Mortgage Rates Slip as Doubts Simmer About Recovery

Top Blue Chip Stocks To Watch Right Now

Jonathan Alcorn/Bloomberg via Getty Images Average U.S. rates on fixed mortgages declined this week amid signs the economic recovery is slowing. Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 4.50 percent from 4.57 percent last week. The average on the 15-year fixed mortgage slipped to 3.54 percent from 3.59 percent last week. The retreat in the average rate of a 30-year mortgage comes just a couple of weeks after the rate reached a two-year high of 4.58 percent on Aug. 22. The average rate on a 15-year mortgage also hit a two-year high -- 3.60 percent -- that day. Overall, mortgage rates remain low by historical standards. Long-term mortgage rates have risen more than a full percentage point since May, when Federal Reserve Chairman Ben Bernanke first signaled that the central bank could begin reducing its monthly $85 billion in bond purchases this year if the economy looked strong enough. The purchases have been intended to keep long-term loan rates extremely low to encourage borrowing and lending. Mortgage rates tend to track the yield on the 10-year Treasury note. Many economists had expected the Fed would to decide at its policy meeting this earlier this week to scale back the bond purchases. But on Wednesday, the central bank voted to continue the bond-buying program at the current levels. It also cut its economic growth forecasts for this year and 2014, warning that the upcoming debt ceiling and budget battles between the White House and Congress could pose risks to financial markets and the economy. Growth and hiring remain modest by the standards of a robust economic recovery. Employers have added an average of 180,000 jobs a month this year, about the same as last year and in 2011. From April through June, the economy grew at a 2.5 percent annual rate, little changed from its 2.8 percent rate in the quarter when the Fed began its bond buying. Concerns over the possibility that interest rates will continue to rise have spurred some homeowners to close deals quickly. U.S. sales of previously occupied homes rose 1.7 percent last month to a seasonally adjusted annual rate of 5.48 million, the National Association of Realtors said Thursday. That's the highest level since February 2007. To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount. The average fee for a 30-year mortgage was steady at 0.7 point. The fee for a 15-year loan also was unchanged at 0.7 point. The average rate on a one-year adjustable-rate mortgage slipped to 2.65 percent from 2.67 percent. The fee was unchanged at 0.4 point. The average rate on a five-year adjustable mortgage fell to 3.11 percent from 3.22 percent. The fee was unchanged at 0.5 point.

Where is Crude Oil Headed?

Elliott Gue shares his outlook for crude oil and explains why the type of crude oil and where it is located determines the price you may be paying.

SPEAKER:  Thanks for joining us.  My guest today is Elliott Gue.  Hi Elliott and thanks for coming by.

ELLIOTT GUE:  Thanks for having me.

SPEAKER:  So what’s going on with oil prices?  It’s so strange because I’m looking at it certainly from the retail end.  I go to get gas one week and where I live in Tennessee, it is $3.19 and then the next week it’s $3.39.  There seems to be no rhyme or reason.

ELLIOTT GUE:  Right, right.  Oil prices have been very volatile this year and really the key thing to remember is that there’s not one price of oil.  There are many different types of oil out there.  In the US when you ask people what’s the price of oil?  Typically they’ll quote to you West Texas Intermediate or WTI crude oil, which is a light, sweet crude oil delivered to Cushing, Oklahoma, and that price has been much lower historically over the last year or so than the price of Brent crude oil which is the key international benchmark so what we’ve seen this year is Brent oil prices have been pretty much flat this year but WTI prices have rallied to almost the same level as Brent.  In fact, at one point in July, WTI prices actually rallied above the price of Brent.  The main reason for this actually has to do more with pipeline capacity than supply and demand.  What’s been happening is as most of the listeners are aware, US oil production has been rising over the past four years primarily because of production from a lot of these shale fields so places like the Bakken shale in North Dakota, the Permian Basin of Western Texas, the Eagle Ford Shale in South Texas.  The problem is there’s not enough pipeline capacity to move that oil from the middle of the county or from landlocked parts of the country to the Gulf Coast so identical oil late last year in Midland, Texas, and West Texas, was trading at almost a $20 a barrel discount to the same oil in Cushing, Oklahoma, even though it’s not that far away from them.  The reason was there just wasn’t enough pipeline capacity.  The good news is that there’s more pipeline capacity opening up,

SPEAKER:  Although it’s controversial too.

ELLIOTT GUE:  It is controversial but we are seeing a lot more, for example, the Keystone Pipeline which is subject to so much debate, part of that pipeline’s already been built and is flowing oil.  The part that goes between Cushing and Houston so that is actually moving a lot of oil out of the middle of the country to the coast.  What’s controversial is the part of the pipeline that extends up to Canada.

SPEAKER:  Going north, right?  Yes.

ELLIOTT GUE:  So we’re seeing a lot of the smaller pipelines moving from places like Cushing to the Gulf Coast or Midland, Texas, to the Gulf Coast.  Those are going ahead and getting built and approved no problem, and because that capacity is coming on stream, in addition to that, we’re seeing more rail capacity so a lot of companies are loading oil onto tanker cars and shipping it to anywhere that they have a market.  For example, Tesoro Refining, which is one of the biggest refiners in the country, is working on a project to take oil from the Bakken shale, transport it west to Vancouver, the Port of Vancouver in Washington, not the Canadian city but the port in Washington state and then barge it to Los Angeles to be able to get cheap oil from the middle of the country to California.

SPEAKER:  That sounds expensive.

