InvestMacro FX

This week our focus is on: Alzheimer drugs that could be worth billions a year, the American dream in a bottle, new commodity plays and the SITFA

The entire investment world is on the edge of their seats waiting for the outcome of two Phase III Alzheimer drug trials underway now. If all these drugs do is slow the progress of Alzheimer’s (they don’t have to promise a cure, just slow the disease), this could be almost as big as Apple.

Barron’s reported both Lilly and Pfizer potentially have huge revenue-producing drugs on the way as early as this year. How big? $10 to $20 billion a year from one drug!

The minority players on the Lilly drug are Elan and JNJ. The Lilly/Elan/JNJ drug play according to analysts has a 10% downside if the trials don’t pan out and a 50% upside if they do. Those are pretty good odds.

The best news is if the Lilly drug is a winner, JNJ, according to Barron’s, is expected to buy out Elan to acquire their 10% stake in it. That would give JNJ a 20% stake and give investors in Elan a very nice payday.

Analysts expect shares of Lilly to start running up later this year in anticipation of the trial results, and Barron’s reported that Lilly and Elan stock should offer the best returns if their drug is approved.

But the drug with the best chance of approval is Pfizer’s. Catherine Arnold of Credit Suisse thinks Pfizer’s stock price is currently reflecting little hope of approval, but Pfizer’s drug had the best results in Phase II trials. That means we should really pay attention to this one!

Investors are cautious about both companies’ stocks, but Pfizer, according to Credit Suisse, has a pitiful PE of about 9, and has other good drugs in their pipeline and could be the better bet of the two big players.

Pfizer’s drug actually showed slowing of Alzheimer’s symptoms in Phase II trials if the patients didn’t have a genetic marker for the disease. It isn’t the cure all we would like, but it’s a lot better than what’s available now.

Drug companies are estimating an annual cost of between $5,000 and $20,000 per year for treatment and there are millions of customers already waiting for some type of relief, and the numbers will only explode as the boomers age.

This is one heck of a story; keep your ear to the ground on this one.

Beer, the New American Dream

An advertising campaign launched in 2010 presents Budweiser beer as the American dream in a bottle. I’m not kidding.

The really amazing news is how well this advertising approach has worked in the developing world and, believe it or not, Canada, too.

Overall sales for AB InBev grew 4.6% in 2011, but the U.S. sales were the anchor of this sprawling beer machine, inching up only 0.3%. Maybe we here at home have had all of the liquid dreams we can stomach for a while.

But Bud’s numbers in the rest of the world have been huge! Bud has a 70% market share in Brazil in less than one year of sales, it had double-digit sales growth in China last year, and is the number one beer in Canada with a 13% market share. And believe me, having spent quite a bit of time in the great white north, Canadians know their beer.

Am InBev is rolling right along, too. Their revenue grew to 39.05 billion in 2011 and their profit grew to 5.86 billion from 4.03 billion. That’s a nice increase. InBev also has about a 50% market share in the U.S., which has been known to crack open a few brews, as well.

It’s hard to remember a time when beer wasn’t doing well. Now that it’s the American dream in a bottle, who knows how big this could be. Am InBev, take a look at this one.

New Commodity Plays

A recent Journal article said that a lot of untested commodity plays have hit the market recently, mostly in the forms of ETFs, all aiming to beat the indices and most are totally unproven.

Some of these are even supposed to pay off if the commodity rises and falls in price, huh?

There are even commodity plays that invest in materials not even on the exchanges. The amazing part, investors are pumping hundreds of millions of dollars into these new-fangled products even as commodity prices have been falling.

Kathryn Young, a Morningstar analyst, said that investors are running to these new products despite the fact that we have very little information about them and no track record to know if they even work.

Some funds are doing nothing more than tracking commodities that have fallen or gained the most in a month and betting that the top 10 gainers or losers will continue to fall or run up even further.

Matt Hougan, President of ETF Analytics at IndexUniverse, was quoted in the Journal article as saying that indexing commodities may not even be the best way to play them, never mind the more exotic plays out there.

That to me says there is a lot of room for error in these unproven products.

Commodities are definitely on a long-term uptrend as the world’s middle class continues to grow, but playing them may require sticking with the tried and true, at least until there are better numbers to support the more extreme options.

The SITFA

This week it goes to those sheep shears out there who want to make sheep shearing a competitive Olympic sport. The new Zealand Farm Lobby believes it’s time to elevate sheep shearing to the world stage.

