More from today’s Money Morning…

Just one day after The Boeing Co. (NYSE:BA) was notified that a multi-billion-dollar U.S. Air Force tanker competition has been put on hold, the embattled aerospace firm said it was steeling itself for a long strike by its hourly work force.

Boeing’s commercial aircraft production areas were quiet Monday after the manufacturer’s 27,000 machinists walked off the company’s jetliner assembly lines to protest a proposed labor contract they contend falls far short of what’s fair in terms of health-care benefits and job security, MarketWatch.com reported.

On Wednesday, Boeing Chief Financial Officer James A. Bell said the company expects the strike to last at least 30 days and said the job action will cause additional delays in its vaunted 787 Dreamliner commercial jet, the Seattle Post-Intelligencer reported.

“I think there’ll be at least a one-month delay,” Bell said Wednesday at a Morgan Stanley (NYSE:MS) conference Webcast from Dana Point, Calif. “Right now, it’s a one-for-one day slip on the 787 and all other programs as well.”

The International Association of Machinists and Aerospace Workers Union continued its tough talk.

“We will continue this fight ‘one day longer’ than the company can afford until they meet our demands,” the union told its members via a late-Sunday posting on its Web site, the P-I reported.

Tom Buffenbarger, the union’s national leader, told The Seattle Times that if the strike costs Boeing $100 million a day in lost sales, as many Wall Street analysts predict, it will take strikers one month and a week to drain the company’s $10 billion cash reserve.

As of now, no new talks have been scheduled.

With the Dreamliner program already 14 months or more behind schedule, the strike now puts in jeopardy Boeing’s plans to test-fly the jet in November and to start deliveries in the third quarter of 2009. Parts shortages and supplier issues have created delays. Boeing has distributed production of the airplane throughout the world.

While conceding that there are still “significant issues” between Boeing and the union, Bell, the company CFO, said “we’ll never get to a complete impasse.”

Although the dispute over the use of outside contractors to perform work that union workers have done in the past is the main sticking point, Bell noted that it’s also “not the only issue we’re apart on.”

On Aug. 28, Boeing offered the employees who make parts and actually assemble the jet aircraft a wage-and-benefits package that includes an 11% raise over three years, bonuses, and a 14% improvement in retirement-pension payments. Boeing also shifted healthcare costs to workers via higher co-pays and medical deductibles.

But the union wanted a 13% raise.

Source: With Tanker Deal Shelved, Boeing Must Dig in For Possible Long Strike

• European Aeronautic, Defence & Space Co. NV (PINK: EADSY), parent company of Airbus SAS, announced yesterday (Tuesday) that it would shift production operations to non-European Union countries such as Tunisia in an effort to cut costs, Bloomberg News reported. “We’re planning to produce basic parts in Tunisia, while research and production of more sophisticated parts and composites would be in Europe,” EADS spokeswoman Gaelle Pellerin said yesterday, confirming comments made by Chief Executive Officer Louis Gallois.

• McDonald’s Corp. (MCD) reported yesterday (Tuesday) that same-store sales increased 8.5% in the month of August as cash-strapped consumers took advantage of the fast food chain’s value menus. “McDonald’s does well in bad economies because people trade down,” John Kornitzer, who oversees $5 billion at Kornitzer Capital Management, told Bloomberg News.

• Reynolds American Inc. (RAI), parent of R.J. Reynolds Tobacco Co., announced yesterday (Tuesday) that it plans to reduce 10% of its staff as part of a restructuring program to realign its brands. The bulk of the cuts will come from the second-largest U.S. tobacco company’s Winston-Salem, North Carolina headquarters, The Associated Press reported.

• The U.S. Justice Department has hired Stanley Litvack, the department’s antitrust chief during the Carter Administration, to consult on a probe of an advertising deal between Google Inc. (GOOG) and Yahoo! Inc. (YHOO). “We have been informed that the Justice Department, as they sometimes do, is seeking advice from an outside consultant, but that we should read nothing into that fact,” Yahoo said in a statement, Reuters reported.

• Google Inc. (GOOG) and two other partners, cable television magnate John Malone and HSBC Holdings PLC (HBC), have announced plans to bring internet access to 3 billion people in Africa and other emerging markets around the world with the launch of at least 16 satellites. So far, each partner of the “O3b” (Other 3 billion) venture has contributed $20 million into the project. The satellites should be operational by 2010, Reuters reported.

• The National Association of Realtors said yesterday (Tuesday) that its seasonally adjusted index of pending U.S. home sales fell 3.2% to a reading of 86.5 in July from an upwardly revised June reading of 89.4. Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed.

• Staffing services company Manpower Inc. (MAN) said yesterday (Tuesday) that its seasonally adjusted net employment outlook fell for the fourth consecutive quarter, reaching a level of 9 – down from 12 last quarter and 18 a year ago. The index measures the difference between employers who plan to add jobs and those who expect to cut them.

• The federal government will run a near-record deficit of $407 billion this year Congressional Budget Office said yesterday (Tuesday). The deficit will probably reach a record $438 billion next year and could go substantially higher after the government’s seizure of Fannie Mae (FNM) and Freddie Mac (FRE).

Source: Global Investing Roundups Wednesday, September 10th, 2008

The Chicago-based Boeing said it wants the extension to incorporate what the aerospace giant contends are essentially new requirements calling for a bigger tanker with a larger fuel-carrying capacity. The Pentagon has told the bidders it will grant two months for the bidders to assemble and submit their new proposals, a Boeing official told the Atlanta Business Chronicle.

“If we’re unable to secure sufficient time to prepare a competitive proposal, there’s little option for Boeing other than not to submit a bid,” Boeing spokesman Dan Beck told the Georgia-based business journal.

This latest development in the politically charged competition for the aerial refueling tankers could push out the delivery date for the much-needed aircraft by another year. But it is also expected to give Boeing more time to build up political support for its new bid, MarketWatch.com reported.

Back in February – in what some industry experts viewed as a surprise decision – Boeing lost the initial contract to a partnership of the Los Angeles-based Northrop Grumman Corp. (NOC) and Airbus SAS, Boeing’s arch-rival in the commercial jetliner business and a subsidiary of the European Aeronautic Defense and Space Co. NV (EADS).

Boeing had offered the Air Force a militarized version of its 767-200ER jetliner platform, but the Air Force opted for Northrop Grumman’s larger Airbus A330 model instead. The bidding process was subsequently reopened when Boeing won a protest with a government watchdog agency after government auditors found “significant errors” in the Air Force’s decision, Forbes.com reported.

Since that time, the Air Force has repeated it prefers an aircraft that can hold more fuel and cargo such as the A330 – essentially leaving the contract open for Northrop to grab as Boeing is forced to scramble to find a replacement aircraft it can use as the basis for an aerial tanker. Boeing’s 777 model is likely too costly because of the high demand from commercial airlines, while its 767-400 would require improvements in both flight range and endurance, said Teal Group analyst Richard L. Aboulafia.

By threatening to pull out of the bidding process, Boeing has established a basis for another protest, Lexington Institute defense-industry expert Loren Thompson told MarketWatch.

“Boeing’s real point here is that the government has changed its requirements for a tanker, so the company needs more time to modify its proposal,” Thompson said. “By putting it the way they have, they have set it up for a formal protest. [After all, why would the company want to] spend millions of dollars on ads and lawyers and question their customer’s decision if they just intended to drop out?”

The tanker contract is a pivotal one for both the military and the defense industry.

The Air Force is desperate to begin replacing its KC-135 Stratotankers, which date back to the Eisenhower-era, are literally falling apart, and have become prohibitively expensive to keep operating. As weapons systems go, the aerial tanker isn’t a luxury: Through the use of aerial refueling, Air Force fighters and bombers can remain aloft for long periods, and can make long-range flights from U.S. bases to hot spots anywhere in the world. The tanker fleet provides a particular advantage when geopolitical flare-ups occur in regions where the U.S. military has no nearby operational bases.

The Boeing and Northrop Grumman/Airbus teams are each desperate to win the tanker deal because – in an era of fiscal uncertainty – it’s one of the last really large aircraft contracts that’s even visible on the horizon. Although the deal’s initial value is $35 billion, some analysts estimate the ultimate value could end up closer to the $100 billion mark if all the needed tankers are eventually built.

Whether it’s through a delay via protest, or by gaining six more months to revise its proposal, some analysts say that Boeing is also pushing out the contract to be awarded under a possibly more friendly Democratic administration whose appointees might be more sympathetic to its cause.

Washington state – where Boeing does much of its U.S. production work – is a Democratic state, while Alabama, where the Northrop Grumman tankers would be assembled, is largely Republican.

That’s an assessment that defense-policy analyst Lawrence Korb just doesn’t buy.

“A new administration won’t change anything because [procurement] rules are rules,” Korb, an analyst with the Center for American Progress, told MarketWatch. “Politics only enters in after you award the contract.”

There’s also the issue of foreign competitiveness.

At a time when the U.S. defense-industrial base is consolidating and contracting, there are also concerns that a foreign aerospace company could be such a large beneficiary from this defense deal: That’s especially true since those benefits will clearly bolster the civilian jetliner business that’s operated by Airbus – which competes directly with Boeing’s commercial airliner business – at a time when long-term global growth is expected to generate billions of dollars in new orders for commercial jetliners.

Source: Boeing Threatens to Pull Out of $35 Billion Air Force Tanker Program

“During 40 years of producing the Current Market Outlook, we have learned that the resilience of air transport growth comes from its intrinsic importance to the livelihood of people around the world,” the report from Boeing reads.

Boeing’s annual Current Market Outlook estimates that passenger travel will grow at a 5% rate, and cargo will grow at a 5.8% over the next several years. Despite record fuel costs, air travel and shipping has become an integral part of daily life for many consumers and businesses. Boeing says that demand will only grow.

A lot of that growth is expected to come from the BRIC nations.

“Long-term, you have to assume that the emerging countries of Brazil, China, India and Russia are going to continue to grow as a larger percentage of the world’s fleet, and they’re growing at a faster rate,” Peter Arment, Greenwich, Connecticut- based analyst with American Technology Research, told Bloomberg News.

Over one-third of the projected $3.2 trillion market is set to come from the Asia-Pacific region, which is expected to have $1.19 trillion in future airplane deliveries, according to Boeing data. North America and Europe are both projected to have $740 billion, while the Middle East region clocks in at $260 billion. Latin American demand is forecast at $140 billion.

In order to meet the upsurge in demand, Boeing estimates that planemakers will deliver 29,400 planes during the period, up from the 28,600 predicted last year.

The effects of the high cost of jet fuel was made apparent in Boeing’s upward revision to 43% from 38% for replacement aircraft as older, less fuel-efficient planes are retired in the face of soaring oil prices.

“We assume that fuel over the near term will continue to be high and volatile and then at some point in the future supply and demand should align and fuel will be priced more at the marginal rate of production,” Boeing Commercial Airplanes Vice President, Marketing Randy Tinseth said at a London press conference.

European rival Airbus SAS, a subsidiary of European Aeronautic, Defence & Space Co. (PINK: EADSY), released its own forecast in February, which was slightly lower than Boeing’s. Airbus expects airlines to buy 24,300 planes worth $2.8 trillion during the next 20 years, Bloomberg reported.

Source: Boeing Projects Increased Demand Despite High Oil, Weak Economy

William says that investment risks in this massive project are limited by the government’s financial backing. Though most local companies are not publicly traded (or not in the US, at least), he says there are several ways for US investors to ride the boom…

Three Ways to Profit From the Biggest Airport on Earth

By William Patalon III

Crude oil and jet-fuel prices are in the stratosphere, many of the world’s top airlines have ordered severe cutbacks, and air passenger traffic is falling. so why is Dubai funneling 82 billion of its petrodollars into an aerospace project that includes plans for the world’s largest airport?

The answer is simple. Dubai isn’t concerned about the near-term turbulence that has sent global investors diving for cover and induced airline-industry executives to hanger portions of their jetliner fleets.

The leaders of that Middle Eastern country have taken a long and studious look at the powerful global trends that are destined to play out over the next 20, 30 or even 40 years, and have crafted their plans accordingly.

In a broad sense, that focus on the long term is a lesson U.S. investors would be very smart to follow.

So, let’s take a close look at how well Dubai’s financerati have thought this through. We’ll look at some moves you can make to profit alongside Dubai. And I’ll even let you in on a surprise conclusion about this project that we’ve reached here at Money Morning – that I can virtually guarantee you’ve yet to hear anywhere else. Perhaps you’ll be the enviable “person in the corner surrounded by a crowd” at the next dinner party you attend.

The Lowdown on a High-Flying Nation

Dubai is situated on the Southwest Coast of the Persian Gulf and is one of six jurisdictions that make up the United Arab Emirates, a member of the Oil Producing and Exporting Countries (OPEC).

Although Dubai built its economy on a foundation of petro-gusher dollars, “black gold” has become an increasingly smaller component of its market muscle. Right now, in fact, oil and natural gas account for only about 6% of Dubai’s estimated $40 billion economy, and some experts predict that its crude-oil reserves will be exhausted in about 20 years.