ELLIOTT GUE:  It sounds expensive.  It costs them about $9 a barrel to move it to the Bakken to the Coast, and additional $4 or $5 a barrel to barge it down, but you got to remember that California doesn’t have a lot of pipelines to other parts of the country so they really haven’t had access in the state to oil from the middle of the country.  They’ve been importing oil from Saudi Arabia at Brent-like prices at $20 and $30 a barrel premiums so that’s a major relief for them to get that cheaper oil and so what you’ve seen in the near term is the price of WTI has come up because more WTI is getting moved out of the middle of the country to the Coast.  Going forward though, I think you’re going to see some of those discounts open up again and so you’ll probably see US oil prices remain at a considerable discount to global oil prices.  The biggest beneficiaries of this are producers in the US that have been selling oil at reduced prices so look at companies for example working in the Permian Basin of Texas.  A company like, let’s trust SandRidge Permian Trust, symbol PER.  They’re going to get much higher realizations for their oil because they now have pipeline capacity to move it to the Coast. 

SPEAKER:  Makes sense, great.  Thank you Elliott.

ELLIOTT GUE:  Thanks for having me.

SPEAKER:  And thanks for joining us at the MoneyShow.com Video Network. 

As Expected, BlackBerry Reports Deep Loss, Revenue Drop

Top Growth Stocks To Buy Right Now

Simon Dawson/Bloomberg via Getty Images TORONTO -- BlackBerry reported a quarterly loss of nearly $1 billion Friday, in line with last week's warning, days after accepting its largest shareholder's tentative $4.7 billion bid to take it out of the public eye. BlackBerry (BBRY), which had warned of poor results on Sept. 20, said its net loss for the second quarter ended on Aug. 31 was $965 million, or $1.84 a share. Revenue fell 45 percent to $1.6 billion from a year earlier. The loss included a writedown of about $934 million for unsold Z10 phones, a touchscreen model that the company had hoped would reverse its fading fortunes. The phone has sold badly with business and consumer customers alike. "This write-off is very real," said Morningstar (MORN) analyst Brian Colello. "They bought a lot of inventory hoping to sell it. The auditors were not convinced that BlackBerry can sell it or sell it at prices that the company was hoping for. We see no reason to be more optimistic than them." Excluding the Z10 writedown and restructuring costs, BlackBerry reported a loss of $248 million, or 47 cents a share. The company plans to shed 4,500 jobs, or more than one-third of its workforce, as it shrinks to focus on corporate and government customers. It will not host the typical post-results call for investors after signing a tentative $9-a-share agreement to be acquired by a consortium led by Fairfax Financial, its largest shareholder, Monday. The Waterloo, Ontario-based company's steep revenue decline and mounting losses have revived fears that BlackBerry, a pioneer in the smartphone sector, faces an ignominious death. "We are very disappointed with our operational and financial results this quarter and have announced a series of major changes to address the competitive hardware environment and our cost structure," Chief Executive Officer Thorsten Heins said in the earnings statement. BlackBerry said Heins wasn't available for an interview. The company said it had sold 5.9 million mostly older-model phones in the quarter but only recognized revenue from 3.7 million, given that many sales had already been booked. By contrast, Apple (AAPL) sold 9 million of its new iPhone 5c and 5s models in the three days after launch. Shares of BlackBerry rose 2 percent to $8.11 in trading before the market opened. The stock remains far below Monday's bid price, indicating doubts that the Fairfax deal would be completed or a rival offer would emerge. BlackBerry said last week it would no longer market its devices to consumers, instead focusing on the professional users that brought its first success and won the little devices the moniker "Crackberry" for their addictive nature. That retreat from the consumer market has already had an impact. Telecom operator T-Mobile US (TMUS) said it would no longer stock the devices in its stores, instead shipping them to anyone who come in to order a BlackBerry. Sprint (S), one of T-Mobile's larger rivals, will take a "wait-and-see" approach. One of BlackBerry's main contract manufacturers, Jabil Circuit (JBL), said it probably would part ways with the company, its second-largest customer.

Passion and Compassion - Paul Tudor Jones, Sells in Review

Passion and compassion are the two engines that drive "venture philanthropist" Paul Tudor Jones II, founder, chairman and CEO of The Tudor Group. Passion fuels his vocation as a hedge fund trader extraordinaire. As of this month, Jones has amassed a personal fortune of around $3.7 billion, according to Forbes. Compassion clearly energizes his avocation, helping homeless children and the poor. Paul Tudor Jones is the founder of Robin Hood, a charitable organization formed in 1988 to target poverty in New York City. Its board of directors is peopled with a number of Guru billionaire investors. In his 2011 speech at the Robin Hood Heroes Breakfast, Jones outlined the various kinds of poverty, the worst being a poverty of opportunity Americans are facing. Last year, Robin Hood invested $132 million in 210 poverty-fighting programs.

The Tudor Group portfolio currently lists 779 stocks, 289 of them new, with a total value of $1.33 billion and a quarter-over-quarter turnover of 58%. The portfolio top three sector weights healthcare at 23.9%, ETF, options, preferred at 22.2% and industrials at 11.2%. Paul Tudor Jones's 12-month average return is 35.13%; he's averaged 6% since inception.

Here's a look at the top four high-impact reductions and sells in The Tudor Group portfolio as of the second quarter of 2013.

Financial Select Sector SPDR ETF (XLF): Reduced

Impact to Portfolio: - 4.26%

Up 29% over 12 months, Financial Select Sector SPDR ETF has a market cap of $9.78 billion; its shares were traded at around $20.14. The dividend is 1.60%.

The Financial Select Sector SPDR ETF is an exchange traded fund.

Historical share pricing:

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Guru Action: As of June 30, 2013, Paul Tudor Jones reduced his position by 52.56%, selling 3,077,000 shares at an average price of $19.08, for a loss of 5.6%. The current share price is $20.14, with a change from average up 6%. His cur! rent shares remaining are 2,777,000.

