Fed Sees Labor-Market Slack Even as It Trims Bond Purchases

The Federal Reserve said slack in the labor market persists even as the economy is picking up, and it continued to trim monthly asset purchases that have pumped up its balance sheet to a record $4.41 trillion.

“A range of labor-market indicators suggests that there remains significant underutilization of labor resources,” the Federal Open Market Committee said today in a statement in Washington. “The likelihood of inflation running persistently below 2 percent has diminished somewhat.”

Policy makers tapered monthly bond buying to $25 billion in their sixth consecutive $10-billion cut, staying on pace to end the purchase program in October.

Fed officials led by Chair Janet Yellen are stepping up a debate over when to raise interest rates for the first time since 2006 as unemployment falls faster than expected and inflation picks up toward their 2 percent goal.

The outlook brightened today with a government report showing the economy expanded more than forecast in the second quarter. At the same time, Yellen has expressed concern about persistent signs of labor-market slack, including low wages. The FOMC repeated it’s likely to reduce bond buying in “further measured steps” and to keep interest rates low for a “considerable time” after ending purchases.

Committee’s Objective

“Inflation has moved somewhat closer to the committee’s longer-run objective,” the Fed said. Its preferred inflation gauge -- the personal consumption expenditure price index -- rose 1.8 percent in May from a year earlier. Its 12-month gain was as low as 0.8 percent in February.

“They are protecting their credibility” by flagging less risk that inflation will persist below their target, said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Inflation has moved from a reason for the Fed to be easier for longer to more of a neutral factor in policy.”

Stocks gained while bonds remained lower after release of the Fed announcement. The Standard & Poor’s 500 Index increased 0.1 percent to 1,971.75 at 2:38 p.m., while the yield on the 10- year Treasury note rose nine basis points to 2.55 percent.

Philadelphia Fed President Charles Plosser dissented, objecting that the guidance on the timing of a rate increase was “time dependent” and didn’t reflect “considerable economic progress.”

Bond purchases will be divided between $15 billion in Treasuries and $10 billion in mortgage-backed securities.

Achieving Goals

Since meeting in mid-June, the committee has come closer to achieving its goals for stable prices and full employment. Employers added 288,000 jobs last month, helping push down unemployment to 6.1 percent, the lowest in almost six years.

Today’s Commerce Department report showed gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the Fed’s view that a first-quarter contraction was transitory.

Consumers, whose spending accounts for 70 percent of the economy, have grown more confident as the labor market improves and rising share prices boost wealth.

The S&P 500 index is up more than 6 percent this year after jumping almost 30 percent last year, aided by easy monetary policy and rising corporate profits.

Almost 77 percent of companies in the S&P 500 have posted second-quarter results that exceeded analysts’ estimates, according to data compiled by Bloomberg.

Slow, Steady

The recovery in demand has “been slow and steady,” said Mike DeWalt, corporate controller for Peoria, Illinois-based Caterpillar Inc., the world’s biggest maker of construction and mining equipment.

Yellen told lawmakers this month that while her view of the economy has turned “more positive,” she’s concerned about signs of job-market “slack” such as low participation in the labor force.

“We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates,” she said in her semi-annual testimony. “There are mixed signals.”

Among them: average hourly earnings fell or were stagnant in the past four months, after adjusting for inflation.

“The most important thing is to look at what’s going on with hourly wages,” according to Brian Jacobsen, who helps oversee $232 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin.

Flat earnings will probably compel policy makers to err on the side of keeping rates low, said Ellen Zentner, a senior economist at Morgan Stanley in New York.

“This is a Fed that’s going to have to be slapped across the face with higher wage growth before they raise interest rates,” she said in a July 25 Bloomberg Radio interview. “And we just haven’t seen any kind of data that points to that yet.”

--With assistance from Tom Keene in New York.

The Two Faces of Coal

Over the past two and a half decades, a real dichotomy has emerged in the global coal markets. In the Western world, coal consumption is on the decline. If you live in the West and read news articles about coal in the West, you might think that coal consumption is on the decline globally. But you would be very wrong.

In the US, coal consumption has been flat to declining for the past 20 years. Just since 2007, US coal consumption has fallen by more than 20%. This is the primary reason the US leads all countries in reducing carbon dioxide emissions over that same time period. Last year, the US still accounted for 11.9% of the global demand of coal, but the 455.7 million metric tons of oil equivalent (Mtoe) that the US consumed was roughly the amount we consumed in 1987.

The story is the same in the European Union (EU). Since 2007, coal consumption in the EU has fallen by 12%. While the consumption decline since 2007 is not as dramatic as that in the US, the decline in EU coal consumption since the late 1980s has been greater. In 1989, US and EU coal consumption were almost identical (480.5 Mtoe for the US versus 487.6 Mtoe for the EU), but then consumption in the EU fell sharply during the 1990s. Today the EU share of the world's coal consumption is 7.5%.

The story of declining coal consumption in recent years holds true for most of the developed world. Canada, Australia, and New Zealand have all seen their coal consumption decline since 2008. Japan's coal consumption was on the decline until the 2010 Fukushima nuclear power plant accident, but has been increasing since as Japan tries to make up for the loss of nuclear power. Germany is a notable exception in the EU. It has seen coal consumption rise in three of the past four years, but there too the general trend for the past 40 years has been sharply lower coal consumption.

Consider that in 1980, the US, the EU, and Asia Pacific each consumed! some 400 to 500 Mtoe of coal. EU coal consumption never went much beyond that level before beginning to decline to the current level of 285.4 Mtoe. US coal consumption rose a little bit, but topped out at 574.2 Mtoe in 2005.

But in the developing world, coal consumption trends have been very different. In fact, coal's gains in the developing world are hard to put into perspective. This graphic should help:

In 1980 the combined coal consumption of the US and the EU was 866 Mtoe. Today, the combined coal consumption of the two is 741 Mtoe. But the increase in Asia Pacific's coal consumption since 1980 is 2196 Mtoe — nearly triple today's combined coal consumption of the US and EU.

China is the world's top consumer of coal, and was responsible for the largest share of Asia Pacific's gains since 1980. Of the 2196 Mtoe increase in coal consumption, China was responsible for 1620 Mtoe — 73.8% of the total gain.  This represents a more than six-fold increase in China's coal consumption since 1980, which is of course partially explained by the outsourcing of manufacturing from developed countries.

No other country comes close to China's coal consumption. In 2013, China consumed 1925 Mtoe, 50.3% of the global total. The US was a distant second at 456 Mtoe (11.9% of the global total), followed by India at 324 Mtoe (8.5%), Japan at 129 Mtoe (3.4%), and Russia at 93.5 Mtoe (2.4%).

