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October 28
Three Ways to Profit From Rising Oil Prices
By Martin Hutchinson
Contributing Editor
Money Morning
Crude oil is knocking on the door of $80 a barrel. That's not what experts have been expecting. At the start of the year, when oil prices were below $40, these experts predicted prices would stay there, or even decline a bit.
But the truth is, an explosion in the world money supply, particularly in China, has fueled oil-intensive growth and caused crude prices to reverse their decline of late 2008. This trend is likely to last for at least the next several months. So how should investors play it?
The underlying cause of the continuing explosion in oil prices is the loose U.S. monetary policy that central banks around the world put in to counter the banking crisis and have kept there. In the United States, interest rates remain at zero – even though inflation is already creeping up towards 3%...
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Why Gold Will Surpass $2,500
Few investors realize that inflation is the least of the factors driving the bull market in gold. Other factors, like Venezuela's crackdown on gold exports, are likely to push prices higher. Find out how to play each of the "7 Key Drivers" in our Money Morning Publisher's Series report... Go here to get it for free.
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Why Mike Dell Hates Me
By Adam Lass
Guest Editor
I am about to buy my daughter a computer for her birthday. But that's not necessarily great news for anyone involved – her, her mother, the folks who are making the machine, or even the guys who are delivering it to us.
My daughter will be pleased enough when she sees the box. What she will find inside the Styrofoam peanuts will greatly resemble my high-end laptop, which she has been coveting (and frequently borrowing) for a year now. But it won't be anywhere near as powerful, and it will only cost me about 10% of what I spent on my machine.
When she plugs it in, she will discover that her cheapskate, dictatorial father has purchased her one of those newfangled "netbooks." It will have just enough computing power and memory to allow her to search Wikipedia, write reports for school, and chat with friends on Facebook...
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Investment News Briefs
With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Consumer Confidence Falls Again; Home Prices Gain for Seventh Month in a Row; Icahn Again Trying to Stop CIT Debt Offer; Obama Reveals $3.4 Billion "Smart Grid" Grant; U.S. Steel Suffers Third Quarterly Loss in a Row; Ford Flourishes in Satisfaction Survey; Old GM Plant to Produce Plug-In Hybrids - The Conference Board's Consumer Confidence Index fell for the second month in a row, dipping to 47.7, compared to 53.4 in September. "Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment," said Lynn Franco, director of The Conference Board Consumer Research Center. "The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."
- The Standard & Poor's/Case-Shiller Home Price Index gained 1.2% sequentially to a seasonally adjusted 144.5 in August, but was down 11.3% year-on-year. "Demand was boosted by investors and tax credits, supply was constrained by foreclosure moratoriums (and) modifications, and (Federal Housing Administration) financing was flowing freely," wrote Deutsche Bank AG (NYSE: DB) analyst Nishu Sood. "This entry level stabilization was real, but it is principally government sponsored and therefore tenuous."
- Billionaire investor Carl Icahn is trying to block commercial lender CIT Group Inc.'s (NYSE: CIT) $30 billion debt exchange offer, telling unsecured bondholders he will pay them 60 cents on the dollar if they agree to reject the plan, Bloomberg News reported. In a statement, Icahn says his 30-day tender offer is "assuring them a floor price in the event the notes trade lower." CIT's plan offers 70 to 90 cents on the dollar in the form of new debt plus equity if they agree to the out-of court exchange. CIT is giving bondholders until Nov. 5 to accept the offer, after which the company would enact a prepackaged bankruptcy. Icahn, who says he's CIT's largest shareholder, last week offered the company $6 billion to pull its offer on the table.
- With the goal of making the nation's power transmission system more efficient, U.S. President Barack Obama announced a $3.4 billion government grant to support 100 "smart grid" projects, which will be matched by $4.7 billion in private investments. Likening the effort to the ambitious development of the U.S. interstate system 50 years ago, President Obama said grid modernization would lead to a "smarter, stronger and more secure electric grid." The grant is a part of the administration's $787 billion stimulus package.
- Pittsburgh-based United States Steel Corp. (NYSE: X) suffered its third-straight quarterly loss amid sagging demand for metal. The company lost $303 million, or $2.11 per share, for the quarter ended Sept. 30. That compares with a profit of $919 million, or $7.79 per share in the same period last year. Chief Executive Officer John Surma was optimistic about the future thanks in part to declining inventories. "We believe that the U.S. and global economies are in the early stages of a gradual recovery, which has been aided by global stimulus policies and may be supported by continued improvement in credit markets and inventory restocking," he said.
- Consumer Reports has deemed Ford Motor Co. (NYSE: F) to be the most improved automaker, while ranking Chrysler Group LLC dead last in terms of reliability. The popular consumer magazine says Ford is the only American automaker that is competing with Asian brands such as Toyota Motor Corp. (NYSE ADR: TM). "Ford definitely has closed the gap," Rik Paul of Consumer Reports told Reuters in an interview. "We started seeing that a couple of years ago. We didn't know at that time if it was a fluke or if it was something they were going to be able to maintain. Last year, they were still there and this year, they are still there."
- General Motors Corp. (NYSE: GRM) is selling its Wilmington, Del. manufacturing plant to Fisker Automotive Inc., which will make the Karma, a luxury plug-in hybrid electric car there starting in 2012, Reuters reported. Fisker intends to pay $18 million for the 3.2 million square foot property, and expects to produce 75,000 to 100,000 vehicles per year at the plant, which was formerly used to make Pontiacs and Saturns. Roughly 2,000 jobs will be created by the time the facility reaches full capacity in 2014.
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The $300 Trillion "Recovery" No One's Talking About
The biggest mega trend in 100 years is already taking over half the world. Early investors could stand to make initial gains of 237%, 139%, 163%, 356%, 341%, and 600% on six companies driving this trend. Click here for details.
What is 'the third element'?
10/27/2009
India Begins "Exit Strategy," But Interest Rates Remain Unchanged – For Now
10/27/2009
OPEC Considers Boosting Production as Oil Prices Continue to Rise
10/26/2009
Bank Failures Top 100, but Public Remains Confident in Deposits
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Double your savings with the "Gold Dollar"
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October 27
| Home Price Index (08/09) |
| Consumer Confidence (10/09) | | October 28 | Durable Goods Orders (09/09) |
| New Home Sales (09/09) | | October 29 | U.S. GDP (Q3) |
| Initial Jobless Claims (10/24) | October 30 | Personal Income and Outlays (09/09) | | | Consumer Spending (09/09) | | Consumer Sentiment (10/09) | Worth Considering
This Market Disconnect May Not Last Much Longer
Buy, Sell, or Hold?
by Horacio Márquez
Insights on Income
by Martin Hutchinson
Inside Wall Street?
by Shah Gilani
When and How the U.S. Economy Will Recover
Three Big Reasons Oil Prices Will Rally Back Big Time
Alternative Energy
Asia
Commodities
Europe
Global Markets
Gold/Precious Metals
Oil
Real Estate
Technology
U.S. Economy
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