CNBC Million Dollar Portfolio Challenge Bonus Bucks Answers for Thursday, October 20, 2011

CNBC Bonus Bucks Answers for Thursday, October 20, 2011 and CNBC Million Dollar Portfolio Challenge

1. Which of Rupert Murdoch's four children once ran a television production company called Shine that was acquired by Murdoch's News Corp. in April?

ANSWER: Elisabeth

2. According to CNBC.com’s table of earnings surprises, how did Abbott Laboratories’ most recently reported earnings per share number compare to the consensus estimate?

ANSWER: EPS was one cent above the estimate

3. Which publicly listed company has the world's largest workforce?

Answer: Wal-Mart

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CNBC Portfolio Challenge Bonus Bucks Answers for Monday, October 3, 2011

CNBC Portfolio Challenge Bonus Bucks Answers for Wednesday, September 21, 2011 and CNBC Million Dollar Portfolio Challenge

1. Australians are expected to splurge A$7.88 billion on pet care services and products in the 2011-2012 financial year. How much are they spending on food per year, according to market research firm IBIS?

ANSWER: A$ 2.8 billion

CNBC Portfolio Challenge Bonus Bucks Answers for Wednesday, September 21, 2011

CNBC Portfolio Challenge Bonus Bucks Answers for Wednesday, September 21, 2011 and CNBC Million Dollar Portfolio Challenge

1. What is the 8th most popular city for business?

ANSWER: Madrid


2. What is the 31st most safest bank in the world in 2011?

ANSWER: Cassa Depositi e Prestiti Turin, Italy


3. In CNBC.com’s “Top 10 Green Cars 2011,” how is the Lexus CT 200h described?

ANSWER: “Sporty, little premium hatchback”

Federal Government Receipts Dropping Uh Oh (Graph)

Investor pay attention. Federal government receipts are dropping. This is a negative especially on the dollar. It also means that shortfalls are likely to lead to bigger auctions of government securities down the road.

Once this series becomes more widely discussed in the media it is likely to create investor uncertainty about the future. This is never a good thing for the market.

With the S and P 500 near 1000, investors should start to assume a more cautious stance.

A short fall in government receipts is a negative on the dollar, will likely lead to higher long term interest rates, and could lead to crowding out in the corporate securities market.

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Dollar Index Flashing Yellow Flag (Chart)

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The Dollar Index is approaching its near term low of 78.34 made back in June, and 77.68 in December. This should bring a note of caution to stock traders.

Back in March, a breakdown in the DI signaled a big break in the stock market. Will history repeat itself?

The DI traded down to 70.69 in March.

Dollar Index Weekly Chart



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Economist Samuelson Warns about China Pessimism and a Run on the Dollar

These are sobering words from renowned economist Paul Samuelson.

Some day -- maybe even soon -- China will turn pessimistic on the U.S. dollar.

That means lethal troubles for the future U.S. economy.

When a disorderly run against the dollar occurs, I believe a truly global financial panic is to be feared. China, Japan and Korea now hold dollars not because they think dollars will stay safe.

Why then?.....

The threat that China and others countries might divest the dollar is starting to cause jitters in the Treasury market. If the countries Samuelson mentioned held on to their dollar assets --but cut back on their purchases of U.S. Treasuries-- interest rates higher immediately.

The given in this equation is that the amounts of Treasuries coming on to the market in the years ahead is enormous.

Growing supply, and the likelihood that U. S. Treasury debt will get downgraded, means that the risk premium for owning longer dated treasuries is likely to rise and rise sharply.

During the early 1990s this risk premium rose to more than five percent.

Lets say we find ourselves with a three percent inflation rate in the next 12-18 months. What is the rate we could see in the ten years treasury?

8-11 percent. Inflation, inflation expectation, dollar risk, supply, plus a fair rate of interest all add to the interest rate that investors will demand in order to buy. It is not hard to envision five or more points of risk premium.

Does it make good sense in this environment to be fully invested in stocks?

My guess is that we are going to see a sharp uptick in inflation in the next 12-18 months. Given the enormous expansion in the money supply it is not hard to envision three percent inflation. Add in the necessary risk premium for owning longer dated securities, and it is not hard to envision sharply higher rates.

Right now most analysts continue to mention how inflation is not a problem. In 1980, when inflation was hitting 1.5 percent per month, analysts were forecasting higher inflation and higher interest rates in the future. Inflation peaked right then and right there.

Our we at the trough in inflation now?

Anybody old enough to remember when the ten year treasury yield was above 15 percent? Three month treasury bill at 14 percent?

It is time to be risk adverse. Not the time to be betting the ranch in the stock market.

To read the entire Samuelson article go here.

