Global Markets

Obama Gains Ground on China Trade Policies as Hu Refuses to Rule Out Floating Yuan

President Barack Obama pushed against potentially unfair trade policies on two fronts in Monday's meeting with Chinese President Hu Jintao and appeared to win a small victory when Hu didn't completely rule out letting the yuan appreciate.

After Obama urged China to move toward a "more market-oriented exchange rate," Hu told him that his country wouldn't yield to "external pressure" in deciding when to adjust the yuan, Bloomberg News reported.

Obama also expressed "his concern" about some "market- access barriers in China," Jeff Bader, senior director for Asia at the National Security Council, told reporters after the meeting, which was held in conjunction with a gathering of world leaders in Washington to discuss nuclear security.

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New $61 Billion Aid Package Is No Cure For Greece's Long Term Ills

After an extraordinary teleconference on Sunday, Eurozone members offered Greece a rescue package worth as much as $61 billion (45 billion euros) at below-market interest rates. But even though the aid package sparked a rally in Greek stocks and bonds, it probably won't be enough to cure the debt-plagued nation's long-term ills.

A surge in Greek borrowing costs last week sent yields to an 11-year high, forcing European finance ministers to take action. The result was an offer of as much as $40.7 billion (30 billion euros) in three-year loans over the next year. Another $20 billion (15 billion euros) in aid could come from the International Monetary Fund (IMF).

The interest rates charged to Athens would be around 5% for a three-year fixed loan – above the IMF's standard lending rate but below the 7.45% jittery investors were getting for purchasing Greek bonds last week.

"This is a huge amount," Stephen Jen, managing director at BlueGold Capital Management LLP in London and a former IMF economist, told Bloomberg News. "This is more than a bazooka. They have gone nuclear on the issue of Greece. In the short run, the market is short Greek assets so we'll get a rally in those."

News of the rescue package sent prices higher for short-term Greek debt vehicles, reflecting a lighter mood among investors who sensed a much lower risk of a debt default.

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How to Profit from the New Iranian Sanction

Growing up in Massachusetts, my mother used to say, "Live long enough, and you'll see just about anything happen in politics."

And she was right.

A wrestler, a standup comic, several movie actors, and former sports figures have been elected to office; tea parties are back as a way of challenging leadership; even a disgraced former governor makes it onto "Celebrity Apprentice."

But she never saw this one coming – a U.S. sanctions move against Iran that may actually work… and make you some money in the process.

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Odds of IMF Bailout Increase as Greek Bond Prices Plummet

Prices for Greek 10-year bonds plummeted to record lows today (Thursday) on speculation Europe's most troubled economy is about to unravel.

Economists expressed new doubts over the country's banks and short term funding plans and warned that recent developments now threaten to create a vicious cycle of bad news.

"The fear factor is beginning to creep in. In fact, it's galloping in," Neil Mellor, a senior currencies analyst at Bank of New York Mellon Corp. (NYSE: BK) in London told The Wall Street Journal.

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Investing in Peru – South America's Hidden Gem

When investing in the emerging markets, you need to cast your net beyond the obvious candidates. Granted, China, Brazil and India have emerged to become very attractive investment stories (I don't trust Russia, the fourth and final "BRIC" economy).

But everyone else has heard of them, too, which is why their markets have been bid up very high in the past year. Their prospects remain excellent, but you're paying a lot for them.

From time to time, however, a country that has been off investors' radar screens has a few good years, and begins to creep onto them. In such countries, risk may be high, but values at least remain reasonable.

That's why it might be worth investing in Peru.

To find out why Peru may be worth a look right now, please read on...

Brazil Wins Eight-Year Battle Against U.S. Cotton Subsidies After Threatening Sanctions

The United States and Brazil yesterday (Tuesday) announced a trade agreement to end their long-standing dispute about U.S. cotton subsidies. The countries reached the deal one day before Brazil was to impose up to $830 million in sanctions authorized by the World Trade Organization (WTO). The United States will give $147.3 million in assistance to […]

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How to Profit From Europe's Best-Kept Secret

Here's a bit of global-investing trivia that I'll wager most folks will have a tough time answering: One of the world's finance ministers has attacked the International Monetary Fund (IMF) for encouraging governments to engage in excessive "stimulus" in 2009, thus giving themselves horrible deficit and debt problems in 2010.

