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While Washington Stews, You Can Cash In on the Biggest "Tax-Inversion" Deal in History

Back in June 2012, we recommended that you pick up shares of Big Pharma player Abbott Laboratories Inc. (NYSE: ABT). The reason: Abbott was planning to split in two at the end of the year, meaning folks who took our advice would end up with stakes in two companies for the price of one.

There was more than bargain-basement thinking at work here.

You see, these corporate breakups – known as spin-offs – have a habit of turning into market-beating profit plays. And the newly minted spin-off firms often end up as takeover fodder – also at big profits.

Abbott followed part of that blueprint.

  • Emerging Markets

  • U.S. Loses Crown as King of M&A to Emerging Markets Maybe U.S. investment bankers are losing their touch.

    For the first time since Thomson Reuters began keeping track in 1976, fewer merger and acquisition (M&A) deals were done in the United States in the first six weeks of 2010 than in emerging-markets.

    During that stretch, emerging markets such as India, Mexico, Brazil and China accounted for 43% of global M&A volume with $91.2 billion worth of deals. That outpaced the United States, which completed roughly $55 billion in deals, accounting for a 29.5% share.

    Surprisingly, Mexico alone did more volume, with 19.1% of the market versus Europe's 17.1% share.

    Read More...
  • How Capital Waves Are Creating the Biggest Profit Opportunities in Today's Markets Back when oil was trading at a record high of $145 a barrel - and was generally expected to go higher - I concluded that the forces at play were speculative, not fundamental - driven by new institutional money looking to diversify away from too many concentrated equity bets. I argued these forces were temporary, and not entrenched, meaning that oil prices were actually headed for a fall.

    The "forces" I was referring to are called "capital waves." Capital waves create some of the biggest trading opportunities in the markets today. Investors who are able to spot capital waves and identify their likely impact have a huge advantage over those who don't.

    With oil, for instance, pundits were calling for new highs of $200, $250, $300 and even $500 a barrel. But behind the curtain, there was a major capital wave at play: I knew that oil was being pumped out of the ground like mad, and that shipping rates were exploding because oil was being stored in offshore, idled tankers. I knew that as little as $20 billion had been "re-allocated" out of the equity markets and into this new-asset-class investment for pension fund accounts.

    As a speculative frenzy seemed to be enveloping the oil market, I called for oil prices to plummet - to more than a few looks of incredulity or outright guffaws.

    When the secondary capital waves took hold, the speculative advance in oil prices first stalled - and then oil prices plunged as capital exited in another wave.

    Don't feel bad if you missed this opportunity. That's the important thing to remember about capital waves - they're out there if you know where to look and how to interpret them. In fact, as good as this oil play was, I see even better opportunities ahead.

    To learn about the Top Five "capital waves," read on... Read More...
  • European Bailout Fund Proposal … Just Another Bad Idea Has bailout mania finally reached Europe?

    The 16 nations that make up the Eurozone are seriously exploring the creation of a "European Monetary Fund," a bailout fund that would help euro-member countries that can't pay their debts.

    This has the potential to be a pretty good idea. If structured correctly, the EMF could provide the discipline and stability that the euro needs.

    However, I'm not holding my breath: Given the EU's track record, the EMF bailout plan will most likely evolve into yet another slush fund for politicians - as well as a drag on the European economy.

    History proves Europe's bailout-fund proposal is unworkable. Read on to see why...

    Read More...
  • Six Ways to Profit as Brazil's Economy Takes Off In many ways, Brazil offers some of the best prospects among emerging markets and deserves to be a core holding in any international portfolio.

    Brazil's economy had only a shallow recession and is now recovering nicely. Its market has been one of the best performing since Dec. 31, 2008, and both inflation and the budget deficit remain under control.

    Yet one can be only moderately bullish - and I'll explain why.

    To find out how to profit from Brazil's bullish prospects, read on...

    Read More...
  • If China Sneezes, Wall Street Will Catch A Cold Investors who needed proof of China's increased importance in the post-financial-crisis world only have to look at the nervousness of recent weeks to get a glimpse of the future.

    When U.S. stocks fell sharply late Friday, they capped off a harrowing 10-day span that has seen the broad U.S. market benchmarks drop by nearly 7%. Emerging markets are down 9%. Not surprisingly, investor fear has sent volatility rocketing 40% - the largest two-week increase since the global financial crisis went nuclear back in October 2008.

    Complicating matters was the continued strengthening of the U.S. dollar - something we've been discussing and warning about for a few weeks. With fear on the rise among global investors, many are abandoning risky positions in emerging-market stocks and bonds and moving cash into the safety of U.S. Treasuries. This bolsters the dollar, which was up 4% in two weeks. That exerts a lot of pressure on commodities. Crude oil fell more than 7% during the week. Gold is down 5%.