In a five-year trading history, Paul Tudor Jones has averaged a gain of 24% on 5,854,000 shares bought at an average price of $16.24 per share. On shares sold, he has averaged a gain of 6% on 3,077,000 shares sold at an average price of $19.08 per share.

Pfizer Inc. (PFE): Reduced

Impact to Portfolio: - 3.57%

Up 16% over 12 months, Pfizer Inc. has a market cap of $190.67 billion; its shares were traded at around $28.88. The P/B ratio is 2.40. The dividend yield is 3.26%.

Founded in 1849, Pfizer Inc. is a global pharmaceutical firm which develops and produces medicines and vaccines used in the fields of immunology, inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain.

Historical share pricing, revenue and net income:

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Guru Action: As of June 30, 2013, Paul Tudor Jones reduced his position by 89.18%, selling 1,629,350 shares at an average price of $29.12, for a loss of 1.1%. The current share price is $28.80, with a change from average down 1%. His current shares remaining are 197,700.

Paul Tudor Jones has averaged a gained of 5% on 1,827,050 shares bought at an average price of $27.34 per share. On shares sold, he has averaged a loss of 1% on 1,629,350 shares sold at an average price of $29.12 per share.

Illinois Tool Works Inc. (ITW): Sold Out

Impact to Portfolio: - 3.2%

Up 28% over 12 months, Illinois Tool Works Inc. has a market cap of $34.14 billion; its shares were traded at around $78.29. The P/B ratio is 3.30. The dividend yield is 2.00%.

Incorporated in 1915, Illinois Tool Works Inc. is a multinational manufacturer of a range of industrial products and equipment with operations in 58 countries. These businesses are internally reported as 40 operating segments to senior management.

Historical share pricing, revenue and net income:

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Guru Action: As of June 30, 2013, Paul Tudor Jones sold out his position, selling 7,500 shares at an average price of $66.88, for a 14% gain. The current share price is $76.23, with a change from average up 14%.

In 10 quarters of holding, Paul Tudor Jones had double-digit gains all the way.

His gains topped out at 73.1% in the third quarter of 2010.

Covidien PLC (COV): Sold Out

Impact to Portfolio: - 2%

Up 16% over 12 months, Covidien PLC has a market cap of $28.8 billion; its shares were traded at around $62.27. The P/B ratio is 3.00. The dividend yield is 1.66%.

Covidien PLC is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. Its products are found in almost every hospital in the United States.

Historical share pricing, revenue and net income:

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Guru Action: As of June 30, 2013, Paul Tudor Jones sold out his position selling 380,400 shares at an average price of $59.39, for a gain of 5.4%. The current share price is $62.61, with a change from average up 5%.

This is another remarkable five-year trading history with gains all the way.

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Here is the complete portfolio of Paul Tudor Jones.

Be sure to read:

Best Medical Companies To Own For 2014

1. Paul Tudor Jones's Undervalued Stocks
2. Paul Tudor Jones's Top Growth Companies
3. Paul Tudor Jones's High Yield stocks
4. Stocks that Paul Tudor Jones keeps buying

If you are not yet a Premium Member, try a 7-day Free Trial.

GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report ti! me lag ca! n be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Check out the GuruFocus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

Will Lawmakers Beat the Looming Budget Deadline?

J. Scott Applewhite/APSenate Majority Leader Harry Reid. WASHINGTON -- With a week left to hammer out a deal to avoid a government shutdown, some lawmakers seem resigned -- if not rushing -- to that end. Most say they don't want the first government shutdown since 1996. But if the government happens to shut down, so be it. Republicans say it is part of their effort to dismantle Democrats' health care overhaul, while Democrats defending the law recall that similar standoffs gave them political gains. And fingers were already being pointed just to be on the safe side. "I believe we should stand our ground," said Sen. Ted Cruz, a tea party darling from Texas who pushed fellow Republicans to link a temporary budget bill with a provision to defund the Affordable Care Act. Some Republicans have vowed to shut down the government unless they can stop the law from taking hold. Cruz and fellow tea party conservatives on Sunday said President Barack Obama and his Democratic allies would be to blame if they don't accede to demands to strike the national health care law. "If Harry Reid kills that [demand], Harry Reid is responsible for shutting down the government," Cruz said Sunday. The tactic won sharp criticism from Democrats and even some Republicans, well aware the shutdown in the-mid 1990s helped President Bill Clinton regain his political footing and win a second term. House Democratic Leader Nancy Pelosi called supporters of the defund-or-else strategy "legislative arsonists." Sen. Tom Coburn, R-Okla., said the effort would not accomplish its goal and was unrealistic. And the president had a direct message to those backing efforts to roll back his health law: "Let me say as clearly as I can: It is not going to happen." The Republican-led House on Friday approved legislation designed to wipe out the 3-year-old health care law. Yet Senate Democratic Leader Harry Reid vowed to keep the health law intact despite Republicans' attempts. And there's virtually no chance Obama would sign such a measure if it were to ever reach his desk. That doesn't mean conservatives -- especially the younger lawmakers closely aligned with the tea party -- are going to stop with their demands. Rep. Tom Graves, R-Ga., said the goal was to defund the president's health care legislation for at least one more year, if not forever. If the government shuts down, it will be because Obama refused to compromise, he said. "We do have eight days to reach a resolution on this, and I propose an idea that kept the government operating and opened for an entire year while delaying and defunding Obamacare for a year so that we could work out those differences," Graves said, appearing on his first national Sunday program. Left unsaid: It would require Obama to abandon his chief domestic accomplishment. "We don't want to shut down the government," said Rep. Matt Salmon, R-Ariz. "I want to make it clear: We want to shut down Obamacare." The unyielding political posturing comes one week before Congress reaches an Oct. 1 deadline to dodge any interruptions in government services. While work continues on a temporary spending bill, a potentially more devastating separate deadline looms a few weeks later when the government could run out of money to pay its bills. Lawmakers are considering separate legislation that would let the United States avoid a first-ever default on its debt obligations. House Republicans are planning legislation that would attach a 1-year delay in the health care law in exchange for ability to increase the nation's credit limit of $16.7 trillion. "I cannot believe that they are going to throw a tantrum and throw the American people and our economic recovery under the bus," said Sen. Claire McCaskill, a Missouri Democrat Even within his own party, Cruz faced skepticism. "It's not a tactic that we can actually carry out and be successful," Coburn said. Cruz and McCaskill were interviewed on "Fox News Sunday." Pelosi spoke to CNN's "State of the Union." Coburn and Salmon were on CBS' "Face the Nation." Graves was on ABC's "This Week."

Syria: The War Dog That Did Not Bark

NEW YORK (TheStreet) -- It was all too frightening, and coming as it did so close to the anniversary of the Sept. 11 attacks, it was all too familiar.

The war drums were beating. There were pictures of dead children. There was talk of threats in the Middle East requiring a military response.

Then on Tuesday night the president spoke, a different president from last time. After a few minutes I turned back to a soccer game.

The U.S., which I prefer to call by its Spanish name Estados Unidos for soccer purposes, was playing our archrival, Mexico, with World Cup qualification on the line. We won 2-0 -- in Spanish, dos a cero. I found the soccer more enticing because the war did not start, the Russians did not back the dictator and the dictator said he would put the chemical weapons beyond use. The president, it seemed, would get what he wanted without war. Why? Maybe it was because Assad's attack with sarin gas killed just 1 in 10 of its intended victims, and the blowback was too much for him to bear. Maybe it was because Russia is now more threatened by Islamic terrorists in Dagestan, Chechnya and its "near abroad" than we are in New York or Chicago. Our Peter Morici, no friend of this president's, called the outcome in Syria "yet another management failure." He thinks the president should have called out the Air Force immediately, without going to Congress, and taken the heat. With all due respect to Morici, George Bush is no longer president. Thomas Jefferson is not on the ballot in Syria. Most Americans see Syria as a battle between forces backed by al Qaeda and a dictator representing just the 10% of the country that is Alawite. We see both sides as evildoers, in the language of the last president. They're scorpions in a bottle; why not let them kill each other? Of course, there are actors more directly involved, and U.S. interests at stake. The Gulf states, the Arab League, they were all pushing for action. Turkey, Lebanon and Jordan face an immense humanitarian crisis that could breed more terrorists unless it's addressed. Israel is nervous, with itchy trigger fingers in Jerusalem.

Now that we've given our consent to the killing continuing, I personally think it would be in our interest to put lots of boots on the ground, on the land of Syria's neighbors. Boots carrying food, water, shelter and medicine. I think that would do more for America's image right now than 1,000 cruise missiles.

Morici warns that inaction will harden Assad's resolve, that the Russians can't be trusted, and that American credibility has been damaged. Maybe the crisis is not yet over.

But economically, this is a big win for the markets. Fear keeps oil prices high, and high oil prices are now a huge benefit to us. Thanks to shale oil, and shale gas, and the cheapest form of renewable energy, which is efficiency, the U.S. economy is accelerating on its own, for the first time this decade, and there is money to be made.

Greed is a big winner in this crisis. The S&P 500 is up almost 18% so far this year. The Dow is up 16%. The Russell 2000 is up 24%. Travel is up, car sales are up, house prices are up and unemployment is down. Even the defense stocks are up. Lockheed Martin (LMT) is up 35% so far this year. Northrup Grumman (NOC) is up 40%. Halliburton (HAL) is up 44%. (Cha-ching, Dick Cheney.) If this is failure, I suggest we make the most of it. In the wake of this crisis, President Bush's advice for Americans facing the Iraq war comes to mind. Let's go shopping. At the time of publication, the author no shares in companies mentioned in this article. But he's long America. Follow @DanaBlankenhor This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

The Fed Postpones the Moment of Truth

The Federal Reserve's postponement of any tapering effort announcement gave investors a lot to consider and MoneyShow's Howard R. Gold thinks, while several hurdles have been cleared for the markets, there's still a long way to go.

The Federal Reserve kept the punch bowl spiked a little longer in a surprise decision that postponed investors' day of reckoning with reality.

On Wednesday, the Federal Open Market Committee voted to maintain its $85-billion monthly bond buying program, defying expectations of two-thirds of economists polled by The Wall Street Journal, who were looking for the central bank to begin tapering its extraordinary bond purchases at this month's meeting.

The reason? The FOMC just hasn't seen the kind of economic growth many gurus and pundits have. "The Committee sees…growing underlying strength in the broader economy," its statement said. "However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."

"With unemployment still elevated and inflation projected to run below the Committee's longer-run objective, the Committee is continuing its highly accommodative policies," Fed chairman Ben Bernanke said at a subsequent news conference.

"I don't recall stating that we would do any particular thing at this meeting," he added in response to a reporter's question.

The Dow Jones Industrial Average and the Standard & Poor's 500 Index immediately spiked to all-time highs as Investors gobbled up stocks right after the news broke.

They were apparently stunned that, what one money manager called "hands down the single most clearly telegraphed move in the history of monetary policy," would have to await another day.

