Archives for December 2009

December 2009 - Page 2 of 10 - Money Morning - Only the News You Can Profit From

Why Gold Will be the "Greatest Trade Ever"

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Forget about all the forecasts being made for 2010. Here's my prediction for 2015: An entirely new name – John A. Paulson – will grace the coveted top of the annual Forbes billionaires list.

And the gap between Paulson and the runner-up billionaire will be huge.

Everyone knows that Bill Gates and Warren Buffet are America's – and the world's – two richest men. But the financial crisis of 2008 and 2009 was not kind to either of them, eradicating $17 billion of their combined net worth.

On that famed list, at No. 33, is where you'll find Paulson today.  The hedge-fund manager's financial acumen led to what is now being called the "the greatest trade ever." By shorting the subprime mortgage market, Paulson & Co. Inc. generated a $15 billion gain. 

Paulson's personal net worth of $6 billion is impressive in its own right. But over the next several years, I believe that Paulson's trading savvy will vault him into the top spot.

And the vehicle that will take him there is gold.

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The Real Story Behind Solar Energy in 2010

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By the time 2009 is in the books, the record will show that solar energy stocks endured a tough year. That's hardly a surprise, given that so many Wall Street analysts (yours truly not among them) lambasted the sector for much of the year.

Analysts also expect the carnage to continue into 2010, and are predicting losses for as many as half of the world's solar companies.

The "thought process" of a Wall Street analyst – and I use that title loosely – goes something like this:

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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.

Nikkei Hits Three-Month High; Obama to Small Banks: Step Up the Lending; Tax Credit Fuels 7.4% Gain in November Home Sales; OPEC Leaves Oil Output Unchanged; WSJ: Apple Approaches CBS, Disney About Internet Television Service; Report: Computer Hackers Stole Millions of Dollars from Citi; Federal Court Upholds Ruling on Patent Infringement by Microsoft; Buffett Adds Comcast COO to Berkshire Board

A weaker yen and strong technology stocks helped Japan's Nikkei 225 finish 1.9% higher at 10,378.03 yesterday (Tuesday), the highest level in three months. Most shares of tech companies gained after Barclays Capital (NYSE ADR: BCS) upgraded its rating on Intel Corp. (Nasdaq: INTC) from overweight to market weight on Monday. "The U.S. dollar strength is undoubtedly helping out the Nikkei," Cameron Peacock, an analyst at IG Markets told MarketWatch.com. "With Japan being such an export-focused economy, the weaker yen is a real positive for Japanese companies' earnings."

The White House will seek to remove bureaucratic barriers that prevent community banks from lending so they can help businesses seize "enormous opportunities" for growth, U.S. President Barack Obama told the heads of a dozen small lenders yesterday (Tuesday). The president encouraged the bankers to keep the nascent recovery of the U.S. economy going by increasing their lending to small businesses and supporting the financial reform measures being proposed on Capitol Hill.

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What the Government Isn't Telling You About the New Healthcare Bill

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In a vote that was held at 1 a.m. Monday, the Senate approved a procedural measure that makes it likely a version of the national healthcare bill will make it into law.

In fact, by taking advantage of an obscure rule that allowed lawmakers to start their day and vote on the measure well before dawn, Senate leaders were able to approve the measure and keep alive the possibility that the healthcare bill will be passed by Christmas.

But if you study the Senate bill carefully – no matter what your political persuasion may be – you have to wonder why they even bothered.

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Corporate Share-Buyback Programs Will Accelerate in 2010, Bringing More Profit Opportunity

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The number of companies buying back their own stock has surged since slipping to the lowest level in more than a decade in the second quarter of 2009. That trend is likely to accelerate in 2010, which is a bullish sign for both the economy and stock market.

Stock buybacks among companies in the Standard & Poor's 500 Index totaled $34.8 billion in the third quarter of 2009, according to Standard & Poor's Financial Services LLC. That's a 43.8% increase from $24.2 billion spent on share buybacks in the second quarter, which was the smallest amount spent since early 1998.

