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November 13
Is Mexico the "New" China?
[Editor's Note: Money Morning Chief Investment Strategist Keith Fitz-Gerald’s new book – "Fiscal Hangover" – will be published on Monday.]
By Keith Fitz-Gerald
Chief Investment Strategist
Money Morning/The Money Map Report
When it comes to global manufacturing, Mexico is quickly emerging as the "new" China.
According to corporate consultant AlixPartners, Mexico has leapfrogged China to be ranked as the cheapest country in the world for companies looking to manufacture products for the U.S. market. India is now No. 2, followed by China and then Brazil.
In fact, Mexico’s cost advantages and has become so cheap that even Chinese companies are moving there to capitalize on the trade advantages that come from geographic proximity.
The influx of Chinese manufacturers began early in the decade, as China-based firms in the cellular telephone, television, textile and automobile sectors began to...
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[Editor's Note: This essay is adapted from "Fiscal Hangover," which will be published on Monday (Nov. 16).]
By Keith Fitz-Gerald
Chief Investment Strategist
Money Morning/The Money Map Report
With all the financial woes in the global economy, the worst thing an investor can do is to "freeze up." With all the ups and downs in the market, it's all too easy for investors to allow their emotions to take control. That's when the smallest mistakes turn into the biggest mistakes.
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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.
Intel Pays AMD $1.25 Billion to Settle Multi-Year Lawsuit; WalMart Forecasts Bleak Holiday Sales on Surging Unemployment News; FHA Capital Reserves Lowest in History; Commercial Paper Market Falls For Second Week in Row; Better Ad Market Helps Disney Profit, Sales Grow; British Airways, Iberia to Merge; Barofsky: TARP Will Be a Loss For Taxpayers; Activision Sees Sales of $310 Million on First Day of Game's Release - Bringing an end to a multi-year battle, Intel Corp. (Nasdaq: INTC) will pay Advanced Micro Devices Inc. (NASDAQ: AMD) $1.25 billion as part of a legal settlement between the world's two largest computer-processor makers. AMD had filed an antitrust complaint against Intel with the European Union, and sued Intel in Delaware in 2005 alleging it controls the market for microprocessors, in part by providing discounts to customers that avoid AMD's products. The settlement includes all antitrust litigation and patent cross-license disputes, the companies said in a statement today. The companies agreed to new 5-year cross-license pact and Intel also agreed to abide by a set of business-practice provisions. Intel had 82% of the market for personal-computer processors at the end of the third quarter, according to Mercury Research in Cave Creek, Arizona. AMD h ad 18%
- Acknowledging its customers are nervous about rising unemployment, Wal-Mart Stores Inc. (NYSE: WMT) posted a higher-than-expected quarterly profit, but lowered its earnings forecast for the holiday quarter that could miss Wall Street estimates. Wal-Mart is warring with rivals, including Target Corp. (NYSE: TGT) and Amazon.com Inc. (Nasdaq: AMZN), in cutting prices for items ranging from toys to books. Wal-Mart executives said on Thursday that its shoppers were still worried about the U.S. economy, despite signs that the country is returning to growth, as unemployment hits double-digit levels. "Customers continue to tell us they're concerned about their own finances and unemployment," Wal-Mart U.S. chief Eduardo Castro-Wright said on a prerecorded call. "We recognize that some customers may be more cautious in their holiday spending."
- The Federal Housing Administration said its reserves fell to the lowest level in history after a record drop in home prices. The government agency that insures at least one of every five U.S. single-family mortgages said its loan insurance ratio, which measures reserves to the amount of loans insured, dropped to 0.53% in the year ended in September, according to an annual actuarial review released by the agency Thursday. The fund is below the 2% threshold FHA is required to maintain by Congress. The insurance program tripled in size last year and has taken on more risk as private industry sources for lenders to finance and insure home loans dried up and the U.S. mortgage default rate rose to a record high. FHA said it's changing its risk models to account for the possibility that the ratio could fall below zero, which may trigger the need for taxpayer aid.
- After three months of consecutive growth, the U.S. commercial paper market contracted for a second straight week, U.S. Federal Reserve data examined by Reuters showed. For the week ended Nov. 11, the size of the commercial paper market fell by $76.6 billion to $1.239 trillion outstanding from $1.315 trillion outstanding the previous week. The market can be a gauge of economic activity as it is a vital source of short-term funding for daily operations at many companies. However, technical factors and seasonal adjustment distortions may have contributed to the recent setback, analysts said.
- An improving ad climate and strength in its cable operations helped The Walt Disney Co. (NYSE: DIS) boost its profit and sales in its fourth quarter ended October 3. Disney posted a net income of $895 million, or 47 cents per share, compared to $760 million, or 40 cents per share in the same period a year ago. Revenue grew 4.5% to $9.86 billion, up from $9.44 billion in last year's fourth quarter.
- After numerous regulatory hurdles, British Airways PLC (OTC: BAIRY) and Spain's Iberia Lineas Aereas de Espana SA (PINK: IBRLF) said they have reached a preliminary agreement to merge that will create roughly $593.7 million (400 million euros) of synergies. The deal, expected to closed by the end of next year, will give British Airways 55% of the new company and Iberia the remaining 45%. Iberia's Chairman Antonio Vazquez will assume the same role with the new company, while British Airways' Chief Executive Officer Willie Walsh will be CEO.
- Troubled Asset Relief Program (TARP) watchdog Neil Barofsky said the program will "almost certainly" result in a loss to U.S. taxpayers. "We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic," he said today at the Bloomberg Washington Summit. "It's almost certainly going to be a loss." Barofsky pointed out that "tens of billions" of dollar will be lost on the bailouts of General Motors Co. (NYSE: GRM) and Chrysler Group LLC, and that some banks that received TARP money are already failing, nullifying any aid they may have received. It's currently impossible to determine what the actual loss will be because some programs are still being rolled out by the government, he said.
- Activision Blizzard Inc. (Nasdaq: ATVI) said it sold 4.7 million copies of "Call of Duty: Modern Warfare 2," generating a record $310 million in sales on Tuesday, the game's first day of release. Analysts expect the multiplatform title will sell 11 to 13 million copies by the end of the year, Reuters reported. Activision stock closed at $11.44 per share yesterday (Thursday), up 0.53%.
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The Most Important Book You'll Read This Year In one easy lesson after another, Money Morning's Keith Fitz-Gerald shows you how to profit from the revolution in global investing. His 60-plus starter picks on Asian companies is worth the price of admission. "If you don't follow his advice," says the renowned Dr. Mark Skousen, "you will get left behind." Go here to learn more… 
11/12/2009
Removal of Stimulus Packages Next Year Poses Bubble, Credit Risks Says World Bank's Zoellick
11/11/2009
IEA World Energy Outlook: Declining Investment Threatens Recovery
11/10/2009
Kraft Launches Hostile Bid for Cadbury
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Rising Gold Prices: Inflation Isn't the Whole Story
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November 9
| No major economic releases. | November 10
| Federal Reserve officials, including the San Francisco Fed President Janet Yellen, to speak. | | November 11 | Retailer Macy's Inc. reports earnings. | November 12
| Weekly initial jobless claims (11/07). Retailer Nordstrom Inc. and Walt Disney Co. report earnings. | | November 13 | An update on the trade balance and consumer sentiment. J.C. Penney Co. reports earnings. |
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