A recent Journal article stated that some people find sheep shearing thrilling. “Thrilling,” their word not mine!

A top clipper can finish a whole sheep in 45 seconds, wow! I’m sure the NFL is trembling at the thought of this kind of competition for their viewer’s dollars.

And these world-class shearers travel thousands of miles to compete in competitions; New Zealand is one of the top destinations.

This is so big in New Zealand that their national betting agency had to create more and different types of bets to serve all who wanted to get in on the action. “Action,” again, their word not mine.

I am not making this up!

In fact, the U.S. shearing competition was recently held just a few blocks form my house here in Baltimore, and I didn’t know it was there. I have to get out more.

Alex Mosler of Lester, Iowa said, if bowling is a sport, shearing can be, too. He thinks if more people saw it in the Olympics and on TV, more people would see it as a sport.

I can see it now, ESSN, Entirely Sheep Shearing Network.

See you next week.

Article by Investment U

Barack Obama and the U.K. Prime Minister are allegedly looking into releasing oil from strategic reserves in an effort to bring down prices. But will it work?

I drive a decade-old Subaru with a 13-gallon tank that gets about 23 miles per gallon on the open road. So with local gas prices dangerously close to $4, when I filled up my tank this morning, it cost over $48. Late last month, I paid about a dollar less.

And I honestly can’t remember the last time my total was under $40.

Elsewhere in the country, prices are even worse. In parts of New York, Maine, Washington state and Oregon, it costs $4.12 a gallon for regular. In a few areas of Texas and about half of Illinois, drivers are forking over anywhere from $4.12 to $4.22.

Then there’s California, which always sports notoriously high prices. On March 14, 2012, the L.A. Times reported:

“California’s retail prices were still rising slightly Wednesday, up 0.2 cents a gallon overnight to an average of $4.363 for a gallon of regular gasoline, according to the AAA Fuel Gauge Report. That’s 40.1 cents a gallon higher than a year ago. Nationally, the average climbed 0.6 cents overnight to $3.811. A year ago, the national average was $3.556 a gallon.”

Recognizing that kind of pain at the pump, rumors are abounding that Barack Obama and the U.K. Prime Minister are looking into the possibility of releasing oil from both countries’ strategic reserves in an effort to bring down oil prices.

But if so, that game plan isn’t nearly as simplistic as it sounds…

To Release Oil or Not to Release Oil

Last Thursday, when the news first hit that the United States was going to dip into its reserves, oil immediately started downward.

Though it started out the day at around $105.70 per barrel, by 12:30, it had tanked to just above $104. But then The Wall Street Journal said the rumors were inaccurate, and the commodity spiked right back up to its opening price, vacillating slightly downwards for the rest of the day as news sources and the White House went back and forth about whether it would happen or not.

In the end it, it closed at about $0.50 lower. But the follow day, oil was right back to marching upwards. And that was despite reiterated reports that, yes, the President planned to utilize America’s energy plan of last resort.

At first glance, that kind of action doesn’t bode well for gasoline prices going forward. But rest assured: It wouldn’t have mattered if oil had dipped a whopping $5 on the news. There isn’t nearly enough of the commodity stored away in the U.S. strategic reserves to make a serious or long-term dent in the markets.

By itself and as of February 29, 2012, it held 695.9 million barrels, which could fuel the country for approximately 36 days at our current rate of consumption. And since there’s practically no way the President will even release a fifth of that, even if the U.K., Japan and other countries pitch in (like some stories say they’ll be encouraged to do), it can’t make more than a temporary dent in our current pain at the pump.

For further proof of the futility of the possibly proposed plan, take Stephen Dinan’s article at The Washington Post:

“Last June, when President Obama last ordered a release from the U.S. reserves, oil was trading at $95.41 a barrel. It dropped about $5 over the next few days, but quickly shot back up and two weeks after the announcement the price was right back where it was before the release was announced.”

There’s no good reason why the situation will play out differently under similar action today.

Iran Might Be Ready to Go to War With the United States

There’s another reason why opening up the strategic reserves isn’t a good idea, and it has nothing to do with prices, either temporary or long term.

Congress first authorized the stash in the Energy Policy and Conservation Act of 1976, with the purpose of protecting itself against an OPEC-directed oil embargo against the United States. If worst came to worst and the Middle East monopolized its output, the United States could at least keep itself going for about a month while it found a more permanent solution.

