The Dow has run up to -- and been turned away from -- 16,000 twice before.
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Even if the AT&T deal falls through because of the Justice Department's lawsuit, someone will come for T-Mobile.
By Jeff Reeves, Editor, InvestorPlace.com
We learned this week that Uncle Sam is less than pleased with the AT&T (T) plan to purchase T-Mobile. This changes little for AT&T and Verizon (VZ), of course, since the mobile market already is rapidly becoming a two-horse race. Sprint Nextel (S) hasn’t turned a quarterly profit since early 2007, and T-Mobile has lost some 150,000 subscribers so far in 2011.
In fact, the Justice Department’s move to step in will do little to “save” T-Mobile. In reality, the only thing it will do is ensure someone other than Verizon or AT&T will wind up purchasing the $39 billion wireless carrier.
So who else is in the market to buy T-Mobile? I have a few suitors in mind -- though most would take some accounting acrobatics or gutsy (perhaps crazy) strategic shifts:
Some indicators suggest that maybe, just maybe, the greenback is about to strengthen.
Although stocks haven't really gone anywhere the last few days, big changes are afoot if you know where to look. It's still early, but technical indicators suggest the dollar is poised for a big rebound in the days to come. That'll have big ramifications for a variety of assets including stocks, gold, and commodities.
Why should the greenback rally now? There have been a number of important developments in the eurozone this week, all of which suggest the euro could be headed for a bout of weakness. That, in turn, should boost the dollar.
The first is that European Central Bank President Jean-Claude Trichet indicated in a speech to the European Union Parliament that his recent rate-hiking campaign is about to end. He did not use the keyword "vigilant," which signals an imminent interest-rate increase. And he noted that the risks to the medium-term inflation outlook are under study.
Political risk in China is heating up.
By Tim Hanson
Imagine you own a business in China. Now imagine that the Chinese government starts running high-profile stories in their media about how you're defrauding your customers, enabling the sale of potentially dangerous pharmaceuticals, and slandering respected academics. Would you be concerned?
I'm guessing you would be, and rightfully so. Companies that attract the wrath of the government in China don't tend to do so well, whether we're talking about Google (GOOG) refusing to play ball on Internet censorship, or Sanlu Group putting melamine in its milk. Google has left the market and given up significant market share, while Sanlu went effectively bankrupt -- and there are many more examples.
This is the worst-case scenario facing Baidu (BIDU) owners today. Following the aforementioned barrage of criticism on China's government-run CCTV last week, Baidu ultimately took to the airwaves itself and, effectively admitting guilt, apologized.
Given the rally in precious metals, investors should treat their gold, silver and platinum heirlooms like bullion.
By Joe Mont, TheStreet
Spiking gold prices over the past few years have been a boon for many Americans, and not just those who invest in bullion, coins and mining companies.
The average person has seen their jewelry collection evolve from fashion to asset. The growing presence of shops and websites offering to buy unwanted gold jewelry is a testimony to how in demand and profitable the precious metal has become. Though less headline-grabbing, silver and platinum have also become even more valuable commodities; from January 2000 to January 2010, the price of gold quadrupled and the prices of silver and platinum more than tripled.
That entails an overlooked risk for many folks. When even a tiny earring clasp is worth enough to pay for dinner at a high-end restaurant, even a modest jewelry box can be worth thousands, ounce by ounce. And yet many fail to recognize the full value of what they own.
A short-term pullback would be a good chance to jump in on these broad-based sector ETFs and ETNs.
By Tom Aspray, MoneyShow.com
Commodity markets dropped along with stocks in early August, as concerns over the health of the economy reached a fever pitch after the debt downgrade.
As stocks have rebounded from the August lows, the major commodity indices, as well as the commodity ETFs and ETNs, have been even stronger. The charts indicate that the correction from the May highs has been quite normal, and there is strong evidence now that the lows are in place.
This suggests that global economies—especially the emerging markets—may be in better shape than most think. The broad-based commodity ETFs and ETNs are now testing strong resistance, so a near-term setback looks likely, but this should be a good buying opportunity.
On Wall Street, you'd be hard-pressed to find similar continuity in leadership, long-term vision and constant questing for the next big thing.
Exxon Mobil (XOM) was all over the news Wednesday, thanks to a joint venture to hunt for oil in the frozen north of Russia. Some pundits questioned whether Exxon will succeed in navigating the risky terrain of Soviet-style politics, to say nothing of the difficulty of drilling in Siberia. Others said Exxon could have just forged its most profitable partnership in history.
However the Exxon deal in Russia plays out in the years ahead, investors should take note of one very important fact: Exxon has been building this deal for years, with an eye on the long term and a refusal to let its current dominance and $350 billion market capitalization overshadow the need for future successes.
Sadly, such discipline in vision is rare in corporate America these days.
Bank of America is raising capital through new deals, but its mortgage nightmares won't go away.
Hints of more cheap cash from the Federal Reserve help stocks, commodities, and other risky assets push higher. But can it last?
Investors have sure been doing a lot of Fed watching lately. With the economy on a knife's edge, dancing between tepid halting growth and a new recession, the people want to see more stimulus on top of the central bank's recent promise to hold interest rates near zero through 2013. So every hint and every wink from Federal Reserve officials is being closely examined as investors worship at the altar of cheap money.