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 700 articles with more than 18,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Roubini on the U.S. Dollar and the Chinese Yuan

The Almighty Renminbi?

Now, imagine a world in which China could borrow and lend internationally in its own currency. The renminbi, rather than the dollar, could eventually become a means of payment in trade and a unit of account in pricing imports and exports, as well as a store of value for wealth by international investors. Americans would pay the price. We would have to shell out more for imported goods, and interest rates on both private and public debt would rise. The higher private cost of borrowing could lead to weaker consumption and investment, and slower growth.

Also see Roubini vs. Zhou on the U.S. Dollar and the Chinese Yuan

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Trade Weighted Dollar Dropping (Graph)

You may be wondering why I put this chart up.

When the trade weighted value of the dollar drops the price we pay for imported goods goes up.

This helps explain why oil and commodity prices are now surging. When you look at this chart it might not seem like the current drop is severe. However, the trade weighted exchange value of the dollar has dropped about 4 percent in the last 45 days.

Take a look at how this is effecting oil, commodity prices, and interest rates.

We will keep you posted on this one.

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Trade Weighted Dollar Index Chart

Trade Weighted Exchange Index.

Link to the chart.

Through March 20, 2009. Current value 110.0347. Looks like a top is in. Would expect dollar to weaken making exports cheaper.

A weighted average of the foreign exchange value of the U.S. dollar against the currencies of a broad group of major U.S. trading partners.
Broad currency index includes the Euro Area, Canada, Japan, Mexico, China, United Kingdom, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Switzerland, Thailand, Philippines, Australia, Indonesia, India, Israel, Saudi Arabia, Russia, Sweden, Argentina, Venezuela, Chile and Colombia.

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Dollar Index Turning Down (Chart and Analysis)

After the Treasury announcement this week, the dollar index traded sharply lower. Along with this, oil and commodity prices moved higher as should be expected.

The market is currently in a downside range expansion. The sharp trade below the blue line (two standard deviations down from the mid point) indicates that the market is oversold and due for a correction or consolidation on a short term basis. If the dollar index fails to regain the 84.00 level and hold, it would be a major negative. The trend is turning down.

The longer term chart of the Dollar Index indicates a major double top with an extended right top that found no new buyers. This is potentially extremely negative. We will put that chart up tomorrow with some analysis.

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Dollar versus Euro Exchange Rate (Chart)

The chart has an interesting long term double bottom. The chart is evidencing a fear of inflation in the U. S. Along with the Chart on Money Supply, M2, these series should be watched closely.

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Trade Weighted Dollar Index Chart

A weighted average of the foreign exchange value of the U.S. dollar against the currencies of a broad group of major U.S. trading partners.

Broad currency index includes the Euro Area, Canada, Japan, Mexico, China, United Kingdom, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Switzerland, Thailand, Philippines, Australia, Indonesia, India, Israel, Saudi Arabia, Russia, Sweden, Argentina, Venezuela, Chile and Colombia.

For more information about trade-weighted indexes see http://www.federalreserve.gov/pubs/bulletin/2005/winter05_index.pdf.

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Roubini on the U.S. Dollar

The following is from the email I received this morning from the RGE Monitor.

U.S. Dollar Outlook

After a brief rally in risky assets earlier this year, the dollar has resumed its safe haven status once more. Dollar shortages for funding needs and deleveraging of cross-border USD-denominated liabilities is also still providing juice for the dollar against G10 currencies (except yen and Swiss franc). Against the euro, the U.S. dollar will likely remain strong in the near-term on expected ECB rate cuts, intensifying Eastern European financial turmoil and Eurozone sovereign credit risk. Against the yen, the U.S. dollar will likely stay around 100 yen in the near-term as markets focus on Japan's deteriorating economic fundamentals. The dollar will re-test its 2008 highs against other G10 and emerging market currencies but could back down on the expansion of U.S. quantitative easing to government debt. In general, the dollar will benefit in the short-term from U.S. government interventions if they appear to put the U.S. ahead of the curve in fighting recession. By the same token, any scent of increased Treasury borrowing needs on top of already all-time high levels of issuance could turn investors’ noses up at the dollar in the long-term.

The RGE Monitor offers a premium service that contains more detailed information.

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Bold Endeavors: How Our Government Built America, and Why It Must Rebuild Now

CNBC Portfolio Challenge Bonus Bucks

CNBC's Million Dollar Portfolio Challenge

The Video Question: China's parliament passed a corporate income tax law in which all companies will pay a unified tax rate. What is the new tax rate?

Answer: 25%

Ameriprise Financial said it plans to buy back stock & increase it's dividend. Up to how much in stock does it plan to buy back?

Answer: $1 billion