Archives for May 2010

May 2010 - Page 7 of 9 - Money Morning - Only the News You Can Profit From

BP Bites the Bullet: Analyzing the Full Cost of the Gulf Oil Spill

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The Exxon Valdez dumped 260,000 barrels of oil off the coast of Alaska, and ExxonMobil Corp. (NYSE: XOM) ended up spending about $4 billion in the wake of that disaster. That means Exxon spent nearly 600 times more on cleanup and litigation than what the oil was actually worth at that time.

So how much will BP PLC's (NYSE ADR: BP) Gulf oil spill, which is significantly greater, set it back?

The fact is, it's still impossible to know exactly how much BP will have to cough up to cleanse itself of this crude fiasco without knowing the full extent of the damage caused. But the picture is getting a little bit clearer each day the cleanup effort wears on.

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U.S. Dollar 'Extremely Overbought' Says Market Researcher

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The euro, which made huge gains against the dollar in the wake of 2008's financial crisis, has come plummeting back to earth amid fears that the Greek credit crisis would spread and undermine the European Union (EU). The euro's decline has meant a sharp rebound for the dollar, which according to respected market researcher Bespoke Investment Group LLC, is now "extremely overbought."

The euro has plunged some 21% versus the dollar from its all-time high back in 2008, Bespoke says. And while it is still above its historical average of $1.183, it is currently less than 2% above its 2008 low.

Meanwhile, the U.S. Dollar Index has rallied over 14% since its short-term lows in November, and it is up 3.5% this week alone.

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The Oil Spill: Disasters and Opportunities

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I find it uncomfortable to advise investors on how to make a profit in the aftermath of a tragedy. And the drama unfolding in the Gulf of Mexico is rapidly developing into just that sort of situation. It has already led me to provide one alert – "Expect Transocean to Keep Going Down" (April 30) […]

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U.S. Job Market Continue Upward Swing, Fueling Confidence in Employment Recovery

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The U.S. job market exceeded estimates by adding 290,000 jobs in April, the Labor Department reported Friday. The biggest upswing in four years indicates a strong upward trend in private sector hiring and a positive outlook for the recovery.

Experts say the job data shows that the recovery is making progress and should erase fears of a double dip recession – even if that progress is slow.

"The jobs report underscores this is a resilience of the recovery," said Lakshman Achuthan, managing director of Economic Cycle Research Institute. "When the business cycle is in an upswing, it starts to feed on itself, and the economy can withstand a pretty big shock without being tipped into a new downturn."

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The Airline Industry: How to Make Good Money From a Bad Business

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After years of off-and-on conversation, UAL Corp.'s United Airlines (NASDAQ: UAUA) is getting into bed with Continental Airlines Inc. (NYSE: CAL) in a merger deal valued at $3.7 billion. The merged entity, keeping the "United" name, will be the largest airline in the world. It will have close to $30 billion in combined revenue, 700 aircraft, and service to 370 destinations in 59 countries, according to BusinessWeek. Early estimates predict savings to reach $1 billion to $1.2 billion annually.

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Money Morning Mailbag: State Budgets Far From Healed After Recession 

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Question: Which of the states are doing best and worst?

– Kathryn

Answer: The first 9 months of 2009 handed states the biggest revenue decline in history and the bleeding hasn't stopped. The Center on Budget and Policy Priorities (CBPP) estimates state budget gaps will grow to $350 billion over the next two years, with every state in "fiscal trouble" except Montana and North Dakota. California is projected to hit $20 billion and New York $9 billion.

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Blunder From Down Under: Australia's Mining 'Super Tax' Will Squeeze the Global Recovery

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Australia just this week unveiled a mining "super tax" that the country plans to levy against its natural-resources sector starting in 2012.

This is bad news.

It's not just because mining is Australia's most important economic sector: Australia is also an enormously important supplier of resources to the fast-growing economies of East Asia, where so many of the world's products are now manufactured. The mining super tax will cause prices to rise on the raw materials that are the key ingredients in so many of those products. And that means the levy from "down under" truly is bad news for the overall global economy.

With the newly announced mining super tax, Australia has shot itself in the foot. In doing so, unfortunately, it may also have peppered the rest of us with buckshot.

To find out which countries - and companies - may be most affected by the "super tax," please read on...

European Debt Contagion Puts U.S. Stock Market on Rollercoaster Ride

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Panic over European debt contagion sent the U.S. stock market on a wild ride today (Thursday), at one point sending the Dow Jones Industrial Average briefly below 10,000 for the first time since November 2009 before the market turned again.

The Dow was down nearly 1,000 points at 9,869.62 at about 2:40 p.m. EDT when it suddenly rebounded. The Dow ended up closing at 10,517 down 350.97 points or 3.2 % on the day.  The Nasdaq Composite Index closed at 2319 down 82.65 points or 3.4%, and the Standard & Poors 500 Index closed at 1127 down 37.85 points or 3.2%. 

The trading left the Dow down 6.1% from its yearly high of 11,205, set less than two weeks ago on April 26.

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Slower Productivity Growth May Force Businesses to Increase Hiring

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U.S. productivity rose faster than expected in the first three months of the year, as employers continued to squeeze existing workers to boost output before hiring new ones, Labor Department figures showed today (Thursday). But the rate of growth slowed, which may force businesses to increase hiring in the coming months.

Separately, fewer Americans filed claims for unemployment benefits for the third consecutive week, in a sign the labor market is slowly recovering from the worst recession since the 1930s.

Productivity rose at a 3.6% annual rate in the first quarter, exceeding the 2.6% median forecast of economists surveyed by Bloomberg News but down sharply from 6.3% in the previous three months.

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