Archives for 2010

January 2010 - Page 108 of 108 - Money Morning - Only the News You Can Profit From

Hot Stocks: With Alcon Sold, Will Nestle Try to Outmuscle Kraft in a Bid for Cadbury?

Is a bidding war brewing for Cadbury PLC (NYSE ADR: CBY)?

In a widely anticipated move, Nestle SA (PINK: NSRGY) said yesterday (Monday) that it would sell its remaining 52% stake of Alcon Inc. (NYSE: ACN) to Swiss drug maker Novartis AG (NYSE ADR: NVS) for about $28 billion. That influx of cash could give Nestle the financial firepower to go up against Kraft Foods Inc. (NYSE: KFT) in a competing bid for Cadbury.

Nestle is always "open to acquisition opportunities if they fit strategically," Chief Executive Officer Paul Bulcke told The Wall Street Journal in September.

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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.

Total Forms Joint Venture with Chesapeake; Manufacturing Index Jumps; Cold Snap Drives Oil Higher; Car Sales Surge in December; Kraft Advances Bid for Cadbury; New BofA CEO Optimistic for U.S. This Year, But Krugman Shows Caution; WSJ: Banned Chinese Companies Continued to Do Business With U.S. Firms

  • Total SA (NYSE ADR: TOT) will pay up to $2.25 billion for a 25% stake in Chesapeake Energy Corp.'s (NYSE: CHK) assets in the Barnett Shale natural gas field in North Texas, Total said yesterday (Monday). Total will pay $800 million for the stake, and up to $1.45 billion for as long as six years by funding 60% of Chesapeake's costs in the field. The Barnett Shale field is the biggest producer of natural gas in the United States and accounted for 52% of Chesapeake's third-quarter output.

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U.S. Escalates Trade Dispute With China

The United States launched another salvo in a trade dispute with China last week when it imposed new duties on imports of steel pipes, escalating tensions between the two powers.

The Chinese government quickly fired back, accusing the U.S. of "protectionism."

The U.S. International Trade Commission (ITC) voted unanimously on December 30 to impose duties between 10.36% and 15.78% on the pipes, which are used mostly by the oil and gas industries. Those new tariffs are designed to negate the subsidies that the U.S. government says China gives its steelmakers.

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Asia's Economic Recovery Gathering Steam with China at the Helm

Manufacturing data today (Monday) confirmed that Asia's economic recovery is gaining strength, and China – whose economy may have expanded at a rate of 9.5% in the fourth quarter – is leading the revival.

The China Federation of Logistics and Purchasing on Sunday said the country's official purchasing managers' index (PMI) rose to 55.2 in December from 54.3 a month earlier. That's the biggest increase since April 2008, and it was aided by an increase in trade. The gauge of export orders rose to 54.5 and the reading for imports climbed to 52.8.

Similarly, the China Manufacturing PMI produced by HSBC Holdings PLC (NYSE ADR: HBC) and Markit Economics jumped from 55.7 to 56.1 last month. The index's average monthly increase in the fourth quarter was the largest on record.

Economists point to these numbers as further evidence of a robust recovery for China's economy, which grew at an 8.9% annualized pace in the third quarter.

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How to Make the Most of a Resurgent M&A Market in 2010

Unlike this time last year, prospects for U.S. corporate mergers and acquisitions (M&A) appear robust heading into the new year. And that bodes well for investors astute enough to identify the sectors where action will likely be hottest.

As an indication of the improving outlook, nine deals with a total value of $19.9 billion were announced from the start of December through Christmas Eve. That came on top of November's 14 M&A announcements, which were valued at $63.175 billion – although that number was distorted somewhat by Warren Buffett's $26.52 billion bid for the 78% of Burlington Northern Santa Fe Corp. (NYSE: BNI) he didn't already own.
 

By contrast, archives of merger-tracking Web site The Online Investor,  show 15 deals involving publicly traded U.S. stocks in December 2008, but the total value was a meager $3.986 billion. (That's not counting the $8.8 billion merger of Japanese electronics giants Panasonic Corp. (NYSE ADR: PC) and Sanyo Electric Co. (OTC: SANYY), which brightened the global picture somewhat.) November 2008 had 14 deals valued at just $4.898 billion.

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Buy, Sell or Hold: Keep Your Portfolio Healthy With Campbell Soup Co. (NYSE: CPB)

On June 1 of last year I recommended buying Campbell Soup Co. (NYSE: CPB). It was a contrarian call at the time, since many brokers and independent analysts had rated the stock a "hold."

That's because most analysts think of Campbell the same way they think of many other consumer staples businesses – as a stable, slow moving business with no real short-term catalyst for growth.

You see, very few remember the tremendous upside that Warren Buffet realized when he invested in another "dull" staples business, The Coca-Cola Co. (NYSE: KO), just prior to a major overseas expansion.And it's precisely that kind of campaign Campbell has mounted – expanding its businesses in Russia, China, and other emerging economies to great success.

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Which Sector Will Step Up and Lead Bulls in 2010?

Digging beneath the surface of the late 2009 market for clues, we find that some measures of breadth continue to deteriorate even as the major indices continue to float near their highs. For example, the percentage of stocks above their 10-day moving average has gone from 81% on Christmas Eve to 71% now. This is an indication that buyers have become more selective.

This adds to a trend that's been developing over the last few months. While the NASDAQ has managed an impressive breakout from its multi-month trading range, it's doing this on the back of fewer and fewer stocks based on the number that are over their 50-day moving average. Part of the problem is the lack of clear market leadership.

One of the reasons that the bull cycle of the past year has been so strong is that it had a rotating cast of leaders: First banks, then retailers, then tech, then energy, then materials, and so on.

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Jobless Claims Improve, but Can Unemployment Turn a Corner?

Fewer-than-anticipated first-time claims for unemployment benefits were filed last week as U.S. businesses shied away from further cuts at the end of the year.

Initial jobless claims dropped by 22,000 to 432,000 last week, the lowest level since July 2008, the U.S. Labor Department said today (Thursday). And the less volatile four-week moving average fell by just 5,500 to 460,250. This is significant because the drop is seen by economists as a more accurate gauge since it irons out week-to-week volatility in the data.

Job cuts tend to wane during the week of the Christmas holiday, and most economists contend that claims must fall below 400,000 before the U.S. economy can begin to create jobs. But the numbers still offer a reason for optimism.

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