Stock Market News & Stocks to Watch from StraightStocks » The Netherlands

DrStockPick.com Stock Report! 11/24/09, YRCW, CVAT, CTHR, TEN, RADS, SYNO

Dr. Stock Pick — Tue, 24 Nov 2009 19:02:40 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Tuesday Nov 24, 2009 DrStockPick.com Stock Report! ************************************************************** Cavitation Technologies, Inc. (OTC BB: CVAT.OB) has filed three new PCT patent applications to protect our intellectual property worldwide. The patents are for Flow-Through Cavitation Assisted Rapid Modification of Crude Oil, Modification of Beverage Fluids, [...]

CBI Wins Refinery Project – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 17:21:05 +0000

Chicago Bridge & Iron Co. (CBI) has been awarded a project valued in excess of US$1.4 billion by Refinería de Cartagena S.A. (REFICAR) for the engineering, procurement services and construction of a new refinery, with processing capacity of 165,000 barrels per day, adjacent to REFICAR's refinery in Cartagena, Colombia. CB&I's scope also includes revamping the existing 80,000 barrel per day refinery. The overall project will relieve regional refining constraints and will enable REFICAR to produce clean, ultra-low sulfur gasoline and diesel from heavy crude.

REFICAR has chosen CB&I to be the single contractor to engineer, procure, and construct this important project, which is key to enhancing Ecopetrol's position as a leading producer for the entire region. Refinería de Cartagena S.A. is owned by Ecopetrol, Colombia's national oil company.

CB&I will provide project management and the engineering, procurement services, fabrication and construction for the new refinery, including the following major components: Crude and Vacuum Distillation, Fluid Catalytic Cracker Naphtha Hydrotreater, Diesel Hydrotreater, Hydrocracker, Hydrogen Plant, Sulfur Plant, Delayed Coker, HF Alkylation, C4 Isomerization, Power Generation and Offsites and Utilities.

In October, the company was awarded a contract in excess of US$100 million by UGI LNG, Inc. to engineer, procure and construct the expansion of the Temple LNG peak shaving facility near Reading, Pennsylvania. CB&I's work scope includes the addition of a new 50,000 cubic meter liquefied natural gas storage tank and related processing facilities designed to provide 150 million cubic feet of natural gas per day during peak demand periods. The Temple LNG expansion will connect directly into the Texas Eastern pipeline to provide gas supplies for the Mid-Atlantic and northeast markets.

Chicago Bridge & Iron Company N.V. provides engineering, procurement, and construction (EPC) solutions, as well as process technologies for the energy infrastructure projects. It primarily focuses on projects related to oil and gas companies. CB&I operates approximately 80 locations around the world. The company was founded in 1889 and is based in The Hague, the Netherlands . Its major competitor is Matrix Service Co. (MTRX).

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Zacks Investment Research

MWW Automotive Group (MWWC.OB) Subsidiary Signs Major Distribution Agreement

QualityStocks — Mon, 23 Nov 2009 14:31:36 +0000

MWW Automotive Group is a young corporation that has gained notoriety across the globe for producing and delivering their products, design and Class A painting services to automobile manufacturers and assembly lines across the world. Today, MWW announced that Modelworxx, its wholly owned subsidiary located in Germany, signed an executive agreement with Isomotive BV, [...]

Dow Gearing Up to Divest – Analyst Blog

Zacks Market Commentaries — Mon, 16 Nov 2009 20:24:25 +0000

Dow Chemical Company (DOW) is planning to sell more non-core assets in 2010 to pay off debt from its $16.5 billion acquisition of rival Rohm and Haas in April of this year. It is planning further debt reductions of about $12 billion. Dow stated that it plans to lighten its debt load and achieve its financial targets ahead of schedule.

The Rohm and Haas acquisition is proving to be positive for Dow, which is expected to consolidate higher-margin and higher-growth specialty businesses and reduce volatility in earnings and cash flow, going forward. Dow is aiming to nearly double margins and quadruple earnings per share while reducing debt in the coming years.

The company has predicted earnings of $4 to $4.50 per share in 2012 (up from last year’s $1.82) to be achieved through a mix of growth synergies as well as restructuring and cost synergies. The company had achieved cost synergies of over $1 billion in the first nine months of 2009. Earnings of 24 cents in the third quarter of 2009 (significantly better than the Zacks Consensus Estimate of 9 cents and 5 cents reported in the previous quarter) were primarily driven by cost reduction and asset sales.

The new business structure is expected to drive Dow’s revenue by more than 10% per annum. Dow expects a greater focus on emerging markets including Southeast Asia, India, Latin America, China and Eastern Europe to contribute about 35% to total revenues in 2012. Management has also projected EBITDA margin expansion from 12% in the recent past to 20% over time.

Recently, Dow divested its Powder Coatings business to Akzo Nobel N.V. (AKZOY) - a leading producer of paints and coatings, based in Amsterdam, The Netherlands - for an undisclosed amount. Including this deal, Dow stated its divestiture activities to be on target to yield more than $3.5 billion in gross proceeds. The company is also planning to divest its Styron business next by the first quarter of 2010. As a part of its restructuring plan, Dow plans to divest 10 to 15 other businesses, which range in size between $100 million and $300 million in annual revenue.

Dow is also likely to benefit from cutting its stake in its basic chemicals business as part of its plan to focus on its more profitable Specialty Chemicals business. Recently, Dow had announced that its subsidiary Kow Kokam LLC acquired nearly all assets of lithium rechargeable battery maker Kokam America Inc. The company also announced the transfer to Dow of collective assets from High Power Lithium, a company focused on the development of technology for use in all lithium ion batter applications. Terms of neither agreement were disclosed.

We have upgraded Dow Chemical Company from Neutral to Outperform.
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Zacks Investment Research

NuStar Closes Public Offering – Analyst Blog

Zacks Market Commentaries — Mon, 16 Nov 2009 16:02:45 +0000

NuStar Energy L.P. (NS) announced the closing of its 5,750,000 common units of public offering, representing $52.45 per unit limited partner interest. Of this, 750,000 units were sold to underwriters. Total net proceeds from the public offering were $289 million, including the additional common units sold.

The partnership expects to use the proceeds of the public offering for general partnership purposes, including potential future acquisitions and growth capital expenditures. Net proceeds include the general partner’s − NuStar GP Holdings LLC (NSH) − proportionate capital contribution of $6.15 million. Pending the use of the proceeds for other purposes, the partnership intends to apply some or all of the net proceeds to reduce outstanding borrowings under its revolving credit facility.

NuStar Energy L.P. is a publicly traded limited partnership, with 8,417 miles of pipeline, 82 terminal facilities, four crude oil storage tank facilities and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

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Zacks Investment Research

Dow Divests Business – Analyst Blog

Zacks Market Commentaries — Fri, 13 Nov 2009 15:32:17 +0000

Diversified chemical company Dow Chemical Company (DOW) has signed an agreement to sell its non-core Powder Coatings Business to Akzo Nobel N.V. (AKZOY), a leading producer of paints and coatings, based in Amsterdam, The Netherlands. Financial terms of the transaction were not disclosed. The transaction is expected to close by the second quarter of 2010, subject to customary closing conditions, including regulatory approvals.

Dow plans to use the proceeds from the transaction to repay debt, consistent with the company's de-leveraging plan. Dow plans to raise about $3.5 billion by divesting its non-core assets. For the Chemicals group Akzo Nobel, the deal will bring upgraded technological expertise and significant synergy potential for the Powder Coatings business, as well as enhance the company's position in the U.S.

The powder coatings activities were purchased by Dow earlier this year as part of its acquisition of Rohm & Haas. Dow Chemical has become the world’s leading specialty chemicals and advanced materials company after acquiring Rohm and Haas for $16.3 billion. The acquisition appears positive for Dow, which is expected to consolidate higher margin and higher growth specialty businesses and reduce volatility in earnings and cash flow, going forward.

Joint ventures and acquisitions are an integral part of Dow’s growth strategy. These provide access to potential markets, new technologies and feedstock, at the same time lowering capital investment and risk. Management intends to place Rohm & Haas, along with some specialty chemical businesses, in a new Advanced Materials division. The acquisition has increased Dow’s position in the Specialty Chemicals market by broadening its product range in paints, coatings and electronic materials. This new division expects to achieve annual sales of $14 billion and cost synergies of $1.3 billion. Dow's current business profile has an anticipated growth rate of about 4% for the period 2009−2012.

The Rohm & Haas portfolio, on the other hand, is rooted in faster growing segments with an expected growth rate ranging between 5% and 9%. On a consolidated basis, the growth rate of the combined portfolio over this period is expected to be within 5% to 7%. The merger would be neutral to earnings in the second half of 2009. However, it is likely to boost Dow’s earnings by 5% in 2010 and 13% in 2011.

Dow is targeting faster-growing regions. The company earns two-thirds of its income from outside the U.S. Growth in emerging economies have been especially rapid, generating almost 28% of Dow’s revenues. Growth is 17% in Europe, where sales are $19.6 billion; 15% in the Asia-Pacific, where sales are $6.2 billion; and 14% in Latin America, where sales are $5.8 billion. Meanwhile, sales growth in Greater China and Eastern Europe were 24% and 30%, respectively.

We maintain our Outperform recommendation on the stock.
Read the full analyst report on "DOW"
Read the full analyst report on "AKZOY"
Zacks Investment Research

EMKR, LXRX, EFJI, DrStockPick.com Watch List! for Friday November 13, 2009, EMCORE Corp., Lexicon Pharmaceuticals, Inc. and EF Johnson Technologies, Inc.

Dr. Stock Pick — Fri, 13 Nov 2009 00:36:07 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ DrStockPick.com Watch List! My Picks for Friday November 13, 2009 are: ************************************************************** EMKR, EMCORE Corporation EMKR provides compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and terrestrial solar power markets. EMKR is the world’s largest manufacturer of highly efficient radiation hard solar cells for space [...]

Zacks Analyst Blog Highlights: Vodafone Group Plc, Telefonica, Deutsche Telekom, France Telecom and Verizon – Press Releases

Zacks Market Commentaries — Thu, 12 Nov 2009 12:45:15 +0000

For Immediate Release

Chicago, IL – November 12, 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: Vodafone Group Plc (VOD), Telefonica (TEF), Deutsche Telekom (DT), France Telecom (FTE) and Verizon (VZ).

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 Wednesday’s Analyst Blog:

Vodafone Profit Leaps, Lifts Savings

The telecom giant reported consolidated revenues of £21.8 billion (US$34.8 billion) for the period, representing a 9.3% year over year growth. Favorable exchange rate (euro-sterling) swings and net impact of merger and acquisition initiatives contributed to this growth. Excluding these impacts (organic basis), revenue declined 3% year over year.

Group service revenue declined 2.6% year over year on an organic basis to £20.5 billion (US$32.7 billion), primarily due to weaker contributions from European markets as recessionary conditions curbed demand for wireless services. Adjusted EBITDA increased 2.9% year over year to £7.5 billion (US$12 billion) driven by cost control.

Revenues for the European segment increased 3% year over year (down 5.1% on organic basis) to £14.9 billion (US$23.8 billion). Service revenue in Europe declined 4.5% organically as growth in Italy and the Netherlands was more than offset by decreases across Spain, Germany and the UK due to a weaker economy, regulatory pressure and intense competition.

Decline in voice revenue continues to offset growth in data. Revenue in Germany and the UK remains under pressure due to mobile termination rate (inter-operator fees) cuts. Vodafone is also losing customers in the UK as subscribers switch to its major rival Telefonica’s (TEF) O2 which is marketing iPhone in the UK.

Moreover, Deutsche Telekom (DT) and France Telecom (FTE) have recently finalized an agreement to combine their UK units, which will create the largest mobile carrier in the UK.

This segment posted revenues of £3.7 billion (US$5.9 billion), up 36% year over year. Organically, service revenue fell 3.2% as consistent growth at Vodacom (South Africa) and increase in subscriber count were partly offset by weak contributions from Romania and Turkey. Service revenue at Vodacom increased 4.2% on an organic basis as a result of healthy subscriber accretion.

Asia Pacific & Middle East segment continues to perform in line with expectation. Revenue surged 15.9% year over year (11.3% organically) to £3.1 billion (US$4.9 billion), driven by continued strong growth in India , the single biggest contributor to organic revenue growth. Service revenue in India increased 20.5% organically boosted by roughly 55% growth in wireless customer base amid intense price competition.

During the six-month period, Vodafone registered roughly 20.6 million net new mobile connections across its operations, bringing the total subscriber base to 323.3 million (83.5% represented by prepaid). India continues to be a key driver for subscriber growth with a net addition of 14 million customers in the first six months of fiscal 2010.

In Europe, the company registered a net loss of 262,000 subscribers during the half-year period. Verizon’s (VZ) mobile unit, Verizon Wireless, in which Vodafone holds a 45% stake, however, posted a net addition of 1.1 million customers.

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NBTY Inc. – Value – Zacks Rank Buy

Tracey Ryniec — Thu, 12 Nov 2009 05:00:00 +0000

NBTY Inc. (NTY) just posted record results for the fiscal fourth quarter as sales jumped 12%. The company is not only a value stock but analysts expect earnings to grow at 13.75% over the next 5 years. NBTY has a PEG ratio of just 0.90.

Company Description

NBTY manufactures and distributes nutritional supplements in the United States and around the globe. The company offers 22,000 products under the name brands Vitamin World, Puritan's Pride, Holland & Barrett, Rexall, Sundown, Worldwide Sport Nutrition and GNC (UK), among others.

NBTY Reports Record Fourth Quarter Results

On Nov 9, NBTY reported fiscal fourth quarter results which easily beat on the Zacks Consensus Estimate by 12.05%. Earnings per share were 93 cents compared to the Zacks Consensus of 83 cents. EPS was 28 cents in the year ago period.

Sales soared by 12% to a record $674 million from $602 million. Sales for the Wholesale/US Nutrition division rose 13% to $404 million. It markets brands such as Nature's Bounty, Rexall and Sundown.

For the quarter, the division outperformed the industry, which saw industry-wide sales of vitamins and other supplements rise by 11% while the company's wholesale brands segment climbed 13.6%.

On the retail side, the company's Vitamin World Stores in the U.S. and LeNaturiste stores in Canada saw net sales up 2% in the quarter but comparable store sales were flat.

Zacks Consensus Estimates Rise

Analysts like what they've heard in the fourth quarter results. The fiscal 2010 first quarter and full year Zacks Consensus Estimates are both moving higher.

The first quarter Zacks Consensus Estimates rose 6 cents to 84 cents in the last 7 days, as 3 out of 6 covering analysts raised in that time.

For fiscal 2010, half of the 8 covering analysts raised in the last week to $3.33 from $3.17 per share. Analysts expect 2010 earnings per share growth of 33.89%.

Value Fundamentals

NBTY is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 12.32 and a price-to-book of 2.31. The company has a strong 5-year average return on equity (ROE) of 15.67%.

Zacks Investment Research

Vodafone Profit Leaps, Lifts Savings – Analyst Blog

Zacks Market Commentaries — Wed, 11 Nov 2009 14:33:46 +0000

Vodafone Group Plc (VOD), the largest wireless carrier in the world by revenue, has announced interim results for fiscal year 2010 with adjusted net income of £4.58 billion (US$7.3 billion) increasing 15% year over year from £3.99 billion (US$6.4 billion) reported a year ago, driven by favorable exchange rate movements and reduced tax. Adjusted earnings exclude one-time items such as impairment losses.

Group Revenue & EBITDA

The telecom giant reported consolidated revenues of £21.8 billion (US$34.8 billion) for the period, representing a 9.3% year over year growth. Favorable exchange rate (euro-sterling) swings and net impact of merger and acquisition initiatives contributed to this growth. Excluding these impacts (organic basis), revenue declined 3% year over year.

Group service revenue declined 2.6% year over year on an organic basis to £20.5 billion (US$32.7 billion), primarily due to weaker contributions from European markets as recessionary conditions curbed demand for wireless services. Adjusted EBITDA increased 2.9% year over year to £7.5 billion (US$12 billion) driven by cost control.

Results by Segment

Europe

Revenues for the European segment increased 3% year over year (down 5.1% on organic basis) to £14.9 billion (US$23.8 billion). Service revenue in Europe declined 4.5% organically as growth in Italy and the Netherlands was more than offset by decreases across Spain, Germany and the UK due to a weaker economy, regulatory pressure and intense competition.

Decline in voice revenue continues to offset growth in data. Revenue in Germany and the UK remains under pressure due to mobile termination rate (inter-operator fees) cuts. Vodafone is also losing customers in the UK as subscribers switch to its major rival Telefonica’s (TEF) O2 which is marketing iPhone in the UK.

Moreover, Deutsche Telekom (DT) and France Telecom (FTE) have recently finalized an agreement to combine their UK units, which will create the largest mobile carrier in the UK.

Africa & Central Europe

This segment posted revenues of £3.7 billion (US$5.9 billion), up 36% year over year. Organically, service revenue fell 3.2% as consistent growth at Vodacom (South Africa) and increase in subscriber count were partly offset by weak contributions from Romania and Turkey. Service revenue at Vodacom increased 4.2% on an organic basis as a result of healthy subscriber accretion.

Asia Pacific & Middle East

Asia Pacific & Middle East segment continues to perform in line with expectation. Revenue surged 15.9% year over year (11.3% organically) to £3.1 billion (US$4.9 billion), driven by continued strong growth in India , the single biggest contributor to organic revenue growth. Service revenue in India increased 20.5% organically boosted by roughly 55% growth in wireless customer base amid intense price competition.

Subscriber Trends

During the six-month period, Vodafone registered roughly 20.6 million net new mobile connections across its operations, bringing the total subscriber base to 323.3 million (83.5% represented by prepaid). India continues to be a key driver for subscriber growth with a net addition of 14 million customers in the first six months of fiscal 2010.

In Europe, the company registered a net loss of 262,000 subscribers during the half-year period. Verizon’s (VZ) mobile unit, Verizon Wireless, in which Vodafone holds a 45% stake, however, posted a net addition of 1.1 million customers.

Outlook

Management has confirmed its outlook for fiscal 2010 with adjusted operating profit projected in the range of £11.0 billion to £11.8 billion (US$17.5 billion to US$18.8 billion), assuming a favorable foreign exchange environment. Free cash flow is projected between £6.0 billion and £6.5 billion (US$9.6 billion to US$10.4 billion).

Vodafone is aggressively pursuing its cost reduction program that includes workforce reduction in Europe . The company has increased its annual savings target to £2 billion (US$3.2 billion) by 2012 from £1 billion (US$1.6 billion) as per earlier expectation. Roughly 50% of the total savings is expected to be realized in 2011.

Moreover, Vodafone continues to accelerate 3G wireless service deployments and expand network availability across Asia, Eastern Europe and Africa. The company’s HSDPA technology based 3G mobile broadband network offers network speeds of 7.2 megabits per second (Mbps) across Europe.

Vodafone has recently upgraded its 3G network in the UK to offer peak download speeds of 14.4 Mbps. Efforts are underway to further upgrade the existing 3G HSDPA network to HSPA+ standard, which will offer future throughput up to 42 Mbps. Moreover, Vodafone is set to launch iPhone in the UK in early 2010.
Read the full analyst report on "VOD"
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Zacks Investment Research

DT Tops Estimates on Cost-Cutting – Analyst Blog

Zacks Market Commentaries — Mon, 09 Nov 2009 18:14:35 +0000

German telecom giant Deutsche Telekom (DT) announced results for third-quarter 2009 with reported earnings per ADS of 31 cents, beating the Zacks Consensus Estimate of 25 cents. Net income of €959 million (US$1.4 billion) reflects a 7.2% increase from €895 million (US$1.3 billion) reported a year ago.

This year-over-year growth was fueled by the company’s ongoing cost-cutting initiatives under the "Save for Service" program. Total savings from this program reached approximately €5.4 billion (US$7.7 billion) at the end of the quarter, exceeding the annual savings target of up to €4.7 billion (US$6.7 billion) originally expected to be achieved in 2010.

Group Revenue & EBITDA

Reported revenues of €16.3 billion (US$23.2 billion) reflects 5.2% year-over-year growth, primarily due to the consolidation of Greek operator OTE group, in which Deutsche Telekom holds a 30% stake. Domestic revenues grew 0.6% year over year to €7.2 billion (US$10.3 billion), while international revenues increased 9.2% year over year to €9.1 billion (US$12.9 billion). Approximately 56% of the revenue was generated outside Germany in the quarter.

Adjusted EBITDA (excluding special items) increased 5.5% year over year to €5.5 billion (US$7.9 billion), driven by improved operational efficiency and reduced cost. OTE contributed €1.5 billion (US$2.1 billion) and €0.6 billion (US$858 million) to the group’s revenue and adjusted EBITDA, respectively.

The following is a snapshot of operating results by segments:

Germany

Revenue from this segment fell 2% year over year to €6.5 billion (US$9.2 billion) as a result of continued erosion in fixed-network lines and unfavorable regulatory measures. German fixed-network and mobile communications operations were combined following the recently completed operational restructuring. Fixed-network revenue declined 3.5% year over year to €4.7 billion (US$6.7 billion), while mobile communications revenue grew 1.4% to €2.1 billion (US$3 billion).

German fixed telephony subscriber base continue to contract as reflected by 8% year over year decline in fixed-network lines that registered 26.65 million lines at the end of the quarter. Broadband business remains on the growth track as total retail broadband lines grew 10.3% year over year to 11.3 million, with 72,000 customers added in the quarter. German mobile communications subscriber base increased 1.4% year over year to 39.3 million.

United States (T-Mobile USA)

Revenue at Mobile Communication USA (T-Mobile USA), the fourth-largest US wireless carrier, grew 3% year over year to €3.8 billion (US$5.4 billion). However, in dollar terms, total revenue for the quarter represents a 2.3% annualized decline. Net income (measured in dollars) also decreased 5.7% year over year to US$417 million.

Blended ARPU for T-Mobile USA was US$47, down from US$52 and US$48 reported in the prior-year quarter and previous quarter, respectively, as growth in data services was offset by lower roaming and customer migration to unlimited plans. Blended churn (customers switching to other products) increased sequentially and year over year to 3.4% as a result of an increase in contract churn due to intense competition.

Higher contract churn affected customer retention at T-Mobile USA in the third quarter, as evidenced by a net loss of 77,000 customers. This is compared to a net gain of 325,000 and 670,000 customers in the previous and year-ago quarters, respectively.

T-Mobile USA remains challenged by the cutting-edge wireless handsets offerings from its larger peers such as AT&T (T) and Verizon (VZ), resulting in increased customer defection. The entity served 33.4 million mobile subscribers at the end of the quarter.

Europe

Revenue for the Europe operating segment (combines operations in the UK, Poland, the Netherlands, Austria and the Czech Republic) decreased 13.2% year over year to €2.6 billion (US$3.6 billion). The Europe segment served 44.4 million cellular customers at the end of the quarter.

Revenue from UK (T-Mobile UK), the largest contributor to the segment’s revenue, decreased 14.6% year over year to €853 million (US$1.2 billion) due to an adverse exchange rate impact and mobile termination rate (inter-operator fees) cuts. Deutsche Telekom has reportedly finalized agreement with France Telecom (FTE) for the merger of T-Mobile UK with Orange UK under a 50-50 joint venture, which will create the largest mobile operator in the UK with 37% market share.

Southern and Eastern Europe

The segment reported revenues of €2.6 billion (US$3.7 billion) for the quarter, reflecting an increase from €1.26 billion (US$1.8 billion) reported a year ago. This growth was fuelled by the inclusion of the OTE group. At the end of the quarter, the segment served 33.7 million mobile customers and 3.7 million broadband connections.

Systems Solutions (T-Systems)

The dismal global economic environment continues to negatively affect new order bookings at T-Systems. As a result, revenues for the segment declined 7.3% year over year to €2.1 billion (US$3 billion). Telecommunications revenue decreased 12.4% year over year to €803 million (US$1.1 billion), while computing and desktop services revenue declined 0.9% to €952 million (US$1.4 billion).

Outlook

Deutsche Telekom has reaffirmed its guidance for 2009, with adjusted EBITDA expected to fall by 2-4% from €19.5 billion (US$27.9 billion) achieved in 2008. Projected free cash flow for 2009 remains at €7 billion (U$10 billion), out of which OTE’s contribution is expected to be €0.6 billion (U$0.9 billion).
Read the full analyst report on "DT"
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Zacks Investment Research

Chicago Bridge & Iron Beats – Analyst Blog

Zacks Market Commentaries — Mon, 02 Nov 2009 20:47:06 +0000

Chicago Bridge & Iron Company NV (CBI) reported net income of $40.8 million, or 42 cents per diluted share, for the third quarter of 2009, compared with $8.6 million, or 9 cents per diluted share, in the third quarter of 2008. This was higher than Zacks Consensus Estimate of 38 cents per share. Revenue for the quarter was $1.0 billion compared with third quarter 2008 revenue of $1.6 billion.

New awards for the reported quarter totaled $1.6 billion, including CB&I’s $550 million Gorgon LNG contract in Australia and the $530 million GASCO award in Abu Dhabi. With less work, the company cut sales-related costs 39%, although overhead shrank by a more modest 12%.

Earlier, the company had announced that it has agreed to buy hydrogen-management technology from H2Gen Innovations Inc. in order to get hold of the Mars modularized Pressure Swing Adsorption (PSA) technology. H2Gen's PSA technology is used to recapture hydrogen and noble gases from waste streams in a variety of industries including oil & gas, petrochemicals and metals. Small footprint PSA process modules provide gas separation and purification with high reliability at a low cost. Financial terms of the proposed transaction were not disclosed.

Cash and cash equivalents increased to $212.0 million as of Sep 30, up from $88.2 million at year-end 2008. Long-term debt was $120 million and shareowners’ equity was $810 million.

