Archives for October 2010

October 2010 - Page 6 of 9 - Money Morning - Only the News You Can Profit From

Everything You Need to Know About Tomorrow's OPEC Meeting

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Crude dropped for the second straight day yesterday (Tuesday) after Saudi Arabia made it clear that the Organization of the Petroleum Exporting Countries (OPEC) will leave its production targets unchanged at its meeting tomorrow (Thursday).
Crude oil for November delivery fell 54 cents a barrel – or 0.7% – to finish at $81.67 a barrel on the New York Mercantile Exchange yesterday. Even with yesterday's decline, oil prices are up 11% over the past 12 months.

Speaking in advance of tomorrow's OPEC meeting in Vienna, Saudi Oil Minister Ali al-Naimi said that prices between $70 and $80 a barrel are "ideal," and noted that the market is "very well-balanced" right now. In a related development, Sanford C. Bernstein & Co. LLC slashed its oil-price forecasts for both next year and 2012, and attributed the new viewpoint to big stockpiles.

But this only provides you with part of the picture. And it'll lead you to the wrong conclusions.

So here's the proverbial "rest of the story" – including everything you need to know about tomorrow's OPEC meeting.

For a better understanding of the workings of the global oil market, please read on...

We Want to Hear From You: Are You Vulnerable to the Budgetary Woes of Your State and Local Governments?

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It's been 25 years since state and local governments across the United States were in such bad shape – and the budgetary pain is far from over.

The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.

"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.

A study released this week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.

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M&A Frenzy Stays Hot With Pfizer's $3.6 Billion Deal for King Pharmaceuticals

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The frenzy of activity in mergers and acquisitions (M&A) continued yesterday (Tuesday), when Pfizer Inc. (NYSE: PFE) agreed to pay $3.6 billion in cash to buy King Pharmaceuticals Inc. (NYSE: KG).

Pfizer, the world's largest drugmaker, is paying $14.25 per share for King. That's a premium of 40% to the stock's Monday closing price of $10.15. As part of the deal, Pfizer will receive such products as Avinza and EpiPen, a pre-filled injection designed to quickly treat serious allergic reactions.

King also gives Pfizer access to the Flector pain patch and morphine pill Embeda. Pfizer has been looking to expand its pain products beyond the arthritis treatment Celebrex and nerve pain remedy Lyrica. King had $1.78 billion in revenue last year and is focused on making pain medications that patients can't abuse.

Pfizer needs new products to help offset revenue losses expected next year when generic copies of its top-selling drug, the Lipitor cholesterol pill, enter the market. Lipitor sales topped $11.4 billion last year.

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CNOOC Creates Biggest China-U.S. Oil Deal For Stake in Shale Gas Industry

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China's state-owned energy company China National Offshore Oil Corp. (CNOOC) (NYSE ADR: CEO) late Sunday announced it would invest $2.16 billion in U.S.-based Chesapeake Energy Corp. (NYSE:CHK) to increase China's stake in unconventional gas resources like shale gas. It is the largest ever China-U.S. oil and gas deal.

CNOOC initially will pay $1.08 billion for a 33% stake in Chesapeake's Eagle Ford shale acreage in Southern Texas. China's third-largest oil company will invest an additional $1.08 billion by paying 75% of Chesapeake's drilling and completion costs in coming years, allowing Chesapeake to tap hard-to-extract shale gas deposits and boosting its weak balance sheet.

The deal highlights China's need to develop its shale-gas extraction techniques. The country has 26 trillion cubic meters of shale gas reserves that are largely unexplored due to a lack of drilling ability – and Chesapeake is a pioneer in the shale gas industry.

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You Heard it Here First: China's Plan to Dethrone the Dollar Continues to Unfold

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The U.S. dollar is on the way out as the world's top reserve currency. And as Money Morning Chief Investment Strategist Keith Fitz-Gerald predicted more than a year and a half ago, the yuan could be set to replace it.

The greenback has served as the world's benchmark reserve currency since the mid-20th century, but soaring deficits and the U.S. Federal Reserve's loose monetary policy have drained the dollar's value. Meanwhile, emerging markets – many of which are vibrant manufacturing hubs, net creditors, and have rich caches of commodities – are more fiscally sound than the United States, which has a $1.3 trillion budget deficit.

"If you look at the fundamentals of a lot of these emerging markets, they are considerably better than developed markets," Kenneth Akintewe, a Singapore-based investment manager at Aberdeen Asset Management PLC told Bloomberg in an Oct. 11 interview. "Who wants to be holding U.S. dollars at this stage?"

China, which leads the world with more than $2 trillion in currency reserves held mostly in U.S. Treasuries, is chief among the countries seeking respite from the dollar's decline. Beijing has long bemoaned the depreciation of the dollar, stating outright that it should be replaced as the world's main reserve currency.

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Global Currency Wars: Three Ways to Profit From the "Race to the Bottom"

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Short of sitting on the sidelines, investors can't escape the global currency wars – a "race to the bottom" shootout that has countries debasing their currencies to boost overseas sales.

But here's the only thing you need to know: As the central banks of the world slug it out in the global currency markets, individual investors who understand the currency-war strategy can reap some extraordinary gains.

Let's take a look.

For three investments that will let you profit from the "race to the bottom," please read on…

For three investments that will let you profit from the "race to the bottom," please read on...

Don't Miss Out on the Global Stock Rally

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Indices across the world rose last week in what looks to be the beginning of a historic stock rally.

The Standard & Poor's 500 Index rose 1.6% last week, while the overseas developed-world large-caps – represented by the Vanguard FTSE All-World ex-US exchange-traded fund (NYSE: VEU) – rose 2.4%.

Meanwhile, the iShares Emerging Markets ETF (NYSE: EEM) rose 1.7%, the iShares FTSE/Xinhua China 25 Index (NYSE: FXI) rose 3%, the iShares MSCI Switzerland Index fund (NYSE: EWL) rose 3%, and the iShares MSCI Australia Index Fund (NYSE: EWA) rose 3.6%.

Among our favoried emerging markets and sectors, iShares MSCI Turkey Index Fund (NYSE TUR) blasted 6.5% higher, the Market Vectors Latin American Small Cap Index Fund (NYSE: LATM) rose 3.5% and Market Vectors India Small Cap Index Fund (NYSE: SCIF) rose 2.4%. The SPDR Gold Trust (NYSE: GLD) rose 2.1% and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) rose 2.6%.

To find out how you can participate in the global stock rally read on...

International M&A Boom Fueled by Global Currency War

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A binge of mergers and acquisitions (M&A) is being fueled by the global currency war, which has increased the value of emerging market currencies.
The value of worldwide M&A totaled $1.75 trillion during the first nine months of 2010, a 21% increase from comparable 2009 levels and the strongest nine month period for M&A since 2008, according to Thomson Reuters.

But mergers and acquisitions involving companies located in the emerging markets skyrocketed by 62.9% during the same period over 2009, totaling $480.7 billion.  During the first three quarters of 2010, emerging markets accounted for 27.4% of worldwide M&A volume compared to 21% during the comparable period in 2009.
And companies are showing more willingness to venture across borders to find the resources they're after.

M&A activity in deals across international borders has surged during the first nine months of 2010, totaling $723 billion accounting for 41.2% of overall M&A volume, compared to 26.1% last year at this time.

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Buy, Sell or Hold: Silver Wheaton Corp. (NYSE: SLW) Is Poised to Profit from the White Metal's Rally

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Have you ever wanted to invest in a company that owned the supply of a product at a nice fixed rate of cost, but was able to leverage the upside, but not have to take any risk in actually making the product?  How about if it's something inherently dangerous and expensive with bad margins like mining?

In the case of Silver Wheaton Corp. (NYSE: SLW) we have a very interesting investment vehicle, because the company does not have to take additional risks to grow its production numbers.  Silver Wheaton owns the rights to silver production from mines that produce it as a bi-product.  This allows the company to enjoy a growing supply curve, while protecting its balance sheet.

It has already purchased these rights upfront for cash, helping some miners with their capital costs to open a new mine.  As these mines ramp up production in whatever primary product they are producing, Silver Wheaton gets access to the silver produced as a bi-product.

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The Dollar's Unavoidable Day of Reckoning is Here...

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The government is printing money 24/7 to paper over the bad debts of the housing crisis and Wall Street bailouts. We're about to enter a cycle of hyper-inflation that will devalue every dollar you own… but there is a way to profit! Find out how in this free report.

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