Now with international tensions rising with Iran due to its threats to close the Strait of Hormuz – “the world’s most important oil chokepoint due to its daily oil flow of almost 17 million barrels per day,” according to the U.S. Energy Information Administration – now is the time to have the reserves stocked as fully as possible.

The chances of Iran actually closing it off aren’t astronomically high. Though the Middle Eastern nation is governed by defiant and oftentimes diabolical dictators, that’s not the same thing as saying they’re insane. And it could easily be counterproductive for Iran to cause too much of a fuss concerning the Strait.

But the threat is still clear and present enough for the U.S. Navy to send out an additional four mine countermeasure ships to the waters.

If something does happen, there’s no telling whether other oil-producing countries in the region will side with Iran or not. So if there’s ever a time we need to play it safe with our current energy assets, it’s now.

And even if that wasn’t true and the entire world was perfectly at peace, utilizing the strategic oil reserves is a nice thought… but that’s about all it is.

Good Investing,

Jeannette Di Louie

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – Fresh concerns over the fate of the euro region have been raised as a possible Greek scenario is expected to be repeated in Portugal and Italy. Italy’s Prime Minister, Mario Monti, is set to meet labor unions to discuss a possible restructuring of the labor laws in the country. Analysts are warning that Italy and Portugal may be on the verge of possible Greece-case scenario.

This has come amid fears that Greece might need a third round of bailout funds as the new bonds are not doing well in the market. German Chancellor Angela Merkel have indicated that the European officials are discussing possibility of combining its rescue funds which might lead to increase in the total crisis fund kitty to 692 billion Euros.

In Italy, the Prime Minister is holding talks with labor unions and employers as the nation seeks to reach an agreement this week. Policy makers in the euro region have, however, issued warning against complacency as they finalized on the Greece bailout fund. The world’s largest debt restructuring will be completed tomorrow when the money will be disbursed.

Christine Lagarde, the IMF managing director, warned that the optimism in the euro region should not be construed to give a sense of security. She said that things cannot be “business as usual” as oil prices are expected to rise as Iran crisis continues. The emerging risks of default in Italy and Portugal are other factors that should be monitored closely as the region tries to avert a dangerous credit crisis.

According to the IMF, the Greek crisis solution holds possible risks that might lead to disorderly exit from the monetary union if not handled carefully. An IMF staff indicated that the materialization of such risks requires the region to have a backup plan to offer additional support. These sentiments seem to coincide with Luxembourg Prime Minister Jean-Claude Junker’s remarks that the leaders have a plan B in case the efforts made by the region fail to work. However, investors are still keeping a close eye to see whether contagion will spread to Italy, Portugal and Spain.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Just why is it that so many people are bad at the game of monopoly?

Growing up, our family monopoly games were raucous affairs with a lot of shouting (and when necessary, wrestling). My younger brother John was always in charge of the cash because no one else was deemed trustworthy.

In retrospect, most of my six siblings never really got the game at all. They carefully managed their cash and picked up random properties. This allowed them to stay in the game for a long time but made ultimate victory impossible.

As for me, I always went for the kill with a strategy of feast or famine.

It was either a great monopoly, like Boardwalk and Park Place, or I would crash and burn and then bolt to play basketball with the neighborhood gang.

Just why is it that so many people are bad at the game of monopoly?

I think it’s because we’re taught at a tender age that tycoons adept at cornering markets are the greedy bad guys. This belief is compounded when we go to college and economics professors rant about evil monopolies and the need to “regulate” the free market.

Enter Carlos Slim

Apparently, Carlos Slim, the wealthiest tycoon in the world according to Forbes, never studied economics.

Carlos Slim’s fortune was built on the back of Mexican telecom monopolies and, as a hobby, he bailed out The New York Times. Companies controlled by Slim have captured 80% of Mexico’s telephone lines, 70% of the cellphone market, and account for an incredible 34% of the value of the country’s entire stock market.

Maybe monopolies aren’t all that bad?

Lasting monopolies are tough to find in America, but there are plenty of them in emerging markets.

Why?

The best way to convince government regulators to protect your market is to be owned by the government itself.

And there are many of these monopoly-like state-owned and -controlled giants in emerging and frontier markets.

China Mobile: The Poster Child

The poster country of this “state capitalism” is China and one high-profile monopoly is China Mobile (NYSE: CHL). The government’s 70% ownership stake is a strong incentive to protect the company’s dominant market position.

