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Global Economy

G8 Plan to Invest in Africa Agriculture Smacks of Colonial Land Grab

A G8 initiative intended to get corporations to invest in Africa with the goal of alleviating hunger on that continent is – surprise, surprise – not working out as planned.

President Barack Obama launched the "New Alliance for Food Security and Nutrition" in 2012 when the United States held the presidency of the G8 (the Group of Eight, a forum of eight of the world's major economies).

By encouraging partnerships between governments and corporations to invest in Africa, the G8 said it hoped to "lift 50 million people out of poverty in sub-Saharan Africa by 2022."

Global Economy

Don't Let the Global Economy Wreck Your Investment Strategy

There's trouble all over the global economy, from fresh tremors in the Eurozone debt crisis to unrest in the Middle East and uncertainty over the fate of Obamacare here at home.

With so many threats to the markets coming from so many directions, what's an investor supposed to think?

Fortunately it's the job of Money Morning's Chief Investment Strategist Keith Fitz-Gerald to figure out which issues investors need to watch and which ones they don't.

On Fox Business Keith spells out what he thinks are the biggest threats to the global economy now and what investors need to be doing about them.

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Want to know more? Here's what Keith thinks would be The Worst Investing Mistake You Could Make Right Now.

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Global Economy

Big Problems: These Countries Are Facing Demographic Time Bombs

When a big economy hits the shoals, there are options.

You can take a Keynesian approach. You can take a Friedmanian approach. There are Bernankes, there are Nodas , the Austrian School, the Chicago School, expansion and contraction – however a government wants to play it, whatever the ideology, there are options and precedents for getting the economy going again.

But there are some problems, some threats that can't be addressed with an easy, take-your-pick policy. These would be the problems posed by simple demographics. Some of the world's biggest economies and most crucial players are facing true demographic crises which, if left untended, will ultimately result in their downfall. These countries are facing demographic time bombs.

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Global Economy

The Top BRIC in the Wall Teeters

Over the last decade, Brazil has grown to become the world's sixth largest economy by nominal GDP, a staggering feat fueled by a massive increase in its middle class ranks.

The nation has been rife for investment opportunity based on its fundamentals and strong commodity sectors, and finds itself as the leading BRIC (Brazil, Russia, India, China) emerging market.

But the recent wave of public protests over the last month could be signaling that Brazil has hit a major snag in its quest to displace France in the top five economies, and its opportunities for growth and fortune may be faltering as the nation experiences increased political turbulence.

The wave of protests began a month ago in Sao Paulo after the government increased bus fares by 10% (a rate that subway fares seem to rise in New York every other week). But the increases were quickly revoked in San Paulo and other major cities after the protests became much larger than about mere bus fares.

Residents have been especially frustrated by a lack of transparency across the country, and the government's increased taxation and decreased returns to average Brazilians in the form of basic and essential services.

Brazil has spent approximately $30 billion to showcase itself to tourists during the 2014 World Cup and 2016 Olympics. Meanwhile, the nation's anti-poverty programs have a mere annual of budget $10 billion in a nation of 191 million.

The widespread demonstrations have produced a national movement to demand better education, healthcare, and transportation services. Despite the protests, the country simply can't meet these obligations at this time for one simple reason: government can't keep up with economic expansion.

Brazil provides one important economic lesson that no one talks about when it comes to rising middle classes in emerging nations.

Many governments are not prepared for population shock or the shock of economic growth.

And while this stands to create a wave of new problems for investors looking abroad for investment opportunities in Brazil, it also teaches a valuable lesson and opens new doors to wealth in South America.

The Retched "Incline" of the Middle Class

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Top News

The Massive Wave of Chinese Investment in the U.S. is Coming to a City Near You

By Diane Alter, Contributing Writer, Money Morning

There's a new wave of investment occurring across the United States – and the "who" behind it makes this a very interesting story…

Faced with an economic slowdown at home, Chinese companies are pouring money into U.S. businesses at a record clip.

From energy to aviation to entertainment, Chinese investment in the U.S. swelled to a record $6.5 billion last year.

But that's just the beginning of this Chinese "invasion."

According to Rhodium Group, which conducts detailed tracking of Chinese investments in the U.S., new business investments are now on track to top that gigantic figure again in 2013.

"We are in the midst of a structural growth story that will transform the China-U.S. investment relationship from a one-way street into a two-way street," Thilo Hanemann of Rhodium told CNBC.

A major reason behind this investment trend: U.S. technological development.

A December 2012 U.S. Treasury Department Committee on Foreign Investment report said it "judges with moderate confidence that there is likely a coordinated strategy among one or more foreign governments or companies to acquire U.S. companies involved in research, development, or production of critical technologies for which the United States is a leading producer."

A finger wasn't directly pointed at China, but the inference was clear.

"Chinese companies are looking for management prowess and technology upgrades when they make acquisitions," Ben Cavender, a senior analyst at China Market Research Group, told The Wall Street Journal.

