• The index that measures pending sales of previously owned homes rose 3.2% in March on the renewed confidence of first-time buyers. Meanwhile, the U.S. Department of Commerce reported that U.S. construction inched 0.3% in March, the first increase in six months, Reuters reported.

• Famed investor and chairman of Templeton Asset Management Ltd. Mark Mobius said emerging-market stocks may “break out” into a bull market at the end of the year. “We are at the base building period for the next bull market,” Mobius, who helps oversee $20 billion in emerging market assets at San Mateo, California-based Templeton, said yesterday (Monday) in an interview with Bloomberg. “What I see happening is perhaps this continuing till the end of the year, and then a break out.”

• Cost cutting measures helped Sprint Nextel Corp. (NYSE: S) post an unexpected quarterly profit excluding items, but the company also lost its highest amount of customers. “There are no clear signs that the business has made its turn,” Piper Jaffray analyst Christopher Larsen told Reuters.

• The Bovespa, Brazil’s benchmark index, hit a seven-month high yesterday (Monday), pushed by analysts’ expectations that Brazil’s economy will contract less than forecast. Analysts also expect commodities to continue jumping on global growth prospects, causing the country’s top commodities producers to see stock gains, Bloomberg reported.

• Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Chairman Warren Buffett blasted bankers, insurers and regulators and said their shortcomings caused the worst recession in half a century.  As he hosted a record 35,000 people at the company’s annual meeting in Omaha, Nebraska on Saturday, Buffett said Wall Street sold subprime mortgage “sewage,” blamed the media and regulators for missing the danger, and lambasted bankers for being blind to the possibility that housing prices could fall, Bloomberg reported.

• Liberty Media Corp (NASDAQ: LCAPA), controlled by cable pioneer John Malone, said on Monday it plans to split off the DirecTV Group Inc (NASDAQ: DTV) satellite TV operator into a separate company combined with other media assets.  Liberty plans to combine the top U.S. satellite TV provider with assets that include Game Show Network, FUN Technologies and three regional sports networks, Reuters reported. Liberty owns a 54% economic stake in DirecTV.

• U.S. airlines face a potential liquidity crisis if revenue keeps falling while credit markets remain tight, Reuters reported.  If revenue does not increase this year, carriers may breach the minimum liquidity covenants enforced by their creditors, who then may accelerate the loan and force a default. “If revenue doesn’t stabilize and capital markets remain constrained, then I think it’s certainly possible that we’ll see increased risk of a covenant breach for a couple of carriers moving into 2010,” said Fitch Ratings analyst Bill Warlick.

• Health Minister Jose Cordova said most of Mexico’s businesses will reopen in two days as the pace of new swine flu infections slows, putting an end to a five-day shutdown of most businesses enacted to stop the spread of the illness, Bloomberg reported.  Mexicans will return to work on May 6 except in areas of the country where new infections continue to rise. Authorities haven’t yet decided whether schools will reopen May 6, he said.

Source: Investment News Briefs Tuesday May 5, 2009

Editors Note: With their investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

For instance, a 5% to 6% contraction in first quarter gross domestic product (GDP) will look decent vs. the wrenching 6.3% decline the U.S. economy experienced in the fourth quarter. Mix in some still weak – but improving – corporate earnings season and there may be reason to hope that U.S. President Barack Obama’s prediction of an economic rebound in 2010 may not be off target after all.

Eddie Cohen, a market historian who is chief investment officer for Stavis & Cohen Financial, a Houston-Texas financial-management firm, points out that the U.S. stock market has endured three protracted bear markets since 1900 (1906-1921, 1929-1942 and 1966-1982) and sees evidence that the United States may be ensconced on one of those periods again.

While Cohen sees some positive indicators, he continues to advise that caution (or even cautious optimism) be the order of the day.

“Plenty of questions still need to be answered before we can proclaim an end to the bearishness and a definitive market recovery,” Cohen said. “At least, we have started to see some rays of sunshine on the horizon, and that is encouraging.  Still, this environment is not the time to be a hero.”

But there are three significant wildcards at play here that could keep the market from sinking into an even deeper malaise – and that could, in fact, be a catalyst for higher stock prices and perhaps even an improved economy in the months to come. Those three wildcards include:

• There’s an estimated $4 trillion in cash in investors’ hands on the sidelines – capital that could be drawn in to further pump up the markets, should the recent rally continue.
• The federal government has already committed to funding $11.6 trillion in stimulus initiatives, and the sheer magnitude of that government intervention could play a substantial role in determining just how long this downturn lasts – or how quickly it ends.
• Stocks are, in many cases, currently trading at levels not seen since the late 1990s, meaning the market is dangling bargains too enticing to ignore.

Cohen believes that investors need to remain cautious and to understand that market sentiment can literally turn on a dime, especially if the volatility levels remain high [there's some evidence that volatility has diminished somewhat in the past week, and is currently below what is usually expected for the start of the corporate earnings cycle]. However, the Texas investment advisor also foresees some potentially positive developments on the horizon and believes that patient long-term investors who are willing to ride out the short-term volatility may want to commit some money to stocks in profit from these low valuations.

Given that there is “an estimated $4 trillion in cash on the sidelines right now … as investors become more confident, some of these funds could potentially find their way into equities and help drive the markets higher,” Cohen said.

The Quarter That Was

When 2008 came to a close, investors hoped the nightmare had ended and some normalcy would return to the economy and the markets. It was not to be. During the first three months of the New Year, a $787 billion stimulus package, multiple blueprints for rescuing the nation’s banking system and a honeymoon period for a new presidential administration that was one of the shortest in U.S. history made it very clear that the nation’s economic nightmare was continuing.

Much of the data portrayed an economy in decline despite the promises by U.S. Federal Reserve Chairman Ben S. Bernanke’s that better times were coming. The U.S. Commerce Department initially reported that fourth-quarter GDP was down 3.8%, its worst showing in 27 years, though not as bad as many economists had projected. A few months later, however, Commerce Department analysts revised that statistic downward to 6.3% and confirmed that the recession had worsened.

Jobless statistics became the barometer for the nation’s declining economic health, as company after company announced major cutbacks. On Jan. 26 – in a single day so bad that it was labeled as “Black Monday” – about 75,000 jobs were eliminated ad the likes of Caterpillar Inc. (CAT), Sprint Nextel Corp. (S), Home Depot Inc. (HD), Texas Instruments Inc. (TXN), General Motors and others announced major job cuts. Even before that dark Monday, there had already been 170,000 job cuts announced that month – and that’s after a 2008 that saw the recession claim 2.6 million jobs.

“Some of the worst job losses are ahead of us, not behind us,” Wells Fargo & Co. (WFC) senior economist Scott Anderson told USA Today at the time.

One-time global giant Citigroup Inc. (C) fell briefly into penny stock territory and came within a heartbeat of nationalization as the U.S. government finally opted to inject more money into the former financial-sector stalwart. A late-quarter restructuring plan seemed to better position Citi.

Nor did the trouble stop with the banks. Two of the U.S. Big Three automakers – General Motors Corp. (GM) and Chrysler LLC – moved closer to bankruptcy as the government rejected the American carmakers’ plans for reorganizing. Indeed, the Obama administration even “suggested” GM’s CEO pursue other endeavors, and laid down serious guidelines regarding future intervention. Even so, bankruptcy may be unavoidable.

But then a funny thing happened on the way to Great Depression II. Citi, Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) each announced promising results for the first two months of the year, surprising investors and igniting a late-quarter stock market rally. In an interesting parallel development, a “surprise” announcement by Wells Fargo & Co. (WFC) last week added fuel to that already-existing rally in financial-sector stocks, and in the market in general.

Some confidence returned to the boardroom – at least within the healthcare sector – as major deals involving Merck & Co. Inc. (MRK) and Schering-Plough Corp. (SGP) ($41.1 billion) and Roche Holding AG (ADR: RHHBY) and Genentech Inc. (DNA) ($46.8 billion) moved forward.

Electronics retailing giant Best Buy Co. Inc. (BBY) reported better-than-expected profits as consumer activity suddenly picked up (at least, above the dismal levels of the fourth quarter). The credit markets began to thaw a bit as corporations issued new debt and the U.S. Federal Reserve offered up a plan to buy U.S. Treasuries as a way of keeping interest rates low.

Though the Dow Jones Industrial Average declined 13.3% for the quarter, March was its best-performing month since October 2002. The tech-heavy Nasdaq Composite Index declined 3.07%, but enjoyed a March that was actually its best month ever. The Standard & Poor’s 500 Index declined 11.67%.

Some of the late-quarter economic reports seem to reflect this brighter outlook. In manufacturing, for instance, factories continued to struggle as industrial production fell to the lowest level in almost seven years, though a favorable durable goods report offered some optimism as the first quarter came to a close.

Home sales likewise offered some cause for optimism, rising in February as buyers took advantage of low rates and a tax-break for first-time homeowners. Retail sales statistics were a bit better than expected – especially after removing dismal auto sales from the mix. And inflation – a much-feared foe with the level of government spending that’s taking place – remained well under control, even as talk of deflation also seemed to subside.

Stocks continued their strong run, even after the quarter closed. Since then, in fact, the Dow has rallied 6%, the S&P 8% and the Nasdaq 8%.

Sound Strategies to Follow No Matter Which Way the Market Moves

Nat Levy, a principal with Houston-based McNeil, Levy & Friedman LP, is a five-decade veteran of the financial-services sector, and has seen his share of uncertainty. In the near term, it rarely pays to prognosticate – so he doesn’t.

“I am unable to predict short-term market or economic movements and don’t know of anyone who can do more than guess at this,” Levy says.

Even so, at a time when many investors are talking about “new rules,” or “new realities,” Levy says it pays to stay the course.

The one prediction he will offer is that some investors will look back on miscues they made today with more than a little regret.

“Right now, we find ourselves in one of those “if only I had…’ periods,” said Levy.  “My one educated guess is that in five years from now we’ll look back and think “If only I had invested in this; if only I had remained invested in that, etc.’.”

Stavis & Cohen Financial’s Cohen points to the usual suspects like automakers and banks as industries that continue to face considerable challenges in the periods ahead.  While he sees signs of renewed housing activity in terms of new and existing home sales, he acknowledges that prices continue to fall each month, foreclosures are increasing, and the newly laid-off workers could exacerbate those trends.

Cohen – like Money Morning – believes that commercial real estate may be the next shoe to drop; vacancies are increasing, rents are under pressure, and banks may not be willing to loan large sums of money to related companies looking to refinance.

Because inflation could become a problem, Cohen says investors should have some exposure to gold in today’s environment.

“The unprecedented level of government intervention has added significant liquidity to the marketplace, but, ultimately may lead to higher levels of inflation,” he said. “Gold can serve as a potential hedge against such price pressures.  Additionally, as the country’s debt and deficit positions mount, the dollar could remain under pressure and gold can be viewed as an insurance policy against a weak currency and the uncertain times faced today and in the future.”

Cohen states that investors can invest in gold directly by purchasing bullion or through funds or exchange-traded funds – one being the SPDR Gold Shares exchange-traded fund, or ETF, (GLD) that track the price movements of the so-called “yellow metal.” His firm uses a manager who buys bullions and stores it in a vault, which he says gives his firm’s clients the opportunity to access a product whose price moves more in lockstep with the market price of gold, and is even more cost effective than gold funds or ETFs.

In terms of stocks, Cohen believes investors should consider small-cap shares.

“Historically, coming out of recessionary times, small-caps are among the best performing equity asset classes,” he says. “Granted, many of these companies may have struggled during the dire economic times as investors shun anything other than industry leaders. Now may represent a decent time for cautiously optimistic investors to again look at small-cap companies, particularly when combined with some exposure to gold as a hedge against renewed downside pressures on stocks.”

Cohen recognizes that the newly enacted government programs could prove helpful in jump-starting the U.S. economy – which should enable the recent upward move in stock prices to continue. In particular, he sees some successes in the Fed’s attempts to get corporations and municipalities borrowing again.

“The credit markets definitely are showing signs of life,” said Cohen. “In the first quarter, domestic companies issued over $350 billion in new investment-grade paper and interest rate spreads between [corporate bonds] and Treasuries are coming down. Likewise, according to Lipper, investment-grade [municipal bonds] were up 4% to 5% in the first quarter and investor demand for such offerings seems to be on the rise. In fact, the state of California moved up a recent sale of $4 billion in bonds by a day to accommodate the demand for what turned out to be one of the largest tax-exempt offerings since 2007.”

Mortgage-market distress could also create some investment opportunities for investors who do their homework, Cohen says.

“I am a firm believer that challenges create opportunities, and no products have experienced more significant challenges over the past few years than mortgage-related securities,” said Cohen. “Amid the subprime debacle and related credit crisis, all mortgage products have struggled and even the higher-quality paper is being priced as if it is a toxic asset. We use a fixed-income manager who has been buying up more stable mortgage-backed issues at what he perceives to be tremendous values because of the negativity that has enveloped the entire asset class.”

A market historian to the end, Cohen likes to return to what he knows best when attempting to analyze just where he believes the markets will head next.

“Dating back to 2000 through mid-March, the equity market lost about 3% in value, so history may suggest we are about halfway through what some would call a secular bear market,” Cohen said. “During such times, it is quite common to experience periods when markets really take off. In fact, during the last few weeks in March, equities rose over 20% and some investors have pointed to that move as evidence that the market had bottomed and the turnaround had begun. In reality, since October 2007, we have seen six rallies of various magnitudes.”

Source: After a Tough First Quarter, Investors Have Cause For Cautious Optimism

[Editor's Note: This look at the U.S. economy and stock market is the latest installment in a series of Money Morning quarterly reports that will examine such topics as gold, housing and oil. These reports will now be a regular feature at the end of each quarter.]

Copper is up. Yields are up. Silver is up. The dollar is down to $1.31 per euro. Why?

We don’t know. But everyone seems to have a cure for what ails the world economy. All the treatments are dangerous. But only one is effective; unfortunately, it also – most likely – fatal. The only sure protection? You guessed it, gold.

For nearly 10 years, we kept a lonely vigil. We watched…we waited…we guffawed…

What were we waiting for? The bubble economy of 2002-2007 had all the appearance of a happy, healthy financial system. Trouble was, it was having far too much fun. People can’t party that hard without getting sick. We waited for them to start throwing up.

Now, there are so many sick people around you have to watch where you step…

Today brings news of more illness.

“More woe as 72,500 jobs axed in one day,” is the lead line in the Financial Times.

As expected, the New Year is brought the collywobbles. The financial crisis of 2008 is becoming the economic crisis of 2009.

The euro area is in its deepest slump ever in its 10-year history… The economy of Europe is expected to decline 1.9% this year.

The woe is most acute on the periphery. Spain, Ireland, Portugal, Greece – the countries that most benefited from low euro-land interest rates are those that suffer most from tightening credit. At the center, France and Germany are still in relatively good shape. But the periphery states are finding it harder to finance their deficits…and, with the limits on deficit spending imposed by the Maastricht Treaty, they have no way to spend their way out of recession (assuming that would actually work).

And out in the North Atlantic, problems caused by the financial crisis have become so severe that mobs are forming in the streets…inducing the president of the country, Geir Haarde, to resign.

Back in the USA, the government is still at work, but the working stiffs are rapidly running out of work to do. Caterpillar (NYSE:CAT) said it was cutting 20,000 jobs. Pfizer (NYSE:PFE) said it could do without 19,000. Sprint Nextel (NYSE:S) lopped off 8,000 people from its payroll. And Home Depot (NYSE:HD) said sales were so slow it sent 7,000 of its employees home.

And this headline from the Wall Street Journal:

“IBM (NYSE:IBM) payroll cuts may be deeper than anticipated.”

Bloomberg reports that last year saw the biggest drop in house prices in the United States since they began keeping records…and probably since the Great Depression. The typical house lost 15% of its value in 2008.

Oh woe…oh woe…

But, fear not… every sentient meddler on the planet is offering advice…and solutions. More below…

*** Over in the Financial Times, the editorial staff tells the Obama Administration what it should do: “stop fretting over currency and press China to spend more.”

On the facing page, a pair of economists insist that government must recapitalize the banks, but must do it in a smarter way:

“The most politically robust solution is for the government to acquire not voting stock, but warrants – the option to buy such stock. These warrants would convert to commons stock when sold, and a Resolution Trust Corporation-type structure could manage the disposal of these controlling stakes into the hands of private equity investors.”

Even commentators who are usually sensible have given in to the urge to public service. Can you blame them? They see a problem…they want to fix it. Many of the leading fixers, of course, are either on the Obama payroll already…or angling for a job.

Other improvers are taking the mountain air at Davos… Maybe the altitude will help them think more clearly…and help them come up with solutions to the problem they clearly don’t understand.

Aside from a couple of economists – Roubini and Shiller – who are trying to explain to the group how market cycles work, none of the movers and shakers now jiggling the Alps or helping Team Obama saw the problem coming. None has any idea how an economy actually functions. None has a clue how to make it work better. In fact, almost all of them played some role – great or small – in CAUSING the crisis…either by omission or commission. Some were regulators who misled the public into thinking there were cops on the beat. Others worked on Wall Street. (Only recently, when they heard the police sirens, did they take the stockings off their faces and dump their pistols in the trash bins.)

Jonathan Weil:

“Almost half the people on Obama’s economic advisory board have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both.”

But that doesn’t stop them from wanting to put things right. And the only fix they can imagine just happens to be a fix which, by pure coincidence of course, gives more power and money to the fixers. Yes, dear, dear reader…

…now, people are retching all over the place. We’re no longer waiting for them to get sick. We’re not on Bubble Watch any more. Now, we’re on Quack Watch…waiting to see how the quacks put them out of their misery.

At every level, the politicians are getting out their black bags and taking command of the situation. In California, for example, two cities aren’t waiting for the Obama ambulance to arrive on the scene. They’re giving mouth-to-mouth themselves. The WSJ reports:

“Victorville, a desert town on the main highway between Las Vegas and Los Angeles, recently approved a $200,000 loan to Victorville Motors, a 40-year-old family-owned dealer in the town’s auto park.”

So you see, dear reader, you don’t need bankers or capitalists to allocate capital. Any city councilman can do it. Yes, of course, the hacks will err…they will allocate capital stupidly and counterproductively. But not necessarily worse than the bankers have done recently…

What they won’t be able to do is to take a year off the calendar. We will never party like it was 2006, again. At least, not in our lifetimes…

Included in the Wall Street Journal this morning is an editorial, commenting on the Obama resuscitation plan. The emergency plan includes hundreds of billions for various projects designed to get the economy’s heart beating again. Trouble is, most of these projects don’t begin until after 2010. Infrastructure spending, for example, takes time. You don’t begin building a bridge tomorrow. First, you have to draw up plans…have engineering studies…and so forth. In other words, the patient is going to be a dried up corpse before the medicine takes effect.

The British newspaper, The Guardian, is also catching on to why the quacks won’t be able to cure what ails the world economy:

“In the 1960s and 1970s, total debt [in the US] was rising at roughly the same rate as nominal GDP. By 2000-2007, total debt was rising almost twice as fast as output, with the rapid issuance all coming from the private sector, as well as state and local governments.

“This created a dangerous interdependence between GDP growth (which could only be sustained by massive borrowing and rapid increases in the volume of debt) and the debt stock (which could only be serviced if the economy continued its swift and uninterrupted expansion).

“The resulting debt was only sustainable so long as economic conditions remained extremely favourable. The sheer volume of private-sector obligations the economy was carrying implied an increasing vulnerability to any shock that changed the terms on which financing was available, or altered the underlying GDP cash flows…

“From this perspective, it is clear many of the existing policies being pursued in the United States and the United Kingdom will not resolve the crisis because they do not lower the debt ratio.

