Archives for December 2010

December 2010 - Page 4 of 9 - Money Morning - Only the News You Can Profit From

Progress Made on U.S.-China Trade, but Currency Roadblock Remains

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The United States and China this week wrapped up a two-day meeting on trade that was aimed at cooling rising tensions between the two nations. Still, despite the progress, currency valuations and trade tariffs will continue to be a fixture of both countries' foreign policies.

The U.S. trade deficit with China this year could top $270 billion, surpassing the 2008 record of $268 billion. U.S. policymakers blame China's undervalued currency and government subsidies for the imbalance. China's disregard for intellectual property rights and bias towards its own domestic companies are also major points of contention.

In a rare show of conciliation, China during Wednesday's trade talks agreed to loosen some of its trade restrictions and better enforce intellectual-property rights on the Mainland -especially to curtail rampant software piracy that costs software makers an estimated $7.9 billion a year in lost revenue.

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Mobile Banking: Why VeriFone Systems Inc. (NYSE: PAY) is Positioned to Win

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With the emergence of handset-driven e-commerce technology, banks, mobile-phone sellers and telecom-service providers are working feverishly to cook up a profitable recipe for the fast-growing mobile-banking business.

But with so many players setting up shop – and so many potential new mobile-payment services on the menu – the safest profit play for investors may be the one that's able to deliver all these services to end-users.

And we've identified a clear early leader.

For insight on the early leader in this new market, please read on...

Shale Gas Initiative Brings Morocco to Our Doorstep

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Last Friday morning, in my office in Pittsburgh, I met with a delegation from Morocco. The five officials were from Office National des Hydrocarbures et des Mines (ONHYM), the national agency overseeing oil, gas, and mining. They're here in the United States under the provisions of a Department of State (DOS) initiative on the major new energy source – shale gas.

And they gathered in my conference room in Pittsburgh to discuss how to best manage this significant new source of fuel.

To find out why Morocco needs U.S. help, read on...

Spain's Debt Rating Faces Moody's Downgrade, Puts Country on Eurozone Bailout Watch

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Moody's Investors Service (NYSE: MCO) yesterday (Wednesday) said it might downgrade Spain's debt rating due to concerns about high borrowing costs, the poor financial state of its banks, and the country's regional debt.

The ratings firm said the country's vulnerability to refinancing needs in 2011 is triggering weak market confidence.

"Spain's substantial funding requirements, not only for the sovereign but also for the regional governments and the banks, make the country susceptible to further episodes of funding stress," said Moody's analyst Kathrin Muehlbronner.

The country currently has an Aa1 rating from Moody's, which was cut from Aaa in September. The news came a day before a planned bond sale of up to 3 billion euros ($4.01 billion), and at a time when Spain needed to bolster investor confidence in its ability to fix its financial woes.

"The news is another negative for Spain, and only makes tomorrow's Spanish bond auctions even more tricky," Niels From, chief analyst at Nordea Bank AB in Copenhagen, told Bloomberg. "Spain is already struggling to convince market participants that the country can put its own house in order itself."

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Chinese IPOs Making Waves in the Market, but Beware of Bubbles

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Record fundraising activity in the market for initial public offerings (IPOs) is pushing valuations for Chinese companies to sky-high levels, raising concerns about a possible bubble.

IPOs are likely to raise more than $300 billion for issuers worldwide in 2010, exceeding the previous record of $295 billion in 2007, despite the sluggish economic recovery in Western markets.

In the first 11 months of 2010, IPOs worldwide already raised $255.3 billion in 1,199 deals, according to a "Year-end Global IPO Update" report from Ernst & Young.

And the red-hot Asian markets, led by China, continued to lead the recovery, raising the most capital ever. Asian issuers have raised $164.5 billion so far this year – already surpassing the $98.2 billion raised in the peak fundraising year of 2006 and accounting for 64% of total global IPO value so far in 2010.

That's more than four times the $40 billion in IPOs completed by the second-ranked North American market. Europe was third, raising $32.8 billion, far outdistancing the Middle East and Africa's $5 billion.

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Nobody Wins with President Obama's Proposed U.S. Tax Package

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U.S. President Barack Obama last week struck a controversial compromise with Republicans on the expiring Bush tax cuts in an attempt to beat the Dec. 31 deadline – and the big tax increase facing American individuals and businesses.

Pundits immediately questioned his call. Did President Obama cave to pressure, or did he pull off a sly political coup? Will this decision aid a still-struggling U.S. recovery, or will it add to the mountain of existing U.S. debt and stick future generations with the tab?

Needless to say, the deal has fired up tempers on both sides of the aisle.

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Dell-Compellent Deal Shows the Sky is the Limit for Cloud-Computing M&A

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In an indication of how far cloud computing has come – and more importantly where it's headed – tech companies have committed some $5 billion to cloud-related mergers and acquisitions (M&A) since mid-April.

Dell Inc. (Nasdaq: DELL) on Monday made the latest move – snatching up data storage company Compellent Technologies, Inc. (NYSE: CML) for $960 million in cash. The acquisition will help Dell expand its offerings of data-center products – cloud computing.

Cloud-computing effectively lets companies outsource information technology (IT) services. The cost of storing data and software, or even billing and payment processes are pushed onto the cloud provider – a separate company that goes through the trouble of securing all of that information.

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