Archives for May 2010

May 2010 - Page 8 of 9 - Money Morning - Only the News You Can Profit From

Despite Spiraling Contagion Fears, Spain Debt Worries Are Overblown

It had a huge housing boom, and is now dealing with the fallout. It has a left-of-center government and a big budget deficit, but relatively low debt in relation to its gross domestic product (GDP). And it has a worrisome current account deficit.

I'm talking, of course, about Spain, which investors clearly fear will be the next domino to fall as a result of the Greek debt contagion.

I disagree.

To see why Spain will shrug off the Greek contagion, please read on...

Delay in Prudential's Deal for AIG's Insurance Unit Threatens U.S. Debt Repayment

Regulators in the United Kingdom threw a wrench into British insurer Prudential PLC's plan to buy American International Group Inc.'s (NYSE: AIG) Asian insurance unit, delaying its $21 billion rights offering until the two parties agree the combined company will have adequate capital.

The delay, or any disruption to the proposed takeover deal, could mean a major setback for AIG's efforts to raise funds to pay back its debts to the U.S. government.

Prudential had planned to issue a prospectus with details of the offering yesterday (Wednesday), including how many new shares will be issued and at what price to shareholders. But the British government's Financial Services Authority (FSA) put the deal on hold with a last minute request for further unspecified information.

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The Bull Market Will Pick Up Pace When Retail Investors Finally Climb Aboard

Data shows that retail investors have not yet bought into the bull market. But when they eventually do regain their confidence, the market will soar to new heights.

Consider this: Trim Tabs Investment Research, a boutique data analysis firm in the San Francisco Bay area that's popular with hedge fund managers, last week declared that it had turned fully bullish from cautiously bullish on U.S. stocks. The firm thus boosted its recommended equity exposure to 100% long from 50% long.

The reason for Trim Tabs' change of posture: Its unique blend of macroeconomic data shows the U.S. economy making a gradual recovery, corporate buybacks are picking up during earnings season, and demand indicators are increasingly bullish.

Let's spend some time understanding their point of view, as the firm is influential among large institutions.

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ABB Ltd. Buys Smart Grid Software Maker to Jump Ahead in Energy Management Industry

Swiss engineering company ABB Ltd. (NYSE ADR: ABB) today (Wednesday) announced it will buy software maker Ventyx for over $1 billion to strengthen its position among energy management competitors by offering smart grid electricity distribution.

ABB will integrate Ventyx into its power-systems division, allowing it to provide modern smart grid software to grid operators who want to run a more efficient distribution system. The deal represents electrical engineering companies' need to prepare energy management networks to handle an increasing supply of renewable sources, like wind and solar.

"The big advantage for energy companies, utilities and industrial customers is that they will now have a single supplier of enterprise-wide information technology platforms and power automation systems," said ABB Chief Executive Officer Joe Hogan. "The advantage for our shareholders is a cash-generating acquisition in an exciting growth market, with a strong management team, a highly complementary offering and geographic scope, and an attractive return on capital employed."

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Question of the Week: Readers Respond to Money Morning's Corporate Profits Query

Corporate profits returned in full in the first quarter of the year, with company after company topping Wall Street estimates.

JPMorgan Chase & Co. (NYSE: JPM) raked in $3.33 billion in first-quarter net income. Ford Motor Co. (NYSE: F) beat analysts' estimates with a $2.1 billion profit. Apple Inc (Nasdaq: AAPL) brought in $3.38 billion.

"There is clear and broad-based improvement in the economic factors in the United States and around the world," said JPMorgan Chief Executive Officer Jamie Dimon. "It appears to be strengthening, not weakening. It is possible that they will strengthen enough to end up with a strong recovery."

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The Greek Debt Crisis Will Slow the Yuan's Advance

Poor Tim Geithner.

Pushed by angry U.S. legislators anxious to brand China as a "currency manipulator," the U.S. Treasury secretary tried to strong-arm China into revaluing the yuan – all because of an assumption that the Asian giant wasn't allowing its currency to appreciate.

Unfortunately for Geithner, those efforts were stymied by a flood of data that actually demonstrates that China's currency has significantly appreciated against the already-wheezing greenback.

To find why China should not revalue the yuan, please read on...

High Oil Prices: Four Ways to Profit From the Looming Zoom

Let's face it: Over the long haul, oil prices are headed higher -probably much higher. For U.S. consumers, high oil prices will represent a major challenge. For investors, however, those same high oil prices could stand as the profit opportunity of a lifetime. Read this report from Money Morning Executive Editor William Patalon III, and find out how high oil prices could shoot your portfolio to new highs.

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We Want to Hear From You: Is U.S. Offshore Oil Drilling Going to Disappear?

News of the Gulf Coast oil spill was only hours old when Money Morning readers first weighed in on the tragedy. The comments and the e-mails haven't stopped since. The chief concern: U.S. taxpayers will yet again be stuck with the tab for a problem caused by corporate malfeasance and lax governmental oversight. Stricter government […]

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Government Reports Show Consumer Spending Fueling Economic Recovery

A string of government reports show that the American consumer is making more money and spending again, providing impetus for a sustained economic recovery.

Personal income jumped 0.3%, or $32.3 billion, in April following a 0.1% rise the month before. The Commerce Department said individual spending rose 0.6%, or $36 billion, last month, the sixth consecutive month spending has increased. Both figures matched estimates from economists surveyed by Briefing.com.

Consumer spending makes up about 70% of the U.S. economy. Economists are keeping a close eye on income and spending because so far, this has largely been a jobless recovery.

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