And based on recent market movements, traders seem to think some additional policy easing is likely at the next Fed meeting in three weeks and that whatever measures are announced will be enough to get the economy revved up again. Sure, precious metals have been on the move over the last few days. But I think the real story has been the rebound in industrial commodities like crude oil and copper.
Fed chairman Bernanke raised expectations by extending the upcoming meeting by a day to allow a "fuller discussion" of the merits and costs of additional stimulus measures. Based on public comments by other Fed members, that discussion seems headed for a positive outcome. Here's why and a look at how investors should prepare.
John Paulson is having a tough year, but we can learn from his mistakes.
"Watch the downside, the upside will take care of itself. That's been a very important guiding philosophy for me. Our goal is to preserve principal, not to lose money. Our investors will forgive us if our returns don't beat the S&P in a given year, but we are not forgiven if we have significant drawdowns."
– John Paulson, 2007
It's been a horrendous August for John Paulson, the hedge fund manager who rose to prominence after earning billions of dollars for himself and his investors betting against subprime securities. As of Aug. 19, one of his flagship funds was down 22% for the month, and 39% year to date.
Here are three lessons ordinary investors can learn from Paulson's experience:
One investment firm is selling securities backed by subprime mortgages. Seriously?
Springleaf Financial plans to sell $242 million in residential mortgage-backed securities backed by subprime loans, The Wall Street Journal reports. Oh, good. I was just about to take a blowtorch to my savings account. This is a much safer way to burn money.
The attraction of these bonds is the yield, priced Wednesday at 4%. And get this: They are rated AAA by Standard & Poor's, so they're a better bet than the U.S. government. S&P is apparently just fine with bonds tied to loans to homeowners with below-average credit scores and almost zero home equity.
But the move changes nothing. AT&T and Verizon are still top dogs, T-Mobile is still going to disappear, and consumers will face fewer options.
By Jeff Reeves, Editor, InvestorPlace.com
Poor AT&T (T). We just learned Wednesday that the Justice Department will try to block its proposed merger with T-Mobile.
Justice lawyers say the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition and raise prices, The Associated Press reports. Expect AT&T to take the fight to court.
Meanwhile, how will AT&T muddle through with a measly $125 billion in annual revenue and just 110 million wireless subscribers? What ever will the company do with its $3.8 billion cash stockpile if it can't buy this competitor?
In case you haven't sensed the sarcasm yet, wake up and smell the coffee. AT&T is hardly on the brink of collapse and hardly a bit player in the telecom sector. The sad reality is that the mobile marketplace has been consolidating for some time, and this will continue with or without the merger.
When it comes to choosing locations for its sought-after stores, Apple's process is similar to high-end brands like Hermes and Louis Vuitton, say real estate experts.
By Olivia Oran, TheStreet
Brooklyn Borough President Marty Markowitz caused a stir recently by making a public plea for an Apple (AAPL) store to be built in Brooklyn as part of a downtown revitalization effort. He was shut down repeatedly.
How could Brooklyn -- a cultural hub filled with musicians, artists and entrepreneurs -- not be a good match for Apple, whose products are used widely and prized by creative types, Markowitz wondered.
The answer lies within Apple's core retail strategy: capitalize on already well-trafficked, well-to-do areas that don't need help gentrifying. In other words, go where the money's at.
For 25 large corporations, the top boss took home more money than the entire company paid in federal income taxes, one study shows.
But what about when a CEO's salary is fatter than the entire federal income tax bill for the company? Or better yet, what if their companies didn't pay any 2010 federal income taxes at all? Is this becoming the new normal?
That's what some of the largest U.S. companies managed to finagle last year, according to a new study from the Institute for Policy Studies. The study found that 25 of the 100 highest-paid CEOs took home more money than their company paid in federal income taxes. The average pay of those 25 CEOs was $16.7 million.
Recent strength in homebuilding stocks may set up good trading opportunities, but as long as the overall trend remains down, long-term investors should stay away.
The surprise increase boosted the homebuilding stocks, as many were already trading well above their recent lows.
The Dow Jones Home Construction Index completed a major head-and-shoulders top in May 2006. It peaked in 2005 at 1100 and closed Tuesday at 208. It is down 81% from the 2005 highs.
Though the SPDR S&P Homebuilders ETF (XHB) and the key homebuilding stocks have provided some good trading opportunities in the past, there are no signs yet of a major bottom.
Twenty-five of the 100 highest-paid bosses made more than their companies paid in taxes last year.
By Jeanine Skowronski, MainStreet
IPS says the 25 highest-paid CEOs averaged 16.7 million in annual compensation, with 22 of them getting net pay increases last year. In 13 of the companies, the pay increases coincided with either a decline in the corporation's tax bill or an increase in their tax refund check.
The low tax bills and large refunds could not be attributed to lower profits at those companies, the institute says, but rather to the use of offshore tax havens and corporate tax breaks.
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[BRIEFING.COM] Equity indices settled on their lows following a steady, session-long slide. Similar to yesterday, small-caps paced the retreat as the Russell 2000 fell 1.6%, extending its December loss to 3.6%. The S&P 500 settled lower by 1.1%, widening its month-to-date decline to 1.3%.
There was no specific news catalyst behind today's slide, which had the markings of broad-based profit-taking. Seven of ten sectors settled with losses of 1.0% or more while only two groups ... More
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