    The corporate bond market - which has been red hot lately, helping to underpin stock-market gains - continued to advance, but slipped relative to ultra-safe government debt. Tim Backshall of Credit Derivatives Research wrote in a note to clients that both high-yield and investment-grade credits have been making the longest and most consistent run of lower lows versus ultra-safe U.S. Treasuries since February 2008.

    While government debt has the edge for the moment, the long-term corporate-credit bull market remains intact, according to WJB Capital Group Inc. strategist Brian Reynolds. He sees the credit bears making a run at credit-derivative products that insure against bond defaults, which are a cheap way to try to manipulate the market.

    Indeed, the cost to protect against default at banks like JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group Inc. (NYSE: GS), not to mention Greece, jumped noticeably last week. But the damage has been limited as bears have failed to get traction against the instruments that they used to catalyze the 2008 credit crisis.

    This lays the groundwork for a powerful snapback rally for stocks.

    To find out more about the China Surprise, read on ... Read More...
  • The Seven Themes That Will Lead to Maximum Profits in 2010 If the crippling financial events of 2008 and 2009 proved one thing, it's that investors need to rethink the entire philosophy of "portfolio management."

    Today, the best-performing managers around the world manage their portfolios based on broad-and-potent market themes. And with good reason.

    It's much easier to follow macro trends based on broad-based themes than it is to cobble together a bunch of different stocks into a portfolio and call it diversified. Theme-based investing is also much more profitable. And it allows you to better manage your risks.

    In short, theme-based investing lets you have your cake and eat it, too. Read More...
  • Four Ways to Profit From the World's Shrewdest Government Three powerful investment trends will separate the winners from the losers in the new year.

    • Global commodities prices will continue to move higher.
    • Emerging economies will outgrow their richer, more-mature counterparts.
    • And the countries that were stingy with their monetary and fiscal bailout plans will now reap the benefits; they will outpace the countries that slashed their interest rates to zero and allowed their deficits to soar.
    One country is poised to profit from all three of those trends. What's more, the political worries that always seem to diminish its allure to investors are poised to recede, making this emerging southern hemisphere heavyweight one of the premiere profit opportunities for 2010.

    I'm talking about Chile. Read More...
  • Emerging Markets Consider Capital Controls to Combat "Hot Money" Inflows Concerned with accelerating inflows of so-called "hot money," more emerging market nations are considering new capital controls to keep their currencies from appreciating and prevent asset bubbles from becoming a problem.

    Loose monetary policy in the United States and Europe has flooded fast-growing Asian economies where Western investors are seeking higher yields. India, Taiwan, South Korea, Hong Kong, and Indonesia are among the regions investigating options to combat the rapid inflows of foreign capital that are driving up stock prices, and threatening their export sectors by forcing their currencies to appreciate.

    "With interest rates exceptionally low and with abundant liquidity around the world, Hong Kong faces the potential risk next year that asset prices may go up sharply and become increasingly disconnected from economic fundamentals," the Hong Kong Monetary Authority said on its Web site. Read More...
  • Jeremy Grantham: With Great Depression II Nowhere in Sight, Look to the "Emerging Markets Bubble" for Maximum Profits The good news is that we have not fallen off into another Great Depression. With the degree of stimulus there seemed little chance of that, and we have consistently expected a global economic recovery by late this year or early next year.

    The operating ratio for industrial production reached its lowest level in decades. It should bounce back and, if it moves up from 68 to 80 over three to five years, will provide a good kicker to that part of the economy. Inventories, I believe, will also recover.

    In short, the normal tendency of an economy to recover is nearly irresistible and needs coordinated incompetence to offset it - like the 1930 Smoot-Hawley Tariff Act, which helped to precipitate a global trade war. But this does not mean that everything is fine longer term. Read More...
  • Buy, Sell or Hold: H.J. Heinz Co. (NYSE: HNZ) Is a Long-Term Keeper, but Will Struggle in the Months Ahead H.J. Heinz Co. (NYSE: HNZ) dominates in the ketchup market.  There is no second.  And Heinz has taken advantage of its revered ketchup brand over the years to develop organically and acquire other brands. However, its overdependence on developed markets and a sluggish U.S. consumer are currently holding the company back. Emerging markets are where […] Read More...
  • Emerging Markets Continue to Offer Opportunity Despite Possible U.S. Recession By Jason Simpkins Associate Editor A narrowing trade surplus and declining money-supply growth in China has some analysts worried about the prospects of global growth, particularly as the U.S. economy flirts with the possibility of recession. But the red-hot Asian markets may prove more resilient than many think. China raised its interest rates six times […] Read More...