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Read More…

What's Spooking Investors in the Stock Market Today

The stock market today is down more than 200 points as China fears trigger a global sell off.

In mid-morning trading, the Dow dived 205.75, 1.39%, to 14,593.65. The S&P 500 slumped 25.78, 1.62%, to 1,566.65. The Nasdaq slid 50.78, 1.51%, to 3,306.47. The Dow and S&P are now off some 5% and 6% respectively from their all-time highs reached earlier this year.

Asian markets were clobbered Monday and European markets melted on increasing fears of a liquidity crunch in China. Major Euro indexes, off roughly 10% from their April highs, are officially in bear territory.

Today's moves continue the rollercoaster ride U.S. equities were on last week, with the Dow shedding 560 points, or 3.66%, over Wednesday and Thursday.

The blue-chip benchmark finished at 14,799.40, down 1.8% for the week, its worst week since April 19. The S&P 500 fared worse, slumping 2.1% last week to end at 1,592.43. The Nasdaq ended at 3,357.25, for a weekly loss of 1.9%.

The VIX, or the CBOE Volatility Index, soared 10.2% last week, ending at 19. Wall Street's "fear gauge" has risen four of the past five weeks, ever since Fed Chief Ben Bernanke's first mumblings about a probable winding down of stimulus.

Monday morning, the VIX jumped 2.14, or 11.23%, to 21.04, its highest level of the year.

Markets were goosed Friday after The Wall Street Journal's Fed watcher Jon Hilsenrath wrote that investors may be misreading optimistic messages sent by the Fed Chairman Ben Bernanke as hawkish.

Also, Goldman Sachs (NYSE: GS) analysts said their top recommendation for 2013 is still to buy stocks and sell bonds.

"We continue to expect the index [S&P] will close the year at 1,750, a rise of approximately 10% from today's top level. However, median historical drawdown episodes suggest at some point during the next six-months that the S&P may decline to mid-1,500s before resounding to our year-end target," Goldman's analysts wrote.

Further giving stocks a lift was a bullish statement to CNBC from renowned hedge fund manager David Tepper, founder of Appaloosa Management: "All the concerns in the markets is because the Fed sees the economy stronger in the future. In fact, their forecast shows that they will wait until a lower unemployment rate (closer to 6% than 6.5) to raise interest rates. So they are a bit easier on the front…I obviously thought they should start to taper. [But] the bottom line when the dust settles [is that the] only one place to be [is] stocks."

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Energy Investing

How your Grandchildren can Reap Profits with These Nuclear Stocks

Three Mile Island. Chernobyl. Sellafield. Fukushima.

These are just the most famous names from an alarmingly long list of civilian nuclear incidents. Each of these accidents resulted sparked intense public debate on the future of civilian nuclear power.

Is it really safe? What do we do with the waste? It'll be toxic for tens of thousands of years? How bad will the next accident be? What kind of trade-off are we making? These are just some of the questions mooted in the wake of these and other nuclear accidents.

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G8

The G8 Will Never Get a Handle on Taxes at This Rate

The G8 meetings this week at Lough Erne in Northern Ireland had a theme of "Tax Evasion and Transparency." This theme may have been chosen because "Enchantment under the Stars," or "A Night to Remember" were taken by the local high school prom committee.

And I joke not to lampoon this august body – far from it. It's only that the efforts of a group of people – none of whom put on a necktie – who help shepherd the world's largest economies ought to be focusing on economic growth, such as that which we haven't really experienced in the West for quite some time now.

Instead, the world is given the Lough Erne Declaration, which calls for a "robust" international framework to ensure fair tax collection and rational tax regimes. That the United States should be mentioned in the same breath as "fair tax collection" or "rational tax regime" is ludicrous enough.

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Global Economy

Bank of Japan Called "Single Biggest Danger to Global Markets Today"

The Bank of Japan is sticking to its policy of fiscal stimulus to try to stoke inflation, and that's rattled markets worldwide.

There are short-term signs of economic recovery such as an increase in consumer spending and in manufacturing.

But longer-term, Money Morning Chief Investment Strategist Keith Fitz-Gerald told CCTV, "there has never been an instance in history where stimulus has worked. So the question really is when, not if, this will break down."

Check out the accompanying video to learn why Keith considers the Bank of Japan "the single biggest danger to global markets today."

Trend Watch

A Deadly Wall of Silence Surrounds a Potentially Global Pandemic Disease

By Greg Madison, Associate Editor, Money Morning

One of the really beneficial things about science is its power to transcend borders and ideologies.

Scientists in countries that may be totally hostile to one another have the chance of collaborating on difficult problems in a spirit of openness.

This ability to collaborate and exchange information across borders is particularly important when a new disease with global pandemic potential emerges, as it has in the Middle East with the respiratory system coronavirus (MERS-CoV).

This "novel coronavirus" was identified in September of 2012 in the Saudi Red Sea port of Jeddah. The disease was found in a deceased 60-year old man who died of acute pneumonia and kidney failure. Little else is known of this unfortunate individual.

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