As ominous as that sounds, Dubai leaders apparently don’t see that as a catastrophe in the making. Today, the biggest pieces of this emirate’s economic might are based on foreign trade (16%), seaport or airport-located duty-free trade zones known as entrepot (15%), and financial services (11%), although real-estate development, construction and tourism are closing the gap quickly.

“Dubai had less oil than [neighbor] Abu Dhabi [and needs] to create jobs for the population,” Richard Aboulafia, an industry consultant with the aerospace-management company, The Teal Group, told MarketWatch.com. “This is them saying: ‘Let’s convert our oil money into something tangible’.”

Said Keith Fitz-Gerald, investment director for Money Morning: “What we’re seeing here is the emergence of an entirely new economy where the world least expected it. This is absolutely progressing much faster than anyone ever expected. And, to borrow an expression from an old movie, ‘There may be a new sheriff in town’,” as global sovereign wealth funds potentially supplant Wall Street as the primary financing vehicle for the world markets.

Consulting giant McKinsey & Co. estimates that Persian Gulf economies will have to create more than 4 million jobs for its own citizens in the next 10 years. The aerospace sector could account for as many as 350,000 new positions by 2015, McKinsey says.

In very recent years, the country has gained a reputation for doing things in a big way, sometimes even past the point of excess. Dubai is already home to the world’s largest mall, biggest indoor ski resort and tallest building – as well as the world’s only “seven-star” hotel, the boat-sail shaped Burj Al Arab, a luxury hotel built on an artificially created offshore island, and a building whose reach of 1,053 feet makes it the tallest structure being used as a hotel anywhere on earth.

And don’t forget “The World” itself, a much-ballyhooed manmade archipelago of 300 islands (situated in the shape of a world map). Most of the individual patches of land were to fetch $15 million to $50 million – although one of the islands was reportedly priced at $250 million.

Currently, an estimated $300 billion in construction-and-development projects are under way in Dubai.

Dubai Takes to the Skies

Dubai’s aviation vision reaches back several decades. But it’s only really reached a critical mass in the past couple of years. Dubai-based Emirates Airlines is currently the world’s fastest-growing carrier. And that fast-climbing rate isn’t because Emirates is growing from a small base.

Indeed, with 180 jetliners, worth an estimated $58 billion, on order, Emirates has become such an industry heavyweight – especially when other top carriers are cutting their fleets – that U.S.-based Boeing Co. (BA) and pan-European aerospace giant Airbus SAS have actually catered elements of multi-billion-dollar airliner-development programs to the needs and demands voiced by Emirates execs.

“The Middle East is taking over the aerospace industry and Dubai is at the heart of it,” Doug McVitie, an aerospace consultant with Arran Aerospace, told MarketWatch.com recently.

And that’s not just because of the major petro-bucks Emirates has at hand. It’s also because of how well the many pieces of Dubai’s growth strategy fit together.

Right now, globalization is the single most important business-and-economic trend unfolding in the world today. And thanks to that globalization – as well as advances in aerospace technology – the sheikdom whose proximity to India and willingness to slash trade taxes made it one of the Gulf region’s key trading outposts back in the 19th Century, once again finds itself at an opportune geographic nexus: From Dubai, it’s now possible to fly nonstop to the West Coast of the United States, or to the Far East – making it the logical stopping-off point for travelers flying between those two points.

“They have a geographic advantage that no one else has,” Diogenis Papiomytis, a commercial-aviation consultant with Frost & Sullivan, told MarketWatch.com. “Within 8,000 miles, they can reach something like 80% of the world.”

Emirates Airlines is reaping the benefits – and in a huge way. Last year, its profits soared 54%, reaching $1.45 billion. Sales jumped 32% as the airline carried more than 21 million passengers – an increase of 21% from the year before.

Right now, the Dubai carrier is watching its business grow at an annual clip of 15-18%. At that pace, and with the help of the passenger and cargo growth other carriers are experiencing in Dubai, Emirates Chief Executive Officer Maurice Flanagan says Dubai International will eventually overtake some of the world’s top airport hubs.

Overall, the existing Dubai International Airport had 34 million passengers – just about half that of the Global Top 3 of Atlanta’s Hartsfield-Jackson (85 million), Chicago’s O’Hare International (77 million) and London’s Heathrow International (67 million).

That’s why Dubai has decided to shoot for the moon and build the world’s biggest airport. A $33 billion development itself, the new Al Maktoum International Airport at Jebel Ali will have six parallel runways and will be able to handle 120 million passengers a year when it’s finished in 2015.