So despite my strong personal distaste for state capitalism, now may be a good time to look at China Mobile when many are questioning the country’s growth prospects.

For 2011, the company’s customer base grew 11.6% to reach 650 million with profits of $19.9 billion. As a defensive consumer business with a 4.1% dividend yield, CHL should hold up rather well in the toughest of markets.

This stock has done a lot better than that so far in 2012 – up 15.5%. Despite this impressive surge, the stock is trading at only a bit over ten times 2012 expected earnings.

China Mobile’s trump card is a $50-billion stockpile of cash reserves ($13 per share) that is sure to cover (or buy out) even the most intrepid of its competitors.

So don’t be shy about investing in monopolies. After all, only one company (Parker Brothers) makes the game of monopoly.

Good Investing,

Carl Delfeld

Article by Investment U

Source: ForexYard

The Australian dollar has seen growth against the JPY this afternoon. At the moment, the aussie is hovering around 88.37. Following last month’s decision by the Bank of Japan to inject millions of yen into the economy, the yen has been consistently dropping against several currencies. Many analysts predicted that we would see some resurgence from the yen but so far predictions have turned up incorrect. Heading towards the end of March, we will see the business year-end for Japan. Traditionally, this time of the year sees an increase in foreign investment in the Japanese economy. If the past repeats itself in this regard, we may well see the yen bounce back from its recent slump.

Read more forex news on our forex blog.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By TraderVox.com

Tradervox (Dublin) – There have been rumors that yen declines registered last week were excessive reversing the trend of the yen against the dollar. In the Asian session, the yen increased against the dollar as Asian stocks declined. However, the euro had earlier touched four and half months high after Angela Merkel, the German Chancellor indicated that euro zone officials had discussed the possibility of combining the euro zone bailout funds as effort to strengthen the financial firewall of the region.

The demand for the currency was also supported by the speculations about the result of Mario Monti’s meeting with the euro zone employers. They are expected to make some changes in the labor laws of the region.

Further, the 17-nation currency was supported by speculation about the German PPI report expected on Tuesday March 20. The European Current account report has also affected the EURJPY pair. The yen gained 0.5 percent against the euro to trade at 109.37 yen per euro after dipping to 110.15 earlier in the day. This is the weakest the yen has been against the euro since October 31. Against the dollar, the yen increased by 0.4 percent to settle at 83.08 yen per dollar.

Last week, the Japanese currency had performed poorly against its peers decreasing by 1.5 percent during the week. The increase against the euro can be attributed to the sentiments from the region about another debt crisis in Portugal and Italy. According to Melinda Burgess, the euro is selling off as negative reports indicate that the region’s economy is lagging behind. Many investors and analysts are speculating the decline of the yen against the dollar as reports from the US read more than expected figures.

Investors are also looking forward to the results of Italian Prime Ministers meeting with the euro region leaders on discussions about labor laws. Analysts are also waiting to see how the EU region will deal with the emerging news of Portugal debt crisis.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The US dollar reversed some of its recent gains to close out the week on Friday, following the release of a disappointing US Core CPI figure. The figure, which came in at 0.1%, led to investor doubts that US interest rates would go up earlier than planned. As a result, the EUR/USD shot up well over 100 pips on Friday to close out the week at 1.3174. Turning to next week, a relative lack of news events means that the dollar could remain bearish for the near future. Still, US housing data, scheduled to be released on Wednesday and Friday, may give the greenback an opportunity to recoup its recent losses.

Economic News

USD – USD Takes Losses vs. Main Rivals to Close out Week

Worse than expected fundamental indicators out of the US led to significant dollar losses to close out last week’s trading session. Both the Core CPI and Prelim UoM Consumer Sentiment figures came in below analyst forecasts. The Core CPI figure in particular dampened hopes that the Federal Reserve would increase US interest rates earlier than expected.

In addition to losses against the euro, the dollar also fell vs. the Japanese yen and Swiss franc. The USD/JPY fell as low as 83.18 on Friday before staging a mild recovery to close out the week at 83.44. The USD/CHF, which peaked at 0.9254 during the morning session, tumbled 100 pips to close out the week at 0.9154.

