As more go back to school, less are out of work

The Labour Day weekend in North America was met with a Friday stock rally based on encouraging employment figures that saw 216,000 jobs lost in the month of August. Although 216,000 is still a significant number out of work this trend of a decline in job slashing, a figure that was upwards of 700,000/month at the peak of the recession, led investors into confident buying to start the long weekend. Furthermore, Canada's job picture actually showed job growth in the tens of thousands signalling a shift out of the recession and leading the TSX Composite Index to new highs for the year.

Tuesday's morning action continued the trend, as market's saw green in the early going, this time fueled by commodities, especially gold, with prices around $1000/ounce. Major market benchmarks were all higher between .5 and 1% with the S&P leading the way.

America's battle for Health Care is taking a more dramatic turn this week as President Barack Obama issued a strong pro health care reform speech to the labor force and is set to speak again to Congress on Wednesday as the health debate enters its final stretches.

Kraft Foods (KFT) is taking a bit of a beating today as it issued, and was quickly rejected in a $16Billion bid for Cadbury (CBY). It's clear investors want more out of a takeover bid, with analysts already speculating the Chocolate maker could fetch near $21Billion if another suitor was found to compete. Shares of CBY are up nearly 40% giving a market cap well over $17Billion, so it seems traders are sharing the investor sentiment for now. Shares of Kraft slid 5% on the news.

Also on tap tomorrow is an annual iPod-related event from Apple (AAPL) as it brings the media over to showcase new iPods and possibly a new version of its iTunes software. Rumors have been rampant as usual for an Apple event, and although the fabled tablet computer is unlikely to appear, new iPod Touch and iPod Nanos are expected to the sporting cameras for easy on the go pictures and videos. Shares of Apple are up almost 1.5% today but are expected to fall following the event unless Apple can surprise with a new announcement of some kind.

Disclosure: Author owns AAPL

Altria Confirms further splits with Philip Morris International

Through all the Surgeon General Warnings, packaging pictures, stop campaigns and legal battles, cigarettes continue to draw both criticisms and profits. The world's largest cigarette company Altria (MO) laid out plans to spin off the International arm of the Philip Morris business.

PMI (Philip Morris International), the maker of the flagship Marlboro brand will now have complete and independent control of operations in over 160 countries. Altria will retain the Philip Morris USA division and will provide specifics of the spin-off after the annual board meeting in January. The International business dwarfs US operations with a revenue disparity of $48Billion to $18Billion. Smoking is a cultural necessity in some regions around the world and despite oncoming legislation is not going anywhere, anytime soon. So smoking kills, which is really terrible, but does that make it a bad investment?

Altria has been instrumental to the Dow's resurgence over the last couple of years and has rewarded shareholders handsomely. The company spun-off its majority ownership in Kraft Foods (KFT) paying shareholders with Kraft Shares and the same thing is to happen with PMI. Now the Kraft spinoff gave investors the peace of mind of having a solid food company without the underlying legal issues associated with cigarette companies. This will, for obvious reasons, not be the case with Philip Morris International. Investors here are getting a pure smoking play in the massive International markets.

The single biggest reason for the spinoff? Valuation. The international business was being dragged down by being associated with its American counterpart where smoking volumes are falling. Its been reported that smoking volume in America fell 3% while International volumes rose over 3%. The only way to truly extract the value in the International business is to spin it off and the thinking is that PMI is going to perform better individually than packaged with Altria in the future of cigarettes.

This is now going to become a cigarette pure play and for those investors confident in the future of smoking there will be no better investment in that industry. So should investors buy MO now or wait for PMI? While the board meeting in which the split will be detailed is 5 months from now Altria is still a solid stock to own and at a price under $70/share is a very reasonable investment. Why? Well for starters, a 4% dividend yield and an expansive array of business lines. Altria also runs the financial segment of Philip Morris and owns a stake in the producer of Miller Lite beer among others.

Legal battles are withering away for the cigarette makers and the overhang of having to pay additional massive settlements is nearly gone. The best part as an investor is that the majority of your customers are addicted for life to your product. So you should be addicted to PMI stock, and until that's spun off, be addicted to Altria.

Disclosure: Author holds no position in any companies mentioned at time of writing