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December 2009 - Page 6 of 10 - Money Morning - Only the News You Can Profit From

U.S. Consumers Feeling More Confident, Increase Retail Spending

The Reuters/University of Michigan preliminary index of consumer confidence increased in November for the first time in three months as the pace of job cuts slowed and shoppers increased retail sales.

The index of consumer sentiment unexpectedly rose to 73.4, much higher than economists had forecast, from 67.4 in November, according to the report released Friday.  The December figure exceeds the average of 65 for the first nine months of the year.

Separately, U.S. retail sales rose 1.3% in November, the Commerce Department said Friday.  The figure was almost twice as much as the 0.7% increase Wall Street had expected.

Improved sentiment may have helped spending as the numbers suggest consumers were buying aggressively during the crucial holiday shopping season, helping to sustain a fragile economic recovery entering 2010.

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Could a Spike in Bond Yields Cause the Economy to Stumble in the New Year?

In normal times, at their most basic level, bond prices follow some very simple laws of financial physics: When interest rates rise, bond prices fall and bond yields rise; when rates fall, bond prices rise, and bond yields drop.

However, bonds could break those laws of financial physics in the New Year – and in a big way. That could inflict some real financial pain on the U.S. recovery, the dollar, the shuddering housing market – and could even ignite a major stock-market reversal.

The U.S. Federal Reserve continues to hold rates on U.S. Treasury securities to artificially low levels – a strategy central bank Chairman Ben S. Bernanke just this week said the Fed intends to adhere to for the foreseeable future.

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Why Russia's Oil Fields Will Soon Be Crawling with Westerners

Western oil majors are about to help Moscow solve its energy problem. And that could be a boon for investors.

The traditional Russian oil fields in Western Siberia are well past peak production. Some satellite fields in the region remain, but the extraction gains will be marginal.

My sources in Russia's Ministry of Natural Resources and Ecology (MNRE), the government entity responsible for distribution and oversight of development leases, now acknowledge that the country's overall crude oil production could decline by more than 7% over the next several years.

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Investment News Briefs

AOL Goes It Alone; Citi to Pay Back TARP Funds; Jim Rogers: Audit, Then Abolish The Fed; Goldman Sachs Adopts "Say on Pay" Policy; GE Gets Contract for World's Largest Wind Farm; Weekly Jobless Claims Rise, Trade Gap Narrows; Gold Bounces Back; U.S. Households' Net Worth Gains in Q3

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France and Britain Take the Lead on Executive Pay Restrictions

Executive pay has been a delicate issue in the United States where the Obama administration's "Pay Czar," Kenneth Feinberg, has been asked to keep bonuses for top financial managers disciplined without driving off top talent.

However, French President Nicolas Sarkozy and British Prime Minister Gordon Brown have been more blunt about exacting a toll on the financial firms that required taxpayer bailouts.

The United Kingdom on Wednesday announced plans to levy an immediate 50% tax on discretionary bonuses greater than 25,000 pounds, or about $40,000.   The U.K. Treasury estimates the tax will affect 20,000 bankers and bring in about 550 million pounds, or about $894,000,000. However, some bankers have suggested the tax would reap about 4 billion pounds, or $6.5 billion, if firms press ahead with large bonus payouts regardless of the tax, the Financial Times reported.

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Despite Recent Pullback, Gold Prices Are Headed Higher

By Karim Rahemtulla, Investment Director, Xcelerated Profits Report

The big news this week is the sudden pullback for gold prices and gold shares. But while the masses scratch their heads in bewilderment, smarter investors know that it had to happen at some point. Nothing goes up in a straight line without pulling back and this correction actually provides welcome respite.

As for us, we entered the gold market long ago and our positions remain solidly profitable. That's the benefit of using pro strategies to build wealth while mitigating risk and providing a valuable downside cushion.

For example, our strangle trade on Yamana Gold Inc. (NYSE: AUY) finally has a chance of making us money on the short side, as Yamana's recent decline has led to a rise for our put options. This is good, as this is actually the more difficult side of the trade.

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Investment News Briefs

With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

Survey: China Investments Will Continue to Grow Next Year; Japan's Q3 GDP Revised Down; Kraft Offers Changes to Cadbury Bid; Volkswagen Buys 20% Stake in Suzuki; Research in Motion Option Activity Surges; U.S. Inventories Rise for First Time in 13 Months; Sprint Shares Rise After Citi Upgrade; Neiman Marcus Hit Hard

  • A survey of 369 U.S. firms showed China will continue to be U.S. companies' top investment destination in 2010, the American Chamber of Commerce (AmCham) in Shanghai said yesterday (Wednesday). More than 90% of those polled by AmCham had an optimistic business outlook for the Red Dragon, up from 81% in a similar 2008 survey. The study also revealed that 64% of companies polled plan on increasing their 2010 investments in China, up from 58% that increased their investments this year. "American companies are finding that their performance in China is the bright spot in an otherwise difficult global picture," said AmCham Shanghai Chairman J. Norwell Coquillard.
  • Japan's economy grew at a much slower pace than previously thought, with government figures showing a revised growth of 0.3% on a quarterly basis, down from the initial 1.2%. On an annualized basis, Japan's gross domestic product (GDP) grew 1.3%, well below the preliminary 4.8% growth estimate. Consumer spending did improve thanks to stimulus measures, but the corporate sector continued to lag, the data showed.

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The Hottest Places to Invest in 2010

[Editor's Note: Money Morning's "Outlook 2010" series delves into the best global profit plays for the new year.]

For global investors, 2010 is shaping up to be a year with two very distinct economic outlooks.

In the first "half," which is actually likely to end in early September, investors can expect a continued escalation in commodity prices, generally bullish stock markets and an ongoing focus on powerful monetary and fiscal "stimulus" initiatives. In the second "half," reality will reassert itself, and investors will find the going tough in many markets.

The real question is: "Which markets will win, and which ones will lose?"


Billionaires Turn to Beggars as Financial Crisis Torches the World's Fortunes

The holiday season is traditionally the time when society extends a helping hand to the less fortunate among us. But this December, thanks to the world's continuing economic unease, we've got a whole new class of "poor" people to worry about.

They're called billionaires – or, even more tragic, "ex-billionaires" – and, according to Forbes magazine, they've taken a bigger financial hit in the past 15 months or so than in any year since the magazine started tracking the fortunes of the world's richest people back in 1987.

In fact, the most recent Forbes survey found that the total number of billionaires around the globe plunged from a record 1,125 in early 2008 to just 793 in March 2009 – a net decline of 332, or 29.5%. Even worse, the total net worth of the world's recognized billionaires plunged 45.4%, from $4.4 trillion in 2008 to just $2.4 trillion this year (numbers are based on stock prices and other values assessed in mid-February). That translates to an average net worth of just $3 billion, down 23%, or $910 million, from 2008.

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Obama Offers New Stimulus Package to Create More Jobs

In an effort to stimulate hiring in the face of a stubborn 10% unemployment rate, U.S. President Barack Obama on Tuesday announced proposals to create more jobs with an expansion of his $787 billion stimulus plan.

In a speech at the Brookings Institution, President Obama avoided calling the proposals a new stimulus package. But the initiatives bear a striking resemblance to the package debated by Congress last February, including more infrastructure spending and a hiring tax credit that didn't make the final cut after objections from members of his own party.

In addition to $50 billion in infrastructure spending, the proposals call for increased lending to small businesses, a one-year moratorium on capital gains taxes, and extending relief to state and local governments.

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