about him, read his bio here.

This article originally appeared on the Learning Markets Web site.

Turning Jonah's Four Weaknesses Into Strength

Topsy-turvy situations in life include the biblical paradox: where we come before the living God in our weakness we redeem strength for the moment.

Jonah, the Minor Prophet, had such a difficult time of it obeying God's call to proclaim impending judgment to the Ninevites; he can be seen, through the text, battling four types of emotion.

These reveal four weaknesses that we, too, battle with. It depends on how we battle as to whether (or not) we draw on the LORD'S strength in getting through.

JONAH 1 - FEAR

Chapter 1 of Jonah hits the ground running; the prophet runs from God in fear. Perhaps it was mortal fear for his life to preach before the heathen of Nineveh; or maybe it was religious indifference, or a lack of faith. Whatever it was, it was fear that drove him the other way.

The LORD'S calling of Jonah is plain enough; he must go immediately (verse 2). But just as immediately, Jonah sprints in the opposite direction boarding a ship from Joppa bound for Tarshish. His fearful, disobedient reaction is 'rewarded' by a peril worse than he can imagine - death lies there, imminent.

Jonah's mistake was to run in fear. We make the same mistake; the instinct is to run when staying put and considering what is before us, and what God is saying, is usually the wiser choice. Obeying God is often about moving beyond the reptilian instinct, where that instinct is based in fear.

JONAH 2 - FAILURE

The sweetest scripture of this short book is saved for a psalm of thanksgiving.

Within the thread of Jonah's gratitude for the provision of a great fish, is the lament for his failure, realising how dire the circumstance was; that his disobedience almost led to his death. Whilst he is ashamed of his failure, he is thankful for the having been saved. It is impetus for obedience, leading into chapter 3.

Just as easily we, too, can reflect over our failures, utilising them as platforms for learning and future obedience.

JON AH 3 - FEELINGS

When the time comes to perform, we often go to water, experiencing fight or flight - the nuances of adrenaline pumping through our bodies, impacting us emotionally.

We could imagine going to a city, known for its revelry, like preaching before the mafia or the KKK; Jonah is faced with preaching an insultingly laughable message - how would they react?

Feelings-from-head-to-toe would be us if we were placed in such an intolerable situation. How do we communicate what God has laid tremulously on our hearts, but by faith?

Faith alone remits courage to do only what God can empower us to do.

JONAH 4 - FRUSTRATION

Notwithstanding the miracle of the Ninevites turning back to God in chapter 3, Jonah is found irreconcilable within a fit of anger. Preaching to the Ninevites has meant his own goals went unmet.

When we obey God, at times our needs and goals will go unmet, and we can expect feelings of frustration. Equally, though, we can expect God to reprove us, as he did Jonah, if our frustration is selfishly poised.

***

Jonah experienced the weaknesses of fear, failure, feelings, and frustration. We do too. We can learn a lot from, and be encouraged by, Jonah's humanity. Be balanced in fear. Accept failure and move on. Perform despite feelings. Patiently endure frustrations.

? 2012 S. J. Wickham.