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U.S. Economy

BHP Billiton's Bid for Potash Could Spark Surge of M&A Activity in Agribusiness Sector

BHP Billiton's (NYSE ADR: BHP) $38.56 billion bid for Potash Corp. of Saskatchewan Inc. (NYSE: POT) is just the latest episode in what's likely to be a continuing surge of merger-and-acquisition (M&A) activity in the agribusiness sector.

Canada-based Potash, the world's largest producer of potash, yesterday (Tuesday) rejected an unsolicited takeover bid from the Australia mining giant, calling the offer "grossly inadequate."

The fertilizer company also quickly adopted a so-called poison-pill defense to fend off would-be suitors, though it said it would be open to a transaction if the price were right.

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Emerging Stock Markets Thrive as U.S. Shares Tumble

As the U.S. stock markets struggle in the midst of slowing economic growth, emerging stock markets are thriving as their surging economies provide cover for savvy investors.

Stocks tripped over the past week after a weak jobless claims report and a lukewarm revenue outlook from Cisco Systems Inc. (NASDAQ: CSCO) on Thursday put an exclamation point on worries about a muddled Federal Reserve Bank policy. U.S. markets lost more than 4% in one of their weakest five-day spans of the year, including a 90% Downside Day on Wednesday that featured a rare event: All 30 stocks in the Dow Jones Industrials Average closed lower.

Small stocks had their throat slit, as the Russell 2000 plummeted below its 50-day and 200-day averages. It was the largest one-week loss for the index since early June when a Hungarian official compared his nation's debt woes to those of Greece. The index is back to early July, wiping out a month of gains. I'm not one to say "I told you so" but let me just note that we have strenuously recommended avoidance of the smalls in an effort to de-risk your portfolios.

Read on to find which markets are outshining the U.S....

Investing Strategies: How to Open an Options Account

Although many traditional brokers still recommend against them and many equity investors are fearful of using them, options are becoming increasingly essential to success in today's unsettled stock market environment. And that means you have to figure out how to open an options account.

"New financial times require new financial tools, and I believe options are a must in today's fragile markets," says Money Morning Chief Investment Strategist Keith Fitz-Gerald. "Learning to use options effectively takes some time – particularly if you are set in your ways – but market conditions have changed so much in such a short time that you have to make the effort if you expect to both maximize profits and guard against major reversals."

Fitz-Gerald regularly employs both stock and index options in his Geiger Index advisory service, which has scored a remarkable 32 profits in 32 tries since its inception.

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Buy, Sell or Hold: Tata Motors Ltd. (NYSE: TTM) Is Kicking Into High Gear

I am constantly hunting for profitable opportunities for my Money Map VIP Trader, the Money Map Report and this column in Money Morning.  And I realized months ago that India would be the one major emerging market that would notably accelerate in the second half of the year and into 2011. 

To take advantage of that trend, I recommended a very pro-cyclical play in my trading service, which you can only see by subscribing. But I also kept up my search and was able to find another good opportunity to recommend here. That opportunity is Tata Motors Ltd. (NYSE ADR: TTM).

About a month ago, my colleague and Money Morning Managing Editor Jason Simpkins articulated a view of the Indian economy that clearly details how that country is looking to accelerate growth.  The major headwind for India has been inflation – more specifically, food prices. 

However, India is experiencing a normal monsoon season and will soon see its production of food increase and food prices drop – the recent spike in wheat prices notwithstanding.  This drop in food prices, coupled with renewed fiscal discipline will help bring inflation down from around 10% to about 6% by year end.

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The Headline You Never Expected: Foreign Growth Could Bail Out the U.S. Economy

During a period of increasingly worrisome headlines about the U.S. economy, there is one bright spot.

The rest of the world appears to be doing much better than we are.

In the long run, that's good news for the United States. Rapid world growth will eventually rekindle the economic fires here, producing a growth that is more balanced than the bubbles of 1995-2008.

Still, getting to that point will be a challenge, since – economically speaking – the home fires don't appear to be burning all that brightly.

To see how foreign growth could bail out the U.S. economy, please read on…

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The Supply Chain Strain Is Changing the Way Manufacturers Do Business

As growing demand boosts production in the second half of 2010, some companies will fail to meet output due to struggles in the supply chain.

Earnings season has shown industrial companies' surging profits in the first half of the year and increased optimism for the months to come. Emerging market strength and stable raw material prices have helped the manufacturing boost.

Industry giants like Caterpillar Inc. (NYSE: CAT) and Siemens AG (NYSE ADR: SI) all raised their outlooks and posted higher-than-expected earnings.

Siemens' second-quarter orders increased by 22% from a year ago and income rose 40% to a record high of $3 billion (2.3 billion euros). The demand increase Siemens is predicting for the rest of 2010 allowed the company to end the reduced working-hour arrangements it had set up with about 19,000 employees.

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Money Morning Mailbag: U.S. Credit-Rating Agency Fights Back to China's Attacks

Last week, the credit rating feud between Standard & Poor's Financial Services LLC and the Chinese firm Dagong Global Credit Rating Co. Ltd – which Money Morning Contributing Editor Martin Hutchinson examined late last month – heated up.

Harold "Terry" McGraw III, chairman and chief executive of S&P said that companies like Dagong joined up with politicians and other countries to unfairly attack U.S. ratings firms.

"If you're in a populist mood, you've got to find the villain," McGraw told the Financial Times in an interview in Beijing.

McGraw referred to comments made to the Financial Times in July by Guan Jianzhong, the chairman of Dagong.

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Whitacre Resigns, but Is GM Really Ready to Roll On with its IPO?

Whether it's because the company is ready to again stand on its own two feet, or because of undue political pressure, General Motors Co. looks to be preparing an initial public offering (IPO) that would repay billions to taxpayers who own a majority stake in the company.

The company yesterday (Thursday) reported a 44% increase in net profit and announced that Chief Executive Officer Ed Whitacre would step down from his post on Sept. 1.

Whitacre, who was named GM's chairman last year as the company emerged from bankruptcy protection, will be replaced by GM board member Daniel Akerson. Akerson has little experience in the automobile industry, but he boasts a solid track record of leading telecommunications companies.

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An Anemic Economic Recovery Keeps the Fed From Focusing on Inflation

With interest rates near zero and a balance sheet that's in excess of $2 trillion, U.S. Federal Reserve Chairman Ben Bernanke would be very glad to offload some of the Fed's obligations. But so far he's has been unable to do so, as an anemic economic recovery continues to monopolize his attention.

The central bank yesterday (Tuesday) announced that it would reinvest the proceeds from expiring mortgage-backed securities into longer-term U.S. Treasuries. The move should help a weakening economy by keeping mortgage rates low. And while it also may boost inflationary pressures, the central bank feels it had little choice.

"Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months," the Federal Open Market Committee said.

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A Tale of Two Investments: U.S. Steel Scenario Illustrates the Power of Dollar-Cost-Averaging

To understand the potential defensive-investing benefits of dollar-cost averaging, let's take a look at two scenarios involving United States Steel Corp. (NYSE: X).

Thanks to the general downtrend in the market, the May 6 "flash crash," and the rapid subsequent rebound, U.S. Steel shares fell from a 52-week high of $70.95 on April 6 to just $52.81 at the market close on Friday, May 14.

Indications of some new life in the construction sector and an uptick in autos would seem to indicate that steel demand could rise – which would be especially good for U.S. Steel, which supplies both businesses.

You've got $10,000 to work with.

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