Category

U.S. Economy

Buy, Sell or Hold: Altria Group Inc. (NYSE: MO) – The 'Sin Stock' You Have to Own

With more than 1 billion smokers worldwide, it is hard to conceive that companies selling cigarettes would not be extremely profitable.  In addition, the majority of people who are smokers also tend to be alcohol consumers. One company that services both of these vices is Altria Group Inc. (NYSE: MO)

Altria Group is a holding company; its wholly owned subsidiaries consist of Phillip Morris USA Inc., U.S. Smokeless Tobacco Co. (prior to 2001 it was known as United States Tobacco Inc.), John Middleton Co. and Phillip Morris Capital Corp.

On Jan. 6 2009, Altria Group purchased UST Inc. in a $10 billion deal that gave the maker of Marlboro cigarettes an entrée into the "smokeless tobacco" market, thanks to UST's ownership of the Skoal and Copenhagen brands.

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European Debt Crisis Raises Caution Flags But U.S. Economy Won't Be Derailed

Stocks somersaulted into the red early last week in the wake of European debt downgrades, rising revulsion over the prospect of a bailout of Athens and a broad re-pricing of risk. Breadth was negative, the number of new highs shrank and number of new lows swelled. Financials tumbled and retailers stumbled. Caution flags are rising.

Click Here to Read More on how European Debt Will Affect the Markets

China-U.S. Trade Relations Plagued by Protectionism

China yesterday (Wednesday) slapped the U.S. chicken industry with the second set of tariffs in less than three months, further escalating tensions with its all-important Western trade partner.

China's commerce ministry said the new tariffs, which will impose charges of as much as 31.4% on imports of U.S. chicken, were a response to what it said were subsidies that created an unfair advantage for U.S. chicken producers.

China in February imposed a 105.4% duty on imports of U.S. poultry after a government investigation found that such products were being sold by the United States at less than the fair value. The new tariffs could altogether close off the market to U.S. poultry producers.

China and the United States have a long history of trade disputes, but these conflicts in recent years have escalated in both frequency and intensity as the two nations vie for global influence.

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Should Investors Sell in May and Go Away, or Ride the Bull Awhile Longer?

I'm sure you have heard the old saw that it's a smart idea to "sell in May and go away."

That concept is based on the notion that the May-to-November span provides a weak environment for investors. I have already heard the cry go up recently because the major indexes are already up a lot more than anyone expected, and this would seem to be a convenient time to take profits.

Yet like most old market adages, there's not much substance to the concept if you take a good look at history.

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Question of the Week: Readers Respond to Money Morning's Financial Reform Query

A vote on financial reform Monday failed to produce the 60 votes needed to move ahead, as Republicans said they felt the bill was rushed and not ready to take the floor.

The Senate's second attempt at bringing the reform bill to debate occurred yesterday (Tuesday) on the same day as Goldman Sachs Group, Inc (NYSE: GS) executives – including vice president Fabrice Tourre, the only individual named in the suit – faced the Senate Permanent Subcommittee on Investigations in Washington. Tourre denied the Securities and Exchange Commission's charges and said the product in question "was not designed to fail."

Goldman was the recipient of $10 billion in bailout funds – one of the most contested topics halting financial reform progress.

The uproar over taxpayer-funded financial institution aid along with the looming financial regulation overhaul prompted our fifth installment of Money Morning "Question of the Week:" How do you feel about the status of financial reform? Has it gone far enough – will too much regulation crimp our free market system? Or does it need to go much further – and can the powers-that-be create an effective reform proposal?

Here is a collection of reader responses showing concern for the future, questions over government spending, and ideas for improvement.

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We Want to Hear From You: Do You Think Booming Corporate Profits Are the Sign of a Strengthening U.S. Economy?

The past few weeks have pulled in one earnings report after another for 2010's first quarter, allowing a better look at the status of corporate profits. Most companies hoped for marked improvements after restructuring and cutting costs in the wake of the financial meltdown that gave balance sheets a beating. And they weren't disappointed: JPMorgan […]

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The Only U.S. Automaker on Track, Ford Posts $2.1 Billion First-Quarter Earnings

Ford Motor Co. (NYSE: F) beat Wall Street estimates by posting first-quarter earnings of $2.1 billion and said it will deliver a "solid profit" for all of 2010, a year earlier than Chief Executive Officer Alan Mulally had projected previously.

Reaping the benefits from a recovering auto market and higher prices for cars and trucks, Ford chalked up its fourth consecutive quarter of net income, the longest streak since 2005.

Ford's U.S. deliveries surged by 37%, more than twice the industry wide average through March, boosting domestic market share at the fastest pace in 33 years. Ford was the only U.S. automaker to avoid bankruptcy in 2009.

First-quarter revenue rose 15% to $28.1 billion, and net income after one-time charges was 50 cents a share, handily beating the projected adjusted earnings of 31 cents a share compiled by Bloomberg . The Dearborn, Michigan based company posted a net loss of $1.43 billion, or 60 cents, a year earlier.

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A V-Shaped Recovery? Don't Bet On It

Corporate profits appear to have returned in full, manufacturing is picking up around the world, commodities prices have rallied and the Standard & Poor's 500 Index is up about 60% since last March.

That makes a pretty compelling case for what some analysts are calling a "V-shaped" recovery. But even with all the momentum the economic recovery has accrued, that kind of talk may be a bit premature.

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Stocks – Led by Apple Inc. – On a Hot Bull Run No Investor Should Miss

Stocks flipped out late Friday morning following an announcement of Greece's decision to seek help from the European Union and International Monetary Fund. But by the end of the session, cooler heads began to prevail and the major indexes ended well into the black, continuing the bull run.

The Dow Jones Industrial Average, Standard & Poor's 500 and Nasdaq all closed about 1.1% lower for the session, but the week's results were a lot better: flat for the Dow and S&P 500, up 0.75% for the S&P Midcap 400 and up 1.7% for the S&P Smallcap 600. 

Overseas large-caps ended the week flat, though China sank another 1%. Our own top choice overseas fared better, as Market Vectors Indonesia Index (NYSE: IDX) closed the week up 4%.  Another star off the week overseas was iShares MSCI Turkey Index Fund (NYSE: TUR), up 3%.

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Retailers Make a Surprising Comeback

You may be hearing a lot of bearish commentary centering on the premise that the market's advance is unsustainable because it has benefited so much from government spending.

But one big swath of the rise in stock prices has come from retailers, and it's hard to make a direct link between fiscal spending and chain store sales.

When the government pays for things like more highways and military goods, more people gain employment and then their families go out and purchase things at companies like Family Dollar Stores Inc. (NYSE: FDO) – a position in our Strategic Advantage portfolio that is fast on the rise. But that's really a "second-derivative" concept, as the statisticians say.

Employment and wage improvements have been the big catalysts.

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