Apparently, so will the return to a more normal monetary policy, even one with extra low interest rates but without the crutch of $1 trillion a year in additional bond buying.

That could keep stocks rallying off sheer animal spirits and the adrenaline of Fed purchases. And the market already has effectively cleared two of the five hurdles I said it would face this fall.

Read Howard's piece 5 Hurdles the Markets Must Clear This Fall on MoneyShow.com.

The threat of US military action in Syria is off the table, because of the collapse of President Obama's efforts to persuade Congress to authorize the use of force and the subsequent offer by Russia to turn its ally Syria's chemicals over for inspection and destruction.

Whether you believe this deal or not, the market sure does: Crude oil prices have fallen 6% since they peaked in late August, while gold prices have dropped 7.5% over the same period, before Wednesday's rally.

Stocks have been further buoyed by Sunday's news that former Treasury Secretary Larry Summers had withdrawn his name from consideration as Bernanke's replacement.

That made Fed vice-chair Janet Yellen the odds-on favorite, even though President Obama doesn't seem to like her very much. But Wall Street does for her long experience, track record of building consensus, and especially her reputation as a dove on monetary policy, which means she might take her time tapering. Perhaps she's exerting her influence already.

NEXT: Where things get tricky

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ISM Manufacturing Growth Surprisingly Rises Much Higher

The Institute for Supply Management (ISM) has reported that manufacturing expanded in August with a reading of 55.7%. This is up by 0.3 percentage points when compared to July’s reading of 55.4%, and it is well above what Bloomberg had a consensus of 53.8%. It effectively matches the highest estimate, within one-tenth of a percent. What really stands out besides this simply beating estimates handily is that August was the highest overall PMI reading in 2013.

A reading above 50% indicates expansion in the manufacturing sector of the economy, while readings under 50% indicate that it is generally contracting. The ISM signaled growth in new orders, production and employment, while there was contraction in inventories and a slowing in supplier deliveries.

The overall economy grew for the 51st consecutive month. The ISM said:

The New Orders Index increased in August by 4.9 percentage points to 63.2 percent, and the Production Index decreased by 2.6 percentage points to 62.4 percent. The Employment Index registered 53.3 percent, a decrease of 1.1 percentage points compared to July’s reading of 54.4 percent. The Prices Index registered 54 percent, increasing 5 percentage points from July, indicating that overall raw materials prices increased when compared to last month. Comments from the panel range from slow to improving business conditions depending upon the industry.

Top Energy Stocks To Buy For 2014

Some 15 of the 18 manufacturing industries showed growth, much better than normal. The only industry reporting contraction in August is Miscellaneous Manufacturing.

FULL ISM DATA

Hot Tech Companies For 2014

When Apple (AAPL) was at $702, professional investors couldn�� love it enough. It was the most-held stock among the largest funds when they reported their holdings as of June 30, 2012.

And then, just like that, the sentiment began to change. The word on Wall Street and in the tech world was that Apple had lost its spark. It would also be very difficult for them to replicate the success they had with the iPhone and the iPad. And the stock price hit the skids.

We have been watching Apple for the past few years from the sidelines. Apple passed our first rule with their financially strong balance sheet, but the stock price never became attractive enough to be considered a value for our portfolio. That all changed on December 28, 2012.

Hot Tech Companies For 2014: SMTC Corporation(SMTX)

SMTC Corporation provides advanced electronics manufacturing services to original equipment manufacturers (OEMs) worldwide. The company?s services include product design and engineering services, printed circuit board assembly production, enclosure fabrication, systems integration, testing, and configuration services. It also provides enclosure and precision metal fabrication, cable assembly, interconnect, and engineering design services. The company offers its integrated contract manufacturing services to OEMs and technology companies primarily in the industrial, computing and networking, communications, consumer, and medical market segments. SMTC Corporation was founded in 1985 and is based in Markham, Canada.

Advisors' Opinion:

• [By Paul]

  SMTC Corp. (NASDAQ: SMTX) is a Canadian company that provides contract electronics manufacturing services, such as surface-mount and through-hole circuit board assembly, product design, testing, packaging and supply chain management. Manufacturers use products built or assembled by SMTC in their computer servers, networking devices or communications products.

  In its most recent earnings report, the company said Q3 sales rose 48% in the quarter to $65.4 million, and earnings per share were 16 cents, up from 3 cents in the same quarter of 2009. Eight of its top 10 customers increased orders as a result of strong market demand for electronics manufacturing. The addition of five new clients added $10 million to the company’s sales in the quarter. SMTX’s year-over-year gross profit more than doubled to $7.9 million, as a result. Generated cash flow reached $4.6 million and the company used much of this extra cash to pay down debt. That’s why SMTX’s debt was just $18 million at the end of the quarter, the lowest level in the company’s history.

  SMTX is in an excellent position to profit from increasing electronics and technology demand, which will continue to climb next year. Buy SMTX below $4.

Hot Tech Companies For 2014: Alliance Fiber Optic Products Inc.(AFOP)

Alliance Fiber Optic Products, Inc. engages in the design, manufacture, and marketing of a range of fiber optic components and integrated modules incorporating these components to communications equipment manufacturers and service providers in North America, Europe, and Asia. The company offers interconnect devices that are used to connect optical fibers and components; couplers and splitters that are used to divide and combine optical power; and dense wavelength division multiplexing (DWDM) devices that separate and combine multiple specific wavelengths. Its connectivity products include connectivity modules; optical connectors, adapters, and cable assemblies; fused and planar fiber optical splitters and couplers; optical tap couplers and ultra low polarization dependent loss tap couplers; amplifier wave division multiplexing (WDM) couplers; optical fixed attenuators; and fused fiber WDM couplers. The company?s optical passive products comprise filter WDMs, amplifier fil ter WDMs, DWDMs, coarse WDMs, compact coarse WDMs, add/drop DWDM filters, optical isolators, optical bypass switches, and automatic variable optical attenuators. Its products are deployed in long-haul networks that connect cities; metropolitan networks that connect areas within cities; last mile access networks that connect to individual businesses and homes; and enterprise networks within businesses. The company sells its products to communications equipment manufacturers who incorporate its products into their systems and sell them to network service providers, as well as to other component manufacturers for resale or inclusion in their products. Alliance Fiber Optic Products, Inc. was founded in 1995 and is headquartered in Sunnyvale, California.

