Investing for Inflation?

So now the government is actually going to subsidize car sales with up to $4,500 in incentives for car buyers who get rid of cars that get 18 mpg or less. 
I understand that the auto industry is hurting. And I also get that more efficient cars help reduce our dependence on foreign oil. But is it appropriate to use tax payer dollars to fund auto purchases? 


50 and 200 Day Moving Averages Look to Converge

10 banks have paid back $68 billion in TARP loans. Including some smaller banks that have already repaid loans, the total is now over $70 billion. Even though the repaid money was raised from secondary stock offerings, which dilute shareholder value, it’s still something of a positive sign, I suppose.

Analyst Raises BAC Price Target, Time to Buy?

On Monday, an influential bank analyst raised his price target for Bank of America (NYSE:BAC) to $19. That implies a 40% jump for BAC. Curiously, this particular analyst didn’t cite any improvements to the business or strength in the bank’s balance sheet. Rather, he based his analysis on improving investor sentiment.

Russia, China, India, Brazil Seek to Dump Dollar

Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, called yesterday’s 2.5% drop on the S&P 500 to a tee. If you watched the video chart analysis from Jason that I included in Friday’s Daily Profit, then you were ready for Monday’s sell-off. I hope you were able to profit from it. 
And bonus points to Jason for calling the closing level of the S&P within 2 points. I think Jason’s video chart analysis will be a welcome addition to Daily Profit. Look for the next one in Friday’s edition.

VIX Showing Greater Uncertainty

Summer doesn’t officially start for a few more days. Tell that to the parents who are now getting their kids off to camp or getting ready for vacation. For the standard two-income household, living easy in summertime is just a memory. 
Including today, we have just 12 more trading days until the end of June and the end of the second quarter. I suspect we will have seen the highs for stock prices by then. That is, if we haven’t seen them already.

Oil Rally Taking a Pause?

Its worse in Europe than here in the U.S. Industrial production dropped 1.9% in a particularly cruel April, nearly double the 1% drop that was expected. First quarter GDP was also down 2.5% for the 16 Euro-zone countries. 
The recession there seems far from over, and Europe’s weakness might be contagious because it should act as a stark reminder just how tenuous global economic recovery is.

IEA Revises Oil Demand Numbers: Good News for Investors?

The International Energy Agency (IEA) reported that demand for oil is picking up. Instead of the 3% drop in demand, the IEA says that it now expects demand to be off a whopping – drumroll please – 2.9%. Sheesh. 
When you’re talking about 83.5 million barrels a day, a one-tenth of a percent revision should not be headline news. Somebody owes me an apology.

New Form of Mortgage-Backed Security Losses Ahead

"The worst is to come…"  
That’s what MetLife’s (NYSE:MET) Chief Investment Officer Stephen Kandarian told Bloomberg this morning.  
He was talking about commercial mortgage defaults. He notes that "[t]ypically there’s a lag between when the economy softens and when the defaults actually occur." 

How Bernanke and Geithner String Along the Rally 24/7

Bravo. The government’s handling of the financial crisis and recovery should be recognized as a masterful performance. At least, so long as you don’t look too deeply into the numbers… 
Bernanke and Co. have managed to restore confidence to the point that economist Paul Krugman has joined the ranks of those who think we are only a couple months away from actual GDP growth.

C and WFC “Profits” in Question

I don’t like to accuse people of lying. Those are fighting words. But after last night’s 60 Minutes interview with Fed Chief Ben Bernanke I am compelled to say that I don’t think he’s telling the truth about America’s banks. 
The interviewer asked point blank if Bernanke believed our banks are solvent. Bernanke responded with an unblinking, unflinching "yes." 
Of course he used the recently performed "stress tests" as his measuring stick. And that’s where the problems begin…