Archives for March 2011

March 2011 - Page 3 of 10 - Money Morning - Only the News You Can Profit From

Investing in Steel: Nine Ways to Strengthen Your Portfolio

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Global steel producers were prolific in 2010, with worldwide output reaching a record 1,414 million metric tons (mmt). According to the World Steel Association (WSA), that represented an average production increase of more than 15% from 2009, when the poor global economy had pushed steel demand down to levels not seen since before the turn of the century.

And, based on recent economic and industry forecasts, both production and demand are expected to continue rising for all of 2011 – which bodes well for investors looking to turn hard metals into solid profits.

The WSA forecasts finished steel consumption in 2011 will rise 5.3% to nearly 1,340 mmt – in spite of the fact that steel prices have reached near-record levels in recent months, climbing in January to more than $800 per ton of hot-rolled coil steel, the industry's base product unit.

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Japan Disaster Update: Beware of Global Insurance Stocks

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The catastrophe-modeling company AIR Worldwide Corp. has estimated that insurance company losses from the Japanese earthquake and tsunami could reach $35 billion.

That has insurance analysts feeling bullish about insurance stocks: In their view, losses are good because it enables the insurers to ratchet up their premiums.

Personally, I don't see it that way. While I like life-insurance and domestic-insurance companies as investments for ordinary investors, I think the big-ticket insurance market is too opaque, too insider dominated, and much too unlikely to deliver decent returns to its outside shareholders.

In short, here in the aftermath of the deadly Japan disaster, investors need to beware of global insurance stocks.

To understand the troubles at hand, please read on...

Gasoline Price Outlook: An Epitaph For Sam the Service Station Man

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I am a great believer in the American entrepreneurial spirit. In fact, the U.S. economy stands or falls on our ability to provide enough space to allow small folks to have big-time dreams.

However, when times get difficult, some little folks end up under the bus – along with their dreams.

To understand what I mean, let's take a look at my friend Sam.

Many of you may remember Sam, the proprietor of an out-of-the-way rural service station situated outside of Pittsburgh. I introduced him to Money Morning readers last summer in an essay: Gasoline-Price Forecasting: What Sam the Gas Station Owner Knows That We Don't.

I've known Sam for years.

So I was stunned to discover that he's throwing in the towel.

To understand what this means for gasoline prices, please click here...

Investors Share Biggest Global and U.S. Economic Concerns

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Earthquakes and nuclear meltdowns in Japan, uprisings in the Middle East, scary job prospects, a gargantuan federal deficit, zooming gasoline prices, and soaring food prices … the list of economic challenges facing the world is long and just seems to get longer.

It's tough to remember the last time U.S. consumers and investors faced so much uncertainty. But the worst thing is that there's no clear end in sight.

No wonder consumer confidence remains shaky, at best.

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Corporate Tax Holiday Could Put $1.2 Trillion in Shareholders' Pockets

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Lawmakers in Washington are mulling a one-time corporate tax holiday on foreign earnings that could provide a bonanza to many U.S. multinational corporations.

If enacted, the holiday would allow U.S. corporations to bring home $1.2 trillion in profits they have stashed overseas at a much lower rate – about 5% as compared to the usual 35%.

Many large multinationals, particularly those in the health and tech sectors, say the tax holiday would be the equivalent of a "free" stimulus package: the government would recover tax revenue while the companies would have more money to invest in job creation, factories, equipment, and research and development.

Of course, corporations fed most of the booty from a 2004 tax holiday back to shareholders in the form of dividends and stock buybacks.

But that's not what the multinationals want Washington to hear. They've formed a coalition to lobby the job creation/investment angle on Capitol Hill while using the weak economy as an ally.

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How Are You Dealing With High Food and Fuel Prices?

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There's no question the staggering rise in food and fuel prices will eat away at U.S. households' income in coming months.

But there is the question of how U.S. consumers will cope with those increased costs – especially when so many are already worried about their jobs, savings, investments and retirement.

With gas prices nearing $4.00 a gallon, and the consumer price index (CPI) in February for food-at-home up 2.8% from 2010, U.S. consumers are facing an economic double whammy. As food and fuel expenses make up a larger slice of household budgets, U.S. consumers have to evaluate just which goods are worth buying.

Montana resident Myriam Garcia some days has to choose between filling up her truck with gas or buying food.

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AT&T Inc. (NYSE: T) Shoots for U.S. Wireless Carrier Top Spot with T-Mobile Deal

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AT&T Inc. (NYSE: T) on Sunday announced it plans to buy smaller rival T-Mobile USA for $39 billion, which would create the largest U.S. wireless carrier and a formidable competitor for current industry leader Verizon Wireless (NYSE: VZ).

AT&T's offer to buy T-Mobile from Deutsche Telekom AG (PINK ADR: DTEGY) is the industry's biggest acquisition since 2004 and combines the industry's second and fourth largest providers. It would add 34 million customers to AT&T's 96 million, giving the newly formed company 43% of the U.S. wireless carrier market and surpassing Verizon's 34% market share.

Sprint Nextel Corp. (NYSE: S), the third biggest U.S. wireless provider, was rumored to be in talks with Deutsche Telekom about purchasing T-Mobile USA. Sprint has struggled in the wireless market behind Verizon and AT&T. The new deal would give AT&T twice as many customers as Sprint.

AT&T not only wants T-Mobile's subscriber base, but also needs the additional spectrum, or airwaves, to expand its network and serve surging demand for video and data content delivery. The new company will also save an estimated $3 billion annually when it eliminates overlapping operations like retail outlets and advertising spending.

"From AT&T's perspective, this is a huge win," independent analyst Chetan Sharma told The New York Times. "It's about being No. 1 and having economy of scale."

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Pay to Play: What China's Rising Wages Mean for Investors

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There's a sea change underway in China's economy – one that's evident in soaring prices, shrinking trade surpluses, and higher property values. And it's being driven by higher wages for workers that for decades have been grossly underpaid.

From the country's fast-growing urban centers to its frontier countryside, wages are rising rapidly across China.

China's 31 provinces boosted minimum wages by an average of 24% last year, according to Yin Weimin, China's minister of human resources and social security. Meanwhile, the average monthly income for migrant workers rose 13% to $256.89 (1,690 yuan).

Six provinces already have raised minimum wages this year, and labor shortages and government mandates will likely compel the remaining 25 to follow suit.

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