Top Insurance Companies To Buy For 2014: Psion(PON.L)

Psion plc, through its subsidiaries, provides enterprise mobile computing solutions, integration services, and product support and maintenance services worldwide. It offers hardware and software, professional services, and customer services and support. The company?s products include hand held computers; rugged vehicle mount computers; connectivity solutions comprising access points, network management products, emulators, and utilities; and companion products, such as printers, speech solutions, imagers and scanners, and tablet PCs. It also provides professional services, including assessment and consultation, infrastructure development, project management, and installation and deployment services. In addition, the company offers reconditioned and rental products, as well as repair services. It serves airport, automotive, cold chain, field service, public sector, passenger management, port and container yard, postal and courier, retail, and warehouse and distribution ind ustries. The company sells its products through a network of third party resellers, distributors, and system integrators, as well as through its direct sales force. The company was founded in 1967 and is headquartered in London, the United Kingdom.

Hot Tech Companies For 2014: Compuware Corporation(CPWR)

Compuware Corporation provides software and Web performance solutions, professional services, and application services in the United States, Europe, and Africa. The company?s software products consist of Mainframe, Vantage, Changepoint, and Uniface product lines. Its Mainframe product line includes File-AID, Xpediter, Hiperstation, Abend-AID, and Strobe used for application analysis, testing, defect detection and remediation, fault management, file and data management, data compliance, and application performance management in the IBM z/OS environment. The company?s Vantage products provide an end-to-end approach for managing application performance by combining end user experience monitoring, business service management, and application performance monitoring; Changepoint products are management and professional services automation solutions that address the needs of executives in technology companies, enterprise IT, and professional service organizations; and Uniface i s an application development environment for building, renewing, and integrating the enterprise applications. It also offers Web application performance management services, which are marketed under the Gomez brand name, are used by enterprises to test and monitor their Web and mobile applications while in development and after deployment. In addition, the company provides professional services, such as implementation, consulting, and training services, as well as various IT services for mainframe, distributed, and mobile environments; and application services, which are marketed under the Covisint brand name that offers SaaS platform providing industry-specific solutions for organizations in the automotive, healthcare, and energy markets, as well as provides support services. The company serves IT departments of various commercial and government organizations. Compuware Corporation was founded in 1973 and is headquartered in Detroit, Michigan.

Advisors' Opinion:

• [By CRWE]

  Compuware Corporation (Nasdaq:CPWR), the technology performance company, will report results for its fiscal 2013 second quarter ��ended September 30, 2012 ��after market-close on October 23, 2012.

• [By James K. Glassman]

  James Roumell, star of the Wall Street Journal's late, lamented stock-pickers-versus-dartboard contest, tells me that "if we had to pick one idea right now, it would be Compuware (CPWR)." Its primary business is software for large, mainframe computers, but it also has several interesting subsidiaries, including Gomez, a leader in Web analytics, and Covisint, a specialist in delivering health-care information. Roumell says he is impressed with both Compuware's cash flow and its potential as a takeover candidate.

Seriously, Should HP Try to Buy Dell?

Hewlett-Packard Co. (NYSE: HPQ) is still in the beginnings of its long-term turnaround under CEO Meg Whitman. Earnings were not so bad, but there is this continued erosion in the core PC and peripherals market and that is acting as a drag. The same is true for Dell Inc. (NASDAQ: DELL), but the difference is that Michael Dell is trying to complete his acquisition of that PC giant. This would be very complicated and almost certainly would garner intense regulatory hurdles and scrutiny, but we think it is becoming a fair question to ask whether Hewlett-Packard should try to merge with arch-rival Dell.

The first thing that you have to consider is that the Department of Justice and many international and foreign regulators would try to fight or outright block this from the start. What is changing now compared to a decade ago is that PC sales trends are starting to look like cigarette sales trends in the 1990s, decline followed by more decline.

The real issue is twofold. Apple Inc. (NASDAQ: AAPL) had been competing for PC sales, but now its iPad tablets have put a major dent into those sales. Ask yourself what Dell and Hewlett-Packard are garnering in the tablet market sales. Ask the same thing about smartphones. Dell and HP are basically at zero on that front.

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What happens if two industry giants come together to say that the only way they can survive is to merge? It is a serious issue happening around PC sales, and competitors like Gateway/Acer, Lenovo, Asus and others are adding incresing competition as this becomes a commoditized cycle. HP critics might have to actually say that the Carly Fiorina acquisition of Compaq was not as bad as they always maintained. And you also cannot forget that International Business Machines Corp. (NYSE: IBM) was so tired of competing in PCs that it actually jettisoned its PC business to Lenovo in China.

Another huge hurdle is the environments, which ultimately will consolidate thousands of jobs. The reality is that Dell and HP have been rivals for so long that it is hard to imagine that the cultures could coexist. Management teams might poison the well. That being said, imagine all of the global supply chains that could be consolidated if the two U.S.-based PC giants were suddenly just one. They might even be able to maintain the two different brands for some time.

