December 15, 2009
How to Profit From the "Evil Genius" of Goldman Sachs
By Martin Hutchinson, Contributing Editor, Money Morning
In this era of growing government involvement, it's no surprise that Washington is poised to be the biggest economic wild card of the new year. Indeed, investors who are trying to estimate the impact that politics will have on their portfolios in 2010 are likely finding this attempt at analysis to be an exercise in futility. If that's been the case, read on: Political pundits - even those who claim to be impartial - spend a lot of time trying to score points for their side. But they aren't really that interested in the economic aspects of the endless battle. I certainly don't claim to be any more unbiased than the next person. However, I thought it worth trying to take an educated guess at what will actually happen, and what it will mean for our money. Let me explain...
30 Times More Profitable Than Stocks
Stocks have made remarkable gains. But Martin Hutchinson has uncovered a bull market that's making up to 30 times more than mainstream stocks. And it has nothing to do with options, penny stocks or foreign stock markets. Martin's identified 5 opportunities in this market he guarantees will make 225% by early 2010. See here...
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Markman on the Markets: Historic Bull Run in Bonds Points to Higher Prices for U.S. Stocks
By Jon D. Markman, Contributing Writer, Money Morning
A sluggish month in the stock market has equity investors worrying about what's next.
But those equity investors would feel so much better if they'd just spend a little time studying the credit markets. And with good reason: The bull market in credit that continues to rage in the face of this stock-market lethargy leads us to one simple conclusion.
Stock prices have to head higher.
Indeed, independent analyst Brian Reynolds tells us that if stocks were trading at the same level as credit, the Standard & Poor's 500 Index would already be at 1,350 - 22% above where it closed on Friday.
For those who argue that the market has already rallied a great deal, or too much, let me just note that the S&P 500 would have to rise by another 41% just to get back to the level of three years ago. The key thing that bulls have in their back pocket is that investors are still trying to get used to the idea that the sky hasn't fallen - and have not yet priced in the prospects for a 25% increase in S&P 500 profits that we are likely to see in 2010.
Continue...
Investment News Briefs
Money Morning Staff Reports
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.
Dubai Gets $10 Billion Bailout; Citi Unveils First TARP Payback Plan; Cadbury Formally Rejects Kraft Offer; British Airways Cabin Crews to Stage Holiday Strike; Obama to Banks: Help the Economy Recover; Online Shopping Grows 3% Over 2008; Chinese Automaker Buys Saab Platform Technology; Toyota to Release Plug-In Hybrid in 2011 - Debt-laden Dubai got a $10 billion bailout from neighboring Abu Dhabi, boosting global markets but raising questions about the undisclosed terms of the deal, Reuters reported. The fund will enable state-owned investment vehicle Dubai World to repay a $4.1 billion bond its real estate developer Nakheel PJSC was due to honor yesterday (Monday). Despite the bailout, credit ratings agency Fitch Ratings Inc. called Abu Dhabi's support only " a tactical step to permit an orderly restructuring of obligations within Dubai to continue."
- Citigroup Inc. (NYSE: C) formally laid out its plans to repay $20 billion in Troubled Asset Relief Program (TARP) loans, which includes selling about $17 billion in common stock and about $3.5 billion of securities that turn into common shares. The TARP payback leaves Citi with a balance of roughly $15 billion, meaning it is still under the U.S. government's thumb. "They're still in the government's embrace. It's just not a bear hug now," Anton Schutz, president of Mendon Capital Advisors Corp., which owns Citi shares, told Reuters .
- Cadbury PLC's (NYSE ADR: CBY) board of directors unanimously rejected Kraft Foods Inc.'s (NYSE: KFT) $16.2 billion bid, calling it "wholly inadequate." While no competing offers have materialized yet, Cadbury has "had indications of interest from third parties on possible business combinations," Chief Executive Officer Todd Stitzer said in a conference call, declining to name any companies. The Hershey Co. (NYSE: HSY) as well as Nestle SA (PINK ADR: NSRGY) have been reported as potential competing suitors, but unless a company comes forward with a bid, Cadbury's shareholders - which have until Feb. 2 to approve or reject Kraft's bid - may green light Kraft's offer. "We're not overwhelmed by Cadbury's defense…This is not enough to squeeze a massively higher offer from Kraft in our view," James Edwardes Jones, an analyst at British broker Execution Ltd. told Reuters. "It is difficult to see why K raft needs to pay up much more than 800 [pence]." Kraft's bid is about 727 pence per Cadbury share, and most analysts believe it needs to pay 820-850 pence to buy Cadbury.
- Cabin crew workers for British Airways PLC (OTC ADR: BAIRY) will stage a 12-day strike during the worst time possible for the carrier: the Christmas and New Year holidays, grounding planes and disrupting travel in one of its most profitable periods, Bloomberg News reported. Eighty percent of the 12,500 workers voted on the measure, with more than 92% backing the strike, the Unite union said yesterday (Monday) at a press conference in London. The strike was prompted by BA's cost-cutting measures after it reported a $352 million (217 million pound) loss in the six months ended Sept. 30. The walkout, planned to begin just after midnight on Dec. 22 until Jan. 2, is a "huge overreaction to the modest changes" BA introduced, the airline said. Still, "the reputational impact will be huge," Mott Macdonald Group Ltd. aviation analyst Laurie Price told Bloomberg . "People will reason if they can' t trust the company at this time of year, when they most want to be with friends and family, when can they trust it?" Shares in BA gained in trading, rising 0.12% to close at $32.70 a share.
- The pressure is on top banks in the country to help get the economy moving again after U.S. President Barack Obama yesterday (Monday) told executives in a meeting "we expect some results" after the "extraordinary help" taxpayers provided to them. "People are not going to tolerate a situation where the bankers have a party, they pick up the tab and then the bankers pay themselves huge bonuses and they're not lending," senior White House adviser David Axelrod said on ABC's "Good Morning America." The House passed legislation Friday that would reform financial regulations, and President Obama says bank lobbyists are trying to thwart Congress' efforts.
- Online spending in the first 41 days of the November-December holiday shopping season rose 3% to $19.9 billion compared to the same period last year, market research firm comScore Inc. (Nasdaq: SCOR) said. Last week saw above-average spending at online retailers, with 4% growth versus a year ago. "Although this most recent week of holiday shopping did not produce the first $900 million spending day, we saw above average growth rates including a strong end to the week," said comScore chairman Gian Fulgoni.
- Beijing Automotive Industry Holding Co. (BAIC) has acquired the intellectual property of General Motors Co.'s (NYSE: GRM) Saab 9-5 and 9-3 sedans and some equipment to make them for an undisclosed sum, Saab said yesterday (Monday). While this isn't a sale of the entire brand, luxury carmaker Spyker Cars NV has expressed interest and said on Sunday the BAIC agreement would be good news as it continued talks with GM, Reuters reported. For BAIC, China's fifth-largest automaker, the deal puts it one step closer to making its own cars. "Even though the Saab platform is old, it's still important for BAIC as it can finally get hold of something it can use later for its own cars," IHS Global Insight Inc. analyst John Zeng said.
- Toyota Motor Corp. (NYSE ADR: TM) took the wraps off its Prius plug-in hybrid electric vehicle (PHEV) yesterday (Monday), saying it plans a widespread release of the car in 2011 - after General Motors Co.'s (NYSE: GRM) Chevrolet Volt and an all-electric car from Nissan Motor Co. Ltd. (OTC ADR: NSANY) , both due in 2010. Toyota will lease roughly 600 units to governments and businesses in Japan, the United States and Europe in the first half of next year and gather feedback from those users before releasing several "tens of thousands" to the general public in the following year.
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