Dollars to Burn

09/10/2009 9:11 am EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

When an enthusiastic foreign suitor comes a-calling, the blushing maiden's kin and neighbors are liable to get caught up in the excitement. That was certainly the case in London Monday, as Kraft's (NYSE: KFT) syrupy bid for Cadbury (LSE: CBRY; NYSE: CBY) had the FTSE gushing 1.7% higher.

In the shrunken realm of trans-Atlantic deals, the Yanks' sweet tooth for Cadbury's chocolates was welcome relief from the Chinese scooping up another commodity supplier. Candy's not strategic but tastes much better than zinc, and speaks to the persistence of our appetites into the presumed age of resource scarcity. So, if sugar prices keep going up, they will at least be offset by the usual synergies and pink slips. Whose recipients will almost certainly continue to chew gum while waiting for the next bubble to inflate.

Speaking of sugar and bubbles, the G20 finance ministers supped in London Saturday, swearing as one that the extraordinary splurge aimed at reviving the global economy will not end any time soon. The politicians also mean to get tougher on the banks where capital requirements are concerned—as soon as the current crisis passes. And as for bankers' enviable pay, the curbs pushed by the French and the Germans got punted to something called the Financial Stability Board, the world's most expensive circular file.

Thanks to heavy government spending and low interest rates, Kraft's not the only one hungry for a bit more risk right now. Business confidence in Australia is at a six-year high. And don't look now, but Shanghai stocks are 7-0 in September, recouping 10%. Chinese property developers have led the charge on expectations that the real estate boom is far from played out.

With another risk-and-resources rally in the works, the low-yielding dollar has been taking on water once again, and not just against gold, which is flirting with a grand an ounce. Even some United Nations suits piled on, pining for a managed-currency regime to force America to live within its means, despite recent evidence that the rest of the world isn't ready for such a calamity.

Beyond Geneva's diplomatic precincts, there's no free lunch, but there are still bargains to be found. When the expense-account crowd heads back up its towers to think deep thoughts, chances are they will be riding elevators made by Schindler (Zurich: SCHN), one of a half-dozen winning global small-cap picks highlighted by fund manager Edwin Lugo in this week's Q&A. He also discusses a Japanese landlord selling for less than the value of its prime office buildings and a Belgian private-equity group that fetched less than the cash on its books late last year. These stocks have run and may no longer be slam dunks, but Lugo says many remain lay-ups.

In the same vein, it seems hard to conjure up a credibly bearish near-term scenario for VTech Holdings (Hong Kong: 303; OTC: VTKHY), the Hong Kong maker of phones and toys boasting rapid growth, a 7% yield and the endorsement of High-Yield International editor Carla Pasternak.

Over at the Internet Wealth Builder, Tom Slee offers the bullish case for Canada's Finning International (TSX: FTT), the top dealer of Caterpillar equipment poised to benefit from the machinery maker's plans to streamline operations.

Cadbury's better known, but those names could prove just as sweet, getting bid up a few hundred shares at a time by investors with too many dollars earning next to nothing.

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