By Matt Hougan

Some of the most popular ETFs over the past month could hold nasty surprises for investors.

Air Products & Chemicals (NYSE:APD) offered an unsolicited bid to acquire smaller peer, Airgas (NYSE:ARG), for $7 billion, including $1.9 billion in assumed debt, or $60 per share. ARG was trading at $43.53 before the news and shares jumped 40% to $60.96, higher than APD’s $60 bid. ARG management previously turned down two offers, but is evaluating this offer and suggested that shareholders wait until their analysis is complete. Meanwhile, investors expect that APD will have to raise its bid in order to get ARG shareholders to act in their own interest.

APD management stated five reasons why acquiring ARG to create the largest industrial gas company in North America makes strategic sense. Here is a summary of APD’s logic with a little commentary:

By Dave Nadig

The headline numbers for fund flows look great, but not for the older players.

Banks are the epicenter of the economic crises that face the developed and emerging nations over the last few years. Many appear to have allowed the media to carry the conversation away from the banks and into sovereign debt issues, social unrest etc., but the main issue still resides in the banks. Why, you ask? Well, because every single major country conducts its finances through the banks and when those finances become stressed, the banks will be the first to show it and usually show it in an aggrieved manner since most banks are still highly leveraged.

The fact that governments worldwide have made the (generally unwise) attempt to bail out their big banks by transferring bad debts and liabilities from the private sector and bank investors to the public sector and taxpayers, doesn't mean that the problem has been solved or even ameliorated.

In an excellent piece of Wall Street Journal analysis on Toyota's (TM) mishandling of its quality recall, Jeff Kingston points out a host of problems that routinely turn otherwise outstanding Japanese companies into headlight-bedazzled deer in the face of crisis.

We'd Rather Not Talk About It

Chad Brand is the founder and President of Peridot Capital Management LLC, an RIA firm based in Pittsburgh that focuses on investment management and consulting services for individuals.

We had the opportunity to ask Chad about his single highest conviction holding in his portfolio and the investment thesis behind it.

Comments on employment data, especially over the past few days, indicate that many are confused about what the data means, how reliable/unreliable it is, and whether or not it is politically motivated. I have written past articles in which many details of how the DOL (U.S. Dept. of Labor) numbers should and should not be used. One of these (here) was a very detailed examination of various aspects of DOL processes. In this article, I want provide a summary update of the earlier work and add some new details.

Political Manipulation

Today, our financial system is so broken that casinos have much more integrity in their business dealings than banks.

Casinos Actually Have More Cash on Hand

In our younger years we were quite accomplished at the “Match Game” on Sesame Street – to some we have just hopelessly dated ourselves, to others we hope to have given you a nostalgic boost. Whichever group you find yourself, please indulge us as we revert to times past and play the game once again…

German PMI – Manufacturing & Services, both rising….

Well, as reported over the weekend on this blog, the EU Commission did in fact demand "more sacrifices" from the Greek people.

In the end, Prime Minister Papandreou had to make a last minute TV appearance to explain to his incredulous listeners that the time had come "to take brave decisions here in Greece just as other countries in Europe have also taken... We all have a debt and duty towards our homeland to work together at this difficult time to protect our economy."

Following on from last week’s Japanese liquidation value: 1932 US redux post, I’ve been trying to determine whether the historical performance of Japanese sub-liquidation value stocks matches the experience in the US. The question arises because of the perception (rightly or not) that the weakness of shareholder rights in Japan means that net current asset value stocks there are destined to trade at a discount to net current asset value. I’m always a little chary of the “Japan has weak shareholder rights” narrative (or any narrative, for that matter). I’d rather look at the data. In this instance, unfortunately, the data are wanting.

In The performance of Japanese common stocks in relation to their net current asset values, a 1993 paper by Bildersee, Cheh and Zutshi, the authors analyzed the performance of Japanese net nets between 1975 and 1988. Here are their findings described in another paper:

It's Monday, time for MBA Mondays.

Last week, I posted about The Present Value Of Future Cash Flows and in the comments and Pascal-Emmanuel Gobry wrote:

About a year ago, I wrote a post about Apple's "blind spot" for Flash. I took more heat for that post than anything else I've written other than political posts. It opened my eyes to the fact that Flash vs HTML5 is one of the most politically heated topics in the tech business. The third rail, as it were.

The choice of what technology web developers use to produce rich browser based applications is a big deal with a lot of important ramifications for companies, investors, and most importantly users. Jeremy Allaire, creator of ColdFusion and Brightcove, addresses this issue on TechCrunch.

I did a quick analysis to measure the performance of closed-end fund IPOs issued in 2009 that have been trading for at least six months:

Avg Net Asset Value gain= +10.5% Avg Market price gain = +0.9%

Tyler Vernon is a Principal and Portfolio Manager at Princeton, NJ based Biltmore Capital Advisors.

We had the opportunity to ask Tyler how he's allocating among different asset classes in this environment, and what his overall strategy is for outperformance in 2010.

[click to enlarge charts]

Non-farm payrolls fell -20,000 in January according to the latest establishment survey from the BLS. November was revised from +4,000 to +64,000 whilst December was revised from -85,000 to -150,000. The 3 month moving average of changes in non-farm payrolls is now at -35,000. Details of job gains and losses are shown below:

An analyst at Deutsche Bank (DB) created some buzz the other day when he said that the PIIGS’ (Portugal, Ireland, Italy, Greece, Spain) debt crisis could be a “dress rehearsal” for a U.S. one.

It makes for a catchy headline, but the funding crisis in America will play out differently than the PIIGS bloc's does. The key difference is our ability to print money and devalue the dollar. QE is off-limits for EU members, at least. Bernanke would probably call that an advantage, but I’m not so sure.

I recently downloaded 1000 pages of data from the National Bureau of Statistics of China. What I actually wanted was data on freight and energy consumption but I decided it was easier to get all that was available and then extract the data I was after.

The reason I wanted freight and energy was to get some idea of how general the growth in China is -- given that there is skepticism in some circles about the actual numbers coming out of China.

The data for the forecast section of these charts is taken directly from Obama's FY 2011 Budget. The forecasts presented in this budget rely, as all forecasts ultimately do, on several critical assumptions. Together, these are among the most heroic and daring assumptions I have ever seen coming from the Office of Management and Budget. They are so off the charts that I don't think they will ever see the light of day. And that would be a good thing, because otherwise we will be facing a very unpleasant economic future.

To begin with, economic growth is expected to average about 4% per year over the next 5 years. That is quite a bit higher than the "new normal" consensus, which sees growth averaging about 2.5-3% per year. I don't really have a problem with that, since I think the "new normal" consensus is too pessimistic. But regardless of how optimistic 4% sounds, the growth projections the administration is using imply that it would take 10 years or more for the economy to return to its potential, or full employment growth. That would amount to a decade of very frustrated voters.