Lastly, this might leave Microsoft Corp. (NASDAQ: MSFT) and Intel Corp. (NASDAQ: INTC) in a winner-take-all or in a serious lurch. Microsoft is currently a part of the Dell deal in financing, and there has been some speculation that ultimately Microsoft may have a full interest in buying Dell. This is problematic as well, but it has been discussed by financial media.

We are not trying to suggest that Meg Whitman would really try to do this deal. We are not even suggesting that Michael Dell would eat the crow here and admit for a second that it would be the right merger at all. In fact, we think the regulatory bodies would fight the merger so hard that the companies likely would never even get close to a closing date. The problem is that HP and Dell are both facing pressures that may be permanent and that were not present in the 1990s and 2000s.

There is a reason these two companies have valuations that are so paltry. Dell is going to be acquired for about 12 times next year’s earnings estimates while HP’s 13% stock drop after earnings has it valued at a mere six times next year’s expected earnings.

No one believes in these companies having a great future. Maybe something radical like this will make more sense if we are still talking about the same erosions and pressures in 2016 or beyond.

Are First Solar Investors Playing With Fire?

With shares of First Solar (NASDAQ:FSLR) trading at around $55.01, is FSLR an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

First Solar is one of the most interesting stories on the planet. There are many arguments that can be made from the bullish and bearish sides. Prior to getting to positives and negatives, let's see what the analysts think. Most of them seem to be on the fence, but there are more bears than bulls: 2 Buy, 17 Hold, 8 Sell. It should also be noted that there is a 33.4 percent short position on the stock, which indicates that there are many non-believers.

As far as positives go, last quarter's revenue increased year-over-year, margins are solid, cash flow is strong, and increased solar modular sales helped First Solar swing to a profit for the quarter compared to a loss for the same quarter last year. First Solar has now delivered a profit four quarters in a row. In addition to that, operating expenses were down to $107.1 million from $533 million. FY2013 guidance is for revenue between $3.8 billion and $4.0 billion, which would indicate continued growth. First Solar also commented that the second half of the year should be stronger than the first half of the year.

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One big negative is that competitors are making cheaper solar panels due to a decline in the price of polysilicon. Another potential negative is that revenue has declined on a sequential basis. First Solar will layoff 150 North American employees in the coming weeks. This is after laying off 2,000 employees last year. Factory expansions have also been canceled. It's evident that First Solar is most focused on the bottom line. This isn't necessarily a negative for shareholders, but it does indicate that growth might not come as easy as many people think.

When it comes to company culture, it's average at First Solar. According to Glassdoor.com, employees have rated their employer a 3.3 of 5, and 52 percent of employees would recommend the company to a friend. An above average 71 percent of employees approve of CEO James A. Hughes.

The chart below compared fundamentals for First Solar, SunPower Corporation (NASDAQ:SPWR), and SolarCity Corp. (SCTY).

	FSLR	SPWR	SCTY
Trailing P/E	11.33	N/A	N/A
Forward P/E	16.02	25.64	N/A
Profit Margin	11.37%	-12.98%	-73.19%
ROE	11.98%	-31.00%	-32.92%
Operating Cash Flow	844.80M	316.47M	146.12M
Dividend Yield	N/A	N/A	N/A
Short Position	33.40%	29.90%	16.60%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

The industry is on fire right now. Despite First Solar’s impressive run, it has actually underperformed its peers.

	1 Month	Year-To-Date	1 Year	3 Year
FSLR	41.08%	74.20%	293.5%	-51.14%
SPWR	118.1%	293.6%	335.4%	95.75%
SCTY	146.9%	321.5%	11.76%	11.76%

At $55.01, First Solar is trading well above its averages.

50-Day SMA	40.60
200-Day SMA	31.91

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E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio is stronger than the industry average of 0.40.

	Debt-To-Equity	Cash	Long-Term Debt
FSLR	0.15	1.01B	562.66M
SPWR	0.80	505.59M	754.22M
SCTY	0.90	127.29M	282.15M

E = Earnings Have Weakened

Earnings have weakened on an annual basis, but revenue has consistently improved on an annual basis.

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	1,246	2,066	2,564	2,766	3,369
Diluted EPS ($)	4.24	7.53	7.68	-0.45	-1.11

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When we look at the last quarter on a year-over-year basis, we see a substantial increase in revenue and earnings. However, there were significant declines in revenue and earnings on a sequential basis.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in millions	497.05	957.33	839.15	1,075.01	755.21
Diluted EPS ($)	-5.20	1.27	1.00	1.74	0.66

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

There is an oversupply of solar panels, a pricing war exists, and solar panels are still too expensive. If alternative energy options become cheaper, then solar energy will be pushed to the side. Many people feel as though solar will take over and it will be the only option, but that's not the case. This will be a long and hard-fought battle for the industry. And competitors from other industries will always be present.

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Conclusion

The stock has serious momentum right now, and the trend is always your friend – until it stabs you in the back. In the near term, First Solar is an OUTPERFORM. There could be a lot more room to run. However, there will likely be a steep correction in the stock price over the next one to two years due to declining demand.

A Great Model And Growing Markets Powering Copa Holdings

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This year has turned into a challenging one for emerging market investors, as China remains weak (at least relatively so), Brazil and Mexico seem to be turning in the wrong direction, and multiple Southeast Asian markets sell off on macroeconomic worries. Even so, business continues on at Copa Holdings (NYSE:CPA), where a strong and savvy business plan has led this Latin American airline to not only strong margins and good growth, but solid prospects for the coming years.