Holding Out For New Opportunities

But the airport itself is only a part of this $82 billion initiative. Dubai wants to become a global aerospace leader. And it’s deploying the Middle East’s favorite business weapon to do so – the holding company.

Middle Eastern players such as Dubai, Kuwait, Abu Dhabi and others use holding companies – financed by government-controlled sovereign wealth funds – as the investment-and-acquisition vehicles to achieve their economic objectives. Dubai, through its Dubai World holding company has been especially adept at using the holding-company strategy as an economic-development vehicle. And the emirate has created a new company, this one called Dubai Aerospace Enterprise, or DAE, which is to focus on the air-transportation sector.

DAE has already shifted into high gear, first recruiting former Honeywell Aerospace CEO Robert Johnson as its top executive and then establishing a number of operating subsidiaries – such as DAE University for training some of the 24,000 pilots the Gulf region will need in the next decade, and DAE Capital, which is buying and leasing aircraft to carriers throughout the world.

Dubai’s grand vision calls for the new airport to become an aerospace metroplex: It will be bigger than all of Hong Kong, and will consist of six different “zones,” each with a different focus. Operations will include service and storage facilities for aircraft and cargo, production and assembly operations for aircraft components, and venues in engineering, training, and airport operations.

Though some analysts expressed concern about the risks and the poor timing, you can bet that this venture won’t fail. It’s not a profit-and-loss situation, given that its “investors” include the government-run Dubai International Capital sovereign fund, Dubai construction heavyweight EMAAR Properties PJSC, and the Dubai International Financial Centre, a 110-acre free-trade zone and international financial exchange.

Said the Teal Group’s Aboulafia: A lack of profitability “doesn’t matter. They are not a profit-and-loss-operation. They will scream until they’re blue in the face that they are not subsidized, but all the working capital comes from the government.”

Here’s the surprising fact: Long-term, this project may turn out to be more than an airport. There’s actually been some conjecture that Dubai could well have plans to devote part of this project to space transportation, either as a commercial-satellite launch facility, or as a recovery area for returning reusable space vehicles – making this one of the first commercial spaceports on earth.

Whatever the ultimate plans are, it’s very clear that Dubai is determined to succeed. But many of the Dubai-based companies are private, and not publicly traded, and those that are public have their shares listed on Middle East bourses, and don’t have U.S.-listed American Depository Receipts (ADRs). And though we’d all love to ride along as investors in one of the big sovereign funds that are spreading billions around the planet, that’s not likely either.

But there are two very clear profit plays here, and one – pardon the pun – flyer.

Fly in Formation on an $82 Billion Project

Boeing (BA) is the most-obvious play here, given that it’s one of only two remaining successful jumbo-jet makers on earth (as I reported here a month ago, China just announced plans for a jumbo-jet company of its own, but that’s at least a decade away).

Boeing will reap billions in airliner orders from the Middle East (England’s Farnborough International Airshow – when billions of dollars worth of airliners are often ordered by carriers and leasing firms during flush times – is scheduled for mid-July) over the next several decades. And that market is dwarfed by the massive demand that’s expected to emanate from Asia: China alone is projected to require $340 billion worth of commercial airliners over the next 20 years.

The company’s defense business is sound, and it just won a favorable ruling from the U.S. General Accountability Office on a protest it lodged over the loss of a U.S. Air Force aerial tanker deal worth an initial $35 billion – and with a potential ultimate value of $100 billion.

At yesterday’s close of $68.21, Boeing’s shares are down 37% from their 52-week high of $107.83. The shares are trading at about 12 times current earnings and 17.5 times projected profits, and carry a dividend yield of nearly 2.4%. What’s more, Boeing has been buying back its own shares, which is often a good sign for shareholders.

Emirates CEO Flanagan – and others involved with the Dubai aerospace project – say the dour outlook for airlines is only temporary and will eventually work itself out. When that happens, we believe Boeing’s shares will definitely move higher – if not before.

MGM Mirage (MGM) is the other key play here. We like the shares of this Las Vegas-based casino-resort operator a lot for several reasons. First, the company is actually a high-profit play on China. And for followers of major global trends, that’s a huge plus.

But MGM also has a very strong tie-in with Dubai, because it already has in place a financing deal from the state-run Dubai World. Last summer, when MGM shares were trading in the $80 range, Dubai World said it would invest $5 billion in MGM.