China also produces the most coal. The 1840 Mtoe mined there in 2013 was 47.4% of the world's total, but not enough to satisfy China's coal demand. As with the consumption figures, the US was also a distant second in production at 500.5 Mtoe, which was more than the US consumed and 12.9% of global consumption. US coal exports are on the rise as a result. Following the US in coal p! roduction! were Australia at 269 Mtoe, Indonesia at 259 Mtoe, and India at 229 Mtoe.

Australia and Indonesia both produce far more coal than they consume, and as a result they are major exporters to Asia. In fact Australia is the world's top coal exporter, with nearly 90 percent of its exports destined for Japan, China or South Korea. US coal producers would love to expand into this market but are at a geographical disadvantage. Further, there aren't many options for US producers wishing to export coal from the west coast. As a result, most US coal exports are destined for Europe.

Nevertheless, the US has 26.6% of global proved coal reserves — the most of any country and enough to produce at its 2013 rate for 266 years. At current market prices for coal, these reserves would be valued at some $15 trillion, so there will be tremendous incentive to mine this coal.

Following the US in coal reserves are Russia with 17.6% of global reserves, China with 12.8%, Australia with 8.6%, and India with 6.8% of global reserves. Each of these countries has enough proved reserves to produce coal for at least 100 years at 2013 rates except for China, which has only enough reserves for 31 years of production at its 2013 consumption rate. Russia, on the other hand, has enough proved coal reserves to produce at its 2013 rate for over 450 years.

Conclusions

The global coal markets are the story of skyrocketing consumption in the Asia Pacific region that far more than offsets the consumption declines in the West. The US has the world's largest coal reserves, and because the US Environmental Protection Agency is attempting to phase coal out in the US, coal producers would like to grow their coal exports. However, these producers are constrained by geography and the availability of west coast coal export terminals in tapping into the growing Asia Pacific market.

The coal sector is one that I have not generally favored for several years. There are some opportunities, but pitfalls abound. Mo! re coal p! roducers are likely to end up as the James River Coal Company (OTCMKTS: JRCCQ), which was forced to declare bankruptcy and is planning to auction off its assets as a result of falling coal demand. But even in sectors with such a bleak outlook, sometimes a true bargain may appear. When it does, we will bring that to your attention in The Energy Strategist.  

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

Why Plug Power Inc. Stock Was Supercharged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hydrogen fuel cell maker Plug Power  (NASDAQ: PLUG  ) jumped again today after an analyst made positive remarks about the company. The stock spiked as much as 11%, but a sell-off at midday brought shares down to a 2% gain in late trading.

So what: Roth Capital said on Friday that after meeting with Plug Power CEO Andrew Marsh it was more confident the company can meet its 2014 revenue and booking guidance. Analysts expect $73.8 million in revenue in 2014; the company reported $5.6 million in revenue for the first quarter, so growth has to pick up quick.  

Now what: While Roth Capital had positive things to say about Plug Power's operations, it didn't get bullish on the stock because of its high valuation. Shares are trading for about 12.5 times estimated 2014 sales and the company is still expected to report a loss for the year. That's too high a price for me to pay -- I'll wait for a profitable turn and a lower valuation before even thinking about jumping in.

Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

China's Looming Bad Loans Are Good News For Distressed Debt Investors

Hey, investors: Would you like acquiring private equity level returns for senior secured loan risks?

That sounds pretty sweet, doesn't it? That's what Guangzhou-based Chinese distressed debt investment firm Shoreline Capital strives to offer.

In the words of its co-founder Benjamin Fanger, his firm has achieved private equity returns for taking secured lender risks investing in China's bad loans during the past ten years.

In essence, unlike distressed debt investors in developed markets who most likely would go through a complicated and time-consuming reorganization process, Fanger's firm does more plain vanilla stuff of buying non-performing loans from Chinese banks, then trying to receive recovery or settlements that are much higher than the prices paid.

Of course, if something sounds too good to be true, it probably is.

The important caveat of Fanger's proposition lies with "taking senior secured loan risks," which when transferred to China's legal environment could be completely lost in translation.

Putting aside China's rarely-tested bankruptcy law — which does not have much relevance to Shoreline's business of investing in non-performing loans — enforcing creditor rights in Chinese courts can be daunting to any outside investors.

"Let's say if you could do ten things in courts in London or New York to enforce your rights as a creditor, you could probably do four or five in China today," Fanger told me during an interview in Hong Kong.

As such, Fanger says he would price those things that he cannot do with predictability in Chinese courts to zero, and then try to create value on the few things that can be done in Chinese courts.

These include doing searches for titles of a borrower's assets, putting liens on those assets, taking the borrower to court, and auctioning off certain assets. Increasingly, investors can also pursue fraudulent conveyance in China's courts, meaning being able to sue a borrower if it transfers its assets to another entity.

Now, with China's economy decelerating and more non-performing loans emerging, Fanger is seeing this as the next great opportunity for his firm.

"In the early 2000s, it was estimated that there were half a trillion U.S. dollars of non-performing loans. Today, non-performing loan estimates in China are around two to six times that number," he says.

That may explain why investors have been hot on the idea of distressed debt investing in China. Shoreline is currently raising a third fund with a target US$500 million, a much larger fund than its previous two funds at US$303 million and US$178.2 million.

Having held a first closing of US$150 million last month, the firm is expecting a swift final closing this fall, a rare feat in today's sluggish private equity fundraising environment.

But for Fanger, this is not the time to gorge on Chinese bad loans. He senses China's bad loans problem is only starting. Asset quality will continue to decline, and liquidity will increasingly become a problem.

Who Will Follow Kodiak Oil & Gas to Be the Next Bakken Buyout?

Despite the fact that Kodiak Oil & Gas (NYSE: KOG  ) has decided to be acquired by Whiting Petroleum (NYSE: WLL  ) for slightly less than market value for similar deals recently, Wall Street seems to love the transaction. Both Kodiak and Whiting have seen shares climb by 10.1% and 10.4%, respectively, following the announcement, which suggests there might have been something bigger to the deal. Let's take a look at what has changed recently for Kodiak and how that could impact other smaller players in the Bakken such as Oasis Petroleum (NYSE: OAS  ) and Triangle Petroleum (NYSEMKT: TPLM  ) .

Source: Chesapeake Energy Media Relations.

