The earnings season beginning today (Tuesday) is shaping up to be an important one, as it could have a significant impact on a struggling stock market rally.

Since the stock market rally reached a pinnacle nearly two weeks ago, the Dow Jones Industrial Average has lost about 3.3% while the Standard & Poor’s 500 Index has fallen about 3.7%. And if this week’s earnings report come in below expectations, the rally that helped stock prices surge more than 50% could come to an abrupt end.

Fortunately, many of the companies set to report earnings this week are traditionally strong performers and for the most part, companies that have weathered the financial crisis. But not all of them have met Wall Street’s expectations.

The quarterly results for five companies in particular – Yum! Brands Inc. (NYSE: YUM), Alcoa Inc. (NYSE: AA), Costco Wholesale Corp. (Nasdaq: COST), Monsanto Corp. (NYSE:

...

Kraft Foods Inc.’s (NYSE: KFT) $16.7 billion unsolicited takeover attempt of Cadbury PLC (NYSE ADR: CBY) is the latest sign of consolidation in the highly competitive food industry, and will likely lead to two things: A bidding war for Cadbury and further consolidation in the sector.

The world’s second-largest foodmaker went public with its bid for Cadbury earlier this week after being snubbed privately. Kraft’s offer – a 31% premium to the chocolate maker’s Friday closing price of $37.46 a share, but less than  – “fundamentally undervalues” Cadbury, it said. The offer is less than 15 times Cadbury’s 2008 earnings before interest, tax, depreciation and amortization (EBITDA).

“Any follow-up offer by Kraft would likely involve a higher price,” Moody’s Investor Service senior analyst Brian Weddington said in a note. “The increased leverage that would result under the proposed transaction would be considerable.”

Increased leverage could be a boon to Cadbury

...

Gold and silver prices climbed to their highest in seven weeks on Monday, as the dollar’s slide to its lowest since mid-December boosted interest in hard assets.

Spot gold hit an intra-day high of $961.00 an ounce, its highest since June 11, and was bid at $959.10 an ounce at 1329 GMT, against $953.90 an ounce late in New York on Friday.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $5.70 to $959.40 an ounce.

“At the moment we’re seeing the dollar as the key factor to movements in the gold market,” said Eugen Weinberg, senior analyst at Commerzbank.

“In the past few months (gold) has gone from being a safe haven to becoming a dollar play. The dollar right now is so weak because no one is looking for a safe haven — because corporate results are so good and stock markets are performing so well.”

Silver was

...

Gold didn’t do much through Hong Kong and London then showed some volatility in Comex trading, reaching an intraday high above $957 around 1 p.m. in New York and tumbling down from there through the Globex, finishing at its intraday low of $948.00/oz., down $3.10. Overnight, gold is little changed. Platinum started moving up in the Far East then developed a downward trend at the Hong Kong close and fell to an intraday low around $1169 just before 10 a.m. in New York, but clawed back from there to an intraday high of $1185 around 1 p.m. Eastern before falling off again, closing at $1175/oz., up $2. Overnight, platinum is trending lower.

Silver traded flat most of the day, as a gentle rise and fall in London and the same in New York canceled each other out perfectly. The metal finished exactly where it started at $13.70/oz., up/down 0

...

[Editor's Note: If it's inflation you're worried about - and commodities you want to invest in - there's no better place to look than the Global Resource Alert trading service, which ferrets out companies poised to profit from the so-called “Secular Bull Market” in commodities. If you’re new to the commodities-investing arena, and are uncertain about the landscape – or even if you’re an “old hand” at natural-resource stocks, but want some insights into the new profit plays and new players – consider hiring a guide: Money Morning Contributing EditorPeter Krauth, a recognized expert in metals, mining and energy stocks, who is also the editor of the Global Resource Alert. A former portfolio advisor, Krauth continues to work out of resource-rich Canada, which keeps him close to most of the companies he researches. Against the growing global financial malaise, Krauth says that commodities are among …

The first thing we did on our return to the world of markets and money this morning was to read “bond king” Bill Gross’s investment outlook for July. We consider this compulsory reading. Gross, the managing director of PIMCO, is one of the smartest underground investors out there. And his no BS approach to the financial markets is always refreshing.

Notes faithful will recall that last month Gross predicted that the economy is heading for what he calls the “new normal” – “higher savings, lower consumption, and an economic growth rate that staggers forward at a new normal closer to 2% as opposed to 3½%.” And we touched again on Gross’s advice for investors in our Friday issue.

The bottom line for Gross is that there can be no recovery to the “old normal” when one in ten Americans is officially unemployed and consumer spending is in the bin. (Gross points out

...

With trading strategies that are based on complex mathematical equations, or that are driven by sophisticated “black-box” computer programs, managed-futures programs are usually able to remove human emotion from the investment equation – a reality that certainly helped them post strong returns last year, even as the volatile U.S. stock market whipsawed investors out of about $7 trillion in shareholder wealth.

Managed futures programs - alternative-investment vehicles that enabled professional money managers to take positions in a wide variety of securities and derivatives - posted strong returns in a year that was marked mostly by investment losses. The average managed futures program returned about 14%, according to the Barclay CTA Index, and 11.4% as measured by the Stark 300 Traders Index.  By comparison, theStandard & Poor’s 500 Index and the tech-laden Nasdaq Composite Index each plummeted nearly 40% in 2008, while the Dow Jones

...

The New York Times has an article today reporting that domestic Natural Gas reserves are 35% higher than previously estimated due to improved ability to tap deep shale deposits. (Zacks Equity Research senior analyst Sheraz Mian has also posted a blog on this earlier.) This helps explain why natural gas prices are so low relative to oil prices. In terms of energy content, there is a 6:1 ratio between an MCF [thousand cubic feet] of gas and a barrel of oil. At the current futures price of $4.12 an MCF, natural gas is going for the equivalent of only $24.72 a barrel, a massive discount to the current $71.06 price of oil. This will make a very significant difference to your energy investments. At least for the near term, look for E&P companies that are "oily," like Denbury Resources (DNR) rather than "gassy" like ...