In spite of the bounce, however, third-quarter share buyback totals represented a 61.2% decline from $89.7 billion in the same period a year ago, and a 79.7% drop from the record $172.0 billion corporations spent in the third quarter of 2007. But for many analysts the turnaround is a major milestone for the economic recovery.

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GDP Revised Lower For Third Quarter, Sets Stage For Slow Growth in 2010

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The U.S. economy expanded at a slower rate than expected in the third quarter, but reductions in corporate spending and inventories have set the stage for continued growth of gross domestic product (GDP) in 2010.

GDP, a broad measure of economic activity, rose at a 2.2% annual rate from July through September, the Commerce Department reported yesterday (Tuesday), compared to a 2.8% gain in its previous estimate.

The new figure was below the 2.8% median estimate of 73 economists in a Bloomberg News survey, and significantly below the government's initial estimate of 3.5%.  The GDP report is the third and final for the quarter.

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How to Profit From the Oil-Price Spike of 2010

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Oil prices staged a remarkable rally this year on the back of a weak dollar and a nascent economic recovery. In 2010, it's likely that these same factors will combine with an increase in global energy demand to push oil prices back up over $100 a barrel.

With stockpiles still high and energy demand rebounding sluggishly, most forecasts are calling for the "black gold" to edge up into the low-triple-digit price range. That's 40% higher than where oil is trading right now – but is still well below the record high of nearly $150 a barrel that was established in 2008.

Money Morning Chief Investment Strategist Keith Fitz-Gerald is even more bullish. He believes that a price of $100 a barrel is "easily attainable" and says that some sort of unforeseen market shock could cause crude oil to spike as high as $150 barrel by the end of 2010.

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Four Ways to Profit From the World's Shrewdest Government

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Three powerful investment trends will separate the winners from the losers in the new year.

  • Global commodities prices will continue to move higher.
  • Emerging economies will outgrow their richer, more-mature counterparts.
  • And the countries that were stingy with their monetary and fiscal bailout plans will now reap the benefits; they will outpace the countries that slashed their interest rates to zero and allowed their deficits to soar.

One country is poised to profit from all three of those trends. What's more, the political worries that always seem to diminish its allure to investors are poised to recede, making this emerging southern hemisphere heavyweight one of the premiere profit opportunities for 2010.

I'm talking about Chile.

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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.

GM Hires Former Microsoft CFO; French Drug Maker Buys U.S. OTC Firm; Ford Looks to Reduce Workforce by 41,000; Galleon's Rajaratnam Pleads Innocent; China Backs Out of Investment In U.S. Gold Miner; Gold Falls Amid Interest-Rate Speculation; Recovery Hopes Send Treasury Yield Curve to Record High

  • General Motors Co. hired Microsoft Corp. (Nasdaq: MSFT) Chief Financial Officer Chris Liddell to the same position, GM said yesterday (Monday). Liddell replaces Ray Young, who will be transferred to China as the automaker's vice president of international operations. "Chris will lead our financial and accounting operations on a global basis and will report directly to me," said GM Chairman and Interim Chief Executive Officer Ed Whitacre."We're also looking to his experience and insights in corporate strategy as a member of the senior leadership team in helping our restructuring efforts." Liddell, who already announced his Dec. 31 departure from Microsoft, will begin at GM sometime next month.
  • French drug maker Sanofi-Aventis SA (NYSE ADR: SNY) has agreed to buy U.S. consumer healthcare group Chattem Inc. (Nasdaq: CHTT) in a deal valued at roughly $1.9 billion in cash, or $93.50 per share, a premium of 34% to Chattem's Friday closing price. The deal should give Sanofi a presence in the over-the-counter U.S. drug market. "It looks for me an interesting deal to generate a lot of synergies," Landesbank Baden- Wü rttemberg analyst Timo Kuerschner, told Reuters.

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