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Fluor Matches Estimates – Analyst Blog

Zacks Market Commentaries — Tue, 10 Nov 2009 18:36:45 +0000

Fluor Corporation (FLR) reported third quarter earnings per share of 89 cents, matching the Zacks Consensus Estimate. Revenue declined by 4% to $5.4 billion, which compares with $5.7 billion in the third quarter of 2008. This change was driven primarily by decreases in the Oil & Gas and Power segments. Revenue in both Industrial & Infrastructure and Government segments was up from last year.

While three of the five business segments reported earnings growth over 2008, the Oil & Gas segment profit declined by 8% and the Global Services segment profit was impacted by a $45 million provision relating to a collection issue on a completed paper mill revamp project.

New project awards for the quarter were $2.9 billion, compared with record awards of $8.8 billion a year ago. Consolidated backlog at the end of the quarter was $28 billion. This represents a $2.9 billion increase from the last quarter and a 23% decrease from a year ago. During the quarter, it removed approximately $1.2 billion from backlog for gas processing expansion project in Russia, which has been delayed indefinitely by the client. Including this project, the cancellations and scope reductions for this year now stand at an accumulative $5.3 billion.

Fluor’s Oil & Gas segment reported quarterly revenue of $2.9 billion, down 11% from the third quarter of 2008, while segment profit declined 8% to $189 million. Declines in both revenue and segment profits reflect declining new award and backlog levels in the recent quarters.

Fluor’s Industrial & Infrastructure segment reported a 26% revenue increase to $1.1 billion and a 49% rise in segment profit to $42 million, reflecting increases in both the infrastructure and mining and metals business lines. Segment profit in the third quarter of 2008 included the impact of a $16 million provision relating to the London Connect infrastructure project.

Revenue for the Government segment rose by 47% to $544 million for the reported quarter. Segment profit for the quarter increased 34% to $24 million, compared to $18 million a year ago. Growth in results can primarily be attributed to contributions from the Savannah River project and LOGCAP IV task orders in Afghanistan.

The Global Services segment reported revenue of $529 million, down 11% from the third quarter of last year. Segment profit was $0.5 million compared with $49 million a year ago, with the majority of the decline attributable to a $45 million provision for the collection issue on the completed paper mill revamp project in Louisiana.

Fluor’s Power segment reported revenue of $317 million, down 40% from the third quarter of 2008. While the segment has continued to replenish backlog throughout the year, revenue declined as a large coal-fired project in Texas progressed closer to completion.

Due to collection issue and recent order cancellations, Fluor has lowered its 2009 earnings guidance to a range of $3.75 to $3.90 per share. The current Zacks Consensus Estimate is $3.85.

Cash and equivalents were $2.3 billion, with negligible long-term debt and shareowners’ equity at $3.1 billion.

Fluor Corporation also announced that its board elected David Seaton to the newly created position of chief operating officer, effective immediately. Seaton, 48, will oversee all five of the company's operating business groups, along with Project Operations, a unit formed earlier this year. He joined Fluor in 1984.

Fluor Corporation through its subsidiaries provides engineering, procurement, construction management, and project management services worldwide. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas. Major competitors include ABB Ltd (ABB) and Foster Wheeler AG (FWLT).
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More reflections on the 20th anniversary of the Berlin Wall falling

Robert Amsterdam — Tue, 10 Nov 2009 17:42:42 +0000

One of my favorite blogs, Business Monitor International's Risk Watchdog, had a post yesterday discussing the wider historical context of the Berlin Wall's fall. The discussion of the persistence of Communism and the comparison between 1979 and 1989 I personally...

Zacks Industry Outlook Highlights: United Technologies Corporation, Oshkosh Corporation, The Boeing Company and Honeywell International Inc. – Press Releases

Zacks Market Commentaries — Wed, 04 Nov 2009 13:30:15 +0000

For Immediate Release

Chicago, IL – November 4, 2009 – Zacks.com releases the latest Industry Outlook. Today, Zacks Equity Research discusses the Aerospace & Defense sector, including United Technologies Corporation (UTX), Oshkosh Corporation (OSK), The Boeing Company (BA) and Honeywell International Inc. (HON).

A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/26834/Aerospace+%26amp%3B+Defense.

With core defense spending expected to slow, U.S. defense contractors need to identify additional revenue sources for the coming years. 2009 holds potential for interesting merger and acquisition (M&A) activity, mostly smaller deals by larger A&D firms to fill in capability gaps -- particularly in the security, defense electronics and aftermarket services business areas. U.S. defense firms may see opportunities in credit-squeezed markets to pick up U.S. assets at historically low price-to-earnings multiples.

Some large companies are expanding into the adjacent markets of mission support and services, such as performance-based logistics, or PBL, which can provide a more consistent -- albeit riskier though perhaps more profitable -- revenue stream.

Building on the example set by engine manufacturers -- Pratt & Whitney, a United Technologies Corporation (UTX) company, and Rolls-Royce Group -- to get 50% of revenues and 60% of profits from their services business, Aerospace & Defense contractors are learning how to take on, measure and internalize risk and to make support and services offerings profitable. This includes understanding how to service the equipment they manufacture, and assembling the necessary infrastructure, capabilities and people to operate it.

Shifting defense priorities could prove to be a boon for some manufacturers as the Pentagon looks to beef up protection for US ground soldiers. Oshkosh Corporation (OSK) is aiming to induct 300 to 500 workers in Wisconsin and calling back as many as 650 it had let go at a Pennsylvania facility as it looks to fill orders for armored trucks that can deflect roadside bombs. The truck manufacturer also won a $1.1 billion contract to build more than 2,200 Mine Resistant Ambush Protect All Terrain Vehicles for use by US troops in Afghanistan.

Companies are also leveraging strong balance sheets to grow organically and acquire new services business. As product development transitions to production program deliveries, it is anticipated that companies will ramp up their services businesses and profitability should improve.

Overall, in the next two decades, The Boeing Company (BA) forecasts delivery of 29,400 new commercial aircraft worth $3.2 trillion. Honeywell International Inc.’s (HON) 2008 forecast predicts 17,000 new business aircraft valued at $300 billion.

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Aerospace & Defense – Industry Outlook

Zacks Market Commentaries — Tue, 03 Nov 2009 20:27:49 +0000

OVERVIEW

Inherently, big defense contractors are expected to eliminate jobs as the Pentagon has lowered spending on traditional weapon systems, while smaller, niche companies may accelerate hiring as the United States garners resources to protect ground troops and strategic computer networks.

Industry pioneer Lockheed Martin Corporation (LMT) aims to reduce 600 jobs as a result of the US Defense Department's decision to terminate the VH-71 presidential helicopter program. The Boeing Company (BA) hinted that Pentagon cuts would claim 1,000 jobs in its defense business, affecting staffing at various work sites in the United States in missile defense and in the Army's Future Combat Systems modernization program, which is now being opened to more competition.

The large commercial aircraft sector is expected to generate most of its revenue from Asia Pacific Japan (APJ) and the Middle East, relying less on U.S. orders because of the current economic climate. However, airline companies worldwide will continue to struggle with the global economic recession, fuel price fluctuations and the difficulty in raising ticket prices, which might have an impact on airplane and engine purchase orders in 2009.

Despite robust business aviation forecasts, there may be short-term customer financing challenges for the business jets segment. Thus, we would generally expect that 2009 to see a fall-off in business jet orders, production and deliveries.

The appetite for both US and non-US Aerospace & Defense assets has been significantly constrained by the ongoing global recession and the resulting squeeze on corporate profits, lack of liquidity and continuing uncertainty about when a recovery is likely to begin. Year-to-date, there have been just six deals with values at or greater than $50 million.

The total value for deals announced during the first half of 2009 with a disclosed value of at least $50 million was just under $600 million, substantially less than total deal values in the first half of 2008 ($11.7 billion), representing a decline of 95% year-over-year. Notably, the largest transaction in 2008 -- Finmeccanica’s acquisition of DRS Technologies, announced in May 2008 for $5 billion -- occurred in the first half of that year. Excluding this transaction, the total deal value for the first half of 2008 was $6.6 billion, which is still much higher than the value of transactions during the first half of 2009.

Financial investors remain on the sidelines as financing remains challenging compared with the same period a year ago. Strategic investors have also experienced a decrease in deal activity involving acquisitions of $50 million or more. To date, there have been four deals announced involving strategic investors. This compares with the 20 deals in the first half of 2008, an 80% decrease over the same period a year ago. Strategic investors have redirected their focus on internal restructuring initiatives.

On an annualized basis, the actual number of deals in 2009 is in line with 2008 (270 compared with 275, respectively). But as the economic downturn intensified in the first half of 2009, the value of those transactions has decreased drastically. The average transaction value for first-half 2008 was $85 million compared with $7.5 million for first-half 2009, representing an approximate 91% decrease.

OPPORTUNITIES

With core defense spending expected to slow, U.S. defense contractors need to identify additional revenue sources for the coming years. 2009 holds potential for interesting merger and acquisition (M&A) activity, mostly smaller deals by larger A&D firms to fill in capability gaps -- particularly in the security, defense electronics and aftermarket services business areas. U.S. defense firms may see opportunities in credit-squeezed markets to pick up U.S. assets at historically low price-to-earnings multiples.

Some large companies are expanding into the adjacent markets of mission support and services, such as performance-based logistics, or PBL, which can provide a more consistent -- albeit riskier though perhaps more profitable -- revenue stream.

Building on the example set by engine manufacturers -- Pratt & Whitney, a United Technologies Corporation (UTX) company, and Rolls-Royce Group -- to get 50% of revenues and 60% of profits from their services business, Aerospace & Defense contractors are learning how to take on, measure and internalize risk and to make support and services offerings profitable. This includes understanding how to service the equipment they manufacture, and assembling the necessary infrastructure, capabilities and people to operate it.

Shifting defense priorities could prove to be a boon for some manufacturers as the Pentagon looks to beef up protection for US ground soldiers. Oshkosh Corporation (OSK) is aiming to induct 300 to 500 workers in Wisconsin and calling back as many as 650 it had let go at a Pennsylvania facility as it looks to fill orders for armored trucks that can deflect roadside bombs. The truck manufacturer also won a $1.1 billion contract to build more than 2,200 Mine Resistant Ambush Protect All Terrain Vehicles for use by US troops in Afghanistan.

Companies are also leveraging strong balance sheets to grow organically and acquire new services business. As product development transitions to production program deliveries, it is anticipated that companies will ramp up their services businesses and profitability should improve.

Overall, in the next two decades, The Boeing Company (BA) forecasts delivery of 29,400 new commercial aircraft worth $3.2 trillion. Honeywell International Inc’s (HON) 2008 forecast predicts 17,000 new business aircraft valued at $300 billion. While we currently don’t have Outperform recommendation on aircraft and engine manufacturers, we have positive outlooks on UTX, BA and HON.

WEAKNESSES

A major Aerospace & Defense sector challenge for 2009 is improving program management and execution. For the past few years, commercial aircraft programs have run late due to global supply chain or design problems. In addition, government aerospace procurements have overrun their budgets.

The root causes for this problem are as follows:

Technical complexity - Today’s programs rely on the use of leading-edge, still-maturing software-based technologies, which require infinitely higher levels of functionality, interoperability and integration. This technical complexity has resulted in increased development time vs. historical programs.
Talent crisis - Twenty-seven percent of employees in the sector are estimated to retire in the next five years. In addition, the National Science Foundation expects the number of science, technology and engineering retirements to increase threefold annually in the next 10 years. Unfortunately, the industry may not be able to attract sufficient new talent to make up for the deficit.
Supply chain challenges - The Aerospace & Defense supply chain management model is transitioning to a global, super-supplier model for the Tier 1 suppliers and original equipment manufacturers (OEMs). These organizations are shedding manufacturing and subsystem assembly work, relying on super- or middle-tier suppliers to take on increasingly complex design and manufacturing tasks.
Politics - Aerospace & Defense programs span multiple years but are budgeted annually. In times of economic stress, other government priorities may prompt cuts in multiyear projects for a number of units. This approach typically results in increased fly-away unit costs.
Program management challenges - Many Aerospace & Defense program schedules are based on a "sunny day" scenario, rather than a more realistic "cloudy day" scenario that contemplates program delays, technical difficulties, supply chain problems and changing requirements. These program management challenges and associated cost overruns need to be addressed by improving cost, schedule, and risk management processes and techniques.

With an increase in passenger traffic and competitors, commercial airplanes have become more commoditized, requiring companies to improve differentiation. Airline manufacturers therefore should promote product and process innovation.

The new Boeing 787 Dreamliner is a good example: It will be the first major aircraft to use composite materials for most of its construction. Featuring an estimated 20% lower direct operating cost, better passenger comfort via higher air pressure and humidity, larger windows and less-frequent maintenance requirements, the 787 has become the most successful aircraft product launch in aviation history, as measured by the number of aircraft ordered prior to first flight.Zacks Investment Research

British Counsel

Robert Amsterdam — Fri, 30 Oct 2009 11:17:05 +0000

British-Russian relations have suffered greatly in recent years, with a series of incidents souring relations: the Alexander Litvinenko scandal, the British Council restrictions, diplomatic exits and various extradition rows. Foreign Secretary David Milliband will visit Russia next week, the first...

AIDS And Foreign Policy

Robert Amsterdam — Thu, 29 Oct 2009 14:32:28 +0000

AIDS experts are aghast to see that rates of HIV in Russia have doubled in the past 8 years, reports the Washington Post. Russia's 'healthy lifestyles' program and advocacy of abstinence have not been effective in combating the problem,...

Election Fraud Apathy

Robert Amsterdam — Mon, 26 Oct 2009 12:53:56 +0000

Whilst opposition leaders may still be in up in arms about October 11's sweeping United Russia victory, Clifford J Levy in the New York Times wonders why it is that the furor about allegations of vote-rigging seem to have very...

Gen’l Dynamics Gets Stryker Deal – Analyst Blog

Zacks Market Commentaries — Mon, 12 Oct 2009 20:39:06 +0000

General Dynamics Corporation (GD) recently received a $647 million contract from the U.S. Army TACOM Lifecycle Management Command for production of 352 Stryker vehicles. The contract was awarded to General Dynamics’ subsidiary General Dynamics Land Systems. The company expects to begin vehicle deliveries in July 2010. Work on the contract will be performed in Anniston, AL; Sterling Heights, MI; Lima, OH; and Ontario, Canada.

The Stryker contract was originally awarded to General Dynamics in 2000. To date, the company has delivered 2,988 vehicles and trained 18,438 soldiers in their operations. The U.S. Army has seven Stryker Brigade Combat Teams, three of which are deployed in combat zones - two in Iraq and one in Afghanistan.

Earlier, General Dynamics had maintained its brisk pace in order booking, taking the total backlog at the end of the second quarter of fiscal 2009 to $67.6 billion. This was a 22.2% rise compared to the $55.3 billion figure in the year-ago quarter.

General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company operates through four segments - Information Systems & Technology (IS&T), Combat Systems, Marine Systems and Aerospace.

We view General Dynamics as a well-run company that is likely to continue to deliver on expectations driven by strong revenue growth, margin expansion and cash-flow generation. Strong defense outlays should further improve the company’s outlook for shareholders while an increasing funded backlog and an improving balance sheet signal additional positive factors for the company. We maintain our Neutral recommendation on the shares.
Read the full analyst report on "GD"
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Reforms and Military Defeat

Robert Amsterdam — Fri, 09 Oct 2009 14:37:17 +0000

While my editor was busily working away yesterday, Ariel Cohen had an opinion piece run in the New York Times. Upon seeing the headline and lede, I was worried that we were going to see yet another one of those...

A Century of Bad Ideas

Bill Bonner — Wed, 30 Sep 2009 20:01:44 +0000

pNot much happened yesterday. The Dow fell 47 points. The newspapers attributed the reversal to surprisingly low consumer confidence numbers. Apparently, consumers aren’t so sure this crisis is over. As we reported yesterday, they’re saving money#8230; maybe even at an 8% rate. /p pOil didn’t move yesterday. Neither did gold./p pThe Wall Street Journal reported that markets were reacting to “emmixed data/em”./p pThat is to say, some reports were encouraging. Others were not. It was as if one weather forecaster called for a blizzard. The other for sunny skies and warm temperatures. Investors didn’t know how to dress./p pAmong the dark clouds was an item on the falloff in tax revenues. States are having a hard time balancing their books, because their tax receipts#8230;/p

Westerwellian Foreign Policy

Robert Amsterdam — Mon, 28 Sep 2009 22:27:01 +0000

With so many changes afoot in Germany following the elections, there is surprising little discussion about how all this is going to affect relations with Russia. There's a pretty good reason for that, as everyone assumes the likely appointment of...

Russia Losing a Generation to Heroin

Robert Amsterdam — Fri, 25 Sep 2009 14:47:07 +0000

Megan K. Stack has a very sad report in the Los Angeles Times today on the proliferation of heroin use in Russia, which has been dramatically increased from the booming narcotics industry coming out of Afghanistan - another thorn in...

FOMC Week…

Contrarian Profits — Mon, 21 Sep 2009 19:07:01 +0000

p The dollar pushes back! FOMC plays battleship? Norges Bank meets this week#8230;Precious metals give back too#8230;And Now#8230; Today#8217;s Pfennig!/p pGood day#8230; And a Marvelous Monday to you! Here we go#8230; Starting a new week all over again#8230; I have a blank page to start each day, and then 2 hours later#8230; The Fabulous Pfennig! A work of art, I must say! HAHAHAHAHAHAHAHA!/p pWell#8230; Recall on Friday, I said that the non-dollar currencies would probably just follow whatever the stocks did, since the data cupboard was empty? Well, the non-dollar currencies didn#8217;t even follow that theme, as stocks pretty much wallowed around in the mud all day#8230; The dollar began to push back at the gains the other currencies had made during the#8230;/p

A New Era in the Defense Industry: Lock And Load On Profits

Investment U — Fri, 18 Sep 2009 19:41:04 +0000

A New Era in the Defense Industry: Lock And Load On Profits by Tony Daltorio, Investment U Research Over the past year, stocks of companies in the defense industry have taken a beating, down thirty percent… forty percent… or more. Valuations have taken an even harder knock, with forward price-to-earnings dropping to just under nine times [...]

RA’s Daily Russian News Blast – September 18, 2009

Robert Amsterdam — Fri, 18 Sep 2009 08:37:22 +0000

TODAY: US missile defense in Eastern Europe plans officially scrapped in favor of 'more efficient' new program. A matter of concession or conviction on Obama's part; mixed reaction from former would-be host countries fearful of Russian dominance; is the...

Still Squaring the NATO-Russia Circle

Robert Amsterdam — Wed, 16 Sep 2009 18:47:23 +0000

There are a number of media outlets reporting on the most recent NATO-Russia foxtrot, NATO Secretary General Anders Fogh Rasmussen's call for an "open-minded and unprecedented dialogue" with Russia. Personally, I'd first rather just go straight to the source: Listening...

Fluor Grabs $150 Million Contract – Analyst Blog

Zacks Market Commentaries — Wed, 09 Sep 2009 22:13:25 +0000

Fluor Corporation (FLR) announced yesterday that it received a $150 million engineering, procurement and construction (EPC) contract from ISAB Energy to rebuild a gas turbine power train.

The contract is to rebuild one of the two 266-megawatt combined cycle gas turbine power trains in Sicily, Italy. The power train, which is a part of a 532-megawatt power plant that provides electric power to the Italian grid, was damaged in an accident in October 2008.

The company is working with ISAB Energy to rebuild the facility and bring its power plant back to full capacity by the end of the second quarter of 2010. The total installed cost for the project managed by Fluor is more than $150 million.

The project was booked into the company’s second quarter 2009 backlog.

During its second quarter conference call, Fluor stated that its backlog at the end of the second quarter was $30.9 billion, down 6% year over year, but up 6% sequentially. New project awards for the quarter amounted to $6.8 billion, compared to $6.4 billion last year. The second quarter backlog also includes a large mining project in its Industrial & Infrastructure segment.

Further, at the start of the third quarter, Fluor’s Government segment won LOGCAP IV for northern Afghanistan. The total contract value is potentially more than $7 billion over five years. Also, the company won an engineering services contract to design a concentrating solar power plant for eSolar, Inc. The company did not disclose the contract value for this project.

Given its year-to-date performance and strong backlog, the company is confident of achieving earnings in the range of $3.80 to $4.10 per share for 2009.
Read the full analyst report on "FLR"
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PennyOmega.com Stock Report! 9/08/09, GMT, CCUR, NVE, AGX, NEOP, TSYS

PennyOmega.com — Tue, 08 Sep 2009 17:23:36 +0000

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Two Companies Taking Advantage of the Growing Deficit

Andrew Snyder — Tue, 25 Aug 2009 20:43:48 +0000

pWashington is spending this country towards its demise. These two companies will hep you put your hard-earned tax dollars back in your pockets. /p pWhat does the government have up its sleeves this time? While the president is on vacation (playing golf with shady business connections), the White House put out a report detailing how the economy is much worse off than it originally anticipated./p pOf course, Wall Street shrugs it off, virtually saying, “Washington was wrong? What else is new?”/p pMost intriguing, or alarming, is the White House’s latest deficit predictions. Instead of the $7 trillion estimate predicted in May, our executive branch is now expecting a gap of $9 trillion./p pIt turns out the notion of higher taxes really does decrease revenues./p pWith#8230;/p

RA’s Daily Russian News Blast – August 20, 2009

Robert Amsterdam — Thu, 20 Aug 2009 08:33:38 +0000

TODAY: Medvedev admits terrorists have strong hand in Caucasus; proposes sidestepping trial by jury for special cases; technological breakthrough to solve missile defence situation? Ukraine-Russia issues still making waves; church reacts on exposé article.At a security conference on the...

Georgia is not Mexico

Robert Amsterdam — Mon, 17 Aug 2009 21:05:00 +0000

Superblogger Matt Yglesias thinks that we should start calling a spade a spade in terms of U.S. military training for Georgia - why bother pretending like it is for operations in Afghanistan? That first point is well taken (clearly the...

Honeywell Gets Aero-Engine Deals – Analyst Blog

Zacks Market Commentaries — Fri, 14 Aug 2009 16:05:36 +0000

Honeywell International Inc. (HON) announced that it has been awarded an additional option year on a contract from the U.S. Army to improve performance and extend the life of the AGT1500 turbine engine that powers the M1 Abrams tank.

The Total Integrated Engine Revitalization Program fourth year option has a not-to-exceed value of more than $300 million, bringing the total contract value to more than $1.4 billion. Honeywell is working with the Army’s Program Manager Heavy Brigade Combat Team, TACOM Life Cycle Management Command and Anniston Army Depot (ANAD) under the contract to provide parts, engineering, depot and field support services, enabling ANAD to reset and maintain approximately 750 engines.

The company also announced that United Kingdom’s Ministry of Defense will purchase the Honeywell 55-L-714A engine and spares, valued at approximately $185 million, to retrofit their fleet of Chinook helicopters. The engines will be provided to the Ministry of Defense over a five-year period.

The Chinook is a multi-mission, heavy-lift transport helicopter that primarily moves troops, artillery, ammunition, fuel, water, barrier materials, supplies and equipment on the battlefield. Chinook is the preferred aircraft in Afghanistan.

Honeywell has delivered more than 5,300 T55 engines. The T55 fleet has accumulated more than seven million hours of operation around the globe, powering helicopters in military operations since the 1960s. In addition to the U.K. Royal Air Force Chinooks, the Honeywell T55 engines are on Chinooks in the U.S. Army, Royal Netherlands Air Force and other fleets worldwide.

Honeywell International Inc. is a diversified technology and manufacturing company. Its nearest competitors are United Technologies (UTX), Goodrich Corp. (GR) and Johnson Controls Inc. (JCI). We currently have a Neutral recommendation on Honeywell.

Read the full analyst report on "HON"
Read the full analyst report on "UTX"
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Read the full analyst report on "JCI"
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North Caucasus a Fertile Ground for Extremism

Robert Amsterdam — Thu, 13 Aug 2009 22:42:57 +0000

We are pretty impressed with the latest article from Sarah Mendelson of the Center for Strategic and International Studies (CSIS) published by Foreign Policy. It is exceptionally easy to whine and moan about conditions of injustice and human rights violations...

Russian Omertà

Robert Amsterdam — Tue, 11 Aug 2009 22:55:53 +0000

Celestine Bohlen has an op/ed in the New York Times on the latest murders in Chechnya:Now, the bodies of Zarema Sadulayeva and her husband, Alik Djabrailov, who worked with an organization that helped young people in Chechnya, have been discovered...

Fluor Beats & Maintains – Analyst Blog

Zacks Market Commentaries — Tue, 11 Aug 2009 14:57:04 +0000

Fluor Corporation (FLR) reported second quarter earnings of 93 cents per share, which is slightly above the Zacks Consensus Estimate of 92 cents and prior-year EPS of 87 cents.

The company witnessed improved margins in most of its businesses. Segment margin in the quarter was 5.8%, up 40 basis points from 5.4% in the second quarter of 2008.

Quarterly sales declined 8.3% to $5,292.6 million from $5,773.6 million last year due to major declines in the Global Services and Power segments. The Global Services segment reported a 35% decline in revenue due to a sharp decline in small capital projects. The company said the revenue in the Power segment declined 36% year over year as a large coal-fired project in Texas progressed closer to completion.

As for the other segments, Oil & Gas segment posted a 9% decline in revenue, while revenue in the Industrial & Infrastructure segment and the Government segment were up 9% and 60% respectively. Strong growth in the Government segment revenue was primarily driven by the contributions from LOGCAP IV task orders and FEMA task orders.

Fluor’s backlog at the end of the quarter stood at $30.9 billion, down 6% year over year, but up 6% sequentially. New project awards for the quarter amounted to $6.8 billion, compared to $6.4 billion last year. This included a large mining project in the Industrial & Infrastructure segment. The company expects additional mining opportunities during the year.

Further, at the start of the third quarter, Fluor’s Government segment won LOGCAP IV for northern Afghanistan. The total contract value is potentially more than $7 billion over five years.

Given its year-to-date performance and strong backlog, the company maintained its 2009 earnings guidance in the range of $3.80 to $4.10 per share. The Zacks Consensus estimate for the year is $3.88 per share.
Read the full analyst report on "FLR"
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Energy Blast – July 31, 2009

Robert Amsterdam — Fri, 31 Jul 2009 09:57:28 +0000

At Medvedev's meeting with with the presidents of Afghanistan, Pakistan and Tajikistan, he emphasized the importance of energy projects as that which 'really helps governments that need to strengthen their economy'. Timan Oil has announced that tycoon Vitaly Belik has...

RA’s Daily Russian News Blast – July 31, 2009

Robert Amsterdam — Fri, 31 Jul 2009 09:12:03 +0000

TODAY: Medvedev pushes for cooperation in Afghanistan, Pakistan and Tajikistan. Lavrov says no justification for Ukrainian expulsions; mortars rumble in South Ossetia as anniversary tensions brew; Russia puts the no in NATO. Journalist denied entry to Lithuania. No smokes...

RA’s Daily Russian News Blast – July 30, 2009

Robert Amsterdam — Thu, 30 Jul 2009 08:05:15 +0000

TODAY: Russia-leaning communists toppled in Moldova; tit for tat diplomacy on Ukrainian diplomat spat. Russia seeks second base in Kyrgyzstan; Georgia war report delayed. Space officials complain about US shuttle jet lag. Solzhenitsyn's widow anti-propaganda. President Medvedev is expected to...

RA’s Daily Russian News Blast – July 23, 2009

Robert Amsterdam — Thu, 23 Jul 2009 07:54:31 +0000

TODAY: Biden in Georgia expresses support for freedom and territorial integrity; Russia-NATO Council meeting pragmatic. Body of missing Russian activist Andrei Kulagin found, second murder in a week. Nobel laureates plead for justice for Estemirova; Russia says no to...

PennyOmega.com Stocks Upgraded, Downgraded and Short Highlights Before the Bell Wednesday July 22, 2009

PennyOmega.com — Wed, 22 Jul 2009 12:37:07 +0000

PennyOmega.com Short Highlights Before the Bell! PennyOmega.com Short Highlights Before The Bell! PennyOmega.com Stocks Upgraded, Downgraded and Short Highlights Before the Bell Wednesday July 22, 2009 ************************************************************** Today ZipRealty (NASDAQ: ZIPR) (www.ZipRealty.com), the nation’s ninth largest real estate brokerage, announced a new mortgage feature, provided by Bank of America Home Loans, that will help streamline the home buying process [...]

DrStockPick.com Stocks Upgraded, Downgraded and Short Highlights Before the Bell Wednesday July 22, 2009

Dr. Stock Pick — Wed, 22 Jul 2009 12:27:38 +0000

DrStockPick.com Short Highlights Before the Bell! Wednesday, July 22, 2009 DrStockPick.com Stocks Upgraded, Downgraded and Short Highlights Before the Bell Wednesday July 22, 2009 ************************************************************** Today ZipRealty (NASDAQ: ZIPR) (www.ZipRealty.com), the nation’s ninth largest real estate brokerage, announced a new mortgage feature, provided by Bank of America Home Loans, that will help streamline the home buying [...]

Listening to Eastern Europe

Robert Amsterdam — Mon, 20 Jul 2009 14:14:37 +0000

Ever since Barack Obama's first relatively friendly state visit to Moscow, Washington and the Kremlin have engaged in a showdown of gestures over the elephant in the room: the legitimacy of Russia's claim to a privileged sphere of influences. Directly...

A Letter to Obama

Robert Amsterdam — Thu, 16 Jul 2009 12:31:24 +0000

Vaclav Havel, Lech Walesa, and a long list of other former leaders of Eastern European states have penned an open letter to U.S. President Barack Obama expressing their fears over what kinds of sacrifices to their sovereignty might come along...

Will Washington Turn a Blind Eye to Kyrgyzstan?

Robert Amsterdam — Mon, 13 Jul 2009 16:23:59 +0000

Remember back in February when the Russians flew a delegation into Bishkek, Kyrgyzstan, offering an extremely generous aid package of about $2 billion? Days later, the local dictatorship revoked the deal with Washington on the Manas air base, a critical...

Base Metals Listless

Doug Casey — Fri, 10 Jul 2009 20:30:38 +0000

pBase metals were (mostly) slightly higher on Thursday. Copper gained 6.35 cents to close at $2.2069/lb. Nickel fell by nearly 2 cents to finish at $6.7139/lb. Zinc was little changed, ending at $0.6780/lb. Aluminum rose by nearly a cent, closing at $0.7014/lb., while lead moved to $0.7319/lb., up more than half a cent from the previous session. br / Despite copper’s rise yesterday, there is renewed sentiment that Chinese demand (which boosted prices by more than half this year) will weaken as the slow seasonal consumption period approaches./p p“The market is watching out for Chinese imports and stockpiles data and these will drive sentiment in the days ahead,” Jia Zheng, analyst at Southwest Futures Co., said yesterday./p p“There is talk that around 100,000 tons#8230;/p

Georgia Wins “Biggest Mover” Award in FP’s Annual Failed States Index

Robert Amsterdam — Mon, 06 Jul 2009 19:40:36 +0000

The 2009 Failed States Index has just been released, a fifth annual collaboration between Foreign Policy Magazine and the Fund for Peace, ranking 177 countries according to a range of economic, political and social indicators. Considering the ease with which...

Stock Market News for July 6, 2009 – Market News

Zacks Market Commentaries — Mon, 06 Jul 2009 13:59:26 +0000

US stocks faltered Thursday, after a worse-than-expected jobs report added to sagging hopes for an economic stabilization. The dismal unemployment picture coupled with disappointing consumer confidence revived caution on the Street and investors sold stocks across the board, driving the S&P 500 index to its third-straight weekly loss. The Dow Jones industrial average plunged 223 points for a 2.6% decline and tech-heavy Nasdaq fell 49 points for a 2.7% loss. Volume was light with only 733 million shares exchanging hands.

All ten industry groups in the S&P 500 suffered losses Thursday after the U.S. Labor Department reported an accelerated pace of job declines and unemployment rate jumped to 9.5%, highest in 25 years; nevertheless, it was below expectations of 9.6%. The report said US employers cut 467,000 jobs from their payrolls in June. According to one estimate, almost 6.5 million jobs have been lost since the recession began in December 2007.

American Express (NYSE:AEP) fell 6.3% to $22.27 and Caterpillar (NYSE:CAT) plunged 8.2% to $31.74. Alcoa (NYSE:AA), which reports its earnings this week, lost 8.4% to $9.86. Crude oil's decline to less than $67 per barrel hurt energy stocks. Exxon Mobil Corp. (NYSE:XOM) eased almost 3% to $68.49, National Oilwell Varco (NYSE:NOV) declined 6.8% to $30.84 and Hess (NYSE:HES) plunged 8.5% to $49.65. Losses were broad based with energy, industrials, financials, technology and consumer-oriented shares bearing the brunt of the sell off. Among technology stocks, IBM (NYSE:IBM) was the leading decliner among Dow components, declining 3% to $101.73; Apple (NASDAQ:AAPL) eased 2% to $140.02. Elan Corp. (NYSE:ELN) jumped 8.6% to close at $7.60, after Johnson & Johnson (NYSE:JNJ) said it agreed to pay $1 billion for an 18.4% stake in the company.

The earnings season begins this week with Alcoa (NYSE:AA) reporting its results on Wednesday. Analysts expect a 34% earnings decline this quarter with all ten industry groups expected to post lower results. The attention, nevertheless, will also be on any talks of sanctions on Iran, North Korean aggression and Afghanistan elections.

Zacks Investment Research

RA’s Daily Russian News Blast – July 6, 2009

Robert Amsterdam — Mon, 06 Jul 2009 07:06:27 +0000

TODAY: Obamarama begins with touchdown in Moscow today; the US President grants interview to opposition paper; Putin rebuffs suggestion he favors old ways; Obama trying divide and conquer on Medvedev and Putin?; missile defense may be a dealbreaker; Stalinism and...

Time to Diminish Expectations

Robert Amsterdam — Sat, 04 Jul 2009 16:16:51 +0000

Remember those halcyon days - like last Thursday - back when lots of people thought that the United States and Russia were on the brink of diplomatic breakthrough? The Obama administration appeared perfectly willing to ditch the Polish and Czech...

Who wears the pants in this diarchy?

Robert Amsterdam — Fri, 03 Jul 2009 19:11:48 +0000

Is it a mistake for President Barack Obama to only meet with President Dmitry Medvedev? Andrew Kuchins thinks so. From the Moscow Times:There should be no illusions about where ultimate decision-making authority in Russia resides today. The "tandem" is a...

Galapagos Vacations? Politician’s Overseas Travel Is Up Almost Tenfold Since 1995

Contrarian Profits — Fri, 03 Jul 2009 18:00:38 +0000

p#8220;A review of travel and financial records showed that Gov. Mark Sanford did not spend public money improperly when he visited his mistress#8221;, the chief of the South Carolina Law Enforcement Division, Reginald Lloyd, said this afternoon./p pThank goodness Governor Sanford#8217;s fornicating was fiscally lawful!/p pBut it shows you that there are hardly any limits to the perks, fringe benefits, and global sex romps that can be had on the taxpayer#8217;s dime by our elected officials#8230;/p p From the Wall Street Journal:/p blockquotepSpending by lawmakers on taxpayer-financed trips abroad has risen sharply in recent years, a Wall Street Journal analysis of travel records shows, involving everything from war-zone visits to trips to exotic spots such as the Galápagos Islands./p pThe spending on overseas travel is up#8230;/p/blockquote

Wonks Weigh In: What White House Would Want

Robert Amsterdam — Thu, 02 Jul 2009 22:37:15 +0000

I just couldn't resist the alliteration temptation. What we're looking at here is the broader directions that should result from next week's Obama-Medvedev powwow. Former U.S. National Security Adviser Zbigniew Brzezinski offers a three-pronged strategy in the Financial Times for...

RA’s Daily Russian News Blast – June 30, 2009

Robert Amsterdam — Tue, 30 Jun 2009 07:47:28 +0000

TODAY: Georgia fuming about war games; US-Russia officials meet in advance of Obama trip; more US cargo to go throgh Russia to Afghanistan?; journalist dies of injuries sustained in an assault two months ago; casino closure imminentThe military exercises...

RA’s Daily Russian News Blast – June 29, 2009

Robert Amsterdam — Mon, 29 Jun 2009 08:06:50 +0000

TODAY: Russia and NATO hold first military talks since Georgia incursion; differences remain; OSCE skeptical about security proposals; issues emerge for imminent Obama visit; the Romanovs returnNATO Secretary-General Jaap de Hoop Scheffer has said that Russia and NATO have...

RA’s Daily Russian News Blast – June 25, 2009

Robert Amsterdam — Thu, 25 Jun 2009 08:11:20 +0000

TODAY: Conflicting voices on air base deal; US hits back at Shuvalov's comments on WTO accession; fears of new Russian incursion prevalent in Georgia; priests find new role in crisis; Communists present Stalin as economic inspirationThe Kremlin claims that the...

Suspect Detection Systems Inc. (SDSS.OB) Announces Completion of 2-Year R&D for Cogito4M Military Grade Rapid Interrogation Technology

QualityStocks — Wed, 24 Jun 2009 18:17:07 +0000

Suspect Detection Systems Inc., a leading developer of counter-terror and crime prevention technology, announced earlier this week that its Cogito4M Military Grade Technology has successfully completed a two-year research and development project. The system was developed through the accumulation of defense field experience in Israel. Cogito4M enables military and homeland security organizations to interrogate terror suspects [...]

RA’s Daily Russian News Blast – June 17, 2009

Robert Amsterdam — Wed, 17 Jun 2009 08:21:47 +0000

TODAY: SCO wraps up in blaze of activity; Medvedev calls BRIC 'historic event'; no decision from US on defense system; German MPs agree Khodorkovsky trial is trial for Russian justice; Vaclev Havel speaks out against RussiaFor detailed step-by-step coverage of...

Building Bricks

Robert Amsterdam — Tue, 16 Jun 2009 10:40:42 +0000

Russia is busy hosting this week: the city of Yekaterinburg will be both the first destination for newly re-elected Iranian President Ahmadinejad, and the site of the first meeting between Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali...

RA’s Daily Russian News Blast – June 15, 2009

Robert Amsterdam — Mon, 15 Jun 2009 06:59:33 +0000

TODAY: 'Milk war' steps up a notch; Lukashenko absent from security summit in Moscow; rapid reaction force agreed upon at CSTO meeting; Kremlin hopes for larger role in Afghanistan resolution; third killing in North Caucasus in week of violence; US...

Chinese Hummers Just a Sign of the Times

Contrarian Profits — Wed, 03 Jun 2009 21:00:00 +0000

pAs you’ve likely heard, stronga Chinese company will soon own the Hummer brand./strong Heh, let’s count the ways this transaction epitomizes the new economic landscape#8230;/p p1. A Chinese company now owns an automaker that will build and sell cars in the U.S. – a first./p p2. That company – Sichuan Tengzhong Heavy Industrial Machinery – doesn’t even make cars. For its first foray into passenger automaking, it’s chosen Hummer, perhaps the world’s most challenging and polarizing brand./p p3. Business is so booming at Tengzhong HIM (its core is road construction and energy equipment) that the company will completely self-finance the deal…not one yuan borrowed from the Chinese government./p p4. While neither party will disclose the price, Hummer was likely sold for a song…less than $500#8230;/p

U.S. Needs Corrective Vision on Russia

Robert Amsterdam — Wed, 27 May 2009 14:12:14 +0000

Daniel Kimmage writes in Foreign Policy today about the myth of mutual interests between Russia and the United States. We've held some of these arguments in the past, such as the idea that Russia has completely opposite intentions with Iran. ...

Respecting Russia vs. Loving Russia

Robert Amsterdam — Fri, 22 May 2009 20:58:33 +0000

One of the oldest tricks in the authoritarian playbook is the subtle theft of the people's sovereignty, grafting the rights of citizens onto a regime of personal power. Cuba's Fidel Castro was and is the grandmaster of this tactic -...

A Modest Proposal – Analyst Blog

Dirk Van Dijk — Tue, 19 May 2009 21:19:47 +0000

We highlight Goldman Sachs Group, Inc. (GS), E-Trade Financial Corp. (ETFC) and The Charles Schwab Corp. (SCHW).

The Federal Deficit will be almost $2 Trillion this year, or over 12% of GDP. If we exclude the WWII years, the previous peak in the deficit as a percent of GDP was 6.3% under Reagan. Next year, the deficit is projected to decline to about $1.2 Trillion, a projection that strikes me as optimistic, but even if achieved will still be a greater share of GDP than during the worst fiscal excesses of the Reagan years.

Much of the deficit this year is unavoidable, as it comes from shrinking revenues as much as from higher spending. With profits down, corporate income taxes are down; with people unemployed, or having their salaries or hours cut, they pay less individual income taxes. And you can just guess what the worst bear market since the Great Depression has done to capital gains taxes.

The stimulus spending was needed to get the economy back on track (along with a very aggressive Fed). Without it, there would be little hope of breaking the vicious cycle dragging the economy down, and with it future tax revenues. However, a huge amount of spending has been directed at the financial sector. While there is some hope that these "investments" will not be a total loss, few expect the $700 in TARP money to actually turn a profit. We will be lucky if we end up getting $500 billion of it back. There have also been huge hidden subsidies to the financial sector in the form of loan guarantees, etc.

Even under the rosy scenario of Obama's budget, the Federal debt will balloon from 40.8% of GDP in 2008 to 65.8% in 2013. This will put a huge burden on our children and grandchildren as they will have to face either higher taxes or lower government services (or both).

Cutting spending or significantly raising taxes at this point would be a huge mistake, and even 2011 may be too soon to do so. After all, when FDR pulled back from the New Deal in 1937, the economy promptly fell back into a nasty recession -- in distinct contrast to his first term, which saw some of the fastest growth in GDP and Industrial Production in U.S. history (obviously coming off a very low base).

The debt overhang we are working off now is much larger relative to the economy than what we had in the late 1920's, so the scale of the problem is similar to that of the Depression. The biggest difference is that we acted promptly this time around, rather than dithering for years and years. Still, at some point we are going to have to raise more revenue.

The options for cutting spending significantly are limited outside of health care (and then only if an optional public plan is part of the reform, voluntary efforts by the Health Care industry will not do the job and should not really be taken seriously). Cut back military spending? In case you have not noticed, we are still fighting two wars. Cut back spending on things like the national Institutes of Health and the Center for Disease control in the face of a possible pandemic? Cut back on infrastructure spending when our bridges are literally falling down, and we need to put people to work?

While I would love to see us cut back on agricultural subsidies, half of the U.S. Senate is elected by 15% of the population, and that 15% includes lots of farmers and those dependent of the farm economy, so this is not going to happen. Cutting Veterans benefits hardly seems to be an honorable thing to do to those who have sacrificed in Iraq and Afghanistan, and should be off the table regardless of how you feel about the wisdom of being involved with those wars.

Eliminate earmarks? Perhaps on procedural grounds it would be wise, but from a budgetary standpoint that was complete campaign nonsense last year. The simply do not add up to that much in the context of the overall budget. Cutting revenue sharing with the States when they are generally in worse fiscal shape than the Federal government (with the largest state being the poster boy for state fiscal problems) does not seem to be a very good answer either.

Unless you want to not pay the interest on the federal debt, or want to drastically cut Social Security and Medicare benefits, there is not that much available to cut on the spending side. Besides, Social Security has been subsidizing the rest of the government for the last quarter century, and cutting benefits now that those loans to the general fund have to be repayed would be the ultimate bait and switch.

One way or another, a big part of the solution is going to have to come on the revenue side. Given the huge inequality of wealth and income in this country (huge relative to our OECD peers, based on the Gini Coefficient, we are closer to Cameroon than Canada in terms of income inequality) we need to avoid putting too much on the backs of the working class. Here is what I would suggest:

Today, the NYSE will probably trade about 5 billion shares. The average price of a S&P 500 stock is about $33. Thus, on the NYSE alone, $165 billion is changing hands in a single day. If there were a transaction fee of 0.1% on that, it would raise $165 million a day, or with about 250 trading days a year, about $41.25 billion per year. If similar fees were levied at the Nasdaq and on options, the total could reach the vicinity of $100 billion. That is not enough to close the fiscal gap, but not exactly chopped liver either.

Long-term investors would hardly notice the tax, but speculating day traders would quickly start to feel the bite. Encouraging people to take a long-term view and actually invest -- rather than engage in pure speculation in little pieces of paper that just happen to represent real companies -- would be a good thing, in my view.

The tax would fall on the Financial sector, and would be a way that that sector ends up repaying the lavish subsidies that it has recently received. Since wealth is even more unequally distributed in this country than is income -- and the wealthy hold much more of their wealth in equities than do the middle class -- the tax would be highly progressive. In effect, the tax would be like a slightly higher commission charge.

This, at the margin, might hurt firms that do a lot of trading particularly for their own account, like Goldman Sachs (GS). For firms that trade mostly for their clients like E-Trade (ETFC) and Charles Schwab (SCHW), I suspect that the fee would be passed along to the customer, especially since it could not be avoided by moving your account to another broker.

As long as the rate was kept low, it would be a very painless tax for all involved. The danger would be that it was too effective, and that the rate would rise over time and trading activity would move offshore. However, at the 0.1% level, I do not see that as a significant danger. Somehow we managed to have a working financial system even before May Day (5/1/75, when fixed commissions ended), when it was not uncommon for transaction fees to be over 3% of the transaction value.

Current transaction fees are almost zero; somehow I don't see how a minor increase would kill the markets. On the other hand, not bringing the fiscal deficit under control in the medium to long term, could kill not just the markets, but the entire economy.
Read the full analyst report on "SCHW"
Zacks Investment Research

Insights from Jeremy Siegel: 3 Reasons Why The Dow Will Hit 10,000 in 2009

Investment U — Mon, 18 May 2009 12:52:08 +0000

Insights from Jeremy Siegel: 3 Reasons Why The Dow Will Hit 10,000 in 2009 by Dr. Mark Skousen, Advisory Panelist Wall Street has been debating the huge run-up in the Dow Jones Industrial Average. Was March the beginning of a huge rally that will take the market to new highs? Have we witnessed the proverbial “dead-cat bounce?” The [...]

Defense Solutions Holdings Inc. / DFSH Announces Distribution Agreement with iRobot

Stuart T. Smith — Thu, 14 May 2009 19:18:01 +0000

Defense Solutions, Inc., an international project management and executive consulting firm, a wholly owned subsidiary of Defense Solutions Holding, Inc. (OTC Bulletin Board: DFSH), announces that the Company has signed an agreement with iRobot Corporation (Nasdaq: IRBT), to distribute its iRobot PackBot®, a multi-mission tactical mobile robot, in Iraq and Afghanistan. iRobot is a designer [...]

QA on Russia and Iran in Venezuela

Robert Amsterdam — Mon, 11 May 2009 19:05:54 +0000

Had everything gone according to plan, the president of the Islamic Republic of Iran, Mahmoud Ahmadinejad, would have spent the weekend visiting Brazil, Ecuador, and his close friends in Venezuela. However following a carefully worded warning from Sec. of State...

Zacks Analyst Blog Highlights: Lockheed Martin, Boeing, Northrop Grumman, Cosan Ltd. and Petrobras. – Press Releases

Zacks Market Commentaries — Mon, 11 May 2009 13:25:42 +0000

For Immediate Release

Chicago, IL - May 11, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Lockheed Martin (LMT), Boeing (BA), Northrop Grumman (NOC), Cosan Ltd. (CZZ) and Petrobras (PBR).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Friday's Analyst Blog:

Defense Budget Spelled Out

Thursday, Congress received a Defense expenditure request of $663.8 billion for fiscal year 2010 in two parts: a baseline budget of $533.8 billion, which is 4.0% higher (2.1% in constant dollars) than the 2009 baseline budget of $513.3 billion, plus a $130 billion kicker to cover ongoing military operations (Afghanistan, Iraq and, perhaps, other interesting places).

This proposed budget would terminate both Lockheed Martin's (LMT) F-22 fighter at 187 shipsets as well as Boeing's (BA) C-17 transport at 205 shipsets. On the other hand, the next chapter of the "Northrop Grumman (NOC)/EADS versus Boeing for the tanker" saga is written in ink for all to see.

Cosan Demonstrates Strength

This week, Cosan Ltd. (CZZ) shares have performed remarkably, with an appreciation over 20% until yesterday. The company's new finance director, Mr. Marcelo Martins, has been stating that the immediate priority of Cosan is to generate cash-flow and reduce net debt through the selling of non-priority assets, like participations in smaller companies. This sounds like music to investors...

Additionally, the new director said that some partnerships in special projects are a priority to raise new capital to allow investments without increasing net debt. It is interesting to remember that few weeks ago the market got excited about the possibility of a partnership with Petrobras (PBR).

We understand this news is positive for Cosan, as the company now seems to be willing to focus on cash-flow generation and debt reduction. We still believe that some kind of agreement to allow the company to access the U.S. ethanol market in the short-to-medium term will be reached, and that Cosan will be able to develop new projects with the focus on partnerships. We are keeping our positive outlook on Cosan.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

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Zacks Investment Research

Defense Budget Spelled Out – Analyst Blog

Zacks Market Commentaries — Fri, 08 May 2009 16:22:39 +0000

Highlights include Lockheed Martin Corp. (LMT), The Boeing Co. (BA) and Northrop Grumman Corp. (NOC).

Thursday, Congress received a Defense expenditure request of $663.8 billion for fiscal year 2010 in two parts: a baseline budget of $533.8 billion, which is 4.0% higher (2.1% in constant dollars) than the 2009 baseline budget of $513.3 billion, plus a $130 billion kicker to cover ongoing military operations (Afghanistan, Iraq and, perhaps, other interesting places).

This proposed budget would terminate both Lockheed Martin's (LMT) F-22 fighter at 187 shipsets as well as Boeing's (BA) C-17 transport at 205 shipsets. On the other hand, the next chapter of the "Northrop Grumman (NOC)/EADS versus Boeing for the tanker" saga is written in ink for all to see.

Of course, this request has to now wind its way through the system, which could make for some stimulating sessions on The Hill, as Congressmen/women fight to support their local defense contractor. In many ways, this is deja vu all over again.

It is interesting, however, that the current Secretary of Defense wants us to finally prepare for the wars currently in progress. Better late than never!
Read the full analyst report on "LMT"
Read the full analyst report on "NOC"
Zacks Investment Research

Resetting Impunity

Robert Amsterdam — Wed, 06 May 2009 15:25:09 +0000

A few days ago we posted some comments and video from American observers on U.S.-Russian relations, which included some exchange of views on realism and the whole "reset button" approach to the Kremlin currently being offered by the Obama Administration. ...

It’s Cinco de Mayo!

Contrarian Profits — Tue, 05 May 2009 20:24:06 +0000

pA Huge currency rally#8230; The games people play now#8230;RBA leaves rates unchanged#8230;Brazilian real is the daily winner! And Now#8230; Today#8217;s Pfennig!/p pGood day#8230; Hola! And a Terrific Tuesday to you! Well, today is Cinco De Mayo#8230; It#8217;s a fun day so go have some fun! I few years ago, I talked about Cinco De Mayo, and some guy took exception to it, and called me a really nasty name#8230; So, I won#8217;t get all flowery about the day, except to say, go have some fun!/p pOf course, to me, the saying #8220;go have some fun#8221; is a staple of my being! Especially these days! I realize that I need to have #8220;more fun#8221;, but work, and all that gets in the way,#8230;/p

The Direction of Energy Policy

Byron King — Thu, 30 Apr 2009 19:36:45 +0000

pThe other day I had lunch with a “brain trust,” of sorts. Participants included a retired executive from an aerospace company. This guy helped design and build many of the reconnaissance satellites that the U.S. has launched. There was a senior executive from a large steel company. There was a venture capitalist who made his first $500 million in the software industry, and who now has much of that wealth spread around in biotech and nanotech startups. There was a former senior political appointee who worked in the Treasury Department. And then there was me./p p style="text-align: center;"strong“Climate Change” Driving Policy Now/strong/p pAccording to the satellite builder, the dominant elements of the political and media culture are “completely in the tank” when it comes#8230;/p

Bribing Kyrgyzstan

Robert Amsterdam — Thu, 30 Apr 2009 19:00:40 +0000

A couple billion dollars can go a really long way in some Central Asian countries, and its a pity that the United States and other NATO members didn't realize that President Kurmanbek Bakiyev was more or less "up for sale." ...

Video: Russia’s Real and Imagined Security Concerns

Robert Amsterdam — Wed, 29 Apr 2009 16:55:06 +0000

During my interview with David Satter, I asked about the Russian decision to push the United States out of the Manas air base in Kyrgyzstan, thereby hampering NATO's chances of success in Afghanistan - which is arguably one example of...

RA’s Daily Russian News Blast – April 29, 2009

Robert Amsterdam — Wed, 29 Apr 2009 07:50:06 +0000

TODAY: meat import ban contested by US; 35,000 army officers face dismissal this year; Lavrov concerned by EU moves towards ex-USSR states; crack down on internet users; Soviet damages; Bolshoi star dies Russia has extended a ban on importing...

Value Trader Snags a 31.48% Winner – Zacks Tale of the Tape

Tracey Ryniec — Thu, 23 Apr 2009 16:40:13 +0000

The Value Trader trading portfolio bagged a nice winner as Force Protection Inc. FRPT was sold this week for a big gain of 31.48%. The position was added to the Value Trader portfolio on April 7.

Force Protection manufactures blast-protected vehicles specifically for use in war zones such as Iraq and Afghanistan.

At the time of its addition, Force Protection was trading at 11.4x forward earnings. The company has announced several new million dollar contracts this month which has buoyed the stock.

"FRPT" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Shuvalov’s Promises for 2020

Robert Amsterdam — Mon, 20 Apr 2009 15:26:46 +0000

There is an interesting op/ed in today's Moscow Times by Michael Bohm, which disputes some that the goals of Strategy 2020 require no readjustment given the damage caused by the economic crisis. Naturally, our eyes our drawn to Bohm's comments...

Russia Has Not Changed its Foreign Policy Goals

Robert Amsterdam — Tue, 14 Apr 2009 17:19:50 +0000

I came across this translation from the Latvian press on TOL about whether or not the global financial crisis is changing Russia's foreign policy ambitions in its near abroad. The short answer: no.You would think that given this increasingly complex...

Aspire Misery Index for the Week Ended April 11, 2009

Small Cap Pulse — Sat, 11 Apr 2009 22:48:01 +0000

April 11, 2009 ndash; The markets managed to edge higher again this week as we headed into earnings season. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; The DJIA closed up 67.22 on the week, or about 0.08%, but it is up 25.5% since hitting intraday lows back on March 6 (still down 7.8% year-to-date). middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; The Nasdaq closed up 50.3 on the week, or about 3.1%, and it is up 30% since hitting intraday lows back on March 9 (up 4.6% year-to-date). middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; The Samp;P 500 closed up 16.81 on the week, or about 2%, and it is up 28.4% since hitting intraday lows back on March 6 (still down about 5.1% year-to-date). Wells Fargorsquo;s better-than-expected preannouncement gave bulls reason to argue that the worst is behind us and that the financial sector may be ready to begin leading the markets onward in the second half of 2009 and into 2010 as the US economy recovers. We arenrsquo;t quite ready to buy into the dream yet, since as far as we can tell, the economic data is still trending worse, led by increasing erosion in the labor markets. Here are some of the lowlights from this weekrsquo;s session that should help keep things in perspective: middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Federal Deficit ndash; The Treasury Department said on Friday that the budget deficit increased by $192.3 billion in March, and is near $1 trillion ndash; and we are only halfway through the budget year. Expectations for the March budget deficit were $150 billion. The administration is projecting a deficit of $1.75 trillion this year. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Wholesale Inventories ndash; Dropped by 1.5% in February, the most on records dating back to January 1992 and more than twice analystsrsquo; expectations. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Trade Deficit ndash; Fell for thenbsp;seventh straight month in February (good news), to the lowest level since 1999, down 28.3% to $25.97 billion. The US deficit with China dropped 31% to $18.9 billion in February, while its deficit with Jpan fell to $2.2 billion, the lowest level since 1994. It is worth noting that China is the largest holder of US debt while Japan follows right behind them. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Dividend Cuts ndash; Samp;P said that a record number of companies cut their dividend in Q1, with the total dividend payments down $77 billion. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Profit Warnings ndash; International Speedway, Emerson Electric, Sharp, Moog, SonicWALL, MEMC, Hillenbrand, Forward Air, middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Ratings Cuts ndash; Fitch cut Seagate, Moodyrsquo;s cut Toll Brothers, Moodyrsquo;s cut Berkshire, Samp;P cut Chrysler, Samp;P cut GM, middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Job Cuts ndash; Headwaters (unspecified number of jobs at Alabama facilities), DMI Industries (cut another 100 jobs), Milwaukee Journal Sentinel (26 jobs), Tate amp; Lyle (cutting 56 workers), Deere (laying off 160 at Des Moines plant), Reno Gazzete-Journal (35 more layoffs), LyondellBasell (cutting 3,000 jobs), Viking Yacht (cutting almost 600 jobs), Amgen (100 jobs), Jamp;J (cutting about 900 jobs), Virginian-Pilot (laying off 40), Caterpillar (planning more job cuts), GE Healthcare (laying off 179 workers), middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Chapter 11 ndash; Jane Cosmetics, Signature Alluminum, Aventine, middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Consumer Borrowing ndash; The Federal Reserve said that consumer borrowing declined at an annual rate of $7.48 billion in February, or 3.5% from January. The decline was greater than expected. Borrowing on credit cards fell by $7.8 billion, or 9.7% - the sharpest decline in dollar terms since 1968 and the sharpest percentage decline since 1978. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Government Spending ndash; War Chest ndash; Obama has asked Congress to quickly approve an $83.4 billion request for military and diplomatic operations in Iraq and Afghanistan. Since September 11, 2001, the US has spent almost $1 trillion on the efforts. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Banks ndash; 2 more banks failed this week, raising the number of bank failures so far this year to 23. For all of last year, 25 banks failed. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; FDIC Insurance Fund ndash; As of the end of 2008, the insurance fund stood at $18.9 billion, the lowest level in almost 25 years, and down from $52.4 billion at the end of 2007. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Pro Baseball ndash; Salaries have dropped by $47 million from opening day last year. 16 of the 30 clubs cut payroll. middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Wine Consumption ndash; World wine consumption fell for the first time in years, down 0.8% in 2008 (6.4 billion gallons), from 2007. However, the US overtook Italy in terms of total wind consumption.

While Recent Studies Find Domestic Terrorism Still a Real Threat – Sector 10, Inc. (SECT.OB) Continues to Supply Innovative Survival Tools

QualityStocks — Mon, 30 Mar 2009 18:14:14 +0000

After the attack on September 11, 2001, Americans became more aware of the threat of terrorism. Right after the attack, many citizens took action to become more prepared by stockpiling food and water. Other citizens became more involved by joining local response teams that trained for catastrophic events. But now after over seven years, our [...]

Defense Sector Rumblings Ahead – Analyst Blog

Zacks Market Commentaries — Tue, 17 Mar 2009 19:41:50 +0000

Highlights include The Boeing Company (BA), General Dynamics Corp. (GD), Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC) and Raytheon Company (RTN).

Awhile back, we published the following warning regarding the Defense Sector: Watch out for the light at the end of the tunnel -- it could be the termination express! Well, it looks like the train is about to arrive.

Reportedly, Defense Secretary Gates is readying the most extreme changes to the Pentagon's spending plans since the end of the Cold War. It is possible that the Pentagon will call for the termination of as many as 6 major weapons systems as soon as the end of March. Programs which are probably on the block include the DDG X Destroyer and the F-22 Lightening II. And these are just the starters. If history repeats itself -- as it has many times in such instances -- other programs will also be axed further down the road to extinction.

The known (there are items hidden in other budgets) Dept. of Defense budget for next year is $534 billion. With all the other demands being put on our financial resources -- including a war in Afghanistan which many observers feel is unwinnable -- this may be the highest defense budget for many years to come.

The big companies that will be affected by such actions are the normal list of suspects: Boeing (BA), General Dynamics (GD), Lockheed Martin (LMT), Northrop Grumman (NOC), Raytheon (RTN), et al.

However, there are a myriad of suppliers that will also be impacted -- just at the same time that Commercial Aerospace is in a nosedive. When it rains, it pours!

Read the full analyst report on "GD"
Read the full analyst report on "LMT"
Read the full analyst report on "NOC"
Read the full analyst report on "RTN"
Zacks Investment Research

Is the Administration’s GDP Forecast Too Rosy?

Menzie Chinn — Tue, 03 Mar 2009 02:05:38 +0000

There's been a lot of discussion of whether the Administration's forecast is too rosy. [1], [2], [3], [4], [5], [6] I thought it useful to examine this issue a bit more deeply.

Figure 1: Real GDP q/q growth rate from Administration (teal), CBO without stimulus (red), February Blue Chip (blue), WSJ mean forecast from February survey (pink), and WSJ trimmed high and log (dark red). WSJ trimmed values delete the top five and bottom five (out of 52) respondents. Source: OMB, CBO (March 2, 2009), and WSJ.

Note that while the Administration's forecast is slightly above the Blue Chip, it is slightly below the mean WSJ forecast (February) at least for 2009. And the Administration forecast is well within the 10% trimmed range of forecasts from the WSJ (that is, I've cut off the top 5 and bottom 5 forecasts from the 52 respondents for the February survey regarding 2009 y/y growth). In other words, this graph confirms the WaPo conclusion:

...while upbeat, the administration's forecasts are within the range of reasonable possibilities, according to economists we consulted.

Some discussion of where the Administration's forecast relates to CBO's is here. Dr. Romer provides additional insight here. I reproduce a graph from that discussion below:

Figure 1 from "Economic Projections and the Budget Outlook, February 28, 2009.

CBO has presented their assessment of the stimulus bill in this report released today. The key graph regarding the impact on the output gap is below.

Figure 1 from CBO, Estimated Macroeconomic Impacts of the American Recovery and Reinvestment Act of 2009, March 2, 2009.
Notice that CBO has presented the impact based upon a range of estimated multipliers. Hence, the calculations are transparent.

I will observe an interesting correlation: a good number of those who critique the Obaman Administration's forecasts the most vociferously are also typically the ones who had no criticisms of the previous Administration's tendency to place off-budgeting process expenditures for Iraq and Afghanistan, as well as emergency expenditures [7]. For additional discussion, see Jeff Frankel's comprehensive assessment.

Friday Potpourri

Contrarian Profits — Fri, 27 Feb 2009 20:50:05 +0000

pMuch on my mind on a Friday morning. So let’s dive right in./p pstrongItem: /strongGDP contracts an annualized 6.2% in the fourth quarter./p pstrongComment: /strongLet’s break down the four major components of GDP. Consumer spending? Down the worst since 1980. Business investment? Down the worst since 1975. Exports? Down the worst since 1971. Government spending? Up slightly. Lots more where this came from, I’m afraid./p pstrongItem: /strongU.S. government taking 36% stake in Citi./p pstrongComment: /strongI love how in journalistic shorthand, these sorts of stories become, “U.S. taxpayers will soon own a big share of Citigroup (NYSE:a href="http://www.google.com/finance?q=C"C/a).” Like hell I do. If I own a piece of it, where do I sign up for the dividend checks?/p pstrongItem: /strongWar spending no longer to be done off-budget./p pstrongComment:#8230;/strong/p

Catastrophic Fall in 2009 Global Food Production

Alex Stanczyk — Tue, 17 Feb 2009 22:00:40 +0000

Catastrophic Fall in 2009 Global Food Production Commodities / Food Crisis Feb 09, 2009 - 07:11 AM By: Eric_deCarbonnel After reading about the droughts in two major agricultural countries, China and Argentina, I decided to research the extent other food producing nations were also experiencing droughts. This project ended up taking a lot longer than I thought. 2009 looks [...]

$8.5 Trillion Bailout

Alex Stanczyk — Wed, 04 Feb 2009 17:20:23 +0000

Wall Street Bailout Exceeds Cost of All US Wars Combined Rock Creek Free Press February 2009 And you can throw in the New Deal, Marshall Plan and Moon Shots as well Casey Research, of Vermont, has analyzed the costs of the government bailouts of the housing crisis, the credit crisis and others and has concluded that the total is [...]

Blackwater’s Loss is DynCorp’s (NYSE: DCP) Gain

Investment U — Tue, 03 Feb 2009 15:45:43 +0000

Blackwater’s Loss is DynCorp’s (NYSE: DCP) Gain Last week, Blackwater Worldwide received the bad news that the U.S. Government could not renew its contract after the Iraqi government refused to renew its license to operate in their country. The decision stems from the 2007 incident where Blackwater security guards fired on, and killed 17 Iraqis in [...]

And Then There’s This…Wednesday, January 28th, 2009

Contrarian Profits — Wed, 28 Jan 2009 19:40:42 +0000

pThe high for gold came at about 1:30 p.m. in Hong Kong yesterday#8230;which was half past midnight Tuesday morning in the Eastern time zone. From there, gold got sold off about $15#8230;and never fully recovered the rest of the day. An attempt to break out early this morning (Wednesday) met with the usual fate in Far East trading./p pSilver was similar#8230;but far more volatile. Unlike gold, it managed to finish positive on the day#8230;even over $12. Let#8217;s see if that lasts into today./p pAs I said yesterday#8230;today is options expiry#8230;and I#8217;m ready for anything#8230;both before and after the close of trading on the Comex this afternoon./p pThe open interest on Monday was a little more subdued. Gold o.i. rose 1,568 contracts to 361,473#8230;and#8230;/p

Turkmenistan Emerges as Serious Natural Gas Player

Contrarian Profits — Thu, 15 Jan 2009 15:33:55 +0000

p style="text-align: left;"Ukraine and Russia are at it again. This time, it’s turned especially nasty, as Russia cut off natural gas supplies to a host of European countries. Tired of relying on Russia, the EU will again look for alternatives. Its eyes will wander to Turkmenistan./p p style="text-align: left;"Back in October, while the world was busy putting out the fires of a financial crisis that still burns, little-thought-of Turkmenistan made a bombshell of an announcement. It seemed to gather little notice at the time. But it could become much more important as the Russian-Ukraine dynamic gets worse./p p style="text-align: left;"Gaffney, Cline and Associates, a British consulting firm, completed an audit of Turkmenistan’s Yoloten-Osman natural gas deposits. Based on GCA’s first results, the fields have a minimum of 4#8230;/p

The Other Infrastructure Stimulus Program: Iraq and Afghanistan

Andrew Gordon — Thu, 15 Jan 2009 13:40:21 +0000

pGoosing infrastructure companies isn#8217;t anything new. It#8217;s been going on since 2003, when the U.S.#8217; #8220;shock and awe#8221; offensive overwhelmed Iraqi forces and resulted in negligible casualties. It was too easy. The casualties came later./p pTwo things will define 2009. One is the huge $1 trillion economic stimulus package featuring #8220;smart grids,#8221; roads and bridges./p pThe other is the winding down of the war in Iraq. I believe that this will supersede handling the aftermath of the current eruption of violence between Israel and Hamas in the Gaza Strip./p pThe promise of ending the war helped a href="http://www.investorsdailyedge.com/article.aspx?id=1783" target="_blank"President-Elect Obama/a get elected, though I believe the policy differences between the two presidential candidates were not as great as generally perceived./p pNow Iran and Afghanistan are Obama#8217;s problem.#8230;/p

Have We Learned Nothing?

Contrarian Profits — Mon, 15 Dec 2008 17:28:47 +0000

pWe pause this morning, while the rest of the world contemplates Mr. Madoff’s Ponzi scheme and this week’s pending machinations of the Fed and OPEC, to ponder matters geopolitical. There’s something extremely telling about the reaction to the reporter who flung his shoes at That Lame Duck in the White House. And it doesn’t bode well for the next four years under the new president./p pSomething significant was missing from the main account of the incident, be it from the a href="http://www.google.com/hostednews/ap/article/ALeqM5j057jBReERcsF-FcZRSWe0h1gaXQD9535UK80"Associated Press/a or a href="http://www.reuters.com/article/newsOne/idUSTRE4BE3F620081215"Reuters/a./p pBut McClatchy Newspapers (its pitiful financial state notwithstanding) got the real story. “Friends said Zaidi covered the U.S. bombing of Baghdad’s Sadr City area earlier this year and had been ‘emotionally influenced’ by the destruction he’d seen,” says its#8230;/p

Major Financial Events And Developments Of 2009

Contrarian Profits — Fri, 12 Dec 2008 14:14:38 +0000

pDollar-Euro parity? Crude at $12 a barrel? 15% unemployment? stronga href="http://www.contrarianprofits.com/articles/author/j-christoph-amberger/" class="alinks_links"J. Christoph Amberger/a /strongpresents the Today#8217;s Financial News top predictions for 2009#8230;/p blockquotepA month ago, I asked my colleagues at TFN to think about the year ahead… the events that will shape the year both politically and financially. In short, to come up with realistic “Predictions for 2009″. As history is fast-forwarding, some of these events have already taken place. Others look increasingly probable… and not half as far out as they appeared just a month ago./p pHere they are, in no particular order/p p*** Dollar hits parity against euro by June 2009./p p*** Oil bottoms at $12 per barrel by April 2009./p p*** Gold falls to $500 as Indian economy crashes and Dubai abandons spending spree./p p***#8230;/p/blockquote

The Fed Is Out Of Control… Good News For Gold

Eric Roseman — Thu, 27 Nov 2008 16:28:45 +0000

pReckless government spending has already put the US taxpayer on the hook for trillions of dollars, says strongEric Roseman/strong. And there is no telling how many more bailouts and loans are to come. Eric says gold will emerge as a surrogate currency as the Fed prints the US dollar into oblivion. And that means a sharp return to its long-term bull run./p pThis from The a href="http://www.SovereignSociety.com" class="alinks_links"Sovereign Society/a:/p blockquotepThe Federal Reserve this week announced new plans to unclog credit markets as the economic recession continues to deepen across the country, stifling bank lending and resulting in widespread hoarding of cash./p pThe Fed announced two new efforts to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion dollars. The move is#8230;/p/blockquote

Major Two Daily Rally — Hold Steady

Richard Shaw — Tue, 25 Nov 2008 01:27:42 +0000

U.S. stocks posted the biggest two-day rally since 1987, rising over 13%. That coming after the Obama announcement of his Treasury Secretary choice on Friday and the weekend announcement of over $300 billion for the Citi bailout, and in spite of Bloomberg’s calculation of total rescue costs over $7.4 trillion. The two-day rise is certainly impressive, [...]

Congratulations President Elect Obama

Contrarian Profits — Wed, 05 Nov 2008 12:29:07 +0000

Congratulations on a long well fought race. Now, “fasten your seat belts, it’s going to be a bumpy ride.” The classic line from Betty Davis seems appropriate. No matter who won this race, they were inheriting a hell of a mess. No need to go into detail, just the list is daunting enough.

The debt, the deficit, two wars without end, the banking crisis, the mortgage crisis, the worldwide economic slow down, Social Security, a deadlocked partisan congress, health care, a tax system that everyone thinks is unfair, collapsing US auto manufacturers, jobs being exported at light speed, the defense of our northern and southern borders, a recession, still no energy policy, and what appears to be a complete collapse of…

Congratulations President Elect Obama

Contrarian Profits — Wed, 05 Nov 2008 12:29:07 +0000

A Personal Blog from Cathy Rankin – QualityStocks Video Anchor

QualityStocks — Tue, 04 Nov 2008 17:10:47 +0000

I wanted to share a personal story I recently discovered that I thought was interesting, and also chilling and heartwarming at the same time. Please read this entire entry (even though it is long), because I feel strongly about reminding people that we still have great, brave men and women overseas fighting for us. In [...]

Pakistan on the Verge of Bankruptcy, Presses Allies for Support

Contrarian Profits — Mon, 20 Oct 2008 12:12:11 +0000

Pakistan said Friday that it would seek $4 billion in financial assistance, mostly from the World Bank, the Financial Times reported. Pakistan, a nuclear power and neighbor to Afghanistan, is on the verge of bankruptcy and if it does not receive the assistance it requires, the economy could collapse resulting in political upheaval and social unrest.

Pakistan has been wracked by inflation, currently running at 25% and its foreign reserves are dwindling. The nation’s currency, the rupee, last week sank to a new low of 84.4 to the dollar and has tumbled more than 33% against the greenback this year. Pakistan’s foreign currency reserves have shrunk to about $4.5 billion, or just six weeks worth of imports, the FT reported.

Unchecked political…

Singapore and Freedom of the Press

Robert Amsterdam — Fri, 17 Oct 2008 23:49:48 +0000

Most readers of this blog are used to occasional coverage of freedom of press issues in Russia, and discussions of the impact on civil society and democracy when the state targets journalists with impunity. As I announced yesterday in a blog post, I recently starting working a pro-bono case representing Singapore's leading opposition party, and it is in this area of freedom of press that we can observe some of the strongest parallel trends in both countries. According to a study by watchdog reporters without borders, Russia ranked a dismal 144 in the Freedom of Press Index - which is below scores awarded to Yemen and Afghanistan. Singapore ranked only slightly better at 141. Whereas government critical journalists in Russia, from Anna Politkovskaya to Ivan Safronov to Magomed Yevloyev, tend to find themselves killed in mysterious circumstances, in Singapore, these journalists and publications usually find themselves at the wrong end of devastating defamation lawsuits.

Detroit gets in on the action

James Hamilton — Tue, 30 Sep 2008 05:23:08 +0000

With all the excitement in financial markets, I almost missed this story on the bailout for automakers.

Breitbart reports:

The US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry, intended to spark a wave of automotive innovation. The loan guarantees were included in a continuing resolution that included funding for the US government and the wars in Iraq and Afghanistan. President George W. Bush has indicated that he intends to sign the bill....

The bill, which was approved by the House of Representatives on Wednesday, are the first loan guarantees for U.S. carmakers since Congress approved a similar 675 million dollar measure for Chrysler Corp. in 1980. Chrysler Chairman Robert Nardelli, however, said this week the loan guarantees should not be considered a rescue package for struggling carmakers. "This is not a bailout," he said.

Well, if the loans are repaid, you might argue that it's not a bailout because no federal outlays were involved. And you might argue the same for the $1.7 trillion in Fannie and Freddie's debt that the U.S. Treasury now seems to be guaranteeing, and for the $3.1 trillion in guarantees on agency MBS, and for the $600 billion or so in loans that the Federal Reserve seems to have extended. Not to mention the $700 billion Treasury plan still under debate.

Now, there may be a wee bit of a correlation among those sundry and staggeringly large exposures-- the state of the world in which the auto loans don't get repaid is likely the same state of the world in which significant chunks of the other items also turn in to a bill due for Uncle Sam.

On the other hand, what's another measly $25 billion among friends?

Technorati Tags: macroeconomics, autos, auto bailout

Detroit gets in on the action

James Hamilton — Tue, 30 Sep 2008 05:23:08 +0000

With all the excitement in financial markets, I almost missed this story on the bailout for automakers.

Breitbart reports:

The US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry, intended to spark a wave of automotive innovation. The loan guarantees were included in a continuing resolution that included funding for the US government and the wars in Iraq and Afghanistan. President George W. Bush has indicated that he intends to sign the bill....

The bill, which was approved by the House of Representatives on Wednesday, are the first loan guarantees for U.S. carmakers since Congress approved a similar 675 million dollar measure for Chrysler Corp. in 1980. Chrysler Chairman Robert Nardelli, however, said this week the loan guarantees should not be considered a rescue package for struggling carmakers. "This is not a bailout," he said.

On the other hand, what's another measly $25 billion among friends?

Technorati Tags: macroeconomics, autos, auto bailout

Congress Working Overtime: $634B Spending Bill and Bailout Plan

Mike Havrilla — Sat, 27 Sep 2008 15:36:00 +0000

An overwhelming 78-12 vote by the Senate sends a massive $634B spending bill to President Bush, who is expected to sign the measure before the government's fiscal year-end comes to a close on Tuesday. The bill contains provisions for $25B in subsidized loans for automakers in addition to removing a ban [...]

Some Observations on the Ongoing Crisis: Causes and Opportunity Cost Again

Menzie Chinn — Sat, 20 Sep 2008 03:15:00 +0000

There's a lot of commentary -- more comprehensive and up to date than I can provide -- on the crisis and the attempts to resolve the logjam in the financial markets.[0], [1] But I stilll have a couple of thoughts about the causes, and the implications, of the process that has resulted in so much turmoil this week.

First, what is the source of the crisis? Is it as is asserted here in this statement from John McCain today?

....
There are certainly plenty of places to point fingers, and it may be hard to pinpoint the original event that set it all in motion. But let me give you an educated guess. The financial crisis we're living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.
These quasi-public corporations lead our housing system down a path where quick profit was placed before sound finance. They institutionalized a system that rewarded forcing mortgages on people who couldn't afford them, while turning around and selling those bad mortgages to the banks that are now going bankrupt. Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington's failure.
...

I certainly concur with the first sentence. But I do wonder about the assertion that the problem started with and is fundamentally driven by Fannie Mae and Freddie Mac. After all, neither of these two institutions were at the heart of the massive surge in subprime mortgages that are the most toxic component of these asset backed securities. Smarter people than me (Justin Fox, Tanta at CR h/t Mark Thoma) have been similarly dubious.

Moreover, the originating entities for these subprime mortgages were not Fannie Mae and Freddie Mac, by large, but rather the banks that the Federal government refused to let state agencies regulate. Or the ones the Treasury's OTS itself failed to regulate. To refresh memories, consider this article from December 18, 2007 NYT:

WASHINGTON-- Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.
Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of "best practices" and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.
And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.
John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.
"He never gave us a good reason, but he didn't want to do it," Mr. Gnaizda said last week. "He just wasn't interested."
Today, as the mortgage crisis of 2007 worsens and threatens to tip the economy into a recession, many are asking: where was Washington?
An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry's excesses. Both the Fed and the Bush administration placed a higher priority on promoting "financial innovation" and what President Bush has called the "ownership society."
...
On Tuesday, under a new chairman, the Federal Reserve will try to make up for lost ground by proposing new restrictions on subprime mortgages, invoking its authority under the 13-year-old Home Ownership Equity and Protection Act. Fed officials are expected to demand that lenders document a person’s income and ability to repay the loan, and they may well restrict practices that make it hard for borrowers to see hidden fees or refinance with cheaper mortgages.
It is an action that people like Mr. Gramlich and Ms. Bair advocated for years with little success. But it will have little impact on many existing subprime lenders, because most have either gone out of business or stopped making subprime loans months ago.
...
The Fed was hardly alone in not pressing to clean up the mortgage industry. When states like Georgia and North Carolina started to pass tougher laws against abusive lending practices, the Office of the Comptroller of the Currency successfully prohibited them from investigating local subsidiaries of nationally chartered banks.
Virtually every federal bank regulator was loathe to impose speed limits on a booming industry. But the regulators were also fragmented among an alphabet soup of agencies with splintered and confusing jurisdictions. Perhaps the biggest complication was that many mortgage lenders did not fall under any agency's authority at all.
...

And for some more concrete examples of how deregulatory zeal had an effect, consider this account from the WSJ (March 22, 2007):

Regulators appointed by President Bush often have been more sympathetic to industry concerns about red tape than their Clinton administration predecessors. When James Gilleran, a former California banker and bank supervisor, took over the OTS in December 2001, he became known for his deregulatory zeal. At one press event in 2003, several bank regulators held gardening shears to represent their commitment to cut red tape for the industry. Mr. Gilleran brought a chain saw.
He also early on announced plans to slash expenses to resolve the agency's deficit; 20% of its work force eventually left. When he left in 2005, Mr. Gilleran declared that the OTS had "exercised increased diligence in its review of abusive consumer practices" while reducing thrifts' regulatory burden. But his successor, Mr. Reich, a former community banker, has reversed many of Mr. Gilleran's cuts. Citing "understaffing," he hired 80 examiners last year and plans to add 40 more this year. A spokeswoman for Mr. Gilleran, now chief executive of the Federal Home Loan Bank of Seattle, said he wasn't available to comment.

So, from my perspective, locating the source of the current crisis in corruption/influence peddling surrounding Fannie and Freddie exhibits a misreading of recent history. (More important might have been lax monetary policy and the saving glut, and exemptions from capital requirements for certain investment banks... [see Ritholtz])

Second, how hard will the rescue be given the reckless decisions of the past? It seems that whatever entity is established to purchase these bad assets will require some fiscal outlay. Estimates are all over the place, given that there is so much uncertainty over how much the assets will be bought for and eventually sold; here is one account:

U.S. Debt May Grow $1 Trillion on Rescue, Barclays' Pond Says
By Sandra Hernandez
Sept. 19 (Bloomberg) -- The U.S. may have to borrow an extra $700 billion to $1 trillion to fund the biggest rescue of the financial system since the Great Depression, according to Barclays Capital Inc.'s Michael Pond.
Federal takeovers of Fannie Mae, Freddie Mac, and American International Group Inc.; the central bank's expansion of lending to financial firms; and a slowing economy will add $455 billion to the Treasury's borrowing needs, the New York-based interest-rate strategist estimated. Pond said Treasury Secretary Henry Paulson's plan to rid banks of "hundreds of billions" of troubled assets would bring the amount to $700 billion assuming the plan costs $200 billion.
"We could easily add up to an additional trillion to the outstanding Treasury debt just from the initiatives announced over the past couple of weeks," said Pond, ranked the best Treasury Inflation-Protected Securities analyst in 2008 by Institutional Investor magazine.
The government's liabilities swelled in past weeks as policy makers sought to arrest a growing financial crisis by taking over financial institutions threatened by a shortage of capital.
The Treasury on Sept. 7 took over mortgage-finance companies Fannie Mae and Freddie Mac and said it would buy mortgage-backed debt in the open market. The Fed this week boosted its Treasury auctions to bond dealers by $25 billion, loaned $85 billion to the insurer AIG, and quadrupled the amount of dollars foreign central banks can auction to $247 billion. Paulson today said the government will buy illiquid assets from banks' balance sheets and insure money-market mutual fund holdings.
Deficit Widens
"The odds of the deficit becoming enormous are certainly there," said Nils Overdahl, a bond fund manager in Bethesda, Maryland, at New Century Advisors, which oversees $500 million. "I suspect you will see issuance at a variety of maturities."
The deficit will likely widen to $650 billion in fiscal 2009 because of the U.S. rescue of Fannie and Freddie, analysts at JPMorgan Chase & Co. wrote in a Sept. 12 report.
Over the next decade, the gap between spending and receipts will swell to $5.3 trillion, Goldman Sachs Group Inc. analysts wrote Sept. 10, revising a previous forecast of $3.6 trillion. The non-partisan Congressional Budget Office forecast a record $438 billion deficit for 2009 on Sept. 9.
"The deficit will soar to enormous proportions,'' said Lou Crandall, the chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. ``Even before this week's events, estimates based on visible factors were pointing to a deficit above $500 billion next year, with the prospect of billions of mortgage- backed securities on top of that."

Some Observations on the Ongoing Crisis: Causes and Opportunity Cost Again

Menzie Chinn — Sat, 20 Sep 2008 03:15:00 +0000

First, what is the source of the crisis? Is it as is asserted here in this statement from John McCain today?

....
There are certainly plenty of places to point fingers, and it may be hard to pinpoint the original event that set it all in motion. But let me give you an educated guess. The financial crisis we're living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.
These quasi-public corporations lead our housing system down a path where quick profit was placed before sound finance. They institutionalized a system that rewarded forcing mortgages on people who couldn't afford them, while turning around and selling those bad mortgages to the banks that are now going bankrupt. Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington's failure.
...

WASHINGTON-- Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.
Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of "best practices" and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.
And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.
John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.
"He never gave us a good reason, but he didn't want to do it," Mr. Gnaizda said last week. "He just wasn't interested."
Today, as the mortgage crisis of 2007 worsens and threatens to tip the economy into a recession, many are asking: where was Washington?
An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry's excesses. Both the Fed and the Bush administration placed a higher priority on promoting "financial innovation" and what President Bush has called the "ownership society."
...
On Tuesday, under a new chairman, the Federal Reserve will try to make up for lost ground by proposing new restrictions on subprime mortgages, invoking its authority under the 13-year-old Home Ownership Equity and Protection Act. Fed officials are expected to demand that lenders document a person’s income and ability to repay the loan, and they may well restrict practices that make it hard for borrowers to see hidden fees or refinance with cheaper mortgages.
It is an action that people like Mr. Gramlich and Ms. Bair advocated for years with little success. But it will have little impact on many existing subprime lenders, because most have either gone out of business or stopped making subprime loans months ago.
...
The Fed was hardly alone in not pressing to clean up the mortgage industry. When states like Georgia and North Carolina started to pass tougher laws against abusive lending practices, the Office of the Comptroller of the Currency successfully prohibited them from investigating local subsidiaries of nationally chartered banks.
Virtually every federal bank regulator was loathe to impose speed limits on a booming industry. But the regulators were also fragmented among an alphabet soup of agencies with splintered and confusing jurisdictions. Perhaps the biggest complication was that many mortgage lenders did not fall under any agency's authority at all.
...

And for some more concrete examples of how deregulatory zeal had an effect, consider this account from the WSJ (March 22, 2007):

Regulators appointed by President Bush often have been more sympathetic to industry concerns about red tape than their Clinton administration predecessors. When James Gilleran, a former California banker and bank supervisor, took over the OTS in December 2001, he became known for his deregulatory zeal. At one press event in 2003, several bank regulators held gardening shears to represent their commitment to cut red tape for the industry. Mr. Gilleran brought a chain saw.
He also early on announced plans to slash expenses to resolve the agency's deficit; 20% of its work force eventually left. When he left in 2005, Mr. Gilleran declared that the OTS had "exercised increased diligence in its review of abusive consumer practices" while reducing thrifts' regulatory burden. But his successor, Mr. Reich, a former community banker, has reversed many of Mr. Gilleran's cuts. Citing "understaffing," he hired 80 examiners last year and plans to add 40 more this year. A spokeswoman for Mr. Gilleran, now chief executive of the Federal Home Loan Bank of Seattle, said he wasn't available to comment.

U.S. Debt May Grow $1 Trillion on Rescue, Barclays' Pond Says
By Sandra Hernandez
Sept. 19 (Bloomberg) -- The U.S. may have to borrow an extra $700 billion to $1 trillion to fund the biggest rescue of the financial system since the Great Depression, according to Barclays Capital Inc.'s Michael Pond.
Federal takeovers of Fannie Mae, Freddie Mac, and American International Group Inc.; the central bank's expansion of lending to financial firms; and a slowing economy will add $455 billion to the Treasury's borrowing needs, the New York-based interest-rate strategist estimated. Pond said Treasury Secretary Henry Paulson's plan to rid banks of "hundreds of billions" of troubled assets would bring the amount to $700 billion assuming the plan costs $200 billion.
"We could easily add up to an additional trillion to the outstanding Treasury debt just from the initiatives announced over the past couple of weeks," said Pond, ranked the best Treasury Inflation-Protected Securities analyst in 2008 by Institutional Investor magazine.
The government's liabilities swelled in past weeks as policy makers sought to arrest a growing financial crisis by taking over financial institutions threatened by a shortage of capital.
The Treasury on Sept. 7 took over mortgage-finance companies Fannie Mae and Freddie Mac and said it would buy mortgage-backed debt in the open market. The Fed this week boosted its Treasury auctions to bond dealers by $25 billion, loaned $85 billion to the insurer AIG, and quadrupled the amount of dollars foreign central banks can auction to $247 billion. Paulson today said the government will buy illiquid assets from banks' balance sheets and insure money-market mutual fund holdings.
Deficit Widens
"The odds of the deficit becoming enormous are certainly there," said Nils Overdahl, a bond fund manager in Bethesda, Maryland, at New Century Advisors, which oversees $500 million. "I suspect you will see issuance at a variety of maturities."
The deficit will likely widen to $650 billion in fiscal 2009 because of the U.S. rescue of Fannie and Freddie, analysts at JPMorgan Chase & Co. wrote in a Sept. 12 report.
Over the next decade, the gap between spending and receipts will swell to $5.3 trillion, Goldman Sachs Group Inc. analysts wrote Sept. 10, revising a previous forecast of $3.6 trillion. The non-partisan Congressional Budget Office forecast a record $438 billion deficit for 2009 on Sept. 9.
"The deficit will soar to enormous proportions,'' said Lou Crandall, the chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. ``Even before this week's events, estimates based on visible factors were pointing to a deficit above $500 billion next year, with the prospect of billions of mortgage- backed securities on top of that."

RA’s Daily Russia News Blast – Sept 19, 2008

Robert Amsterdam — Fri, 19 Sep 2008 06:12:30 +0000

TODAY: Russia could block Nato from using its airspace; Robert Gates’ statement on Russia harshly interpreted, Condoleezza Rice tries a violent verbal attack although even US commentators are unimpressed; new military assertiveness; corruption; allies. Russia has threatened to block NATO from using its airspace for operations in Afghanistan, citing member states’ ‘hostile’ policies toward Moscow. US Defense Secretary Robert Gates most recent statement on Russia has not been taken kindly by this Russian newspaper, although the New York Times portrays his position as cautious about provoking hostilities. Condoleezza Rice’s strong rhetoric on Russia this week, which was critical on a range of issues, marks a ‘one-way ticket to insignificance’. Mikhail Gorbachev sees her stance as reckless. Russia is refusing to allow OSCE observers to patrol in South Ossetia.

Enemies or Vassals

Robert Amsterdam — Sat, 06 Sep 2008 21:39:28 +0000

For a long time I had been hoping against hope that somehow relations with Russia would finally earn a spot on the list of debate topics for U.S. politics (it is quite difficult to contend with Iraq and Afghanistan in the exceptionally narrow bandwidth American media reserves for foreign policy). But now that the question of how Washington should respond to the "resurgence of Russia," or whichever narrative we want to use here, is most certainly going to be the foreign policy topic du jour in the presidential debates, I am reminded that I should always be careful what I wish for. Case in point, this ruminative column by James Traub in the New York Times reminds us of all the Cold War hangovers, memories of passive vs. active anti-communism, and basically of how Russia continues to have the unique ability to be nearly incomprehensible in the context of left vs. right U.S. partisan politics. Traub writes about experiencing the déjà vu effect of his one-time position on U.S. policy toward the Soviet Union, both in periods of harmless decline and other moments of renewed aggression (Afghanistan). Having once been an anti-anti-communist myself in my previous life, I understand why so many liberal-leaning people in the West are having trouble reconciling and understanding the Russia problem in the context of the invasion of Georgia.

Wednesday News Roundup

Sean Brodrick — Wed, 03 Sep 2008 09:46:11 +0000

A growing global power crisis looks to be greater economic and political danger than oil

Lost in all the attention oil is receiving, reports from around the world indicate that 100 or more countries may be suffering, many acutely, from shortages of electricity. Given who is in trouble, both the economic and the political danger of this growing global power crisis are starting to look greater than oil’s. China and India, two of the biggest engines of economic growth, look to be in serious trouble. Pakistan and Afghanistan, hotbeds of terrorism, are routinely plunged into darkness. South Africa’s mining industry is vexed. Even some countries that can afford high oil prices don’t have sufficient electricity to run refineries.

While not facing shortages, many developed countries on whose consumers the world economy depends are increasingly facing what is called “fuel poverty,” a combination of rising electricity and home heating oil costs. The problem is already acute in Great Britain and is starting to take hold in the United States.

Crude oil plunge good for China economy

The "price fall of crude oil will help China to tame inflation, which is one of the country's biggest pressures currently," said Tang Min, the China Development Research Foundation deputy secretary general.

Because of booming economic development and severe natural disasters this year, the country's consumer price index (CPI), a main gauge of inflation, rose 7.9 percent in the first half over the same period last year.

China's oil imports increased sharply amid a booming economy and surging demand. Last year, the nation imported 163 million tonnes of crude, up 12.4 percent over the previous year. This accounted for nearly 50 percent of the oil consumed nationwide, according to China Customs figures.

Chinese Banks Cut Fannie, Freddie Debt

Amid jitters about the future of Fannie Mae and Freddie Mac, China's four biggest listed banks have pared back their holdings in debt related to the two U.S. mortgage giants. At the end of June, the four banks held a combined $23.28 billion of debt issued or guaranteed by Fannie and Freddie. That's a small fraction of the trillions of dollars outstanding, but the reductions attracted interest as a possible gauge of broader sentiment toward such securities.

European Investment, Consumer Spending Drop as Economy Shrinks
European consumer spending, company investment and exports declined in the second quarter, dragging the economy into a 0.2 percent contraction and pushing it to the brink of a recession.

Commodity hedge fund collapses

The hedge fund manager Ospraie Management has said that it will close its flagship fund after it plunged 27 percent in August on losses in energy, mining and natural resources equity holdings, in one of the biggest ever closures of a commodities-focused hedge fund.

Australian gold production's slump

Preliminary figures show that Australian gold production fell 7% to a 19 year low in the year to June.

India's August Gold Imports Rise 56% as Price Drop Lures Buyers

India, the world's biggest buyer of bullion, increased gold imports in August for the first time in 11 months as a decline in prices boosted jewelry demand.

Purchases were about 98-100 metric tons, compared with 64 tons in the year-ago month, according to provisional data from the Bombay Bullion Association Ltd., a grouping of 230 traders.

Election 2008: A McCain Victory Won’t Mean Same Old Republican Story

Martin Hutchinson — Wed, 03 Sep 2008 00:44:32 +0000

[“Election 2008" is an ongoing Money Morning series that examines the investor implications of the presidential election campaign] By Martin Hutchinson Contributing Editor One thing... Money Morning is here to help investors profit h...

ManTech International Corp. – Aggressive Growth – Zacks Rank Buy

Zacks Market Commentaries — Wed, 03 Sep 2008 00:00:00 +0000

ManTech International Corp. (MANT) reported a 45% year-over-year increase in net income last quarter and has also raised full-year guidance for 2008. In August the company won a contract from the United States Army that could reach a value of $820 million.

Company Description

ManTech International Corp. provides a variety of information technology and other services to United States government agencies that focus primarily on national security. The company is involved in every phase from design and production to implementation and maintenance. Mantech's headquarters are located in Fairfax, Virginia, it has 7,400 full-time employees, and carries a market cap of $2.1 billion.

Net Income Up 45%

On July 30th ManTech announced second-quarter results which included net income of $21.9 million, a 45% year-over-year increase. Earnings per share were 62 cents, topping the consensus estimate of 60 cents. This was the third earnings surprise in the last four quarters, with an average surprise of 5.14%.

Revenue was $465.0 million, up 33% from $348.7 in the second quarter of 2007. The boost in revenue was driven by the companies strategic focus on national defense and intelligence markets.

Raising Guidance

ManTech also announced new full-year earnings and revenue guidance. Full year 2008 earnings per share is now projected to be between $2.46 and $2.53, up from between $2.37 and $2.47. The company estimates full-year revenue for the current year to be between $1,845 and $1,880, up from between $1,735 and $1,800.

Awarded a $820 million contract

ManTech announced, on August 20th, that it had been awarded a two-year contract of up to $820 million. The contract from the United States Army will included mine detection and retrieval systems used to clear improvised explosive devices(IED) in Iraq and Afghanistan. The company will also provide mine protected vehicles as well as services and training related to the equipment delivered to the Army.

Completed Acquisition of Emerging Technologies Group

ManTech announced the completed acquisition of Emerging Technologies Group on September 2nd. The cyber security company is expected to generate approximately $20 million in revenue for 2009 through its service to the Intelligence Community and Department of Defense.

The Chart

Shares of MANT had been in a bullish trend before setting a new 52-week high of $62.06 earlier in August. The stock has since come off of the high but is once again pressuring $62.00 per share as it bounces off of the trend line. Take a look at the chart below.

"MAN2" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

I.O.U.N.Z. more than they I.O.U.S.A

Bernard Hickey — Sun, 31 Aug 2008 20:31:31 +0000

I’m told there’s a hot new documentary out that’s set to do for the boring world of national debt what Al Gore’s An Inconvenient Truth did for the boring world of greenhouse gas emissions. It’s called I.O.U.S.A. I haven’t seen it yet, but there’s certainly an amazing story to be told about how Americans have borrowed [...]

Candidates and the Credit Crisis

Jeffrey Miller — Fri, 29 Aug 2008 02:10:10 +0000

At "A Dash" we join many others in closely following David Merkel's work on The Aleph Blog, one of our featured sites since its inception. David covers a variety of interesting subjects. He is authoritative on some and inquisitive on others, and he knows the difference. Today he cites a Bloomberg article [...]

Biden on Georgia and Russia

Robert Amsterdam — Thu, 28 Aug 2008 14:37:44 +0000

Barack Obama's candidate for Vice President Sen. Joe Biden made the Russian invasion of Georgia a heavy focus of the foreign policy piece of his speech to the Democratic National Convention last night. It would have been hard to imagine just a few months ago that the word "Russia" would barely even make it into anyone's speech at the DNC. This is pulled from the full text:

As we gather here tonight, our country is less secure and more isolated than at any time in recent history. The Bush-McCain foreign policy has dug us into a very deep hole with very few friends to help us climb out. For the last seven years, this administration has failed to face the biggest forces shaping this century: the emergence of Russia, China and India as great powers; the spread of lethal weapons; the shortage of secure supplies of energy, food and water; the challenge of climate change; and the resurgence of fundamentalism in Afghanistan and Pakistan, the real central front against terrorism. In recent days, we’ve once again seen the consequences of this neglect with Russia’s challenge to the free and democratic country of Georgia. Barack Obama and I will end this neglect. We will hold Russia accountable for its actions, and we’ll help the people of Georgia rebuild. I’ve been on the ground in Georgia, Iraq, Pakistan and Afghanistan, and I can tell you in no uncertain terms: this Administration’s policy has been an abject failure. America cannot afford four more years of this.

I find that lots of politicians are talking about holding Russia accountable, but very few are able to articulate what that would mean.