Chicago Bridge & Iron Company N.V. provides engineering, procurement and construction (EPC) solutions, as well as process technologies for the energy infrastructure projects. It primarily focuses on projects related to oil and gas companies. CB&I operates approximately 80 locations around the world. The company was founded in 1889 and is based in The Hague, the Netherlands. Major competitor is Matrix Service Company (MTRX).
Read the full analyst report on "CBI"
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Zacks Investment Research

AQNM, CX, PSFT, AXP, PWRM, NDAQ, CSRH, VZ, CVAT, GE, DrStockPick.com Stock Report!

Dr. Stock Pick — Wed, 28 Oct 2009 17:20:30 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Wednesday October 28, 2009 DrStockPick.com Stock Report! AQNM, CX, PSFT, AXP, PWRM, NDAQ, CSRH, VZ, CVAT, GE ************************************************************** AXP, American Express Company AXP, a payments and travel company, provides charge and credit payment card products, and travel-related services worldwide. AXP’s division American Express Business Travel announced today the findings of [...]

Time for New Stock Market Leadership?

Frank Holmes — Mon, 26 Oct 2009 05:00:00 +0000

This analysis is from John Derrick, U.S. Global Investors Director of Research. The market has rallied dramatically since the March 9 low, with the biggest beneficiary of this rally being low-quality companies. This intuitively makes sense, given that companies with the most troubled outlooks are the ones most likely to have a strong recovery when the dire outcomes predicted at the bottom of the crisis failed to transpire. Quality may have different meanings to different investors, but in a recent research piece, Citigroup ranked performance based on multiple definitions of quality. Samp;P earnings quality ranking, debt-to-capitalization ratio and return on equity were used as proxies for quality. The research universe was the small-cap Russell 2000 Index, but I believe broader market conclusions can be drawn as well. Based on Samp;P earnings quality rankings, companies with C or D (the two lowest categories) ratings returned about 55 percent over the past six months, while the highest-rated stocks returned about 11 percent. As a whole, the Russell 2000 universe returned 30 percent over that time period. This trend is also broadly true for the other measures of quality. Generally speaking, companies with higher debt burdens outperformed companies carrying low debt, and companies with negative return on equity outperformed the broader market as well as the companies with the highest return on equity. Morgan Stanley also recently released a research report that looked at low-priced stocks as a proxy for low-quality and found that Samp;P 500 stocks trading below $5 dramatically outperformed. The same analysis was conducted on the MSCI Europe Index with very similar results, indicating a broad-based global phenomenon. Morgan Stanley highlighted that the recovery so far has been driven by multiple expansion ndash; the valuation that investors are willing to pay has increased, but that has not been supported by an increase in earnings in the current period. But we are now potentially at an inflection point at which the junk rally has more or less run its course and the market is beginning to focus on earnings growth. The business cycle plays a significant role in market valuations in the sense that the market anticipates a recovery and pays up for the anticipated earnings stream. Once the recovery takes hold, however, investors focus on actual earnings power as the primary driver of valuations. One persuasive indicator that the recovery has indeed taken hold can be seen in the ISM Manufacturing Index, which moved above 50 about six weeks ago, indicating that the economy is expanding. What has worked so far in this stock market recovery will not likely carry us into 2010 and beyond, so the time could be right to reposition for the next leg of the recovery. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The Russell 2000 Index is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000. The Russell 3000 Index consists of the 3,000 largest U.S. companies as determined by total market capitalization. The MSCI Europe Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe. As of September 2002, the MSCI Europe Index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The Samp;P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states. #09-734

Prieur’s readings (October 20, 2009)

Prieur du Plessis — Tue, 20 Oct 2009 09:43:50 +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.

Beacon Enterprise Solutions Group, Inc. (BEAC.OB) Continues Engagement with Fortune 100 Pharmaceutical Company

QualityStocks — Mon, 19 Oct 2009 18:20:03 +0000

Today, Beacon Enterprise Solutions Group, Inc., an emerging global leader of high performance Information Transport Systems (“ITS”) infrastructure solutions, announced that it has expanded its relationship with an existing Fortune 100 pharmaceutical client to provide ITS infrastructure documentation, design, installation and ongoing management services. Valued at approximately $27 million, the engagement will initially focus on [...]

Zacks Analyst Blog Highlights: Royal Philips Electronics, Sony Corporation, General Electric Company, Panasonic Corporation and Nucor Corporation – Press Releases

Zacks Market Commentaries — Tue, 13 Oct 2009 12:23:09 +0000

For Immediate Release

Chicago, IL – October 13, 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: Royal Philips Electronics (PHG), Sony Corporation (SNE), General Electric Company (GE), Panasonic Corporation (PC) and Nucor Corporation (NUE).

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:

Philips Misses Zacks Consensus

Royal Philips Electronics (PHG) reported earnings of 27 cents per share for the third quarter of 2009, below the Zacks Consensus Estimate of 38 cents.

Sales amounted to $8.04 billion, a decline of 11% on both nominal and comparable bases.

Healthcare sales declined by 4% on a comparable basis due to declines at Clinical Care Systems, Imaging Systems and Healthcare Informatics.

Consumer Lifestyle sales fell by 15% on a comparable basis, due to declines in all businesses except Health & Wellness.

Lighting sales declined by 13% on a comparable basis, led by double-digit declines at Professional Luminaires, Lighting Electronics and Automotive Lighting.

In mature markets, double-digit declines at Lighting and Consumer Lifestyle were offset by a mid-single digit decline at Healthcare.

Sales in emerging markets showed sequential improvement although it remained 11% below the level achieved in the corresponding prior-year quarter.

The Group cash balance increased by €145 million to €3.7 billion, driven by free cash inflow of €353 million, partly offset by €172 million in payments for acquisitions. Operating activities generated cash inflow of €470 million compared to €210 million in the corresponding quarter of prior year.

Inventories as a percentage of sales rose by 70 basis points to 14% at the end of the quarter. Net debt at the end of the quarter amounted to €0.6 billion compared to €1.5 billion at the end of the prior-year quarter. Group equity remained stable at €13.4 billion.

Royal Philips Electronics, headquartered in the Netherlands, integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity". Major competitors include Sony Corporation (SNE), General Electric Company (GE) and Panasonic Corporation (PC).

High-Cost Inventory Hurts Nucor

U.S.’s largest recycler of steel scrap, Nucor Corporation (NUE), has announced its guidance for its third quarter ending Oct. 3, 2009. Nucor expects losses of 15 cents to 20 cents per share in the quarter. The Zacks Consensus Estimate expects a loss of 15 cents.

Helped by increased sales volumes, Nucor posted a second quarter loss narrower than the Zacks Consensus Estimate. Net loss in the quarter was $133.3 million or 43 cents per diluted share. This was against a net loss of $189.6 million or 60 cents per diluted share in the prior quarter of 2009, an improvement of 30%.

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Philips Misses Zacks Consensus – Analyst Blog

Zacks Market Commentaries — Mon, 12 Oct 2009 14:31:58 +0000

Royal Philips Electronics (PHG) reported earnings of 27 cents per share for the third quarter of 2009, below the Zacks Consensus Estimate of 38 cents.

Sales amounted to $8.04 billion, a decline of 11% on both nominal and comparable bases.

Healthcare sales declined by 4% on a comparable basis due to declines at Clinical Care Systems, Imaging Systems and Healthcare Informatics.

Consumer Lifestyle sales fell by 15% on a comparable basis, due to declines in all businesses except Health & Wellness.

Lighting sales declined by 13% on a comparable basis, led by double-digit declines at Professional Luminaires, Lighting Electronics and Automotive Lighting.

In mature markets, double-digit declines at Lighting and Consumer Lifestyle were offset by a mid-single digit decline at Healthcare.

Sales in emerging markets showed sequential improvement although it remained 11% below the level achieved in the corresponding prior-year quarter.

The Group cash balance increased by €145 million to €3.7 billion, driven by free cash inflow of €353 million, partly offset by €172 million in payments for acquisitions. Operating activities generated cash inflow of €470 million compared to €210 million in the corresponding quarter of prior year.

Inventories as a percentage of sales rose by 70 basis points to 14% at the end of the quarter. Net debt at the end of the quarter amounted to €0.6 billion compared to €1.5 billion at the end of the prior-year quarter. Group equity remained stable at €13.4 billion.

Royal Philips Electronics, headquartered in the Netherlands, integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity". Major competitors include Sony Corporation (SNE), General Electric Company (GE) and Panasonic Corporation (PC).

We currently have a Neutral recommendation on PHG.
Read the full analyst report on "PHG"
Read the full analyst report on "SNE"
Read the full analyst report on "PC"
Read the full analyst report on "GE"
Zacks Investment Research

Johnson Controls Bags Contract – Analyst Blog

Zacks Market Commentaries — Tue, 06 Oct 2009 15:45:00 +0000

Johnson Controls (JCI) has won a record-breaking $87 million project at Princess Noura bin Abdulraham University, the world's biggest women-only university in the Kingdom of Saudi Arabia. Under the contract, Al Salem Johnson Controls, the company's joint venture in Saudi Arabia, will supply 26 York brand chillers to Princess Noura University.

The Wisconsin-based supplier of automotive interiors, batteries and other control equipment will supply chillers that use HFC-134A refrigerant, which does not contribute to ozone depletion. They are manufactured in San Antonio, Texas.

The York brand is a proven market leader in energy efficiency. Al Salem Johnson Controls will also supply radiators for the chillers, making this one of the company's largest single orders in its history. The company achieved the first and largest-ever chiller order in the world for the Pearl Qatar project. It has also succeeded in winning the Bahrain Bay project.

Johnson Controls has won notable contracts over the years. The State of Michigan had awarded $148.5 million in state tax breaks to the Johnson Controls–Saft joint venture to build the first U.S. production facility for lithium-ion batteries in Holland , Michigan .

Johnson also bagged lithium-ion battery contracts from the U.S. Advanced Battery Consortium and Ford Motor (F). Johnson Controls was also selected by the U.S. Department of Energy as one of 16 companies to participate in an $80 billion contract to improve energy efficiency projects in Federal buildings.

The company expanded its sales force to take advantage of the significant growth opportunities for efficiency retrofits in the government market. We recommend the shares of Johnson Controls as Neutral with a target price of $27.
Read the full analyst report on "JCI"
Read the full analyst report on "F"
Zacks Investment Research

J&J Joins Vaccine Bandwagon – Analyst Blog

Zacks Market Commentaries — Tue, 29 Sep 2009 21:13:11 +0000

It seems that the swine flu pandemic has attracted many large pharmaceutical players towards the vaccine business, the latest being Johnson & Johnson (JNJ). Yesterday, J&J acquired an 18% stake in a Netherlands-based biotech company, Crucell NV, for $440 million. The deal will primarily focus on developing a universal vaccine for influenza treatment using Crucell's genetically engineered antibody technology.

Additionally, vaccines for other diseases will be developed in due course. Following the deal, J&J’s per-share earnings will be reduced by 2 cents to 4 cents in 2009.

Per the deal, Crucell will retain the European marketing right for the vaccine which will be jointly produced by the companies, while Johnson & Johnson will market the vaccine in the rest of the world. Accordingly, Crucell is eligible to receive royalties on global sales.

Although the vaccine influenza vaccine is still in an early stage of development, this move is quite advantageous for Crucell as it would have been difficult for the company to bear late-stage development expenses on its own.

We believe the move by Johnson & Johnson should boost its topline going forward as vaccines are becoming one of the most sought-after segments in the pharmaceutical industry. Although J&J is one of the largest players in the pharmaceutical segment, it does not have a strong presence in vaccines. This deal will enable J&J to compete with established vaccines players such as GlaxoSmithKline (GSK), Merck (MRK), Novartis (NVS) and Sanofi-Aventis (SNY).

Johnson & Johnson is in a diversifying mode, which is evident from its deal with Ireland-based biotech company Elan Corporation (ELN) a few months back. For an 18.4% stake in Elan, J&J paid $885 million in addition to $500 million investment for a majority stake in the Alzheimer's disease pipeline -- another prime target of the pharmaceutical industry.

For the full year of 2008, J&J’s pharmaceutical division contributed 39% of its total annual sales while the consumer segment and the medical devices segment and diagnostics accounting for 25% and 36%, respectively. We believe the pharmaceutical segment will get a strong boost on the successful execution of the recently signed deals.

The company’s strong cash balance augurs well for such further acquisitions. We have a Neutral recommendation on the stock.
Read the full analyst report on "JNJ"
Read the full analyst report on "ELN"
Read the full analyst report on "GSK"
Read the full analyst report on "MRK"
Read the full analyst report on "NVS"
Read the full analyst report on "SNY"
Zacks Investment Research

Simulated Environment Concepts Inc.’s (SMEV.PK) History of Innovation

QualityStocks — Thu, 24 Sep 2009 17:40:35 +0000

Over the years, Simulated Environment Concepts Inc. (SEC) has been recognized as the most innovative and leading provider of massage equipment. The company’s products are distributed in the United States and over 30 other countries. SpaCapsule and SpaCapsule Anywhere are self-contained, full body massage systems aroma-therapy units, audio and video entertainment systems packaged into one [...]

Motorola Wins Major Contract – Analyst Blog

Zacks Market Commentaries — Wed, 23 Sep 2009 15:15:00 +0000

Recently, Motorola Inc (MOT) was awarded a contract to supply EuroDOCSIS 3.0 digital video modems to UPC Broadband for its pan-European network. UPC Broadband is the European division of Liberty Global Inc (LBTYA), the largest cable TV operator in Europe.

Using Motorola’s SBV6120E EuroDOCSIS 3.0 voice and data solution, UPC will deliver high-speed (120 Mbps) data and IP voice and services to its customers in The Netherlands, Austria, Czech Republic, Hungary, Slovakia and Switzerland. The SBV6120E is part of Motorola's complete portfolio of bandwidth-expanding EuroDOCSIS 3.0-certified technologies.

EuroDOCSIS 3.0 standard is based on 8 MHz channels whereas U.S. DOCSIS 3.0 standard is based on 6 MHz channels. Motorola’s DOCSIS 3.0 solutions enable cable operators to cost-effectively introduce new value-added services, increase bandwidth for feature-rich services, generate higher return on investment, and increase revenues.

Although the financial terms of this contract haves not been disclosed, we believe the UPC contract will act as a major catalyst for the company’s cable modem termination system (CMTS) business since Motorola is quickly losing its ground to both its larger peer Cisco System Inc (CSCO) and the emerging dark-horse Arris Group Inc (ARRS).

According to a recent report of Infonetics Research, Arris has become the new world leader in the CMTS market commanding approximately 47% of the global CMTS market having taken over leadership from Cisco System (39%) and Motorola (10%).

According to our assessment, the DOCSIS 3.0 market will continue to remain healthy in the near future as Intense competition among cable operators, satellite carriers and telecom service providers for broadband market share has forced the cable MSOs to opt for cost effective bandwidth enhancing technology for high-speed network.

Major cable MSOs in the U.S. are aggressively deploying the DCOSIS 3.0 technology. This in turn may result in significant demand for Motorola’s fiber-based network architectures such as, passive optical networks and DOCSIS 3.0 solutions.
Read the full analyst report on "MOT"
Read the full analyst report on "LBTYA"
Read the full analyst report on "CSCO"
Read the full analyst report on "ARRS"
Zacks Investment Research

DrStockPick.com Stock Report! 9/10/09, SSYS, ONCO, NSTC, ASCA, CTV, OSUR

Dr. Stock Pick — Thu, 10 Sep 2009 16:43:34 +0000

DrStockPick.com Stock Report! Thursday September 10, 2009 ************************************************************** Dimension 3D Printing, a brand of Stratasys Inc. (NASDAQ: SSYS), today announced the launch of its sixth annual “Extreme Redesign: The Ultimate 3D Printing Challenge.” The contest challenges computer-aided-design (CAD) students worldwide to submit their most creative, useful and innovative Extreme Redesigns - whether an [...]

U.S. Ousted as Most Competitive Economy

Frank Holmes — Wed, 09 Sep 2009 05:00:00 +0000

The global recession claims another victim - the United States is no longer the worlds most competitive economy. Switzerland, a beacon of relative stability during the past 18 months of worldwide economic turmoil, toppled the topsy-turvy U.S. from the No. 1 spot in the latest update of quot;The Global Competitiveness Reportquot; from the World Economic Forum. The WEF uses a wide range of metrics to measure competitiveness, which it defines as quot;the set of institutions, policies and factors that determine the level of productivity of a countryquot; as a means to produce prosperity for its citizens. The U.S. was panned in the report for too-close relationships between government regulators and the private sector, and for quot;the perception that the government spends its resources wastefully.quot; Specifically mentioned were the massive additions to the federal deficit made by the Bush and Obama administrations, used to finance the Iraq war and economic stimulus. Singapore ranked third, with Sweden, Denmark, Finland, Germany, Japan, Canada and The Netherlands rounding out the top 10. At the other end of the list, corruption- and inflation-plagued Zimbabwe - a prime example of how not to run an economic or political system - somehow managed to move up one spot from the bottom. It was replaced by Burundi at No. 133. The WEF said in its report that the three largest BRIC countries - Brazil, India and China - are among the few countries likely to improve their global competitiveness as a result of the recession. Some of the reasons: focus shift from export to domestic markets, greater efficiency by thinning out non-competitive producers, and more emphasis on improving education and other foundational issues. Each of these three also have challenges. For China (ranked 29th in the WEF report), they include lack of technology and rigid labor markets. India (49th) has to deal with huge prosperity gaps between its thriving cities and its rural areas. Brazil (56th) also has inequality issues, along with upgrading its public and private institutions. Russia, the fourth BRIC, is seen as one of the economies most likely to see negative ramifications from the recession. Its dependence on oil and natural gas exports expose it to more economic risk than the other BRIC components, which are far more diversified and have better financial markets. Weak property rights and government favoritism issues also hurt Russia (63rd, down 12 spots from a year earlier) in the rankings. Emerging Europe on the whole saw its competitiveness fall as a result of the financial crisis after years of booming consumption paid for by borrowing from foreign banks. All 492 pages of quot;The Global Competitiveness Reportquot; for 2009-10 are available *here. *This link goes to the World Economic Forum Web site. U.S. Global Investors does not endorse any information supplied by this website and is not responsible for any of its content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

U.S. Ousted as Most Competitive EconomyU.S. Ousted as Most Competitive Economy

Frank Holmes — Wed, 09 Sep 2009 05:00:00 +0000

APD Buys New Hydrogen Plant – Analyst Blog

Zacks Market Commentaries — Wed, 02 Sep 2009 20:00:26 +0000

Air Products (APD) acquired a new steam methane reformer (SMR) hydrogen facility from MarkWest Energy Partners L.P. (MWE). The facility, which is under construction, is in Corpus Christi, Texas. The company did not disclose the financial details of the transaction.

This acquisition further reinforces Air Products’ position as a leading hydrogen provider in the U.S. Gulf Coast. The company said that the new facility, which is expected to be operational in March 2010, will produce over 30 million standard cubic feet per day. It will be owned and operated by Air Products.

The companies also signed a separate long-term supply agreement whereby Air Products will provide hydrogen and steam to MarkWest.

Earlier this year, Air Products strengthened its U.S. Gulf Coast hydrogen pipeline network with the successful completion of a pipeline connection across Lake Pontchartrain. The company said that this enhances the supply reliability and efficiency to its own liquid hydrogen production plant in New Orleans, which is the largest liquid hydrogen facility in the world. In addition, Air Products is in the process of building two new steam methane reformers in the Louisiana portion of its Gulf Coast system.

Air Products has hydrogen pipeline networks operating around the world, including in Southern California, U.S., in Sarnia, Ontario, and Edmonton, Alberta in Canada, and in Rotterdam in The Netherlands.

During the second quarter conference call, the company said that the refinery hydrogen volumes continued to increase. Further, the company expects these volumes to increase modestly from the current levels across most of its pipeline franchises, due to higher demand and fewer customer outages.
Read the full analyst report on "APD"
Read the full analyst report on "MWE"
Zacks Investment Research

Dow Sells Refinery – Analyst Blog

Zacks Market Commentaries — Wed, 02 Sep 2009 18:25:27 +0000

Dow Chemical Co. (DOW) completed the sale of its Netherlands-based crude oil refinery to Paris-based Total SA (TOT), one of the six major global oil companies, for about $800 million. The refinery is a key supplier of refined products, including diesel, to the European market. The move is in line with Dow’s strategy of divesting non-core assets. The deal received regulatory approval last month.

The Midlands, Michigan-based chemical company stated that the divestiture will increase its financial flexibility, improve cash flow and will help pay down debt. The company plans to use the proceeds from the deal to pay down debt, which was raised for the Rohm and Haas acquisition.

The Rohm and Haas acquisition increased Dow’s net debt from $8 billion to $22 billion in the first half of 2009. This resulted in a significant net cash deficit of $19 billion during the period. However, Dow Chemical has become the world’s leading specialty chemicals and advanced materials company after acquiring Rohm and Haas for a total investment of $16.3 billion.

Dow Chemical also noted that it expects to close its sale of the salt producing company, Morton Salt under Rohm and Haas to the Germany-based K+S AG for $1.68 billion in second half of 2009. K+G AG is an agricultural chemical and salt company and the largest supplier of Potash in Europe. The company is also divesting its stake in Optimal Group of Companies to Malaysia's state-controlled oil company for $660 million by the end of the year.

This apart, media reported that Dow Chemical and Saudi Aramco are expecting cost synergies of about $4 billion on their joint petrochemical complex as the slowing economy reduces project cost. The estimated cost of the plant was at least $20 billion before reduction. Saudi Aramco is the state-owned national oil company and the biggest oil corporation in the world with the largest proven crude oil reserves and production.

We maintain our Neutral recommendation on the stock.

Read the full analyst report on "DOW"
Read the full analyst report on "TOT"
Zacks Investment Research

Valero Still Struggles – Analyst Blog

Zacks Market Commentaries — Thu, 27 Aug 2009 22:00:36 +0000

The largest oil refiner in the U.S., Valero Energy Corporation (VLO), is deferring its search for overseas acquisitions following the decline of an acquisition stake in a Netherlands refinery.

The company had sought acquisition of Dow Chemical’s (DOW) 45% interest in the TRN refinery for an enterprise value of approximately $725 million. But the refinery’s major stake holder, Total SA (TOT), turned down Valero’s offer by exercising its right of first refusal. Valero wanted to confine the European diesel market by capturing this acquisition opportunity.

On the other hand, yesterday, the company closed one of its refineries in San Nicolas, Aruba, indefinitely. Despite the refinery’s capability of processing low-cost heavy sour crude oil, it was suffering from low product margins.

These factors point to our weak outlook for near-term refinery margins and a growing list of medium- to long-term challenges. Weak refined product demand and excess capacity, both in the U.S. as well as globally, are expected to cap margin gains. These factors are expected to weigh on the fortunes of all refining players in general and Valero in particular.

With the outlook for domestic refiners remaining bleak, we see little reason for investors to own the stock as the ongoing long-term fundamental changes in the industry suggest future struggle. We therefore maintain our Underperform rating.
Read the full analyst report on "VLO"
Read the full analyst report on "DOW"
Read the full analyst report on "TOT"
Zacks Investment Research

DrStockPick.com Stock Report! 8/25/09, PCSV, USNA, MASI, IGNT, HILL, TDC

Dr. Stock Pick — Tue, 25 Aug 2009 18:59:56 +0000

DrStockPick.com Stock Report! Tuesday August 25, 2009 ************************************************************** PCS Edventures!.com (OTCBB: PCSV) today announced that The Brain, its proprietary robotic micro-controller, has been successfully deployed in hundreds of sites throughout the United States and worldwide including Singapore, Thailand, Korea, Saudi Arabia, the Netherlands, and Germany. Following a soft launch this spring, combined [...]

August 24th CEOcast Weekly Newsletter

QualityStocks — Mon, 24 Aug 2009 12:06:13 +0000

Companies featured in this edition of the newsletter: CUR, CVM, DKAM, ICLK, IMUC, IWEB, OMCM, ONEZ, SVUL, TAGS Markets managed to extend their run this week, hitting fresh highs for ‘09 despite coming under pressure from negative economic reports and a significant two week correction in Chinese equity markets. All told, the Dow ended up [...]

Suntech Q2 Profit Falls – Analyst Blog

Zacks Market Commentaries — Fri, 21 Aug 2009 22:47:26 +0000

Suntech Power Holdings Co. Ltd. (STP) failed to live up to market expectations of a revival in its fiscal second quarter. Although EPADS of 6 cents during the quarter surpassed the Zacks Consensus EPADS estimate of a penny, this was a far cry from the year-ago EPADS of 31 cents. Also, the quarterly results included a $17.5 million foreign exchange gain on account of the appreciation of the euro versus the dollar. Excluding this impact, the company swallowed a loss per ADS of 5 cents during the quarter.

On the revenues front, Suntech witnessed a marginal growth of 1.7% sequentially to $321 million. The growth came through higher shipments leading to volume growth over the first quarter of 2009. Suntech’s dependence on Germany continues, with almost half of its sales coming from the country during the quarter, and Italy chipping in a healthy 13%. The company also generated revenues from France, Greece, Benelux ( Belgium , Netherlands and Luxembourg ) and the Czech Republic . Overall Europe generated approximately 78% of total sales during the quarter. Besides, the company generated 11% from Asia, 8% from North America and 3% from rest of the world.

In the second quarter, Suntech witnessed 8% lower average selling price (ASP) from the previous quarter. Still, gross margins rose to 18.6% in the second quarter from 17.8% in the prior quarter. This was due to improvements in the company’s cost structure on account of lower silicon wafer costs.

Wuxi, China-based Suntech is a leading solar energy company in the world. The company designs, develops, manufactures and markets photovoltaic cells and modules. Looking forward, Suntech expects more than 50% spike in shipments in the third quarter over the second quarter. However, the company sees no further room for margin expansion in the near term. The company revised its fiscal 2009 shipment guidance to approximately 600MW from the earlier guidance range of 600MW to 700MW.