Exposing Kodiak's flaw
The first thing that stands out to investors for Kodiak Oil & Gas is its incredible growth story over the past few years. Since the first quarter of 2012 to today, the company has seen production and revenue grow by 7.41 and 7.5 times, respectively. This makes it one of the fastest growing oil producers in the country:

Company	Production Growth 2011-2013
Kodiak Oil & Gas	741%
Whiting Petroleum	138%
Oasis Petroleum	317%

Not only that, but the company has a prime acreage position in the Bakken formation, which is becoming a more prolific oil reserve by the day. Thanks to better drilling technology and more experience in drilling tight oil wells, the total recoverable amount of oil in the region has more than doubled to 7.38 billion barrels of oil since the U.S. Geological Survey's first assessment of the shale play, and top companies in the region even consider that to be a conservative estimate. This means that the 2,100 or so potential drilling locations Kodiak has on its books may only be scratching the surface of this company.

This huge surge in production and Kodiak's push to tap that potential has come at a cost -- its financial health. Along with that revenue growth, its total debt has tripled to $2.25 billion because the company's capital expenditures have been outpacing its cash flow. The theory is that its increased production and revenue would catch up to its debt load, and it would start to generate free cash flow.

In most cases, this theory was starting to work, but one recent change for producers in the Bakken region has changed that dynamic, and that is North Dakota Industrial Commission's decision to limit natural gas flaring at wells. According to the commission, any well that cannot reduce flaring at the well by 74% by October will not be allowed to produce more than 200 barrels per day at each well. Not only will this involve preparing new wells to capture gas, but companies will also need to go back to previous wells. Kodiak doesn't really have the financial flexibility to go back and make those installations at previous wells, nor could it risk having its wells' production be so constrained. By combining forces with Whiting, the combined company will have a bit more financial flexibility to make the necessary fixes at its new and existing wells.

Who's next?
Kodiak Oil & Gas isn't the only one that has employed this growth strategy in the Bakken, and several other companies that are either Bakken-centric or have smaller assets in the region will also struggle with these new regulations. The companies that immediately come to mind are Oasis Petroleum and Triangle Petroleum because they are pure plays, but two other companies that could be at risk here are Halcon Resources (NYSE: HK  ) and Magnum Hunter Resources (NYSE: MHR  ) . While Magnum Hunter and Halcon do have assets elsewhere, they have both been using the Bakken as a production base to generate revenue while they explore less established shale formations. Based on the cash flow at these companies, they can ill afford to see production limited in the Bakken.

Company	% Production From Bakken (on Boe basis)	Total Wells in Bakken (net)	% of Capital Expenditures Covered by Operational Cash Flow (LTM)
Oasis Petroleum	100%	406.2	29.2%
Triangle Petroleum	100%	39.6	19.5%
Magnum Hunter Resouces	31%	98	7.2%
Halcon Resources	71%	188	23.8%

Source: Company 10-ks and S&P capital IQ, authors calculations.

Magnum Hunter has already been in the process of linking its current and upcoming wells to a natural gas gathering system to reduce flaring, so it may be in a better position than the others on this list in that regard. However, if these companies are already struggling to finance operations before these flaring regulations start to take hold, then don't be surprised if they follow a similar path to Kodiak Oil & Gas and sell either its Bakken operations or sell out entirely.

What a Fool believes
The next several months will be very interesting regarding the future of the Bakken. These new regulations will put immense pressure on companies that have not been dealing with natural gas, especially the smaller ones that are already financially stressed. When you add this little wrinkle to the mix, it's a little easier to understand why Kodiak has decided to be acquired by a bigger fish in the Bakken pond for a less than premium price. Investors with a stake in the region should really keep an ear to the ground, because it's very likely that we will see another similar deal soon.

America's $600 billion energy problem means invest in these three stocks today
A dark specter is looming that is ready to stop America's Energy boom right in its tracks, and no one is talking about it. This one critical element could cost us more than $600 billion, but every day we wait, that number grows and grows. The U.S. government thinks investment in this sector is so important, even the Internal Revenue Service will give you a free pass if you invest in this select group of stocks. Our analysts at The Motley Fool have combed over this special class of stocks, and we have identified three that could make you rich! Find out the names of these IRS-gift-wrapped stocks in our special report, "3 Stocks The IRS Is Begging You to Buy." Simply click here, and we'll give you free access to this valuable investing resource.

These Brewery Stocks Can Take Your Portfolio to New Highs

Brewing is an enormous industry and Boston Beer (SAM) is the biggest player in the craft beer industry, telling almost 20% of the craft beer portion and 1.3% of the aggregate U.s. beer market. The organization works in a developing market as The Brewers Association reported mid-year 2013 development of 15% in dollar deals and 13% in volume for craft beer.

As the craft beer industry has a considerable measure of room to develop, Boston Beer confronts rivalry from Molson Coors Brewing (TAP) and Constellation Brands (STZ) (STZ.B). Each of the three organizations have had great runs on the Street, however Boston Beer and Constellation Brands have been the greatest outperformers. We should investigate each of them.

Boston Beer Is On A Dominating Run

Boston Beer's second from last quarter results were noteworthy. Center shipments developed by 29% versus the same quarter in the past year. On the over of this volume development, net revenue expanded 30% from a year ago to $216.4 million. Earnings hopped 23.5% versus the same quarter in the past year to $1.89 for every offer. Analysts expected earnings of $1.84 for every offer.

Going ahead, full-year 2013 consumptions development is presently estimated to be between 21%-24%, up from the past scope of 17%-22%. This is critical on the grounds that it alludes to the rate at which beer, effectively dispatched from a maker like Boston Beer to a wholesaler, leaves the merchant's stockroom in transit to end clients i.e., consumers. In this way, an augmentation in this metric is a positive.

The upward modification was ascribed to the solid exhibitions of the Samuel Adams, Twisted Tea, and Angry Orchard brands. Samuel Adams is one of the biggest craft beer offerings in the nation, and Angry Orchard juice has turned into one of the top U.s. juices. The hard fruit extract class is presently short of what 1% of the U.s. beer market, and the class is developing at more than half for every year. This exhibits an immense development open door for Boston Beer going ahead.

Boston Beer works in an aggressive business sector and subsequently it need to fall back on promoting, advancements, and motivators for boosting deals. This is the reason Boston Beer is making brand speculations that will have durable profits, however these moves will have an orientation on earnings. Thus, Boston Beer decreased its earnings direction to a scope of $5.05-$5.35 for every offer from the past scope of $5.10-$5.40 for every offer.

Molson Coors Brewing Company Is Falling Behind

Boston Beer's promoting endeavors appear to be profiting the organization as its rival, Molson Coors, battled in the past quarter. Amid the second from last quarter, Molson Coors reported that deals volume declined 0.9% versus the past year to 8.96 million hectoliters.

As a consequence of this, Molson Coors' revenue declined 2% to $1.17 billion and missed the consensus estimate of $1.22 billion. Molson Coors reported balanced earnings for every offer of $1.45, up 5.8% versus the same quarter a year ago. The build in earnings was because of enhanced pretax earnings in its U.s., Europe, and universal organizations.