The goal: Help MGM execute its China strategy, which the Vegas gaming firm has been pursuing since the middle 1990s.

And China is far from MGM’s only target market overseas. It’s working with the Mubadala Development Co. in both Dubai and Abu Dhabi on some similar luxury-level [non-gaming] projects. Mubadala is an investment arm of the Abu Dhabi government.

MGM is on the verge of becoming a top global brand in the hospitality sector, and Dubai wants a piece of the action. You can bet that as Dubai develops its airport property, and throttles up its global tourism strategy, MGM will be a key participant, given that Dubai already owns part of the company.

“Dubai is getting in on the ground floor of some very powerful trends,” Money Morning’s Fitz-Gerald said.

U.S. brokerage houses are downgrading the shares because of a big drop-off in traffic in Vegas. But, to borrow a phrase, that’s not where the action is – or, at least, isn’t where the future action is going to be.

At yesterday’s close of $36.60, MGM’s shares are down 64% from their 12-month high.

If you want one highly speculative play — based almost solely on the hope for takeover — make a study of out-of-favor aircraft leaser Genesis Lease Ltd. (ADR: GLS). The Ireland-based firm has seen its shares drop about 64% from its 12-month high as the credit crisis and the airline-industry downturn savaged the sector. But some experts wonder if DAE Capital might not take this opportunity to grow a bit faster by picking up assets at a discount.

“The level of ambition and the money and willingness to support [the airport project] is staggering,” David Stewart, a consultant with AeroStrategy, told journalists.

Source: Three Ways to Profit From the Biggest Airport on Earth

• French financial market regulator, the Autorité des Marchés Financiers, filed a formal complaint yesterday (Tuesday) against European Aeronautic, Defense & Space, the parent company of Airbus S.A.S. and more than a dozen current and former executives in connection with an inquiry into allegations of insider trading and other market abuses, the International Herald Tribune reported. The regulator said it was initiating sanction proceedings against several individuals for violations of French insider trading rules and against the company itself for misleading investors by failing to meet market standards on the publication of financial information.

• Ford Motor Co.’s (F) U.S. sales fell 14% last month as demand for its trucks and sport utility vehicles plunged while gas prices rose and construction continued to slow. Ford was the first major automaker to report, and other automakers are expected to have faired just as poorly amid waning consumer confidence.

• Microsoft Corp. (MSFT) won’t change from its original $44.6 billion bid for Yahoo! Inc. (YHOO) The Wall Street Journal reported. Citing people close to the situation, the paper said strategists from the Redmond, Wash.-based company didn’t find anything in Yahoo’s recent presentation to investors that would justify paying more. So far Microsoft has met once with Sunnyvale, Calif.-based Yahoo and still hopes to enter more serious discussions.

• Security Capital Assurance Ltd. (SCA), the bond insurer, sued Merrill Lynch & Co. Inc. (MER) for breach of contract in an attempt to avoid losses on about $3.1 billion in collateralized debt obligations, Bloomberg News reported. “Determined to get those CDO risks off its books at all costs before the third quarter of 2007 closed, Merrill Lynch made the decision to blatantly ignore its prior commitments to” SCA, the Hamilton, Bermuda-based company said. SCA is seeking at least $28 million in damages.

• Executives from Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), BP PLC (BP) and Royal Dutch Shell PLC (RDS.A, RDS.B) appeared before a U.S. Congressional panel yesterday (Tuesday) to explain why their firms are not to blame for record-high energy prices despite booking $123 billion in profits in 2007. “The American people deserve answers and it is time for Big Oil to go on the record about these record prices,” said Rep. Ed Markey of Massachusetts, chairman of the House Select Committee on Energy Independence and Global Warming, Reuters reported.

• The Blackstone Group LP (BX) announced it had raised $10.9 billion for its Blackstone Real Estate Partners VI fund, which will invest in properties with depressed prices. “With this fund we will be able to enter new markets and expand Blackstone’s global investment activities,” said Chad Pike, senior managing director and London-based co-head of Blackstone’s real estate group, CNNMoney reported.

• Gold prices sank to a two-month low below $880 yesterday, as the rising dollar continued to prod investors to sell previous metals. Gold hit a low of $872.90, far below its all-time high of $1,030.80, hit just two weeks ago.

• Indonesia’s March inflation rate surged 8.2% from the previous year, the fastest pace in 18 months. Food and energy prices are mostly to blame, as wheat, soybeans, corn and palm oil hit records this year, Bloomberg reported.