Turning to this week, a lack of significant news events means that the dollar may not have many opportunities to reverse its current bearish trend. Still, there are several indicators that may turn out to generate market volatility. US housing data, scheduled to be released on Wednesday and Friday, may signal further gains in the American economic recovery. In addition, Thursday’s weekly Unemployment Claims figure is forecasted to show ongoing improvements in the labor sector. If true, the dollar could see gains as a result.

EUR – EUR Has Mixed Session to Close out Week

The euro saw significant gains against its safe-haven currency rivals to close out last week’s session. The EUR/USD reversed its downward trend on Friday, and gained well over 100 pips to close out the day at 1.3174. Against the Japanese yen, the euro was up close to 100 pips to close out the week at 109.92. Analysts attributed the common-currency’s reversal to disappointing news out of the US which caused investors to shift their funds away from the dollar and yen. That being said, the day was not all positive for the euro. The EUR/CHF maintained its bearish trend from Thursday to close out the week at 1.2060. Beginning on Thursday morning, the pair has dropped close to 100 pips.

Turning to this week, traders will want to note several potentially significant economic indicators out of the euro-zone. Thursday in particular could see heavy volatility, as manufacturing data out of Germany and France, the euro-zone’s two biggest economies, are scheduled to be released. In addition, a speech from the ECB President may provide investors with additional insight into the current state of the euro-zone economic recovery. In the meantime, the euro may see additional gains in the coming days if news out of the US once again comes in below analyst predictions.

Crude Oil – Crude Oil Sees Gains to Close out Week

Crude oil reversed losses taken earlier in the week to close out Friday’s session at $107.18 a barrel, up almost $2 a barrel for the day. Analysts attributed the increase in the price of oil to worse than expected US fundamental indicators which caused the dollar to slip on Friday. Typically, a bearish dollar causes commodities like oil to go up, as they become more attractive to international buyers. In addition, supply side fears caused by the upcoming EU ban on Iranian oil drove the price of oil higher.

Turning to this week, oil may continue to see gains, providing the dollar extends its bearish trend. Traders will want to note the results of several US indicators, including Tuesday’s Building Permits and Wednesday’s Existing Home Sales figures. Should either of them come in below expectations, the USD may drop further which could help support a higher price for oil.

Dow Jones – Dow Jones Takes Mild Losses during Friday’s Session

The Dow Jones capped its gains on Friday, following seven consecutive sessions of upward momentum. The Dow closed out the week at 13158.25, down from Friday’s high of 13222.25. While the downward reversal was attributed to worse than expected US fundamentals, analysts were quick to note that the gains for the week were the biggest so far this year.

This week, traders will want to note the results of several US indicators, particularly the Existing and New Home Sales figures scheduled for Wednesday and Friday. Any signs that the American economic recovery is gaining momentum are likely to help the US stocks see gains. Should either of the housing indicators come in above forecasts, the Dow Jones may resume its upward movement.

Technical News

EUR/USD

Most long-term technical indicators show this pair range-trading, meaning that no significant movements are forecasted at this time. That being said, traders may want to take a wait and see approach, as a clearer picture may present itself in the near future. The daily chart’s Williams Percent Range, which is trending upward at the moment, may eventually reach overbought territory. In such a case, a bearish correction could occur.

GBP/USD

The weekly chart’s Williams Percent Range is currently hovering in the overbought zone, indicating that a bearish correction could occur in the coming days. A bearish cross on the daily chart’s MACD/OsMA lends further support to this theory. Traders may want to go short in their positions.

USD/JPY

A bearish cross on the weekly chart’s Slow Stochastic indicates that a downward correction could occur in the near future. Furthermore, in another sign that the pair could move down, the daily chart’s Williams Percent Range is currently at -20. Going short may be the wise choice for this pair.

USD/CHF

A narrowing of the Bollinger Bands on the weekly chart indicates that a price shift could occur in the coming days. That being said, most other technical indicators are not showing a clear picture as to which direction the shift could be. Traders may want to take a wait and see approach for this pair.

The Wild Card

GBP/JPY

A bearish cross on the 8-hour chart’s Slow Stochastic indicates that this pair could see a downward correction. This theory is supported by the Relative Strength Index on the same chart, which is right around the 75 level. Forex traders may want to go short in their positions ahead of a possible downward correction.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By The Sizemore Letter

If you are a bond investor looking for current income, you have to be feeling a little down these days.  With the 10-year Treasury barely yielding 2%, the only way to get a decent return is by dipping into more exotic territory like high-yield junk bonds or emerging market bonds.  In most bond offerings, you’re looking at a stream of income that is too low to meet current needs yet promises to actually get worse with the passing of time.  This isn’t investing; it’s slow-motion lifestyle suicide.