Molson Coors has been battling with decreases in deals volume for as long as three years. The organization keeps on expecting powerless shopper request in the nearing quarters in light of progressing macro-monetary headwinds and a movement in buyer inclination. In spite of this, the organization will quicken its dedication to transformational deliberations furthermore build advertising ventures in its brands to drive volume development in the impending quarters.

Heavenly body Brands Continues To Impress

By correlation, Constellation Brands has been on a tear not long from now with its stock cost up by about 98%. Group of stars is concentrating on sustaining its shiny new items. What's more, Constellation has likewise centered around acquisitions and mergers for development. In June in the not so distant future, it used $4.75 billion on getting the half Crown stake that it didn't effectively own.

Amid the second quarter, Constellation's beer portion revenue expanded 3.4% versus the year-back quarter. Net deals just about multiplied versus the year-prior period to $1.46 billion, essential because of the combination of Crown's business. Heavenly bodies' general gross net revenue, nonetheless, shrunk by 70 premise focuses as a consequence of higher grape expenses and shipment timing.

Floated by a hearty quarterly execution, Constellation Brands issued cheery direction for financial 2014. The organization now expects financial 2014 balanced earnings for every offer to be in the $2.80-$3.10 region, contrasted and the $2.60-$2.90 it anticipated prior.

Main concern

As I would see it, both Constellation Brands and Boston Beer look like great choices for benefitting from the brewing business in the U.s. Then again, Molson Coors has been battling. Speculators who look to profit from this industry ought to investigate either Constellation or Boston Beer relying upon their taste.

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Get Ready for McDonald's Coming Summer Swoon

Earnings from McDonald's (NYSE: MCD  ) are due out next week, and investors should prepare themselves for the worst. After a brief spring thaw in April when comparable sales barely managed to break even with last year's results, they turned south again the following month and all signs are pointing to another dismal performance.

Despite many upbeat prognostications about how things can turn around for the burger chain, I've been skeptical of the rosy outlook because consumer dining preferences have changed. Not just in their opting to eat at classier fast-casual joints, but in the foods they're eating, too. 

Earlier this year the industry was anticipating a recovery because comps across the sector improved, but I pointed out how traffic was still falling, which to me was the more serious problem. The higher comparable sales were registered because prices were rising, not due to consumers eating out more often.

Yet analysts at Janney Capital Markets said McDonald's franchisees had a bounce in their step during the winter freeze and were looking for spring to bring with it higher sales. While that did not pan out, as we subsequently saw, the analysts are back with another forecast, and this one is downright gloomy. If even the franchisees are biting their nails, there's small hope the burger joint will surprise the market to the upside.

Nation's Restaurant News reported the franchisee survey the analyst conducted (just as it does before every earnings report), and the outlook for the restaurant chain is the worst it's ever been since it began taking the pulse of the business. On a scale of 1 to 5, with 1 being the worst and 5 being excellent, franchisees registered a sentiment of just 1.8, well below the 2.9 historical average. Moreover, while a quarter of the respondents blamed the economy for the state of affairs, more than half said the problems were internal at McDonald's itself.

The biggest problem they cited was the constant rollout of new products. Not only was it confusing to customers, but it cost the franchisees a lot of money to implement them. In doing so, McDonald's has lost its identity with the consumer.

Burger King Worldwide (NYSE: BKW  ) recognized a similar problem in its own operations and made a conscious effort to limit new menu items. While some still find their way into its restaurants, like its Satisfries addition, in general the burger shop keeps new items to a minimum. And now it's further differentiating itself from the competition by rolling out, market by market, a novel home delivery service, BK Delivers. Like McDonald's, Burger King and other fast-food restaurants offer more delivery service internationally; here in the U.S. it's a fairly rare occurrence. 

The worry here for McDonald's is that the market trends aren't improving. According to Black Box Intelligence and People Report, restaurant comps turned negative in June and traffic plunged further south. Now the MillerPulse Report is out, and it's finding the same discouraging results, as same-store sales and traffic fall far below year-ago numbers.

What we have is evidence piling up that the industry as a whole is sickly, but McDonald's has a special problem in that its franchisees feel the burger chain has additional baggage it's carrying. With over 14,000 restaurants in the U.S. and more than 5,000 worldwide, this is a significant enough vibe that although McDonald's stock is only a little below its all-time record highs, it may soon be jumping from the frying pan into the fat fryer.

Apple's next smart device presents a mouthwatering opportunity
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Bill Gates is gone. Microsoft is now officially Satya Nadella's

  Microsoft's Nadella swings the ax NEW YORK (CNNMoney) In case there was any doubt, the Satya Nadella era has arrived at Microsoft.

Nadella announced Thursday that Microsoft (MSFT, Tech30) will cut 18,000 jobs within the next year, part of his push to slim down the company and narrow its focus.

Analysts see this strategy shift as long-overdue. Microsoft dominated the tech industry when Nadella's predecessor, Steve Ballmer, took over from founder Bill Gates in 2000. But in the years since, Microsoft has sputtered.

Microsoft under Ballmer had been slow to respond to innovations from rivals like Apple (AAPL, Tech30) and Google (GOOG). It launched a series of poorly conceived devices and two poorly received versions of Windows. Observers questioned Microsoft's direction.

The layoffs Microsoft announced Thursday "speak to Nadella's attempt at cleaning up part of the mess that Ballmer left behind," analysts at FBR Capital Markets wrote in a research note.

The house-cleaning also proves that Microsoft is now officially Nadella's company.

Industry observers often suspected that Gates retained ultimate authority at Microsoft during Ballmer's rocky tenure. Nadella has left the issue unambiguous. The company announced that Gates would step down as chairman on the same day Nadella's hiring was made public.

"I run the place," Nadella said at a conference in May. "Bill's helping."

Since taking over, Nadella has said repeatedly that Microsoft must position itself for a "mobile-first, cloud-first world," with a particular focus on productivity software. It's a vision he outlined at length in an open letter to employees last week.

The strategy makes sense given that Windows sales have eroded over the past year-plus. The goal is to make products like Office, Outlook and Skype staples for individual customers regardless of the device they're using, and to transform Windows from a desktop operating system to cloud computing platform that can be accessed from anywhere.

Nadella also made his presence known at Nokia, the last major acquisition Microsoft made during the Ballmer era. Some 12,500 of the layoffs announced Thursday will come from Nokia, many of which were redundancies Microsoft found between the two companies. And Nade! lla killed off Nokia's plans to make Android smartphones, transitioning the "Nokia X" project to Windows Phone software.

Investors appear enthusiastic about Nadella's moves thus far -- Microsoft shares rose 2% Thursday, and are up nearly 20% since his hiring in February.

