Daily Gains Letter

Global Economy

Global Economy Forecast for year 2014

By taking the economic conditions of all of the countries into consideration, we can get a clear picture of the global economy.  Understanding the global economy and the shifts among countries allows businesses to better allocate capital to geographic regions that are experiencing growth.

Currently, the U.S. is the largest economy in the world, followed by China. Shifts among countries in their global economic ranking are the result of many criteria, including population growth and fiscal and monetary policies. Knowing which part of the world is growing economically and which part is shrinking is extremely important for businesses.


Early Preview: My Stock Market Outlook for 2015



Sneak Preview Stock Market Outlook 2015I will be formulating my complete stock market outlook for 2015 in a couple weeks, but at this time, I’m feeling somewhat uneasy. This year has turned out to be what I was expecting back in January 2014, with stock market trading being characterized by uncertainty and hurdles. Small-cap stocks are heading for their worst performance since 2011, when the Russell 2000 fell just below six percent. The index is languishing, with a loss of one percent after the nasty down week we just experienced. The selling was, in my view, somewhat driven by panic selling and capitulation. It gave stock market investors reasons to dump positions and take profits prior to year-end. The s ... Read More



Global Economy: Why It’s a Year-End “Mess”



Global EconomyHeck, it doesn’t look like Santa will be coming to the stock market this year. The blue-chip Dow Jones Industrial Average (DJIA) fell 185 points on Tuesday, prior to rallying to cut its loss—but this was followed by a 170-point intraday decline on Wednesday. Yesterday, the DOW did rally 63 points, but the index was up more than 200 points earlier in the session, so clearly, the apprehension continues to grip the market. The volatility and stock market apprehension is even more amazing given that the DOW came within nine points of testing 18,000 just a few days back. The mainstream financial media was quickly talking about the DOW at 20,000 and how amazing the stock market bull run was. On CNBC, I heard a stock market ... Read More



Positive Numbers for U.S. Economy Driving Business to Restaurant Stocks



U.S. Economy Driving Business to Restaurant StocksRecently, in the U.S. economy, we have been seeing decent jobs numbers, cheaper gas prices, and appreciating wealth in the housing market. The end result is consumers with more money to spend on things that make them happy, such as dining and travel. And I can see an investment opportunity opening up in some restaurant stocks. When people are confident with their financial situation, they tend to spend more freely. Take a look at the chart of the Dow Jones US Restaurants & Bars Index, which has been edging higher and appears to be breaking out following a sideways channel. I feel there’s a continued investment opportunity in the sector, as lo ... Read More



Investors Beware: U.S. Not Immune to Stalling in Global Economy



U.S. Not Immune to Stalling in Global EconomyThe U.S. economy has been showing some positive growth that has helped to propel the stock market higher, but be careful: there appears to be some cracks forming in the global economy to which the U.S. economy will not be immune. Japan reported that its economy fell back into a recession after contracting an annualized 1.6% in the third quarter, representing the second straight quarter of contraction. Part of the blame will squarely lie with Prime Minister Abe and his controversial decision to raise the country’s sales tax from five percent to eight percent in April. I consider the decision to raise the sales tax wrong, as it largely impacts the middle cla ... Read More



What China-Japan APEC Talks Could Mean for Investors



China-Japan APEC Talks Could Mean for InvestorsThe annual Asia-Pacific Economic Cooperation (APEC) summit started on Monday in Beijing, and I bet there will be a lot of discussion on the state of China and Asia in the global economy. My readers all know the impact of China on the global economy, as I’ve written on its relevance before. If China fails, so will the global economy, including the United States and the fragile eurozone. Russia is already looking to extend its economic ties beyond the Great Wall. Yet it’s clear the country that gave us spectacular double-digit gross domestic product (GDP) growth for years is now strugglin ... Read More



My New Strategy for China’s Slowing GDP Growth



China’s Slowing GDP GrowthAs many of my long-time readers may already know, I have been bullish on China and Chinese stocks for some time. However, I’m now thinking that there could be some growth issues forming in the shadows—but that doesn’t mean there isn’t an opportunity to profit. We have been seeing some obvious signs surfacing that suggest China’s economy is stalling, but we really don’t know the true underlying gross domestic product (GDP) growth rate in the Chinese economy. According to the National Bureau of Statistics, China’s GDP grew at an annualized 7.3% in the third quarter, the slowest growth in five years and down from ... Read More



Interest Rates: Why They’re Not Headed Up Anytime Soon



Fed’s Plans for Interest Rates Could Be Investing AdviceThe Federal Reserve has spoken and to no one’s surprise, there was really nothing new from Fed Chair Janet Yellen, who did as was expected after shaving off another $10.0 billion in monthly bond purchases. The Federal Reserve will cut the remaining $15.0 billion in October, bringing its third round of quantitative easing (QE3) to an end. What the stock market here and around the world also heard was that the Federal Reserve will likely maintain ... Read More



How the ECB’s Actions Could Boost U.S. Markets



ECB’s Actions Could Boost U.S. MarketsNot too long ago, the European Central Bank (ECB), to fight the economic slowdown in the eurozone, lowered its benchmark interest rates. The hope with this move was the same as it was in the U.S., England, Japan, or other countries that are facing economic scrutiny: lowering interest rates will eventually increase lending and eventually bring in economic growth. In addition to this, the ECB also announced that it will be taking part in an asset purchase program—something similar to what was implemente ... Read More



How to Hedge Against a Stalling Global Economy



Stalling Global EconomyThe stock market charts are showing some hesitation once again following the recent technical breaks to new record-highs for the S&P 500 and Dow Jones Industrial Average. On the charts, the blue chip DOW is back below 17,000. Its continued failure to hold after breaking above 17,000 for the fifth time is a red flag that suggests more weakness and vulnerability could be in the works for the stock market on the horizon. Small-cap stocks are also subject to some selling again with the Russell 2000 declining to below both its 50-day and 200-day mov ... Read More



Where Oil Prices Are Headed



Where Oil Prices Are HeadedGasoline prices are finally headed lower at the pumps, but it’s happening slowly. It always seems prices at the pumps rise much faster when oil prices increase, but they move much slower when oil prices decline. I guess that’s big oil for you. The average price of regular gas across the nation is around $3.55 a gallon. That’s down from the more than $4.00 a gallon we witnessed in July 2008 and again in May 2011. Lower gas prices translate into more money in your wallet to spend on other goods and services. This is good for the country’s economic growth. As a consumer, while we are experiencing lower gas prices at this ... Read More



How to Profit from ECB’s Attempts to End Economic Slowdown



Economic SlowdownRemember what happened in the U.S. economy when the financial system was about to collapse? The banks weren’t lending to each other, businesses, or even consumers. The U.S. economy was in a deep economic slowdown. Investment banks like the Lehman Brothers had already collapsed and more would follow. Something had to be done or else it would be a disaster situation. When all of this was happening, the Federal Reserve stepped in to save the U.S. economy. It started to use a monetary policy tool called quantitative easing. The idea was simple: print money out of thin air and then buy back bad debt from the ba ... Read More



Depressed Copper Prices Presenting Perfect Buy-Low, Sell-High Opportunity?



Copper Prices PresentingBy now, you have probably noticed one phenomenon: the speculations regarding China’s growth are increasing each day. Turning on the TV or flipping through the pages of the newspaper, you’ll likely hear and read all about how the second-biggest economic hub in the global economy will tumble. No doubt, the arguments backing this argument are very credible. The Chinese economy is seeing an economic slowdown and troubles in that country continue to gain strength. For example, the Chinese manufacturing sector is stalling. In March, the HSBC Flash China Manufacturing Purchasing Mangers’ Index (PMI) declined to its lowest level in eight months. The output index declined to an ... Read More



How to Profit from This Declining Currency



Declining CurrencyProblems in the Canadian economy are growing and whispers of an economic slowdown are looming in the air. If an economic slowdown does occur, the Canadian dollar will be the primary victim—and investors can profit heavily from this scenario. The central bank of the country isn’t very optimistic about the growth. Commenting on the country’s first-quarter growth, the governor of the Bank of Canada, Stephen Poloz, said, “What we have seen is that the numbers in the first quarter have been a little shy of what we were expecting.” He added, “It’s easy to point to the weather as a qualitative explain ... Read More



Sin Stocks Posting Impressive Gains in Struggling U.S. Economy



Why Sin Stocks Are Where the Money Is in This Stock MarketAs the investing adage of the day goes, “When the going gets tough, the tough get eating, smoking, and drinking.” And there’s plenty of tough economic data out there to send people into the arms of their favorite vices and sin stocks. In a nutshell, U.S. unemployment has improved year-over-year to 6.7%, but the improved numbers are the result of an increase in low-wage-paying part-time retail jobs. The underemployment rate remains high near 13%, as does the long-term unemployed at 2.3%. And despite the soaring S&P 500, wages haven’t really budged in y ... Read More



This Sector the Only Bright Spot in October Retail Sales



October Retail SalesOctober U.S. retail sector sales numbers are in, but are they worth getting excited about? The Census Bureau announced on Wednesday that October retail sector sales increased 0.4% month-over-month and 3.9% year-over-year to $428.1 billion. From a shorter-term perspective, the 0.4% increase really isn’t anything to get excited about; that 3.9% year-over-year increase, though, looks pretty good. (Source: “Advance Monthly Sales for Retail and Food Services October 2013,” U.S. Census Bureau web site, November 20, 2013.) Or does it? Take a step back, and you ... Read More



If It Looks Like a Bubble and Acts Like a Bubble…



Looks Like a BubbleMaybe I’m reading into the economy too much, but the current state of the U.S. economy and Wall Street isn’t adding up. The vast majority of people don’t think we’re in a bubble, including Federal Reserve chair nominee Janet Yellen. Granted, you can only really point to a bubble in retrospect, but still, it certainly looks and feels like we are in one. Talking before the Senate Banking Committee during her first public appearance as Federal Reserve chair nominee, Janet Yellen said she plans to keep p ... Read More