Archives for December 2009

December 2009 - Page 7 of 10 - Money Morning - Only the News You Can Profit From

Credit Trouble for Spain and Greece Spreads Fears of Sovereign Defaults

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Standard & Poor's today (Wednesday) cut its credit outlook for Spain to "negative" from "stable," fanning concerns that sovereign defaults will spread throughout the global economy.

The dimmer outlook for Spain "reflects the risk of a downgrade within the next two years," S&P said.

It also increased fears among investors that the world could see a wave of global credit defaults. After the default of state-owned Dubai World forced investors to think twice about the recent rally in global stocks, Fitch Ratings Inc. on Tuesday cut Greece's credit rating to BBB+ from A-minus.

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GM Maps Future by Revamping Management Team

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When General Motors Corp.'s (NYSE: GRM) Chief Executive Officer Fritz Henderson resigned last week, it not only set off a comprehensive management shakeup at the highest levels, it also signaled an entirely new direction for the beleaguered carmaker's future.

Henderson's resignation was the definitive moment in the changing of the guard at GM, and the death knell for a culture built on a "business as usual" mind-set.

That much was made clear by new Chairman and Interim CEO Ed Whitacre Jr. as he laid out his vision for the company's future for about 800 high-level employees at a meeting last week.

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Investment News Briefs

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Obama Proposes New Stimulus Initiatives; CIT to Exit Bankruptcy Tomorrow; Gold Falls a Third Straight Day; GM Aims to Repay TARP by End of 2010; P&G Chair Lafley to Retire; United Orders 50 New Aircraft from Boeing and Airbus; Strong Europe Sales Keep McDonald's Growth Going; Kuwaiti Sovereign Wealth Fund Sells Citi Stake

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China's Emergence is the Decade's Most-Read Story

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China's emergence as a global economic superpower was the most-read news story of the past decade, surpassing such events as the Iraq War and the 9/11 terrorist attacks, concludes The Global Language Monitor LLC, a U.S. media tracking group.

There's a strong-and-growing interest in the Asian heavyweight, now the world's No. 3 overall economy, said Global Language President Paul JJ Payack.

"The rise of China to new economic heights has changed – and continues to challenge – current international order," Payack said. "It is with little surprise that its ongoing transformation has topped all other news stories in a decade [that's been marked] by war, economic catastrophe, and natural disasters."

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Property Group Bucks Commercial Real Estate Trend with $2.23 Billion Acquisition

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Simon Property Group Inc. (NYSE: SPG) defied prevailing commercial real estate trends yesterday (Tuesday) by agreeing to acquire Prime Outlets Acquisition LLC, an operator of 22 outlet centers around the nation, for $2.33 billion including debt.

Prime Outlets operates factory outlet centers in major U.S. metropolitan markets including Washington D.C., Baltimore, San Antonio and Orlando. The centers were 92% occupied as of June 30 and generated sales of about $370 a square foot, Simon Property said.

Simon will pay Prime Outlets' owners $700 million, 80% in cash and 20% in common operating partnership units, plus $1.63 billion in debt, Indianapolis-based Simon Property said.

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Three Reasons Commodities Prices Will Continue to Soar in the New Year

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[Editor's Note: This report on commodities is part of our "Outlook 2010" series, which chronicles the global-investing outlook for the new year.]

In a Money Morning column last December, I predicted that "commodities may be due for a recovery in 2009." It's always nice to be right, but I have to say the move in some commodities has surprised me. Just look at the performance figures for the 12-month period that ended in mid-November.

When it comes to commodities, most of 2010 will be a reasonably close repeat of 2009. You may think that sounds dull – until you look at the accompanying chart (see chart below) and realize just how much more there is to go.

Although the rally started at an admittedly low point in January, by mid-November it was very clear that commodities were once again in a major bull market. A few commodities have been left out – coal, natural gas and many foodstuffs have experienced lackluster performance – but many of the others (such as the metals, in particular) have had an exceptional year.

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Citi's Pandit is the Right Man For the Job - at Bank of America

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Bank of America Corp.'s (NYSE: BAC) search for a new boss to succeed the deposed Kenneth D. Lewis had ground to a complete halt. Nobody was willing to take the job for the compensation the Obama administration's "Pay Czar" was willing to authorize.

Now Bank of America is repaying its Troubled Asset Relief Program (TARP) funds in order to get out from under the pay czar's tyranny, in the hope the big bank can attract a worthy chief executive officer. That's a good strategy, and it just might help BofA attract the most obvious candidate of all: Vikram S. Pandit, the embattled (and $1-a year) CEO of Citigroup Inc. (NYSE: C).

Pandit got the Citigroup job after 11 years at Morgan Stanley (NYSE: MS) and founding the Old Lane hedge fund, which Citi bought for $800 million – only to shut down less than a year later.

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New Stimulus Won't Save Japan From Deflation, Soaring Deficit

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Japan today (Tuesday) unveiled an $80.6 billion (7.2 trillion yen) stimulus package to bolster the economy and promote employment. But a sharp drop in exports, declining prices and rising joblessness should continue to plague the world's second-largest economy.

Japan's stimulus package will put $39 billion (3.5 trillion yen) toward supporting regional growth. Some $9 billion (800 billion yen) will go to environmental programs and $6.8 billion (600 billion yen) will be used to promote job growth. Much of the remainder will be used to offer loan guarantees for small companies to ease a credit crunch.

Japan's third-quarter gross domestic product GDP rose at a 4.8% annual rate, after revised growth of 2.7% in the second quarter. But the nation's currency, which is hovering around a 14-year high against the dollar, is jeopardizing the recovery by making Japanese exports more expensive for other countries.

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Investment News Briefs

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More AIG Execs Threaten to Quit Over Pay; Bernanke Not Raising Rates Anytime Soon; Gold, Oil Fall After Fed Comments; October Consumer Credit Falls Less Than Expected; SEC Charges Former New Century Execs with Fraud; Cadbury to Respond to Kraft Bid Next Week; BlackRock Plans First Debt Offering in Two Years; Commercial Loan Delinquencies at Record High; RIM's BlackBerry to Get Wider Reach in China

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