Archives for April 2010

April 2010 - Page 5 of 10 - Money Morning - Only the News You Can Profit From

Decline in U.S. Natural Gas Imports is Causing Panic in Leading Exporting Nations

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The world 's biggest natural gas exporters met today (Monday) in Algeria and agreed to index gas prices to oil as shrinking U.S. natural gas imports are causing a global supply glut.

"All ministers agreed and supported that we continue our efforts to achieve indexing gas to oil," said Russian Energy Minister Sergei Shmatko.

The Gas Exporting Countries Forum (GECF) members include Russia, Iran, Qatar and eight other nations that hold two-thirds of the world 's gas reserves. They 've watched gas prices fall nearly 50% in the past two years. Current gas prices of $4 per million British thermal unit (BTU) are about 20 times lower than oil, but are usually around 10 times lower than oil.

U.S. natural gas prices have fallen 28% since December as an increase in the U.S. shale rock gas supply has reduced the need for U.S. natural gas imports. Shale rock gas is retrieved from tight rock formations and its U.S. boom led the country to extract more gas than Russia last year for the first time since 2001.

Russia 's energy giant Gazprom has a five-year plan to take 10% of the U.S. natural gas market share, but U.S. shale gas exploration has put a damper on that goal.

"The influence of shale gas raises the prospect of change on gas markets," Russian Natural Resources Minister Yuri Trutnev told Reuters. "We have a problem with shale gas. This is not only my position, but the position of Gazprom as well."

As the United States becomes a less reliable consumer, gas suppliers aren 't having much luck replacing the lost business.

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Buy, Sell or Hold: Is Pfizer Inc. (NYSE: PFE) the Right Prescription for Your Portfolio?

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In 2008, the journal Health Affairs reported that 25% of China's adult population  – about 375 million people – was "overweight" or "obese."

That number is expected to double by 2028, and obesity is just one health issue in a densely polluted nation that finds itself battling a growing list of ailments.

So it's no surprise that China's pharmaceutical market has been surging at a compounded annual growth rate (CAGR) of more than 16% — the fastest pace in the world, according to research by market-intelligence leader IMS Health Inc. (NYSE: RX). IMS Health estimates that by 2020 the Chinese market for pharmaceuticals will be $110 billion, second only to the United States.

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How the Goldman Sachs Fraud Case Could Accelerate Wall Street Reform

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When the U.S. Securities and Exchange Commission announced Friday that it had filed a fraud action against Goldman Sachs Group Inc. (NYSE: GS), the news hit the financial markets like a carefully targeted bomb.

The Goldman Sachs fraud case, which relates to the investment bank's subprime-mortgage business, caused the financial giant's shares to nosedive 12.8%. The fallout spread to the broader markets, too, causing the Dow Jones Industrial Average to drop 1.1% and the Standard & Poor's 500 Index to skid 1.6%.

That reaction wasn't overblown.

Depending on how rough the SEC wants to play it, the case has the potential to shut down the cartel known as Wall Street. It could even jump-start the kind of sweeping overhaul that legal or regulatory reformists have so far failed to launch.

To see how the government fraud case against Goldman Sachs could force Wall Street to reform, please read on...

Here's Why U.S. Stocks May be Headed Higher

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U.S. stocks were back up to their old tricks last week, as volatility waned and financial, industrial and retail stocks waxed. It was a week in which risk was in fashion – until Friday, when the U.S. Securities and Exchange Commission (SEC) hammered Goldman Sachs Group Inc. (NYSE: GS) with fraud charges related to the subprime-mortgage crisis. With that, playing defense was considered offensive.

Leading the way forward were companies that are the ultimate in beta and hopefulness – such as beaten-down bond insurer Ambac Financial Group Inc. (NYSE: ABK), which rose 60%, beaten-down car parts maker American Axle & Manufacturing Holdings Inc. (NYSE: AXL), up 10%, beaten-up retailer Tuesday Morning Corp. (Nasdaq: TUES), up 24%; and beaten shoemaker Crocs (Nasdaq: CROX), up 20%. We're not talking, here, about investors who last year bought the shares of companies that were left for dead; these stocks might actually be worth something in an economic turnaround.