At present, Suntech is trading at a premium to its comparable peers in terms of price-to-book and price-to-sales on account of its leadership position in cell conversion efficiency and improving module manufacturing cost. However, falling ASPs, pruned expansion plans in light of lower demand and dilutive stock issuances make Suntech’s valuation unappealing in the near term. Thus, we maintain our Neutral recommendation on the shares.

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

Energy Blast – August 21, 2009

Robert Amsterdam — Fri, 21 Aug 2009 09:09:46 +0000

Following the hydropower plant disaster, President Medvedev instructed the government 'to provide uninterrupted energy supply to industrial enterprises, social institutions and the population'. Apparently Rushydro will not raise its prices to offset the cost of repairs. Russian regions reportedly owe...

DrStockPick.com Stock Report! 8/20/09, TXT, OMTR, DKAM, PSPM, NUTR, MFSF

Dr. Stock Pick — Thu, 20 Aug 2009 19:40:14 +0000

DrStockPick.com Stock Report! Thursday August 20, 2009 ************************************************************** Brower Piven, A Professional Corporation announces that a class action lawsuit has been commenced in the United States District Court for the District of Rhode Island on behalf of purchasers of the securities of Textron, Inc. (NYSE: TXT) during the period between July 17, 2007 and [...]

PennyOmega.com Stock Report! 8/17/09, S, ATK, EBIX, LMT, GWBU, NKE

PennyOmega.com — Mon, 17 Aug 2009 17:43:51 +0000

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“Advances in Development Reverse Fertility Declines” – Science or Hocus Pocus?

Edward Hugh — Sun, 09 Aug 2009 08:28:00 +0000

by Edward Hugh: : L'Escala de Empordàbr /br /According to a once-upon-a-time post on the Economist's a href="http://www.economist.com/blogs/certainideasofeurope/2007/07/a_fistful_of_reply.cfm#list-comments"Certain Ideas of Europe Blog/a Edward Hugh “was very cross” about some of the journalism they were serving up over at that prestigious journal. Well, not to worry, since this time he is hopping mad. And the issue which lies behind his wrath is essentially the same one, how to interpret and understand the demographic processes which are currently so evidently affecting our societies. In what is simply the latest episode in a long and sorry saga (if you want documentation, please see the comments Claus Vistesen and I nailed to their "Wall" in the above linked post) this week's print issue contains a href="http://www.economist.com/sciencetechnology/displaystory.cfm?story_id=14164483"a research review from their science and technology correspondent/a who is evidently not backward in coming forward with headline grabbing claims. According to the said corresponedent the demographic transition (a process which has been ongoing for over two hundred years now) has finally and definitively gone into reverse gear:br /blockquote"One of the paradoxes of human biology is that the rich world has fewer children than the poor world. In most species, improved circumstances are expected to increase reproductive effort, not reduce it, yet as economic development gets going, country after country has experienced what is known as the demographic transition: fertility (defined as the number of children borne by a woman over her lifetime) drops from around eight to near one and a half. That number is so small that even with the reduced child mortality which usually accompanies development it cannot possibly sustain the population.br /br /If Mikko Myrskyla of the University of Pennsylvania and his colleagues are correct, though, things might not be quite as bad as that. A study they have just published in Nature suggests that as development continues, the demographic transition goes into reverse."/blockquotebr /br /Well quite a strong claim is being made here. The idea that a group of researchers have come up with a finding that shows the "rule....that people have fewer children as their countries get richer...no longer holds true" is certainly not one to be sniffed at. Such a strong claim needs some very heavy backing you would think, given all the research that has gone into the topic in recent years.br /br /In fact, the research makes no such direct claim, since Myrskylä et al simply find statistically significant evidence for a reversal in the relationship between the human development index (HDI)br /and the total fertility rate (Tfr) at HDI levels around 0.85–0.9. The rest is only interpretation. As we will see, to move from a simple statististical correlation to formulating a hypothesis you need an explanatory framework, and you need to be able to make falsifiable predictions. The Nature letter from Myrskylä et al is far from being at this stage of development. They have simply found an interesting correlation, and the rest is in the eye of the observer.br /br /blockquote"Back in 1975, a graph plotting fertility rate against the Human Development Index fell as the Human Development Index rose. By 2005, though, the line had a kink in it. Above an HDI of 0.9 or so, it turned up, producing what is known in the jargon as a “J-shaped” curve (even though it is the mirror image of a letter J). As the chart shows, in many countries with really high levels of development (around 0.95) fertility rates are now approaching two children per woman. There are exceptions, notably Canada and Japan, but the trend is clear."/blockquotebr /br /However, according to the Economist the trend is clear. But is it? Edward has been doing some digging.br /br /In fact the problem goes beyond the Economist, since the source behind the article is a letter published in Nature. Below a href="http://www.nature.com/nature/journal/v460/n7256/full/nature08230.html"you can read that letter/a.br /br /blockquote"During the twentieth century, the global population has gone through unprecedented increases in economic and social development that coincided with substantial declines in human fertility and population growth rates. The negative association of fertility with economic and social development has therefore become one of the most solidly established and generally accepted empirical regularities in the social sciences. As a result of this close connection between development and fertility decline, more than half of the global population now lives in regions with below-replacement fertility (less than 2.1 children per woman. In many highly developed countries, the trend towards low fertility has also been deemed irreversible. Rapid population ageing, and in some cases the prospect of significant population decline, have therefore become a central socioeconomic concern and policy challenge10. Here we show, using new cross-sectional and longitudinal analyses of the total fertility rate and the human development index (HDI), a fundamental change in the well-established negative relationship between fertility and development as the global population entered the twenty-first century. Although development continues to promote fertility decline at low and medium HDI levels, our analyses show that at advanced HDI levels, further development can reverse the declining trend in fertility. The previously negative development–fertility relationship has become J-shaped, with the HDI being positively associated with fertility among highly developed countries. This reversal of fertility decline as a result of continued economic and social development has the potential to slow the rates of population ageing, thereby ameliorating the social and economic problems that have been associated with the emergence and persistence of very low fertility."/blockquotebr /br /br /Here is the chart (reproduce from Nature data) which the Economist presents to illustrate the 'J curve' relationship.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Sn1c5QH2KJI/AAAAAAAAOw8/9EElMH7Rg3w/s1600-h/Nature+Chart.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 252px; DISPLAY: block; HEIGHT: 277px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367548469545674898" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sn1c5QH2KJI/AAAAAAAAOw8/9EElMH7Rg3w/s400/Nature+Chart.png" //abr /br /Nice, isn't it? Nature even go to the lengths of a putting up a special "event" podcast featuring an interview with Hans Peter Kohler (a href="http://www.nature.com/nature/podcast/"click here for link/a) as if to underline the importance of the "finding") But does any of this have any compelling validity?br /br /Methinks not as much as the authors of the letter, or those who are covering it in the media, are trying to make out. There are many issues which are raised here, but I would just like to mention three.br /br /The first is the decision of the research team to work with a period based fertility measure which is known to be very unreliable for "tempo" reasons (the Total Fertility Rate- Tfr) as the basis for a longitudinal study. And let us remember, the authors only really claim to have found a correlation between HDI levels in the 0.85–0.9 range and movements in the Tfr, and there could be many explanations for this. Indeed the authors themselves even offer one of them in their supplementary information - "countries at development levels near the critical level HDI = 0.86 might have a more rapid postponement of childbearing than more advanced countries.. " - a possibility which, in fairness to the authors, they try to test for.br /br /And you don't have to rely on me for the suggestion that the Tfr is hardly the most desireable measure for what they want to do, since the authors themselves point this very fact out in the supplementary information (and the only thing which surprises me is that nobody else who has reviewed the research seems to have twigged the implications of this). So the very title of the Letter is totally misleading, they have not found that "Advances in Development Reverse Fertility Declines" -since in the first place the direction of causality is not adequately determined (it might be that reverses in fertility decline advance development, as I try to show in a piece referenced below) and in any event the research only shows movements in the HDI correlate with movements in the Tfr (and not with "fertility").br /br /blockquoteThe recent literature on low fertility in developed countries has pointed to the important role of delayed childbearing, that is, the ongoing postponement of childbearing to increasingly later ages. In the context of this paper, delayed childbearing is potentially important because the postponement of childbearing can distort the total fertility rate as a measure of the quantum (or long-term level) of fertility. “Tempo effects”, or the reductions in the total fertility rate resulting from a postponement of childbearing, have been shown to partially explain the very low fertility rates observed in some European countries./blockquotebr /br /So this is the first issue. Due to the phenomenon of birth postponement, the Tfr is a hopelessly unreliable indicator, and what is often called "the birth recovery" is in fact a statistical issue produced by the fact that the Tfr first sinks to very low levels (the birth dearth) and then recovers as women reach the new (higher) childbearing age. Since all of this is simply so obvious, I am absolutely astounded that two such well known and highly respected demographers - Hans-Peter Kohler and Francesco Billari - have placed their name on a piece of research that could almost be described as a publicity stunt. I am even more astounded by the way Nature appear to have been hoodwinked.br /br /Basically, I don't think that there can be any doubt that if they used a more comprehensive measure of fertility - say completed cohort fertility - they wouldn't get the correlation they claim to have found, since CFRs never fell so low, and have not bounced back in the same way. This is essentially because this indicator removes the temporal component found in the TFR (older first birth ages among women in developed societies) and only focuses on quantity. True, they did carry out a robustness test using an adjusted Tfr, but the results are much weaker, and the sample far from satisfactory (at least for the claims being made), and the authors well know this (see below).br /br /In their longitudinal study the authors look at Tfrs for a number of countries over the period 1975 to 2005 and compare these to the lowest Tfr reading observed while a country's HDI was within the 0.85–0.9 window. For all countries considered, the HDI in 2005 was found to be higher than the HDI in the reference year. For 18 of the 26 countries that attained a HDI 0.9 by 2005, the Tfr in 2005 was found to be higher than the TFR in the reference year. As I say, this is hardly surprising, given the tempo impact on Tfrs. The "2005 18" are Norway, the Netherlands, the United States, Denmark, Germany, Spain, Belgium, Luxembourg, Finland, Israel, Italy, Sweden, France, Iceland, the United Kingdom, New Zealand, Greece and Ireland.br /br /Perhaps it is more surprising (and interesting) to learn that they found six countries where the HDI was over 0.9 but where the Tfrs didn't pick up: Japan, Austria, Australia, Switzerland, Canada and South Korea. Clearly the absence of "rebound" in even the Tfrs is something of a cause for preoccupation in these countries, and examining the background to what is happening in these countries could at the end of the day turn this research into something quite interesting. That is to say, if for their level of development we might have expected the tempo effect to be more or less over, why do some countries continue to have very low fertility levels?br /br /Basically, to shoot a hole straight through their hypothesis (falsify it that is, surely in science things should be falsifiable), I would say it is only necessary to find a significant number of countries in the first group where fertility as measured by a better indicator didn't rise. Unfortunately we don't have a really good time series for such an indicator, but Eurostat have published statistical estimates for Completed Cohort Fertility Rates (Cfrs) for EU countries up to the 1989 cohort. That is, estimates of what fertility is likely to be for women who were 30 in 2009. Looking at this data, the following countries would appear to offer no evidence whatever for a rebound in cohort fertility in what we know to dat: Norway, Netherlands, Denmark, Germany, Italy, Finland, Sweden, France, Iceland, the UK, Greece and Ireland. That is to say, as far as I am concerned, the whole hypothesis falls till at least subsequent data confirm it.br /br /I haven't been able to check foir the US (but the Cfr is probably up) Israel (also) or New Zealand. Belgium has little available data. So the only two European countries which you could say with some degree of security actually could confirm the hypothesis would be Luxembourg and Spain - but if you just look at the increases in Spain - from 1.34 to 1.35 - and think about the fact that 5 million new migrants arrived (mainly in childbearing ages) between 2000 and 2009, then the result is hardly dramatic, and if you look what just happened to the economy, it is more than likely that GDP per capita is plummeting, and and household income (which has a weighting of more than one third in the HDI) with it. Which brings me to the second question, the reference year. But before I move on to that, as I say above, the authors are perfectly well aware of the issue with using Tfrs.br /blockquoteIn particular, one could speculate that tempo effects might be—at least partially—responsible for the observed change in the development–fertility association. For example, countries at development levels near the critical level HDIcrit = 0.86 might have a more rapid postponement of childbearing than more advanced countries. If this were the case, tempo effects would reduce the TFR more strongly at intermediate than at advanced HDI levels, and the positive association between HDI and TFR in Figures 1–2 could be partially explained by differences in the pace of fertility postponement, rather than by variation in levels among advanced countries./blockquotebr /br /The authors therefore carry out a robustness test which effectively amounts to a cross-sectional study (cross-sectional note, not longitudinal) of the relationship between the total fertility rate with and without adjustment for tempo effects, and the human development index in 1975 and 2005. Tempo adjusted TFRs are not available over the period in question so they simply took data for 2005 (for those countries for which it is available from the ’European Demographic Data Sheet 2008’ (published by the Vienna Institute of Demography, Vienna, Austria) and from McDonald P, Kippen R. The Intrinsic Total Fertility Rate: A New Approach to the Measurement of Fertility (Population Association of America Annual Meeting 2007, New York, 2007). What they can then show is that the HDI–TFR relationship at persists at advanced development stages persists even after adjusting the total fertility rate for tempo effects. But, as I say, this is cross sectional, not longitudional. What does this jargon mean? It means there is no clear causal relationship, since equally it could be better HDIs which is driving better fertility, and hence you can use the HDI to explain differences between countries if you wish, but not the evolution of fertility in individual countries. The 2005 result is show as a black line in the chart below, where you can see that as HDI goes up, Tfr also seems to be higher.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sn1xBKpJlQI/AAAAAAAAOxE/GnOAvjVfEW4/s1600-h/cross+section.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 371px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367570595746256130" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sn1xBKpJlQI/AAAAAAAAOxE/GnOAvjVfEW4/s400/cross+section.png" //abr /br /Which is very much to the point, and brings me to my second issue, since in my blog post "Taking Solow Seriously - Does Neoclassical Steady State Growth Really Exist?" (a href="http://edwardhughtoo.blogspot.com/2009/06/taking-solow-seriously-does.html"which you can find here/a) - I demonstrate using a few simple charts that the evolution in GDP per capita (which accounts remember for one third of the HDI) may well be a function of underlying population dynamics, since three countries with stronger population growth and higher fertility (the US, the UK and France) evidently perform much better than three will low-to-negative population growth and very low fertility (Italy, Japan and Germany).br /br /Also, it should be remembered, as I mention, we need to think about base years. 2005 was the mid point of a massive and unsustainable asset and construction boom. I think there is little doubt that if we took 2010 or 2011, the results would be rather different.br /br /Finally, the piece in the Economist article that I personallyfind most interesting is the following:br /br /"Dr Myrskyla’s data, however, suggest the ultimate outcome of development may not be a collapsing population at all but, rather, the environmentalist’s nirvana of uncoerced zero population growth."br /br /I want to stress, I certainly think this stationary population idea is certainly one possibility in the more highly developed nations - but if we move to stationary populations, with higher and higher proportions of the population in the older age groups the result is - as we know - a rising median population age. It is the economic impact of the abrupt rise in median age that I personally am focused on, and how just this rise, and the resulting fall in living standards for many young people, might feedback in a negative way on fertility and thus produce ever more rising median ages. In recent days, some have been asking why people like myself are so focused on what is going on in Latvia, which is after all, a pretty small country. Well, I think here in the issues raised by the Nature letter we have just one more reason why that country is important, since in a sense it is conducting a "live" experiment.br /br /Finally, I want to say, none of the above should be read as suggesting that there isn't a great deal of interest and material to talk about in the study the authors have carried out. Nor would I hold them entirely responsible for the way in which others have used and abused their work. I just the reserach doesn't demonstrate what they want it to demonstrate, and that the study doesn't deserve the kind of high media profile it has been receiving, since it is going to mislead the general public more than it will enlighten them, given the important methodological issue which are still to be clarified.br /br /The heart of the problem is twofold. The excessive reliance on a rather problematic indicator (the Tfr) and the causality issue when it comes to GDP per capita and higher fertility (which way does the arrow point?). In fairness the authors do attempt to construct their own combined time series based on a mixture of tempo-adjusted Tfrs and Tfrs, a procedure which seems at the very least to be somewhat problematic if you want to reverse fifty years of academic consensus. And they do get the same sort of result, but the outcome is much weaker and is based on a much smaller sample of only 25 countries. But even this result is at the very least odd, since, as I argue above, cohort fertility hasn't really increased in most of thecountries concerned. So I think we really all need to see more details of how the authors actually constructed the time series to be able to form a better judgement.br /br /But all this being said, and whatever the original intentions of the authors, serious scientific debate does seem to have been turned here into something of a media circus. Wasn't it blogs that were supposed to do that?br /br /strongAppendix/strongbr /br /Below I offer a series of charts showing estimated completed cohort fertility rates based on data compiled by Eurostat using the distribution of births by parity (first and second or higher order births) and mean age of mothers at respective parities to carry out the calculations. Evidently, the most recent data for hard data on completed cohort fertility comes for the 1960 - 1965 cohort. These charts should not be treated as hard data, but a rule-of-thumb type quick visual inspection suggests that it is hard to accept the case for a substantial fertility rebound in many European countries.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Sn3PO8BEe7I/AAAAAAAAOx8/9eOvojQ9XYQ/s1600-h/Switzerland+and+Slovenia.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 203px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367674186431232946" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sn3PO8BEe7I/AAAAAAAAOx8/9eOvojQ9XYQ/s400/Switzerland+and+Slovenia.png" //abr /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sn3PJ0CFCQI/AAAAAAAAOx0/yu_FnUR5KkM/s1600-h/norway+and+denmark.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 203px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367674098388633858" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sn3PJ0CFCQI/AAAAAAAAOx0/yu_FnUR5KkM/s400/norway+and+denmark.png" //abr /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Sn3PGVm-g8I/AAAAAAAAOxs/1jEqYkUYjqE/s1600-h/netherlands+and+Italy.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 201px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367674038682289090" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sn3PGVm-g8I/AAAAAAAAOxs/1jEqYkUYjqE/s400/netherlands+and+Italy.png" //abr /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sn3PCbmMTYI/AAAAAAAAOxk/6BPfKQPDsIc/s1600-h/luxembourg+and+spain.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 203px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367673971570134402" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sn3PCbmMTYI/AAAAAAAAOxk/6BPfKQPDsIc/s400/luxembourg+and+spain.png" //abr /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Sn3O-cYGe_I/AAAAAAAAOxc/ktZadAXfAaU/s1600-h/ireland+and+Greece.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 204px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367673903059991538" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sn3O-cYGe_I/AAAAAAAAOxc/ktZadAXfAaU/s400/ireland+and+Greece.png" //abr /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sn3O6b_brlI/AAAAAAAAOxU/eGWratutFCw/s1600-h/Iceland+and+Sweden.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 201px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367673834237046354" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sn3O6b_brlI/AAAAAAAAOxU/eGWratutFCw/s400/Iceland+and+Sweden.png" //abr /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sn3O2NEgbvI/AAAAAAAAOxM/sfcSNnQpjQc/s1600-h/finland+and+germany.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 202px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5367673761512320754" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sn3O2NEgbvI/AAAAAAAAOxM/sfcSNnQpjQc/s400/finland+and+germany.png" //adiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/8991369883287712098-4815330640925891745?l=globaleconomydoesmatter.blogspot.com'//div

Dean Foods Beats Marginally – Analyst Blog

Zacks Market Commentaries — Thu, 06 Aug 2009 17:39:40 +0000

Dean Foods (DF) reported strong second-quarter results with earnings of $0.43 per share, a penny above the Zacks Consensus Estimate. Quarterly earnings were up 30.3% year-over-year.

Quarterly net sales declined 13.6% year over year to $2.7 billion due to the pass-through of lower overall dairy commodity costs, despite positive contributions from acquisitions and volume growth in Fresh Dairy Direct and modestly lower sales in the WhiteWave-Morningstar business.

Net sales in the Fresh Dairy Direct segment declined 16.0% as the company passed some of the lower dairy costs to customers but was partially offset by continued volume growth. Raw milk prices were 41% lower compared to the prior-year.

Net sales at WhiteWave-Morningstar fell 4.6% to $622 million, attributable to slower category growth and the company’s exit from a food service business in the Silk brand and some private label organic milk business in the U.K. The decline was partially offset by volume gains, especially in the yogurt and cottage cheese categories.

Net sales of Horizon Milk rose in low single-digits due to higher pricing and continued distribution expansion. International Delight and Land O’ Lakes also grew modestly in low single-digits.

Moreover, the company entered into an agreement to acquire the Alpro division of Vandemoortele N.V. during the quarter. The deal was fixed for a transaction price of approximately 325 million euros and was completed early in the third quarter. Alpro is the European leader in branded soy-based beverage and food products with strong brands like Alpro soya and Provamel. Alpro has five manufacturing facilities in Belgium, United Kingdom, France and Netherlands and employs approximately 750 people. Management believes that the acquisition provides great opportunity for the company to expand into new markets across the European Union. Hence, the acquisition establishes Dean Foods as a global leader in the soy-based beverages and food products, with leading brands and over $1 billion in combined retail sales.

Following the earnings release, management raised its guidance for fiscal 2009. Annual earnings are now expected to be at least $1.60 per share, roughly 20% above year-ago levels. Previous guidance was $1.55 per share.

Although commodity costs continue to be favorable, management is concerned about the continued competitive activity in fluid milk operations and is cautious regarding diminished commodity favorability in the future. Earnings for the third quarter are expected to be $0.30 per share.

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XO Holdings Inc. (XOHO.OB) Subsidiary Provides Secure Communications Capabilities through Domestic and International Partnerships

QualityStocks — Mon, 03 Aug 2009 20:26:00 +0000

XO Communications, a subsidiary of XO Holdings Inc., provides advanced communications services through its nationwide and metro networks and broadband wireless capabilities. The company today announced the expansion of its domestic and international MPLS network capabilities by securing domestic and international partner agreements. The communications company now provides coverage in all 50 states and 22 [...]

Global Slowdown and Plunging Profits Have ‘Big Oil’ Companies Searching for Ways to Rebound

Contrarian Profits — Fri, 31 Jul 2009 22:10:08 +0000

pIn late January, Exxon Mobil Corp. (NYSE: a href="http://www.google.com/finance?q=XOM" target="_blank"XOM/a), the world’s most ubiquitous oil giant, capped off a whipsaw year in the global oil markets by reporting net income of $45.2 billion, an all-time record for corporate profits that shattered the former record it had set a year before./p pThe number was so big and the results beat Wall Street estimates by so much at a time when the credit crisis was wreaking havoc on so many other sectors that Oppenheimer #38; Sons (NYSE: a href="http://www.google.com/finance?q=NYSE%3AOPY" target="_blank"OPY/a) oil analyst Fadel Gheit a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/01/30/AR2009013003744.html" target="_blank"couldn’t help but quip/a that he didn’t think Exxon “will be lining up for any TARP money or government handout anytime soon.”/p pExxon wasn’t the only heavyweight reaping the benefit of a zooming energy market#8230;/p

Energy Blast – July 30, 2009

Robert Amsterdam — Thu, 30 Jul 2009 09:20:36 +0000

Russia and Cuba have signed an agreement for joint oil exploration in the Gulf of Mexico, with Moscow offering $150 million in credit for construction materials. A recent US Geological Survey has estimated that as much as 9bn barrels of...

Solar News – The German Solar Energy PV Market

Dawn Van Zant — Thu, 16 Jul 2009 13:00:00 +0000

Hamburg, Germany - Rotterdam, the Netherlands, 16 July 2009 - Germany has been leading the way towards a healthy solar energy market for some years now.

Energtek, Inc. (EGTK.PK) Led by Successful Management Team

QualityStocks — Mon, 13 Jul 2009 17:46:08 +0000

In today’s busy and ever changing market, many companies lose sight of their most important asset: a quality, effective mangement team. As the lifeblood of the company, it is essential to maintain a group that will continue to provide success and notoriety. That is why Energtek, Inc., a prominent alternative energy technology company, is excited [...]

Echelon Wins More Smart-Grid Biz – Analyst Blog

Zacks Market Commentaries — Wed, 08 Jul 2009 21:55:12 +0000

Echelon Accelerates Smart Grid Adoption

As a leading provider of smart grid meters, Echelon (ELON) is well positioned in the rapidly growing advanced metering infrastructure (AMI) market. On July 7, 2009, Echelon, in partnership with ROMlight International, announced that it would install its LonWorks control networking technology at the Kelly Western Services Ltd. aircraft hangar in Winnipeg for high bay lighting systems, which are particularly used in buildings.

Echelon has been growing through customer wins and also has footprints in Germany, Denmark, France, Russia, Sweden, Italy, Australia, Austria, The Netherlands, and the United States. This deal is its first win in Canada.

Smart control networking provided by Echelon helps in cost savings for utilities by reducing labor costs and increased meter reading accuracy, through capabilities such as early detection of failing streetlights, forewarning about outages, light output balancing and dimming services.

Kelly Western replaced all of the 1,000 watt lamps in the hangar with ROMlight’s 575 watt digital ballast high bay fixtures embedded with Echelon’s control networking technology. This helped reduce energy use by over 60%, or over 250,000 kWh per year, and obtain dimming services during off peak hours.

This strategic relationship is expected to pave the way for growth for ELON. We also believe Echelon will benefit from the increased investment in energy efficient projects and technologies. Additionally, ABI Research expects the AMI market to grow at a CAGR of 24% through 2013. By 2013, 28% of electric meters are expected to be ‘smart.’ Echelon will definitely benefit from the growing smart control networking technology. Revenue to Echelon is expected to be around $2 billion from smart projects.

Although Echelon is poised for growth from new customer orders but we remain uncertain on how speedily the future new projects will be awarded to Echelon. Echelon’s largest competitor, Siemens AG (SI), also offers metering systems directly or through large IT integrators such as International Business Machines (IBM) or telecommunications companies such as Telenor. We therefore reiterate our Hold rating on Echelon.
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Beacon Enterprise Solutions Group, Inc. (BEAC.OB) Executes Purchase Order with Fortune 500 Company

QualityStocks — Wed, 08 Jul 2009 17:11:43 +0000

Yesterday, leading advanced IT solutions company Beacon Enterprise Solutions Group, Inc. announced the execution of a new purchase order with a Fortune 500 Pharmaceutical Company that will encompass both domestic and international locations, including Germany, Spain, Italy, France, Canada, Australia, the Netherlands and the UK. The Fortune 500 customer, headquartered in New Jersey, is a [...]

USCorp (USCS.OB) Signs Boart Longyear to Complete Arizona Drilling Program

QualityStocks — Mon, 06 Jul 2009 16:47:38 +0000

Today, USCorp announced that it has selected Boart Longyear (“Boart”) to execute the final Phase 3 drilling program at its Twin Peaks project in Yavapai County, Ariz. Boart is the world’s leading integrated drilling services provider and products manufacturer for the minerals industry. The company also has a substantial presence in the environmental energy and [...]

Energy Blast – June 22, 2009

Robert Amsterdam — Mon, 22 Jun 2009 08:48:04 +0000

Russia and the Netherlands have 'serious plans' to increase their energy projects; Royal Dutch Shell is seeking involvement in the Yamal region. The oil giant has made a discovery of natural gas in the Norwegian Sea that could be the...

An Open Letter to Shareholders of Former Yukos Assets

Robert Amsterdam — Fri, 19 Jun 2009 11:30:24 +0000

Today the defense team for Mikhail Khodorkovsky is running a letter, bearing the signature of Robert Amsterdam, in the global edition of the Financial Times. The story has been covered by Dow Jones and some other news outlets. Below is...

Black Gold of the North Sea

Byron King — Tue, 16 Jun 2009 15:30:05 +0000

h2“It’s only gas,” said the geologists. And wow, were they ever frustrated… The year was 1959. The geologists were in the Netherlands, near a small town named Groningen, at the southern edge of the North Sea. They worked for Shell and Esso (now Exxon Mobil) and were drilling a well. /h2 h2Instead of oil, however, the drill bored into a massive deposit of natural gas. All that hard work and expense for a disappointing find of natural gas./h2 div class="entry" pBut the politicians of Europe weren’t so disappointed. They soon sat up and took notice, because…/p pWith further drilling near Groningen, it became clear that the Dutch gas field was gigantic. We now know that in its early days, the Groningen field was the largest#8230;/p/div

Dean Buys European Leader – Analyst Blog

Zacks Market Commentaries — Mon, 15 Jun 2009 20:39:54 +0000

Dean Foods (DF) announced today the agreement to acquire Alpro, a division of the Vandemoortele Group. Alpro is the European market leader in branded soy food products, with the brands Alpro (which targets the retail and out-of-home channels) and Provamel (which is distributed in the specialized organic health store channel). With five manufacturing sites in Belgium, the United Kingdom, France and the Netherlands, Alpro generates annual revenues of e260 million ($360 million).

Dean Foods expects the e325 million ($450 million) transaction price to be modestly accretive to 2009 earnings. The transaction is being financed under the company's existing revolving credit facility, and management does not expect the need to raise additional equity as a result of the acquisition.

Demand for soy and organic foods have increased rapidly due to growing awareness among consumers regarding the health benefits of soy and organic foods. The Dean Foods brand of Silk Soy is the leading brand of soymilk in the U.S. The acquisition of the European market leader will make Dean Foods the global leader in the soy beverages and related products category, with over $1 billion in annual retail sales.

Management sees significant opportunities to leverage the strengths of both the U.S and European businesses across a common soy platform in order to accelerate revenue and earnings growth. In addition, the shelf-stable attributes of soy products relative to milk will allow the company to expand soy products globally.

Management has taken definitive actions to improve shareholder value. In 2005 the company spun-off TreeHouse Foods, and in 2007, paid out a $15 per share special dividend. Management has focused on the branded products business, reduced SKUs, and integrated strategic acquisitions in the Dairy Group. Now with the Alpro acquisition, the company is enhancing its WhiteWave-Morningstar division.

We rate Deans Foods a Buy.
Read the full analyst report on "DF"
Zacks Investment Research

The European Parliament election of 2009: the “summer of discontent” poll?

Manuel Alvarez-Rivera — Sun, 07 Jun 2009 15:48:00 +0000

by Manuel Alvarez-Rivera, Puerto Ricobr /br /An election is currently taking place in the 27 member countries of the European Union, to choose 736 members of the European Parliament for a term of five years. Some countries went to the polls on June 4, 5 and 6, but most are holding the election on Sunday, June 7. In addition, one of the smallest members of the EU, the Grand Duchy of Luxembourg, will hold a parliamentary election simultaneously with the EP poll.br /br /The European Parliament a href="http://www.europarl.europa.eu/elections2009/default.htm"2009 elections website/a bills the event as "27 countries, one election," but it would be more appropriate to speak about 27 separate elections that happen to be held simultaneously across a four-day period. Even though all EU countries use proportional representation to allocate EP seats since 1999 (when Great Britain proper switched from first-past-the-post to PR), the rules vary from country to country, and the U.K. actually uses two electoral systems: closed party-list PR for England, Scotland and Wales; and the Single Transferable Vote (STV) for Northern Ireland's three EP seats (the latter since 1979, when the European Parliament became a popularly elected body).br /br /In addition, European elections tend to be dominated as much by national issues as by European issues - hardly surprising in light of the fact that the elections are contested by not by EU-wide parties but by the political parties active in each member country, which subsequently form parliamentary groups in the European Parliament that reflect Europe's major political currents (i.e. Socialist, Liberal, Conservative, Green and so on). In fact, European elections in many countries are little more than glorified mid-term elections, or in some cases (such as Bulgaria, the Czech Republic and Portugal) dress rehearsals for general elections to be held later this year.br /br /Meanwhile, in some countries this year's European poll has been overshadowed by national scandals, such as the ongoing M.P.s' expenses controversy in the United Kingdom, and more recently the publication by the Spanish newspaper "El País" of racy photos taken in the private villa of Italian Prime Minister Silvio Berlusconi - who already faces a messy divorce and had previously secured a ban over the publication of the controversial pictures in Italian news media.br /br /Just as important, the EP vote is taking place in the middle of a global financial crisis that has hit the newer members from Eastern Europe particularly hard. The now-wobbly economies of many of these countries appears to have reinforced a growing sense of "buyer remorse" - or more accurately, admission remorse - among large sectors of public opinion in many Western European EU members, which already had serious reservations about bringing in countries that had considerably lower standards of living and of governmental transparency - in particular Romania and Bulgaria, the EU's two newest (and poorest) members.br /br /As it happens, the economic hardships brought about by the ongoing financial crisis appear to have created a fertile environment in many countries for right-wing populist parties preaching a thinly veiled racist and xenophobic discourse, typically anti-immigration, anti-Islamic and often anti-East European as well as anti-EU. These parties, which have developed a motivated following, may also benefit from the low voter turnout that has characterized recent European elections in most member countries.br /br /The declining turnout rates in European elections constitute something of a paradox, as the European Parliament has actually become a more powerful institution over the course of the last three decades. However, an Eurobarometer survey (a href="http://ec.europa.eu/public_opinion/archives/eb_special_en.htm"EB71.1/a) carried out in January and February of this year indicates that while a slight plurality of respondents believes the EP's role within the European Union has been strengthened during the last decade, nearly as many say it has stayed the same or has been weakened.br /br /Moreover, the European Parliament does not yet play a role as powerful with respect to the European Commission - the EU's executive - as that of national parliaments relative to their respective governments: for example, EP approval is not always necessary for EU legislation. The less-than-straightforward role of the European Parliament within the EU - somewhat reminiscent of that of a 19suputh/u/sup century parliament under a limited monarchy - appears to be a major factor contributing to the low turnout: in the Eurobarometer survey, an insufficient understanding of the EP's role was cited as the main reason for not voting in European elections.br /br /However, a large plurality of Eurobarometer respondents indicated they would like to see the European Parliament play a more important role than it currently does; in fact, the EP's role will be significantly strengthened if the Lisbon Treaty is ultimately approved - a development that might raise the institution's relatively low profile and pave the way for higher turnout rates in future European elections. In the meantime, the sad truth remains that for many EU voters, EP elections don't even register on the radar - less than a third of respondents was aware an European election was due this year, according to the Eurobarometer survey - or simply aren't viewed as relevant: the perceptions that voting in the event would not change anything, and that the EP did not sufficiently deal with problems concerning respondents were the second and fourth most frequently cited reasons for not voting in the election; not being sufficiently informed to go to vote ranked third.br /br /European election results were not supposed to be available until Sunday evening, but in an unprecedented breach of rules, the outcome of the European vote in the Netherlands became available after the polls closed there last June 4, much to the displeasure of EU officials; preliminary figures have the right-wing populist Party for Freedom (PVV) in a strong second place, just behind the Christian Democratic Appeal (CDA) party of Prime Minister Jan Peter Balkenende. Meanwhile, the Labour Party (PvdA) - the junior partner in Balkenende's coalition government - suffered heavy losses, but the opposition, social liberal Democrats 66 (D66) soared to their best EP result since 1994. However, the turnout rate stood at just 36.5%, well below the 80.4% turnout in the country's 2006 general election.br /br /There is no doubt the Party for Freedom - whose leader, Geert Wilders faces prosecution for making anti-Islamic statements - has tapped into a strong undercurrent of discontent in the Netherlands (at least among those bothering to vote in the election there), but it remains to be seen how strongly and in what manner will that discontent manifest itself in other EU countries.div class="blogger-post-footer"img width='1' height='1' src='//blogger.googleusercontent.com/tracker/8991369883287712098-4129750866343158750?l=globaleconomydoesmatter.blogspot.com'//div

Valero Energy Loses Money – Analyst Blog

Zacks Market Commentaries — Wed, 03 Jun 2009 19:19:30 +0000

Valero Energy (VLO) guided towards a $0.50 per share loss in the second quarter of 2009 due to a very weak operating environment and longer than expected downtime at two of its refineries.

We had downgraded Valero shares to Sell on May 26 to reflect the challenging macro backdrop for refiners. The guided $0.50 per share loss for the second quarter would compare to earnings of $1.37 per share in the second quarter of 2008. We also have a Sell rating on Tesoro (TSO).

Valero's results were adversely affected by extended downtime at its Delaware City and McKee refineries, very weak refining margins, and narrow crude quality spreads. Crude quality spreads refer to the discount at which lower quality grades of crude oil trade relative to higher quality crudes, such as the U.S. benchmark, West Texas Intermediate (WTI). Capable refiners, such as Valero, would use lower priced crudes to make useful refined products, such as gasoline, which would pad their margins.

Not all refiners are configured to convert such low-priced crudes into useful refined products. But with the discounts shrinking, Valero can no longer enjoy that advantage. As an example of the discount, the spread between WTI and Maya (a heavy/sour Mexican crude) averaged $3.56 per barrel in the second quarter of 2009, a drop from roughly $21 a barrel in the second quarter of 2008.

Valero also announced plans for to raise capital through a 40 million-share common stock offering. The stock issuance would follow the company's $1 billion debt offering in March.

The company has been fairly active on the acquisitions front lately, having acquired 7 ethanol plants from the bankrupt VeraSun Energy (VSUNQ) for $477 million and Dow Chemical's (DOW) 45% interest in a Netherlands refinery for $600 million.
Read the full analyst report on "VLO"
Read the full analyst report on "TSO"
Read the full analyst report on "VSUNQ"
Read the full analyst report on "DOW"
Zacks Investment Research

And Then There’s This…Tuesday, June 02nd, 2009

Contrarian Profits — Tue, 02 Jun 2009 19:38:50 +0000

pold was taken down a few dollars in Sunday night trading by the bullion banks in New York#8230;but once Sydney and Hong Kong opened for the day, gold [and silver] returned to the plus column. Gold saw its highs moments before Hong Kong closed#8230;and silver shortly after#8230;in early trading in London. From there, both metals got slowly sold off. The real action didn#8217;t start until the Comex open, where every rally attempt in either metal#8230;but gold in particular#8230;got sold off by a not-for-profit seller./p p style="text-align: center;"a href="http://caseyresearch.com/dImage.php?i=1243941734-gold47.gif"/aa style="text-decoration: none;" href="javascript:openKKCImage('1243941734-gold47.gif',635,405);"/a/p pWith oil up, the US$ down#8230;and the CRB making a major upside move#8230;$1,000 gold was a 12#8243; putt. But it was obvious [at least to me] that someone didn#8217;t want that to happen#8230;at least not yesterday. Platinum#8230;/p