It's worth noting, however, that Microsoft has announced a number of major reorganizations since the turn of the century that haven't amounted to much. The challenge for Nadella now is to put his vision into action -- to make Microsoft relevant again in an industry that's been reshaped by its competitors.

"We participated in the PC market," he told analysts in April. "Now we're in a market that's much bigger than the PC market."

VW's U.S. plant to add 2,000 jobs

A concept version of the new Volkswagen SUV to be built at its plant in Tennessee. NEW YORK (CNNMoney) Volkswagen is nearly doubling the employment at its Chattanooga, Tenn. plant, bringing a new SUV and 2,000 jobs to its only U.S. factory.

The German automaker says it is investing $600 million in the plant to build the seven-passenger vehicle by the end of 2016.

The plant, which opened in 2011, has about 2,400 workers currently. It has become the center of the United Auto Workers' efforts to organize workers at plants built in the South by foreign automakers.

After narrowly losing a vote to represent workers at the plant in February, the UAW announced last week it would still open a chapter at the plant who wanted to join the union on a voluntary basis. Anti-union politicians in the South have opposed any union organization.

VW says the new vehicle is a key to its plans to sell 800,000 cars in the United States by 2018, nearly double their U.S. sales volume last year.

"The fact that the new line is being announced four days after the rollout of UAW Local 42 in Chattanooga reinforces the consensus that the UAW has reached with the company.," said UAW Secretary-Treasurer Gary Casteel.

The union opponents criticized VW for being too willing to recognize the union. Unlike most employers who fight against union representation of its work force, VW was willing to accept a union out of a desire to set up "works councils" at the plant which can come up with methods to make the plant more efficient. U.S. labor law makes establishing a works council difficult without union representation for its workers.

Even with the union's latest move to represent VW workers, the state agreed to contribute a $178 million in state funds for site development and preparation as well as training new em! ployees.

ValueX Presentation - The Opportunity Offered by Closed End Funds

Closed End Funds - A Unique Opportunity

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Bank Of Internet Holding - The Worst Is Yet To Come

<p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> Bank Of Internet Holding - The Worst Is Yet To Come

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United Continental’s ‘Sustainable’ Improvements Lifts Airline Stocks

The market may be sinking, but airline stocks are flying after United Continental (UAL) supplied an encouraging update, helping to boost the likes of Delta Air Lines (DAL) and American Airlines (AAL), as well.

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Following yesterday’s close, United Continental said that passenger revenue per available seat mile, or PRASM, increased by 3.5% during the second quarter, above the top-end of 3% from its previous forecast. Stifel’s Joseph DeNardi and Sawyer McKelvey explain why the market is pleased with United Continental’s update:

United's guidance for 2Q reflects an improved outlook for revenue and cost performance with consolidated PRASM expected to increase 3.5% y/y (compared to prior guidance of 1% – 3%) driven by better than expected results from the Domestic and Pacific regions. The positive trends on the Pacific are encouraging, and we expect this trend to continue into 3Q before softening somewhat in 4Q as seasonal demand softens. In addition, we believe United's domestic revenue performance was solid and a clear improvement from 1Q results. The company's outlook for unit costs in 2Q improved as well with guidance now for CASM-ex to be flat y/y. While some of the improvement to the 2Q outlook is due to certain costs shifting into the 2H, we believe a portion of the savings is the result of the company's focus on improving its cost structure and should be more sustainable.

We are increasing our 2014 estimate to $4.10 from $3.85 based primarily on an improved outlook for 2Q though we suspect there may be some upside to our outlook for 3Q and 4Q depending on unit cost trends in 2H14.

United Continental’s report came after Southwest Airlines (LUV) and American Airlines released positive reports of their own, helping to arrest the group’s slide.

Shares of United Continental have jumped 7.1% to $42.90, while American Airlines has gained 1.4% to $42.59 and Delta Air Lines has risen 0.8% to $37.26. Southwest Airlines has dipped 0.3% to $27.14.

Can Taco Bell Cook Its Way Out of Last Place? (And Should It Even Try?)

www.tacobell.com The munchers have spoken, and Taco Bell isn't going to like what it's hearing. A recent Consumer Reports poll asked its readers to chime in with their opinions on the quality of signature items at leading fast food restaurants. It got an earful as more than 32,000 offered up their thoughts on more than 96,000 meals across 65 chains. The most magnetic headline of the report was that McDonald's (MCD) burgers ranked dead last among the 21 largest burger flippers in the country. However, Yum! Brands (YUM) -- the parent company of KFC, Pizza Hut and Taco Bell -- got a double dose of bad news when KFC ranked eighth and worst on the list for chicken, and Taco Bell stumbled into a last-place eighth out of eight competitors in the burrito category. The Fine Cuisine-Cost Conundrum It's not necessarily ironic that the country's largest burger, fried chicken and Mexican chains ranked last in the Consumer Reports taste test. It makes sense. These chains tend to offer cheaper fare than their rivals, and part of that is a byproduct of lower spending on ingredients. Despite the advantages of buying in massive bulk, one should never expect the raw materials that go into a $1.49 Beefy 5-Layer Burrito at Taco Bell to be in the same category as those that go into a $6 burrito at Chipotle Mexican Grill (CMG). There's also something to be said about the old adage that familiarity breeds contempt. The well-known top dogs will always be the easiest targets. However, Taco Bell still needs to be careful. It used to be a compliment to be mentioned in the same breath as McDonald's, but these days, it's disparaging. People Still Want Their Gorditas Taco Bell can point to recent performance to prove that it's not being shunned by diners (relatively speaking) in the same way that McDonald's is. Outside of an unusual dip in its most recent quarter, Taco Bell has mustered positive comparable store sales pretty consistently in this country over the past couple of years. That hasn't been the case for McDonald's, which is coming off of three consecutive quarters of negative comps in the U.S. Taco Bell should be able to turn things around for the quarter that ended in June. We'll find out how it held up later this month when Yum! Brands offers up fresh financials, but the late March arrival of the Waffle Taco and June's addition of the Quesarito likely resulted in a healthy uptick in traffic.

3 Stocks Under $10 to Trade for Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Tech Stocks to Trade for Gains This Week

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Novatel Wireless

Novatel Wireless (NVTL) provides wireless broadband access solutions for the mobile communications market worldwide. This stock closed up 7.4% to $2.02 in Tuesday's trading session.

Tuesday's Range: $1.82-$2.05

52-Week Range: $1.51-$4.43

Tuesday's Volume: 156,000

Three-Month Average Volume: 180,882

From a technical perspective, NVTL ripped sharply higher here right above its 50-day moving average of $1.78 with decent upside volume flows. This sharp spike higher on Tuesday is quickly pushing shares of NVTL within range of triggering a near-term breakout trade. That trade will hit if NVTL manages to take out some key overhead resistance levels at $2.11 to $2.18 and then once it clears is 200-day moving average of $2.25 with high volume.

