Archives for April 2010

April 2010 - Money Morning - Only the News You Can Profit From

By Failing to Lock Up Canadian Oil Supplies, U.S. Exposes National Energy Plan Flaws

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Under new U.S. President Barack Obama, it was all supposed to be different. The new administration had vowed to deliver a national energy plan that would guarantee this country's future energy security. The rich and geographically nearby Canadian oil sands should have been part of that plan.

At the end of the day, the United States dropped the ball on the oil sands, meaning Americans are stuck with yet another pieced-together national energy plan that has more sizzle than steak.

Unfortunately, the cost of this misstep will be higher than ever.

For a detailed look at America's latest energy miscues, please read on...

Seven Cash Cows That Point the Way to Profit

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In uncertain economic times, every investor needs a little extra cash in their pocket. These stocks should do the trick. We're not talking about commodity plays here, rather these "cash cows" are the companies with enough "moo-lah" to invest in their own growth… something that should definitely pay off in the long run for investors. Check out our "cash cow" stocks in this report.

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Money Morning Mailbag: Readers Eager For Effective Financial Regulation

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The Money Morning mailbag continues to overflow with reader thoughts and concerns regarding financial reform – which is finally making slow progress in Washington. After three failed attempts to bring a financial regulation bill to the floor this week, the Senate on Wednesday finally agreed to start debate.

Following is a collection of this week’s Money Morning reader comments on our articles regarding reform, inspired also by more news from the Securities and Exchange Commission case against Goldman Sachs Group, Inc. (NYSE: GS) as executives faced a Senate committee hearing.

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HP Shakes Up Smartphone Market With $1.2 Billion Palm Buyout

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Hewlett-Packard Co. (NYSE: HPQ) today (Thursday) bought Palm Inc. (Nasdaq: PALM) in a $1.2 billion deal that marks a giant step by the computer firm into the burgeoning smartphone market and brings to a close speculation about a struggling company that was running out of options.

The deal will catapult H-P, the world's largest tech company in terms of revenue, into direct competition with a handful of other tech giants – including Apple Inc. (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Microsoft (NYSE: MSFT) – in the rapidly growing smartphone market.

H-P said it would pay $5.70 a share in cash for Palm, representing a 23% premium over its Wednesday closing price.

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China-U.S. Trade Relations Plagued by Protectionism

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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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Debt Contagion Fear Spreads in Europe as S&P Lowers Eurozone Credit Ratings

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Standard & Poor's yesterday (Wednesday) lowered Spain's credit rating – just one day after downgrading the ratings of Greece and Portugal. The downgrades have prompted Germany to promise a quick release of Greece bailout funds as fears of a debt contagion spread rapidly across Europe.

"It is probably fair to say that Tuesday, 27 April was the day that the situation in the euro area took a dramatic and rather frightening turn for the worse," credit analysts at Credit Suisse (NYSE ADR: CS) in London said in a research note. "The concern is the extent and speed of the spreading of the crisis in an environment of too many financial obligations, not all of which will be serviced, in our view, and in a crisis which in our view is about far more than Greece."

S&P downgraded Spain's long-term credit rating one notch to AA from AA+ with a negative outlook, citing an extended period of low economic growth and high borrowing costs.

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The Winners and Losers in the 'Commodities New World Order'

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In the "commodities new world order," commodity producers will be king.

Investors who need proof need only consider recent events. Iron ore prices are at record levels, and the annual-price-setting arrangement has broken down. Venezuela President Hugo Chávez has signed "dark side" agreements with Russian Prime Minister Vladimir Putin for Russian companies to develop Venezuela's oil-and-mineral resources. China may have invested $1 trillion or so in U.S. Treasuries, but the Asian giant's only truly successful investment so far has been the 17% stake it took in Canadian-resources player Teck Resources Ltd. (NYSE: TCK).

Welcome to the commodities new world order. These events serve notice that – as we put the global financial crisis behind us – the commodity "haves" will set the agenda … while the commodity "have nots" will fall farther and farther behind.

To discover the identities of the new-world-order winners – and losers – please read on...

As Scary as it Seems, Greek Debt Crisis Won't Spawn Second Global Meltdown

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The Greek debt crisis is starting to display an uncanny resemblance to the subprime crisis that sank the U.S. housing market, sent the global economy into a tailspin and touched off the worst financial crisis since the Great Depression.

Indeed, Greece has behaved very much like a subprime country:

  • It has borrowed more money than it can possibly repay – all the while lying to everybody about its true state of affairs.
  • "Liar loans" have been made, in Greece's case, to enable the country to "cook the books" with regard to its budget deficits.
  • New problems continue to emerge – apart from the liar loans – making it impossible to be sure all the troubles have been unveiled.
  • And as was the case with the subprime-mortgage crisis, embattled Wall Street investment-banking-giant Goldman Sachs Group Inc. (NYSE: GS) appears to have been intimately involved in the business.

And the similarities don't end there.

To understand why the Greek debt crisis won't spawn another global financial crisis, please read on...

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

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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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