The S&P 500 index plunged into a bear market on July 9 2008 — more than 20 percent below its record high close of 1,565.15 points on Oct. 9, 2007 — after ceding to the pressure of a housing slump, a credit crisis, record-high oil prices and a weakening economy.

The S&P 500 was officially introduced in 1957 but its value has been extrapolated. Since 1929, whenever the index has fallen into a bear market, it has on average shed 29.4 percent of its value for the duration of the slump, which has averaged just over a year.

The S&P 500’s worst bear market occurred in the early years of the Great Depression and stretched from April 10, 1930, to June 1, 1932.

The following is a recap of the previous 10 bear markets for the S&P 500, using “The Stock Traders Almanac 2008″ data:

(updated on July 15 with news that Gillespie won't join as chairman)

Alliance & Leicester had increasingly been looking like a takeover target and Spain's Santander has taken advantage of 75 percent collapse in the mortgage banks' share price over the past year.

The Spanish bank had made little secret of its ambition to expand in the UK banking sector following its acquisition of Abbey in 2004, having already sniffed round A&L last year.

The move shows Santander's faith in the UK banking sector, the Daily Telegraph says, and that prudently written mortgages are still valuable. "Halifax-owner HBOS will take some comfort from that. As will the Government and the Financial Services Authority, who are fed up with rescuing or orchestrating the rescue of Britain's troubled banks," the newspaper's banking editor Philip Aldrick writes.

But what about the shareholders?

To those who stuck with A&L throughout its share price downturn the deal is worth 317p per share - they will be getting one Santander share for every three A&L share that they own, plus a cash dividend of 18p per share - still significantly lower than the 12-month high of 1,170p.

They might be well advised to hold on to their shares. According to thisismoney.com, one of Alliance & Leicester's major shareholders, Standard Life, has given clear advice to shareholders big and small: Don't sell yet. "Santander wants to buy this bank on giveaway terms," Standard Life warns. It predicts a higher counter-offer soon.

Significantly, as part of its 1.3 billion pound takeover bid Santander says it's willing to fund A&L's 42 billion pounds of mortgage obligations. With economists predicting a fall of as much as 35 percent in house prices from peak to trough, A&L's reliance on mortgage business was a key factor behind its share price dropping 75 percent last year as the credit crunch started to bite in Britain.

Simon Maughan, analyst at MF Global, has told Reuters that Santander could use the deal to drive through economies of scale to boost profitability at Abbey, which is low relative to its other operations.

The FT's Alphaville blog points out that apart from obvious cost synergies, Santander's Emilio Botin wants to accelerate expansion at Abbey. Adding A&L would increase Santander's share of the UK mortgage market close to 13 percent.

Bank analysts at Lehman Brothers say that Santander is likely to have been attracted by A&L's 31 billion pounds in deposits, plus the prospect of extracting close to 180 million in cost synergies, the Times said.

On the executive front, one factor that might "oil the wheels" is A&L's recent appointment of Alan Gillespie, a well-respected industry veteran to succeed the late Sir Derek Higgs as chairman, Management Today points out. "The choice of Gillespie (who A&L pinched from Ulster Bank) was widely seen as an attempt to steady the ship ahead of further write-downs," the magazine says on its Web site.

It was announced late on Monday that Alan Gillespie would not join it as chairman next month as previously announced.

A report in the Financial Times that Saudi Arabia has agreed in principle to defer payments for crude oil sales to Pakistan worth $5.9 billion has raised speculation about what it is looking for in return.

The Daily Times suggests that the Saudis are buying political stability in Pakistan, which may include throwing a lifeline to President Pervez Musharraf.  "Apparently, the immediate impact will be on PML-N chief Nawaz Sharif's politics of confrontation with Musharraf, which will have to be diluted significantly in line with ground realities," it says. "The Saudis, like the Americans, want a stable transition to civilian rule and no confrontation between the politicians and the military, including Musharraf."

The Saudis have no interest in seeing Pakistan descend into chaos, not least because this would further strengthen al Qaeda which has set its own sights on the kingdom's rulers. It may also see Sunni-dominated Pakistan as a potential counterweight to Shi'ite Iran. So it would make sense for it to buy stability in Pakistan.

At the same time, Saudi Arabia is looking to use Pakistani farmland to grow grains  to protect itself from food shortages and rising prices, as indeed are other Gulf states.  So there may be an element of oil-for-food as well as oil-for-stability in the deal.

The  Daily Times adds a note of warning however in a subsequent editorial. It says Islamabad must also look to alternative sources of energy so that the Saudi bailout does not become "politically suspect".

One to watch, with no doubt far more to come before this deal is fully played out.

The problem with Anheuser Busch’s defence strategy is that it makes the Budweiser-maker an even more enticing target for InBev, for if the St Louis-based brewer can trim costs so easily how much more can the ruthless cost cutters at InBev take out?

Anheuser would have a stronger case if it had a stronger track record as a cost controller. But while top executives at InBev are said to travel the Atlantic in economy class, Anheuser has a fleet of Falcon executive jets and Bell helicopters.

So if Anheuser can cut $1 billion in costs by 2010 what can InBev do? The Brazilian-led management have been reported to be looking at $1.4 billion, and perhaps even more once the aircraft are put on the block.

Moreover, the St Louis management want to keep their SeaWorld theme parks and still make some of their beer packaging, while InBev sees vertical integration as a thing of past and would put these non-core assets up for sale for $4 billion plus.

InBev can probably afford to increase its cash bid to $70 per Anheuser share from the current $65 before the deal becomes less compelling, but until it makes a higher bid the market will fret it may turn to equity to bridge the $5 gap rather than raise more debt or promise to sell down Anheuser’s 50 percent stake in Mexican brewer Modelo.

It probably needs only a few dollars more per share for a winning bid, but InBev will be in no hurry with global markets tumbling, Anheuser’s defence plan unconvincing and a Delaware court case which may oust Anheuser directors still to be decided.        

European industry is suffering under soaring energy costs. Profit warnings are becoming more common and industry leaders predict plant closures and job losses may follow.

Companies say they are doing all they can to improve their game but want government help.

Britain’s Castle Cement, part of Germany’s Heidelberg Cement, is a case in point. Its cement furnace in Stamford, England, is replacing much of its coal with  alternatives  — tyres, bone meal, paper – as $140 a barrel oil sends all fuel costs skyrocketing.   

Industry says tax cuts and energy market reform is needed. Big energy users also want an easing in EU plans for tough CO2 emissions cuts, arguing the measures will simply put them out of business and shift production to places like China which have less efficient and more environmentally damaging production processes.

So, are governments doing enough to support the continent’s core industrial base?

Should certain sectors of the economy be singled out for special support?

Will planned European CO2 cuts, which are not matched by the U.S. and China, wreck the continent’s industrial core without helping the environment?

What's with farming these days? The humble, even if slightly romantic vocation, is attracting a new breed of participants as investing in farmland and agriculture becomes the latest fad in the world of investments.
 
With financial markets in tumoil and commodity prices at record highs, traditional financial players such as investment banks and hedge funds, and even sovereign wealth funds of cash-rich emerging economies are increasingly looking at farm land as the next major investment avenue.

The motivations are varied -- from pure financial punting to concerns about food security. Underlying all this is the belief that the rapid economic expansion of China and India could add more than a billion people between them to the ranks of consumers of meat and wheat-based products. And then there is the growing demand for land to grow crops for biofuels.

Morgan Stanley has bought some 40,000 hectares of land in Ukraine , while the New York Times reported this month that Calyx Agro, a division of the giant Louis Dreyfus Commodities, is buying tens of thousands of acres of cropland in Brazil.

Chinese firms are said to be locking up farmland and mineral reserves in Africa, while Saudi Arabia and Bahrain plan to grow strategic grains abroad to protect their countries from crises in world food supply.

According to Asia Times, Pakistan's Prime Minister Yousaf Gillani during a visit to Saudi Arabia in early June sought $6 billion in financial and oil aid in return for hundreds of thousands of acres of agricultural land, which could be tilled by the Saudis.
 
All this could present some poor countries with both opportunities and threats. With oil prices at near record highs, they could trade their energy security with the food security needs of their investors and bring millions of acres of non-arable land into use. But contract farming could just as easily boomerang if high prices and domestic food shortages create a backlash against such barter deals.

Asia cemented its status as the 21st Century workshop of the world by exporting the goods global consumers loved at prices that kept falling. Now it’s producing the one thing the world hates — inflation.

Higher prices from the world’s factory floor have major implications for a global economy still reeling from the credit crisis and increasingly dependent on Asian exports.

Read the full story by Kevin Plumberg

InBev has timed its $46.3 billion bid for Budweiser brewer Anheuser-Busch well. Anheuser’s shares have gone nowhere for five years, Chief Executive August Busch IV is not the leader his father was, while InBev is buoyed by strong revenues from Brazil, where the real is riding high.

That probably explains the wall of silence from the Budweiser brewer’s home town of St Louis. What does it do to fight off the $65 a share bid — sack its chief executive, sell
off its non-core assets or look for a friendly white knight?

The Busch family has had influence over the group well beyond its small 3.5 percent stake. But with hard cash on the table, hedge funds moving in and investment guru Warren Buffett sitting on 5 percent, the family no longer pulls all the strings.

It could move to sell off its SeaWorld entertainment parks and its packaging non-core assets for $4 billion, but the Stella Artois and Beck’s Belgian-Brazilian brewer InBev has already said it will do that anyway if its bid is successful.

And finding a friend? Well, SABMiller already owns U.S. No 2 brewer Miller, Diageo doesn’t want a massive gamble on the U.S. economy and beer market, and Heineken simply can not afford it so soon after swallowing half of Scottish and Newcastle.

InBev may well have to pay a few dollars more to win, but with half its earnings coming from Brazil and the real on a roll, it is confident it can get the financing — credit crunch or no credit crunch.

Time for a Bud?

InBev thinks so.

Are steel companies really hurting from huge rises in the price of raw materials like iron ore? The biggest miner BHP Billiton reckons they aren’t and hopes to sway anti-trust regulators who are reviewing its takeover bid for rival Rio Tinto.

Steel firms from China to Japan to Europe have cited rising raw material costs as they ramp up prices, with Germany’s Salzgitter the latest to push the blame upstream.

Rio Tinto agreed record prices rises with China’s Baosteel on Monday that nearly doubled the price of iron ore this year under long-term contracts and BHP may try to get even more .

Raw material costs, however, only make up about 30 percent of the price of hot rolled coil steel, a figure which has not changed much over the past seven years, BHP Billiton Chief Executive Marius Kloppers argued at a presentation on Tuesday.   

During the same period, iron ore prices have jumped 382 percent, metallurgical coal is up 599 percent and manganese ore is 486 percent more expensive. Tightness in the steel market is to blame for steel prices that have more than tripled and have allowed steelmakers to pass on all the the raw material costs to consumers, Kloppers said.   

“It basically shows that the very high steel costs have been driven almost entirely, certainly in the majority, by constraints on steelmaking capacity, and not raw material
costs,” Kloppers said.  

He was floating an argument he hopes will win the day as BHP seeks competition approval for a marriage of Rio and BHP, the second and third biggest iron ore producers respectively, which will command over a third of the seaborne iron ore market.    

Steelmakers have vowed to oppose the all-share takeover offer worth $170 billion, while BHP argues that they are enjoying healthy margins despite the price rises in raw materials. Watch this space.

What a difference seven weeks makes.

Goldman Sachs made a rather large U-turn on Monday, reversing its May recommendation to overweight the S&P 500's consumer stocks and take a neutral position in the index's financial stocks.

It was costly advice for those clients who took it : financial stocks are down 18 percent since Goldman's initial call, and consumer stocks have dipped 7 percent, while the overall index has slipped a mere 5 percent.

"Obviously that forecast hasn't turned out too well," Goldman analysts led by David Kostin wrote in a note, providing a contender for understatement of the year. "Our thesis was clearly wrong in hindsight."

The investment bank's new recommendations are to underweight both sectors -- 7 percent for "consumer discretionary" stocks, compared with an S&P 500 weight of 8.4 percent, and 13 percent for financial stocks, versus 15.1 percent in the S&P 500. Financial stocks have been so battered this year that they are now only the third-biggest component of the index, having been superseded by information technology stocks.

That weighting harkens to the late 90's dotcom bubble, when Kostin's predecessor Abby Joseph Cohen was running the shop. Looks like Kostin is finding it difficult to fill the shoes of the "Queen of the Bulls."