Traders should now look for long-biased trades in NVTL as long as it's trending above its 50-day at $1.78 and then once it sustains a move or close above those breakout levels with volume that hits near or above 180,882 shares. If that breakout materializes soon, then NVTL will set up to re-fill some of its previous gap-down-day zone from March that started at $2.85.

LeapFrog Enterprises

LeapFrog Enterprises (LF) designs, develops, and markets technology-based learning products and related proprietary content for children worldwide. This stock closed up 1.9% to $7.71 in Tuesday's trading session.

Tuesday's Range: $7.48-$7.85

52-Week Range: $6.10-$11.95

Thursday's Volume: 1.45 million

Three-Month Average Volume: 830,318

From a technical perspective, LF jumped modestly higher here right above some near-term support at $7.40 with strong upside volume flows. This spike higher on Tuesday pushed shares of LF into breakout territory, since the stock took out its 200-day moving average of $7.69 to some more near-term overhead resistance at $7.69. Shares of LF are now quickly moving within range of triggering another big breakout trade. That trade will hit if LF manages to clear more key overhead resistance levels at $7.87 to $8 with high volume.

Traders should now look for long-biased trades in LF as long as it's trending above some near-term support levels at $7.40 to $7.26 or its 50-day at $7.12 and then once it sustains a move or close above those breakout levels with volume that hits near or above 830,318 shares. If that breakout materializes soon, then LF will set up to re-test or possibly take out its next major overhead resistance levels at $8.80 to $9, or even $9.31.

Silver Standard Resources

Silver Standard Resources (SSRI) is engaged in the acquisition, exploration, development, and operation of silver and silver resource dominant mineral projects principally in the Americas. This stock closed up 1.9% to $8.86 in Tuesday's trading session.

Tuesday's Range: $8.62-$8.97

52-Week Range: $5.18-$12.21

Tuesday's Volume: 1.55 million

Three-Month Average Volume: 1.19 million

From a technical perspective, SSRI jumped modestly higher here right above some near-term support at $8.50 with above-average volume. This stock has been uptrending strong for the last month, with shares moving higher from its low of $6.28 to its recent high of $9.08. During that uptrend, shares of SSRI have been consistently making higher lows and higher highs, which is bullish technical price action. This bump higher on Tuesday is starting to push shares of SSRI within range of triggering a big breakout trade. That trade will hit if SSRI manages to take out Tuesday's intraday high of $8.97 to some more near-term overhead resistance at $9.08 with high volume.

Traders should now look for long-biased trades in SSRI as long as it's trending above support near $8.50 or above its 50-day at $8.11 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.19 million shares. If that breakout triggers soon, then SSRI will set up to re-test or possibly take out its next major overhead resistance levels at $9.50 to $10, or even $10.50 to $11.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>4 Stocks Rising on Big Volume

>>3 Big Stocks on Traders' Radars

>>5 Blue-Chip Stocks to Trade for Summer Gains

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Lorillard Is a Solid Long-Term Pick

According to Euromonitor, 4% of the global smoking market will have switched over to e-cigarettes by 2050. Bloomberg projects e-cigarette to surpass traditional cigarette sales by 2047. By some estimates, e-cigarettes are already projected to become a $1.7 billion industry in the U.S. by the end of this year. This is why tobacco companies depend on e-cigarettes now. Altria Group (MO), Reynolds American, and Lorillard (LO) have started selling e-cigarettes in order to make up for declining sales of cigarettes as awareness about the dangers of tobacco spreads. Let's take a look at the moves they have been making.

Altria's Diversification Is Its Strength

Altria Group, the largest manufacturer of tobacco products in the U.S., has a diversified business model as it operates in three segments -- smokeable products, smokeless products, and wine. It also holds a 27% stake in SABMiller. This diverse portfolio makes the company one of the most defensive tobacco companies as it does not depend on just tobacco products for revenue.

Altria launched the MarkTen brand of e-cigarettes in August 2013. This means that the company is a new entrant in this market which is dominated by the first mover -- Lorillard's Blu brand of e-cigarettes. Altria's net revenue increased 5% year over year to $6.6 billion in the third quarter on the back of strong sales in the smokeless and smokeable products segments. Its adjusted earnings per share grew 12.1% versus the year-ago period to $0.65 per share.

Altria has an excellent record of paying dividends. During the third quarter, it increased its dividend by 9.1% which marked the 47th dividend increase in 44 years. During the third quarter, Altria paid $883 million in dividends and repurchased shares worth approximately $156 million. Altria reaffirmed its 2013 earnings guidance range of $2.36-$2.41 per share, representing a 7%-9% growth rate from $2.21 per share in 2012.

Wine Segment May Suffer

Altria's revenue from the wine segment has increased from $67 in 2009 to $74 in 2012. The periodic price increases authorized by the company was the primary driver of this growth, however it may not continue. This is because wine demand in the U.S. has doubled since 2000 but the worldwide production has been falling. Due to this shortage, wine prices are expected to rise and studies have shown that when prices in one alcohol segment rise, moderate or young drinkers will switch to another segment. As a result, Altria's wine segment will suffer because of the lack of supply.

Lorillard: The Pioneer

Lorillard remains the king of the market as far as the e-cigarette segment is concerned. It has the first-mover advantage and it has continued to perform well as a result. After acquiring Blu in 2012, the company expanded its distribution channel from 12,000 to 127,000 retail stores. As a result, Blu has attained a 49% share of the U.S. electronic cigarette market.

Lorillard delivered good third-quarter results as revenue climbed 10% versus the same period in the previous year to $1.8 billion on the back of strong sales of electronic cigarettes and regular cigarettes. It also beat the consensus estimate on earnings with adjusted earnings of $0.83 per share, 15.3% higher than the year-ago period.

Going forward, Lorillard is expanding into the U.K. e-cigarette market. It has signed an agreement to acquire SKYCIG, a leading premium brand of electronic cigarettes in the U.K. This will boost Lorillard's sales as the e-cigarette segment is evolving rapidly.

Menthol Issue

More than 75% of Lorillard's revenue comes from the sale of menthol cigarettes. However, the FDA is pushing to ban methanol cigarettes in the U.S.A. This may sound like a big problem, but it isn't. Why not? Well, primarily because of the extremely high brand loyalty of smokers in the U.S.A. This means that even if FDA rules against menthol cigarettes, Lorillard will not lose its sales overnight as a vast majority of the loyal smokers will switch to regular cigarettes and will stay with Lorillard's Newport brand.

