Archives for May 2010

May 2010 - Page 5 of 9 - Money Morning - Only the News You Can Profit From

A Broad-Based U.S. Recovery is Strengthening the Global Economy Against Europe's Turmoil

Stocks scattered across the capital markets last week like the unwanted children of a terrible divorce, as a blunted rally following a global margin call put a hex on every sector and most commodities – but a U.S. recovery marched on.  

So far in the ten sessions of May, the Dow Jones Industrial Average is down 3.6%, the Nasdaq 100 is -4.7%, the S&P SmallCap 600 is -3.1% and overseas large-caps are down 8.6%.

That's a whole lot of falling, and for what reason? The headlines tell us that investors freaked out over Greek debt, fear of a contagion effect on Spain, speculation that U.S. earnings have peaked, and worry that the great global capital machine will soon seize up for lack of customers and credit.

But headlines don't always tell the whole story.

To take a closer look at why the markets are down, click here.

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Buy, Sell or Hold: Citigroup Inc. (NYSE: C) Is a Turnaround Play that Investors Can't Afford to Miss

Citigroup Inc. (NYSE: C) is truly a global bank.  With operations in more than 100 countries, it leads in consumer banking, credit cards, corporate lending, investment banking and brokerage.  But its forays into the U.S. mortgage market, and its huge exposure to the U.S. retail and corporate banking markets, created huge losses from which the company is still recovering.

Citi, guided by a prudent and savvy investment banker, Vikram Pandit, has embarked in one of the most ambitious and difficult transformations ever attempted by a financial institution.  It is shedding bad assets, cutting costs, raising capital and has segregated the impaired assets and businesses that Citi would like to dispose into a so-called "bad bank," a subsidiary by the name of Citi Holdings.  The success of the restructuring will depend on both Citigroup's execution and on the underlying strength of the U.S. and global economies.

But therein lies the huge upside.  As I have written before, there are few investment opportunities more profitable than the restructuring and turnaround of a business.  And given the huge size of Citi's balance sheet and the fact that banks are pro-cyclical to the economies in which they operate, the potential gains are extremely large.

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China Continues Its Run on African Commodities With $23 Billion Nigeria Oil Deal

China signed a $23 billion oil deal with Nigeria Thursday, reducing Nigeria's fuel imports and positioning China within reach of high quality African oil reserves.

China State Construction Engineering Corporation Limited (CSCEC) signed the deal to build three oil refineries with Nigerian National Petroleum Corporation (NNPC), which said this could be the biggest deal China has ever made with Africa.

Nigeria, Africa's leading oil producer, imports about 85% of its fuel because of the poor condition of its refineries. Shehu Ladan, head of NNPC, said at the signing ceremony that the added refineries would reduce the $10 billion spent annually on imported refined products.

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How to Play Gold - So it Doesn't Play You

The Greek bailout has turned gold into a "must have" investment. But the new gold rally will be different from gold rallies of the past. This time around, gold isn't serving as protection from inflation… it's become more speculative. Read this report to find out exactly how to play gold now.

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Eight Semiconductor Stocks To Charge Up Your Portfolio

Today's world literally runs on semiconductors. Virtually every device that plugs in or uses a battery has its functions controlled by semiconductors of one type or another. And, with spending curtailed in the recent financial crisis, many of the semiconductors in use are either wearing out or going out of date. But, good times are here again for semiconductors. Here's how to make a profit on the new semiconductor boom market.

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Money Morning Mailbag: Investors Should Steer Clear of Australia's Mining "Super Tax"

Money Morning Contributing Editor Martin Hutchinson last week introduced readers to the Australian mining "super tax" that will disrupt the industry's cyclical nature and threaten mining companies' profitability.

Reader questions and comments poured in immediately, especially from our friends in the land down under. Some criticized the government's greed, others saluted the tax, and many wondered what action to take as investors. The result was a passionate, well-informed, and at times combative, reader dialogue. 

Australian Prime Minister Kevin Rudd has proposed an additional 40% tax on mining company earnings and hopes to use the revenue to snag some hefty cash piles from the profitable natural resources industry. But instead he is putting the economy in danger of future funding shortfalls: If the mining industry's revenue stream starts to run thin, the projects the money is supporting will be strapped and funds will have to be squeezed from elsewhere.

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Gold Prices Surge and Will Keep Climbing as Investors Protect Against European Debt Crisis

Gold prices yesterday (Wednesday) broke through to a record high, as investors feared the Eurozone bailout plan would debase the euro and escalate inflation.

Gold for June delivery continued its record-breaking Tuesday climb to hit $1,243.10 an ounce Wednesday. The contract reached an intraday high of $1,249.20 an ounce. Spot gold prices hit $1,244.45 an ounce, up almost 20% in the past three months.

Gold's reputation as a "safe haven" investment causes the metal's price to move inversely to investor confidence, which has been rattled by the Greece debt crisis and last week's 1000-point plunge in the Dow Jones Industrial Average.

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Does the EU Bailout Signal the Euro's Demise?

Does the European Union (EU) bailout signal an end for the euro currency?

Investment icon Jim Rogers and lauded economist Nouriel Roubini think so.

And they may be right.

Eurozone governments were forced to spring into action on Sunday to defend the besieged euro. The currency has come under tremendous pressure as investors wonder if Greece's fiscal crisis will spread to other heavily indebted nations.

Greece's deficit-to-gross domestic product (GDP) ratio is a staggering 13.6%, but Greece is No. 2 on the list of over-spenders. No. 1 is Ireland, whose deficit-to-GDP ratio is 14.3%. Spain comes in third at 11.2%; and Portugal is fourth at 9.4%.

The euro in the past six months has dropped by about 17% against the dollar, as investors rushed to ditch the currency.

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How the Greece Bailout Turned Gold Into a 'Must-Have' Investment

With so much uncertainty in the U.S. stock market – not to mention the debt-contagion concerns emanating from Greece and other European Union (EU) countries – it's more important than ever for investors to hold "hard assets," such as gold and other commodities.

In my view, what's happening in Europe is particularly important for investors to be aware of and understand. The so-called " shock-and-awe" bailout strategy undertaken by the EU and the International Monetary Fund (IMF) – which establishes a $1 trillion rescue package for member-countries facing financial crisis – will not be the answer.

To see how gold and other hard assets are becoming "must-have" investments, please read on…

To see how gold and other hard assets are becoming "must-have" investments, please read on...

Taipan Daily: Trillion Shmillion - Europe's "Common Currency" Is Still Doomed

As far as the euro goes, the trillion-dollar "shock and awe" program was a shocking disappointment. Here's why.

"… while Europeans no longer fear foreign armies, they are starting to fear foreign bondholders. Europe's existence as a "lifestyle superpower' has depended on an ample supply of credit… "
– Gideon Rachman, Financial Times

"…this is just another example of a short-term, leveraged solution, that merely adds to the burden of future problems…"
– Marc Ostwald, Monument Securities

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