An Old Model with New Profitability
Copa operates a familiar, tried-and-true hub-and-spoke model, serving 65 destinations in 29 countries. A large percentage of the company's business goes through Panama City, where the company has more than 85% market share, and this is a logical geographical hub for connecting flights from/to North America, Central America, and South America.

What's a little unusual about Copa is that so many of its routes are thinly traveled. Roughly 75% of the company's routes average fewer than 20 passengers per day. You might think that serving such tiny markets would be terrible for the financials, but Copa does a good job of matching its capacity to its demand. It does such a good job, in fact, that the company's operating margins are the highest in the world among publicly-traded airlines – well ahead of Latin American comparables such as LATAM Airlines (NYSE:LFL), GOL Linhas (NYSE:GOL), not to mention American operators like Southwest (NYSE:LUV) and high-margin carriers like Japan Airlines and Turkish Airlines.

Not only are those routes profitable, but that thin passenger traffic keeps rivals at bay. The demand and opportunity for direct routes is relatively limited across Central and South America, leaving the company with relatively low risks on those routes.

Expansion and Competition
Copa's main challenge will be managing its future growth. The company has expanded its operations in Colombia, bringing it into competition more often with Avianca, and it is likely that LATAM Airlines, GOL, and Aeromex will factor more into the company's competitive picture going forward. As investors have seen over and over again in the U.S. airline sector, competition is rarely ever a good thing, and although Copa's model seems straightforward, it remains to be seen how far the company can extend before competition starts chewing into that robust operating margin.

Still, Copa can ride a generally rising tide. As the economies of countries like Panama and Colombia grow, air travel demand is also increasing. As individual incomes and wealth improve, air travel demand increases and so too do the expectations of those travelers – service quality, safety reputations, and so on make more and more of a difference, and that should work in favor of well-established larger carriers like Copa and LATAM Airlines. To frame the argument a little more definitively, while Latin America has about 9% of the world's population, IATA statistics indicate that it accounts for only 5% of global air passenger volume – even just closing half of that gap would represent a significant increase in the number of passengers for airlines in the region.

Strong Loads, but Fuel Is Always a Risk
About a month ago, Copa reported second quarter earnings that saw revenue rise 15% despite a 2.5% decline in revenue per available seat mile that was driven by lower yields (down almost 5%). The load factor was pretty good, though, as it rose 1.7% to over 75%. As I said before, one of the positives to the Copa model is that they make sure they don't fly empty seats.

On the profits side, operating income jumped almost 35% as fuel costs declined more than 7% and ex-fuel unit costs declined nearly 3%. That speaks well to the company's cost focus, though fuel prices are an ongoing risk for every airline operator.

The Bottom Line
Between a strong operating model and rising demand, I believe Copa is in a good place for the long-term.

My only real issue is valuation, not surprising given the stock's 70% rise over the past 12 months. I suspect that my long-term revenue growth estimate of 8% may be on the low side, given the revenue growth rates seen at Southwest and Alaska Airlines (NYSE:ALK) over the past decade (more than 12% and 7%, respectively), but that revenue growth estimate and cash flow growth of roughly 17% suggest a fair value of around $140. Bump the revenue growth estimate for the next decade to 12% and the price target soars to $185, but investors may want to note that even the very bullish Wall Street analysts don't project that much growth and it may prove hard to maintain mid-teens free cash flow margins with the capacity additions that sort of growth would need.

Disclosures: As of this writing, the author has no financial positions in any companies mentioned.

More Retirement Savers Turning to Professional Advice: Vanguard

The total number of participants invested in a professionally managed allocation has more than doubled from 17% at the end of 2007, according to Vanguard’s recently released How America Saves 2013 report.

By 2017, Vanguard estimates that 55% of all participants will be entirely invested in a professionally managed investment option.

The annual report notes that in 2012, 36% of all participants in 401(k) retirement plans at Vanguard invested their plan assets in a professionally managed investment option, “dramatically improving their portfolio diversification and potentially making them more financially prepared for retirement compared with participants making investment choices on their own.”

Jean Young, co-author of How America Saves, said in a statement that “the number of participants completely turning their portfolio construction over to a professional, or obtaining advice from professionals, is an important trend in the potential future financial security of retirees. It represents a shift in responsibility for investment decision-making away from participants—many of whom may be inexperienced investors—to investment and advice programs that have been vetted by employers as part of their fiduciary obligations.”

The study also notes that 27% of all participants in 2012 were invested in a single target-date fund, 6% held a single traditional balanced fund, and 3% used a managed account advisory program. Also, 14% of participants who were offered an investment advice service through their plan adopted one.

The report also points out that average plan account balances rose by 10% in 2012, to $86,212, which reflects both “the effect of both ongoing contributions and market returns,” Vanguard says.

For participants with a balance at both the end of 2007 and the end of 2012—the worst five-year period in the markets in most people’s lifetimes—the median account balance grew 67% for the same reasons, Vanguard notes. “Nearly 90% of participants in this group saw their balances rise during this time.”

Steve Utkus, director of the Vanguard Center for Retirement Research, and co-author of How America Saves, says that “Some may look solely at plan account balances and underestimate the retirement readiness of Americans, saying that most of us still aren’t financially prepared for retirement.” However, he said, “when you look at the data comprehensively, the fact remains that many Americans are doing a good job accumulating private savings to supplement Social Security in retirement.”

Indeed, Vanguard says that many participants are “strong savers” in their plan. One-fifth of them saved 10% or more, 11% saved the maximum allowed, and 15% of participants over age 50 made catch-up contributions in 2012. “Taking into account both contributions made by participants and those made by employers to participants’ accounts, the average total savings rate was 10.5% in 2012,” the report notes.