Tuesday, April 20, 2010

Canada Matching China Profits at Discount Lure Cash

Investors are pouring more money than ever into Canada, drawn by earnings growth that almost equals China’s and shares trading for 18 percent less.

International funds pumped in $2.7 billion over the last year as analysts forecast companies in the Standard & Poor’s/TSX Composite Index will boost profits 42 percent and pay the best dividends relative to global equities on record. The market value of Canadian stocks has risen the most among the world’s 15 biggest nations this year in U.S. dollar terms. Prices gained 2.8 percent and the Canadian currency strengthened 3.6 percent, according to data compiled by Bloomberg.

Canada is becoming investors’ favorite because its banks avoided bailouts and the budget deficit is less than half that of the U.S., compared with their economies. The benchmark index may beat global equities for a fourth year as the recovery lifts demand for energy and metals providers, which make up 46 percent of the market. The S&P/TSX’s price-earnings ratio was 18 percent below China’s CSI 300 Index before today, Bloomberg data show. (more)

Foreclosure Pipeline Is Full to Bursting

Last August, I wrote a story for AOL/Daily Finance titled Housing bottom premature. The clue? Foreclosure pipeline full. The backlog of distressed mortgages has only grown larger since then.

As Mish noted, Foreclosure activity hit a record in the first quarter of 2010.

According to realtytrac.com, foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 932,234 properties in the first quarter, a 7 percent increase from the previous quarter and a 16 percent increase from the first quarter of 2009.

Meanwhile, the heavily hyped Federal program to stave off defaults via massaging the terms of mortgages is failing spectacularly: Defaults Rise in Loan Modification Program. (more)

A Greater Threat Than Terrorism

Is offshore outsourcing good or harmful for America? To convince Americans of outsourcing's benefits, corporate outsourcers sponsor misleading one-sided "studies."

Only a small handful of people have looked objectively at the issue. These few and the large number of Americans whose careers have been destroyed by outsourcing have a different view of outsourcing's impact. But so far there has been no debate, just a shouting down of skeptics as "protectionists."

Now comes an important new book, Outsourcing America, published by the American Management Association. The authors, two brothers, Ron and Anil Hira, are experts on the subject. One is a professor at the Rochester Institute of Technology, and the other is professor at Simon Fraser University. (more)

The 10 SCARIEST Charts Of The Recession

Over the past year, a number of economists have proclaimed the recession's end. The media, too, have urged economic optimism, particularly in the last few weeks. At the New York Times, Floyd Norris argued that the economy is experiencing "a cyclical recovery that is gaining strength." This week's Newsweek cover story trumpets the valiant recovery of a "comeback country" now roaring ahead in post-recessionary times.

But a closer look reveals a far more muddled picture. In the first quarter of 2010, economic activity fell in half of the U.S. states, the number of national housing foreclosures jumped back near their 2009 peak, and household debt as a percentage of GDP, long-term unemployment, and income inequality are still at or near their historic highs.

Before you get too excited about the recovery, check out these charts from the recession's still lingering impact: (more)

Now we know the truth. The financial meltdown wasn't a mistake – it was a con

The global financial crisis, it is now clear, was caused not just by the bankers' colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday's announcement that the world's most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world. Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we've seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves. (more)

Goldman Probes May Lead Global Stocks Lower, AMP Says

Widening probes of Goldman Sachs Group Inc. may prompt a drop of as much as 10 percent in global stock markets, according to AMP Capital Investors Ltd., a unit of Australia’s biggest provider of pension plans.

The MSCI World Index, as well as U.S. and Asian equity gauges, are ripe for a “multi-month” correction after valuations soared, said Nader Naeimi, a strategist who helps oversee $90 billion for the Sydney-based mutual-funds manager. AMP Capital last week began moving to cash assets from equities, anticipating a decline in stocks, Naeimi said. The MSCI World, which measures 23 developed markets, has rallied 43 percent in the past 12 months. (more)

Fraud, It’s Much Bigger Than Goldman Sachs

Goldman Sachs was charged with fraud last week by the Securities and Exchange Commission. The investment bank says the charges are “unfounded in law and fact.” Regulators allege “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party,” SEC Enforcement Director Robert Khuzami said in a statement. In other words, Goldman and a hedge fund client put together a ball of sub-prime crap designed to fail and bet against it. Goldman also took out insurance on those same mortgage backed securities from AIG–yes, the same AIG taxpayers bailed out to the tune of $180 billion. Goldman was paid a total of nearly $13 billion from AIG at the direction of Treasury Secretary Tim Geithner. What a mess and it is going to get much worse before it gets better. (more)

BNN: Bruce Campbell, president, Campbell & Lee Investment Management, shares his top picks

click here for video

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