For a stream of income that is both tolerably high today and likely to keep up with inflation tomorrow, you need to invest in dividend-paying stocks.  The yields on the stocks of many world-class, blue chip companies are higher than what you can get in the bond market, and unlike bonds—whose coupon payments are fixed—healthy companies can and do raise their dividends with time.

So, in the spirit of bluesman John Lee Hooker—and his classic One Bourbon, One Scotch, One Beer—I’d like to offer one dividend stock, one dividend ETF, and one dividend mutual fund.

We’ll start with the stock.  I can think of nothing to cure the low-yield blues than a fat 9% dividend, and that is exactly what Spanish telecom giant Telefónica  (NYSE: $TEF) is offering at current prices.

Telefónica has taken a beating in recent years due primarily to weakness in the Spanish fixed-line market.  Yet Telefónica’s promising Latin American markets—which make up nearly half of revenues—continue to grow.  While mobile phones are already ubiquitous in Latin America, many consumers still use simple prepaid plans or share a single phone with multiple family members.  The upgrade cycle to smart phones with expensive data plans is just beginning, and Telefónica is in excellent position to capture this trend.

Telefónica cut its dividend last year to conserve cash during the Eurozone debt crisis; yet even after the cut, the yield stands at 9%, and I believe that the payout is likely to significantly rise again within a year.  Telefónica is a stock that you can plan to hold for years, milking the dividend all the way.

Moving on, with the market looking at risk of a short-term correction, having some part of your portfolio allocated to more defensive sectors would seem prudent.  And the iShares Dow Jones Select Dividend ETF (NYSE: $DVY) fits the bill quite nicely.  Nearly half of the ETF is invested in utilities and consumer staples, and all of the companies included have a long history of consistent dividend payouts.  This was the first ETF formed with a specific dividend-focused mandate, and it remains one of the best.

At current prices, DVY yields 3.33%, which is considerably more than what you will find in the bond market.  This ETF is a fine investment option for yield-hungry investors irrespective of what happens in the broader market.

Finally, for the mutual fund, I’m going to go a slightly different direction.  Rather than focus on high yield today, I recommend that investors buy shares of the Vanguard Dividend Appreciation Fund (VDAIX) with a mind towards tomorrow.  The Vanguard fund follows the investment methodology of the Dividend Achievers Index, meaning that it only buys shares of companies that have raised their dividends for a minimum of ten consecutive years.

We’ve had a pretty rough go of it over the past ten years, and particularly the last five.  If a company was able to raise its dividend through something like the 2008 meltdown, you know that it has the ability to survive Armageddon.  And VDAIX is loaded full of companies that meet that description.

Currently, the fund yields just shy of 2%, within basis points of the 10-year Treasury.  But unlike that Treasury note, the Vanguard fund will almost certainly pay you a larger check next year  and every year after that.  In addition to being a reliable source of income, this is a fund that you can make the core of your growth portfolio.

So, dear reader, don’t despair.  There are income options out there besides traditional bonds.  And if these three don’t lift your spirits, perhaps putting on an old John Lee Hooker record will help.

Charles Sizemore is editor of the Sizemore Investment Letter and principal of Sizemore Capital.  TEF and DVY are held by Sizemore Capital clients.

By TraderVox.com

Worse than expected fundamental indicators out of the US led to significant dollar losses to close out last week's trading session. Both the Core CPI and Prelim UoM Consumer Sentiment figures came in below analyst forecasts. The Core CPI figure in particular dampened hopes that the Federal Reserve would increase US interest rates earlier than expected.

In addition to losses against the euro, the dollar also fell vs. the Japanese yen and Swiss franc. The USD/JPY fell as low as 83.18 on Friday before staging a mild recovery to close out the week at 83.44. The USD/CHF, which peaked at 0.9254 during the morning session, tumbled 100 pips to close out the week at 0.9154.

Turning to this week, a lack of significant news events means that the dollar may not have many opportunities to reverse its current bearish trend. Still, there are several indicators that may turn out to generate market volatility.

US housing data, scheduled to be released on Wednesday and Friday, may signal further gains in the American economic recovery. In addition, Thursday's weekly Unemployment Claims figure is forecasted to show ongoing improvements in the labor sector. If true, the dollar could see gains as a result. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox