Archives for April 2010

April 2010 - Page 9 of 10 - Money Morning - Only the News You Can Profit From

How Long Will Emerging Markets Continue to Prosper From U.S. Debt Ills?

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A surge in purchases of emerging market debt and a dip in buyers' appetite for U.S. Treasury bonds has sparked speculation that developing nations have become the next safe haven for bond investors. But the more likely scenario is a reversal of capital flows that will sustain Treasury debt for a little while longer.

Emerging market bonds have enjoyed the best first quarter on record as new issuance has surged and interest rate spreads over U.S. Treasuries have narrowed to their lowest since 2008.

Sovereign bond markets in developing countries have sold a record $157 billion so far this year, a 42% jump over the same period in 2009, which marked the previous record, according to data from Dealogic Holdings plc.

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Oil Prices On a Tear and Headed Higher

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Oil prices are at their highest level in more than a year and a half and are likely to head even higher as the global economy bounces back from recession.

Benchmark crude for May delivery rose $1.75 to settle at $86.62 a barrel on the New York Mercantile Exchange (NYMEX) Monday. That followed gains of $1.11 a barrel on Thursday and $1.39 a barrel last Wednesday.

In all, prices are up over 5% since last week and over 70% since April 2009. And right now oil is trading at its highest level since Oct. 8, 2008, when crude settled at $88.95.

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How to Stop Greedy Banks From Killing U.S. Capitalism

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A white paper on bank reform delivered to Congress and regulators last week by the Association of Mortgage Investors – the powerful lobbying group that represents huge institutional investors – warns that if the securitization market isn't radically reformed "it will be difficult if not impossible for capital market investors to return to funding economic activity."

What the report doesn't say is that banks – standing in the way of bank reform – don't want a simplified, standardized, and transparent securitization market, because that would revitalize free-market disciplines and undermine the control they exercise over the credit markets.

Right now, the stock market is discounting news about tight credit conditions. But analysts worry about an increasing disconnect between rallying stock prices and the hoped-for rebounds in consumer-driven growth and the U.S. housing market – both of which are struggling with a lack of access to credit. This disconnect is fostering fears of a stock-market correction.

Investors need to understand exactly what's at stake here. And they need to know how to protect themselves and – even more important – how to profit from the volatile-but-powerful capital waves that will result from this fundamental battle over our future.

To understand the escalating risk – and strategies needed to protect the free markets – please read on...

Know When to Fold'em: When Is the Right Time to Sell a Stock?

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There's one word in every stock market movie ever made that's never uttered in a normal tone of voice. Never merely said, but rather shouted.

That word is SELL!

Indeed, no other word in the financial lexicon is so often associated with market uncertainty, investor fear, or in the worst case, outright panic . Truthfully, I can't recall a single film in which the protagonist calmly decides to sell based on reasoned analysis.

Of course, that's the case in movies because it makes for stronger plots – ones propelled by high drama and intense emotions. But all too often, it's much the same in real life.

And it shouldn't be.

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SandRidge Energy Buys Oil Developer to Reduce Its Reliance on Suffering Natural Gas

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SandRidge Energy, Inc. (NYSE: SD) on Sunday announced it would pay $1.6 billion for Arena Resources, Inc. (NYSE: ARD) to develop a more oil-focused business, as natural gas prices remain low.

SandRidge will pay $2.50 in cash and 4.78 SandRidge shares for each Arena share – a 17% premium to Arena's $34.26 Thursday closing price. The combined company will be valued at around $6.2 billion.

This purchase makes SandRidge one of the largest producers of conventional oil and gas in West Texas. It's the second acquisition for the company since November, when it paid $800 million for Forest Oil Corp. (NYSE: FST) properties.

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Pacifying the Panda: U.S. Companies Must Take a New Approach to China

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There's no question about what kind of profit opportunities the Chinese market offers. Moreover, the willingness of U.S. companies to partner with China in the pursuit of profit is equally blatant.

So why is it that more U.S. businesses feel less welcome in China now than they did four years ago?

The fact is that in the past four years, China's economy has continued to grow by leaps and bounds, while a humiliating financial collapse and soaring debt have tarnished much of the shine that once adorned the U.S. market.

Indeed, for the first time in perhaps more than a century China has the upper hand. How long that will last is a difficult question to answer, but right now, China wants to use its leverage to support domestic companies – and it's doing so unapologetically.

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Buy, Sell or Hold: BHP Billiton is Poised to Pick Up Big Gains on the Back of a Global Commodities Bull

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Face it, commodity prices are in a secular rally – and there are three big reasons why.

  • Loose Monetary Policy
  • Growing Demand in Emerging Markets
  • And the Congruent Devaluations of Major CurrenciesWe've already profited from this inflationary trend in the Money Map VIP Trader.  And – just like I did with the broadband revolution – today I am presenting you with a stock that stands to benefit from these developments – BHP Billiton Ltd. (NYSE ADR: BHP).

First, let's talk about policy. Immediately following the 2008 financial crisis, the Group of 20 (G20) countries agreed to stimulate their economies simultaneously.  And, while the emerging economies almost unanimously have already returned to strong rates of growth, most advanced economies are just now turning the corner.

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Why the Bulls Can Stand Strong at Home and Overseas

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Stocks enjoyed another plus week, closing one of the better Marches of the past 80 years. It seems like ages since volatility has been this low, and there have been many complaints about complacency and listlessness. Yet those concerns may be misplaced if indeed we are enjoying the second leg of a normal bull cycle. Low volatility in a bearish phase does suggest complacency, to be sure, but in a bullish phase it serves more to keep expectations in check. 

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We Want To Hear From You: Time to Answer the Question of the Week

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With the inaugural installment of our new "Money Morning Question of the Week" feature under our belts, we are extremely excited about the insightful and passionate responses our readers continue to share on the topic of health care. We are dedicated to reporting and sharing cutting edge news and information with you, and we think feedback is a necessary part of making this process as successful as possible.

Please take some time to ponder this week's question, and share any thoughts, concerns or questions you have about U.S. debt. Some fear it, some are angered by it, and others are finding ways to profit from it. We want to know what you think about our country's situation and how it will affect you in all the positions you may hold – taxpayer, employee, business owner or investor.

Check back here later this week as we post the answers and pose a new question for discussion – don't be shy, we are ready and waiting to hear what you have to say!

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Citigroup Spin-Off Primerica Boasts Strong Stock Debut in Hot IPO Market

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Citigroup Inc. (NYSE: C) on Thursday debuted its insurance spin off Primerica Inc.'s (NYSE: PRI) stock with soaring results, as 2010 proves to be a strong year for initial public offerings (IPOs).

The stock opened strong Thursday morning with 21.36 million shares at $15.00, and closed up 31% at $19.65 a share.

Primerica wanted to sell 18 million shares at $12 to $14 per share and raise $290 million, but exceeded expectations with more than 21 million shares at $15 each for a $320.4 million sale.

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