Name the country that finance minister hails from.

I'll even give you a hint: He's not from Germany, which avoided "stimulus" but tends to be polite about the IMF and had a fairly nasty recession itself.

Give up?

He's from Poland.

Although it's a surprising answer, don't be too surprised. Poland is today the most capitalist country in Europe and has become one of the most capitalist economies in the world.

It's clearly Europe's best-kept secret.

The story of Poland's emergence is both interesting and instructive. And during a period of growing angst and uncertainty here at home, Poland represents an interesting place to put some investment capital.

Let me explain…

To find out more about the profit opportunities posed by Poland, please read on...

Irish Banks Get Bailout as Ireland Continues Drastic Moves to Leave PIGS Behind

Ireland's government will extend more aid to the nation's banks in an effort to salvage the economy and avoid going down the same path as struggling Greece.

The Irish government has set up a "bad bank" to help the banking sector rebound from massive losses on loans to property developers. The National Asset Management Agency (NAMA) will apply an average discount of 47% to $21.5 billion (16 billion euros) of loans in the first tranche. The bank will take over a total of $107 billion ($80 billion euros) of loans, transferring the debt from the balance sheets of Ireland's biggest banks – Allied Irish Banks, PLC (NYSE ADR: AIB) and Bank of Ireland (NYSE ADR: IRE).

"It looks like they are going to try and take all the pain now," said Stephen Taylor, strategist at Dolmen Securities. "It looks likely that at this stage the state is going to have to increase its ownership of the banks."

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Historic Agreement Ends 40 Year Old Iron Ore Benchmark as Miners Get Short-Term Pricing Contracts

In a historic moment for commodities markets, two of the world's largest iron ore producers, Vale SA (NYSE ADR: VALE) and BHP Billiton Ltd. (NYSE ADR: BHP) signed short-term contracts for record prices with Asian steel mills that effectively replace a 40-year-old system of setting prices annually.

The landmark move by Vale and Anglo-Australian BHP ended the annual benchmark system when they signed new short-term deals linked to quarterly prices on the spot market, with the Brazilian company winning a 90% increase. Another large iron ore producer, Rio Tinto PLC (NYSE: RTP) has yet to sign any new contract, but is expected to soon follow.

The primary mineral used in steel, iron ore directly affects steel prices and the cost of everyday goods, including refrigerators, cars, and washing machines. That made the recent negotiations one of the most important issues for the global economy and commodity markets.

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"Capital Waves" Point to High-Tide Profits for Commodities, Tech and Emerging Markets

It was November 2008, and a global financial crisis that started in the U.S. credit markets had already leveled such one-time corporate stalwarts as Lehman Brothers Holdings Inc. (OTC: LEHMQ), Fannie Mae (NYSE: FNM) and American International Group Inc. (NYSE: AIG). The U.S. economy was in an apparent freefall, and stock prices wouldn't hit bottom until early the following March.

In the midst of that chaos, Money Morning's Shah Gilani made five predictions, anticipating five looming "aftershocks" he said were certain to come true.

He was correct on all five counts – every prediction came true.

This wasn't the first time Gilani has made such bold predictions – and been proven right. In July 2008, for instance, when crude oil was trading at a record high of $145 a barrel, he predicted that the "black gold" was destined for a major fall – even though many pundits were calling for prices to spike as high as $200, $250, $300 and even $500 a barrel.

Once again, Gilani was right.

Gilani, a retired hedge-fund manger, Money Morning columnist and noted expert on the global credit crisis, has been able to do this time and again for one simple reason: He understands the power and profit potential of the global financial market's "capital waves."

"Capital waves create some of the biggest trading opportunities in the markets today," Gilani said in an interview last week. "Investors who are able to spot capital waves and identify their likely impact have a huge advantage over those who don't."

And the profit plays that loom are shaping up as the biggest and best, yet.

For the full transcript of Gilani's detailed question-and-answer session, please read on.