By Jason Simpkins Associate Editor Air China announced yesterday (Wednesday) that it will buy 45 The Boeing Company (BA) jets to help cover increased domestic demand at a time when many Western airlines are struggling to overcome high fuel prices and declining traffic. Air China will buy 15 Boeing 777s and 30 Boeing 737s at a cost of $6.3 billion, the company said on its website. The purchase will increase Air China’s fleet by 35%, as the company competes with other Chinese carries for a dominant share of a market that is expected to grow 9% annually over the next several years, The Associated Press reported. Whereas commercial airlines in developed markets have been struggling, with some even collapsing under the weight of high fuel costs and sluggish demand, airplane manufacturers have been buoyed by strong demand in emerging markets ...

By Jason Simpkins Associate Editor Brazilian stocks as measured by the country’s Bovespa benchmark stock index has fallen 20% from its May 20 record, but that doesn’t mean it’s time to give up on Latin America’s largest economy. Brazil still has plenty to offer, and with stock valuations low, it’s a good time to go bargain hunting. In fact, a big reason why Brazilian stocks have dropped is because the country’s central bank has been forced to raise rates to curb inflation. Policymakers have raised the benchmark rate twice since April, to 12.25%. Of course, inflation isn’t a problem unique to Brazil. Inflation in India has been at alarmingly high levels since the first week of June, when it jumped from 8.75% to 11%. And many analysts expect government data released today (Friday) will show wholesale prices soared to a 13-year high of ...

By Jason Simpkins Associate Editor First-quarter growth in the 15-nation Eurozone was weaker than first reported, yet another worrying development for a region already struggling with soaring inflation. The combined Eurozone economy grew by 0.7% in the first quarter compared to the three months prior, revised down from a previous forecast of 0.8%, Eurostat reported. While the figure is still relatively strong, a U.S. slowdown, rampant inflation, and low consumer demand could drag the economy down even further in the second half of the year. The European Commission’s gauge of consumer confidence declined to a level of -17 in June from -15 in May. Economic sentiment declined to 94.9 from 97.6 in May. Much of the decline was attributed to a steep rise in Eurozone inflation, which hit a 16-year high of 4% in June. “The surge in food and energy prices is ...

By Jason Simpkins Associate Editor Merrill Lynch & Co. Inc. (MER) has raised its annual infrastructure-spending estimate for emerging markets by 80%, as developing countries try to keep pace with fast-growing economies and large cash reserves, BusinessWeek reported. Investment in infrastructure, which the firm sees as the long-term solution to inflation, will rise from $1.25 trillion to $2.25 trillion annually over the next three years. And China, the Middle East, and Russia will account for 70% of infrastructure spending. The report from Merrill Lynch pointed out that Xstrata PLC (OTC: XSRAY) recently predicted emerging markets would spend $22 trillion on infrastructure in the next 10 years. “That estimate is among the highest we’ve seen,” the report noted, “with an implied run rate of $6.6 trillion over the next three years.” Estimated Infrastructure Spending For the Next Three Year...

By Jason Simpkins Associate Editor After a disappointing string of failed takeovers, CNOOC Ltd. (ADR: CEO) has reignited its foreign expansion initiative with a $2.49 billion buyout of Norway’s Awilco Offshore ASA. China Oilfield Services Ltd., a unit of China’s top offshore oil and gas producer will pay $16.66 (85 kroner) a share, an 18.7% premium to last week’s closing price. Awilco’s board unanimously approved the offer and the deal, which still requires regulatory approval, but should be closed by October. China Oilfield will borrow about $2.3 billion to finance the deal. "I think 85 kroner a share is a good price," Stian Eliassen, an analyst at Carnegie ASA in Oslo, told Bloomberg News. "They’re very interested in Awilco’s jack-up rigs, seven of which will be available to be leased by clients next year."...

By Jason Simpkins Associate Editor Payrolls tumbled for the sixth consecutive month in June, bringing the total number of job losses in the first half of the year to 438,000. Such a steep drop in employment could easily cause consumer spending to falter in the months ahead and drag the economy into a recession. After shedding 62,000 jobs in May, U.S. employers slashed another 62,000 jobs in June, the Labor Department said last week. Builders reduced payrolls by 43,000 after cutting 37,000 employees in May. Financial firms cut 10,000 jobs in June after losing 3,000 the month prior. And factory payrolls dropped by 33,000 after declining 22,000 in May. The national unemployment rate has gone up by a full percentage point in the past year, hitting 5.5% in May. The country added 91,000 on average in 2007, but has lost an average of ...

By Jason Simpkins Associate Editor Crude futures closed at yet another record high yesterday (Wednesday) after government data showed a decline in crude inventories. The news followed a separate report from the International Energy Agency that said oil supplies would remain tight through 2013. The U.S. Energy Department yesterday reported a decline of 2 million barrels in crude supplies last week. As a result, August crude climbed $2.60 to settle at an all-time high of $143.57 a barrel in New York. In a separate report, released Tuesday, the Paris-based IEA, said supplies of crude would remain tight for the next five years, as surging demand from emerging markets overwhelms a softening in developed countries. “Structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium-term,” the IEA said in its Medium-Term Oil Market Report. ...

By Jason Simpkins Associate Editor Iraq has officially opened the door for foreign oil companies to invest in the country’s rich energy sector for the first time in more than 30 years. Thirty-five foreign oil majors have been invited to bid for contracts to provide technical support and help boost production in eight oil and natural gas fields. The contracts will be awarded in 2009, as Iraq’s oil minister, Hussein Shahristani, hopes to increase production by 2 million barrels of crude oil per day by 2013. Iraq has the world’s third largest proven petroleum reserves, according to the Energy Information Administration (EIA). While Iraq boasts proven reserves of 112 billion barrels, the EIA estimates that up to 90% of the country remains unexplored. Only 2,000 wells have been drilled in Iraq, versus approximately 1 million in the state of Texas alone. The war-torn ...

By Jason Simpkins Associate Editor High oil prices, a steep drop in consumer confidence, declining home values and a weak dollar conspired to drive the Dow Jones Industrial Average to its lowest point in two years, and made for the benchmark index’s worst June since the Great Depression. After falling more than 300 points last Thursday and extending losses on Friday, the Dow lost 4.2% in the week ended closing at 11,346.51 - its lowest level since September 2006. All totaled, the Dow plunged 9.5% in June - its worst mid-year performance since the 18% drop in the 1930s. Story continues below… Sign up right now, and we’ll send you an important new report for free: “The Three Best Investments in Asia.”...

By Jason Simpkins Associate Editor Consumer spending in the United States rose an unexpected 0.8% in the month of May, the biggest increase since last November, as nearly $50 billion worth of rebate checks were cashed and put to use. Incomes grew 1.9% in May - their biggest jump in nearly three years - and the Commerce Department said rebates fueled a 1% surge in retail sales for the month. However, analysts have been quick to dismiss the figures as an apparition that will dissipate along with government assistance. “This is the tax rebate that you’re seeing here,” Chris Low, chief economist at FTN Financial, told Bloomberg. “It’s a sense of hope, but it doesn’t last. Call it a holiday from reality.” Story continues below… Sign up right now, ...