May Manufacturing Improves Again According To The JPMorgan Global PMI Report

Edward Hugh — Tue, 02 Jun 2009 16:12:00 +0000

By Edward Hugh: Barcelonabr /br /Global factory activity continued to improve in May amid growing optimism that the worst of the recession may be over. Output contracted at a much less ferociously than at the start of the year in one economy after another, and this month three countries actually registered output growth - India, China and Turkey. The JP Morgan global manufacturing index (PMI) rose to 45.3 in May from 41.8 in April, the highest level in nine months, although still a long way below the 50.0 mark dividing growth from contraction. The component indexes for output and new orders were both running at much higher levels than in April.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SiQ2GPxC3EI/AAAAAAAAOM0/C1ZwuHwfdgk/s1600-h/jpmorgan+global%C3%A7.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 228px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342454538907606082" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SiQ2GPxC3EI/AAAAAAAAOM0/C1ZwuHwfdgk/s400/jpmorgan+global%C3%A7.png" //abr /br /However, the headline PMI is still at a very low level by historic standards, and well below one which would be consistent with outright recovery. On the other hand, it is clear that the easing of the worldwide manufacturing recession which we have been seeing over the past two months has continued and has been substantial. The month-on-month gains in the PMI, output and new orders indexes in April and May are the greatest in the series history (which is not that surprising follow a series of record falls). All of the national indexes for these variables rose during the latest survey period.br /br /Among the countries surveyed (see foot of post for details) only India, China and Turkey reported increased production. Japan (slowest for 13 months), the United States (weakest fall in current nine-month downturn) and the United Kingdom (slowest drop in a year) saw substantial easings in their respective rates of contraction. Although the Eurozone vastly underperformed relative to the global average, its output index rose to the greatest extent in survey history and to an eight-month high.br /br /strongNew orders/strong contracted for the 14th month running in May, the longest period of contraction in the survey history. However, the Global Manufacturing New Orders Index climbed to 48.6, its highest level in a year. The rate of decline in global trade slowed sharply to its weakest since last September. China and India reported increases in total new orders for the second successive months in May. The U.S. and Turkey were the only other nations covered by the global survey to report gains, with new business rising for the first time in one-and-a-half years in the U.S. and for 17 months in Turkey.br /br /br /Although May data pointed to strongsubstantial jobs losses/strong, the rate of decline eased to a six-month low. Employment has now fallen for 14 successive months. Almost all of the nations covered reported lower staffing levels, the exceptions being India (slight gain) and China (no change). Among the other countries, only the U.S. and Austria failed to report slower rates of decline. The pace of job cutting eased to five, six and seven-month lows in the Eurozone, Japan and the U.K., respectively.br /br /At 40.8 in May, the Global Manufacturing Input Prices Index posted its highest reading since October 2008 but remained below the neutral 50.0 mark for the eighth month running. Only India and Russia saw increases in costs. The rate of decline eased sharply in the U.S.br /br /What follows is a very extensive country-by-country, blow-by-blow account assembled from across the national reports. It is probably too dense to read at one sitting, but you can simply pick and tick the regions and the countries that interest you, as I do think the monthly manufacturing PMIs give a reasonable picture of what is actually going on, as opposed to what some would like to believe is going on.br /br /strongEurope/strongbr /br /br /strongSweden/strong /pbr /br /pSweden's seasonally adjusted purchasing managers' index rose to 43.7 in May, climbing for the fifth consecutive month, according to the reprot from the survey sponsors Silf and Swedbank.br /The May result compared with a 38.8 reading in April and was considerably above consensus expectations for a 40.2 result. /pbr /br /pbr //pbr /br /pa href="http://2.bp.blogspot.com/_ngczZkrw340/SiQzIDhjyeI/AAAAAAAAOMk/Z6ai5thlnyQ/s1600-h/sweden.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 237px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342451271446284770" border="0" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SiQzIDhjyeI/AAAAAAAAOMk/Z6ai5thlnyQ/s400/sweden.png" //abr /br /br /strongEurozone/strongbr /br /The Markit Eurozone Final Manufacturing PMI posted 40.7 in May, up from 36.8 in April and above the earlier flash reading of 40.5. The rise of 3.9 points in the PMI was the largest seen since the survey began in June 1997 and raised the index further above February’s record low to hit a seven-month high. However, the PMI extended its run below the no-change mark of 50.0 into a 12th successive month, a sequence unprecedented in the series history.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SiQnqmuEm5I/AAAAAAAAOL0/t8WzmQ0GPGg/s1600-h/eurozone.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 229px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342438670870027154" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SiQnqmuEm5I/AAAAAAAAOL0/t8WzmQ0GPGg/s400/eurozone.png" //abr /br /br /National PMIs stayed firmly in recession territory across all of the member states covered by the survey. However, the indexes for Germany, Italy and Spain all rose by the largest amount in their respective series histories. Greece posted the highest reading overall.br /br /br /The rise in the PMI was driven by a record easing in the rate of contraction of manufacturing output, which fell at the weakest pace since last September and slower than indicated by the flash estimate. Rates of contraction eased most sharply in Germany, Italy and Greece (which also posted the slowest decline overall). The consumer, intermediate and investment goods sectors all saw rates of output contraction ease during the month.br /br /br /The rate of decline in new orders was the weakest since August 2008 and slower than the earlier flash estimate. All countries covered by the survey saw a shallower rate of retrenchment of new orders. Order flows to investment goods producers were especially weak, although the rate of decline in this sector was much slower than in recent months. Consumer goods was the only sector to report a faster rate of reduction in new work than one month ago.br /br /br /May data pointed to a 12th successive monthly decline in manufacturing employment. The rate of job cutting was much slower than in April, but slightly faster than the flash estimate. All of the countries covered by the survey reported marked reductions in employment, but only Austria saw staffing levels drop at a faster pace than in April. Intermediate and capital goods producers continued to report the greatest decreases in staffing levels.br /br /br /Export order volumes continued to fall in May, with producers of capital goods hit especially hard. However, the overall rate of decline eased to its slowest since last September and was less steep than that signaled by the flash estimate. Rates of decline eased across all of the member states covered by the survey, with the most noticeable slowdowns signaled for Germany, Greece and the Netherlands.br /br /br /Input costs fell for the seventh month running, albeit at the second slowest pace during that period and to a lesser extent than signaled by the flash estimate. Cost deflation eased in all of the nations covered. The sharpest decrease in costs was reported by France and the weakest by Greece.br /br /br /Although the rate of decline in average output prices eased to a four-month low, it remained severe and was slightly faster than the earlier flash estimate. Falling output prices were blamed on weak demand and strong competition. Of particular note, Germany reported a record drop in prices charged. May data pointed to survey record reductions in stocks of both raw materials and finished goods. Germany reported the greatest depletion in both cases, and the stock reduction was again most pronounced in the capital goods sector. Buying activity was cut back further, although the rate of decline in quantities of purchases eased for the third successive month.br /br /br /Looking ahead, the combination of record reductions in inventories and a slower rate of decline of new orders meant the orders-to-inventory ratio – which tends to lead the production cycle – rose to an 18-month high in May (and above that calculated based on flash estimates).br /br /br /br /strongGermany/strongbr /br /Germany's manufacturing PMI rose to 39.6 in May. That compared with 35.4 in April and was stronger than the 39.1 economists had expected. The improvement mainly reflected slower falls in output, new orders and employment than in April. Although the PMI hit a seven-month high, the index was still well below the neutral 50.0 mark. Deteriorating operating conditions have now been recorded for 10 months running, the longest period since 2002-2003.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SiQpoGO9usI/AAAAAAAAOL8/RPp_zohsftw/s1600-h/germany+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 213px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342440826813135554" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SiQpoGO9usI/AAAAAAAAOL8/RPp_zohsftw/s400/germany+PMI.png" //abr /May data signaled a sharp easing of the rate of decline in manufacturing output. Reduced rates of contraction have been recorded in each month since January’s survey record fall. Anecdotal evidence suggested that a more moderate drop in new orders supported production levels in May. The seasonally adjusted index measuring new order volumes recorded one of its largest ever one-month gains in May, to signal that new work contracted at a much slower rate than in April.br /br /br /Manufacturers noted that price discounting and improved sentiment about the economic outlook had supported client demand. New export orders also declined at a slower pace, with the rate of reduction the least marked since September 2008.br /br /br /A steep rate of job shedding persisted in May as firms continued to implement staff restructuring in response to excess capacity at their plants. Reports from panelists also pointed to a general aversion to hiring in May, leading to delays in the replacement of departing staff. Employment levels have now fallen for eight months running, but the rate of decline eased slightly since April’s survey record.br /br /br /Substantial destocking continued in May as firms adjusted to lower demand and sought to cut costs through improved stock management. Both stocks of purchases and finished goods inventories declined at their fastest rates since the survey began in April 1996.br /br /br /Average cost burdens dropped sharply in the latest survey period, albeit at the least marked rate since last November. This led to another marked drop in factory gate prices, with the rate of decline hitting a new survey record in May.br /br /br /strongFrance/strongbr /br /France's headline manufacturing PMI climbed to a nine-month high of 43.3, from 40.1 in April. The PMI was boosted by slower falls in output, new orders, employment and stocks of purchases, while suppliers’ delivery times also exerted a weaker negative influence.br /br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SiQqXu1CPEI/AAAAAAAAOME/VgELe4vDd78/s1600-h/france+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 213px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342441645164084290" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SiQqXu1CPEI/AAAAAAAAOME/VgELe4vDd78/s400/france+PMI.png" //a Manufacturing production fell for a 12th successive month in May. Although still sharp, the rate of decline eased further from February’s series record and was the least marked since last August. The weaker drop in output mirrored a similar easing in the rate of contraction of new orders. The latest decline in new work was the slowest in 11 months, amid reports of a stabilization in demand following the severe weakening seen in the second half of 2008 as the financial crisis worsened. /pbr /br /pData suggested that demand had firmed from both domestic and foreign clients, as the latest decrease in export orders was the smallest for eight months. In a further sign of recovering demand, manufacturers’ stocks of finished goods declined at the fastest pace in the survey history in May. It was the seventh fall in successive months, and suggests that the inventory cycle may soon reach a point at which production will need to be stepped up in order to rebuild depleted stocks. Reflecting the smaller fall in new orders, backlogs of work decreased at a weaker pace in May. The latest drop in outstanding business was the least marked in eight months. /pbr /br /pEmployment also declined at a slower (albeit still marked) rate, with the pace of job shedding easing to a seven-month low. Firms’ purchasing activity contracted at a milder rate in May, mirroring the trend in output. That said, the decline in input buying was still substantial and contributed to another marked fall in stocks of purchases. /pbr /br /pA number of panelists linked lower preproduction inventories to efforts to improve cash flow. Lower demand for raw materials allowed suppliers to deliver purchased items faster on average in May. Consequently, lead times shortened for a ninth consecutive month. Weak demand also led a number of vendors to offer discounts and this, combined with lower prices for a number of commodities on global exchanges, resulted in a further steep reduction in average purchasing costs. Output prices decreased in May as manufacturers cut their tariffs in response to intensifying competition. The rate of decline remained sharp, despite easing to a four-month low.br /br /br /strongItaly/strongbr /br /Operating conditions in the Italian manufacturing sector continued to deteriorate at a significant pace in May. Nonetheless, rates of decline registered for production, new orders and employment all eased, while stocks of postproduction goods fell for a second successive month. The headline Markit/ADACI manufacturing PMI rose from 37.2 in April to 41.1 in May. While this represented the greatest month-on-month gain in the history of the series, the index continued to register a considerable monthly deterioration of conditions and the level remained well below that recorded before the collapse of Lehman Brothers in September.br //pbr /br /pa href="http://1.bp.blogspot.com/_ngczZkrw340/SiQrEqrUXzI/AAAAAAAAOMM/dWjRVVTLRMg/s1600-h/italy+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 213px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342442417143701298" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SiQrEqrUXzI/AAAAAAAAOMM/dWjRVVTLRMg/s400/italy+PMI.png" //abr /Further falls in new business continued to suppress production volumes during May. Nonetheless, activity at manufacturing plants fell at the weakest pace since September 2008. Anecdotal evidence suggested that weak demand from both foreign and domestic clients (as a consequence of the poor economic climate) resulted in the latest decline in new order books. Even so, the deterioration of overall demand was the weakest in eight months. Italian manufacturers continued to trim staffing levels during the latest survey period. However, mirroring the trend in workloads, the rate of job shedding eased from April. Redundancies and the non-replacement of leavers were cited as methods of workforce streamlining. /pbr /br /pDestocking remained evident during the latest survey period. Post-production inventories fell for the second straight month during May, although the rate of decline was fractionally weaker than seen in the previous survey period. Average prices paid for inputs fell for the seventh month in a row during May. Nevertheless, the rate of decline was the weakest in the current period of falling costs. Survey respondents indicated that lower purchasing activity had intensified competitive pressures at suppliers – resulting in lower list prices. Firms also noted that the strong performance of the euro (notably against the U.S. dollar) had kept average costs down. /pbr /br /pSavings from lower input prices were swiftly passed on to clients in the form of lower factory gate prices during May. Panel members reported that the economic downturn had markedly increased competition, forcing manufacturers to reduce charges. Despite lower costs, marked falls in workloads resulted in a further drop in firms’ purchase volumes during May. Subsequently, suppliers’ delivery times shortened further and pre-production inventories fell at the fastest pace in the history of the survey.br /br /strongSpain/strongbr //pbr /br /pGermany's manufacturing PMI rose again in May, hitting 39.8. That compared with 34.6 in April. The improvement mainly reflected slower falls in output, new orders and employment than in April. Although the PMI hit a nine-month high, the index was still well below the neutral 50.0 mark. Deteriorating operating conditions have now been recorded for 17 months running.br /br /br /May data signaled a sharp easing of the rate of decline in manufacturing output. Reduced rates of contraction have been recorded in each month since December’s survey record fall. The seasonally adjusted index measuring new order volumes recorded one of its largest ever one-month gains in May, to signal that new work contracted at a much slower rate than in April. /pbr /pa href="http://2.bp.blogspot.com/_ngczZkrw340/SiQyWJBrM8I/AAAAAAAAOMc/VG5p610pMF4/s1600-h/spain+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 221px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342450413929706434" border="0" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SiQyWJBrM8I/AAAAAAAAOMc/VG5p610pMF4/s400/spain+PMI.png" //abr /br /br /strongGreece/strongbr /br /The May manufacturing PMI eased back sharply, hitting the slowest contraction in seven months due to improvements in the generall outlook. The Markit Greece Manufacturing PMI index showed that the rate of contraction in production, new orders and employment weakened.br //pbr /pThe headline PMI was the highest since last October, rising to 46.1, sharply up from the 40.9 registered in April.br /br //pbr /pa href="http://3.bp.blogspot.com/_ngczZkrw340/SiQm_TIPNdI/AAAAAAAAOLs/Ic-PcBkpeX4/s1600-h/greece+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 229px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342437926876689874" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SiQm_TIPNdI/AAAAAAAAOLs/Ic-PcBkpeX4/s400/greece+PMI.png" //abr /The decline in incoming new orders fell back slightly in May, and was the weakest recorded during the current recession. However, those surveyed reported that difficult operating conditions persist, due to the weakening in demand both domestically and in foreign markets.br /br /Employment, purchasing activity and stock levels all fell significantly, but at a slower rate than in April.br /br /br /strongEastern Europe/strongbr /br /strongRussia/strongbr /br /The May survey of Russian manufacturing business conditions from VTB Capital provided further evidence that the second quarter contraction will be much slower than the one registered in the first three months of 2009. The headline seasonally adjusted Russian Manufacturing PMI has been nudging up continuously from December’s record low of 33.8, and stood at a seven-month high of 45.3 in May. The month-on-month gains in the PMI over the past three months have averaged 1.6, following a record 6.2 rebound in February.br /br /br /Although the rate of decline in manufacturing slowed further in May, the sector is still experiencing a longer and more pronounced contraction than that seen during the financial crisis of 1998. At that time the PMI was in negative territory for seven successive months in negative territory. The current run now extends to 10 months – and at a more substantial average pace of contraction.br /br /br /Underpinning the ongoing contraction in output was a sustained fall in incoming new work in May. Anecdotal evidence linked lower receipts of new business to a combination of subdued underlying demand and difficulties experienced by clients in securing sufficient credit. However, the rate of decline was the slowest in the current eight-month sequence. The pace of contraction in new export orders also slowed in May. Excess capacity in manufacturing remained in evidence in May, as outstanding business declined further. That said, the rate of reduction was the slowest since April 2008.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SiQ0tx127QI/AAAAAAAAOMs/yvTfoiFrwGo/s1600-h/russia+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 244px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342453019046243586" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SiQ0tx127QI/AAAAAAAAOMs/yvTfoiFrwGo/s400/russia+PMI.png" //abr /br /br /strongPoland/strongbr /br /The fall in manufacturing in two of the EU's largest East European economies slowed in May. Despite a certain stabilisation in credit markets and the appearance of some small 'green shoots', the EU's eastern front is still beset by a sharp industrial contraction, due to increasing export dependence accompanied by a collapse in euro zone demand. There is some evidence that improving sentiment in western Europe have produced slightly brighter expectations for industrial performance, particularly in Poland, where exports account for only about 45 percent of the economy, versus around 70 percent for the Czech Republic.br /br /The Polish manufacturing PMI edged up to 42.55, from 42.1 in April, signalling the weakest pace of decline since October.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SiQjX0IATxI/AAAAAAAAOLk/_PUQnd1gZC4/s1600-h/poland+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 228px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342433950004432658" border="0" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SiQjX0IATxI/AAAAAAAAOLk/_PUQnd1gZC4/s400/poland+PMI.png" //abr /br /br /strongThe Czech Republic/strongbr /br /Czech PMI also crept upwards - to a seven-month high of 40.5, from 38.6 in April. The Czech manufacturing sector continues to experience a sharp contraction mid-way through Q2, although the worst of the industrial downturn may now passed. The PMI data also support the view that Poland is at this point weathering the crisis better than more export-reliant neighbours such like the Czech Republic.br /br /However, the worse-than-expected growth and industry data released last month, mean that these very slight upticks do not give much hope for a rapid, robust recovery, even in Poland which was one of the few countries to actually show year on year growth in the first quarter (0.8 percent) although the economy almost certainly contracted on a seasonally adjusted basis when compared with the last three months of 2008.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SiQi84Mz9eI/AAAAAAAAOLc/HYC9DUB2_r8/s1600-h/czech+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 227px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342433487241868770" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SiQi84Mz9eI/AAAAAAAAOLc/HYC9DUB2_r8/s400/czech+PMI.png" //abr /Data released at the end of last week showed Czech industrial output fell by 23 percent in April, returning to a near record pace of decline after a brief respite in March. That followed a worse-than-expected year on year fall in gross domestic product of 3.4 percent in the first quarter.br /br /Economists have also warned that rising job cuts at firms, a contraction of investment, rising bankruptcies, and very weak credit growth were also taking a toll on the economy, preventing an early rebound from the crisis. Indeed Czech media reported only last Monday that truck maker Tatra will cut 450 of its 2,750 workerforce. Thus while expectations are improving significantly actual operating conditions are not.br /br /br /strongHungary/strongbr /br /Hungarian manufacturing contracted for a record eighth consecutive month in May as the economic recession deepened. The manufacturing PMI came in at 45.3 in May - up from a revised 40.6 in April, according to Halpim - the Hungarian Association for Logistics, Purchasing and Inventory. This is the second month in which the contraction has eased.br /br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SiTdY372DCI/AAAAAAAAONc/bCRfKLSDCqg/s1600-h/hungary+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 229px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342638477369805858" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SiTdY372DCI/AAAAAAAAONc/bCRfKLSDCqg/s400/hungary+PMI.png" //abr /br /Hungary’s industrial production decline slowed in March, the latest month for which data is available, as the global economy showed signs of recovery, helping demand for exports. Output fell a workday-adjusted 19.6 percent from a year earlier after an annual 25.2 percent decrease in February.br /br /strongTurkey/strongbr /br /br /Turkish stocks hit an 8-month-high on Monday, rising along with other global bourses on encouraging data from China, and on the increasing evidence of green shoots at home. Turkey's manufacturing PMI rose in May to 51 from 44 in April, according to the Markit manufacturing PMI survey. A whisk above the 50 dividing line, but enough to put Turkey - along with India and China - in the very illustrious group of economies whose industrial sectors are now expanding.br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SiQgJmV6QlI/AAAAAAAAOLU/2QAxC3Z5UyI/s1600-h/turkey+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 224px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342430407251608146" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SiQgJmV6QlI/AAAAAAAAOLU/2QAxC3Z5UyI/s400/turkey+PMI.png" //abr /br /strongAsia/strongbr /br /strongJapan/strongbr /br /br /The recent improvement in Japan's industrial activity appears to have continued in May according to the latest reading from the Nomura PMI survey, since while the survey found that activity in the Japanese manufacturing sector fell for the fifteenth successive month, the drop in output was the smallest seen in just over a year. I wouldn't attach too much importance to the discrepancy between the PMI survey and the actual output outcome (production was up in April over may according to Minstry data) at this point, since the survey methodology (which is normally pretty reliable) is probably struggling a little to handle the severity of the shock in the manufacturing sector and calibrate results. The general direction of an easing in the annual rate of contraction is in harmony on both readouts.br /br /In fact, the seasonally adjusted headline Purchasing Managers’ Index (PMI) rose sharply in May to 46.6, from 41.4 in April, pointing to the slowest deterioration in operating conditions for nine months.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Sh-tCoZ4bSI/AAAAAAAAOJc/KKfpB6foti0/s1600-h/japan+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 220px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5341177943802015010" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Sh-tCoZ4bSI/AAAAAAAAOJc/KKfpB6foti0/s400/japan+PMI.png" //abr /br /May’s survey also showed that incoming new orders received by Japanese manufacturers fell for the fifteenth month running. But again the rate of decline continued to ease from December’s record drop to the smallest contraction in the weakest in the current sequence. While foreign order levels continued to fall, they did so at a much slower rate as improved orders from China continuing demand weakness in other regions (such as the US and Europe). May’s survey pointed to a sixth successive monthly decline in the prices charged by Japanese manufacturers for finished goods.br //pbr /pAlthough still sharp, the latest drop in output charges was the weakest since last December. Strong competitive pressures and falling raw material prices were cited as key factors undermining manufacturers’ pricing power in May. Average cost burdens faced by Japanese manufacturers fell for the sixth month running in May. Despite remaining steep, the rate of decline eased to its weakest for four months. Lower raw material prices were reported to have depressed costs during the month, with steel frequently mentioned by panellists. Levels of business outstanding fell again in May, extending the current period of decline to sixteen consecutive months. Despite slowing to its weakest since last August, the rate of backlog clearance was still steep in the May survey period. Evidence provided by the survey panel linked the latest decline in work-in-hand to spare capacity resulting from falling workloads.br /br /The PMI report also showed that Japanese manufacturers reduced their workforces for the tenth straight month in May. The rate of job shedding remained sharp, despite easing to its weakest for six months. Of those firms that reported a decline in employment, the majority attributed this to the non-renewal of temporary contracts and lower output requirements.br /br /br /strongChina/strongbr /br /The CLSA China Purchasing Managers Index rose to 51.2 in May from 50.1 in April, making May the second consecutive month the CLSA PMI was above 50.0, after eight months of being below the critical line. The rate of destocking increased in May, which was encouraging given there is some anecdotal evidence that production may be running ahead of orders. On aggregate the reverse seems to be true. The CLSA China PMI is compiled by U.K.-based research firm Markit Economics. The export order index increased to 50.1, the first expansion in 11 months. The output index fell to 56.9 from 57.4 and the new order index dropped to 56.2 from 56.6.br /br //ppa href="http://3.bp.blogspot.com/_ngczZkrw340/SiQU2hoehUI/AAAAAAAAOKs/lfQ_1wuvKoc/s1600-h/china+pmi+one.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 239px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342417984941884738" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SiQU2hoehUI/AAAAAAAAOKs/lfQ_1wuvKoc/s400/china+pmi+one.png" //abr /br /In fact in China there are two indexes, a fact which has lead to some controversy. The second index produced by the government-backed Federation of Logistics amp; Purchasing has repeatedly shown slightly higher readings, a feature which may be the result of giving a slightly larger weighting to the state enterprises, which are more oriented towards the domestic market. The May PMI saw the CFLP benchmark reading fall to 53.1 in May from 53.5 in April. This was the third consecutive month this index has held above 50.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SiQWFMtZoqI/AAAAAAAAOK0/tNa9uJW2QrI/s1600-h/china+PMI+two.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 239px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342419336535057058" border="0" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SiQWFMtZoqI/AAAAAAAAOK0/tNa9uJW2QrI/s400/china+PMI+two.png" //a So despite a good deal of controversy about what exactly is happening in China, and how sustainable what is happening actually is, it does seem that, for whatever reason, manufacturing industry is expanding at this point.br /br /strongIndia/strongbr /br /br /Conditions in India's manufacturing sector improved again in May, building on growth already seen in April. Most notably, the domestic market was the main driver of expansion, as foreign demand for Indian manufactures remained weak. A second straight month of output and new order growth led companies to hold off from further workforce rationalization. However, competitive pressures continued to restrain the pricing power of manufacturers. Despite accelerated input price inflation, firms cut their factory gate prices for the seventh month running.br /br /br /The headline Markit Purchasing Managers’ PMI rose for the fifth successive month in May (and for the second month of expansion) to 55.7. This was the highest reading since last September and indicated a marked improvement in the health of India’s manufacturing industry.br /br /br /With incoming new work and production rising since April, as well as an accumulation of backlogs, Indian manufacturers generally maintained their staffing numbers. Marginal growth in May ended a five-month period of retrenchment.br /br /Purchasing costs in India’s manufacturing sector rose for the second consecutive month, and at an accelerated pace in May. This was commonly linked to higher demand for raw materials. However, strong competition prevented firms from passing on their greater cost burdens to customers. Charges were reduced further, albeit at the weakest rate in the current seven-month period of decline. Commenting on the latest survey findings, Gemma Wallace, economist at Markit, said: “Rising for a second straight month in May, the headline PMI indicates that India’s manufacturing economy is gaining strength, after a five-month period of weakness. Data show that the sector is currently being carried by robust domestic demand, as export sales continued to fall. Nevertheless, this alone was enough to boost manufacturers’ confidence; inventories were built up for the second month running, whilst workers were hired for the first time since last October. There is also evidence of mounting inflationary pressures within the sector. Demand for raw materials contributed to an increase in input costs over the month, although inflation also reflected speculation on commodities markets. While intense competition remained a bind on manufacturers’ pricing power in May, the latest cut in charges was only fractional. If competitive pressures are mitigated by further improvements in demand going forward, it will most likely result in output prices rising.”br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SiQXmyz_VOI/AAAAAAAAOK8/GJkP8mSXzHA/s1600-h/india+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 225px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342421013210551522" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SiQXmyz_VOI/AAAAAAAAOK8/GJkP8mSXzHA/s400/india+PMI.png" //abr /br /br /strongAmericas/strongbr /br /strongUnited States/strongbr /br /Economic activity in the United States manufacturing sector failed to grow in May for the 16th consecutive month, while the overall economy grew for the first time following seven months of decline, say the nation's supply executives in the Institute for Supply Management's latest Manufacturing ISM Report On Business. According to Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee:br /br /"While employment and inventories continue to decline at a rapid rate and the sector continued to contract during the month, there are signs of improvement.....May is the first month of growth in the New Orders Index since November 2007, with nine of 18 industries reporting growth. New orders are considered a leading indicator, and the index has risen rapidly after bottoming at 23.1 percent in December 2008. Also, the Customers' Inventories Index remained below 50 percent for the second consecutive month, offering encouragement that supply chains are starting to free themselves of excess inventories as nine industries report their customers' inventories as 'too low'. The prices that manufacturers pay for raw materials and services continued to decline, but at a slower rate than in April."br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SiQcXiqyDII/AAAAAAAAOLM/AVmEfiJHu7E/s1600-h/usa+pmi.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 227px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342426248737066114" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SiQcXiqyDII/AAAAAAAAOLM/AVmEfiJHu7E/s400/usa+pmi.png" //abr /br /strongBrazil/strongbr /br /Latest survey findings indicated that Brazil’s manufacturing economy shrank yet again in May, with indices tracking trends in new orders, production, employment, backlogs and inventories still stuck in negative territory. However, data also showed that contractions in all of these variables, except finished goods stocks, slowed considerably. The monthly drop in output was especially small. The seasonally adjusted Banco Santander PMI) climbed further in May to its highest level in the current eight-month period of contraction. At 47.8, up from 44.8 in the previous month, the index suggested a much more moderate deterioration in operating conditions. Again, data indicated that the improvement predominantly stemmed from the domestic market, as new export sales continued to fall steeply.br /br /br /Data for input costs, output prices and suppliers’ delivery times pointed toward a further steep drop in price pressures across Brazil’s manufacturing economy in May. Falling demand for raw materials left vendors with spare capacity. Consequently, lead times for input deliveries shortened for the seventh month running (although the improvement was restrained by poor domestic infrastructure).br /br /Competition among suppliers to secure new contracts provided manufacturers with greater scope for price negotiations. Alongside cheaper imports, resulting from a weakened U.S. dollar, pressure on vendors to reduce their prices contributed to another sharp decrease in average purchasing costs. Moreover, the rate of decline accelerated slightly to a new series record. Lower cost burdens were reflected in Brazilian manufacturers’ charges. Firms decreased their tariffs in order to attract more custom.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SiQZt2zIObI/AAAAAAAAOLE/E4SA2KIuR-c/s1600-h/brazil+PMI.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 229px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5342423333563021746" border="0" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SiQZt2zIObI/AAAAAAAAOLE/E4SA2KIuR-c/s400/brazil+PMI.png" //a/pbr /br /strongCoverage Of The JP Morgan Report/strongbr /br /The Global Report on Manufacturing is compiled by Markit Economics based on the results of surveys covering over 7,500 purchasing executives in 26 countries. Together these countries account for an estimated 83% of global manufacturing output. Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease.br /br /The following countries are included in the report:br /br /United States, Eurozone, Japan, Germany, China, United Kingdom, France, Italy, Spain, Brazil, India, Australia, Netherlands, Russia, Switzerland, Turkey, Austria, Poland, Denmark, South Africa, Greece, Israel, Ireland, Singapore, Czech Republic, New Zealand, Hungarydiv class="blogger-post-footer"img width='1' height='1' src='//blogger.googleusercontent.com/tracker/8991369883287712098-2597908422211196839?l=globaleconomydoesmatter.blogspot.com'//div

Solar Stock News – Yingli Green Energy (NYSE: YGE), Energy Research Centre of the Netherlands and Amtech Systems Announce Research Collaboration to Develop Next Generation High Efficiency Solar Cells

Dawn Van Zant — Mon, 01 Jun 2009 13:00:00 +0000

BAODING, China TEMPE, AZ - June 1 2009 - Yingli Green Energy Holding Company Limited (NYSE: YGE) ("Yingli Green Energy"), one of the world's leading vertically integrated photovoltaic ("PV") product manufacturers, the Energy Research Centre of the Netherlands ("ECN"), a leading solar research center in Europe, and Amtech Systems, Inc. (NASDAQ: ASYS) ("Amtech"), a global supplier of production and automation systems and related supplies for the manufacture of solar cells, today announced a three-party research collaboration agreement to develop next generation high efficiency solar cells.

Indexing Fundamentalists: Another Casualty?

IndexUniverse Staff — Wed, 27 May 2009 20:55:56 +0000

Claymore files request to change ETF from U.S. large-cap-focused to foreign small-caps.

In another reduction of alternative indexes that use different valuations and business fundamentals to weight companies, Claymore Advisors is seeking to switch an existing exchange-traded fund to a more traditional market-cap size weighted benchmark.

But that isn't all.

In a filing dated May 21, the trust for the Claymore/Great Companies Large-Cap Growth ETF (NYSE: XGC) is asking the Securities & Exchange Commission to let it invest in much smaller companies. And while listed largely on U.S. exchanges, they'd be foreign-based businesses.

The new fund would be called the Claymore/BNY Mellon International Small Cap ETF.

The document notes that the new ETF's "investment objective is not fundamental" in nature. It clearly states the change will revert to a strictly passive indexing approach. (See filing here.)

The request to regulators by Claymore comes on the heels of PowerShares' decision to close 19 of its ETFs, a dozen of which were based on fundamental indexes created by Rob Arnott's Research Affiliates. (See related story here.)

While the existing XGC also follows an index, it's based on an investment approach by Great Companies Inc., a Tampa Bay, Fla.-based money management firm. Its managers rank companies by such factors as price-earnings growth rates, or PEG ratios, and various debt measures for assessing profitability.

Great Companies uses computers to crunch fundamental data to compare value characteristics against growth metrics for domestic large-cap names. Stocks are ranked and added to the ETF's underlying index according to the adviser's composite scoring system.

When it was launched in April 2007, XGC came with an expense ratio of 0.60%. It hasn't changed since then and it had slightly more than $3.7 million in assets through Tuesday.

Higher Price Tag

When it was first coming to market, a Great Companies' portfolio manager acknowledged that XGC's price tag was higher than rival large-cap funds such as Vanguard and iShares. "But we're providing more of a managed-account product than a classic index-fund product," he said in a MarketWatch.com story at the time. (You can read the story here).

The new small-cap international ETF would face stiff competition as several newcomers have jumped into the asset class in the past few years. But one bone of contention for U.S.-based investors in often illiquid foreign waters is that it can be difficult to follow small-cap names held by their funds.

The new Claymore offering would address that concern by predominately investing in overseas firms with listings on major U.S. exchanges. The fund would hold mainly companies with American depositary receipts or global depositary receipts and market caps of $250 million to $2 billion.

At the end of March, such a makeup gave the underlying index a definite slant to emerging markets. The BNY/Mellon benchmark consisted of 92 stocks. The weightings by country then were: Brazil 21.37%; China 19.20%; India 7.28%; United Kingdom 6.88%; Chile 5.59%; Mexico 4.19%; Russia 3.64%; Japan 3.40%; Israel 3.10%; Netherlands 2.78%; Greece 2.64%; South Africa 2.57%; Italy 2.14%; Argentina 1.98%; Switzerland 1.96%; France 1.89%; Korea 1.79%; Australia 1.68%; Ireland 1.61%; Colombia 1.51%; Hungary 1.00%; U.S. 0.82%; Indonesia 0.50%; Hong Kong 0.46%; Denmark 0.45% and Germany 0.41%.

No expense ratio is listed in the filing. But if the new fund were in the same neighborhood as XGC's, it would seem to have a better fighting chance when competing in the small-cap international arena.

Prices for rival ETFs range from around 0.40% and up. For example, the group's granddaddy is the WisdomTree International SmallCap Dividend Fund (NYSE: DLS). Meanwhile, Vanguard entered the field in March with an ETF charging 0.38%. (For a more complete breakdown on competing international small-cap ETFs, see stories here and here.)

-- This report was submitted by IndexUniverse.com's Murray Coleman.

Plastinum Polymer Technologies Corp. (PLNU) Finds the Netherlands on its Side as Revenue Begins to Move

QualityStocks — Wed, 13 May 2009 18:38:28 +0000

The concept of purely “western” business is taking on differing forms as economic and social issues morph with quickly diverging social/economic issues. Many countries are now indicating their displeasure with the typical economic model and are looking for a blend of social and capital markets that might be able to coexist. If this blend [...]

Morningstar: Grading On A Curve

Matt Hougan — Wed, 13 May 2009 01:33:07 +0000

Morningstar is out with a new report on the global mutual funds industry, and the only country to score an "A" is the U.S. That's flattering, I suppose. But it can mean only one thing: we're grading on a curve.

The report—which is a great piece of research, and is available here—examines the mutual fund investor experience in 16 countries. It analyzes that experience on a variety of metrics: Investor Protection; Transparency in Prospectus and Shareholder Reports; Transparency in Sales Practices and Media; Fees and Expenses; Taxation and Distribution/Choice.

The U.S., as mentioned, is the only country to earn an "A." China gets a "B+" while Italy, Japan, The Netherlands and Taiwan rank "B's." The numbers go on from there with New Zealand bringing up the rear, earning a big D-.

I don't have the global experience to compare the U.S. and New Zealand, but I know one thing: we don't deserve an "A."

How do we deserve an "A" when the majority of mutual funds are sold on commission, putting the interests of financial agents at odds with the interests of investors?
How do we deserve an "A" if 70-85% of our funds trail the market average, due primarily to high fees?
How do we deserve an "A" if the average mutual fund turns over its entire portfolio each and every year?
How do we deserve an "A" when most mutual funds don't bother to vote their shares in an intelligent fashion?
How do we deserve an "A" when we have a 401(k) program that disguises its fees and shunts investors into overpriced, under-performing funds?
How do we deserve an "A" when our shareholder communications (starting with prospectuses) are unintelligible legalese, and 99% of them are thrown away unread?

Savvy investors in the United States can find great mutual fund products: products with low fees, high transparency and dedicated management.

But the majority of Americans are poorly served by mutual funds, which charge high fees for a substandard product and uses tantalizing advertisements to lure investors into chasing returns.

An "A"? Not in my book.

Census Hiring and Reporting Methods Minimize April Unemployment Numbers

Don Miller — Mon, 11 May 2009 17:00:52 +0000

pEmployers cut 539,000 jobs in April, the lowest total in six months, but the Labor Department said the unemployment rate still soared to 8.9%, from 8.5% in March. While some analysts viewed the latest report as a sign of a nascent economic recovery, the unemployment numbers are almost certain to head higher before the recession is declared over./p pLast week’s report could have been worse if the numbers hadn’t been held in check by a burst of federal government hiring of temporary workers to prepare for the 2010 Census./p pThe report was also skewed by the way the government categorizes the unemployed. As strongema href="http://www.moneymorning.com" class="alinks_links"Money Morning/a/em/strong previously reported, a href="http://www.moneymorning.com/2009/01/26/unemployment-rate-2/" target="_blank"if laid-off workers who have given up looking for new jobs or have settled for part-time#8230;/a/p

Dutch entrepreneurs warm to solar energy

Dawn Van Zant — Tue, 05 May 2009 13:00:00 +0000

When it comes to solar energy, Dutch entrepreneurs are successful all over the world. This was evident at The Solar Future in Rotterdam, the biggest solar energy conference ever held in the Netherlands.

Roubini Global Economics: Navigating towards Bretton Woods 3?

Prieur du Plessis — Thu, 30 Apr 2009 07:37:20 +0000

"... it is hard to argue that the large global imbalances that arose a few years ago had no role whatsoever in the current global synchronized recession. However, so far, global imbalances do not seem to be on even the long-term agenda of most of those trying to remake the global financial system," argues Nouriel Roubini and his team in this thought-provoking article.

Russia’s Rosneft Nailed in Yukos Suit for $389 Million

Robert Amsterdam — Wed, 29 Apr 2009 20:20:21 +0000

Kommersant, via Reuters, is reporting that a Dutch court has upheld a lawsuit brought by the former shareholders of Yukos against the Russian government - specifically Rosneft - obligating them to pay upwards of $389 million to compensate for the...

Voodoo Economics

Bill Bonner — Wed, 29 Apr 2009 19:55:49 +0000

pFinally…we’re back in London. We left at the beginning of April…went to San Diego and Los Angeles…then to Buenos Aires and Salta…then to Paris for a few days.. and now we’re back. London is cold and rainy…just like we left it. Not exactly home…but it will do. But what’s this? strongThe City seems to be winding down. All those hot shots in the financial sector aren’t so hot any more./strong /p pIn the space of just ten years, the percentage of GDP generated by the financial sector almost doubled – from 5.5% in 1996 to 10.8% a decade later. But now the whole sector is shrinking…along with bonuses…payrolls…and expense accounts./p pAnd since Britain counted so heavily on the financial high fliers and their#8230;/p

Steep Drop in GDP May Also be First Sign of Economic Recovery

Money Morning — Wed, 29 Apr 2009 19:43:22 +0000

By Don Miller Associate Editor Money Morning U.S. gross domestic product (GDP) plunged at a surprisingly sharp 6.1% annual rate in the first quarter, marking its worst performance in 50... Money Morning is here to help investors profit h...

NewMarket Corporation – Value – Zacks Rank Buy

Tracey Ryniec — Tue, 28 Apr 2009 05:00:00 +0000

NewMarket Corporation (NEU) , the specialty chemical additives manufacturer, saw a record first quarter as quickly declining raw material prices boosted operating profit. The company has surprised 2 out of the last 4 quarters by an average of 12.52%. NEU has a PEG ratio of just 0.80.

Company Description

NewMarket manufactures chemical additives for petroleum products through its subsidiaries Afton Chemical and Ethyl Corporation.

Afton Chemical manufactures custom-formulated chemical blends that helps fuels burn cleaner and engines last longer.

Ethyl Corporation produces diesel cetane improve and gasoline performance additives. It operates terminal storage and distribution services from facilities in Houston and Dordrecht, Holland.

NewMarket Crushed First-Quarter Estimates by 70.91%

On Apr 22, NewMarket reported record first-quarter results and easily beat Wall Street estimates by 78 cents per share. Net income rose 45% to $28.7 million, or $1.88 per share, from $19.8 million, or $1.27 per share. Analysts were expecting only $1.10.

The record quarter was the result of record petroleum additive operating profit which jumped 33% to $50.1 million from $37.7 million in the year ago period. The big gains were in fuel additive profits which were helped by rapidly declining raw material costs and stable market demand. Lubricant additive profits were flat compared to the prior year.

The global economic slowdown had an effect on first-quarter business, however, as petroleum additives sales fell 12% year over year to $334.8 million from $380.6 million. The first 2 months of the quarter were especially weak, with quantities shipped dropping 26% for the quarter.

Many of NewMarket's customers destocked during the quarter, especially in lubricants, but once that process is complete, shipping volumes are expected to increase as petroleum additives are nondiscretionary and vital to the operation of modern machinery.

Cash is Still King

NewMarket increased its cash position from December 2008 by $37.7 million to $59.5 million. During the quarter, the company also repaid $41.9 million on its revolving credit agreement leaving that facility with no draw debt outstanding at the end of the quarter.

Dividend Increased

On Apr 24, NewMarket announced that it was raising its quarterly dividend to 25 cents per share from 20 cents per share paid in the previous quarter. The dividend is payable on July 1 to all shareholders of record at the close of business on June 15.

The current dividend yield, with the higher distribution, is 1.80%.

Value Fundamentals

NewMarket is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 11.11. NEU's price-to-book is 2.69. The company also has an outstanding 5-year average return on equity (ROE) of 17.86%.

Zacks Investment Research

How to Protect Your Finances from Reckless Government Spending

Contrarian Profits — Thu, 23 Apr 2009 20:17:38 +0000

tr strongNotes from thebr / Investment Underground/strong /tr tr pThursday, April 23, 2009/p pPalermo Viejo, Buenos Aires, Argentina/p pstrongThe greatest economic disaster in recorded history (and how to profit from it)#8230; Your market ”script”#8230; Lessons on guerrilla investing#8230; Banks switch sides#8230; The best communications company in the world#8230; 3 sectors you should own now#8230; Your key to “permanent wealth”#8230; A massive glitch in the administration’s matrix#8230;/strongstrong /strong strongemNotes/em subscribers beat up on your editor#8230; 1,159% gains as stocks go bust#8230; And more! /strong/p pstrong*** “The current administration#8217;s economic strategy could create the greatest economic disaster in recorded history,” /strong says a href="http://www.contrarianprofits.com/articles/author/porter-stansbury/" class="alinks_links"Porter Stansberry/a in today’s ema href="http://www.dailywealth.com" class="alinks_links"DailyWealth/a./em/p ulNot only is the administration planning on enormous deficit spending this year, but the current plan calls for increasing deficit spending emfor the next decade /em– spending that will more than#8230;/ul/tr

Whom Do We Owe? – Analyst Blog

Dirk Van Dijk — Tue, 21 Apr 2009 21:03:13 +0000

Recently, the monthly data on who the major holders of treasury debt are was released. Overall, $3.162 Trillion of Treasury debt was held overseas at the end of February 2009, up 37.5% from a year before ($2.226.1 Trillion).

The largest holder and the largest increase in absolute terms is China, which holds $744.2 billion -- a 52.4% increase from $486.9 billion in February of 2008. Japan is the next largest at $661.9 billion, but up only 13.5% from a year ago.

Next is a group that probably hides who the true holders are, the Caribbean Banking Centers. The collectively hold $189.1 billion of Treasury debt, and are up a stunning 82.0% from a year ago. They are followed by the Oil Exporters, at almost the same level, $181.7 billion, but who surprisingly had a much smaller increase, up just 24.0%.

Perhaps most striking about the list are some of the countries towards the bottom of the list. For example, Canada holds only $10.9 billion of our debt, down 51.1% from a year ago. This is less than one third the amount of our debt that Mexico owns ($37.9 billion). Thailand owns more ($39.7 billion) than twice the amount that is held by Israel, France, Italy, Sweden, the Netherlands and Belgium. Brazil holds more ($130.8 B) than those major European countries combined.

This data seems to be more evidence that the world's economic center of gravity is shifting from what we have long termed the "developed" counties (roughly speaking the OECD, but not exactly, since both Mexico and Turkey are members of the OECD) to what we used to think of as the "third world."

Clearly the developing world has taken a big economic hit with the current worldwide slowdown, but they may come out the other side of this in better shape than most people recognize. While many people point to China as America's new bankers, clearly they are not alone, and far-off exotic locals are becoming increasingly important to the government in financing our debt, not just the traditional non-US financial centers like London, Geneva and Frankfort. Zacks Investment Research

Abbot Says Milk Powder Sold In China Is Perchlorate Free

China Retail News — Mon, 13 Apr 2009 19:31:52 +0000

In response to a report that stated 15 American infant formula milk powder products contain perchlorate, Abbot, one of the three major milk powder producers from the United States, declared that all their products sold on Chinese market are all made with milk from New Zealand, Ireland or the Netherlands, so they aren't contaminated with [...]

Record U.S. Job Losses in March, Unemployment Highs In Europe

Money Morning — Wed, 01 Apr 2009 16:13:57 +0000

By Mike Caggeso Associate Editor Money Morning The U.S. private sector cut a record 742,000 jobs in March, higher than analysts’ expectations and a leap from the upwardly revised... Money Morning is here to help investors profit handsome...

USA to become the world’s largest solar energy market

Dawn Van Zant — Wed, 01 Apr 2009 13:00:00 +0000

Rotterdam, The Netherlands, Munich, Germany -- 1 April 2009 - "In 2010, PV will be by far the most cost-effective way of generating electricity. The solar PV market in California will explode once people discover that they can generate their own rooftop power for less than it costs from their utility," says Barry Cinnamon, long-term expert, CEO and founder of solar system integrator Akeena Solar in California.

SLE May Sell Household Business – Zacks Tale of the Tape

Zacks Market Commentaries — Mon, 30 Mar 2009 17:22:55 +0000

Sara Lee Corp. (SLE) is considering the sale of its International Household & Body Care business to undisclosed suitors. The stock is down over 1.5% amid volumes that are at unusually low levels.

The unit, which is based in the Netherlands, is likely to fetch the owner of Kiwi shoecare and Ambi Pur brands more than $2 billion.

"We will carefully evaluate all opportunities and do what is in the best interest of the company and its stakeholders," said chief executive Brenda C. Barnes in a statement.

Analysts expect significantly weakened consumer demand to continue exerting pressure on the near term performance of SLE. Accordingly, fiscal 2009 earnings estimates have been reduced by a penny over the past month and by 9 cents over the past 60 days.

SLE is a Zacks #4 Rank ("Sell") stock.

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

Zacks Analyst Blog Highlights: Analog Devices Inc., Gilead Sciences, CV Therapeutics, Koninklijke Philips Electronics N.V., and Skyworks Solutions, Inc. – Press Releases

Zacks Market Commentaries — Fri, 20 Mar 2009 14:29:49 +0000

For Immediate Release

Chicago, IL March 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: Analog Devices Inc. (ADI), Gilead Sciences (GILD), CV Therapeutics (CVTX), Koninklijke Philips Electronics N.V. (PHG) and Skyworks Solutions, Inc. (SWKS).

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

Here are highlights from Thursday's Analyst Blog:

ADI Strategy Tough for Near Term

Most of Analog Devices Inc.'s (ADI) products are in the analog category. Analog and mixed-signal products tend to be more customized, with relatively longer life cycles than digital components.

Consequently, sales of older analog products can keep contributing to revenue for longer time periods and at higher margins than corresponding digital products. Although competition in the analog market has been increasing in recent years, the large upfront design costs embedded in the customized devices continue to act as deterrents to many smaller players.

Gilead Buying CVT: Brilliant Move

Gilead Sciences (GILD) is perhaps world's premier play on HIV/AIDS therapy. We consider Truvada -- a reformulation of drugs Viread and Emtriva -- to be a potential breakthrough product for the treatment of HIV/AIDS. Additionally, the approval of Atripla offers the next big wave of top-line growth for the company.

Gilead has previously done an outstanding job in strategic acquisitions. The Triangle Pharmaceuticals deal in 2002 was the stepping stone for the basis of leading product, Truvada and Atripla.

The proposed acquisition of CV Therapeutics (CVTX) is a brilliant move in our view. In one single transaction, Gilead gains knowledge in developing and commercializing cardiovascular drugs, which should enhance the darusentan program, puts into place significant infrastructure to diversify into the cardiovascular business -- all while picking up immediately revenues and future stronger profitability with Ranexa and Lexiscan. We say, "Very well done!"

Sell Philips Electronics

Headquartered in Amsterdam, The Netherlands, Koninklijke Philips Electronics N.V. (PHG) is one of the world's largest electronics companies and the biggest in Europe, with sales of EUR27 billion in 2007 and EUR26.3 billion in the full-year 2008.

Given the reduced visibility in the global economy, which progressively deteriorated during the quarter, the company has decided to restructure businesses in all 3 sectors which lead to additional charges in the Q4FY08. This has caused us to reduce overall revenue growth rate to negative 3.2% in Euro terms, for 2009 compared to negative 2.2% recorded for 2008. The revenue growth rate in terms of dollars is projected at negative 12% for FY09 compared to 3.78% for FY08.

Skyworks Ahead of the Pack

Shares of Skyworks Solutions, Inc. (SWKS) continues to defy gravity, reasserting the fact that the company's leading position in the power amplifier (PA) market makes it a strong and sustainable player in the handset semiconductor space. Since our last post on Feb. 6, when the shares had already seen a 54% upswing relative to our Feb. 3 recommendation price, the shares have advanced another 19% to close at $8.07 yesterday. In other words, the shares have nearly doubled since our last recommendation on Feb 3.

Skyworks is primarily a handset semiconductor components vendor (77% revenues) that focuses on the analog front-end components, primarily power amplifiers. SWKS also sells non-handset diversified analog components (23% of revenues) into a broad range of end applications.

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About Zacks Equity Research

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Zacks Investment Research

Sell Philips Electronics – Analyst Blog

Zacks Market Commentaries — Thu, 19 Mar 2009 19:11:59 +0000

Headquartered in Amsterdam, The Netherlands, Koninklijke Philips Electronics N.V. (PHG) is one of the world's largest electronics companies and the biggest in Europe, with sales of EUR27 billion in 2007 and EUR26.3 billion in the full-year 2008.

Given the reduced visibility in the global economy, which progressively deteriorated during the quarter, the company has decided to restructure businesses in all 3 sectors which lead to additional charges in the Q4FY08. This has caused us to reduce overall revenue growth rate to negative 3.2% in Euro terms, for 2009 compared to negative 2.2% recorded for 2008. The revenue growth rate in terms of dollars is projected at negative 12% for FY09 compared to 3.78% for FY08.

The company is working to improve its cost structure and its EBITA margins have declined in 4Q08 due to restructuring charges booked. Based on these results, we have downgraded the shares of PHG to a Sell with a price target of $15.00 or 7.5x 7.8x our 2009 EPADS estimate of $1.97.

Udayan Mukherjee contributed to this report.
Read the full analyst report on "PHG"
Zacks Investment Research

Unilever Shares Keep Buy Recs – Analyst Blog

Zacks Market Commentaries — Mon, 09 Mar 2009 17:23:43 +0000

Unilever NV (UN) and Unilever Plc (UL) manufactures, markets, and sells a broad portfolio of consumer products across the globe in developed, developing, and emerging markets. The Netherlands-based (Rotterdam) company operates in Europe, North America, Asia and the Pacific, Latin America, Africa, and the Middle East.

The benefits from the implementation of Path to Growth, Unilever 2010, One Unilever, and Accelerating Change strategies, along with strong cash flow, are positives for the future prospects of Unilever. In addition, the simplified management structure has improved operational decisions, and the one-to-one equivalence between PLC and NV shares has improved financial transparency.

Impressively, the underlying operating margin increased in 2008 despite rising input costs in 2008. The Buy rating is maintained on Unilever.
Read the full analyst report on "UN"
Read the full analyst report on "UL"
Zacks Investment Research

JP Morgan’s Global PMI Shows Another Substantial Contraction In February

Edward Hugh — Wed, 04 Mar 2009 08:14:00 +0000

by Edward Hugh: Barcelonabr /br /The performance of the worldwide manufacturing sector remained very weak in February. Although the JPMorgan Global Manufacturing PMI rose further from December's record low, at 35.8 it was still well below the critical no-change mark of 50.0. Rates of decline eased for production and new orders, but accelerated to reach a new survey record for employment.br /blockquote"The PMI edged higher for a second successive month in February. The data are still pointing to marked declines in output and new orders, but the gains in these indexes indicate that the rate of contraction has begun to ease in global industry. Production cuts are likely to remain deep near-term while companies reduce inventory." David Hensley, Director of Global Economics Coordination at JPMorgan/blockquotebr /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SaweWTZ7AnI/AAAAAAAAM4E/mTNmx1ft-QM/s1600-h/global+pmi.png"img id="BLOGGER_PHOTO_ID_5308651429277926002" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 228px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SaweWTZ7AnI/AAAAAAAAM4E/mTNmx1ft-QM/s400/global+pmi.png" border="0" //abr /br /Employment declined for the eleventh successive month in February. The performance of the US manufacturing labor market was especially weak, with staffing levels falling at the fastest pace in the sixty-one year ISM series history. Employment also fell at survey record rates in the Eurozone, Japan, the UK, Australia and Switzerland.br /br /strongEurozone/strongbr /br /Final Purchasing Managers’ Index data confirms that the rate of deterioration of the Eurozone’s manufacturing economy continued to gather pace in February. The Markit Eurozone Final Manufacturing PMI fell from 34.4 in January to 33.5, the lowest reading in the 11.5-year history of the survey and also slightly below the earlier Flash reading of 33.6. The renewed downturn in the PMI was driven by output falling at a new record rate, and to a greater extent than signaled by the Flash, registering the ninth successive monthly fall in production.br /br /Slower rates of decline in Germany, Spain, the Netherlands, Greece and Austria were countered by sharp accelerations in rates of contraction in France and Ireland and a more moderate acceleration in Italy, with all three latter countries seeing record falls in output.br /br /blockquoteCommenting on the PMI data, Markit chief economist, Chris Williamson said: “The final Eurozone PMI data are a further disappointment on the earlier Flash numbers for February, and indicates that the rate of decline of manufacturing has yet to stabilize. The data are consistent with manufacturing output and employment falling at annual rates in the region of 12 and 5 percent, respectively. Germany is currently seeing the steepest downturn in demand, though sharply falling sales remain widely reported by country and product sector.”/blockquotebr /br /strongGermany/strongbr /br /Operating conditions remained extremely tough in the German manufacturing sector in February as a near-record downturn in new orders led to another rapid reduction in output. Lower workloads and subsequent excess capacity led to further staff restructuring in February, with data pointing to the fastest rate of job shedding since the series began in April 1996. Meanwhile, the deflationary dynamic in factory gate prices strengthened in February, with charges reduced sharply in response to low demand and a marked fall in raw material costs.br /br /The headline seasonally adjusted Markit/BME Purchasing Managers’ Index (PMI) – designed to give a single-figure snapshot of operating conditions in the manufacturing economy – posted 32.1 in February, little-changed from the earlier ‘flash’ figure of 32.2. Although the PMI remained indicative of a sharp retrenchment of the German manufacturing sector, the index rose for the first time since March 2008.br /br /The slight rise in the PMI, from 32.0 to 32.1, was largely the result of a slower contraction of production levels compared to January’s survey record.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SawgGRl1CZI/AAAAAAAAM4M/VjUn-e4RiEI/s1600-h/germany+pmi.png"img id="BLOGGER_PHOTO_ID_5308653352936343954" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 217px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SawgGRl1CZI/AAAAAAAAM4M/VjUn-e4RiEI/s400/germany+pmi.png" border="0" //abr /br /New order volumes continued to fall at a near survey record rate in February, reflecting a general reluctance among clients to commit to new work. Anecdotal evidence also pointed to shrinking demand from companies in the automobile sector.br /br /Input prices fell rapidly in February and the rate of deflation was little-changed from the previous month’s survey record. Meanwhile, data pointed to a fourth successive drop in factory gate prices, with the rate of deflation the fastest since the series began in September 2002.br /br /blockquoteCommenting on the final Markit/BME Germany Manufacturing PMI survey data,Tim Moore, economist at Markit Economics said: “German manufacturers suffered another brutal month in February as the slump in demand from abroad showed little sign of abating. Severe weakness in manufacturing exports will continue to weigh heavily on GDP in the first quarter, with the latest drop in new export orders by far the fastest of the big four Eurozone nations. The survey also indicates that official manufacturing employment numbers will fall at the fastest annual rate for around 15 years in Q1.”/blockquotestrongSpain/strongbr /br /Spanish manufacturing conditions continued to deteriorate in February at levels similar to a month earlier, though off December's record low. The indicator rose in February to 31.8 from 31.5 a month earlier, both readings significantly off December's record low of 28.5.br /br /"Although the headline PMI ticked up again in February, operating conditions remained extremely tough. It is still too early to start talking of a recovery in the Spanish manufacturing sector," said Markit economist Andrew Harker.br /br /Over half of those surveyed reported lower orders in February due to falling demand and noted particularly sharp declines in demand from abroad, especially Europe. Both output and input prices slipped to record lows as the economic environment deteriorated, with raw material prices easing and producers cutting prices to stimulate demand.br /br /blockquote"The series record falls in both input prices and output charges signal that deflationary pressures are set to intensify, with consumer price deflation possible in the near future," said Harker. /blockquotebr /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SawhlS59YlI/AAAAAAAAM4U/DJt5pKa7yfU/s1600-h/spain+PMI.png"img id="BLOGGER_PHOTO_ID_5308654985376784978" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 220px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SawhlS59YlI/AAAAAAAAM4U/DJt5pKa7yfU/s400/spain+PMI.png" border="0" //abr /br /br /strongItaly/strongbr /br /Italian manufacturers faced another month of deteriorating operating conditions during February. Output, employment and outstanding business all fell at series record rates, while new business from both domestic and foreign markets fell sharply. The headline seasonally adjusted Markit/ADACI Purchasing Managers’ Index posted 35.0 in February, down from 36.1 in January and a reading only marginally above November’s survey low.br /br /New business received by Italian manufacturers fell for the 14th straight month during February, and at an accelerated rate from January. The far-reaching impact of the economic downturn was cited by respondents as the principal factor underlying the latest decline. The drop in demand was broad-based with falls in new orders reported in both domestic and overseas markets.br /br /Employment at Italian manufacturers fell at the fastest pace on record during February. Panel members reported that plummeting workloads had been the primary force lowering staffing levels during the month.br /br /Deflation remained evident in the sector during February as both input and output prices fell at series record rates. A sharp drop in raw material prices was cited as the key factor driving down costs. The fall in input prices partially accounted for the record decline in factory gate charges. The economic downturn increasing competitive pressures was cited as a further key factor forcing manufacturers to lower tariffs. More generally, panelists reported that liquidity constraints had forced them to request longer crediting periods, thereby impacting on their ability to make new purchases with vendors. Combined with reduced production requirements, Italian manufacturers subsequently lowered their purchasing activity and (where possible) utilized existing stocks of purchases.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SawicpUB8oI/AAAAAAAAM4c/ESqppJrTLd4/s1600-h/italy+pmi.png"img id="BLOGGER_PHOTO_ID_5308655936284521090" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 211px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SawicpUB8oI/AAAAAAAAM4c/ESqppJrTLd4/s400/italy+pmi.png" border="0" //abr /br /strongFrance/strongbr /br /French manufacturing activity contracted at a record pace in February as new orders remained weak.The weakness in the sector's activity level was reflected in the manufacturing purchasing managers index, which fell to an all-time low of 34.8 in February, down from both the 35.4 figure expected and January's 37.9 figure. According to Markit, the reduction in output was due to ongoing declines in new orders levels, with data suggesting both domestic and foreign markets are deteriorating.br /br /blockquote"Another steep drop in new orders suggests that extremely weak demand is becoming entrenched, with firms remain focused on reducing their inventories of both purchases and finished goods," Markit economist Jack Kennedy said in a press release. Furthermore, with the PMI pointing to record low levels in both input and output price components, deflationary pressures are likely to grow, adding to arguments for further monetary easing in the euro zone, Kennedy added./blockquotepbr /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SawjS8RL7WI/AAAAAAAAM4k/XkNMRbpDiQA/s1600-h/france+PMI.png"img id="BLOGGER_PHOTO_ID_5308656869085801826" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 211px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SawjS8RL7WI/AAAAAAAAM4k/XkNMRbpDiQA/s400/france+PMI.png" border="0" //abr /strongAsia/strongbr /br /strongJapan/strongbr /br /Japan's February manufacting PMI showed manufacturing activity contracted for a 12th straight month in February, underscoring the fact that the depressed state of Japanese industry is likely to continue. The Nomura/JMMA Japan PMI edged up to a seasonally adjusted 31.6 from a record low of 29.6 in January./ppbr /a href="http://1.bp.blogspot.com/_ngczZkrw340/SagfWSnBMdI/AAAAAAAAM10/wh7uZ7QNA8g/s1600-h/japan+two.png"img id="BLOGGER_PHOTO_ID_5307526628669206994" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 222px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SagfWSnBMdI/AAAAAAAAM10/wh7uZ7QNA8g/s400/japan+two.png" border="0" //abr /strongChina/strongbr /br /China’s manufacturing shrank for a seventh month in February as the global financial crisis cut exports and growth across Asia. The CLSA China Purchasing Managers’ Index rose to a seasonally adjusted 45.1 from 42.2 in January.br //pblockquote“Manufacturing activity is still contracting, only at a more moderate pace than at the end of 2008,” said Eric Fishwick, head of economic research at CLSA in Hong Kong. Increases in the PMI and measures of orders are “encouraging,” hebr /said./blockquotebr /br /The index for export orders rose to 39.5 in February from 36.3 in January. A measure of orders climbed to 44.2 from 39.9. Output gained to 43.9 from 39.7. An employment index rose to 46.6 from 45, its first increase in seven months.br /br /p/pa href="http://1.bp.blogspot.com/_ngczZkrw340/SawkN23jllI/AAAAAAAAM4s/BCfjblNk6Vo/s1600-h/china+pmi.png"img id="BLOGGER_PHOTO_ID_5308657881248405074" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 238px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SawkN23jllI/AAAAAAAAM4s/BCfjblNk6Vo/s400/china+pmi.png" border="0" //abr /br /strongIndia/strongbr /br /Indian manufacturing activity shrank for a fourth straight month in February as the global downturn hurt demand and soured business sentiment, a survey showed on Monday. The ABN AMRO Bank purchasing managers'index rose to a seasonally adjusted 47.0 in February from January's 46.7.br /br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/Saw8XxVeoBI/AAAAAAAAM48/pjVaWs9rK2I/s1600-h/india+pmi.png"img id="BLOGGER_PHOTO_ID_5308684439841054738" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 224px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/Saw8XxVeoBI/AAAAAAAAM48/pjVaWs9rK2I/s400/india+pmi.png" border="0" //abr /br /The Indian economy grew 5.3 percent in the fourth quarter of 2008 (calendar), according to Indian government data released last Friday, below forecasts of 6.2 percent and the previous quarter's growth of 7.6 percent.br /br /br /br /br /strongCentral and Eastern Europe/strongbr /br /br /strongRussia/strongbr /br /Russian manufacturing contracted for a fifth month in a row in February as the ruble’s devaluation increased corporate costs and demand slumped at home and abroad, according to the latest report from VTB Capital. VTB’s Purchasing Managers’ Index was at 40.6, after a 34.4 reading in January. The duration of the index contraction now matches the decline registered in 1998, when the government dropped its support of the ruble and defaulted on $40 billion of debt. And the contraction doesn't seem set to end anytime soon.br /br /blockquote“The data suggests that the current downturn will be more pronounced than inbr /1998, with a sharp V-shaped rebound appearing unlikely,” Dmitry Fedotkin, anbr /economist at VTB Capital in Moscow, said in the report. /blockquotebr /a href="http://3.bp.blogspot.com/_ngczZkrw340/SawlAPqQCtI/AAAAAAAAM40/9_QEwUzNfgs/s1600-h/russia+pmi.png"img id="BLOGGER_PHOTO_ID_5308658746896943826" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 243px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SawlAPqQCtI/AAAAAAAAM40/9_QEwUzNfgs/s400/russia+pmi.png" border="0" //abr /br /strongHungary/strongbr /br /Hungary's manufacturing purchasing manager index came back slightly from its all-time low of 38.5 in January to 39.7 in February, according to the Hungarian Association of Logistics, Purchasing and Inventory Management (HALPIM), the publisher of the PMI. While the contraction of the manufacturing industry that started last October continues, the rate of contraction has eased slightly.br /br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/Saw96tXtYcI/AAAAAAAAM5E/w2nALLw5ZyU/s1600-h/hungary+PMI.png"img id="BLOGGER_PHOTO_ID_5308686139583717826" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 227px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/Saw96tXtYcI/AAAAAAAAM5E/w2nALLw5ZyU/s400/hungary+PMI.png" border="0" //abr /br /strongCzech Republic/strongbr /br /The Czech Purchasing Managers' Index (PMI) rose to 32.6 in February, from 31.5 in January, the first upward move in a year, but the reading still indicated a rapid contraction, according to the press release from Markit Economics and ABN Amro. The figure for output continued to fall at a sharp rate overall in February for the eighty month. However, seasonally adjusted output rose for the second month running from December's record low, indicating the weakest rate of decline in three months. New orders remained well below the no-change mark of 50.0 in February, indicating a seventh successive monthly drop. For the third month running, over half of the survey panel reported lower new orders, linked to the worsening climate of demand both at home and in key export markets.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SaxBaZheGEI/AAAAAAAAM5M/MTkD8BS1kVU/s1600-h/czech+republic+pmi.png"img id="BLOGGER_PHOTO_ID_5308689982546647106" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 227px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SaxBaZheGEI/AAAAAAAAM5M/MTkD8BS1kVU/s400/czech+republic+pmi.png" border="0" //abr /br /strongPoland/strongbr /br /The Purchasing Managers' Index for the Polish manufacturing sector rose in February for the second month in a row and came in at 40.8 (from 40.3 in January). However, the figure for output fell to 40.2 points from a previous 40.6 points. Analysts said the February PMI figure probably marked a rebound after earlier sharp declines and suggested a weaker zloty may have helped cushion perceptions of the downturn by making exports cheaper. But they added that the outlook for growth remained grim.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/SaxCYSTXZQI/AAAAAAAAM5U/Fqw5-rqIvnw/s1600-h/poland+PMI.png"img id="BLOGGER_PHOTO_ID_5308691045760328962" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 228px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SaxCYSTXZQI/AAAAAAAAM5U/Fqw5-rqIvnw/s400/poland+PMI.png" border="0" //abr /br /strongUSA/strongbr /br /br /Manufacturing contracted in February as the PMI registered 35.8 percent, which is 0.2 percentage point higher than the 35.6 percent reported in January. This is the 13th consecutive month of contraction in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.br /br /A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates contraction in both the overall economy and the manufacturing sector. Ore stated, "The past relationship between the PMI and the overall economy indicates that the PMI for February (35.8 percent) corresponds to a 1.7 percent decline in real gross domestic product (GDP) on an annual basis."br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SaxHXVfIvZI/AAAAAAAAM5k/HPYLHkgzLnU/s1600-h/us+pmi.png"img id="BLOGGER_PHOTO_ID_5308696526993276306" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 227px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SaxHXVfIvZI/AAAAAAAAM5k/HPYLHkgzLnU/s400/us+pmi.png" border="0" //a