Final Words

The market for traditional tobacco products is weakening. E-cigarettes are the new growth driver for this industry. This is why investors should be inclined toward an investment in Lorillard, the first mover in the category. Lorillard is now expanding its e-cigarette business while the others have just started off domestically. Also, Lorillard has an impressive dividend yield of 4.60%. Investors who are looking for an investment in the tobacco industry should definitely take a look at Lorillard.

Currently 0.00/512345 Rating: 0.0/5 (0 votes)

Subscribe via Email Subscribe RSS Comments Dr. Paul Price - 5 hours ago

What were MO and LO selling for at the time you wrote about them?

Is there some reason you don't want to let people know these simple facts?

Please leave your comment:
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Harley-Davidson's Heavyweight Motorcycles Aren't Leading The Parade On Wall Street

It's the Fourth of July! And almost all of the holiday fun-seeking Americans are out on the road to enjoy the festivities of the highly valued Independence Day. Practically every major road and highways have been teeming with all types of vehicles for them to celebrate this revered and most popular national holiday.

The usual roar of motorbikes, for one, led by the No. 1 of them all, the Harley-Davidson power motorcycles, continue to lead all kinds of parades or road activities in most towns and cities. But despite Harley's globally popular Hog and its other motorbikes, shares of this maker of major heavyweight motorcycles haven't been leading the parade on Wall Street, where the stock market has been operating on all cylinders, with the Dow Jones industrial average and S&P 500-stock index hitting multiple all-time record highs this year.

Shares of Harley have slumped to $68.75 a share on July 2, 2014, down from $73.23 on April 30, 2014, in part due to dire forecasts of sales prospects ahead. The drop in Harley-Davidson's stock price has surprised investors because the stock market has been on a tear. The motorcycle leader's stock had been expected to join the market's big rally this year. But the one big reason behind the stock's retreat: Worry about a softening in motorcycle sales worldwide.

"We now see a somewhat heightened level of risk in the near term, given recent indications of sluggish year-to-date motorcycle industry retail trends that appear essentially flat," warns Scott Hamann, analyst at KeyBanc in a note to clients. He has downgraded Harley-Davidson to a hold from a buy, and removed his price target of $80 a share.

One major source of concern is the continuing weakness in the European market. "Near-term results could be weighed down by economic weakness in Europe," says Efraim Levy, analyst at S&P Capital IQ, who recently reiterated his recommendation of a "Hold" on Harley-Davidson's stock, even as he continues to hold a positive outlook for long-term sales growth. In fact, Levy expects revenues rise this year by 12% and by 8.5% in 2015. "We have a positive view of Harley-Davidson's cost-cutting  efforts," adds Levy, and the company's solid balance sheet.

Still he and other analysts aren't inclined to minimize the potential risks involved in the sluggish European market and how that could hurt motorcycle sales should the situation dampen the global economic recovery. Expanding its operations internationally is one of the company's major objectives. It expects to open 100 to 150 new dealerships from 2009 through the end of this year. Through the end of December 2013, Harley-Davidson has added 118 new international dealers.

Harley Davidson (Photo credit: racin jason)

The company may have to re-study and revise the timing and schedule in its international expansion plans in light of the weak forecasts for sales in Europe.  

Although "we feel the stock has worthwhile total return potential out to 2017-2019," says Alan G. House of investment research firm Value Line, "conservative accounts should note, however, that the company is susceptible to economic downturns, as is evidenced by its subpar Earnings Predictability score (in Value Line's ranking system)." Value Line ranks Harley-Davidson only No. 3 in its Timeliness and Safety metrics.

In the meantime, however, the analyst expects Harley-Davidson's profitablity will continue. He sees the company earning $3.90 a share in 2014 on projected revenues of $6.5 billion, and $4.50 a share in 2015 on estimated sales of $7 billion. In 2013, Harley-Davidson earned $3.28 a share on revenues of $5.8 billion.

The company has about 30 models of Harley-Davidson heavyweight motorcycles, with U.S. manufacturer's suggested prices ranging from $249,849 in 2012 and $235,188 in 2011 — but still below the high of $303,479 in 2008. The company manufacturers five families of Harley-Davidson brand motorcyclces: Sportster. Dyuna, Softtail, Touring, and VRSC.

The No. 1 Tip to Accelerate Your Financial Independence Day

We all share the dream of financial independence. By reaching the point at which our assets generate enough to cover our expenses for the remainder of our lives, we gain the freedom to focus all of our time on the things that really matter.

In honor of our nation's Independence Day this Fourth of July, the slideshow below shares the No. 1 tip to help you more quickly reach your own Financial Independence Day. Along with that tip, it also includes a brief discussion of how to think about money in terms of time, as well as priorities to make it easier to make the tough decisions that will help you attain financial independence sooner.

How to get even more income during retirement
Social Security plays a key role in your financial security by reducing the amount you need to save on your own to cover your retirement expenses. Still, it's not the only tool to boost your retirement income and help you reach your financial independence day sooner. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

How to Insure Your Retirement Like You Do Your Car (Almost)