“In particular, having governments buy distressed assets from the banks, or provide loan guarantees, is not an effective solution. It does not reduce the volume of debt, or force recognition of losses. It merely re-denominates private sector obligations to be met by households and firms as public ones to be met by the taxpayer. “

We have suggested another way to look at this, several times. The WSJ further explains:

“…the money from this spending boom has to come from somewhere, which means it is removed from the private sector as higher taxes or borrowing. For every $1 the government ‘injects,’ it must take $1 away from someone else – either in taxes or by issuing a bond.”

The Journal, not to be left out of the orgy of civic spirit, favors a different kind of medicine: tax cuts. Permanent cuts in marginal rates, it says, are the best solution.

We never met a tax cut we didn’t like. But we don’t see how it solves the essential problem: whether the feds spend the dollar, or the taxpayers…it’s still just a dollar.

But everybody’s got some patent medicine he wants to try. The most potent elixir is the one from the central bank of the US, the Fed. In fact, it’s the only one that works. The Fed has cut rates to the lowest level in 95 years…

“What will the Fed do next?” asks CNBC.

“Since it can’t lower rates any more,” answers the WSJ, “it has begun effectively to print money in an attempt to bolster the economy.”

This is where it gets interesting. We’re not on Bubble Watch now…we’re on Quack Watch…looking to see how much damage the fixers do. We bring the binoculars up to our eyes…and look at the printing presses. And what do we see? Gold.

*** Have you noticed? Bernie Madoff bears a striking resemblance to George Washington. And so goes the nation…from the man who couldn’t tell a lie, to the man who couldn’t tell the truth.

*** Gold is moving again. It’s up 15% in the last 2 weeks and 34% from its October low. What’s going on? While almost every analyst expects a deflationary slump…gold is acting as if inflation were in the headlines.

What has bothered us is that so many people expect inflation…and a rising gold price. Where’s the surprise, we wondered.

We could only think of two. One – that deflation goes deeper and remains longer than expected…pushing the gold price down and discouraging the gold speculators. Two – that inflation arrives quickly…and violently – before investors have a chance to unload their government bonds, or buy gold.

Which will it be?

Source: Hangover Nation

Silver followed a similar route, but it got sold off shortly before the Comex opened…with the selloff continuing until about 8:30 a.m. in New York. From there it rose in fits and starts to its peak of the day around 12:30 p.m….where it, too, got sold off quietly into the Globex close.

It should not be a surprise to anyone that gold and silver open interest soared on Friday on such spectacular price moves. In gold, o.i. rose a huge 17,817 contracts to 359,905…as the spec funds in the Non-Commercial category of the COT started to pour into this market. In silver, o.i. rose 1,343 contracts to 88,599…not really a big number of contracts, considering. It would be a good bet that JPMorgan (NYSE:JPM) and HSBC USA (NYSE:HBC) would have taken the majority of the short positions against all these new longs in both metals. This has been their SOP for the last ten years at least…so why should they change their game plan now?

Options expiry is tomorrow. I’m sure there’s a tonne of call options that would expire in the money on any gold price close over $900 at the end of Comex trading on Wednesday. It will be interesting to watch the price action over the next 36 hours. I would suggest the same thing for silver over $12.00. I don’t think that the boyz want to part with all the premiums on these call options that they’ve written…plus I’m sure that they don’t want to risk that someone is laying in the bushes waiting for their $900 call options to finish in the money so they can convert to futures and stand for delivery on the Comex. That’s another big no-no. I also note that despite Monday’s decent price action, the share action did not match that…and the major gold indexes all finished down a little on the day.

Here’s a graph of what’s been going on in the gold ETF…GLD (NYSE:GLD)…lately. It is current as of last Friday. I thank Gene Arensberg for this.

click to enlarge

In gold news, there were no new additions to the GLD…and SLV (NYSE:SLV) finally added about 6 million ounces…up to 236 million ounces. After Friday’s activity, I would think that the SLV is due even more silver than that. Over in Switzerland, the Swiss gold ETF added about 125,000 ounces, which brings their total up 3.388 million ounces. Their silver ETF added a healthy 2.1 million ounces. They now have 35,926,000 ounces stashed away for their investors. At this rate, it won’t be long before this ETF has more silver than the Central Fund of Canada. And speaking of CEF, I see that their underwriter, CIBC, has an offering on the table as I write this. This closes at 8:00 a.m. this morning. The numbers should be interesting when they get around to reporting them later today. Over at the U.S. Mint, the good folks have stamped out 87,000 gold eagles and 1,769,000 silver eagles (for the month of January) as of yesterday. One would think that they will be able to add to these totals before the end of the month. We’ll see. And lastly is this story from Business Intelligence from the UAE…”There is an acute shortage of gold coins at the annual Dubai Shopping Festival taking place this year from 15 January-15 February. The main reason for the short supply of gold coins is primarily due to their heavy demand in Dubai, the main regional source for gold in Middle East.”

In other news, Bloomberg… (NYSE:FNM) Fannie May to Tap U.S. for as much as $16 billion in aid, following (NYSE:FRE) Freddie’s request for $35 billion last week. According to a story in the N.Y. Times, nationalization of U.S. banks is getting a new, and apparently serious, look. In another Bloomberg story, I note that Caterpillar (NYSE:CAT), Sprint Nextel (NYSE:S) and Home Depot (NYSE:HD) led companies announcing plans to cut at least 61,000 jobs as sales withered and construction slowed. In a story in the Jerusalem Post, it appears that the U.S. Navy (in a covert operation) intercepted an Iranian arms ship in the Red Sea. Not a thing about that in the U.S. press. In a late-breaking story out of the International Herald Tribune New York), “U.S. authorities said that they arrested the chief executive of private financing firm Agape World on suspicion of running an alleged Ponzi scheme that attracted $400 million in investments.” According to an AP story filed from Harare…”City workers in Zimbabwe’s capital began an indefinite strike Friday, demanding to be paid in foreign currency…’We can’t afford to continue to receive our salaries in Zimbabwe currency, which is not buying anything,’ said the head of the municipal workers.”

click to enlarge

Three stories today. Prompted by gold’s ascent through $850, GoldMoney founder and GATA consultant James Turk plots the metal’s price in the major currencies and concludes that all are losing value against gold and that gold is proving the only safe haven financially. Turk’s analysis is headlined “Gold Breaks Above $850″ and you can find it linked here.

The second story is the latest commentary from silver analyst Ted Butler. Butler states that the concentration of the short position in silver on the New York Commodities Exchange has intensified, and he proposes that the U.S. Commodity Futures Trading Commission conduct its investigation of the silver market in public. Butler’s new commentary is headlined “Madman Across the Water” and is linked here.

And lastly, another commentary from James Turk. To quote the first paragraph…”There is a determined grassroots movement in the United States seeking the restoration of sound money. There are many different groups comprising this movement, but all share the same aim. It is to restore gold and silver to its rightful role as the money of the United States, as mandated by the Constitution.” The essay is entitled “Restoring Sound Money in America” and the link is here.

When people fear their government, there is tyranny. When governments fear the people, there is liberty. – Thomas Jefferson

The next thirty-six hours in the gold market should tell us a lot. If the gold price can hold up for another couple of days…until we get past options expiry….we could see prices move up…and in a hurry. However, the boyz can pull the pin any time they wish…so I’m always on the lookout for “in your ear.” But maybe they want the price to rise…or maybe they are now in no position to stop it. We will, as they say, find out in the fullness of time.

See you tomorrow.

Source: And Then There’s This…Tuesday, January 27th, 2009

• Siemens AG (SI) put aside nearly $1.3 billion to settle charges that it bribed government officials around the world to win contracts. The concessionary provision will affect earnings for the year ended Sept. 30, Bloomberg reported.

• Internet titan Google Inc. (GOOG) announced Wednesday (yesterday) that its wariness for antitrust-related legal battles ultimately killed discussions with Yahoo Inc. (YHOO) about forming an advertising partnership, the New York Times reported. The breakdown reopens the door for a possible Yahoo-Microsoft Corp. (MSFT) relationship, which also has its share of starts and stops.

• Enbridge Inc. (ENB) announced quarterly profits rose 88% and net income spiked $130.4 million, or 41 cents a share, for the third quarter, Bloomberg reported. Canada’s largest pipeline company said volume increased 33% on the Athabasca liquid pipeline system, a major artery into one of the world’s most oil rich fields.