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With a 183% Gain on Ford Motor Co.'s Shares, This Money Morning Stock Pick Was Truly a "Better Idea"

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In late 1968, one of America's "Big Three" automakers adopted the slogan: "Ford has a better idea."

In July 2008, in his weekly "Buy, Sell or Hold" column, Money Morning's Horacio Marquezhad a better idea of his own: Buy Ford.

Investors who took heed of that advice have done quite well – Ford Motor Co. (NYSE: F) shares have soared more than 180% since they were recommended on July 28, 2008, at $4.75 a share. Ford's stock closed Thursday at $13.45 – for a gain of 183%.

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Answer Our Question of the Week: Is U.S. Employment Finally Improving?

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The U.S. unemployment rate held steady at 9.7% for the third straight month in March as the world's largest economy added jobs at the fastest pace in three years – the most-certain sign yet that the worst job market in a generation is finally improving, economists say.

"This recovery is for real," Chris Rupkey, an economist at The Bank of Tokyo
Mitsubishi UFJ Ltd., said in a statement.

Still, there are causes for concern.

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How to Profit As Copper Becomes the "New Gold"

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Copper is a key metal that keeps the world economy humming. Used in art and industry, copper consumption has grown by 4% a year since 1900. But, for some reason, everyone in the world still prefers gold. Read this report to discover why copper may become the "new gold" for investors. And, find out the best ways to profit from copper's rise.

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SEC Charges Goldman Sachs With Fraud, Sending Its Stock, Reputation Tumbling

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The Securities and Exchange Commission (SEC) on Friday charged Goldman Sachs Group, Inc. (NYSE: GS) with securities fraud in a civil suit, claiming the financial giant defrauded investors with a mortgage-related investment that was intended to fail.

The SEC accused Goldman Sachs of failing to disclose vital information on a synthetic collateralized debt obligation (CDO) that was peddled to clients while the bank bet against its success, knowing the bank was likely to come out the winner. The SEC says Goldman used hedge fund Paulson & Co. to pick particularly risky securities for the product with a higher chance of collapsing.

The whole financial sector slid after the SEC's announcement. Goldman's stock fell over 12% Friday to close at $160.70 a share.

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Money Morning Mailbag: Can Anyone Fix the Fiscal Mess?

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As opinions continue to pour in to the Money Morning mailbag, something is becoming quite clear: People are getting fed up with the national and global "fiscal mess." The pessimists outweigh the optimists and are tired of standing idly by watching ineffective financial policies.

As the United States continues to spar with China on currency issues and Greece has yet to make substantial strides toward recovery, U.S. taxpayers and investors fear that our country is headed for worse economic times. Despite the fact there's a financial reform bill on the horizon, there is overwhelming doubt that the government will implement as much of a financial system overhaul that's needed. 

Here are some of the more passionate views on the government mistakes that caused a U.S. financial quagmire, threatening the country's future stability.

Regional Banks Are Bouncing Back - And You Can Profit

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Our contrarian thesis in regional bank stocks has played out well in the past few weeks, as other investors are beginning to see that these companies are under-appreciated, under-priced, over-hated and over-shorted. 

The iShares Regional Banks (NYSE: IAT) ripped higher by more than 8% in the past week alone.  And I still think that many of these stocks have a long way to go, since fair value in some cases is 2x, 3x, and even 5x higher than current levels.

Super-regional southern bank Regions Financial Corp. (NYSE: RF), for instance, traded as high as $32.50 in 2007, then fell as low as $2.27 in 2009 – a decline of 93% in just two years. RF's recovery has gotten off to a much slower start than peers like U.S. Bancorp (NYSE: USB) because it made a lot more iffy loans along the Gulf coast. But over the past six months, it has become clear that super-low interest rates will allow RF to build enough reserve against losses. Additionally, other distressed-debt firms are stepping up to take problem mortgages off their hands. 

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