Archives for November 2009

November 2009 - Page 7 of 10 - Money Morning - Only the News You Can Profit From

Kraft Launches Hostile Bid for Cadbury

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Kraft Foods Inc. (NYSE: KFT) yesterday (Monday) refused to sweeten its $16.4 billion offer for Cadbury PLC (ADR NYSE: CDY).

Instead, the North American food giant repeated the terms of its original offer, which Cadbury rejected two months ago. Kraft will now put its bid directly to Cadbury shareholders, setting the stage for a battle that could last months.

Cadbury swiftly rejected the bid, saying the offer is now worth less than the initial proposal, which had already undervalued the company. Kraft's bid is now worth 4% less than the original offer, and 6% below the current stock price, because Kraft shares have lost some of their value.

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U.S. Companies Finding More Consistent Growth Overseas

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McDonalds Corp. (NYSE: MCD) yesterday (Monday) became the latest in a long line of U.S. companies to find growth overseas as domestic growth continues to falter. Although there are some signs show the United States is headed toward a recovery, rising unemployment is weighing on consumers, who continue to cut back on discretionary spending. The […]

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Buy, Sell or Hold: Buffett's Berkshire Hathaway Inc. Has Been Masterfully Managed and Will Continue to Benefit Investors

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Last year, on Aug 25, I recommended readers start buying shares of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) in incremental amounts until the end of 2008.  I emphasized that Berkshire should be a core, long-term holding in investors’ portfolios and not a stock to trade in and out off.   Today, the stock is about 11% […]

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Commodities-Rich Australia Leads the West's Recovery

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The Reserve Bank of Australia (RBA) last month became the first Western economy to raise its key interest rate since the financial crisis began almost two years ago. It proceeded to raise the rate for a second time in a month last week, just before it published its quarterly report on Friday, which says bottlenecks […]

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Investors Needn't Fear a Double-Dip Recession

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A new report contains some very good news for investors: Double-dip recessions are very rare. That means that a drop back into recessionary conditions looks less and less likely even as unemployment creeps higher and has crossed the 10% threshold for the first time in a quarter century. After reviewing U.S. economic history all the […]

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Western Oil Majors Reluctantly Return to Iraq

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Exxon Mobil Corp. (NYSE: XOM) and Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B) on Thursday won the right to develop Iraq's West Qurna-1 oilfield.

The agreement is the third such deal this year, which means Iraqi oil production could increase at a faster pace than previously expected and potentially lead to a drop in oil prices.

Iraqi officials earlier this week finalized an agreement with BP PLC (NYSE ADR: BP) and China National Petroleum Corp. (CNPC). Policymakers also reached an initial agreement with a consortium led by Italy's Eni SpA (NYSE ADR: E) that will develop the Zubair oil field.

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Investment News Briefs

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With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

Retail Sales Slump; U.K. Government Fines UBS $13.3 Million; Exxon and Shell Sign Iraq Oil Contract; BOE Expands Quantitative Easing; FBI Arrests 14 in Galleon Probe; Petrobras Finds Gas in Peru; Shares of Ancestry.com Soar on IPO; Mortgage Rates Drop Below 5%

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Is the Government Rehabilitating the Economy or Delaying the Inevitable?

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While all the talk at present is about economic corners turned and markets charging ahead, no one is paying much notice to an American economy that's deteriorating right before our eyes.

These myopic commentators seem to be simply moving past the now almost-universally held conclusion that, before the crash of 2008, our economy was on an unsustainable course. If these imbalances had been corrected, then perhaps I, too, would be joining in the euphoria. But evidence abounds that we have not veered at all from that dangerous path.

The U.S. Bureau of Economic Analysis just reported that consumer spending as a percentage of U.S. gross domestic product (GDP) has risen to 71%, a post-World War II record. This level is notably higher than other wealthy industrialized countries, and vastly higher than the levels sustained by China and other emerging economies. At the same time, our industrial output is contracting, our trade deficit is expanding once again (after contracting earlier in the year), and our savings rate is plummeting (after an early year surge).

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Has Asia Dethroned Detroit as the Auto Sector Leader?

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Back in May I recommended that readers should buy shares in Ford Motor Co. (NYSE: F) on the grounds that the U.S. carmaker would gain market share from the bankrupt General Motors Corp. (OTC: MTLQQ) and Chrysler Group LLC. Ford’s third-quarter profit and healthy October sales growth show I called that one right. One doesn’t like to blow one’s own trumpet excessively, but if you’d followed my advice in May, you would today be sitting on a profit of nearly 50%.

However, while I admire Ford for its brilliant strategic decision not to cave in and accept government-sponsored bankruptcy, and wish it well in its future battles with GM and Chrysler, I’m not sure the company that Henry founded represents the future for the global automobile industry.

More likely – while Chrysler will become a money-pit that is closed only by political means, and GM will limp on as a smaller and marginally profitable U.S. and European producer – Ford will slim down to become a specialty producer of cars tailored to the tastes and needs of the U.S. market. It’s well known that the auto preferences of U.S. consumers differ greatly from those of their European counterparts.

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