• The FCC voted 5-0 in approval of Sprint Nextel Corp’s (S) June purchase of Clearwire Corp., MarketWatch reported. The merger is critical to the survival of both, as they claimed to be unable to build a mobile wireless Internet network that could compete with rival AT&T (T).

• GMAC Financial Services, a division of General Motors Corp. (GM) said yesterday (Wednesday) that its third-quarter loss widened to $2.52 billion. GMAC had a loss of $1.6 billion during the year-earlier period. Third-quarter revenue fell 24% to $1.72 billion from $2.25 billion. GM reports earnings tomorrow (Friday).

• Time Warner Inc. (TWX) reported net income of $1.07 billion, or 30 cents a share, for the three months ended Sept. 30. Revenue was at $11.71 billion, relatively unchanged from last year’s  $11.68 billion. The company reported 18% growth in profits from continuing operations.

• Molson Coors Brewing Co. (TAP) yesterday (Wednesday) announced a 28% increase in third-quarter profit. The company reported third quarter net income of $173.2 million, or 94 cents per share, up from $134.7 million, or 74 cents per share, a year ago.

• News Corp. (NWS) said yesterday (Wednesday) that first-quarter net income dropped 30% from a year ago. Net income fell to $515 million, or 20 cents per share, compared with $732 million, or 23 cents per share, in the year-earlier period. Revenue rose 6.3% to $7.5 billion.

Source:Global Investing Roundups Thursday, November 6th, 2008

Verizon Wireless is 55% owned by Verizon Communications Inc. (VZ) and 45% owned by Britian’s Vodaphone Group PLC (ADR:VOD).

The deal values Alltel – the fifth-largest wireless carrier in the United States – at more than eight times its earnings before interest, tax, depreciation and amortization (EBITDA). Or about $22 billion, which includes Alltel’s debts.

In November, Alltel’s $27.5 billion sale to private equity firms TPG Capital and GS Capital Partners LP, an arm of Goldman Sachs Group, Inc. (GS) was nine times EBITDA.

Alltel has 13 million customers and spans rural markets and smaller cities in 34 states, comprising a 5% share of the market. It also handles calls for Verizon and AT&T in areas where they don’t have coverage.

The purchase will allow Verizon to offer service in 57 rural markets. Synergies are expected to generate incremental savings of $1 billion in the second year after the deal closes, Verizon Wireless said a statement.

“This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services,” Lowell McAdam, Verizon Wireless president and chief executive officer, said in the statement.

An Alltel acquisition would not only shoot Verizon Wireless past AT&T as the top U.S. wireless service provider, but it will also put additional downward pressure on the T-Mobile USA Inc. and troubled Sprint Nextel Corp. (S).

Telecom Titans Getting Bigger Around the World

The high profile merger of telecom titans has quickly developed into a strong global trend.

In Europe, France Telecom SA’s (FTE) $41.9 billion offer for Finnish fixed-line provider TeliaSonera AB (PINK:TLSNF) was rejected Thursday. But that doesn’t mean the deal is over.

“The question is how much can they raise the offer,” Thomas Romig, a fund manager at Cominvest Asset Management in Frankfurt, told Bloomberg Television.

Earlier this week, Telkom South Africa Ltd. (ADR:TKG) said it received a takeover offer from Mvelaphanda Resources Ltd. and Vodaphone.

And in China, the telecom market is undergoing a massive government-ordered restructuring – with the top six companies being melded into three – as the country ramps up efforts to adopt third-generation wireless technology.

Domestically, the industry trends only makes expansion more difficult for large – but not large enough – wireless providers such United States Cellular Corp. (USM), Rural Cellular Corp. (RCCC) and Shenandoah Telecommunications Co. (SHEN) to compete.

Unfortunately, that’s their problem to deal with because the mobile industry is expanding by leaps and bounds as customers increasingly ditch fixed-line service to wireless.

And the leaders of wireless service and technology are the ones that will thrive.

Source: Verizon to Buy Alltel for $28 Billion, Vaults Past AT&T as No. 1 U.S. Mobile Provider