Alamy You can insure your home and car from disasters and accidents. Life insurance essentially protects your family from the loss of your income should tragedy strike. You can't insure your retirement accounts in the quite same way, but there are a few tried and true strategies that can safeguard them. 1. Continue Saving for Your Retirement Even During Your Golden Years There is no rule that you have to stop investing when you hit your golden years. One of the best hedges to outliving your retirement assets is to continue investing even when you reach retirement age. While there are mandatory age distributions from 401(k) retirement plans and traditional IRAs, you can continue to make investments in other assets during your retirement. "With increasing life expectancy and retirements that could last for decades, investing may be a necessity for many retirees, says J.J. Montanaro, a certified financial planner with USAA. "If you just look back at the last 30 years, a dollar has lost nearly 60 percent of its purchasing power to inflation. Investing offers a way to combat that loss of purchasing power. The key is to develop a plan that will allow you to achieve what you want to achieve without causing chronic insomnia." 2. Work Longer While some Americans must continue to work during retirement because of a lack of savings, others simply want to work and enjoy the social aspect of working during retirement. Mitch Anthony debunks the old concepts of retirement in "The New Retirementality." "A longer work life means continued engagement as well as continued paychecks," he says. "The day you cash your last paycheck, the price of everything begins to matter. Why enter a shrinking economic reality sooner than you need to?" Retirement today looks very different than it did decades ago, and that isn't necessarily a bad thing. The real problem is getting over our preconceived notions as to what retirement means in today's economy and society. 3. Invest in Passive Income Strategies Many financial experts believe that you need several buckets of income to supplement your retirement. For example, you could have a pension, income from real estate, Social Security and an annuity to help replace the income that you had before you retired. "Typical retirement planning is that you work like a dog for 40 years, save up and spend from principle until you exhale your last breath," says Todd Tresidder, financial mentor and author of "How Much Money Do I Need To Retire and other books. "If you flip that upside-down and -- rather than amassing a big pile of assets -- save assets that produce cash flow in excess of your expenses, we then eliminate risks. We create perpetual income." Retirement is a euphemism for old-age financial independence. The core of financial independence using passive investments is that you create cash flow from investments that exceed your expenses and only spend the cash flow, not the principle balance. A passive income requires minimal input from you after you invest in it to start. 4. Invest in Annuities An annuity is essentially an insurance product. You trade a lump sum for equal monthly or yearly payments when you invest in an annuity. For example, a $1 million lump sum payment to an insurance company could provide you with more than $40,000 in yearly payments for you and your heirs the rest of your lives. (Of course, details vary.) "Annuities shift risks from you to the insurance company," says Tresidder. "Retirement planning as it's commonly practiced today is nothing more than self-insurance, where you are accepting most of the risk. Using annuities shifts market risk, actuarial risk and longevity risks from you to the insurance company." There are many benefits and several drawbacks to annuities. They may provide higher yields than traditional pension plans and other retirement options, but they also leave no assets for your heirs when you die. 5. Hedge Your Investments My father-in-law retired after working as an executive for decades at a large, national bank. In addition to his pension, he held a lot of company stock that he received as options. After the financial crisis in 2008, his stock and dividends took a severe hit. The stock has recovered, but my in-laws endured several rocky years. You can use option strategies to protect your stock positions in many cases. An option gives you the opportunity to sell or buy shares of stock with contracts at a future time at a set amount of money, instead of relying on the fluctuations of the market. If you don't feel comfortable with options, you can enlist a financial planner to hedge your retirement investments. 6. Get Professional Help It never hurts to get professional financial help if you are worried about your retirement accounts and if you will have enough saved for retirement. It has never been easier to find qualified financial planning -- fee-only, commissioned-based, or even by the hour for giving advice without creating a financial plan. Insurance companies do not offer retirement portfolio insurance, but there are ways that you can hedge against calamity with your retirement accounts.

United Airlines & JetBlue: Plane Swap

Wolfe Research’s Hunter Keay and Jared Shojaian think United Continental (UAL) and JetBlue (JBLU) should swap planes. They explain:

Getty Images

We believe both United Continental and JetBlue have fleet inefficiencies that contribute to poor margins for both airlines. If United Continental acquired JetBlue's 60 E-190s (and the 24 on order), in a transaction like the one Delta Air Lines (DAL) and Southwest Airlines (LUV) announced in 2012 when Southwest Airlines agreed to sublease its 88 B717s to Delta Air Lines, we believe both companies would benefit. This would also represent no incremental capacity to United Continental, by our math…

We rate shares of both United Continental ($54 TP) and JetBlue ($15 TP) as Outperform. We think both companies are underearning their potential (for different reasons), and we expect material earnings and margin improvement next year. And both companies could help in this improvement by one relatively straightforward transaction.

they need to do something. Shares of United Continental have gained 1.8% to $41.80 at 3pm today, while JetBlue has risen 1.4% to $11, a far cry from Delta Air Lines’ 3.7% rise to $40.16 and Southwest Airlines’ 3.2% advanced to $27.71.

Do Not Miss out on Facebook's Growth Story!

Undeniably, this is the social media age and it is hard to imagine anyone with access to the Internet without a social profile. In the recent past, the birth of various social media platforms led analysts to believe that Facebook (FB) was losing its presence among people especially teenagers. However, it might have been a tad bit early to have written off Facebook's presence among teenagers as this report from Forrester based on a survey conducted in the US establishes that Facebook is still teens' favourite social networking website.

Focus on mobile.

In my opinion, the acquisition of Instagram and now, WhatsApp were made with the intent of growing mobile engagement. As stated by management in earnings call, Instagram reached 200 million monthly actives in the first quarter from a mere 22 million monthly actives a couple of years back, when it was acquired. It is not hard to imagine the possibilities with such a humungous database given the fact that Facebook has the capability to develop customized products for advertisers. While the company is looking to monetize Instagram via ads in near future, WhatsApp will play an instrumental role in expanding Facebook's reach by offering a simple and lucid messaging service.

Launching Slingshot

Recently, the social network giant launched a photo messaging app that directly competes with Snapchat, called the Slingshot. This is a definite indication of the fact that Facebook is in no mood to leave any stone unturned in engaging the adolescent population. Initially, the company launched Slingshot only for the US population but the period of exclusivity was short-lived as the company took no time to roll out the app to its international users. It is important to note that the launch of Slingshot will have a positive impact on mobile engagement of users, a segment that Facebook is aggressively targeting for its immense potential.

Bidding on data

It is always interesting to see a battle that involves tech giants because of the strategies that play out on the field are unimaginably astute. Facebook and Google (GOOG) (GOOGL), are two big names in the field of online advertising that aim to offer best possible products to its advertisers. In one such attempt, Facebook has officially announced that it will track the user's behaviour via the "like" button in order to serve better targeted ads. Till now, Facebook had been collecting and using data about users on its site using the "like" button but now it will expand this mechanism to any other website having the "like" button.

In contrast, Google has always used this mechanism in its search and display network in order to build a sturdy basket of offerings for the advertiser. Google has been a long reigning leader in the online ads space with an approximate of 32% market share under its command. Facebook is a distant second in this space but the recent surge in its daily monthly active users and development of better targeting techniques has made it a potential threat to Google. While, Facebook has already inched closer to Google by working on more or less similar ad serving mechanisms, the former has also begun to execute on its strategy of targeting the small business groups.

Back in 2011, Google started the "Get your business online" campaign in India with a view to get small businesses online and eventually on the ad platform. Now, even Facebook has understood the significance of small business groups as evidenced by its latest Facebook Fit tour conducted in New York City with the intent to woo small business owners with better tools and customer insights. Thus, in conclusion, it can be said with certainty that even though Google is a leader in the online ads space but it is already facing the heat because of rapidly growing reach of Facebook.

Takeaway

It is no stranger to us that Facebook had a lacklustre launch on the exchange and the Street punished the stock hard for bearing an unjustified value. However, over the past quarters, Facebook has demonstrated a commendable performance that has been primarily driven by mobile. Facebook has a gold-mine of data and the inclusion of Instagram and WhatsApp will only add to the massive database of the company which the advertisers madly love. Thus, these fundamental strengths make Facebook a competent buy for your portfolio

About the author:Riddhi KharkiaA practicing Chartered Accountant based out of India. I have keen interest in analyzing tech stocks that are driven by value.

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