Blog > News that Matters > This Week’s Market Update: Real estate growth spots, a daring gold price prediction, and the withering of the organic food craze
 | Email This Article Email This Article  | 

This Week’s Market Update: Real estate growth spots, a daring gold price prediction, and the withering of the organic food craze

Posted April 25, 2008

Baltimore — (TFN): Merrill Lynch’s David Rosenberg recently wrote: “If not for the ongoing support from foreign-derived earnings, U.S. profit growth would be even further in the red. U.S. corporate profits derived from domestic demand sources sagged 30% annualized in the fourth quarter.”

In a global economy, where companies sell their products and services not in one but in a hundred markets, the indicative value of stripping out foreign earnings from their balance sheets may be debatable at best if you want to assess the strength of a company or economy: After all, if you applied the same to Germany, India, and China, you’d have to arrive at the conclusion that their respective economic booms never happened—since most of their growth occurs not by virtue of domestic demand or consumption, but due to exports and global diversification.

The value of international diversification is clear in the recent spate of corporate earnings: Ford (F) reported first-quarter profits of $100 million due to cost reductions in North America and strong profits in its international sales, especially in Europe. Pre-tax profits rose in all international sales regions, led by Europe, offsetting continued losses in North America.

A week ago, Coca-Cola Co. (KO) had announced first-quarter profit growth of a whopping 19 percent — due again mainly to overseas growth. Again, foreign earnings more than made up for slumping U.S. sales.

Apple (AAPL) reported earnings of $1.05 billion, or $1.16 a share, on $7.51 billion in revenue for the quarter ended March 31 — vs. earnings of $770 million, or 87 cents a share in the same period last year.

Given the dominant climate of gloom and doom, it is the fruits of global diversification that have been keeping the Dow Jones Industrial Index near the 13,000 level for most of the past week—and especially the rising value of foreign currency-denominated sales vs. the dollar that accounts for the continues strength of American businesses!

Here are a few TFN headlines that you may have missed last week:

***The Top 5 U.S. Real Estate Markets of 2008: Real estate prices are falling across the country. Foreclosures are rising, and swaths of unsold properties are looking for buyers.

U.S. real estate may look like the last place you want to invest your money, but there are still pockets where residential and commercial properties retain the potential for healthy returns. In these five under-the-radar markets, property prices are set for a rebound. If you know where to look!

The list of U.S. communities we’ve compiled is an effort to combine the best of both real estate worlds: residential and commercial. We looked for areas where the built-in diversification makes for ideal investment opportunities.

***Green Investing: Carbon Reduction Investment Opportunities: Just in time for Earth Day, Nick Hodge reveals the best ways for those interested in socially conscious investing to profit from the new push in carbon reduction on this week’s Smart Trading Action Alert with Laura Cadden.

***Investing in a recession: The state of the U.S. economy has been a source of much controversy. Are we in a recession already? Could we actually be slipping into a depression? Just how bad are things going to get and when are the mass layoffs, the continued devaluation of the dollar, and poor stock performance going to end?

Ian Cooper explains why investors should look to gold and mining stocks during times of economic uncertainty.. and makes a daring prediction for the gold price.

***Food Prices: Short Whole Foods (MFMI): Barack Obama may be stunned at the price of arugula at Whole Foods. But as disposable incomes deflate and U.S. communities’s tax base erodes, I predict that WFMI will wither right alongside the health food craze as the recession takes hold.

***Investing in Uranium: Nuclear energy going cheap: Dominic Frisby writes: “If there’s one area of the commodities markets that’s looking extremely cheap right now, I would say it’s uranium. Or rather uranium junior mining companies. Uranium is in a bear market; the trend is most definitely down. But we are reaching a point where it’s hard to see how some of them can get much cheaper.”

What we’re working on for next week:

I briefly glanced at our video production schedule for next week, and here’s what I saw: Laura Cadden has invited Andy Gordon of Investor’s Daily Edge on her show, and Krista Das hosts Taipan alumnus Todd Schoenberger. I have been asked to order my thoughs on the effects that the mass shutdowns of manufacturing industries in Beijing and other Chinese provinces will have on the economy as a whole during the Olympic Games.

****Make sure you sign up for our FREE TFN News Feed for breaking news, special reports and new financial videos. Sign up through your favorite reader here. Or, if you prefer, have the feed delivered to your email.

Related Articles


Posted by J. Christoph Amberger · Filed Under News that Matters 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus