Stock Market News & Stocks to Watch from StraightStocks » China

How to Earn Putin Points and Survive in Russian Business

Robert Amsterdam — Wed, 25 Nov 2009 22:28:21 +0000

I was taken aback the other day to open up the Moscow Times website and find an glowing opinion article written by Brian Zimbler, a Moscow based lawyer of the firm Dewey & LeBoeuf. The article, which heaped praise upon...

Long Term Evolution (LTE): How to Join the Race for the Next Dominant Broadband Technology

Investment U — Wed, 25 Nov 2009 18:35:47 +0000

Long Term Evolution (LTE): How to Join the Race for the Next Dominant Broadband Technology by Sheena Martin, Contributing Editor Wednesday, November 25, 2009 Over the past five years, an incredible new technology has gained momentum and is set to make its debut imminently. And as always, early investors are likely to enjoy the greatest [...]

Warning! Warning! This is not good news

Andrew Snyder — Wed, 25 Nov 2009 15:22:27 +0000

pBaltimore #8212; (a href="http://www.todaysfinancialnews.com" target="_blank"TFN/a): Did you feel it? Just a couple of hours ago, you went into debt for another $106. You never signed any paperwork or agreed to it – a handful of unelected officials took care of that for you – but you’re now on the hook for at least another Franklin./p pEarlier today, the Treasury auctioned off yet another chunk of American debt. This time it offered seven-year bonds to the tune of $32 billion. In all, the nation will go in hock for yet another $118 billion this week. /p pIt may sound like a lot, but it’s just another busy week of financing Washington for Geithner and his crew./p pWhile so many of us in the financial punditry business#8230;/p

How and Why China Will Flood the Gold Market

Contrarian Profits — Wed, 25 Nov 2009 14:58:29 +0000

The Chinese government is telling people gold and silver are good investments that will safeguard their wealth. After last year's meltdown in the stock market, people believe it. After all, Chinese citizens don't receive government retirement money... and they don't have company pension plans like people in many other countries do.

China Gengsheng Materials (CHGS.OB) Renews Major Contracts with Three Steel Producers

QualityStocks — Wed, 25 Nov 2009 14:21:11 +0000

One company that has been catching the attention of small-cap investors is China Gengsheng Materials. China Gengsheng is known for developing and marketing a broad range of industrial material product and has grown into a market leader by offering state-of-the-art customized solutions. Today, the young company made the announcement that they have renewed full service contracts [...]

Manulife Buys Stake, Raises Equity – Analyst Blog

Zacks Market Commentaries — Wed, 25 Nov 2009 14:15:00 +0000

Manulife Financial Corporation (MFC) has agreed to purchase a 49% stake in ABN AMRO TEDA Fund Management Co. for US$156 million in cash. The joint venture will be named Manulife TEDA Fund Management Co. Ltd. It will offer traditional retail and institutional asset management services in the Chinese market. Established in 2002, ABN AMRO TEDA Fund Management currently has assets of US$3.8 billion under management.

The 51% stake is owned by Northern International Trust, part of Tianjin TEDA Investment Holding Co., a company owned by Tianjin city in China. Manulife expects to complete the stake purchase in the first quarter of 2010. The company also expects this transaction to add to its earnings in the first year.

Manulife is also bolstering its capital position with a $2.5 billion common equity raise. The company recently announced that it has agreed to issue common shares to a syndicate of underwriters for an aggregate price of C$2.5 billion (US$2.37 billion) at C$19 each in a "bought deal" public offering in Canada. Manulife also intends to retire roughly $1 billion of outstanding debt under its credit facility with Canadian chartered banks using other cash resources of the company.

We believe that the stake purchase and equity offering are a strategic fit. The buying of the 49% stake will help the company to expand its business significantly in China. This equity raise would enable the company to significantly strengthen its capital position and to have access to the highest level of capital since it went public. Additionally, the company would have the flexibility to make meaningful acquisitions and explore growth opportunities.
Read the full analyst report on "MFC"
Zacks Investment Research

Fed Gives Clear Message – Analyst Blog

Dirk Van Dijk — Wed, 25 Nov 2009 13:44:59 +0000

The minutes of the Federal Reserve meeting of November 3rd and 4th were released yesterday. The clear message of the minutes is that short-term rates are going to stay very low for a long time to come. Below is the summary of the participants' view of the economy, and my translation/commentary/analysis of it interspersed.

"In the meeting participants’ discussion of the economic situation and outlook, they agreed that the incoming data and information received from business contacts suggested that economic activity was picking up as anticipated, with output continuing to expand in the fourth quarter."

I agree that we will see positive economic growth in the fourth quarter -- perhaps not very robust growth, but it will be comfortably on the right side of zero.

"A number of factors were expected to support near-term growth: Business inventories were being brought into better alignment with sales, and the pace of inventory runoff was slowing; activity in the housing sector appeared to be turning up, and house prices seemed to be leveling out or beginning to rise by some measures; consumer spending appeared to be rising even apart from the effects of fiscal incentives to purchase autos; the outlook for growth abroad had improved since earlier in the year, auguring well for U.S. exports; and U.S. and global financial market conditions, while roughly unchanged over the intermeeting period, were substantially better than earlier in the year."

Changes in inventories were a substantial drag on growth in the fourth quarter of last year through the second quarter, but that started to turn around in the third quarter. In fact, except for the drawdown in inventories, economic growth would have been a positive 0.7% in the second quarter, rather than the negative 0.7% we saw. In the third quarter, rebuilding of inventories added 0.87 points of the 2.80 total growth. In other words, if inventories had remained unchanged, growth would have been less than 2.0%.

As for consumer spending, the rebound has been muted outside of autos, although it is up rather than down. Over the long term I’m not sure that's such a good thing, but for the time being we need the consumer to wake up.

The U.S. is not going to be leading the world out of this downturn, China is. However, economic growth is not a zero-sum game, and if places like China are growing, that is good for the U.S. economy. Even though the dollar has not changed relative to the Yuan, the falling dollar will still help our exports, since we are often competing against the Europeans and the Japanese when we sell into places like China. A week dollar makes Boeing (BA) more competitive versus Airbus, and General Electric (GE) well positioned relative to Siemens (SI).

"Above-trend output growth in the third quarter was a welcome development. Moreover, the upturn in real GDP appeared to reflect stronger final demand and not just a slower pace of inventory decumulation.

"While these developments were positive, participants noted that it was not clear how much of the recent firming in final demand reflected the effects of temporary fiscal programs to support the auto and housing sectors, and some participants expressed concerns about the ability of the economy to generate a self-sustaining recovery without government support."

Well, we learned yesterday that the output growth in the third quarter was closer to trend than above trend, but the Fed did not have that data at the time of the meeting. I share the concern about the ability of the economy to generate a self-sustaining recovery. We still need the training wheels. Without the stimulus, the economy would probably still be headed south.

"Nonetheless, participants expected the recovery to continue in subsequent quarters, although at a pace that would be rather slow relative to historical experience, particularly the robust recoveries that followed previous steep downturns. Such a modest pace of expansion would imply only slow improvement in the labor market next year, with unemployment remaining high. Indeed, participants noted that business contacts continued to report plans to be cautious in hiring and capital spending even as demand for their products increased."

The Fed members are masters of understatement. Normally when you have a sharp and deep recession, you have a big snap back. It is not unusual to see at least one quarter where growth exceeds 6% coming out of a recession. I see very little chance of that happening this time around. If we can sustain growth rates like we saw in the second quarter of 2.8% for all of 2010, I would count that as a major victory.

Coming out of previous recessions, the consumer was a much smaller part of the economy, and had room to expand. I don’t see that as the case this time, with the consumer at a record 71% of the economy. The savings rate was also much higher coming out of previous recessions,and had room to fall -- not true this time around. Business investment actually continued to fall in the third quarter, even as the rest of the economy was growing, mostly due to a 15.1% plunge in spending on non-residential structures. That alone shaved 0.55 points from economic growth.

Spending on Equipment and Software did pick up a little bit (up 2.3% in 3Q, adding 0.15 points to growth), and the software side of that could be helped by the new Windows operating system from Microsoft (MSFT).

"Nonetheless, economic growth was expected to strengthen during the next two years as housing construction continued to rise and financial conditions improved further, leading to more-substantial increases in resource utilization in product and labor markets."

Yes, housing will probably see some rebound, since it is near a record low share of the economy (set in the second quarter). However, we have too many housing units in the country, so it does not make a lot of sense to be building more of them. We need to see more household formation.

That means we need more jobs -- jobs that will get recent college graduates out of their parents' basements and into houses or apartments of their own. Jobs that will allow people who are now living on their friends' couches to get their own places. That presents a bit of a chicken-and-the-egg problem, since historically housing is one of the key areas lifting us out of recessions.

"Most participants now viewed the risks to their growth forecasts as being roughly balanced rather than tilted to the downside, but uncertainty surrounding these forecasts was still viewed as quite elevated. Downside risks to growth included the continued weakness in the labor market and its implications for income growth and consumer confidence, as well as the potential for credit availability to remain relatively tight for consumers and some businesses."

I still see the risks as being tilted to the downside, mostly for the factors that the Fed cites here.

"In this regard, some participants noted the difficulty that smaller, bank-dependent firms were having in securing financing. The CRE sector was also considered a downside risk to the forecast and a possible source of increased pressure on banks.

"On the other hand, consumer spending on items other than autos had been stronger than expected, which might be signaling more underlying momentum in the recovery and some chance that the step-up in spending would be sustained going forward. In addition, growth abroad had exceeded expectations for some time, potentially providing more support to U.S. exports and domestic growth than anticipated."

I suspect that with banks pulling in credit card lines, that the strength in consumer spending outside of autos (and autos was artificially helped by Cash for Clunkers) will prove to be ephemeral. I would also note that after the Fed meeting we got a downward revision to September retail sales and the October retail sales were decidedly mediocre.

I fully agree that the growth abroad is a major positive force for the U.S. economy. The weaker dollar will also be beneficial in that regard. However, the economy that seems to be leading the world out of this slump, China, seems most interested in importing basic materials. While there are many U.S. based firms that produce those materials, such as Freeport McMoRan (FCX), their actual operations are located mostly abroad, so the effect on the U.S. economy will be muted.

If, on the other hand, Chinese demand for steel leads to an increase in demand for iron ore from Vale (VALE) in Brazil, that might end up stimulating Brazilian demand for U.S. goods. So then, Chinese growth would have an effect on U.S. growth, even if some of it is indirect.

There is much more in the minutes, if you want to read them in their entirety, you can read them here.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience, he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market-beating Zacks Strategic Investor service.
Read the full analyst report on "BA"
Read the full analyst report on "GE"
Read the full analyst report on "SI"
Read the full analyst report on "MSFT"
Read the full analyst report on "VALE"
Read the full analyst report on "FCX"
Zacks Investment Research

Zacks Analyst Blog Highlights: Bank of America, MGIC, Fannie Mae, Freddie Mac and Hewlett-Packard – Press Releases

Zacks Market Commentaries — Wed, 25 Nov 2009 12:53:57 +0000

For Immediate Release

Chicago, IL – November 25, 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: Bank of America (BAC), MGIC (MTG), Fannie Mae (FNM), Freddie Mac (FRE) and Hewlett-Packard (HPQ).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

Home Prices Continue to Rise

It is encouraging to see home prices rise. If this continues, some of the people in underwater houses (meaning with a mortgage more than the value of the house) might just see the flood recede and regain some positive equity in the house. This would greatly reduce the number of foreclosures in the future. It would make it an economically rational thing for people to pay their mortgages again. As it stands today in big areas of the country, it isn’t.

As a result, mortgage delinquencies have been skyrocketing, and eventually those delinquencies will lead to foreclosures. That could reignite a vicious circle, where the foreclosed houses flood the market, once again depressing prices, which causes more people to think there are better places to put their money than paying their mortgages.

Rising home prices have the potential to turn that into a virtuous cycle. To the extent that happens, it has very positive implications for the entire mortgage complex, from the big banks like Bank of America (BAC) to the mortgage insurance firms like MGIC (MTG) to the wards of the state, Fannie Mae (FNM) and Freddie Mac (FRE).

However, I fear that the increase in home prices is only temporary. That it is the product of extraordinary government efforts to prop up home prices, and that those efforts can not be sustained forever. These include the tax credit (recently expanded to include move up buyers), which is scheduled to end at the end of April, and the Fed’s program of buying up $1.25 Trillion in mortgage-backed paper to manipulate mortgage rates lower. They should finish up their purchases by the end of March.

HP Revenue Down, EPS In-Line

Hewlett-Packard (HPQ) reported fourth quarter EPS of $1.14, exceeding the Zacks Consensus Estimate by a penny.

Revenue for the quarter came in at $30.8 billion, a decrease of 8.0% from the $33.6 billion reported in the year-ago period and down 5.0% on constant currency basis.

Revenue fell across all businesses, including servers and data storage systems, software, PCs and printers. The Americas reported a 3.0% decline in revenue to $13.6 billion. Revenue declined 17.0% in Europe, the Middle East and Africa (EMEA) to $11.7 billion and 1.0% in the Asia Pacific to $5.4 billion. Revenue from China increased more than 20% from the year-ago quarter.

International markets accounted for 64% of total revenue in the fourth quarter, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 4.0% on a year-over-year basis and accounting for 10.0% of total HP revenue.

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DrStockPick.com Stock Report! 11/25/09, STM, CSRH, HLIT, SOLF, OBAS, CIMT

Dr. Stock Pick — Wed, 25 Nov 2009 11:35:43 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Wednesday Nov 25, 2009 DrStockPick.com Stock Report! ************************************************************** Consorteum Holdings Inc. (OTCBB: CSRH) launched its consumer stored value rebate card. The consumer rebate card program will offer manufacturers and retailers a new way to process mail-in rebates that ensures increased customer loyalty and decreased [...]

Jinpan International Limited – Value – Zacks Rank Buy

Tracey Ryniec — Wed, 25 Nov 2009 05:00:00 +0000

Jinpan International Limited (JST) is taking advantage of worldwide interest in wind energy as international sales rose 40% in the third quarter. The company is trading with a forward P/E of 11.67.

Company Description

Jinpan International manufactures cast resin transformers for voltage distribution equipment in China and other countries. The company's medium voltage transformers are used in large infrastructure projects such as factories and real estate developments and in municipal projects like airports and subway systems.

Jinpan is one of only two UL certified cast resin transformer manufacturers in the world.

Jinpan Beats in the Third Quarter

On Nov 17, Jinpan reported third quarter results that blew by the Zacks Consensus Estimate by 125.49%. Only 1 analyst covered the company in the third quarter. Earnings per share were $1.15 compared to the Zacks Consensus of 51 cents. This was an improvement of 81.6% compared with the year ago period.

Sales, however, fell 1.8% to $43.9 million from $44.7 million in the third quarter of 2008 primarily due to a reduction of material costs that was passed onto customers in the form of lower unit prices.

The company has been growing its international business. In the third quarter, sales outside of China jumped 40% to $8.1 million. International sales accounted for 18.5% of net sales up from 13% of net sales in the year ago period.

Sales of cast resin transformers that benefit wind power applications boosted international sales in the quarter. International customers also bought traditional products for use in urban settings such as trains, subways and hospitals, in factories and in commercial settings such as data centers.

Wind energy applications are hot. Wind energy products accounted for 18% of net sales in the quarter while cast resin transformers made up the rest.

2009 Outlook

In the fourth quarter, Jinpan expects order volume to continue to grow but there will be pricing pressure due to lower raw material prices.

It forecasts 2009 sales to be in the range of $154 million to $159 million or basically flat to 3% higher compared to 2008 sales of $154 million. Earnings per share for 2009 are expected to be between $3.40 and $3.54.

Zacks Consensus Estimates Climb

Given the company's guidance, the 1 covering analyst for 2009 raised the estimate to $3.41 from $2.81 per share in the last week. Earnings per share are expected to grow by 40.33% in 2009.

There are 2 analysts covering 2010. 1 of them raised 2010 full year estimates in the last week. The Zacks Consensus rose by 5.3% to $3.56 from $3.38 in that time period.

Value Fundamentals

Jinpan International is a Zacks #1 Rank (strong buy) stock. It has a price-to-book ratio of 2.5. The company has an excellent 1-year return on equity (ROE) of 24.75%. Shareholders are also rewarded with a dividend, which is currently yielding 0.60%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Zacks Investment Research

JPMorgan Fortifies China Mgmt – Analyst Blog

Zacks Market Commentaries — Tue, 24 Nov 2009 21:08:26 +0000

JPMorgan Chase & Company (JPM) said on Monday that it has appointed Zili Shao as chairman and chief executive of its China operation. It has also appointed Fang Fang as vice-chairman of its Asia Investment Banking operations.

The company has initiated management changes to strengthen its China operations as Chinese companies are now closely focusing on domestic as well as global expansion.

Mr. Shao, currently the head of the Asian practice at the law firm Linklaters, is experienced in some of the biggest financial deals involving China, including the acquisition of Guangdong Development Bank and Industrial and Commercial Bank of China’s purchase of a $5.5 billion stake in Standard Bank of South Africa. Mr. Shao will assume his new responsibilities at JPMorgan’s China business in late January.

Mr. Fang would be responsible for JPMorgan's investment banking strategy and business development efforts involving China and all markets across Asia including Japan, Australia and India.

With their expertise, both Shao and Fang will help JPMorgan develop additional financial products and services for corporate and investor clients in China.

Business diversification has helped JPMorgan to achieve earnings stability during the ongoing downturn of the economy. This diversity may prove to be as much a positive during the recovery as it was during the downturn. Within traditional banking, a diversified product portfolio will sustain better than many other banks, which have exited some of these areas and become excessively dependent on a few products. Also, JPMorgan will be able to leverage its strong deposit base when interest rates finally rise.

However, while we anticipate continued synergies from the company’s diversification and strong capital position, we believe increasing provisions and worsening credit quality will be a drag on future earnings.

Read the full analyst report on "JPM"
Zacks Investment Research

Small Cap Voice Featured Company: Hitor Group, Inc. (HITR.OB)

QualityStocks — Tue, 24 Nov 2009 16:02:53 +0000

Hitor Group, Inc. is a publicly traded company focused on overseeing the operations of several business units. The Hitor Petroleum business unit focuses on the oil industry, specializing in meeting the various needs of exploration, drilling, extraction, transport, storage and distribution. Hitor Petroleum supplies equipment, fixtures, machinery, parts, and services primarily to organizations, governments, and [...]

Company News for November 24, 2009 – Corporate Summary

Zacks Market Commentaries — Tue, 24 Nov 2009 14:36:26 +0000

• Hewlett Packard (NYSE:HPQ) reported strong results after Monday's close, helped by robust sales in China and improved margins on its service operations. The firm also increased share repurchases to $12 billion and projected fiscal 2010 earnings of $4.25 to $4.35 a share on revenues of $118 billion to $119 billion, inline with its earnings' preannouncement two weeks earlier

• Analog Devices (NYSE:ADI) reported better-than-expected fiscal fourth quarter earnings of 36 cents a share, 10 cents above Zacks estimates, on revenues of $572 million, which beat projections of $523 million, but fell short of last year's $660.7 million. The firm expects fiscal first quarter results of 36 cents to 37 cents a share

• Heinz (NYSE:HNZ) reported fiscal second quarter earnings of 76 cents a share, beating estimates of 69 cents, on revenues of $2.67 billion, above estimates of $2.63 billion. Full-year guidance was raised to $2.72-$2.82 from earlier expectations of $2.60 to $2.70 a share

• Medtronic (NYSE:MDT) reported better-than-expected third quarter results of 77 cents ex-items, 3 cents above estimates, on revenues of $3.84 billion, which topped estimates of $3.75 billion. The company expects fiscal 2010 adjusted earnings of $3.17-$3.22, above Street projections of $3.15

• Reports said Citigroup (NYSE:C) is selling its Diners Club credit card enterprise to Bank of Montreal for about $1 billion

• UBS (NYSE:UBS) downgraded Union Pacific (NYSE:UNP) to "neutral" but maintained a $67 price target

• National Semiconductor (NYSE:NSM) was added to Citigroup's (NYSE:C) Top Picks Live List, with a $20 price target

• JP Morgan (NYSE:JPM) reiterated its "overweight" rating on General Electric (NYSE:GE) on improvements in fundamentals

Zacks Investment Research

H-P Revenue Down, EPS In-Line – Analyst Blog

Zacks Market Commentaries — Tue, 24 Nov 2009 13:39:13 +0000

Hewlett-Packard (HPQ) reported fourth quarter EPS of $1.14, exceeding the Zacks Consensus Estimate by a penny.

Revenue

Revenue for the quarter came in at $30.8 billion, a decrease of 8.0% from the $33.6 billion reported in the year-ago period and down 5.0% on constant currency basis.

Revenue fell across all businesses, including servers and data storage systems, software, PCs and printers. The Americas reported a 3.0% decline in revenue to $13.6 billion. Revenue declined 17.0% in Europe, the Middle East and Africa (EMEA) to $11.7 billion and 1.0% in the Asia Pacific to $5.4 billion. Revenue from China increased more than 20% from the year-ago quarter.

International markets accounted for 64% of total revenue in the fourth quarter, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 4.0% on a year-over-year basis and accounting for 10.0% of total HP revenue.

Results and Analysis by Segment

The Technology Solutions Group (TSG) was $14.1 billion down 2.6% year over year. Within TSG, Enterprise Storage and Servers (ESS) revenue declined 17.0% year over year, driven by declines across all three business units -- Industry Standard Servers, Business Critical Systems and Storage. Services revenue increased 8.0% year over year, mainly due to the addition of EDS’ revenue. EDS’ integration was ahead of the company’s plans. HP Software revenue fell 16.0% year over year with declines in both the Business Technology Optimization (BTO) portfolio and other software.
Personal Systems Group (PSG) revenue was $9.8 billion, which fell 12.0% year over year despite an 8% year-over-year increase in unit shipments. The company maintained its leading market position in PCs in every region. However, notebook revenue declined 8.0%, while Desktop revenue declined 16.0%. Commercial client revenue was down 15% and Consumer client revenue down 8.0%.
Imaging and Printing Group (IPG) continued to struggle as revenue was $6.4 billion, down 15.0% year over year. Ink supplies, commercial hardware and consumer hardware also reported substantial declines. We believe this segment has come under pressure due to strong competition from cheaper brands. Printer unit shipments decreased 20.0% from which period, with consumer and commercial printer hardware units down 14.0% and 138.0%, respectively. Consumer and commercial hardware revenue declined 17.0% and 32.0%, respectively.
HP Financial Services (HPFS) revenue was $0.7 billion, up 5.0% year over year. Financing volumes increased 6.0%, while in net portfolio assets increased 21.0%.

Operating Results

Gross margins for the quarter were 23.7%, up 60 basis points year over year. This increase in gross margin can be attributed to efficiency gains in services and increased supplies mix in IPG. The company continues to reduce cost; lowering operating expenses by 16.0% from the year-ago quarter. The lower costs are driven by structural changes that drive sustainable improvements. GAAP operating margin for the quarter was 10.2%, up from 8.2% reported in the year-ago quarter.

GAAP diluted net earnings per share (EPS) in the fourth quarter were $0.99, compared with $0.84 in the prior-year period. Non-GAAP financial information excludes after-tax costs related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges of approximately $0.15 per share and $0.19 per share in the fourth fiscal quarter of 2009 and 2008, respectively. Non-GAAP EPS were $1.14, compared with $1.03 in the prior-year period.

HP generated $3.4 billion in cash flow from operations versus $3.9 billion in the previous quarter. Free cash flow was $2.6 billion. The company exited the quarter with long-term debt balance of $13.9 billion, after repaying $1.5 billion of debt.

HP also returned $2.3 billion to shareholders in the form of share repurchases and dividends. The company ended the quarter with $13.3 billion in cash and short-term investments versus $13.7 billion in the previous quarter.

Guidance

For the first quarter of fiscal 2010, HP estimates revenue of approximately $29.6 billion to $29.9 billion, GAAP diluted EPS of $0.90 to $0.92 and non-GAAP diluted EPS of $1.03 to $1.05. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.13 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

For the full-year 2009, the company expects revenue of approximately $118.0 billion to $119.0 billion, up from its previous estimate of $117.0 billion to $118.0 billion. The GAAP diluted EPS is expected to be in the range of $3.65 to $3.75, up from its previous estimate of $3.60 to $3.70, and non-GAAP diluted EPS is expected to be in the range of $4.25 to $4.35, up from its previous estimate of $4.20 to $4.30.

Non-GAAP diluted EPS estimates for fiscal year 2010 exclude after-tax costs of approximately $0.60 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. These estimates exclude the potential impact of the acquisition of 3Com Corporation that the company announced in November 2009.
Read the full analyst report on "HPQ"
Zacks Investment Research

Green IPO Watch at Renewableenergystocks.com: New Solar IPO – China Based Trony Solar Holdings

Dawn Van Zant — Tue, 24 Nov 2009 13:00:00 +0000

POINT ROBERTS, WA - November 24 2009 - www.RenewableEnergyStocks.com, a leading investor news and research portal for the renewable energy sector within www.Investorideas.com, reports on the announced IPO for China based thin film solar company, Trony Solar Holdings. The solar stock plans to list on the NYSE under the symbol TRO.

Zacks Analyst Blog Highlights: Skyworks Solutions, Ericsson, Alcatel-Lucent, Nokia and Siemens – Press Releases

Zacks Market Commentaries — Tue, 24 Nov 2009 12:27:38 +0000

For Immediate Release

Chicago, IL – November 24, 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: Skyworks Solutions (SWKS), Ericsson (ERIC), Alcatel-Lucent (ALU), Nokia (NOK) and Siemens (SI).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s Analyst Blog:

Skyworks Beats Estimates

Operating margin came in at 14.4% compared to 12.0% in the previous quarter. Earnings per share came in at 24 cents, easily beating the Zacks Consensus Estimate of 18 cents.

During the quarter, the company retired $17.4 million in 2010 convertible bonds, which led to a dilution of the equity base by two million.

Going forward, although the management remains cautious about the broader economy, it expects revenues to grow by 15% - 20% year over year driven by mobile Internet, energy management and diversified analog applications. Management indicated improved order visibility and strength in backlog at the end of the quarter. This implies a revenue guidance of $238 million - $242 million. Operating margin is forecasted around 20%. Earnings per share are expected around 25 cents.

The company launched network infrastructure digital attenuators, voltage controller oscillators, synthesizers and mixers at Huawei, ZTE, Ericsson (ERIC), Alcatel-Lucent (ALU) and Nokia-Siemens (NOK)/(SI).

Skyworks is well positioned to benefit from recent trends in the handset market, which are favorable to increasing dollar content for RF components. In general, the increasing complexity of higher-end phones that offer multi-band communication across various air standards are expanding the market for Skyworks’ products due to the need for backward compatibility from 3G to 2G networks. There is a significant growth opportunity in the handsets market, propelled by the launch of 3G in China.

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Zacks Analyst Blog Highlights: Las Vegas Sands, Citigroup, Goldman Sachs, Barclays PLC and UBS AG – Press Releases

Zacks Market Commentaries — Tue, 24 Nov 2009 12:16:19 +0000

For Immediate Release

Chicago, IL – November 24, 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: Las Vegas Sands (LVS), Citigroup (C), Goldman Sachs (GS), Barclays PLC (BCS) and UBS AG (UBS).

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Here are highlights from Monday’s Analyst Blog:

Sands China Raises $2.5B in IPO

The proceeds from this offering, combined with $1.75 billion in bank financing, would aid Sands China to restart its Macau's Cotai Strip construction projects. Last year, the company was forced to halt its casino expansion projects in Macau due to financial constraints, at which time it laid off 11,000 workers.

The IPO is being handled by five investment banks. Citigroup (C) and Goldman Sachs (GS) are the joint global coordinators for the offer while Barclays PLC (BCS), BNP Paribas SA and UBS AG (UBS) are the underwriters.

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Zacks Investment Research

Money Supply on Fire, Spreads to Gold

Frank Holmes — Tue, 24 Nov 2009 06:00:00 +0000

While in San Francisco to speak at the Hard Assets Investment Conference, I sat down with Dow Jones MarketWatch reporter Laura Mandaro to discuss the topic on a lot of investorsrsquo; minds these days mdash; gold. I highlighted some factors for Laura, including the effect rising money supply can have on gold prices. Money supply is on fire in the E-7 and G-7 mdash; theyrsquo;re just printing awayhellip;Unless money supply shrinks dramatically in the G-20 countries and interest rates rise dramatically in the G-20 countries, I think gold is going to go through its 1980 inflation-adjusted price levels. E-7 is a classification wersquo;ve created for the emerging worldrsquo;s most-populous countries ndash; the well-known BRIC countries (Brazil, Russia, India and China), plus Indonesia, Pakistan and Mexico. We believe that demographics are a key growth driver for developing countries, and that by monitoring the E-7, we gain valuable insights and can be early in spotting important new trends. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-821

Sands China Raises $2.5B in IPO – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 21:57:51 +0000

Las Vegas Sands (LVS) Macau unit, Sand China raised $2.5 billion through its Hong Kong initial public offering (IPO). The company has priced the IPO for 1.87 billion shares at HK$10.38 per share, the low end of the expected HK$10.38-HK$13.88 range.

The proceeds from this offering, combined with $1.75 billion in bank financing, would aid Sands China to restart its Macau's Cotai Strip construction projects. Last year, the company was forced to halt its casino expansion projects in Macau due to financial constraints, at which time it laid off 11,000 workers.

The IPO is being handled by five investment banks. Citigroup (C) and Goldman Sachs (GS) are the joint global coordinators for the offer while Barclays PLC (BCS), BNP Paribas SA and UBS AG (UBS) are the underwriters.

Earlier, in October, rival company Wynn Resorts (WYNN) had held its IPO for its Macau assets. Wynn Macau has experienced a strong debut in the Hong Kong stock exchange. Wynn sold 1.25 billion shares or a 25% stake in its Macau business. However, the shares of Wynn Macau are now trading at a discount to the offering price.

Macau is the only Chinese city where gambling is legal. It has become an attractive destination for casino companies such as Las Vegas Sands, Wynn Resorts and MGM Mirage (MGM), which are investing billions for expansion on this island. Macau has survived the economic downturn relatively well.

Macau has generated HK$105.6 billion ($13.5 billion) of gross gaming revenue in 2008, more than double the revenue generated by the Las Vegas strip. Also, visa restrictions had recently been slackened by Beijing to allow mainland tourists to visit Macau once a month rather than twice a year.

The capital bolstering initiatives augur well for Las Vegas Sands, which has a robust development pipeline, with projects in Macau, Las Vegas, Singapore and Pennsylvania.
Read the full analyst report on "LVS"
Read the full analyst report on "MGM"
Read the full analyst report on "WYNN"
Read the full analyst report on "C"
Read the full analyst report on "GS"
Read the full analyst report on "BCS"
Read the full analyst report on "UBS"
Zacks Investment Research

Skyworks Beats Estimates – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 21:35:50 +0000

Skyworks Solutions (SWKS) earlier reported revenues of $228.1 million in the fourth quarter of fiscal 2009, up 19% sequentially and surpassed management’s guidance range of $220 million - $225 million.

Operating margin came in at 14.4% compared to 12.0% in the previous quarter. Earnings per share came in at 24 cents, easily beating the Zacks Consensus Estimate of 18 cents.

During the quarter, the company retired $17.4 million in 2010 convertible bonds, which led to a dilution of the equity base by two million.

Going forward, although the management remains cautious about the broader economy, it expects revenues to grow by 15% - 20% year over year driven by mobile Internet, energy management and diversified analog applications. Management indicated improved order visibility and strength in backlog at the end of the quarter. This implies a revenue guidance of $238 million - $242 million. Operating margin is forecasted around 20%. Earnings per share are expected around 25 cents.

The company launched network infrastructure digital attenuators, voltage controller oscillators, synthesizers and mixers at Huawei, ZTE, Ericsson (ERIC), Alcatel-Lucent (ALU) and Nokia-Siemens (NOK)/(SI).

Skyworks is well positioned to benefit from recent trends in the handset market, which are favorable to increasing dollar content for RF components. In general, the increasing complexity of higher-end phones that offer multi-band communication across various air standards are expanding the market for Skyworks’ products due to the need for backward compatibility from 3G to 2G networks. There is a significant growth opportunity in the handsets market, propelled by the launch of 3G in China.

Another favorable trend is the continued shift towards multi-mode modules, which save board space in a handset, generating higher margins. The company has tie-ups with major OEMs that underscore the company’s success in gaining market share. The company is also making good progress in the linear business with WLAN wins at Intel (INTC) and Broadcom (BRCM).

Headquartered in Woburn, Massachusetts, Skyworks Solutions designs, manufactures, and markets a broad range of high performance analog and mixed signal semiconductors that enable wireless connectivity.
Read the full analyst report on "SWKS"
Read the full analyst report on "ERIC"
Read the full analyst report on "ALU"
Read the full analyst report on "NOK"
Read the full analyst report on "SI"
Read the full analyst report on "INTC"
Read the full analyst report on "BRCM"
Zacks Investment Research

China Mobile to Market Dell Phone – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 21:00:08 +0000

China Mobile (CHL) will be the first mobile operator to sell the much-talked-about Dell (DELL) smartphone. The Mini 3i, as its is called, is a slim, touch screen smartphone to be supported by China Mobile's new OPhone and Mobile Market platforms.

The 3.5-inch widescreen is intended to create a big-screen experience, adding to the clarity of images and videos. The Mini 3i is compatible with lot of applications like e-mail platforms and office productivity software. This new smartphone was produced through a year-long collaboration with China Mobile and also Dell is making substantial investment in smartphones.

Dell’s entry into the smartphone segment looks like a logical progression, as the company is already manufacturing and rolling out reasonably priced netbooks in the market. However, Dell is a late entrant into the market, unlike its peer Apple Inc. (AAPL), which has already grabbed a large share of smartphones such as iPhone 3G and iPhone 3GS.

As per the technology research firm Canalys, third quarter 2009 worldwide smartphone shipments grew 4% year on year, to 41.4 million units. Nokia (NOK) maintained its worldwide smartphone leadership position with a 40% share of the market, up from its year-ago position, but down 5% from the previous quarter. Research In Motion (RIMM) was in second place, with a market share of 21%, almost flat sequentially.

Apple’s market share was 18% in the third quarter, up from the 14% share in the second quarter, with significant improvement in the iPhone 3GS supply across many countries. HTC retained the fourth position with a 5% share.

Dell’s third quarter results were not very encouraging, with revenue, gross margin and EPS declining on a year-over-year basis. Dell suffered from the PC market slowdown. Although there are signs of recovery in this market, the smartphone market is expected to witness much stronger growth rates. Therefore, Dell’s decision to enter this market at this point is a big positive. Although initial revenue may not be substantial, the company would benefit from the growth trends, if its smartphone is well accepted.

We believe that there is no reason why Dell phone should not gain popularity, considering Dell’s history of innovation -- although the success rate could vary as competition is intense. We believe that even if Dell is able to capture a small share of the smartphone market, the additional growth opportunity would be substantial.

China Mobile was a natural choice for Dell to launch its smartphone in the country. China Mobile has a registered capital of RMB 51.8 billion and assets of over RMB 700 billion. The company is aggressively developing the mobile communications industry in China and the company Listed among the Top Fortune 500 companies.
Read the full analyst report on "CHL"
Read the full analyst report on "DELL"
Read the full analyst report on "AAPL"
Read the full analyst report on "NOK"
Read the full analyst report on "RIMM"
Zacks Investment Research

XL Expands in China – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 19:04:44 +0000

XL Capital Ltd. (XL) last week announced its plans to expand its international operations in China. XL has received approval from the China Insurance Regulatory Commission (CIRC) to start preparatory work to set up a Property and Casualty (P&C) company in China.

The China Insurance Regulatory Commission is an agency of China authorized by the State Council to regulate the country’s insurance products and services market and maintain legal and stable operations in the insurance industry.

XL has got permission from CIRC to prepare for China operations till the second half of 2010. After the initial preparations are done, if the company receives license, it will establish an insurance subsidiary that will serve both local and international corporations in China, as well as its existing clients with operations in China.

Year till date, gross premium generated from the P&C operations was $4.9 billion, down from $6.4 billion last year, with a combined ratio of 92.8% compared to 96.9% in the same period last year.

A substantial portion of the company’s P&C insurance business and a majority of its life reinsurance business are carried on internationally, thereby leaving it vulnerable to foreign exchange fluctuations. During the third quarter of 2009, the company suffered a loss of $16.8 million in this regard, negatively affecting results.

XL has had a representative office in Beijing since 2006, dedicated to deepening the company’s understanding of the China market.

During the third quarter, the company reported earnings of 89 cents, up from 39 cents last year. Net written premiums fell 4.4% year-over-year to $1.3 billion. Premium volumes have been negatively impacted by the global economic conditions, reduction in mergers and acquisitions, exit from certain (unprofitable) lines of business and the ongoing efforts of risk managers to reduce their concentration of risk (limits) with all insurers.

XL Capital has also been working towards developing a reliable infrastructure that will improve operational efficiency, standardize processes and optimize costs. Though we expect net premium written by the company to remain under pressure, the above measures will help it to maintain its profitability. Therefore we maintain a Neutral rating on the shares for now.
Read the full analyst report on "XL"
Zacks Investment Research

Longwei Petroleum Investment Holdings Ltd. (LPHI) Reports Strong Third Quarter

QualityStocks — Mon, 23 Nov 2009 18:51:54 +0000

Longwei Petroleum Investment Holdings Ltd. reported income of $7.21 million, or $0.09 per share, for the third quarter of 2009. The company earned $5.5 million, or $0.07 per share, in the same quarter of last year Revenues also increased year over year to $59.3 million from $44.48 million. Longwei Petroleum Investment Holdings Ltd. had $9.4 [...]

What Obama was really doing in China

Andrew Snyder — Mon, 23 Nov 2009 16:01:50 +0000

pBaltimore #8212; (a href="http://www.todaysfinancialnews.com" target="_blank"TFN/a): It looks like we found out what President Obama was actually doing in China last week. When he wasn’t bowing to foreign leaders or taking tours of historic China, our leader was giving the Chinese some financial advice./p pIsn’t that a scary thought?/p pJust a couple of days after Obama touched down in Washington, China makes a very American decree. It’s telling its banks it had better shore up their capital situations or face strong sanctions from the government./p pThey say imitation is the sincerest form of flattery. America did it first, now the communists are following./p pIn case you missed the news over the past year or so, China’s economy is flat-out soaring ahead. While no figure that disseminates from#8230;/p

CHA Boosts Handset Portfolio – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 15:20:00 +0000

China Telecom (CHA), the largest Chinese fixed-line operator, has revealed plans to augment its wireless handset portfolio. The company is currently in talks with overseas handset vendors and targets to offer Research in Motion's (RIMM) popular BlackBerry handset and Palm’s (PALM) smartphones in China in late 2009 or early 2010. This move represents a part of China Telecom’s efforts to boost its share in the domestic wireless space.

China Telecom is the market leader in fixed-line phone services in one of the world’s fastest growing telecom markets. Being one of the incumbent telecom operators in China, the company is well positioned to benefit from the country’s rapid economic growth coupled with aggressive wireless expansion.

With roughly 700 million subscribers, China is the largest wireless market in the world. China Telecom added mobile operation to its service offering in October 2008 through its acquisition of China Unicom’s (CHU) CDMA wireless business for approximately RMB43.8 billion (US$6.4 billion). However, China Telecom’s wireless CDMA operation accounts for only 7.5% of mobile phone users in China, well behind in terms of market penetration in this segment. The company is currently the smallest of the big three wireless carriers in China.

To boost wireless market share, China Telecom’s rivals China Mobile (CHL) and China Unicom are increasingly focused on broadening their mobile handset offerings. Leveraging its new 3G services, China Unicom recently launched Apple’s (AAPL) iPhone in mainland China.

While China Mobile is still considering selling the iPhone, it is currently rolling out android-based handsets (“Ophones") and will launch Dell’s (DELL) first smartphone in the near future. In contrast, China Telecom is yet to clinch any high-end handset contract from a major overseas vendor. Under this scenario, an opportunity to market two of the world’s most sought after cellular handset brands may lift China Telecom’s fortune in wireless.

China Telecom hopes to increase its total mobile subscriber base to over 100 million by 2011, representing over 15% of the total Chinese wireless market. Additionally, the company plans to sign up 35 million new 3G users in 2009 and address 97% of the urban population by the end of the year. China Telecom’s expanding handset range supported by the upcoming premium smartphone offerings will help it to reach this goal.
Read the full analyst report on "CHA"
Read the full analyst report on "CHL"
Read the full analyst report on "CHU"
Read the full analyst report on "RIMM"
Read the full analyst report on "AAPL"
Read the full analyst report on "PALM"
Read the full analyst report on "DELL"
Zacks Investment Research

Solar Energy Initiatives, Inc. (SNRY.OB): Grass Roots Solar

QualityStocks — Mon, 23 Nov 2009 15:13:27 +0000

These days, solar is one of the most popular words in the green lexicon. You hear it everywhere, with most of the talk focusing on the increasingly large solar power plants that are now being built. New designs have dropped the price of large scale solar electricity generation by over 80% in the last 25 [...]

The Best Energy Investments in the World

Contrarian Profits — Mon, 23 Nov 2009 15:00:37 +0000

Brian Hunt, editor in chief of Stansberry’s free online investment digest, a href="http://www.thedailycrux.com/"The Daily Crux/a, interviewed Marin [Katusa, Casey Research]to get his take on where oil prices are headed for the long-term... the regions where investors and traders should focus their dollars... and some of his favorite energy companies with massive upside.

Company News for November 23, 2009 – Corporate Summary

Zacks Market Commentaries — Mon, 23 Nov 2009 14:11:02 +0000

• A large run of holiday sales offerings crashed the Ebay (NASDAQ:EBAY) website, causing a major weekend web outage

• Tyson Foods (NYSE:TSN) reported better-than-expected earnings of 28 cents a share, beating Zacks estimates by 2 cents, on revenues of $7.2 billion, which exceeded Zacks estimates of $6.85 billion

• India’s Reliance Industries bid $12 billion in cash for Lyondell Bassell when it exits bankruptcy

• Microsoft (NASDAQ:MSFT) is reportedly in discussions with News Corp. (NASDAQ:NWSA) to "de-index" the firm's news websites from Google (NASDAQ:GOOG)

• Coca-Cola (NYSE:KO) announced plans to more than double the number of its bottling plants in China over the next ten years as part of its goal to triple sales to the country

• Hershey (NYSE:HSY) trust encouraged the firm to counter Kraft's (NYSE:KFT) hostile, $16.2 billion bid with its own, $17 billion offer

• According to S&P most US banks are failing to meet adequacy standards comfortably enough to avoid ratings downgrades. Both HSBC (NYSE:HBC) and Goldman Sachs (NYSE:GS) showed stronger-than-average balance sheets, with UBS (NYSE:UBS) and Citigroup (NYSE:C) well below average

Zacks Investment Research

Solar Stocks News – LDK Solar Reports Financial Results for Third Quarter 2009

Dawn Van Zant — Mon, 23 Nov 2009 13:00:00 +0000

XINYU CITY, China and SUNNYVALE, Calif. - November 23, 2009 - LDK Solar Co., Ltd. ( NYSE: LDK), a leading manufacturer of multicrystalline solar wafers, today reported its unaudited financial results for the third quarter ended September 30, 2009.

Zacks Analyst Blog Highlights: Dell Inc., Berkshire Hathaway, Burlington Northern Santa Fe Corporation, JPMorgan Chase and Wells Fargo – Press Releases

Zacks Market Commentaries — Mon, 23 Nov 2009 12:49:16 +0000

For Immediate Release

Chicago, IL – November 23, 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: Dell Inc. (DELL), Berkshire Hathaway (BRK.A), Burlington Northern Santa Fe Corporation (BNI), JPMorgan Chase (JPM) and Wells Fargo (WFC).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

Dell Falls Short of Expectations

Dell Inc. (DELL) reported third quarter 2010 EPS of 23 cents, below the Zacks Consensus Estimate of 27 cents.

Revenue for the quarter was $10.75 billion, down 17.0% from $12.97 billion reported in the year-ago quarter and up 1.0% from $10.62 billion reported in the previous quarter. The company’s third quarter reported revenue was adversely affected by the timing of the Windows 7 launch and due to backlog buildup in the company’s SMB and consumer businesses.

Large Enterprise posted revenue of $3.4 billion, an increase of 4.0% sequentially and decline of 23.0% year-over-year. In the last quarter, the company expended its networking partnership with Brocade and Juniper, and introduced products like PowerEdge 11g servers and expanded PowerVault storage systems.

Public revenue for the quarter was $3.7 billion, down 3.0% on sequentially and 7.0% from the year-ago quarter. Shipments were down 12.0% on a sequential basis, due to seasonality in the U.S. public sector business.

Small and Medium Business revenue for the quarter was $3.0 billion, up 5.0% sequentially and down 19.0% from the year-ago quarter. Shipments increased 9% sequentially. The segment benefited from steadily improving demand in both the Americas and the Asia-Pacific region, as well as better performance in EMEA during the second half.

Revenues for Consumer Business were down 10.0% year-over-year, but flat sequentially to $2.8 billion with shipments growing 4% sequentially.

Dell’s total sales in China, India, Brazil and Russia increased 18.0% sequentially and 5.0% over last year. China, the second-largest revenue generating country for Dell, reported revenue increase of 20.0% sequentially and 8.0% from the year-ago quarter.

Buffett Borrows for Rail Acquisition

Warren Buffett, the CEO and Chairman of Berkshire Hathaway (BRK.A) announced on Thursday to borrow $8 billion of loan for the acquisition of Burlington Northern Santa Fe Corporation (BNI). Berkshire Hathaway, which already owns a 22% stake in Burlington Northern, announced earlier this month it would acquire the rest for a total value of $34 billion. Buffet agreed to pay $100 a share in cash and stock to buy the rest of the company.

The $8 billion loan that will be provided by JPMorgan Chase (JPM) and Wells Fargo (WFC) is intended to be paid back in three years’ time.

For Berkshire, the acquisition of Burlington Northern, or BNSF, the second largest railroad, will be its biggest to date. With it, Berkshire is adding a railroad transportation business with its already diverse range of businesses including retail, manufacturing and insurance, as well as several regional electric and gas utilities.

The acquisition is expected to close in early 2010 and is subject to Burlington Northern’s shareholder approval. Post acquisition, Burlington Northern will operate from its headquarters as a wholly owned subsidiary of Berkshire Hathaway.

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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.

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=5517

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Zacks Investment Research

Prieur’s readings (November 23, 2009)

Prieur du Plessis — Mon, 23 Nov 2009 08:38:15 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also add the links to any other worthwhile articles you would like to share to the comments section.

On the Ground in Brazil

Frank Holmes — Mon, 23 Nov 2009 06:00:00 +0000

If seeing is believing, natural resources and infrastructure opportunities abound in Brazil. The above photo was snapped by our global strategist Jack Dzierwa at Satilde;o Paulorsquo;s Guarulhos International Airport as he spent hours trying to board a domestic flight to Rio de Janeiro. Not surprisingly, he didnrsquo;t make the flight. Jack has traveled extensively around the world, and he says hersquo;s never seen anything like the hectic scene at Guarulhos, which just canrsquo;t service the rapidly growing number of Brazilians who can now afford to travel by air. Scenes like this are important for investment managers to experience in order to grasp the significance of whatrsquo;s taking place in emerging countries like Brazil. You just canrsquo;t get the full flavor of the chaos at Guarulhos from an economic data spreadsheet or a research report. Jack traveled to Brazil to collect some insight on the countryrsquo;s infrastructure development and the best prospects for investment. His experience at the airport gives him tacit knowledge and a clear understanding that Brazil will have to expand on its domestic infrastructure. Brian Hicks, who co-manages our Global Resources Fund (PSPFX), has also spent the week in Brazil ndash; he has been doing research and meeting with natural resources companies. Brazil is a key driver for natural resources and infrastructure markets. It is home to 190 million people, many of them moving into the middle class, and itrsquo;s also one of the worldrsquo;s fastest-growing economies. Similar to China, this rise of the middle class will increase demand for oil and other commodities, and its expansion will put growing pressure on the countryrsquo;s inadequate infrastructure. Just a couple of weeks ago, a blackout left nearly 60 million people without electricity and another 7 million without water. Traffic in downtown Satilde;o Paulo is so bad that many businessmen use helicopters as taxis to get around the city. Brazil only has three main international airports, despite that it has 14 cities with at least 1 million residents. The U.S. Energy Information Administration estimates that Brazil has more than 12 billion barrels of proven oil reserves. That number is certain to grow as we learn more about the large discoveries recently made off its southeastern coast. In addition to vast reserves of oil, it is also a leading producer of iron ore, aluminum, platinum and other industrial metals. This natural wealth puts Brazil in an enviable position compared to some other large emerging economies. As the domestic demand for resources increases with infrastructure expansion, much of that demand can be met from internal sources. This benefits the economy on both ends and sets the stage for further economic growth. Please consider carefully a fundrsquo;s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. #09-818

Burberry To Accelerate Expansion In China

China Retail News — Sun, 22 Nov 2009 19:30:40 +0000

According to Angela Ahrendts, the CEO of the British luxury group Burberry, the company plans to accelerate its expansion in China and to increase the number of its franchised stores in the country to 100 over the next few years. Ahrendts said during a press conference held in Burberry's London headquarters that the company will enhance [...]

Russia’s Consumers Get “Carried” Onwards And Upwards

Edward Hugh — Sun, 22 Nov 2009 16:24:00 +0000

blockquote“Cutting rates by 50 basis points here and there is not going really diminish the appeal of the ruble,” said Manik Narain, an emerging markets strategist at Standard Chartered Bank Plc in London. “In terms of nominal interest rates Russia (at 9% as of 24 November) is still offering the highest yields in the emerging market space and in an environment where oil prices are remaining relatively well supported we think that the ruble will continue to be seen as an attractive way to position for global recovery,” /blockquotepbr /The world's central banks are having a hard time of it these days, having just gotten through the worst banking and financial crisis in living memory they now face a growing dilema between continuing to give support to the developed economies (which are yet to recover from those early hammer blows) and the danger of creating fresh global asset price bubbles in emerging economies, asset bubbles which could easily be being fuelled by low US interest rates and a weak dollar. The latest warning in this respect comes not from Nouriel Roubini (or even from me, a href="http://fistfulofeuros.net/afoe/economics-country-briefings/the-dollar-as-a-funding-currency/"but see this post/a, and a href="http://www.forexblog.org/2009/11/interview-with-edward-hugh-the-dollars-demise-is-vastly-overstated.html"this recent interview I gave on Forex Blog/a), rather it emmanates from Germany’s new finance minister, Wolfgang Schäuble. His comments - which were a href="http://www.ft.com/cms/s/0/4ec41a1a-d616-11de-b80f-00144feabdc0.html"cited in last Saturday's Financial Times/a - highlight official concern in Europe that the exceptional steps taken by central banks and governments to combat the crisis carry with them a series of undesireable side effects.br /br /Such openly expressed concerns only add further weight to a href="http://www.ft.com/cms/s/0/85f1fac2-d1dc-11de-a0f0-00144feabdc0.html"recent statements made in China/a, where only a week ago the banking regulator Liu Mingkao explicitly criticised the US Federal Reserve for indirectly fuelling the “dollar carry-trade” – a process whereby investors borrow dollars at ultra-low interest rates in the United States and the invest them in higher-yielding assets abroad.br /br /Wolfgang Schäuble went even further, saying it would be “naive” to assume the next asset price bubble would look just like the last one. “More likely today is a scenario in which excess liquidity globally creates a new [sort of] asset market bubble.” he said, and the fact “ that low interest rate currencies such as the US dollar increasingly being used as a basis for currency carry trades should give pause for thought. If there was a sudden reversal in this business, markets would be threatened with enormous turbulence, including in foreign exchange markets.”br /br /As I argued in my last post on the carry trade, the danger of a short term sudden reversal may be being overstated at this point, since exit from emergency life support will be at best slow and measured in the United States, while ample funding will continue to remain available in Japan, where the central bank a href="http://www.ft.com/cms/s/0/c3a3be3e-d608-11de-b80f-00144feabdc0.html"has now formally recognised that the economy is once more back in deflation/a (officially it exited in 2006, and did the Bank did manage to summon up half a percentage points worth of interest rate rise before falling back again, but in reality, if we strip out the oil price impact, the sad truth is that Japan never really left deflation).br /br /However, regardless of whether or not we are running the danger of having an overly rapid unwind effect, untold damage is in fact being done, with the structural distortions being produced by the massive “wall of liquidity” which is currently sweeping the planet being evident enough, showing up as it is in some unexpected places, like Russia for example.br /br /br /strongRuble Once More On The Rise/strongbr /br /On the face of it the idea that investors who were rushing for the Russian door following the Roki tunnel incursion back in August 2008 may now be rushing back in again may seem hard to believe, particularly given the serious economic recession which followed, and in reality it isn’t quite like this, but what is clear is that a steady and significant flow of funds is now most definitely heading in Russia’s direction - even if the immediate objective is not to increase Russia most definitely needs, namely capital investment. A brief glance at the ruble vs US dollar charts shows immediately what has been happening. After hitting a low of $31.39 on September 2 the ruble has been steadily rising, and was at $28.65 on November 11, since which time it has been hovering, as investors vacilate waiting to see where policy and the currency go from here./ppa href="http://1.bp.blogspot.com/_ngczZkrw340/Sw4pa3BFLiI/AAAAAAAAPow/4p8N8w7-NNQ/s1600/rouble+2.png" /ppimg style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 240px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408305743940365858" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sw4pa3BFLiI/AAAAAAAAPow/4p8N8w7-NNQ/s400/rouble+2.png" //a At the same time, if we look at movements in the ruble-USD over a longer period of time (2 years in the chart below) it is plain the the ruble hit bottom on 4 February 2009 at $36.22 after falling steadily from 17 July 2009 when it touched $23.25./pp /ppbr //ppa href="http://3.bp.blogspot.com/_ngczZkrw340/Sw4pXI2mHVI/AAAAAAAAPoo/UTsQ29_bkVA/s1600/rouble+one.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 244px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408305680008748370" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sw4pXI2mHVI/AAAAAAAAPoo/UTsQ29_bkVA/s400/rouble+one.png" //abr /br /br /br /br /In fact, as I say, while it is clear that Russia is on the receiving end of a steady inflow of funds, it is far from clear that these funds are of the kind she most needs at this point. Much of the money has been going into stocks, and Russian equity funds drew record amounts at the end of October, according to data provided by EPFR Global. And Bllomberg data show that the ruble has been the second-best performer among emerging market currencies after the Chilean peso over the past three months, gaining 8.7 percent in the period. And even foreign currency purchases from the central bank and lowering interest rates systematically to a record low (in Russian terms) has not worked. Indeed Russi'a foreign currency reserves have now risen to $441.7 billion (as of Nov. 13) compared with the low of $376.1 billion reached on March 13. Indeed the Micex Stock Index of Russia’s 30 most liquid stocks has gained 116 percent this year, making the Index the world’s best- performing benchmark equity measure since January (in local currency terms) according to Bloomberg data. br /br /In comparison Russia’s foreign direct investment plummeted an annual by 48.1 percent, the most on record, to just $10 billion in the first nine months of the year, while overall foreign investment, including credits and flows into securities markets, was $54.7 billion, down 27.8 percent when compared with the same period a year earlier,according to Federal Statistics Service data. Other foreign investments, including loans from foreign banks and Russian companies’ foreign divisions, were down 20.9 percent in the period to $43.7 billion. The consequence of all this is that the decline in investment activity has been - as can be seen in the GDP growth components chart below - perhaps the greatest single drag on the domestic Russian economy over the past twelve months.br /br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Swq58CA-BvI/AAAAAAAAPnI/A-avWTMjlnI/s1600/russia+growth+components.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 297px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5407338743595927282" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Swq58CA-BvI/AAAAAAAAPnI/A-avWTMjlnI/s400/russia+growth+components.png" //abr /br /But this overall impression no longer gives us a precise up-to-date picture picture because, in a reversal of the previous pattern of capital flight Russia has, significant capital flows have, since mid-September, been making their way towards Russia, in the process enabling the central bank to once more rebuild up its badly shaken currency reserves. These have fluctuated from a high of $582 billion in August 2008 to a low of $384 billion in Feb – April 2009, and now stand at some $413 billion as of September. What is happening is that pressure to repay those outstanding debts which external lenders are unwilling to rollover means the aggregate capital flow data to some extent masque a change in the structure of Russian external debt. In the opinion of Guillaume Tresca, a Paris-based emerging market strategist with Credit Agricole’s Caylon Unit, the Russian authorities are now under severe pressure to accept the inevitability of short term ruble appreciation and even though they “will try to do what they can to smooth the process, it’s very hard for them to go against the flow” since current “capital inflows are massive.”br /br /Indeed a consensus seems to be now emerging that Russia’s central bank may find itself having to reluctantly accept a stronger ruble next year as rising commodity prices prove too powerful a force for policy makers to counter and as consumer demand plays a bigger role in the bank’s decisions. Representatives of the Russian administration have repeatedly asserted that they will cap the ruble’s advance with Vladimir Putin stating his government won’t allow excessive appreciation in a bid to give some support to struggling exporters. But the Canute like task of driving back the ocean is hardly an easy one, and the IMF recently warned that efforts to fight the ruble’s advance may prove “unproductive.”br /br /The problem is, in the short term at least, letting the rouble rise has its attractions for a Russian administration faced with simmering popular frustration with their inability to get the ongoing contraction fully under control. A rising ruble means slower inflation and more spending power for domestic consumers, who have yet to get over the record 10.9 percent economic contraction which hit them in the second quarter. Given that the eight interest rate cuts introduced by the central bank since April have manifestly failed to unlock the credit flow to consumers as banks hold back their lending on concern borrowers can’t repay their debt (see chart below) a rising exchange rate certainly seems to be worth a second look as a way forward, since while a higher exchange rate coupled with near double digit inflation may cripple manufacturing competitiveness, it does transfer incomes directly into people’s pockets, something hard pressed politicians might see as quite beneficial.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Swv02_RS5BI/AAAAAAAAPnQ/EGbBRnSLgsk/s1600/russia+credit+growth.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 327px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5407685003122500626" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Swv02_RS5BI/AAAAAAAAPnQ/EGbBRnSLgsk/s400/russia+credit+growth.png" //a Lending is still - as can be seen in the above chart prepared by the World Bank for its latest report - a problem, and corporate (or non-financial corporation lending) fell by 0.7 percent in September from August continuing the ongoing decline. Lending to households dropped 1.1 percent making the eighth consecutive monthly decline, with year on year levels now in negative territory, while non performing retail loans rose, climbing to 6.4 percent from 6.2 percent.br /br /And the World Bank expect the many bank balance sheets will continue deteriorating as the share of non-performing loans increases. “In the environment of increasing credit risks, lending activities by the banks have remained limited despite improving liquidity conditions in the economy and continuing monetary loosening.” Bad debts in the banking industry may reach an average of 10 percent by the end of the year according to the Bank.br /br /br /And when we look at ruble realities, as the IMF point out, efforts to stem the ongoing rise with intervention are far from being able to give the desired result. Bank Rossii bought a net $15.2 billion and 485 million euros in October, their largest foreign currency purchases since May, and went on to buy $6 billion during the first 17 days of November according to press reports citing central bank chairman, Sergey Ignatiev. Yet last week the Russian the ruble ended 0.1 percent higher at 35.0632 against the central bank’s target currency basket, its strongest level since December 23 2008. The ruble appreciated 3.4 percent in October against the dollar (for its second consecutive monthly gain) and has risen more than 1 percent so far in November. Thus the central bank has now moved on to use monetary policy to try and stem the rise, and said on October 29 that it would also use interest rates in an attempt to reduce the “attractiveness of short-term investments in Russian assets and stop the accumulation of risk”.br /br /The recent rise follows ruble a 35 percent slump against the dollar between August last year and January, raising the cost of imports (which make up about 49 percent of the consumer goods sold in Russia) and, in theory, making Russia's domestic industry somewhat more competitive externally. However, without a sound institutional infrastructure, and a coherent monetary policy, short term devaluation gains can easily be turned into medium term inflation, thus defeating the purpose of corrective price devaluation.br //pp/pbr /br /br /pThe problem is not in fact of recent making, and is a product of a steady and systematic long term mismanagement of Russia's monetary policy which has now created a veritable Procrustean bed of problems for Russia's economy and society. Failure to address the underlying inflation problem between 2005 and 2008 meant that large structural distrortions were accumulated in the economy, including a massive problem of commodity export dependence, a problem which effectively turned the country into a veritable disaster waiting to happen if ever there should be a protracted lull in the secular rise in energy prices. That lull has most definitely now arrived, and while Russia's future depends in the short term - on energy prices, it is far from clear what the future holds for the energy prices themselves. /pbr /pa href="http://3.bp.blogspot.com/_ngczZkrw340/Swv5min3eZI/AAAAAAAAPnY/rqDWKGy7ABg/s1600/world+bank+oil.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 283px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5407690218112776594" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Swv5min3eZI/AAAAAAAAPnY/rqDWKGy7ABg/s400/world+bank+oil.png" //abr /br /Weak global demand for oil has led to a sharp rise in excess capacity and OPEC's spare capacity has risen to levels not seen since 2002, when prices averaged USD25/barrel with OPEC’s pricing power staying very low. Up to now oil prices have remained in the USD70/barrel range, supported by OPEC output restraint and its stated desire to have prices reach what it calls "a comfortable level" - ie near USD75/barrel - as well as by expectations of rising demand. At its September 2009 meeting, OPEC left its production quotas unchanged but indicated it would take rapid action if prices dropped sharply. OPEC production, however, continues to edge higher, with compliance to its combined cuts of 4.2 million barrels per day falling to 66 percent in September from 71 percent in August. Thus there is evidence of OPEC strains and there is considerable uncertainty about real levels of 2010 demand, all of which makes for considerable uncertainty about prices. As can be seen in the above chart, World Bank oli price estimates (like the economic growth ones) have fluctuated from a 2010 price estimate of around $62.95 in March to the current (November) level of $75.29. While the earlier estimate may be considered to be too low, the current ones may well be too high, thus a level of $70 may not be an unrealistic forecast. It should be noted however that there are credible dissenters, and in a more or less reasoned analysis Capital Economics suggest that oil prices could well fall back again in 2010 to average somewhere around $50. If this forecast proves anywhere near correct, the Russian economy is going to be subject to major downside risks, due in particular to the difficulties posed by:br /br /i) financing the fiscal deficitbr /ii) rising unemploymentbr /iii) growing bad loans in the banking systembr /iv) refinancing external debtbr /v) the continuing high level of consumer price inflation and the difficulties this poses for monetary policy at the central bankbr /br /Added to all this, the economy will clearly not rebound as easily as many seem to foresee, adding to the risk element on all fronts.br /br /br /strongA Return To Growth In The Third Quarter/strongbr /br /Following the deep output drop sustained in the first half of the year (10.4% of GDP year on year), the slow recovery in global demand and rise in commodity prices has helped lift Russia’s economy up from its earlier lows. But the recovery has only been a modest one, since preliminary data indicate that the economy still registered a 9.4 percent year-on-year drop in the thrid quarter, indicating only a very small improvement (possibly a seasonally adjusted 0.6%) over the second quarter. More recent data also point towards a rather uneven progression, with the manufacturing sector falling back while rising real incomes means that consumer demand is producing stronger growth in the services sector.br /br /As in other countries, investment (both foreign and domestic) took a severe hit on the back of the credit crunch, and gross capital formation was indeedthe main demand side factor dragging GDP down in the first half of the year (by 14 percentage points), followed at some distance by consumption, which contributed 1.2 and 3.0 percentage points to aggregate output contraction rates respectively in the first and second quarters. Net exports, on the other hand, made a positive contribution (5.1 percentage points in the first quarter and 5.9 percentage points in the second) although strongas elsewhere/strong the strongdrop in imports/strong was the key factor. When imports are looked at in volume (price adjusted) terms we find that real ruble depreciation (the real effective exchange rate depreciated by 5.9 percent in the first nine months of 2009) meant that the import contraction was more severe than it seemed, especially in the second quarter of 2009 when the drop in imports meant that net exports increased by 66 percent.br /br /strongUnemployment Falls Back, But Problems Remainbr //strongbr /br /Six million Russians were added to the government’s official poverty count in the first quarter of this year alone, and by the end of 2009, 17.4 percent of the population or 24.6 million people will be living beneath the subsistence level of $185 per month, almost 5 percent more than before crisis, according to World Bank estimates. Unicredit analysts forecast that the number of Russians with disposable incomes of more than $1,000 per month will fall 48 percent this year to about 13.6 million, or roughly 9.6 percent of the population. Thus this recession is likely to have lasting and important results./pbr /pOn the hand, employment statistics from the Federal Statistics Service indicate that a sharp downward adjustment in the labour market took place up to February this year, before moderating and then reversing. Unemployment seems to have peaked in February at 9.5 percent following the sharp decline in output, and the severity of the blow was especially strong in the industrial sector. /pbr /pa href="http://1.bp.blogspot.com/_ngczZkrw340/Swv-srF1PgI/AAAAAAAAPng/ib8hHjWpxx8/s1600/russia+unemployment.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 201px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5407695821023297026" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Swv-srF1PgI/AAAAAAAAPng/ib8hHjWpxx8/s400/russia+unemployment.png" //abr /br /br /Since the beginning of March 2009, however, with real level of economic activity bottoming out (see above chart), the labor market continued to show moderate improvement: by September the number of those in employment had increased by 2.6 million, and the rate of unemployment fell to 7.6 percent, down significantly but still much higher than in September 2008 (5.8 percent). According to the World Bank this steady improvement is rather misleading as it reflects significant seasonal gains in employment and a shift in labor adjustment towards labor hoarding in the manufacturing sector.br /br /As the World Bank also notes, the long term regional differences in Russian unemployment rates are striking ranging from a low of 1.6 percent in Moscow to a high of 52.1 percent in Ingushetia in August 2009. Traditionally unemployment is largely concentrated in the Southern, Far Eastern and Siberian federal districts. However, the crisis related unemployment shows a different pattern, with the largest increases in unemployment being found in the North Western District (from 4.8 to 7 percent) and the Urals (from 4.9 to 8.1 percent). Regression analysis carried out by the World Bank revealed that unemployment levels were higher in those regions with higher levels of manufacturing, and where industrial production accounted for a larger share of GDP.br /br /And while it is entirely possible that the economy will show a “modest” recovery in the second half of 2009, this is “unlikely to have significant impact on social indicators,” according to the World Bank. Unemployment will increase to 9 percent “as seasonal factors wane” from 7.6 percent in September and it may take three years before the number of Russians living in poverty falls to pre-crisis levels, the World Bank estimates. Indeed, in the short term real incomes are “likely to fall further". /pbr /pstrongMonetary Policy Mess /strongbr /br /The political threat posed by growing unemployment and rising poverty must most certainly be one of the reasons behind Russia’s central bank recent decision to lowered its key interest rates for the eighth time in six months, in a bid to both stimulate lending and to stem the inflow of funds and the rise in the value of the ruble which is making the work of restoring competitiveness to the manufactured sector all the more difficult. Earlier this month Bank Rossii cut the refinancing rate to 9 percent from 9.5 percent and reduced the repurchase rate charged on central bank loans to 8 percent from 8.5 percent. Despite the reductions Russia still has the fourth-highest benchmark interest rate in Europe after Ukraine, Iceland and Serbia.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sw24Z-mJeJI/AAAAAAAAPog/dK4SaanO7nc/s1600/russia+interest+rates.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 230px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408181483981076626" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sw24Z-mJeJI/AAAAAAAAPog/dK4SaanO7nc/s400/russia+interest+rates.png" //abr /br /The best thing that can be said about Russian monetary policy instruments is that they are hopelessly ineffictive. Even October consumer-price growth at 9.7% annually, while well down on June 2008s 15.1 percent peak, is still horribly unacceptable, and it is extremely hard to understand how economic mismanagement and incompetence can have reached such a level that an economy which has been contracting at the rate of nearly 10 per cent a year can still have this kind of price inflation. There is no other word for it, this is a mess.br /br /br /The bank is caught on the horns of a large dilema, since cutting rates further to stem inflows and the ruble rise may only risk fuelling more inflation, yet First Deputy Central Bank Chairman Alexei Ulyukayev stressed only last week that the central bank did not exclude the possibility of further cutting its rates in November and that its board could discuss a cut as early as Nov. 24. Indeed the bank stated explicitly at the end of October that it was ready and willing to use interest rate policy to stem speculative capital flows that "threaten to undermine currency stability". /pbr /pstrongInflation Woesbr //strongbr /One consolation at least in all this mess is that pressure on Russia’s producer prices have been easing, and prices have even been falling. According to the preliminary data from the State Statistics Service, the price of goods leaving factories and mines was in fact down an annual 10.8 percent in August following a record 12.3 percent drop in July. Evidently The with the 2008 spike in oil and energy prices the logic behind this is easy to see. What is not so easy to see is why domestic prices take so long in responding to general capacity utilisation signals and why the Economic Development Ministry still seems comfortable with the expectation that average inflation will range between 12 percent and 12.5 percent in 2009 only marginally down from last year’s 13.3 percent. Stunning!br /br //pbr /br /pa href="http://3.bp.blogspot.com/_ngczZkrw340/Sw0V_P4X0lI/AAAAAAAAPno/7WSwEAciAlg/s1600/russia+inflation.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 243px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408002903880749650" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sw0V_P4X0lI/AAAAAAAAPno/7WSwEAciAlg/s400/russia+inflation.png" //abr /br /And while consumer price inflation has been tame in recent months this good behaviour may not last long, since it could rise more than expected in November, according to Deputy Economic Minister Andrei Klepach, a development that could prompt the central bank to bring its rate-cutting policy to a halt. Consumer prices could rise "by about 0.3% to 0.4%" in November, Klepach said in comments recently. And Klepach’s prediction seems to be near the mark, since consumer prices rose 0.1% in the week to 9 November, bringing to an end a period of just over three months without inflation, according to the latest data from the Federal Statistics Service. Looking into the future price growth may be further spurred by an influx of budget spending in the fourth quarter, as well as by a planned 30% increase in pensions which is due to come into effect on 1 December.br /br /The rising ruble, driven by higher oil prices and speculative capital seeking to capitalize on Russia's comparatively high interest rates, has put the central bank in a quandry. While a strengthening currency hurts the country's exporters, further rate cuts risk driving up inflation, which Prime Minister Vladimir Putin predicted – probably optimistically - would be just over 8% by the end of the year, which amazingly would be a post-Soviet low.br /br /In fact, despite the fact that inflationary pressures have been easing in Russia in recent months, chiefly due to collapsing consumer demand and outlfows of capital following the crisis that hit the country a year ago, Russia's inflation in January 2010 is only expected to be "significantly below "the level of January 2009, according to the First Deputy Chairman at the central bank Alexei Ulyukayev recently. This kind of argument is hardly reasssuring, since inflation last January was at an annual rate of 13.4%, and the suggestion now is that consumer prices will increase by between 0.2% and 0.3% in November and by the same amount in December.br /br /strongWhy Not Devalue?/strongbr /br /Well, one way not to solve the problem would be a ruble devaluation according to European Bank for Reconstruction and Development Chief Economist Erik Berglof. Even while recognising that the country has a very difficult couple of years in front of it, Berglof argued recently “this (devaluation) is the wrong way to think about the recovery in Russia”.br /br /As he said, Russia’s failure to wean itself off its reliance on commodity exports has condemned the country struggling to find economic growth in the face of a large drop in demand for its key export products. “If you want to have a flexible exchange rate, you need to get out of this dependence on commodities,” Berglof said. “It’s a major concern that in the last 10 years Russia has become actually more dependent on commodities. Unfortunately, not much progress has been made.”br /br /Well, this is eaxctly the point, and is why I have been arguing over the last two year about how a href="http://russiatooat.blogspot.com/2007/12/inflation-in-russia-two-much-money.html"all those wage increases which the Russian administration seemed to rejoice in/a (since they bought short term popularity, and fuelled consumption) simply stoked-up the domestic inflation bonfire and in the process did untold damage to domestic competitiveness. However it is evident Russia's industries cannot now simply be transformed overnight, and this is where I find a weakness in Berglofs argument, since some remedy is needed to straighten out the distortions and get of commodity export dependence. But what? If it isn't devaluation, then surely we will need to see very substantial wage deflation in order to attract the now much needed inward foreign investment.br /br /Of course not everyone agrees with Berglof, and the Russian Association of Regional Banks, whose 450 members include the Russian units of Barclays and Citigroup, has called for a devaluation of as much as 30 percent. Billionaire Vladimir Potanin, realist and owner of 25 percent of OAO GMK Norilsk Nickel, said in recent interview with the Russian Newspaper Vedomosti that the “interests of the economy” will lead the currency to depreciate in the “mid term,” allowing exporters to cut costs and modernize production.br /br /Nonetheless energy, including oil and natural gas, accounted for 69.1 percent of exports to countries outside the former Soviet Union and the Baltic states during the first seven months of this year, according to the Federal Customs Service, while metals were responsible for another 12%. So the commodities dependency is massive, and this situation can't be turned round easily.br /br /strongGetting Carried Away By Global Liquidity?/strongbr /br /Bank Rossi are also not 100% convinced by the merits of Berglof's reasoning, as witnessed by the fact that they facilitated a 35 percent depreciation in the ruble during the second half of last year (see chart below), and as the collapse in raw material prices and the dramatic change in local credit conditions first pushed Russia's economy into recession the ruble’s trading range was widened to between 26 and 41 against the dollar-euro basket.br //pbr /pHowever, as I keep stressing, the central bank is now locked on the horns of a massive dilemma, since as risk appetite returns, with it comes the enthusiasm for buying the so called "high yield" currencies - like the South African Rand, the Russian ruble and the Hungarian forint. Instruments denominated in all these currencies offer investors substantial returns at the present time thanks to offering some of the highest interest rates among globally traded currencies.br /br /Indeed buying Russian rubles was one of the key recommendations made by Angus Halkett, currency strategist at Deutsche Bank in London, in a research report published back in April, and the market seems to have followed his advice The so-called carry trade works by investors borrowing in currencies with low interest rates and good prospects of continuing depreciation (the USD at the moment, for example) in order to buy higher-yielding assets, in countries with high domestic interest rates and continuing prospects for ongoing appreciation.br /br /In general, engaging in one or other form of the thousand-and-one-varieties carry trade is pretty standard practice during times when returns for real economic activity are low, and central banks hold down rates and supply liquidity. Indeed we may include here the kind of carry practiced by banks in borrowing from the central banks only to then lend - for a small, but very low risk, interest rate commission - to their national government, who at this stage in the business cycle will normally be running a fiscal deficit. So more than funding recovery, the watchword at the moment is very much "carry on carrying".br /br /But for those on the receiving end, the consequences of so much carry are far from innocuous, since the process simply funds all sorts of economic distortions, and far from allowing normal market corrections to occur, it simply amplifies the problem. And this is exactly what is starting to happen now in Russia. The ruble had its biggest weekly advance in more than three months last week as risk sentiment rose, following industrial output data from China, which is now the world’s second-largest energy user, which simply showed output increased at a faster pace than forecast.br /br /As a result the ruble tends to rise as risk sentiment does, and in particular as economic data exceeds consensus expectations, and the currency has now been on an upward trend since mid-August (see chart below), gaining 0.7 percent to 30.6629 per dollar last Friday alone. This was the highest close since July 27. Over the week as a whole the ruble appreciated 3.1 percent, the most since the week ending May 22. So things are now becoming very detached from the so called "fundamentals" (whatever those might be in the topsy turvy world in which we now live), since it simply is not plausible that the currency should be rising in this way in a country with 12 percent consumer price inflation and which badly needs to move away from commodity export dependency. The only conclusion which could be drawn is that the Russian economy now needs massive structural reforms, and on any imaginable scenario in the world in which I live these are simply not going to be implemented.br /br /On the other hand Russia’s central bank may have to accept a stronger ruble next year as rising commodity prices prove too powerful a force for policy makers to counter and as consumer demand plays a bigger role in the bank’s decisions. The authorities “will try to do what they can to smooth the appreciation, but it’s very hard to go against the flow,” said Guillaume Tresca, Paris-based emerging market strategist for Calyon, the investment-banking unit of Credit Agricole. “Capital inflows are massive.”br /br /Policy makers have indicated they will cap the ruble’s gains and Prime Minister Vladimir Putin has said his government won’t allow an excessive appreciation as exporters struggle to tap into a global trade recovery. Even so, efforts to fight the ruble’s advance may prove “unproductive,” the International Monetary Fund warned on Nov. 12, adding that “underlying factors” justify its strength. There is a growing consensus that Russia’s central bank is now close to accepting the inevitable, and will allow the ruble to continue appreciating to help domestic demand and cap inflation. As Clemens Grafe, chief economist at UBS in Moscow puts it, “A higher exchange rate, because it transfers incomes into people’s pockets, could actually be more beneficial,”br /br /strongFiscal Resources Near To Running On Empty?/strongbr /br /br /According to preliminary estimates from the Ministry of Finance, the federal budget deficit totaled 4.0 percent between January and September, slightly below the expected level, in part due to the under execution of budgeted expenditures in the first three quarters of 2009. The federal non-oil deficit (which excludes drawing on oil revenues) amounted to 11.0 percent. This is managable, especially given the comparatively low level of Russian sovereign debt to GDP. However, as the World Bank point out under the likely scenario of a sluggish global recovery and modest growth, Russia will face a tightening budget constraint and need to reduce expenditures and the fiscal deficit over the medium term. Further, funding the planned increase in social expenditures, mainly related to increases in pensions, may well requires spending cuts in other expenditure categories. /pbr /br /pThe Ministry of Finance baseline federal budget estimates with conservative oil assumptions icorporate plans to reduce the federal budget deficit from 8.3 percent of GDP in 2009 to 3 percent in 2012, but the medium term fiscal outlook also indicates an extensive drawdown of Russia's Reserve Fund to finance the deficit. Given the size of the anticipated deficit, the Reserve Fund is likely to be depleted by the end of 2010 and borrowing will be required to offset the gap. Estimates of the Ministry of Finance indicate that the combined external and internal borrowing to cover the fiscal deficit will amount to 1.0 percent of GDP in 2009, 1.6 percent in 2010, 2.5 percent in 2011, and 1.5 percent in 2012. All of this is manageble, but the depletion of the Reserve Fund does mean that if downside risks materialise, and in particular if there are more writedowns in the banking sector needing government support that there is now little in the way of a cushion between managed adjustement and unstable dynamics.br /br /br /strongOutlook – A Hard Road To Travel/strongbr /br /br /If one thing is clear hear it is that attaining a recovery in Russia's economic fortunes at this point is going to be no easy feat, as a href="http://www.bloomberg.com/apps/news?pid=newsarchiveamp;sid=aC8Q3ycECRlw"Trust Investment Bank put it in their latest report/a, October data for the world’s largest energy exporter suggest “an almost complete absence of clear signs of recovery” since industrial output slumped and capital investment fell. October capital investment was still down 17.9 percent while industrial output dropped an annual 11.2 percent in October worse than the September reading. Even unemplyment was up again, at 7.7%, although as the World Bank pointed out, this is the result of the same seasonal factors which lead to the fall in unemployment over the summer. Dbr /br /On the other hand disposable incomes climbed a monthly 6 percent in October and rose 3.9 percent compared with the same period last year, the biggest annual jump since September 2008, according to provisional data from the Federal Statistics Service, while wage declines eased with wages falling an annual 4.5 percent, compared with a 4.9 percent annual decline in September. And retail sales, which had previously fallen for nine consecutive months, the longest period of declines on record, suddenly sprang back to life, with October retail sales rose 3.2 percent from September and declined by 8.5 percent on an annual basis as compared with a 9.9 percent drop the month before.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sw0ZKg7CYQI/AAAAAAAAPnw/bQRC4SINF3E/s1600/russia+retail+sales.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 242px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408006395968774402" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sw0ZKg7CYQI/AAAAAAAAPnw/bQRC4SINF3E/s400/russia+retail+sales.png" //abr /br /Other data also show this mixed picture. Monthly GDP Indicator data from VTB Capital, based on the PMI surveys for the Russian manufacturing and service sectors, continued to show economic contraction on an annual basis in October, butthe rate of decline eased for the fifth consecutive month. The Indicator showed a 0.6% annual contraction, the slowest rate seen suring the current eleven-month period of continuous decline.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sw2smUlPK_I/AAAAAAAAPoA/Det1Qvhq7ls/s1600/GDP+indicator+2.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 243px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408168501901732850" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sw2smUlPK_I/AAAAAAAAPoA/Det1Qvhq7ls/s400/GDP+indicator+2.png" //abr /br /The seasonally adjusted Total Activity Index remained above the no-change mark of 50.0 for the third month running in October, indicating growth of private sector output. The Index improved fractionally over September, to 54.2, indicating reasonably robust growth (although it remained below its historic trend of 56.6). This was driven by a faster rise in services activity, while the rate of growth in manufacturing production slowed to a weaker pace. On a quarterly basis the indicator showed 0.4% q-o-q growth for the second month running.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/Sw2qzRN1UlI/AAAAAAAAPn4/h6pCnqcA1nI/s1600/GDP+Indicator+One.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 242px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408166525313307218" border="0" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/Sw2qzRN1UlI/AAAAAAAAPn4/h6pCnqcA1nI/s400/GDP+Indicator+One.png" //abr /br /blockquoteCommenting on the survey, Aleksandra Evtifyeva, Senior Economist at VTB Capital, reported:br /br /““The GDP Indicator continued to point to an improvement in economic activity in October. The manufacturing sector’s performance deteriorated slightly while activity in the services sector is approaching pre-crisis levels. This might be one of the consequences of higher oil prices and a stronger rouble as low export orders were the main drag on manufacturing. Another encouraging development highlighted by the October surveys was the deceleration in the pace of job cuts: the employment sub-indices now stand at around 47, which is already higher than last autumn./blockquotebr /The GDP indicator reading was based on manufacturing sector survey findings which confirmed that overall Russian manufacturing business conditions deteriorated in October. Although output, new orders and input purchases all continued to grow, the rates of expansion slowed compared to September. Moreover, manufacturers shed jobs at a faster pace than in September.br /br /The headline seasonally adjusted Russian Manufacturing PMI fell from 52.0 in September to 49.6 in October, signalling an overall deterioration in the business climate at the start of the fourth quarter. It was the first month-on-month fall in the headline index since it plummeted to a record low (33.8) in December 2008, although the latest figure was indicative of only a marginal rate of decline. Of particular note, the new export orders index posted a strongish decline to 47.8, evidently reflecting the recent ruble appreciation. The input price index continued to point to strong rise in costs associated with metals, energy and oil-related items while output prices index pointed to a moderating growth in price charged.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sw2xWi1TESI/AAAAAAAAPoI/50mTeapNq4s/s1600/russia.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 244px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408173728407425314" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sw2xWi1TESI/AAAAAAAAPoI/50mTeapNq4s/s400/russia.png" //abr /br /In contrast the rebound in Russian services activity rose continued in October, supported by a record fall in charges, and Russia's services sector, which accounts for about 40 percent of the economy, rose for the third consecutive month, reaching its highest level since September 2008, although the reading of 54.3 still remained significantly below the long-run series average.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sw2yMDZ9MQI/AAAAAAAAPoQ/ZbQ0hewWC1Y/s1600/russia.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 243px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408174647684182274" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sw2yMDZ9MQI/AAAAAAAAPoQ/ZbQ0hewWC1Y/s400/russia.png" //abr /br /br /strongSo Where Do We Go From Here?/strongbr /br /In contrast to the most recent PMI data and the opinions of analysts like Neil Shearing at Capital Economics and Trust Investment Bank , Russia's political leaders are markedly more optimistic. Russia’s economy may expand as much as 4 percent in the last quarter of 2009 following a timid return to growth in the third quarter, according to Deputy Economy Minister Andrei Klepach speaking at a conference in Moscow recently. The economy may show “quite strong growth” of between 3 percent and 4 percent in the fourth quarter over the previous three months, Klepach said. This is an interesting claim, and doubly so given that Klepach has been quite cautious so far this year in his claims. Evidently the rising price of oil and the return of some financial flows into Russia is firing up optimism, as are the numbers for retail sales, we will just have to hope they won't fire up the inflation process again, although with lending to households still stuck in gridlock, perhaps the dangers here should not be overstated. More worryingly, inflation may fail to fall significantly from its current high level, even as the central bank reduces interest rates in a bid to stem the ruble rise.br /br /Klepach's optimism is not shared, however, by the World Bank who in their latest report argue Russia’s economy will suffer a deeper contraction than they previously estimated this year even after a series of central bank interest rate cuts which have manifestly failed to ease the “prolonged” credit drought. The World Bank now expect the Russian economy to contract by 8.7 percent this year, compared with their June forecast for a 7.9 percent decline. The government is currently predicting the economy will shrink 8.5 percent this year and grow 1.6 percent next year.br /br /br /blockquote“We expect that the central bank will continue lowering its policy rate in thebr /near future to facilitate credit to the real sector,” the World Bank said. “Thebr /impact, however, appears to be limited. The policy rates are mostly indicative,br /while the cost of credit remains very high.”/blockquoteThe OECD, on the other hand, seems rather more positive, arguing that Russia’s economy will enjoy a stronger commodity-driven rebound than first estimated, although, they hasten to add, authorities should avoid a sudden removal of stimulus measures to ensure the domestic economy keeps up the pace of its advance. They now expect the Russian economy to expand by 4.9 percent in 2010, compared with a June forecast for 3.7 percent growth, although output is still expected to contract 8.7 percent this year (broadly in line with the World Bank), more than the 6.8 percent estimated in June. The 2010 figure seems very optimistic in the light of the problems here identified, and more than adding to our appreciation of the Russian situation such numbers may rather cast doubt on the methodology being applied, and raise questions about some of the numbers being seen for other countries.br /br /br /blockquote“Although recovery is in prospect, the large output gap and subdued inflation suggest that policy stimulus should not be removed too hastily,” the OECD said. “Fiscal policy should be managed to avoid dislocative demand effects from a surge of expenditures in late 2009 followed by a tightening in 2010.” /blockquotebr /According to the OECD, Russia’s economy will enjoy a stronger commodity-driven rebound than first estimated and “Fiscal and monetary stimulus and the recovery of global demand should result in a strong rebound of output towards the end of 2009". The basic OECD argument is that “A large part of the policy stimulus will be felt only late in the year, as fiscal expenditure is back-loaded and a series of interest rate cuts began only in the second quarter.”br /br /strongLong Term Impact On Russian Growth/strongbr /br /But let us not underestimate the difficulties. According to the World Bank Russia’s real GDP will likely return to pre-crisis levels only in late 2012. And, the Bank says, without a more productive, diversified, and competitive economic base, its long-term growth is likely to be slower than in the past decade and than the pre-crisis expectationbr /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sw21w05Cq4I/AAAAAAAAPoY/BxotSEDWSOI/s1600/Russia+Trend+Growth.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 213px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5408178577978076034" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sw21w05Cq4I/AAAAAAAAPoY/BxotSEDWSOI/s400/Russia+Trend+Growth.png" //abr /br /Russia’s pre-crisis decade of prosperity was built on strong capital inflows, rising consumer and corporate credit, and significant capital investment. The post-crisis world will look very different: Russia will need to implement fiscal adjustment and diversify its economy in the context of sluggish global growth, low capital flows, and more limited access to foreign financing. So it is now time to look towards a new growth model based on increases in productivity and know-how and on more efficient allocation and use of investment, labor, and FDI. Next generation reforms should be geared to make Russia's monetary policy instruments much more effective, the Russian economy much more productive, diversified, and open—and more able to respond to future shocks. The success and duration of the transition from the current model of heavy dependence of natural resources to a more sustainable growth model depends, according to the World Bank on maintaining a competitive exchange rate, sustaining a prudent fiscal stance, improving the investment climate, more mobile capital and labor, making the financial sector deeper and more efficient, investing in infrastructure to eliminate key bottlenecks to growth, and strengthening governance and fighting corruption as part of the overall effort to improve the effectiveness of the public sector.br /br /The OECD more or less agrees: “Laying the foundations for sustained rapid growth will require unwinding some of the distortive consequences of the crisis". And, may I add, unwinding some of the distortive processes which lead the crisis to be such a severe one in the first place.div class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/7303901362201842397-2825345067395600868?l=russiatooat.blogspot.com' alt='' //div

Prieur’s readings (November 21, 2009)

Prieur du Plessis — Sat, 21 Nov 2009 08:24:30 +0000

The lie of the investment land, according to Dylan Grice

Prieur du Plessis — Sat, 21 Nov 2009 07:45:24 +0000

This podcast features an excellent interview with Dylan Grice, strategist of Société Générale. Dylan, who has been described as "the Robin to Albert Edward's Batman", discusses stock market bubbles, China and geo-politics.

Cowen’s Stone Maintains Suntech (NYSE:STP) at NEUTRAL on Q3 Earnings Report

Small Cap Pulse — Fri, 20 Nov 2009 21:06:00 +0000

November 20, 2009 ndash; Analyst Comments ndash; Cowenrsquo;s Rob Stone weighed in on Suntechrsquo;s (NYSE:STP) Q3 financial results this morning noting that given the delayed ramp of Pluto and thin-film production, and outstanding GSF A/R exposure, he thinks shares are fairly valued. He maintains a NEUTRAL rating on the stock. Q3 Results Suntech (NYSE:STP) reported Q3 revenues of $473.1 million, compared with revenues of $594.4 million for the same period last year, and $320.9 million in Q209. Gross margins in Q3 were 17.7%, down from 18.5% in Q2, and 21.5% in Q308. Net income was $30,1, or $0.16 per diluted ADS, compared with $42.5 million for the same period last year and $9.6 million in Q208. Highlights for the quarter included hitting 16.53% conversion efficiency. Management increased its FY09 shipment target from 600MW to a range of 640MW to 660MW, and an increase in total cell and module production capacity to 1.4GW by mid-2010, of which 450MW will be Pluto-enabled. Stonersquo;s Key Takeaways middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Shipments to Germany should continue to grow, but account for a smaller percentage, with stronger growth in the rest of Europe (Italy, France, Czech Republic) middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; U.S. distribution and utility scale projects, China and other Asian markets (Australia, Korea and Japan) should also drive growth middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Raising 2009-12E shipments to 640MW, 1.1GW, 1.6GW and 2.2GW including system integration of 37MW, 100MW, 160MW and 230MW middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Mix of systems reduces GM by about 60 basis points in 2009, 80-100 basis points in 2011/12 but GM in 2010 reflect better H1 module ASPs middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Raised EPS to $0.35, $0.65, $0.99 and $1.35 on revenue of $1.6B, $2.1B, $2.7B and $3.5B

China Forestry, Inc. (CHFY.OB) Signs Letter of Intent to Acquire Gaoxin Agriculture

QualityStocks — Fri, 20 Nov 2009 19:22:21 +0000

Timber investment group China Forestry Inc. announced today that the company has signed a letter of intent to acquire the landscape engineering and construction firm Shaan’Xi Province Gaoxin Agriculture and Animal Husbandry Development Holding Co., Ltd. The company, located in Xi’An City, Shaan’Xi Province, generated over RMB 81 million in revenue in 2008. China Forestry feels [...]

This Small Oil Producer is Ripe for a Takeover… Here’s How to Profit

Investment U — Fri, 20 Nov 2009 18:18:58 +0000

This Small Oil Producer is Ripe for a Takeover… Here’s How to Profit by Sheena Martin, Contributing Editor Friday, November 20, 2009 Takeovers are big news in the market at the moment. In fact, did you know that takeovers have the biggest one-day gain in stocks for any asset? As my colleague – and takeover expert [...]

China Mobile Outlines 4G Plan – Analyst Blog

Zacks Market Commentaries — Fri, 20 Nov 2009 16:23:53 +0000

China Mobile (CHL), the world’s largest wireless carrier by subscriber, has revealed its plan to commence the trial run of its 4G network during World Expo 2010 to be held in Shanghai from May 1 to Oct 31, 2010. The company’s 4G service is based on the TD-LTE (Time Division Duplex Long Term Evolution) mobile broadband technology. Roughly 200 participants and 70 million visitors are expected to assemble at the Expo.

China Mobile has recently selected Alcatel-Lucent (ALU) for the responsibilities of design, construction, installation and integration of communication infrastructure to facilitate the 4G network trial. The TD-LTE network will provide advanced wireless services (including high-definition TV and ultra-fast broadband Internet access) to the visitors at the exposition.

The three major Chinese telecom operators China Mobile, China Unicom (CHU) and China Telecom (CHA) are investing heavily in Shanghai to improve the city’s network infrastructure, thereby ensuring the delivery of smooth network coverage for Word Expo 2010. China Mobile plans to invest RMB 15 billion ($2.19 billion) over the next three years in Shanghai.

China Mobile’s TD-LTE venture is being supported by the British telecom giant Vodafone (VOD). In addition to Alcatel-Lucent, the company has also selected Ericsson (ERIC), Motorola (MOT), Nokia Siemens, Huawei Technologies and ZTE Corp as the primary technology vendors for the upcoming 4G project in Shanghai.

China Mobile’s TD-LTE network will enable downlink speeds of 60 megabits per second (Mbps), which is 20−30 times faster than the average throughput levels offered by existing 3G networks. China Mobile plans to allocate approximately 60% of its capital expenditure over the next few years to develop its 4G network.

The company’s recently accelerated development plan for TD-LTE stems from the uncertainties related to the success of its TD-SCDMA technology based 3G services. China Mobile is facing challenges regarding the adaptability and performance of this indigenously developed 3G standard.

European and American 3G standards such as WCDMA and CDMA2000, which have been adopted by China Unicom and China Telecom, respectively, offer faster network speeds and already enjoy wide acceptability in the marketplace. Additionally, TD-SCDMA also suffers from certain limitations when it comes to international roaming. These issues may restrict a wider adoption of China Mobile’s 3G network.

China Mobile aims to leverage the 4G TD-LTE opportunity to offset the limitations of the 3G TD-SCDMA network. Moreover, this move will also provide an opportunity to leapfrog the company’s Chinese peers to emerge as the first carrier to deploy 4G LTE based mobile broadband network in China, representing a significant competitive advantage.

Read the full analyst report on "CHL"
Read the full analyst report on "CHU"
Read the full analyst report on "CHA"
Read the full analyst report on "ALU"
Read the full analyst report on "VOD"
Read the full analyst report on "ERIC"
Read the full analyst report on "MOT"
Zacks Investment Research

Capitalism is alive and well

Andrew Snyder — Fri, 20 Nov 2009 16:03:57 +0000

pBaltimore – (a href="http://www.todaysfinancialnews.com" target="_blank"TFN/a): Hallelujah, the markets work! You have no idea how happy I was this morning when I opened the Wall Street Journal and found an article detailing Goldman Sachs shareholder anger at the recent bonus payouts./p pNow, I don’t care who makes what. That’s between bosses and their worker bees. But I do get a little peeved when Uncle Sam tries to tell some worker he can’t get paid per his contract./p pBefore you go shouting about how Washington saved Wall Street and therefore we, as taxpayers, get a say over pay, let me ask you this. Does your mortgage company tell you what color to paint little Johnnie’s room? Does your car loan provider tell you how fast to#8230;/p

DrStockPick.com Stock Report! 11/20/09, WAKE, CSRH, NTRI, ERTS, SOTK, WATG

Dr. Stock Pick — Fri, 20 Nov 2009 15:43:48 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Friday Nov 20, 2009 DrStockPick.com Stock Report! ************************************************************** Consorteum Holdings Inc. (OTCBB: CSRH) launched its consumer stored value rebate card. The consumer rebate card program will offer manufacturers and retailers a new way to process mail-in rebates that ensures increased customer loyalty and decreased [...]

Suntech Tops Zacks Estimates – Analyst Blog

Zacks Market Commentaries — Fri, 20 Nov 2009 14:40:00 +0000

Suntech Power Holdings Company Ltd. (STP) posted strong third quarter results of 16 cents, double the Zacks Consensus Earnings per American Depository Share (EPADS) estimate of 8 cents. However, the company fell short of the year-ago EPADS of 33 cents by 17 cents.

Suntech registered total net revenues of $473.1 million in the reported quarter, an increase of 47.4% from $321 million in the previous quarter. Operating expenses were $39.3 million compared to $38.6 million in the previous quarter. Operating expenses included a net $3.5 million reversal of bad debt provision. Income from operations was $44.8 million compared to $21.1 million in the prior quarter.

Gross margin for the core wafer to module business was 20% in the reported quarter, compared with 19.1% in the preceding quarter. Overall consolidated gross profit was $84.1 million and gross margin was 17.8% in the reported quarter compared to consolidated gross profit of $59.7 million and gross margin of 18.6% in the second quarter of 2009.

The lower gross margins were primarily due to the low profitability of the systems integration business in China that has been implementing some of the country's first utility scale solar projects. Net interest expense was $23.5 million in the reported quarter compared to net interest expense of $24.3 million in the quarter before. Net interest expense includes $11.3 million non-cash expenses.

Foreign currency exchange gain was $10.5 million in the reported quarter compared to $17.5 million in the year-ago quarter. Foreign currency gain was primarily related to the appreciation of the euro versus the dollar in the quarter.

Suntech’s capital expenditures during the quarter were primarily for the construction of thin film production facilities in Shanghai and other infrastructure projects to support the expansion of capacity and totaled $25.4 million.

The company reported cash and cash equivalents of $655.7 million at the end of the first nine months of fiscal 2009 from $760.5 million at the end of the first six months of fiscal 2009. Long term bank borrowings stood at $136.3 million at the end of the first nine months of fiscal 2009 from $136.2 million at the end of the first six months of fiscal 2009.

Wuxi, China-based Suntech is a leading solar energy company in the world. The company designs, develops, manufactures and markets photovoltaic (PV) cells and modules. Looking forward, Suntech expects more than 10% spike in shipments in the fourth quarter over the third quarter of fiscal 2009. Gross margin in the fourth quarter of 2009 is expected to be relatively flat compared to the preceding quarter.

Suntech has increased its full-year 2009 PV shipment target from 600MW to a range of 640MW−660MW. Capital expenditures are expected to be approximately $120 million for the full year 2009. For fiscal 2010, Suntech expects at least 75% shipment growth in 2010. The company targets to expand to 1.4GW of PV cell and module production capacity by the middle of 2010, of which 450MW will be Pluto technology-enabled.

Accordingly, Suntech expects capital expenditures to be approximately $200 million in 2010. We maintain our market Neutral recommendation on the shares.
Read the full analyst report on "STP"
Zacks Investment Research

DrStockPick.com Stock Report! 11/20/09, BDX, PWRM, PTSC, IRF, BBOX, PRCP

Dr. Stock Pick — Fri, 20 Nov 2009 14:15:17 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Friday Nov 20, 2009 DrStockPick.com Stock Report! ************************************************************** Power3 Medical Products, Inc. (OTCBB: PWRM), a leader in neurodegenerative disease and cancer biomarkers and diagnostic tests, announced further international recognition of validity as the company’s President and CSO, Dr. Ira Goldknopf, will deliver an invited [...]

Dell Falls Short of Expectations – Analyst Blog

Zacks Market Commentaries — Fri, 20 Nov 2009 13:51:13 +0000

Dell Inc. (DELL) reported third quarter 2010 EPS of 23 cents, below the Zacks Consensus Estimate of 27 cents.

Revenue

Revenue for the quarter was $10.75 billion, down 17.0% from $12.97 billion reported in the year-ago quarter and up 1.0% from $10.62 billion reported in the previous quarter. The company’s third quarter reported revenue was adversely affected by the timing of the Windows 7 launch and due to backlog buildup in the company’s SMB and consumer businesses.

Revenue by Segment

Large Enterprise posted revenue of $3.4 billion, an increase of 4.0% sequentially and decline of 23.0% year-over-year. In the last quarter, the company expended its networking partnership with Brocade and Juniper, and introduced products like PowerEdge 11g servers and expanded PowerVault storage systems.

Public revenue for the quarter was $3.7 billion, down 3.0% on sequentially and 7.0% from the year-ago quarter. Shipments were down 12.0% on a sequential basis, due to seasonality in the U.S. public sector business.

Small and Medium Business revenue for the quarter was $3.0 billion, up 5.0% sequentially and down 19.0% from the year-ago quarter. Shipments increased 9% sequentially. The segment benefited from steadily improving demand in both the Americas and the Asia-Pacific region, as well as better performance in EMEA during the second half.

Revenues for Consumer Business were down 10.0% year-over-year, but flat sequentially to $2.8 billion with shipments growing 4% sequentially.

Dell’s total sales in China, India, Brazil and Russia increased 18.0% sequentially and 5.0% over last year. China, the second-largest revenue generating country for Dell, reported revenue increase of 20.0% sequentially and 8.0% from the year-ago quarter.

Operating Results

Gross margin for the quarter was 17.3%, below 18.8% reported in the third quarter of 2009. The decline in gross margin took place as gross profit declined at a higher rate than revenue.

In addition, operating expenses declined 10.0% from the year-ago quarter, as a result of a decline in both SG&A and R&D expenses. This translated into an operating margin of 4.5% versus 6.7% in the year-ago quarter. Tax rate for the third quarter was 34.5%, compared to 28.0% in the year-ago quarter.

Earnings per share during the quarter were $0.17, down from $0.37 reported in the year-ago quarter and $0.24 reported in the previous quarter. The EPS for the quarter included a pre-tax expense of expense of $123.0 million or $0.05 per share and $40.0 million or $0.01 per share for amortization of intangibles. Excluding that, the EPS for the quarter comes to $0.23.

Balance Sheet & Cash Flow

Dell’s cash conversion cycle improved by a day to negative 36 days. Cash flow from operations declined to $801.0 billion from $1.0 billion reported in the previous quarter. The company ended the quarter with $13.12 billion in cash and short-term investments versus $11.99 billion in the previous quarter. Long-term debt stood at $3.44 billion at the end of the quarter versus $3.39 billion in the previous quarter.

Guidance

Dell did not provide any guidance for the fourth quarter, but expects seasonal improvement in demand from the consumer end market. However, Public sector demand may be lower. The company expects fourth quarter revenue to improve over the third quarter.
Read the full analyst report on "DELL"
Zacks Investment Research

Zacks Analyst Blog Highlights: Apple Inc., KT Corp., SK Telecom, China Unicom and American Express Company – Press Releases

Zacks Market Commentaries — Fri, 20 Nov 2009 13:00:31 +0000

For Immediate Release

Chicago, IL – November 20, 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: Apple Inc. (AAPL), KT Corp. (KTC), SK Telecom (SKM), China Unicom (CHU) and American Express Company (AXP).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

South Korea Welcomes iPhone

Apple Inc.’s (AAPL) iPhone is finally reaching the hands of South Korean mobile users. The country’s telecom regulator Korea Communications Commission (“KCC") has granted Apple the license to sell the iconic handset in the domestic cell phone market. KCC has also lifted the restrictions that prohibited location-based services on smartphone devices such as the Google Maps application on iPhone.

South Korea’s second-largest wireless carrier KT Corp. (KTC) will start booking Internet order for iPhone (3G & 3GS) soon and begin selling it from Nov 28, 2009. The company targets to initially sell 150,000 units priced between KRW250,000 and KRW300,000 (US$216 and US$260). KT’s peer SK Telecom (SKM), the largest mobile operator in the country, is still negotiating with Apple for securing distribution rights.

South Korean wireless market is technologically advanced and relatively mature with roughly 47 million total subscribers, representing 96% penetration of the country’s population. Currently, the country’s cellular handset market is dominated by local companies such as Samsung and LG Electronics, two of the world’s leading handset manufacturers.

With KCC’s approval, South Korea is set to become one of the last major Asian countries to get the iPhone. The device has been already launched by China Unicom (CHU) in China in October 2009. Additionally, iPhone is also being sold in other major markets such as India, Japan and Australia.

AmEx to Buy Revolution Money

American Express Company (AXP) said on Wednesday that it will acquire Internet payment platform Revolution Money for about $300 million.

The deal is expected to close in early 2010. Following the closure of the deal, Revolution Money would operate as a subsidiary of AmEx. The founder and chief executive of Revolution Money, Jason Hogg, will continue as president and chief executive.

St. Petersburg-based Revolution Money was founded by AOL co-founder Steve Case’s Revolution LLC in 2007. Revolution Money provides payments through an internet-based platform and issues prepaid cards that can be used for offline payments or to withdraw cash from ATMs in the U.S. Additionally, Revolution Money offers MoneyExchange, a service to remit money by people using social and instant messaging networks.

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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=5517

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Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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312-265-9380
Visit: www.zacks.com

Zacks Investment Research

Zacks Analyst Blog Highlights: Toyota Motors, Petroleo Brasileiro S.A., ExxonMobil Corp., Chevron Corp., and Royal Dutch Shell PLC – Press Releases

Zacks Market Commentaries — Fri, 20 Nov 2009 12:26:57 +0000

For Immediate Release

Chicago, IL – November 20, 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: Toyota Motors (TM), Petroleo Brasileiro S.A. (PBR), ExxonMobil Corp. (XOM), Chevron Corp. (CVX) and Royal Dutch Shell PLC (RDS.A).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

Toyota’s 1st Sales Gain in 15 Months

Toyota Motors (TM) has posted its first year-over-year monthly sales gain across the globe in 15 months during October. The company’s sales rose 4% to more than 630,000 vehicles. In the U.S., the company’s sales fell 3.5%.

However, in the domestic market Toyota’s sales grew 15% helped by tax breaks for purchases of environment-friendly cars. In China, the company saw a staggering rise of 40% in sales. Toyota returned to profitability in the second quarter of fiscal 2010 ended Sep 30, 2009, after reporting losses since the third quarter of fiscal 2009.

The company posted a profit of ¥21.8 billion ($232 million) or ¥6.96 per share (7 cents) per share. This profit was attributed to government incentive programs across the world – such as the U.S. “Cash for Clunkers"– that helped the company recoup its market share. Consolidated revenue in the quarter dipped 24% to ¥4.54 trillion ($48 billion).

Automotive revenue fell 24% to ¥4.11 trillion ($44 billion) while Financial Services revenue shrank 17% to ¥307 billion ($4 billion). This was on the back of a decline in vehicle sales in each region as well as a negative impact from the appreciation of yen. Sales volume declined 16% to 1.64 million units due to a decrease in volume in all the regions except North America.

Petrobras Profit Exceeds Ests

Brazilian energy giant Petroleo Brasileiro S.A. (PBR), or Petrobras S.A. announced encouraging third quarter results, helped by strong performance from the Supply segment. Earnings per ADR came in at R$1.66 (96 cents), comfortably beating the Zacks Consensus Estimate of 80 cents. However, on a year-over-year basis, Petrobras’ earnings per ADR was down approximately 28.7%, hurt by lower prices of oil and natural gas. Still, they were better than the high double-digit earnings decline suffered by other majors such as ExxonMobil Corp. (XOM), Chevron Corp. (CVX), and Royal Dutch Shell PLC (RDS.A).

Total oil and gas production during the third quarter of 2009 reached 2,534 million oil-equivalent barrels per day, from 2,524 million in the previous quarter and 2,437 million in the same period of 2008. Compared to the third quarter of 2008, Brazilian oil and natural gas liquids production increased 4.8%, while international production was up 24.6%. However, Brazilian natural gas volumes were down 3.3% from the year-ago period, while international output during the quarter was down 6.0% year over year.

During the third quarter of 2009, the average sales price of oil in Brazil decreased 36.4% from the year-earlier period to $64 per barrel. Average sales price of international oil was down 16.9% year-over-year, reaching $57.16 per barrel. Regarding natural gas, average international sales price decreased 21.5% from the third quarter of 2008, while domestic price was down 61.5%.

Refining costs per barrel in Brazil was down 2.6% to $3.37 and internationally, it fell 45.2% to $3.51. Lifting cost per barrel moved down 24.5% in Brazil to $22.86, while overseas costs rose 9.4% to $5.6. Petrobras exported an average of 724,000 barrels of oil per day, 10.2% higher compared to the same period last year.

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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.

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=5517

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Zacks Investment Research

Zoellick on the world economy and new hotspots

Prieur du Plessis — Fri, 20 Nov 2009 09:40:07 +0000

In this three-part video interview, Robert Zoellick, president of the World Bank, discusses a range of topical issues concerning the global economy, new economic hotspots, the Chinese currency peg and lessons from the crisis.

Prieur’s readings (November 20, 2009)

Prieur du Plessis — Fri, 20 Nov 2009 09:26:14 +0000

Squanderville vs. Thriftville

Prieur du Plessis — Fri, 20 Nov 2009 09:24:39 +0000

Using animation, Warren Buffett eloquently explains in just more than two minutes why trade imbalances lead to serfdom. Put differently, and in the context of the US / China talks, "Thriftville" owns "Squanderville" in the endgame.

Demand for Gold Rising in China

Frank Holmes — Fri, 20 Nov 2009 06:00:00 +0000

You can add gold demand to the list of items being supported by China. China was the sole market to see positive growth in consumer demand for gold, rising 12 percent from a year ago the World Gold Council reports. Total gold demand in China reached 120 tonnes, nearly double the amount from just four years ago. Overall, gold demand was off 34 percent from 2008 but that is largely the result of exceptionally high demand increases during the darkest time of the financial crisis. On a year-to-date basis, gold demand is only down 6.3 percent. Chinarsquo;s improving economy has made consumers less price sensitive than those in India and the Middle East who have not fully adjusted to gold prices at current levels. Jewelry demand in India fell 42 percent on a year-over-year basis but Indians havenrsquo;t abandoned their strong cultural connection to gold. Exchange activity among consumersmdash;where old pieces are swapped for new onesmdash;has spiked. The WGC says this ldquo;suggests a strong desire by consumers to remain attractive in the [gold] market.rdquo; BMO doesnrsquo;t believe that the downtick in demand is a symptom of a long-term trend. In a research note, they write that ldquo;the combination of a strengthening economy, modest supply growth, central-bank buying and concerns surrounding the U.S. dollar and inflation should continue to support gold demand and prices into 2010.rdquo; All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-819

China, the Renminbi, and Global Imbalances: A Quantitative View

Menzie Chinn — Fri, 20 Nov 2009 04:45:12 +0000

President Obama's trip to China has returned to scrutiny the role of China's currency and macroeconomic policies in perpetuating global imbalances. [0] [1] [2]

Figure 1: Log real value of RMB (blue, left axis), and Chinese trade balance in billions USD at annual rates (red, right axis) from Chinese statistical sources, and twelve month trailing moving average (maroon). Source: IMF, International Financial Statistics, ADB, NBER and author's calculations.

Various observers have continued to ascribe a central role to real RMB appreciation to effect global rebalancing. I think it's useful to remember that, given a Chinese trade balance in excess of 260 billion USD, appreciation can only have a certain impact. From Cheung, Chinn and Fujii (forthcoming):

...using a single equation error correction model, allowing for coefficient shifts with Chinese accession to WTO, leads to a statistically insignificant estimate of the price elasticity. In the 2000-06 period, the implied price elasticity is zero. Using this point estimate, then a 10% appreciation would actually lead to a shrinkage of the trade balance from 400.9 billion to 355.2 billion. This estimate of 45.7 billion (2000$) is somewhat less than the $88.6 billion current dollars reported in Marquez and Schindler (forthcoming) [working paper version].

The export equations take the form:

Δ exp _t = θ ₀ + ρ exp _t-1 + θ ₁ y^* _t-1 + θ ₂ r _t-1 + θ ₃ k _t-1 + σ ₁ Δ exp _t-1 + 2 lags of first differenced right hand side variables + quarterly dummies + WTO dummy + v _t

Where exp is log exports, y^* is log RoW GDP, r is the real exchange rate, and k is the Chinese capital stock. The import equations take the form:

Δ imp _t = β ₀ + φ imp _t-1 + β ₁ y _t-1 + β ₂ r _t-1 + γ₁ Δ imp _t-1 + 1 lag of first differenced right hand side variables + quarterly dummies + WTO dummy + u _t

Where imp is log imports, y is log GDP.

Separate regressions are run for ordinary and processing trade, over the 1993Q4-07Q1 period. The adjusted R²'s range from 0.77 to 0.92.

If we take the Goldstein-Lardy misalignment estimates of 20% to heart, then a 20% appreciation would lead to an approximately 91.4 billion (2000$) reduction in the Chinese trade balance. As best as I can tell, the export prices from China, and to China (as proxied by unit value indices for Hong Kong) have probably stayed constant relative to 2000; hence the nominal impact is around 90 billion USD (with considerable uncertainty surrounding this point estimate).

This leaves a large Chinese trade surplus in place, around 170 billion even before the rebound in the Chinese surplus anticipated as the world aggregate demand recovers. Now, to the extent that Chinese reserve accumulation is due to a current account surplus and capital inflows, one could hope that a revaluation would have an additional knock-on effect by deterring capital inflows (the argument would be revaluation would eliminate expectations of appreciation that would provide capital gains on holding RMB). That is, recall the balance of payments identity:

CA + KA + ORT ≡ 0

Where CA is the current account, KA is private capital account, and ORT is official reserves transactions.

Figure 2, drawn from Prasad and Sorkin (2009) shows that net inflows were not a major factor, at least in 2008.

Figure 2 from Eswar Prasad and Isaac Sorkin, "Sky's the Limit? National and Global Implications of China's Reserve Accumulation," mimeo (July 2009).

This suggests to me that rebalancing requires as much or more Chinese fiscal stimulus and a concerted effort to encourage private consumption via enhancing the social safety net, in addition to RMB revaluation. (This can be seen in a Mundell Fleming framework, as applied to China [3]). And it also requires determined action from the US side as well (see here). If only we'd conducted a sane fiscal policy in 2001-08 [4], our range of action would now be wider in this respect.

Are negative yield money funds next?

Richard Shaw — Fri, 20 Nov 2009 00:13:47 +0000

The U.S. policies have driven short-term interest rates to Japan-like levels, creating “free” money for banks, creating a massive carry-trade speculative investment funds flow, financially crippling low and middle income senior citizens who have historically relied on bank deposits to supplement their meager Social Security checks, and pushing very hard on investors to leave the [...]

PWRM, HZHI, HCEI, CVAT, PSFT, TAXS, CSRH, AQNM, DrStockPick.com Stock Report!

Dr. Stock Pick — Thu, 19 Nov 2009 21:45:12 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Thursday November 18, 2009 DrStockPick.com Stock Report! PWRM, HZHI, HCEI, CVAT, PSFT, TAXS, CSRH, AQNM ************************************************************** HCEI, Healthy Coffee International Inc., HCEI.PK HCEI is well positioned in the market place at the intersection of three mega-billion dollar industries: coffee, wellness and energy drinks, and has quickly established offices [...]

Grainger Boosted by Acquisitions – Analyst Blog

Zacks Market Commentaries — Thu, 19 Nov 2009 21:10:14 +0000

W.W. Grainger Inc. (GWW) reported a 3% year-over-year drop in October sales. (October this year had one less selling day compared to October 2008.) The company benefited from a 2% positive contribution from the businesses in Japan and India, 1% from the acquisition of Imperial Supplies and 2% from favorable foreign currency translation. Excluding the impact of acquisitions and currency exchange, Grainger’s daily sales in October were down 8% from last year.

The company witnessed a 7% decline in daily sales in the U.S., as demand remained weak across all end markets. These results include sales from Imperial Supplies, which the company acquired in mid-October. Excluding this acquisition, U.S. daily sales were down 8%.

In the Canadian (Acklands-Grainger) division, daily sales were up 5% due to favorable foreign exchange. However, the division’s daily sales were down 7% in local currency due to continued weakness in the Canadian economy.

Sales of Grainger’s other businesses increased 177%, primarily driven by incremental sales from acquisitions in Japan and India, along with sales growth in Mexico, Puerto Rico, China and Panama.

Grainger anticipates November sales to be flat or up modestly from last year’s level. The company expects sales to be in a range of down 2% to up 1% for the fourth quarter. Full-year sales are expected to come in 9% to 10% below the 2008 level. The company forecasts fourth quarter EPS of $1.13-$1.23 and full-year EPS of $5.10-$5.20.

Further, Grainger provide guidance for 2010. The company is forecasts 2010 revenue to be up 4%-9% year-over-year. Earnings for 2010 are anticipated in the range of $5.30 to $5.80 per share. Grainger expects a 3% sales contribution and 5 cents per share of earnings growth from acquisitions made in 2009.

Acquisition

Grainger announced an all-cash acquisition of Alliance Energy Solutions. The company expects the acquisition to be accretive to earnings by approximately 1-2 cents per share in 2010.

Alliance Energy Solutions is a provider of turn-key energy-efficient retrofits. Grainger said that this is its first service-based acquisition in the U.S. With this acquisition, Grainger can provide value added services to complement its deep product line around lighting products. The company did not disclose other terms of the deal.
Read the full analyst report on "GWW"
Zacks Investment Research

Japan’s Shiseido Eyes 20% Growth In China

China Retail News — Thu, 19 Nov 2009 19:30:23 +0000

Japanese cosmetics company Shiseido has announced plans to introduce a new brand into China with the aim of gaining 20% growth in this market. According to Yasuhiko Harada, the chief financial officer of Shiseido, the company made revenues of JPY690 billion last year. Of the total revenue, 10% was from the Chinese market. Shiseido says that due [...]

South Korea Welcomes iPhone – Analyst Blog

Zacks Market Commentaries — Thu, 19 Nov 2009 18:46:09 +0000

Apple Inc.’s (AAPL) iPhone is finally reaching the hands of South Korean mobile users. The country’s telecom regulator Korea Communications Commission (“KCC") has granted Apple the license to sell the iconic handset in the domestic cell phone market. KCC has also lifted the restrictions that prohibited location-based services on smartphone devices such as the Google Maps application on iPhone.

South Korea’s second-largest wireless carrier KT Corp. (KTC) will start booking Internet order for iPhone (3G & 3GS) soon and begin selling it from Nov 28, 2009. The company targets to initially sell 150,000 units priced between KRW250,000 and KRW300,000 (US$216 and US$260). KT’s peer SK Telecom (SKM), the largest mobile operator in the country, is still negotiating with Apple for securing distribution rights.

South Korean wireless market is technologically advanced and relatively mature with roughly 47 million total subscribers, representing 96% penetration of the country’s population. Currently, the country’s cellular handset market is dominated by local companies such as Samsung and LG Electronics, two of the world’s leading handset manufacturers.

With KCC’s approval, South Korea is set to become one of the last major Asian countries to get the iPhone. The device has been already launched by China Unicom (CHU) in China in October 2009. Additionally, iPhone is also being sold in other major markets such as India, Japan and Australia.

KCC’s approval to allow foreign handset vendors to enter the domestic market is aimed at increasing the options for brand-conscious cell phone users rather than just limiting their choice to indigenously manufactured devices. In April 2009, the Korean government cleared the path for foreign handset vendors by abolishing a mandate requiring all mobile handsets sold locally to use a home-grown software platform.

While approval of iPhone in South Korea represents a boon for local mobile users, the presence of a leading foreign brand will intensify competition in the country’s highly penetrated mobile market. Local companies such as LG and Samsung are gearing up for the emerging competition as they are strengthening their handset range by adding more state-of-the-art devices.

Nevertheless, iPhone represents a significant opportunity for the incumbent wireless carriers in South Korea (such as KTC and SKM) to attract high-end customers, which would help them to boost wireless data ARPU (average revenue per user) and customer base.

Read the full analyst report on "AAPL"
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Read the full analyst report on "SKM"
Read the full analyst report on "CHU"
Zacks Investment Research

DrStockPick.com Stock Report! 11/19/09, PWRM, PLCE, AERT, COWI, EFIR, FLDR

Dr. Stock Pick — Thu, 19 Nov 2009 18:42:49 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Thursday Nov 19, 2009 DrStockPick.com Stock Report! ************************************************************** Power3 Medical Products, Inc. (OTCBB: PWRM), a leader in neurodegenerative disease and cancer biomarkers and diagnostic tests, announced further international recognition of validity as the company’s President and CSO, Dr. Ira Goldknopf, will deliver an [...]

China Marine Food Group Ltd. (CMFO) Releases 2010 Guidance

QualityStocks — Thu, 19 Nov 2009 16:26:42 +0000

China Marine Food Group Ltd., a China based processor and distributor of seafood products, today announced revenue and net income guidance figures for the year 2010, showing anticipated increases in revenue and net income. The company is now forecasting 2010 revenues of greater than $80.0 million, based on current sales from China Marine’s existing distribution network [...]

VIASPACE, Inc. (VSPC.OB) Announces Expansion of Giant King(TM) Grass Production Capacity

QualityStocks — Thu, 19 Nov 2009 14:16:36 +0000

VIASPACE Inc., a clean energy company growing Giant King(TM) Grass as a low-carbon, renewable energy crop, announced that it has leased an additional 136 acres in Guangdong Province, China. The new acreage has already been planted with Giant King Grass. With 250 acres now under cultivation, VIASPACE is in negotiations to acquire more land. The current [...]

PWRM, PFE, DrStockPick.com Stock Report! Power 3 Medical Products Inc. and Pfizer Inc.

Dr. Stock Pick — Thu, 19 Nov 2009 14:00:16 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Thursday Nov 19, 2009 DrStockPick.com Stock Report! PWRM, PFE ************************************************************** PWRM, Power 3 Medical Products Inc, PWRM.OB PWRM is a leading bio-medical company engaged in the commercialization of neurodegenerative disease and cancer biomarkers, pathways, and mechanisms of diseases through the development of diagnostic tests and drug targets. PWRM’s patent-pending [...]

Toyota’s 1st Sales Gain in 15 Months – Analyst Blog

Zacks Market Commentaries — Thu, 19 Nov 2009 14:00:00 +0000

Toyota Motor (TM) has posted its first year-over-year monthly sales gain across the globe in 15 months during October. The company’s sales rose 4% to more than 630,000 vehicles. In the U.S., the company’s sales fell 3.5%.

However, in the domestic market Toyota’s sales grew 15% helped by tax breaks for purchases of environment-friendly cars. In China, the company saw a staggering rise of 40% in sales. Toyota returned to profitability in the second quarter of fiscal 2010 ended Sep 30, 2009, after reporting losses since the third quarter of fiscal 2009.

The company posted a profit of ¥21.8 billion ($232 million) or ¥6.96 per share (7 cents) per share. This profit was attributed to government incentive programs across the world – such as the U.S. “Cash for Clunkers"– that helped the company recoup its market share. Consolidated revenue in the quarter dipped 24% to ¥4.54 trillion ($48 billion).

Automotive revenue fell 24% to ¥4.11 trillion ($44 billion) while Financial Services revenue shrank 17% to ¥307 billion ($4 billion). This was on the back of a decline in vehicle sales in each region as well as a negative impact from the appreciation of yen. Sales volume declined 16% to 1.64 million units due to a decrease in volume in all the regions except North America.

In North America , volume increased by 13,938 units to 250,704 units driven by demand generated by the Clunkers program. Toyota revised its consolidated vehicle sales for the fiscal ending Mar 31, 2010, from 6.6 million to 7.03 million units, an increase of 430,000 units.

This figure reflects the increase in sales due to the success of various incentive programs launched by governments across the world to stimulate demand in the industry as well as sales of the company’s own hybrids and other environment-friendly vehicles. Consequently, consolidated net revenues forecast were upgraded to ¥18 trillion ($191 billion).

However, the company anticipates an operating loss of ¥350 billion ($3.72 billion) and net loss of ¥200 billion ($2.13 billion) for fiscal 2010. These lead us to recommend the shares of the company as Neutral.
Read the full analyst report on "TM"
Zacks Investment Research

Solar Stocks News – Suntech (NYSE: STP) Reports Third Quarter 2009 Financial Results

Dawn Van Zant — Thu, 19 Nov 2009 13:00:00 +0000

SAN FRANCISCO and WUXI, China - November 19, 2009 - Suntech Power Holdings Co., Ltd. (NYSE: STP), the world's largest crystalline silicon photovoltaic (PV) module manufacturer, today announced financial results for its third fiscal quarter ended September 30, 2009.

What if They Stop Buying our Debt?

Contrarian Profits — Thu, 19 Nov 2009 11:52:24 +0000

pstrongDoug Hornig, senior prognosticator at a href="http://www.caseyresearch.com/crpmkt/crpSolo.php?id=168#38;ppref=CTP168ED1109C"The Casey Report/a, analyzes the alarming trend of U.S. federal debt and its future implications./strong /p p“I have always depended on the kindness of strangers,” said Blanche DuBois, in the final words of the play A Streetcar Named Desire. Well, don’t we all./p pMany citizens probably still cling to the old saw that public debt doesn’t matter because “we owe it to ourselves.” Wrong. Debt always matters. And as for whom we owe it to, it is a lot of kind (or, at least, not yet unkind) strangers./p pAs recently as 1970, foreign holders of U.S. debt were essentially non-existent. But their slice of our obligation pie has steadily increased, especially over the past two decades, until now foreign#8230;/p

Prieur’s readings (November 19, 2009)

Prieur du Plessis — Thu, 19 Nov 2009 09:17:21 +0000

Prieur’s readings (November 19, 2009)

Prieur du Plessis — Thu, 19 Nov 2009 09:17:21 +0000

DrStockPick.com Stock Report! 11/18/09, INTG, PWRM, RSG, KNOT, ASPN, FFNW

Dr. Stock Pick — Wed, 18 Nov 2009 20:15:36 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Wednesday November 18, 2009 DrStockPick.com Stock Report! ************************************************************** The InterGroup Corporation (NASDAQ: INTG) today announced that, on November 17, 2009, the Company received notice from the Listing Qualifications Staff of The NASDAQ Stock Market LLC (the “Staff”) indicating that the Staff has determined to [...]

Niusule Biotech Corp. (NIUS.OB) Announces Guidance for Calendar Year 2010

QualityStocks — Wed, 18 Nov 2009 20:10:38 +0000

Niusule Biotech Corp. develops and distributes health food and related products manufactured in the US to Chinese consumers. The company launched its Niasule Gummy Bears nutritional supplements for children in September 2009 and its PlantFusion protein powder in June 2009. Niusule has a retail distribution network of 36 outlets in the Zhejiang province and is [...]

Tesco To Set Up Joint Venture In China

China Retail News — Wed, 18 Nov 2009 19:30:36 +0000

British retail giant Tesco has announced that it will set up a joint venture in China to develop its shopping center business in the nation. The joint venture will be 50% owned by Tesco and the remaining 50% will be owned by Asian investors, including HSBC Nan Fung China Real Estate Fund, Singapore's Metro Holdings, and [...]

Eastman Boosts Guidance – Analyst Blog

Zacks Market Commentaries — Wed, 18 Nov 2009 18:11:54 +0000

Eastman Chemical Co. (EMN) has raised its full year 2009 earnings guidance to $3.50 per share from the initial guidance of $2 to $3 per share, driven by an expected strong growth in its core business. The company is hoping to deliver about 20% or over $6 per share growth in annual earnings by 2012, as the economy recovers completely.

The Zacks Consensus Estimate is pegged at $3.22 for 2009 and at 93 cents for the fourth quarter. Recently, Eastman’s close peers, Dow Chemical Company (DOW) and Dupont (DD) have also predicted strong growth in earnings.

Eastman stands to benefit from its business restructuring and cost-cutting measures, which are expected to result in cost savings of more than $200 million for the full year 2009. Eastman’s earnings of $1.38 per share in the third quarter of 2009 had bettered the Zacks Consensus Estimate of $1.13 per share helped by lower costs.

The company managed margins by reducing its operating costs. However, lower selling prices and volumes across all major segments resulted in a 21% year-over-year fall in Eastman’s top line of $1.3 billion for the quarter. Eastman’s core businesses, including Coatings, Adhesives, Specialty Polymers and Inks, Fibers, Performance Chemicals and Intermediates as well as Specialty Plastics suffered on weak demand from the automotive, building and construction, and packaging markets.

Tennessee-based Eastman, which makes chemicals, plastics and fibers used in everything from paints to furniture, expects to benefit from a better product mix and cost reduction measures in the fourth quarter of 2009. However, the company expects volatility in raw material and energy costs and a decline in sales volume due to normal seasonality having a negative affect on the upcoming quarter.

Eastman expects the growth in earnings investments in sustainable products and emerging markets. The company is eyeing the cigarettes market, which is witnessing high growth on the back of strong demand from Russia and China. Strong demand for cigarettes will help earnings in the company's fibers unit, which also produces base materials for clothing. Eastman produces acetate tow, used to make filters for cigarettes. In the Performance Polymer segment, Eastman is expecting operating earnings of $25 to $50 million by monetizing IntegRex technology investment through licensing.

This apart, Eastman has about $117 million remaining on a share repurchase allocation, and intends to use that up in the next few years. Eastman is more open now to acquisitions or joint ventures than it had previously been, due in part to a new growth strategy. The company recently launched a $250 million note offering for fund growth projects.
Read the full analyst report on "EMN"
Read the full analyst report on "DOW"
Read the full analyst report on "DD"
Zacks Investment Research

China Digital Animation Development, Inc. (CHDA.OB) Enters Stock Purchase Agreement

QualityStocks — Wed, 18 Nov 2009 18:04:02 +0000

Today, China Digital Animation Development, Inc. announced that it has entered into a stock purchase agreement with Chongqing Dinv Ares Filming Production Co., Ltd. (Dinv Ares), an award-winning film production company based in Chongqing, China. The acquisition will be an all-stock transaction in which China Digital Animation will issue one million shares of its common [...]

American Oriental Disappoints – Analyst Blog

Zacks Market Commentaries — Wed, 18 Nov 2009 17:04:03 +0000

American Oriental Bioengineering’s (AOB) third quarter earnings per share came in at 13 cents, well below the Zacks Consensus Estimate of 19 cents and 21 cents in the year ago period. The company derives revenues from two operating segments – Manufacturing and Distribution. During the quarter, Manufacturing accounted for more than 95% of the company’s total revenues.

Total revenues increased 11.7% year over year to $78.8 million. American Oriental records Manufacturing revenues from two sources – Pharmaceutical and Nutraceutical products. Both sources recorded an increase of 6.3% to $66 million and 8.2% to $9.2 million, respectively, compared to the third quarter of 2008. The company generated $3.6 million from its Distribution business during the reported quarter.

Revenues from prescription pharmaceutical products increased 22.7% to $29.8 million during the quarter, primarily driven by increased sales of Jinji capsule, Boke and CCXA products, partially offset by decline in sales of Shuanghuanglian injection powder (SHL). We believe prescription drug sales should continue their growth trajectory as China is aiming a reform in the health care sector to incorporate the previously unaddressed rural markets.

Although prescription pharmaceutical products recorded a robust growth during the quarter, revenues of OTC pharmaceutical products declined to $36.2 million compared to $37.8 million in the year ago period, primarily due to lower sales of Jinji Yimucao, a drug included in China's Essential Drug list since distributors reduced orders viewing price uncertainty related to health care reform.

While American Oriental recorded an increase in revenues, both gross profit and margin deteriorated during the quarter. Gross profit was $44.1 million compared to $47.2 million in the third quarter of 2008 while gross margin was 56%, compared to 66.8% in the prior year period. A shift of revenue mix to CCXA's generic product sales, rising raw material prices and lower margin Distribution business from Nuo Hua brought down the margin.

An increase in both selling & marketing and general & administrative expenses reduced operating income of the company, which came down to $15 million in the quarter compared to $21.6 million in the year ago period. Selling & marketing and general & administrative expenses increased 23.2% due to higher promotional initiatives and 37.7% driven by expenses related to improving production efficiency and other norms to meet more stringent GMP manufacturing standards, respectively.

Read the full analyst report on "AOB"
Zacks Investment Research

Worldwide Energy and Manufacturing USA, Inc. (WEMU.OB) Clarifies and Reaffirms Guidance for FY 2009

QualityStocks — Wed, 18 Nov 2009 16:13:37 +0000

Worldwide Energy and Manufacturing USA, Inc.’s management today clarified and reaffirmed guidance for the 2009 fiscal year ending December 31, 2009. Jimmy Wang, chief executive officer of Worldwide Energy and Manufacturing USA, Inc., stated, “The Company reaffirms guidance previously provided in our November 5, 2009, third-quarter earnings conference call that we expect annual revenues of [...]

Another Acquisition by Danaher – Analyst Blog

Zacks Market Commentaries — Wed, 18 Nov 2009 15:42:45 +0000

Gilbarco Veeder-Root, a wholly owned unit of Danaher Corporation (DHR), agreed to buy a petroleum dispensing pump (PDP) unit from Larsen & Toubro (L&T) in India. The PDP business unit manufactures, sells, integrates and services petroleum dispensers, LPG equipment, and automation systems solutions. The financial terms of the acquisition were not disclosed.

This acquisition will further strengthen Gilbarco’s position in the fast growing Indian market. Danaher’s management stated that the acquisition reaffirms the company’s interest in India and is in tandem with its long-term growth strategy. The acquired unit will be joining 14 other Danaher companies in India.

The PDP unit will be a part of Gilbarco Veeder-Root’s organization in a new division called Gilbarco Veeder-Root India. Gilbarco supplies integrated fuel control, site management and support services for petroleum marketers and commercial fuelling enterprises.

During its third quarter conference call, Danaher pointed that it was seeing strongly positive growth in China and India, the two high growth countries in Asia. The company said that though the rest of the emerging markets were soft, it witnessed mid-single digit growth in China and India during the quarter. The company is quite bullish on growth opportunities in these two countries.

Danaher is focused on strengthening its competitive position and accelerating its sales and earnings growth potential through acquisitions. During the third quarter, the company completed six acquisitions and announced another two acquisitions to be completed in the fourth quarter.

Danaher Corporation, together with its subsidiaries, designs, manufactures, and markets professional, medical, industrial, commercial, and consumer products, primarily in the United States, Europe, and Asia. Major competitors are Emerson Electric Company (EMR) and Johnson Controls Inc (JCI).

We currently have a Neutral recommendation on DHR.

Read the full analyst report on "DHR"
Read the full analyst report on "EMR"
Read the full analyst report on "JCI"
Zacks Investment Research

Power3 Investors Looking Forward to Expo (OTC:PWRM)

Jay Garcilazo — Wed, 18 Nov 2009 15:23:21 +0000

Miv Investments Inc. has initiated an independent bullish technical trading alert for 11/18/09 on Power3 Medical Products, Inc. (OTC:PWRM). Shares of the company finished the day at $0.129, up 69.74% from the ...

Power3 Investors Looking Forward to Expo (OTC:PWRM)

Jay Garcilazo — Wed, 18 Nov 2009 15:23:21 +0000

Stock Market News for November 18, 2009 – Market News

Zacks Market Commentaries — Wed, 18 Nov 2009 14:03:17 +0000

U.S. stocks closed higher for the second consecutive day, helped by strength in shares of commodity-related companies even as major retailers said they remain cautious ahead of the holiday season. At the end of a session that lacked conviction, major stock indexes managed to reach their fresh 13-month highs. A smaller-than-anticipated rise in industrial production also weighed on sentiments.

Waning risk appetites sent gold prices up 20 cents to a fresh all-time high of $1,139.40. Treasuries rose, pushing corresponding yields lower. The yield on the benchmark 10-year note slipped to 3.33% from 3.34% late Monday. Crude prices closed above $79 per barrel. Copper prices rose to 14-months highs on expectations that China demand will remain robust.

A perpetual decline in the value of the dollar and record low interest rates in the US have driven stocks higher as investors, seeking higher return on their investments, have sought refuge in equities. A subdued inflation has also proved welcome for the economy.

This morning’s stock futures show a mixed opening on the Street. Dow Jones industrial average futures are down 2 points, or about 0.1%, at 10,396. Standard & Poor's 500 index futures are up 0.10, or nearly 0.1%, at 1,107.50, while Nasdaq 100 index futures are down 5.50, or 0.3%, at 1.803.25.

On Tuesday, the 30-share Dow Jones industrial average rose 30.46 points, or 0.3%, to 10,437.42, its highest close since October 2, 2008. The Dow had jumped 136 points Monday after the retail sales report. The broad Standard & Poor's 500-stock index inched up 1.02 points, or 0.09%, at 1,110.32 and the tech-heavy Nasdaq composite index gained 5.93 points, or 0.27%, to 2,203.78. Meanwhile, the price of US Treasuries continued to gain, with the 10-year up 7/32 as its yield eased to 3.323%. On the New York Stock Exchange, volume slowed to 972,000 shares with declining shares ahead of advancing issues by an 8 to 7 margin. The Vix volatility measure fell 2.1% to 22.41.

Six of the ten S&P500 industry sectors managed gains yesterday, led by gains in basic material shares (+1.1%), technology (+0.5%), and telecommunications (+0.5%). Consumer service shares (-0.4%), oil and gas (-0.2%), utilities (-0.2%) led on the downside, with industrials shedding 0.04%.

The US dollar gained against a basket of currencies yesterday in a delayed reaction to Fed Chairman Bernanke's remarks that the Fed is "attentive to implications of changes in the value of the dollar," as well as indications the Fed may be inching toward more restrictive policy measures as financial markets show signs of improvement.

A cautious holiday season guidance from major retailers such as Target (NYSE:TGT) and Home Depot (NYSE:HD) weighed on retail shares. Target (NYSE:TGT), down 3.0% on Tuesday, said average transaction size has dwindled in November, adding it sees lower fourth quarter same-store-sales. Home Depot (NYSE:HD), off 2.4%, provided below-consensus fourth quarter guidance, saying its markets remain under pressure. Ford (NYSE:F) shares, meanwhile, rose to their two-year high on news its Fusion hybrid was named Motor Trend's 2010 Car of the Year.

Zacks Investment Research

Debt – the fall of the U.S. economic empire

Contrarian Profits — Wed, 18 Nov 2009 13:11:12 +0000

The 19th century belonged to Britain, the 20th century belonged to America and in the 21st century, China will rule the business world. Whether you like it or not, this transition is already underway and it will intensify over the coming decades.

Prieur’s readings (November 18, 2009)

Prieur du Plessis — Wed, 18 Nov 2009 11:06:59 +0000

Charlie Rose in conversation with Henry Kissenger

Prieur du Plessis — Wed, 18 Nov 2009 10:56:19 +0000

In this post, Charlie Rose sits down with Henry Kissinger, German-American scholar and Secretary of State of the United States from 1973 to 1977, to discuss President Obama's visit to China.

DryShips Inc. – Value – Zacks Rank Buy

Tracey Ryniec — Wed, 18 Nov 2009 05:00:00 +0000

DryShips Inc. (DRYS) is now a Zacks #1 Rank (strong buy) stock as estimates rise after a tough year where earnings per share dropped by 90%. The stock is now cheap, trading at just 6.6x forward earnings.

Company Description

DryShips operates drybulk carriers and offshore oil deep water drilling worldwide. The dry bulk fleet has a capacity of over 3.4 million deadweight tons and operates 39 drybulk carriers, including 7 Capesize, 30 Panamax and 2 Supramax carriers.

The company's offshore oil deep water drilling division operates 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships.

DryShips Surprised by 28.57% in the Third Quarter

On Oct 26, DryShips reported its third quarter results and beat the Zacks Consensus Estimate by 6 cents. Earnings per share were 27 cents compared to the Zacks Consensus of 21 cents.

The drybulk carrier segment continues to be challenged by the global economy. Net voyage revenues (voyage revenues minus voyage expenses) fell to $114.8 million from $228.2 million in the year ago period.

The company said the decrease was due to substantially lower freight market compared to the third quarter of 2008.

The offshore drilling segment, however, saw revenues rise 22.1% to $107.6 million from $88.1 million in the year ago period.

Outlook

Going forward, the company is seeing signs of economic recovery from countries other than China and India. Its drybulk fleet is also virtually fixed for the rest of 2009 and for 2010. It is also already 77% fixed for 2011.

Zacks Consensus Estimates Rise

Analysts have been raising estimates since the earnings beat. The fourth quarter Zacks Consensus Estimate has risen 4 cents to 25 cents in the last month.

The 2009 Zacks Consensus has climbed 12.8% to $1.06 from 94 cents per share in the prior 30 days with 7 out of 8 analysts raising during that time.

Fundamentals

DryShips has surprised on estimates 2 out of the last 4 quarters. The company's price-to-book ratio is just 0.67. Analysts expect 5-year sales growth of 77.18%.

Zacks Investment Research

China Green Agriculture, Inc. – Momentum – Zacks Rank Buy

Michael Vodicka — Wed, 18 Nov 2009 05:00:00 +0000

China Green Agriculture, Inc. (CGA) is once again pressuring its 52-week high after jumping higher on a recent third-quarter earnings surprise.

Company Description

China Green Agriculture, Inc., through its subsidiaries, develops and manufactures specialty fertilizers in China. The company also produces agricultural products like fruits, vegetables and flowers. China Green was founded in 200 and has a market cap of $297 million.

Chinese stocks are hot, and CGA is no exception, with the company's strong third-quarter results, reported on Nov. 11 helping to push shares back within striking distance of the 52-week high.

Third-Quarter Results

Sales were up 27% from last year to $11.3 million. EPS also came in strong at 24 cents per share, 4 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last four quarters by an average of 4 cents, or 26%.

The company's largest segment, Jinong, which sells fertilizer compounds and accounts for 90% of revenue, noted its top three sellers accounted for 16% of total sales, displaying solid revenue diversity. The group's sales were up 33.5% from last year, driven by increased production capacity and sales of its higher-end products.

Margins Expansion and a Strong Balance Sheet

Gross margin also expanded nicely, increasing to 62% from 56% last year. The company's cash position jumped $17.4 million to $35 million. Short-term loans totaled $2.2 million, against equity of $85.5 million. The company has no long-term debt.

Estimates Jump

After word of the good quarter estimates moved higher. The current-year estimate added 6 cents and now stands at 91 cents. The next-year estimate is pegged at $1.36, a bullish 49% growth projection.

Valuation

Shares of CGA are trading have some value too, trading with a forward P/E of 14X, a discount to the overall market.

The Chart

Shares of CGA are up big since taking flight in early April, hitting a new 52-week high at $15 in August. Since then shares have traded mostly sideways but continue to pressure to the top end of the recent range, take a look below.

Zacks Investment Research

Crown Equity Holdings, Inc Makes Two Acquisition Announcements in November: A Dr Stock Pick News Report!

Dr. Stock Pick — Wed, 18 Nov 2009 01:10:52 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Tuesday November 17, 2009 DrStockPick.com Stock Report! Crown Equity Holdings - CRWE has been trading on the quiet side lately but it looks like things are starting to heat up! CRWE - Crown Equity Holdings, Inc has recently made some announcements regarding acquisitions that could have far [...]

PWRM, HZHI, HCEI, CVAT, PSFT, CSRH, AQNM, DrStockPick.com Stock Report!

Dr. Stock Pick — Tue, 17 Nov 2009 22:44:50 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Tuesday November 17, 2009 DrStockPick.com Stock Report! PWRM, HZHI, HCEI, CVAT, PSFT, CSRH, AQNM ************************************************************** HCEI, Healthy Coffee International Inc., HCEI.PK HCEI is well positioned in the market place at the intersection of three mega-billion dollar industries: coffee, wellness and energy drinks, and has quickly established offices in [...]

Merge Raising Gross Proceeds – Analyst Blog

Zacks Market Commentaries — Tue, 17 Nov 2009 21:45:22 +0000

Merge Healthcare Incorporated (MRGE) decided to raise up to $27.3 million in gross proceeds, before placement agency fees and other expenses, by offering 9,084,032 shares of the company’s common stock at a purchase price of $3.00 per share. The offer is only for select institutional investors and is expected to close on Nov. 18, 2009.

Merge will use the proceeds primarily to prepay in full its senior secured notes held by Merrick RIS, L.L.C. due June 2010. The remaining amount will be used for general corporate purposes like the working capital financing.

William Blair & Company, L.L.C. is the lead placement agent for the fund raising offer. Craig-Hallum Capital Group LLC and Robert W. Baird & Co. Incorporated are the co-placement agents for the offering.

Merge is a healthcare software and services company focused on integrating radiology workflow to improve productivity, profitability and patient care by fusing business and clinical workflow, and intelligently managing and distributing diagnostic images and information throughout the healthcare enterprise.

Merge was paralyzed by several issues in the past like a dwindling cash balance, management turnover, accounting miscues and litigations. The real turnaround started from the second quarter of 2008 when the company received a much needed cash infusion of $20 million from Merrick RIS, LLC in May 2008.

Merge Healthcare recently tapped the Chinese healthcare market by forming an alliance with Shanghai Kingstar Winning Co., a leading healthcare IT provider in China. The alliance is likely to widen Merge's customer base and increase its top line. Congress' approval of more than $20 billion in spending on health information technology is also likely to benefit the company. However, a majority of the spending in the U.S. will be felt between 2011 and 2015.

Merge’s main competitors include AllScripts-Misys Healthcare Solutions (MDRX) and Amicas, Inc. (AMCS).
Read the full analyst report on "MRGE"
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Read the full analyst report on "AMCS"
Zacks Investment Research

GM’s Loss Subsides – Analyst Blog

Zacks Market Commentaries — Tue, 17 Nov 2009 19:52:10 +0000

General Motors (hereafter, GM) -- presently, Motors Liquidation Company (MTLQQ) -- posted a narrower loss in the third quarter (Jul 10 - Sep 30) compared with the results depicted by "Old GM" in the first quarter, before the company was transformed by a stay in Chapter 11.

GM, which began operations as a new company on July 10, 2009, has revealed a net loss of $1.2 billion for the quarter, significantly less than $6 billion it lost in the first quarter. The company’s earnings before interest and taxes (EBIT) before special items for the period were negative at $261 million. GM’s North American market showed a loss of $651 million while GM International Operations recorded a profit of $238 million.

The improvement was attributed to incentive programs including "Cash for Clunkers" and stability in the international market, especially China, Brazil, India and Russia (BRIC). In particular, the China market has been a significant contributor to the company’s results by maintaining a leading market share position.

GM and its joint venture partners in China continue to see an upward trend. They sold more than 478,000 vehicles in the quarter, up from approximately 364,000 and 451,000 units in the first and second quarters, respectively.

The company generated revenue of $28 billion -- up from the revenue recognized by "Old GM" in the prior quarter by $4.9 billion. The improvement in revenue was mainly caused by the Clunkers program and a higher global seasonally adjusted annual rate (SAAR) of 67.8 million units compared to 62.7 million units in the previous quarter, besides GM’s stabilizing global share.

GM’s global share went up 0.3 percentage points to 11.9% in the quarter from the first half of the year. The U.S. market share was flat at 19.5% compared to the first half of the year. In BRIC, the company had 13% of the combined market share, up 0.2 percentage points from the prior quarter.

GM’s dealer inventories decreased 158,000 units to 424,000 vehicles in the U.S. at the end of reported quarter from the end of the prior quarter. Some of the brands that delivered strong retail performance in the U.S. include Chevrolet Camaro and GMC Terrain Chevrolet Equinox, Buick LaCrosse and Cadillac SRX. In the international market, brands that gained attention are Holden, Chevrolet Cruze, Daewoo Matiz Creative, Opel Astra and Chevrolet Agile.

GM’s structural cost has been significantly reduced by restructuring including salaried and hourly headcount reductions, engineering savings and volume related savings. In the first nine months of the year, structural cost declined by $6.7 million to $31.1 million compared to the year-ago period.

Financial Position and Loan Repayment

GM had positive operating cash flow, before special items, of $3.3 billion in the quarter. This reflected a favorable working capital impact from production start-up, timing of supplier payments and lower capital spending. As of Sep 30, 2009, cash and marketable securities grossed $42.6 billion.

GM has announced its plan to accelerate repayment of its outstanding $6.7 billion (13% of the $52 billion that U.S. taxpayers have invested in the company, mainly for a 61% ownership stake) in U.S. Treasury (UST) loans as well as the C$1.5 billion ($1.4 billion) in Export Development Canada (EDC) loans, ahead of the scheduled maturity date of July 2015. Improving global economic situation, stabilizing industry sales and healthier cash position are the underlying factors behind GM’s decision.

GM plans to repay the loans in quarterly installments from escrowed funds, beginning next month with an initial $1.2 billion payment to be made in December ($1 billion to the UST and $192 million to the EDC), followed by quarterly payments. Any escrowed funds available as of Jun 30, 2010, would be used to repay the UST and EDC loans unless the escrowed funds were extended one year by the UST. Any balance of funds would be released to the company after the repayment of the UST and EDC loans.

In addition, GM has begun to repay the German government loans that had been extended to support Opel. As of Sep 30, 2009, the company had a balance of €900 million ($1.3 billion), of which €500 million ($700 million) has been repaid in November. The outstanding amount of €400 million ($600 million) will be repaid at the end of the month.

Road Ahead

For the fourth quarter, GM has projected the industry SAAR volume in the U.S. to be 10.7 million units in the upcoming quarter, down from 11.7 million units in the reported quarter. Globally, the estimated figure is 65.4 million units. For 2010, GM has forecasted total industry volumes to be 62 - 65 million units globally and 11 - 12 million units in the U.S.

GM expects to have negative net cash flows in the fourth quarter due to several factors including cash outflows related to the Delphi settlement and payments for U.S., Canada, Ontario and German government loans. Consequently, cash balances at the end of the year are expected to be materially lower than third quarter levels of $42.6 billion.
Read the full analyst report on "MTLQQ"
Zacks Investment Research

DrStockPick.com Stock Report! 11/17/09, GAMR, PWRM, WOLF, IIIN, AMCS, RLGT

Dr. Stock Pick — Tue, 17 Nov 2009 19:46:14 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Tuesday November 17, 2009 DrStockPick.com Stock Report! ************************************************************** Power3 Medical Products, Inc. (OTCBB: PWRM), a leader in neurodegenerative disease and cancer biomarkers and diagnostic tests, announces further international recognition of validity as the company’s President and CSO, Dr. Ira Goldknopf, will deliver an [...]

CRWE, Crown Equity Holdings, Inc. Entered Into Agreement With TTNews of Taiwan

Dr. Stock Pick — Tue, 17 Nov 2009 19:10:14 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Tuesday November 17, 2009 ************************************************************** Crown Equity Holdings, Inc. Entered Into Agreement With TTNews of Taiwan LAS VEGAS, Nov. 17, 2009 (CRWENEWSWIRE) — Crown Equity Holdings, Inc. (OTCBB:CRWE) announced that it has entered into a Mutual Assistance and Technical Cooperation Agreement with TTNews of Taiwan. Crown Equity Holdings, [...]

China Technology Development Group Corp. (CTDC) Teams Up With ISEC-UNIDO to Develop Chinese Solar Research Lab

QualityStocks — Tue, 17 Nov 2009 17:59:48 +0000

China Technology Development Group Corp., a clean energy group focused on bringing together related technologies to create solar energy systems, announced today a cooperative agreement between China Technology Solar Power Holdings Limited (CTSP), and the United Nations Industrial Development Organization International Solar Energy Center for Technology Promotion and Transfer (ISEC-UNIDO). This agreement will co-establish the [...]

Industrial Production Rebound Stalls – Analyst Blog

Dirk Van Dijk — Tue, 17 Nov 2009 17:39:25 +0000

In October, overall Industrial Production rose by 0.1%, far below the 0.6% increase registered in September and the 1.3 increase registered in August. It was also well below the 0.4% consensus expectations.

To my mind, this is one of the most important economic reports, and one that does not get anywhere near the attention it deserves in the press. The September numbers were revised down from 0.7% growth, while the August numbers were revised up from 1.2%, so call it a wash on the revisions -- although they do make the slowdown more dramatic.

Of far more concern than just the raw slowdown in the numbers was the source of the meager increase. Industrial production has three major categories: manufacturing, mining and utilities. Of these, manufacturing is by far the most important. Mining is a relatively small sector in the U.S., and while utility output is important, it is as likely to be influenced by the weather as it is by the pace of economic activity.

Manufacturing production actually fell by 0.1% in October following a 0.8% increase in September (revised from 0.9%) and a 1.4% increase in August (revised from 1.2%). Over the course of the last year, manufacturing production is down by 8.0%. Mining production also fell by 0.2% in October, partially reversing a 0.6% increase in September and a 1.1% increase in August, and is down by 6.8% over the course of the last year.

Thus, more than the entire increase in Industrial Production was due to an increase in utility production output, which rose by a very large 1.6%. In September, utility production was down by 0.2% and it was up by 0.8% in August. On a year-over-year basis, utility ouput is down 2.0%.

All the Industrial Production numbers are seasonally adjusted, but the adjustments are most significant in the case of utilities, since power demand is so much a function of the weather. The graph below shows the year-over-year change in Total Industrial Production as well as that for manufacturing and utilities (mining was left off so the graph did not look like a plate of spaghetti).

Notice that utility production (green line) bears very little relationship with overall industrial production or the overall state of the economy. Manufacturing production is very tightly correlated, but a little bit more prone to extremes. Since the total includes utilities, I would argue that the manufacturing data is the part you really want to pay attention to. Since the Fed has been keeping records of production broken out by manufacturing, mines and utilities, only the 1973-74 downturn challenged the most recent downturn in severity.

Production of final products was unchanged in October following a 1.0% gain in September and a 1.5% surge in August. Final products are further broken down into production of consumer goods and the production of business equipment. Production of Consumer goods were unchanged in October following increases of 1.3% in September and of 1.6% in August.

A major factor in the surge in August and September was the rebuilding of inventories of autos by companies like Ford (F) and its suppliers like TRW Automotive (TRW) that were depleted by the Cash for Clunkers program. It looks like that bounce is over.

Production fo business equipment fell by 0.2%, following a decline of 0.4% in September and a 1.1% increase in August. On a year-over-year basis, overall production of finished goods is down by 4.5%. However, production of consumer goods has held up much better than that of business equipment, with consumer goods down byt 2.9% year over year and business equipment down by 6.8%.

Keep in mind that the consumer share of the overall economy surged to a record high 70.98% in the third quarter, while the investment share of the economy languished at a near record low of just 11.04%. Businesses simply see no reason to buy more equipment to expand production. The reason why businesses have no desire to invest in new plants and equipment is that they have so much existing equipment that is just sitting around and gathering dust.

The other information in the report is capacity utilization. The good news is that overall capacity utilization edged up to 70.7% in October, marking the fourth straight month of improvement. The bad news is that it is simply an awful absolute level. The long-term average total capacity utilization is 80.9%. Even after four months of increases, we are still below the all-time record low prior to this downturn of 70.9% set in December of 1983 (data on capacity utilization goes back to 1967).

The other bad news is that the rate of improvement is slowing dramatically. Overall capacity utilization bottomed out in June at 68.3%. It then gained 0.7% in July and 1.0% in August. The graph below (from http://www.calculatedriskblog.com/) shows the history of Capacity Utilization as far back as the Fed has been keeping records of it. The rate of improvement slowed to 0.5% in September and was just 0.2% in October. That is not a good trend.

Further, over the past year, overall capacity has shrunk by 0.8%, which helps goose the numbers and makes them look better, although I don’t think that Revlon (REV) and Estee Lauder (EL) combined have enough lipstick to make this pig look good. All of the improvement was due to higher capacity utilization by utilities, which is the one area that has actually increased capacity over the last year (by 1.8%). Utility utilization rose to 79.0% from 77.9% in September. Since it is so weather dependent, utility utilization is by far the least important measure, and it is actually not too far below its long-term average of 86.8%.

Utilization of the nation’s mines actually fell slightly to 83.5% from 83.6% in September. That is up from a low of 80.8% in June, and like utilities, it is not all that far below its long-term average level of 87.6%. Mining capacity, though, has declined by 0.6% over the last year. Given the strength in commodity prices, it is somewhat surprising that mine output has not risen further than it has.

The real problem is in the capacity utilization for manufacturing, which was flat at 67.6% in October, although it was up slightly if you factor in the fact that the September manufacturing capacity utilization levels were revised up from 67.5%. Manufacturing utilization bottomed out in June at 65.1%, and from July through September was increasing at a very respectable rate of 0.83 points a month. A flat reading breaks that momentum.

Further, over the last year, as some factories have closed up shop for good, overall capacity has declined by 1.0%. Decreasing the denominator can make things go up just as much as increasing the numerator can, but the implications for the economy are not the same.

Thus with almost one-third of the nation’s factories sitting idle, it is not a huge surprise that companies are not rushing to buy more equipment, which explains why the output of business equipment has been so much weaker over the past year than output of consumer goods.

This huge amount of slack in the economy is the principal reason that inflation is not a problem now, nor is it likely to be so for the next year or so. Think of it as unemployment of capital. Companies are not going to try to push through price increases if they know that their competitors have all sorts of spare capacity and can ramp production immediately to take market share.

It is also the reason (along with unemployment of labor) that the Fed will keep interest rates low for a long, long time. If there is no inflation, then pumping money into the economy through low interest rates does not really cause any significant problems for the economy.

If that money is not flowing into the real economy -- by raising industrial production, by increases in inventories and of final consumption by either consumers of companies -- it will flow elsewhere. One of the places it first flows to is into the stock market. While the very slow progress we are making on overall Industrial Production, especially manufacturing production is not good news for Main Street, it is extremely good news for Wall Street. Yes, it also puts pressure on the dollar, but so what if it's not going to result in higher inflation.

Eventually this will help bring back Industrial Production and put that capacity back to work as it stimulates exports, and U.S. consumers turn to domestically produced goods since they are cheaper. Of course, as long as China keeps the Yuan pegged to the dollar, this sentiment does not apply Chinese goods, which make up a huge proportion of imported consumer goods. However, at the margin, it will help.

Read the full analyst report on "F"
Read the full analyst report on "TRW"
Read the full analyst report on "REV"
Read the full analyst report on "EL"
Zacks Investment Research

Shuaiyi International (SYID.OB) Appoints New Chief Financial Officer

QualityStocks — Tue, 17 Nov 2009 16:37:11 +0000

Shuaiyi International New Resources Development Inc. is a leading nutraceutical company focusing on the development of engineered “Cordyceps Militaris” products in China. The company has about a 19% share for such products in China, with a distribution network in more than ten Chinaese provinces. The company’s products are based on a fungus that is typically [...]

Omnicity Corp. (OMCY.OB) Riding the Broadband Wave

QualityStocks — Tue, 17 Nov 2009 15:55:44 +0000

Omnicity Corp., known for bringing wireless broadband services to rural America, is on top of one of the biggest waves in telecommunications, the rapid expansion of broadband services outside of the traditional urban and suburban base areas. It goes without saying that the communications industry is the nervous system of today’s economy, generating global annual [...]

SINA Beats Forecast – Analyst Blog

Zacks Market Commentaries — Tue, 17 Nov 2009 15:00:25 +0000

After market closed, SINA Corp. (SINA) reported revenues of $96.4 million in the third quarter of 2009. Revenues was down 8.6% year over year but was up 6.8% sequentially. Revenues exceeded the company's guidance of $91.0 – $94.0 million and easily beat the Zacks Consensus estimate of $94.0 million.

This reflects strong execution of the company’s online advertising business in China , which grew double-digits sequentially. We expect a huge improvement in SINA’s advertising business, as advertising spending recovers.

SINA expects to benefit from government stimulus packages. Moreover, management is witnessing signs of a strong recovery in the advertising market in China in the second half of this year, which is reflected in the company’s higher-than-expected guidance.

Advertising revenues decreased 16.3% year over year but was up 10% quarter over quarter, exceeding the company’s guidance of $60.0 – $62.0 million. Non-advertising revenues increased 11.6% year over year and was marginally up from last quarter. This was better than management’s guidance of $31.0 – $32.0 million.

Gross margin was 59% in the quarter, up from 57% last year and 56% in the preceding quarter. This was due to increasing advertising revenues outpacing the growing cost of advertising revenues, primarily bandwidth-related. This raised advertising gross margin, which in turn, raised overall margins.

Operating margin came in at 22.5% as operating expenses decreased 3% year over year but increased 6% sequentially, mainly due to higher marketing costs.

Net income on a non-GAAP basis was $20.1 million, down 15.4% from last year, but up 17% quarter over quarter. Earnings per share (EPS) of 34 cents beat the Zacks Consensus Estimate of 30 cents, but were down from 39 cents reported in the year-ago period.

Under the $100 million share repurchase program, SINA repurchased approximately 2.5 million shares for $50 million at an average price of $20.37. The company expects to continue repurchasing the remaining $50 million in future quarters, which will add to shareholders wealth.

During the quarter, the company generated $29.1 million of cash from operations, compared to $18.8 million last quarter. The company ended the quarter with cash and equivalents of $599.7 million, an increase of $17.7 million from the previous quarter. As of September 30, 2009, convertible debt remained at $99 million.

In October, SINA completed the merger of its online real estate advertising business with E-House ( China ) Holdings Ltd., subsidiary of China Real Estate Information Corporation (CRIC). SINA has 39% equity interest in CRIC. This merger will help SINA form the largest online and offline real estate information and consulting platform in China .

SINA also entered into a private equity placement of its ordinary shares with New Wave Investment Holding Company Limited, a British Virgin Islands company established and controlled by Charles Chao, SINA's Chief Executive Officer and other members of the management. SINA will receive gross proceeds of $180 million in exchange for approximately 5.6 million shares. The issuance of shares to New Wave will have a dilutive effect on the company's outstanding shares in the fourth quarter of 2009.

Guidance
The company will account for its interest in CRIC from Oct 1, 2009 and expects to recognize a material gain from the closing of the merger transaction with CRIC.

Going forward, management expects revenues of between $93 million and $96 million, excluding advertising revenue from real estate business due to its merger with CRIC. Including the advertising revenue from real estate business, total revenue will range between $106 million and $109 million.

Advertising revenue is expected to be $61 – $63 million and non-advertising revenue to be $32 – $33 million in the fourth quarter. Including the carve out of the real estate business, the forecasted advertising revenues would have been between $74 million and $76 million.

SINA is a leading provider of online media and value-added information services in China . SINA’s online advertising business has continued to do well and has built a competitive edge based on its popularity in China . The company expects strong growth in advertising revenue in 2010 due to resurgence in margins.

We maintain our Neutral rating on the stock.
Read the full analyst report on "SINA"
Zacks Investment Research

PWRM, NGSX, DrStockPick.com Stock Report! Power 3 Medical Products Inc. and NeurogesX, Inc.

Dr. Stock Pick — Tue, 17 Nov 2009 13:45:34 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Tuesday November 17, 2009 DrStockPick.com Stock Report! PWRM, NGSX ************************************************************** PWRM, Power 3 Medical Products Inc, PWRM.OB PWRM is a leading bio-medical company engaged in the commercialization of neurodegenerative disease and cancer biomarkers, pathways, and mechanisms of diseases through the development of diagnostic tests and drug targets. PWRM’s patent-pending [...]

VIASPACE, Inc. (VSPC.OB) Announces Q3 2009 Financial Results

QualityStocks — Tue, 17 Nov 2009 13:45:08 +0000

VIASPACE Inc., a clean energy company providing products and technology for renewable and alternative energy, this morning reported its financial results for the third quarter ended September 30, 2009. Revenues totaled $1.23 million, including $1.06 million from the late-2008 strategic acquisition of Inter-Pacific Arts, Inc. (IPA), and $171,000 primarily from Ionfinity’s military contracts for monitoring and [...]

Zacks Analyst Blog Highlights: Dell Inc., Apple Inc., Nokia, Research In Motion and American Dairy Inc. – Press Releases

Zacks Market Commentaries — Tue, 17 Nov 2009 11:30:51 +0000

For Immediate Release

Chicago, IL – November 17, 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: Dell Inc. (DELL), Apple Inc. (AAPL), Nokia (NOK), Research In Motion (RIMM) and American Dairy Inc. (ADY).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s Analyst Blog:

Dell’s Smartphone Strategy

Dell Inc. (DELL), one of the world’s leading computer manufacturer, has decided to start manufacturing its smartphone device. The company has zeroed in on Brazil as the first manufacturing destination and chosen Claro as its carrier partner in the region. Dell will also be manufacturing the device in China and partner with China Mobile in that region. The phone will be using the Google Android operating system.

Dell’s entry into the smartphone segment looks like a logical progression, as the company is already manufacturing and rolling out reasonably priced netbooks in the market. However, Dell is a late entrant into the market, unlike its peer Apple Inc. (AAPL), which has already grabbed a large share through smartphones such as iPhone 3G and iPhone 3GS.

As per the technology research firm Canalys, third quarter 2009 worldwide smartphone shipments grew 4% year on year, to 41.4 million units. As per the findings of the research firm, Nokia (NOK) maintained its worldwide smartphone leadership position with a 40% share of the market, up from its year-ago position, but down 5% from the previous quarter. Research In Motion (RIMM) was in second place, with a market share of 21%, almost flat sequentially. Apple’s market share was 18% in the third quarter, up from the 14% it held in the second quarter, with significant improvement in the iPhone 3GS supply across many countries. HTC retained the fourth position with a 5% share.

There is no reason to think that Dell phones would not gain popularity considering the company’s history of innovation, although the success rate could vary as competition is intense. We believe that even if Dell is able to capture a small share of the smartphone market, the additional growth opportunity would be substantial.

American Dairy Beats Expectations

American Dairy Inc. (ADY) reported third quarter results before the opening bell today. The company’s net income from continuing operations stood at $11.1 million, or 52 cents per share, from a loss of $22.1 million, or $1.19 per share in the year-ago quarter. Quarterly earnings also surpassed the Zacks Consensus Estimate for a profit of 31 cents per share.

American Dairy is a leading producer and distributor of premium infant formula, milk powder, and soybean, rice and walnut products in China. The company, which operates through its wholly owned subsidiary Feihe Dairy and other subsidiaries, has 200 milk collection stations, 2 dairy farms and 6 production facilities. The company has capacity to produce approximately 1,220 tons of milk powder per day and a distribution network of over 90,000 retail outlets across China.

The Beijing-based company recorded an impressive 94.1% year-over-year growth in quarterly sales to $72.1 million. The expansion was primarily driven by strong demand for American Dairy’s milk powder products (mainly infant formula products), which recorded a 151.7% growth in volumes to 6,561 tons and contributed 77.5% to total sales. Moreover, the robust revenue performance was also helped by company’s augmented distribution network and efforts to expand into new geographic areas in China.

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Donald Coxe – Investment Recommendations (November 2009)

Prieur du Plessis — Tue, 17 Nov 2009 08:51:07 +0000

The November edition of the Coxe Basic Points research report (subtitled "The Power of Zero") by Donald Coxe has just been published. His investment recommendations are listed in this post, and a link to the full report is also provided.

Prieur’s readings (November 17, 2009)

Prieur du Plessis — Tue, 17 Nov 2009 08:50:30 +0000

Five reasons China is not a bubble

Prieur du Plessis — Tue, 17 Nov 2009 08:43:05 +0000

The success of the stimulus and the lofty economic numbers China has managed to produce amidst a global crisis has led many to claim China is the next great bubble. This guest post argues that there are five reasons China is not a bubble and its prospects remain strong for at least the next 20 years.

Ctrip.com International Limited – Aggressive Growth – Zacks Rank Buy

Tracey Ryniec — Tue, 17 Nov 2009 05:00:00 +0000

Ctrip.com International Ltd. (CTRP) has been taking advantage of the rebound in the Chinese economy. The company is expected grow 2009 earnings by 35.79%.

Ctrip.com provides online travel services to business and leisure travelers in China. Travelers can make hotel reservations, purchase flights and arrange vacation packages. Ctrip.com targets the frequent independent traveler who is looking to make informed and cost-effective travel bookings.

Ctrip.com Surprised by 25.81% in the Third Quarter

Continuing its hot streak, on Nov 11, Ctrip.com beat the Zacks Consensus Estimate for the fourth quarter in a row. Earnings per share were 39 cents compared to the consensus of 31 cents.

Revenues jumped 47% to $80 million compared to the year ago. All three of its segments saw revenues soar.

Hotel reservations rebounded, growing 41% year over year and jumping 16% from the prior quarter. Hotel reservation volume rose 47% but was partially offset by a decrease in commission per room.

Ticketing for airline travel also rose by 45% year over year and also increased 8% quarter-on-quarter. The story was the same for packaged tour revenues which rose 93% compared to the third quarter of 2008 and climbed 53% quarter-on-quarter as leisure travel volume rebounded.

The company also has cash on hand, as of Sep 30, 2009, of $207 million.

Fourth Quarter Outlook

Ctrip.com expects the growth to continue. It is projecting about 25% to 30% revenue growth in the fourth quarter.

Zacks Consensus Estimates Jump

With yet another big earnings surprise, covering analysts have been revising estimates higher. The fourth quarter Zacks Consensus Estimate is up 3 cents to 35 cents per share in the last 7 days.

5 out of 8 analysts raised full year estimates to $1.29 from $1.22 per share in the last week.

The 2010 Zacks Consensus Estimate is also jumping. Analysts expect year over year earnings growth of 32.73% in 2010. The Zacks Consensus is up $1.71 from $1.53 per share in the last 90 days.

The 2-Year Chart

Ctrip.com's stock has been on fire since the March lows. The stock recently traded at new 52-week and 5-year highs. See the 2-year chart below.

Zacks Investment Research