Aegon a Solid Insurance Buy – Analyst Blog

Zacks Market Commentaries — Mon, 02 Mar 2009 16:26:42 +0000

Headquartered in The Hague, Netherlands, Aegon N.V. (AEG) provides a multitude of insurance and pension-based saving and investment solutions. It is one of the world's ten largest life insurance companies ranked by assets, profits and market capitalization. Insurance services include personal and commercial life, health and accident insurance.

We are maintaining our Buy recommendation on Aegon after its 4th quarter results. While the current environment will be challenging for investment portfolios, we think that, at its current multiple, the stock is at a significant discount. Our six-month target price is $5.00.

At a current multiple of 3.3x our 2009 EPS and 0.2x Book, the stock is trading at a multiple substantially below the average of that of its peers. As such, fundamentally we think that there will be potential gain for stock in the near term.

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

The EU Bonds Story Rumbles On

Edward Hugh — Wed, 18 Feb 2009 22:39:00 +0000

by Edward Hugh: Barcelonabr /br /br /Wolfgan Munchau a href="http://www.ft.com/cms/s/0/c94ac804-fb62-11dd-bcad-000077b07658.html?nclick_check=1"was complaining only last weekend/a about the extraordinary narrow-mindedness of Europe's economic and political leadership in the face of the current financial and economic crisis, from Ireland in the West to Hungary in the East, and from Greece in the South to Sweden in the North. But more than narrow mindedness what we are faced with is innocence and inability to react, and frankly I am not sure which is worst. I say "innocence" because it is by now abundantly clear that they simply haven't yet grasped the severity of the problems we face (in countries like Spain, or even Germany itself, let alone in the East), and I say inability to react, since they are always and forever moving too little and too late. The initial response to the banking crisis last October was one example (where we saw a landshift-style volte face in the space of only one week) and the way we are now confronting the need to live up to the promises then made about guaranteeing the banking sector, and in particular the "systemic" banks, would be another. br /br /The complete confusion which seems to reign over at the ECB about whether or not the Eurozone can operate some sort of US/Japanese style quantitative easing would be a third.br /br /Only today we are faced with yet another example of how our leaders are meticulously dangling their toes in the icy water where a more seasoned mariner would simply see the need to dive straight in and rescue the drowning man.br /br /It a href="http://www.bloomberg.com/apps/news?pid=20601100sid=aAog4Vqb6SGQrefer=germany"is reported this morning/a that Germany and France are now contemplating the possibility of bailing-out entire nations, rather than simply individual banks, as European government budget commitments steadily mount-up while their sovereign debt ratings start to buckle under the weight of a growing and deepening European recession. br /br /As reported in my post yesterday (a href="http://spaineconomy.blogspot.com/2009/02/santander-fund-suspends-payments.html"here/a) German Finance Minister Peer Steinbrueck became the first senior European politician to broach the topic earlier this week, when he stated that some of the 16 euro area nations are now “getting into difficulties” and may need help, citing Ireland as an example. French officials are also reportedly concerned about how the current "stand alone" sovereign debt situation is leading to widening spreads on Austrian, Irish, Greek and Spanish debt as the cost of insuring against default rises to records. What we have before us is not simply a case of seeing "fiscal irresponsibility" punished, it is a mechanism whereby the eurozone can be peeled apart, and where those states who enter a negative economic growth-bank bailout-fiscal deficit dynamic which means the cost of financing their debt (and thus their bank bailouts) rises so prohibitively that it virtually excludes the possibility of giving further fiscal stimulus to their sinking economies, and does so in such a way that a self reinforcing (and self fulfilling) process may be produced, a process which only leads in one direction and to one conclusion: that of sovereign default.br /br /The problem is that it is not just one or two quarters of negative growth we are talking about here, we are talking of deep depressions, and ones during which deep structural damage can be inflicted on the economies of those states who are hardest hit.br /br /blockquote“When push comes to shove Germany, France, the larger players will bail out those smaller peripheral players,” said Alex Allen, chief investment officer of Eddington Capital Management. “You can’t let one part of the system fail because it leads to failure of the whole system.”/blockquotebr /br /European deficits have evidently surged enormously this year as governments are faced with the need to provide funding for the heavily strained banking system and provide some kind of stimulus to their rapidly contracting economies. EU member states have already committed more than 1.2 trillion euros in an attempt to save the banking systems from collapse, and it is evident that a second and possibly larger wave of bailouts may now be imminent. br /br /In particular many of us our now concerned that the eurozone bond market could potentially face a crisis similar to that unleashed by the collapse of Lehman Brothers in September 2008. As ECB board member Lorenzo Bini Smaghi put it earlier this month there’s a “risk that the mistrust that there is today in financial markets” is “transformed into mistrust in states.” br /br /blockquote“I would be very reluctant to say: ‘O.K., let Ireland or Greece default, the market will sort it out, punish them for their irresponsibility of the past,’” said Thomas Mayer, co-head of global economics at Deutsche Bank AG in London. “They tried it with Lehman and realized that was not a good idea.” /blockquotebr /br /strongThe Spreads Widen/strongbr /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SUEsR712NQI/AAAAAAAALuU/VGFiqyCyzBw/s1600-h/bond+spreads+2.png"img id="BLOGGER_PHOTO_ID_5278548924887872770" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; HEIGHT: 170px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SUEsR712NQI/AAAAAAAALuU/VGFiqyCyzBw/s320/bond+spreads+2.png" border="0" //abr /br /The gap between the interest rates Greece, Austria and Spain must pay investors to borrow for 10 years and the rate charged Germany yesterday rose to the widest since before they adopted the euro. Credit-default swaps on Ireland rose to a record on Feb. 16, climbing to 378.4 points. Greek credit-default swaps, 270 points on Feb. 16, show a 4.5 percent chance that the country will default in the next 12 months, according to ING Bank NV. br /br /strongAre Bailout's Possible Under Maastricht?/strongbr /br /The simple answer to the above question is most emphatically yes, a href="http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2006:321E:0001:0331:EN:PDF"under article 119 of the Treaty/a. As follows:br /br /blockquoteWhere a Member State is in difficulties or is seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments, or as a result of the type of currency at its disposal, and where such difficulties are liable in particular to jeopardise the functioning of the common market or the progressive implementation of the common commercial policy, the Commission shall immediately investigate the position of the State in question and the action which, making use of all the means at its disposal, that State has taken or may take in accordance with the provisions of this Treaty./blockquotebr /br /Which in plain English basically means, through you go with your proverbial coach and horses. Indeed they may well have already been driven through, a href="http://www.euractiv.com/en/euro/hungary-offered%2065-eu-loan-face-turmoil/article-176751"last November, in the case of Hungary/a.br /br /blockquote“The European Commission stands ready to provide a loan of €6.5 billion to Hungary,” the EU executive said in a statement on Wednesday (29 October), adding that “the concrete modalities will shortly be finalised in cooperation with the Hungarian authorities”. Under the plans, the Commission will borrow money from the markets using EU-denominated bonds and then lend it to Hungary, without drawing from the EU budget. The facility is established under Article 119 of the Treaty.It is the first time that Brussels has used the instrument to help an EU country (see background). The facility foresees an overall ceiling of €12 billion of outstanding loans. This funding is limited to EU countries which are not part of the euro zone./blockquotebr /br /The €12 billion ceiling currently provisioned for in the bond facility has not so far been reached, but it has long been evident that other Eastern EU countries would need to draw from the facility for financial help. Thus it is hardly surprising to learn that French President Nicolas Sarkozy had already proposed raising the ceiling to €20 billion at an EU summit on 7 November.br /br /blockquote"I will propose on 7 November that the European Union itself, which has 12 billion available to support a certain number of liquidities and to support a certain number of states, should go up to at least 20 billion (euros) to increase our capacity to respond to the crisis," Sarkozy said, according to Reuters./blockquotebr /br /As one EU official told journalists at the time "the Commission could also change the regulation and lift the ceiling". Or, in other words, when needs must, it will.br /br /br /blockquotestrongA Little History/strongbr /br /The principle of borrowing money from financial markets on behalf of the European Community has previously been applied to grant aid to extra-EU countries, in particular before the 2004 enlargement. Kosovo, Moldova and Georgia are all currently receiving financial help through EU loans raised on the market. In January 1993, Italy, a member of the European Community (the EU's forerunner), was granted an eight billion ECU loan to support its strained balance of payments. Since then, no member state has received financial help through this instrument.br /br /The idea of borrowing money via the issue of EU bonds was first launched by former Commission President Jacques Delors via his 1993 plan for growth, competitiveness and employment. Delors initially wanted EU bonds to fund the European budget. But the majority of member states opposed the idea, fearing it would ultimately increase their expenditure on the Community budget. br /br /Borrowed money has been used by the EU to fund projects in several cases, although the amounts involved have been small. For instance, a 'New Community Instrumentexternal ' was used in the late 70s and early 80s to help regions affected by earthquakes in Italy and Greece. Italy has recently proposed using European bonds to fund key EU projects, but the idea garnered little support /blockquotebr /br /br /The gateway for the coach and horses is also being prepared on another front, as a href="http://www.ft.com/cms/s/0/11d97162-fd41-11dd-a103-000077b07658.html"the Financial Times reports this morning/a. In this case we are talking about the European Investment Bank, which, according to the FT, is set to lend the European car industry 7 billion euros in the first half 2009 to support the manufacturing of environmentally clean vehicles. This is already a substantial increase on the approximately 2 billion euros a year the bank extended to the industry before the crisis, and there may be more, much more, to come. Pathways are being prepared, even as the wheels on the coach are oiled and the horses' mains groomed.br /blockquotePhilippe Maystadt, the bank’s president for the past decade, revealed the €7bn figure to the Financial Times, as he explained the EIB’s plans to shoulder a bigger financing burden in crisis-hit Europe. Member states have already asked the EIB to increase its annual lending programme by €15bn ($19.2bn, £13.3bn) to €63bn for this year and next in an effort to revive the economy./blockquotebr /br /strongSo Why The Criticism?/strongbr /br /So why, if there behind the scenes so many preparations are now being made did I start this post by saying that more than narrow mindedness, what I felt we were faced with is innocence and an inability to react? Well basically, because I think that Europe's leaders are still in general denial on the scope of this problem. We are not talking simply of little cases, like Greece and Ireland, we are talking about potentially much harder chestnuts to crack, like Spain, and Italy, the UK, and even Germany itself. Remember Germany's economic is now contracting at an almost astonishing pace, and German bonds are getting harder to sell all the time.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SZVEBkNS_0I/AAAAAAAAMpk/aG2cwybbjc0/s1600-h/german+GDP.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 226px;" src="http://4.bp.blogspot.com/_ngczZkrw340/SZVEBkNS_0I/AAAAAAAAMpk/aG2cwybbjc0/s400/german+GDP.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5302218929988632386" //abr /br /The full extent of the problems in the German banking system, as defaults mount in Spain and Eastern Europe, is yet to be measured. Only today German Chancellor Angela Merkel’s Cabinet a href="http://www.bloomberg.com/apps/news?pid=20601100sid=aSb_mO9Ij7i0refer=germany"approved a draft bill/a allowing the state to seize control of property lender Hypo Real Estate Holding AG, paving the way for the first German bank nationalization since the 1930s. And the volume of assets thought to be likely to need to be bought by any bad bank (or banks) created is very large. Hypo's loans alone are thought to total almost 260 billion euros, and numbers in the 400 to 600 billion euro range are being mentioned. So the fear here is not that a German sovereign default is looming, but that German debt may no longer maintain "benchmark" status, and thus the rate of interest the German government may have to pay to maintain its debt may rise, again impeding efforts to help maintain the economy afloat, and almost inevitably biting into the country's already strained health and pension systems.br /br /blockquoteFinance Minister Peer Steinbrueck was quoted by the Frankfurt Allgemeine Sonntagszeitung weekly newspaper as saying he could "not imagine (the establishment of a "bad bank") economically or above all politically". A bad bank would need to be financed with 150 billion to 200 billion euros of taxpayer funds, he said. "How am I supposed to present that to parliament? People would say we are crazy." Steinbrueck said no one could predict whether the rescue fund would need to be expanded given mounting losses at banks, but noted it still had room to distribute more money./blockquotebr /br /And one last example for today, of how the one half (the Commission) doesn't know what the other half (the Nation State leaders) is up to. Joaquin Almunia (who is so often "really out to lunch" on economic issues, he is, as they say "challenged" by the complexity of macro economics, a href="http://spaineconomy.blogspot.com/2009/01/putting-out-fires-during-noahs-flood-or.html"see for example this post here/a) a href="http://www.google.com/hostednews/afp/article/ALeqM5gw7OfGCOm9dMlvHBQ54LRkjhFWew"has warned/a that Brussels could take action soon against EU member states which let their budget deficits rise above the 3% threshold (see a href="http://fistfulofeuros.net/afoe/economics-and-demography/a-year-is-a-long-time-in-economic-forecasting/"P O'Neill post here/a).br /br /blockquoteThe EU's executive arm plans Wednesday to examine the budgetary circumstances of several countries, including France, Germany, Greece, Ireland, Malta, the Netherlands and Spain, to see whether action is needed. Most of them, notably France, Greece and Spain, have already forecast that their deficits will blow out beyond three percent of gross domestic product (GDP) -- the limit set out in the EU's Stability and Growth Pact.br /br /France, which has called for the EU limit to be eased as governments grapple with the worst economic downturn in decades, has said it expects its deficit to be 3.2 percent GDP in 2008 and 4.4 percent in 2009. Ireland's deficit is expected to blow out to 5.5 percent in 2008, and then 6.5 percent in 2009, with Dublin hoping to bring things back into line in 2011. Spanish authorities expect a deficit of 5.8 percent this year. Germany, Europe's biggest economy, has forecast three percent this year but believes the figure could grow to more than four percent in 2010. Greece, for its part, foresees a deficit of 3.7 percent in 2009. The Netherlands is due to publish its latest figures Tuesday and might just scrape through. /blockquotebr /br /Given the difficult, and unforseen, pressure we are all up against, this is, quite frankly ridiculous. Not that rising fiscal deficits, and rising debt to GDP ratios, are something we should be casual about, but I think what we need is a certain loosening of the rules in the short term, to be followed by a much stricter tightening as we move forward. And do you know the mechanism I would use to discipline the reluctant states when it comes to paying off the accounts run up during the emergency? Why yes, you've got it, the availability of those much-easier-to-finance EU backed bonds.br /br /You see while the first argument in favour of EU bonds may be an entirely pragmatic one, namely that it doesn't make sense for subsidiary components of EU Inc. to be paying more to borrow their money when the credit guarantee of the parent entity can get it for them far cheaper, the longer term argument in favour is that it may well enable the EU Commission to become something it has long dreamed of becoming - an internal credit rating agency for EU national debt. Basically in the mid term the EU bonds system can only work if it is backed by a very strong Lisbon type reform pact for those countries who apply to make use of the facility. This is what now needs to be worked on. And how do we know that that there won't be yet another round of backsliding on all this? Well we don't, this is the risk we just have to take, but sometimes you do need to simply cross your fingers and jump, since the burning building behind you looks none to attractive either, but what we do know is that since there will now be a mechanism whereby the bad behaviour of the few really can penalise the many financially, then there really will be some meaningful incentive to generate a pact, this time, that really has teeth to stop that penalisation taking place.

Vladimir Putin: be Björn Again

Jason Corcoran — Mon, 16 Feb 2009 14:32:00 +0000

span style="font-weight:bold;"The Guardian - Comment is free/spanbr /br /br /span style="font-style:italic;"The Russian PM should embrace his Abba-loving side – in a global downturn, his country needs all the kitsch it can handlebr /Comments (67)/spanbr /br /span style="font-weight:bold;"By Jason Corcoran /spanbr /br /Claims that Vladimir Putin is a secret Dancing Queen are causing a sensation in Moscow.br /br /The prime minister's press office has denied that the judo-loving, tiger-hunting all-action hero is a closet Abba fan, following a private concert given by the tribute band Björn Again. Putin's personal spokesman Dmitry Peskov also took the unusual step of writing to the Times to reiterate the point.br /br /But the Kremlin has been far too hasty in trying to suppress this story. Russians would warmly embrace their leader's softer musical side in a crucial year, as the capital prepares to host the ultimate celebration of kitsch for the very first time.br /br /Russia and the Slavic nations take Eurovision very seriously and are tremendously proud of Dima Bilan's achievement in winning last year in Belgrade.br /br /Bilan, a heartthrob throughout Russia and the Commonwealth of Independent States (CIS), won following an audacious performance that was accompanied by Olympic figure-skating champion Eugeni Pluschenko who skated during the performance, and violinist Edvin Marton playing a rare 1697 Stradivarius, once used by Paganini.br /br /Sporting and cultural achievements, much more than peak oil prices and military incursions, have restored Russians' pride in their country.br /br /The unprecedented outpouring in June last year of an estimated 700,000 football fans onto the streets of Moscow, following Russia's trouncing of the Netherlands indicates how much they care about national triumph through sport.br /br /Russians deeply appreciate classical and popular music in its different forms. Glamour and showbiz are exalted and Moscovites will embrace Eurovision for all its tackiness and absurdity.br /br /With global prices of oil, Russia's chief export, now dropping, there's less money swishing about to lavish on recreation and sport.br /br /Uefa Cup champions Zenit St Petersburg, sponsored by energy giant Gazprom, recently sold Russia's star Andrei Arshavin to London's Arsenal.br /br /Other domestic clubs are feeling the pinch with Moscow's Khimki having to merge with FC Saturn to save costs. The national football team's manager, Guus Hiddink, was this week been hired as the Chelsea's latest manager, following reports he hasn't been paid by Russia for two months.br /br /Staples of Moscow's cultural life such as attending the ballet, the theatre or musical performances are becoming more inaccessible, with inflation remaining defiantly high and job losses spreading across the economy.br /br /By May, social morale in the country might need a shot-in-the-arm.br /br /The UK has the theatrical impresario and composer Andrew Lloyd Webber as its main cheerleader and Russia needs its own Super Trouper so it can retain its crown in May.br /br /Putin's protege, President Dmitry Medvedev, has made no secret of his affinity for British heavy rockers Black Sabbath and Deep Purple. Medvedev publicly attended the latter's concert last year and posed for thumbs-up photos with the band afterwards.br /br /Putin, a former KGB officer, might be best advised to shed his macho image and show a fluffier, feathered-boad element to his steely facade. If the Russian rouble carries on sliding and commodity prices continue to languish, Putin could be forgiven for sending out a SOS.br /br /The Eurovision in May could prove to be the Russian premier's Waterloo if discontent about the economy dents his undeniable popularity. Mamma Mia, I think Putin should unleash his inner Abba.br /br /http://www.guardian.co.uk/commentisfree/2009/feb/13/russia-vladimir-putin

Aegon a Buy on Valuation – Analyst Blog

Zacks Market Commentaries — Fri, 23 Jan 2009 11:32:54 +0000

Aegon N.V. (AEG) provides a multitude of insurance and pension-based saving and investment solutions. It is one of the world's ten largest life insurance companies ranked by assets, profits and market capitalization. Insurance services include personal and commercial life, health and accident insurance.

We are maintaining our Buy recommendation on Aegon after its third quarter results. While the current environment will be challenging for investment portfolios, we think that, at its current multiple, the stock is at a significant discount to its peers. Our six-month target price is $7.00.

The company has also further strengthened its distribution channel in Spain and is entering new growth areas such as Mexico, India and China. The company's capital position has been strengthened by the Netherlands government's recent capital injection.

Read the full analyst report on AEG

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

Stock of the Day: AerCap Holdings (NYSE: AER)

Investment U — Mon, 19 Jan 2009 20:00:37 +0000

Stock of the Day: AerCap Holdings (NYSE: AER) This Small Cap is Quickly Gaining Altitude… by Robert Williams, Associate Investment Strategist, The White Cap Report A small-cap aviation company, based in The Netherlands, is gaining traction in a difficult investment environment. The company - AerCap Holdings (NYSE: AER) - is a global player in the aircraft engine leasing industry. [...]

ASML Posts $116 Million Q4 Loss

Daniel Shepard — Thu, 15 Jan 2009 07:34:40 +0000

Thursday January 15, 2009 Navivest ASML Holdings N.V., (ASML) the Netherlands based largest manufacturer of lithography systems that are used for the production of integrated circuits or chips, today announced its 2008 fourth quarter and full year results. For the Q4 period, the company reported net sales of EUR 494 million versus the EUR 955 million in the [...]

Why Corporate Bonds Could Be The New ‘Safe Haven’ In 2009

Eric Roseman — Mon, 29 Dec 2008 11:47:24 +0000

pGiven the implicit government guarantees, strongEric Roseman/strong says it is likely that investors will soon start to switch from low-yielding Treasury bonds to high-grade corporate debt. The Fed#8217;s balance sheet is now polluted by the toxic debt it has taken on from banks. And demand for Treasuries will not keep pace with the deluge of supply in the coming year. Eric says this could make investment grade corporate debt the new safe haven in bonds in 2009./p pThis from a href="http://www.SovereignSociety.com" class="alinks_links"Sovereign Society/a:/p blockquotepSeveral segments of the credit markets have come back to life in December after crushing losses recorded in September and October. Though it’s too early to celebrate a broad-based credit revival, the largest issuers of investment grade debt surged this month as#8230;/p/blockquote

Looking to 2009 after 2008: Fear but Much Promise

Jonathan O'Shaughnessy — Tue, 23 Dec 2008 22:53:36 +0000

As one of the most shocking and dismal economic years of our time comes to a close, it deserves a moment to take a look at the vast shifts which have transpired. Major banking giants which have fallen, stock markets have plummeted, and a whole host of issues have reared their head for the [...]

So Just When Does Spain’s Twin Deficit Problem Become Unsustainable?

Edward Hugh — Thu, 11 Dec 2008 17:00:00 +0000

by Edward Hugh: Barcelonabr /br /br /This, it seems, is the question of the day. a href="http://www.imf.org/external/np/ms/2008/120908.htm"According to the IMF/a Spain’s economy faces a contraction of at least one percent next year. And the IMF stress that the risks to this forecast “remain on the downside” since the country’s real-estate market is “in full correction,”. Also, horror of horrors (and we will return to this). The government’s budget deficit will exceed five percent of gross domestic product next year, the Fund forecast.br /br /While the IMF seem to be more aware of the scale of the problem than the Spanish government currently are, they do seem to be putting all of the emphasis for recovery on some much needed labour market reforms, but personally I don't think even these are playing in the right ball park, we need a big picture "breakout" escape plan, to cut loose from the pincers of cash drought, corporate bankruptcy, construction dependency, large scale contraction and price deflation. It's a big mess, and will need an equally bold and ambitious plan to get to grips with it.br /br /One point which is obvious at this stage is that Spanish government forecasting - which has currently built a 1% expansion into the 2009 budget - is getting ever more out of line with the economic dynamic. Really this is the first thing which has to change. Spain urgently needs someone leading the country who is able to turn the page, put some realistic numbers on the table, and try to work to meet objectives, instead of simply failing to achieve them time after time. What do I mean by this, well, if you seriously think that the contraction next year will be of 2% of GDP then it is better to say 3%, and beat your target, than say its going to be 1% growth and come in with a 2% contraction. Not only will your citizens be getting more and more fed up with all of this (and the impact on morale should not be treated lightly) but much more to the point, since Spain is heavily dependent on foreign finance to buy the debt that the government is going to need to issue (see more below) to finance the fiscal deficit, then each and every failure to achieve target is likely to be punished with a higher cost of financing debt (as the yield spread on the risk rises). So as well as the credibility cost, this kind of playing fast and loose with the forecast is now likely to carry a real financial cost.br /br /Of course, in true wooden-bureaucrat style (where are we here, back in the old USSR?) a spokeswoman who declined to be named in line with ministry policy informed Bloomberg that while the Finance Ministry shares the IMF’s analysis of the economic situation, it doesn’t back the specific IMF forecasts on growth and the budget deficit. Obviously the spokeswoman not only decline to be named, she also declined to enter the Byzantine discussion of how it is possible to share the analysis without sharing the conclusions. On the other hand the man who is hotly rumoured to be pencilled in as Pedro Solbes successor in the next facelift - Economy Secretary David Vegara - was rather more elegant when questioned about the estimate by reporters "To me it's reasonable, I always think the IMF and OECD do their work with first class technical groups,". Exactly, although of course, in the forecasting game even the best of technical teams can get it wrong, which is what the IMF allow for when they talk about "downside risk".br /br /Vergara was a href="http://www.reuters.com/article/GCA-CreditCrisis/idUSTRE4B92HR20081210"also of interest yesterday/a insofar as he specifically denied that Spain faced a deflation problem, although he did admit that inflation was likely to reach a very low level. I think, yet one more time, this is "ostrichism" (avestruzeria), since the drop in prices is now so evident, and the contraction in Spain is going to be so sharp, that Spain has to be the one developed economy where price deflation is now a near certainty, and you can quote me on that. As I go to my local bar for the morning coffee, I always take a look to see whether the 1.15 euros they currently charge for a cafe con leche has been brought down to 1.10 euros. Not yet of course, but when will that happen? In March? In June? I bet it happens before August next year (and I will report). And when it goes down to 1.10 euros, the next move will be 1.05 euros, and so on..... depending on just how long the deflation continues.br /br /strongSo Just How Much Will The Spanish Economy Contract In 2009?/strongbr /br /Well, I think this is a very hard question to answer. I think a 1% contraction is a done deal, and my own previous best guess was in the 3% to 5% contraction range, which is, of course, very strong indeed. And there I was happy to leave it, until that is Deutsche Bank came out with their latest 2009 forecast for the German economy, where chief economist Norbert Walter has said that Germany's gross domestic product could contract by as much as 4 percent next year. This has to be "bottom of the range" estimate, but then, it might happen, I mean these are not just numbers spun out of thin air, they are backed by analysis, German manufacturing is contracting very rapidly at the moment (but not as rapidly as Spanish manufacturing). The German government itself is forecasting a 1% contraction, and the IFO institute came out today with 2% contraction for 2009 estimate (the median forecast?). At this point I won't go so far as to modify my original forecast for Spain, but what I will say is that if German GDP contracts by 4% in 2009, then Spain's will contract in the 5% to 7% range, since on every important reading Spain is contracting more rapidly than Germany at this point, and there really is no bottom in sight, just what appears to be a "black hole", sucking us down.br /br /strongBut what About The Sovereign Debt? What Is Going On With All That Government Spending?/strongbr /br /This I think is the big point.br /br /At the risk of boring to tears all my regular readers I would first like to stress that what we have in Spain is not a simple garden-variety housing correction. Spain is a country which was allowed across the 2000-2007 period to develop massive macroeconomic imbalances, which to some extent were reflected in a huge housing boom. But the imbalances (current account deficit of 10% of GDP, massive migrant flows - 5 million people in 8 years, rapidly rising household and corporate debt - rising at 20% pa, and reaching around 90% and 120% of GDP in 2008 respectively) and not the housing are the key to the problem. Thus Spain's economy is not reeling under the weight of the unwinding of the property boom, but rather Spain's property boom is reeling under the impact of the unwinding of the macro imbalances, and this unwinding became more or less inevitable once the US sub prime crisis broke out in August 2007. I think it is no accident that the two countries who noticed most the shell shock from the sub prime turmoil were Spain and Kazakhstan, since these two countries were the most dependent on selling some type of paper or other in the wholsale money markets to finance their imbalances, and the doors to these markets effectively closed in September 2007.br /br /So what we need to think about is the impact Spain's financial system problem is having (due to difficulties in financing the current account deficit) on the housing bubble and the construction industry, since this I think is the way the causal arrow works in this case, and not the other way round. And it has been the failure to appreciate this causal chain, in my opinion, that has lead so many people to have had so much difficulty understanding the extent of the problem we have here in Spain.br /br /Basically the housing boom had masked the enormous problem Spain had acculumlated in terms of its current account deficit, for the simple reason the funds which were happily flowing in to fuel the boom meant the books balanced easily enough each and every month. But once people became just a little bit nervous about what was happening to that boom, and how sustainable it was, the flow of funds suddenly dried up, just like that, in September 2007, and the size of the hole in the flagship side suddenly became apparent. Since that time the bilge pumps have been busily trying to drain all the water which has been flowing in, but alas without notable success.br /br /When I say the bilge pumps have been working, I am talking about attempts by the ECB and others to provide liquidity to the Spanish banking system, but if we look at what has been happening to lending in Spain in recent months, we will see that this particular cocktail still isn't managing to reach the parts "the other beers cannot reach". Below we have a chart (based on Bank of Spain data) which shows net additional lending to households on a monthly basis.br /br /br /br /pa href="http://4.bp.blogspot.com/_ngczZkrw340/SUE0FDUcT9I/AAAAAAAALuc/c434xdj5rCo/s1600-h/spain+household+lending.png"img id="BLOGGER_PHOTO_ID_5278557499649970130" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 198px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SUE0FDUcT9I/AAAAAAAALuc/c434xdj5rCo/s320/spain+household+lending.png" border="0" //a What is clear from a quick glance is that lending since June has been virtually stationary, which means basically new funding is being provided for mortgages only at the same rate as old ones are paid up. This effectively means that if something can't be paid for in cash or with a credit card, then it really isn't being sold, and every time less so. To get things in perspective, new lending to households was running at the rate of about 10 billion euros a month up to the summer of 2007. It also means that a business sector which had become accustomed to having new business at the rate of 10 billion euros a month has no found itself with virtually nothing (as I say, simply the business you can do on the basis of recycling the old credits which are being paid off)./ppBut there is new money every month, the CA deficit (which is reducing) is being squared, so where is the new money going. Well that's easy isn't it, it's going to the government to finance the growing deficit, and to Spain's corporates, who need to keep refinancing all that debt, debt which is only mounting, of course, because no one has money to buy the products they want to buy... and why, you may ask, don't they have money? Because the money needs to go to keep the companies afloat, or to fund government rescue plans, to help the firms (possibly via the banks) who can't sell becuse the customers don't have money to buy. Oh, I see./ppOf course the solution to this macarbre vicious circle is not to lend the money to the customers who are in any event far to deep in debt, but to reduce the current account deficit which lies at the heart of the problem, possibly by encouraging some people abroad to borrow a bit more money, and then selling them something they need, at a price they may be interested in. It's called "export". /ppIn fact Spanish corporates received a net 19 billion in additional lending over the three month July-September (while households received a net 800 million) but as we can see, all this extra debt isn't moving us forwards very fast, and indeed we are actually going backwards.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SUE4mZk7-DI/AAAAAAAALuk/kku3qwWxSsg/s1600-h/spain+ca+deficit.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 176px;" src="http://4.bp.blogspot.com/_ngczZkrw340/SUE4mZk7-DI/AAAAAAAALuk/kku3qwWxSsg/s320/spain+ca+deficit.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5278562470606927922" //abr /br /As I say, Spain's big problem is the current account deficit, which reached 10% of GDP last year (see chart above). At the present time this deficit is dropping slightly as imports collapse, but it is not falling as fast as it should be, and meantime, as I am saying, the Spanish government is raising its borrowing needs. Spain has movied in 2008 from having a 2% of GDP surplus in January to a 3% deficit in December (ie a shift of 5% of GDP), in 2009 we will move up to at least 5% (as the IMF suggest, and we could even move higher depending on what happens to GDP).br /br /blockquoteThe fiscal response has been swift and large. The government has taken 4 percent of GDP in structural measures for 2008-09 to assist the economy-bigger than many EU partners and ahead in timing. Together with automatic stabilizers, this results in deficits of 3 percent of GDP in 2008 and over 5 percent in 2009-a swing of more than 7 percent of GDP in the headline balance (compared with an end-November 2008 estimate of 1¾ percent for the euro area as a whole). While the mission notes the focus in the 2009 package on spending for labor-intensive local public works, the authorities need to ensure that this is channeled to its most productive use. The mission sees this fiscal effort (with built-in unwinding as the exit strategy) as temporarily boosting demand.br /IMF Article IV Consultation: December 2008/blockquotebr /br /So in 2010 we could find ourselves with a CA deficit of around 8% of GDP and a government fiscal deficit rising up into the 5% to 7% region. If this does prove to be the case, then I think the financial markets are absolutely going to see red (there are already problems with the eurozone sovereign 10 year bond spreads, see the charts below - click on the image to see it better) and Spain could find itself just where Hungary was in 2006.br /br //pa href="http://1.bp.blogspot.com/_ngczZkrw340/SUEsR712NQI/AAAAAAAALuU/VGFiqyCyzBw/s1600-h/bond+spreads+2.png"img id="BLOGGER_PHOTO_ID_5278548924887872770" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 170px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SUEsR712NQI/AAAAAAAALuU/VGFiqyCyzBw/s320/bond+spreads+2.png" border="0" //abr /br /br /As ECB Council Member Jürgen Stark said a href="http://online.wsj.com/article/SB122886118428192663.html"in an article in yesterday's Wall Street Journal/a, the environment for conducting economic policies, and in particular monetary and fiscal policies, has now become extremely "challenging". One part of this challenge is going to be the funding of all the extra borrowing that euro-area governments will need to do to make good on all their promised support for the banking system, most notably the funds for recapitalization and guarantees for interbank loans. Stark estimate that to date, the envelope of funds for possible recapitalizations and guarantees amounts to some €2 trillion, or roughly 20% of euro-area GDP. This is a very large number.br /br /br /As Stark also notes many euro-area governments failed to use the past boom times to consolidate their public finances (although this was not especially the Spanish case). As a consequence, many euro zone governments are now entering the current downturn with high deficit and debt ratios. Given the weak growth ahead and the costs of the bank bailouts, these ratios are inevitably set to rise. Stark estimates that in a year's time the deficits in many euro-area countries will be between 5% and 7%, up from around 3% now, while public debt may rise by 10 to 20 percentage points. Again these numbers are very large, and financing them is going to be, as Stark would say "challenging".br /br /As can be seen from the chart above, interest-rate spreads for government bonds are already high (and rising) in a number euro-area countries, and I would draw special attention here to the cases of Greece and Italy, since they have been constantly warned about the danger of this kind of development. And governments are having growing difficulty selling paper, as both the Netherlands and Austria found out this week. The Dutch government failed to raise as much as it had targeted for three bonds - maturing over five, six and seven years, respectively - while the Austrian government saw one of the weakest auctions in years for 12-year paper. These difficulties highlight the potential problems that may be faced with the vast pipeline of government and government-backed debt following the announcements of big fiscal packages to stimulate economies and bail out banks.br /br /And analysts are warning that while the problem isn't a big one right now, these early signs of stress, following so closely on the back of the announcement of big fiscal stimulus programmes, are a clear warning of potential problems next year when record volumes of debt are due to be issued. More than $1,000bn of government debt is expected to be raised in Europe in 2009, while close to $2,000bn is forecast in the US.br /br /The Austrian government found itself forced to pay 13 basis points more than comparable 12-year bonds for its €1.1bn issue, while the Dutch government only managed to raise a total of €2.46bn for the three bonds being sold after indicating that it wanted between €2.5bn and €3.5bn. Since the Netherlands is normally considered one of the strongest and safest of credits,then frankly this does not augur well.br /br /The thing is, Spain's downturn is now pushing the country's former fiscal rectitude into the distant past of historical memory. Worse, the debt is being levered up, not to buy a piece of the future for a country in the process of a thoroughgoing renewal, but rather to keep one group of already moribund and walking dead corporates alive, just as long as it remains possible to keep selling Spanish Sovereign debt at prices which don't swallow up most government revenue simply paying off the debt. But as those spreads move skywards that point will be reached, most probably in 2011. By which time Spain will be perfectly poised for one of those classic twin deficit national-bankruptcy scenarious financial crisis theorists like to write so much about. br /br /blockquoteShort-run fiscal policies need to be embedded in a long-run context to explain how the debt can be lowered once the economy stabilizes. Public debt, while still manageable, is poised to jump. To boost confidence in light of high aging costs, the authorities should present a plan how to lower the debt again once activity stabilizes, including with pension reform. The mission encourages the authorities to develop an intertemporal public sector balance sheet for publication in the annual budget. It would show the debt already incurred, and also the present value of the projected stream of future deficits (a forward-looking debt) under unchanged policies. This provides perspective on long-run fiscal sustainability.br /IMF Article IV Consultation: December 2008/blockquotebr /br /Keynes once recommended paying people to dig holes in the ground and fill them in again rather than leaving them languishing on the dole. The Spanish government seem to have gone one stage further, they are only paying us to dig the hole, there is no plan to fill it in again, unless that is they have a prepaid contract with Komatsu or Caterpillar to come over (in the eventuality this is needed, which it will be) with some earth moving equipment, and shove the soil back in to bury the lot of us.

NuStar a Brightly Shining MLP – Analyst Blog

Zacks Market Commentaries — Thu, 04 Dec 2008 15:28:59 +0000

San Antonio, Texas-based NuStar Energy, L.P. (NS) is a master limited partnership (MLP) that engages in the transportation and storage of crude oil as well as refined products in the U.S., the Netherlands Antilles, Canada, Mexico, the Netherlands, and the U.K.

The continued downward pressure on MLP units is primarily due to concerns about liquidity, since most of the long-haul pipeline operators have limited, if any, commodity-price exposure. Our preferred MLPs (which includes NS) generate stable cash flows, are investment-grade credits and provide for distribution growth.

NuStar's current quarterly distribution of $1.0575 per unit (annualized run rate of $4.23 per unit) represents an attractive yield of 11.07%. We believe that the partnership can easily maintain distribution growth in the 6%-7% range over the next few years. With an above peer-group average distribution coverage level and a GP IDR cap of 25%, NuStar's distribution growth prospects remain very attractive.

Read the full analyst report on NS

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

Recession Dating: Some People Are Going to Be Surprised

Menzie Chinn — Tue, 02 Dec 2008 05:27:51 +0000

The typical Econbrowser reader might not be surprised at the NBER decision -- but some others will. From a May 2008 WSJ article:

"The data are pretty clear that we are not in a recession," Council of Economic Advisers Chairman Edward Lazear told a meeting of editors and reporters from the Wall Street Journal and Dow Jones Newswires.
...

"I would be very surprised if the NBER, looking back at this period, would date this as a recession," Mr. Lazear said. There are even indications that revised first-quarter estimates would be slightly stronger than 0.6%. "The optimists seem to have been closer to right on that than the pessimists," he said.

Just to reiterate, that quote is from May 2008.

Here's a picture of GDP and gross domestic income (as suggested by Jim in this post, and noted in the BCDC announcement).

Figure 1: Gross domestic product (blue), and gross domestic income (red), in Ch.2000$, SAAR. NBER defined recession shaded gray, and NBER dashed line at NBER peak. Source: BEA GDP release of 25 November 2008, and NBER.

I thought at the time Ed Lazear would regret those remarks. But Lazear's views were not unique. Here are some additional quotes of interest, hoisted from the comments sections in Econbrowser:

From March 2008, in response to my worries about 2008H2 growth:

While the financial market turmoil and dysfunctional credit markets are significant wild cards, interest rates are so low (and could be 2.25% this week!) that you have to think that growth later this year and into '09 should be positive, if not strong.

Yet another:

The Macroeconomic Advisers monthly real GDP index rose to a record high in December. It fell in October but rebounded in November and December.
Preliminary indicators suggest it rose again in January.
I get a sense that some academic economists are actually rooting for a recession, a way of punishing the country for having elected Bush.
...

In other words, looking at data too close to the candidate turning point can easily lead to subsequently embarrassing remarks. Nonetheless, the specific dating of the recession to December 2007 has spurred lots of queries about whether it matters, when (i) the recession is so much in evidence, and (ii) whether any greater importance should be accorded to a declaration by the NBER as opposed to any other group or individuals. Here are some thoughts on both questions, augmented with some retrospective views.

First, to the question of whether it matters that there's a declaration. Here, I turn to Jeffrey Frankel, who is on the NBER BCDC, but is speaking on his own behalf:

We sometimes hear the question "Who needs the NBER Committee anyway?" This question most often comes in one of two forms:
(a) Everyone in the real world has known that the economy has been in a recession for some time. In past cycles, media reports have sometimes taken the line "Ivy Tower Eggheads Finally Figure Out What Everybody Else Has Known All Along." The implicit critique is that the committee takes too long after the event -- typically almost a year -- to make its declaration. One short answer is that our job is to be definitive, authoritative, but not fast. We don’t want to have to revise our dating of the peaks and troughs later, in part because it would sow confusion among those who rely on them (from econometric researchers to political speechwriters). GDP and other official statistics are often revised after the fact, for example. We leave it to others -- pundits, forecasters, consulting companies, financial newsletters, and so on -- to try to get there first. We deliberately get there last.
(b) The other form taken by the question "Who needs the NBER committee?" runs as follows: "The rule of thumb is simple: two consecutive negative quarters of GDP growth. Why complicate things?" The Frequently Asked Questions segment of the BCDC announcement answers this in detail. For now, observe simply that questions (a) and (b) are inconsistent with each other. As of December 1, 2008, the US economy has not yet experienced two consecutive negative quarters. So an argument that we should wait for two consecutive quarters (critique b) is the opposite of the critique that we should have acknowledged a recession before now (critique a).

Taking Frankel's points into account, we can then move to the second question, whether it matters that NBER BCDC makes the determination. Think back to the two-quarter rule of thumb. Why is it a "rule of thumb"? Because the data are revised over time -- most importantly GDP -- the two quarter (sometimes defined as a "technical recession") is heavily reliant upon the series that is most subject to revision. I've discussed the importance of revisions numerous times in this context: [1], [2], [3], [4], [5].

Another motivation is to recall that the NBER is a research group, and not a policy group, trying to identify for historical purposes the ebb and flow of activity. In any case, we want to place the responsibility for identifying peaks and troughs in economic activity in the hands of a disinterested group, and not in -- say -- the government. (I'll add that it's an auspicious group: "Robert Hall, Stanford University (chair); Martin Feldstein, Harvard University and NBER President Emeritus; Jeffrey Frankel, Harvard University; Robert Gordon, Northwestern University; James Poterba, MIT and NBER President; David Romer, University of California, Berkeley; and Victor Zarnowitz, the Conference Board. Christina Romer of the University of California, Berkeley, resigned from the committee on November 25, 2008, and did not participate in its deliberations of November 28.")

(For those wondering why NBER gets to declare the recession dates, one hint is that it was NBER researchers Burns and Mitchell (1946) who developed the lens through which "cycles" experienced in industrial economies were perceived. For the inquisitive, here is a link to the volume which summarized that research: Burns, Arthur F. and Wesley C. Mitchell, Measuring Business Cycles (NBER, 1946).)

This is why I think so much of the commentary, saying that this was all obvious, not only demonstrates a distressing level of ignorance, but also a juvenile approach to discourse (see e.g., here). Yes, it was pretty obvious that we were in a recession, but when it began is something that could have been placed at any number of dates. We will have a similar debate when we starting thinking about dating the trough.

I think it's also of interest to look back at whether we should be so surprised. I'll focus on the debate that occupied our attention months ago: whether the yield spread had predictive power for future economic activity. Well, now we can conclude the answer was yes. The inversion in August 2006 predates the recession's beginning by about 16 months.

Now, what we don't know is how well the prediction holds cross-country. This graph from a March 2007 post suggests it will work for Europe (we'll have to see what CEPR says, although current forecasts seem pretty definitive).

Figure 2: Ten year - three month term premium, daily averages. For US (blue), ten year rate is constant maturity, three month rate is for T-bills in secondary market; for Euro area (red), the ten year rate is the GDP-weighted rate of on-the-run benchmark bond yield, three month rate is for interbank money rate; for Germany (green), the short rate is the daily interbank rate. NBER recession dates shaded gray, CEPR recession dates (converted from quarterly dates) shaded light blue. Squares are data for March 9 (where Euro ten year rate proxied by arithmetic average of benchmark bid yields for Germany, France, Italy, Netherlands and Spain). Sources: St. Louis Fed FREDII; IMF, International Financial Statistics; Financial Times; NBER; CEPR; and author's calculations.

Here's a cross-country snapshot from an October 2007 post.

Figure 3: Ten year benchmark bond yield minus three month yield spreads, from Economist, Oct. 12, 2007 and Oct. 11, 2006 issues, and author's calculations.

Australia and the UK seemed to be conforming to the prediction from the yield curve. Canada so far has failed to experience negative growth, and so might be thought to also conform to the prediction of yield curve -- at least so far.

Technorati Tags: yield spread, GDP, gross domestic income, recession, term premium, data revisions, NBER, and Business Cycle Dating Committee.

Iceland Gets $11 Billion Bailout

Contrarian Profits — Fri, 21 Nov 2008 12:36:19 +0000

Iceland today (Thursday) secured nearly $11 billion in loans from the International Monetary Fund (IMF) and other nations. The bailout will help the island nation stabilize its currency and recapitalize its banks, but it will also saddle its tiny population with a huge debt burden.

The IMF will lend Iceland $2.1 billion, and Finland, Sweden, Norway and Denmark will loan $2.5 billion to help the country re-float its currency and shore up its banking sector.

The Icelandic krona, or crown, has lost about 70% of its value since the nation’s financial crisis first began. The government put restrictions on currency trade as it wrestled with the crisis, however one of the stipulations of the IMF loan is that Reykjavik once again float…

Groping Through the Murk and Risk

Sean Brodrick — Tue, 18 Nov 2008 11:48:22 +0000

The US is probably going to join the rest of the industrialized world in recession and all the bad news probably isn’t priced in yet. However, it would not be surprising to see a rally soon.

We’re approaching Thanksgiving. In 13 of the last 15 years the Dow has been up the week before Thanksgiving. Combined with the light volume around the Thanksgiving holiday – there’s an old saying on the Street, “never short a dull market” – we could see a powerful move to the upside before the Dow, the S&P 500 and the Nasdaq finally hold hands and jump off the next cliff.

And then there are commodities. Crude oil fell to the lowest closing price since January 2007 as Japan entered a recession for the first time since 2001. Meanwhile, China National Petroleum, that country’s largest petroleum producer, said demand has dropped “sharply.''

The collapse in crude and other commodities was accompanied by a rip-roaring rally in the U.S. dollar. But now here’s an interesting thing. The U.S. dollar has not been able to capitalize on its recent breakout – stalling at overhead resistance – and yet commodities continue to go lower. This shows that commodities are weak all on their own – they can’t blame all their troubles on the greenback.

The fact that the dollar broke out to the upside and is now consolidating those gains rather than taking off is perplexing, considering the bad news pouring in about other economies. There was bad news for the U.S.yesterday beyond the massive layoffs by Citigroup. The New York Federal Reserve Bank's Empire State Manufacturing Index fell 0.8 points to -25.43. That's the third consecutive month in negative territory and a record low in the seven-year history of the survey.

But bad economic news hasn’t dragged on the U.S. dollar previously, because the news from other economies is so much worse. Like I said, it’s puzzling. Well, if this were easy, everyone would be millionaires. Instead, we grope through a market that is murky with risk.

Here are some stories that I find interesting ...

Why the Energy Crisis Will Oulast the Credit Crisis
The International Energy Agency's annual World Energy Outlook, released on Wednesday, predicts that oil prices will start a steep climb soon, and by 2030 will settle around $120 a barrel — more than double this week's price — as producers face rocketing costs of equipment such as drills and rigs, and are forced into the increasingly expensive business of extracting oil from less accessible fields, many of them far out at sea. Added to that, the world economy continues to grow — albeit at a slower rate — which will likely accelerate again at some point in the coming years — prompting billions more people to drive cars and burn electricity at home during the next two decades.

Big Oil: We told you so
With prices sharply lower from the summer's highs, Big Oil's decision to hold off on new production now seems rather wise.

S&P Notes Surge In Defaults
A total of 85 companies defaulted on bond debt worth $284 billion through Nov. 11, according to Standard&Poor’s, which estimates that the default rate could increase to as much as 9.6% by October of 2009. The rise in defaults contrasts with last year, in which 22 companies defaulted, and 2006, in which there were 30 defaults.

The Six Unknowns That Are Roiling the Stock Market BusinessWeek asked stock market experts to identify the biggest unknowns facing investors. These factors will be crucial to clearing up a foggy outlook. Unfortunately, it could take months—if not years—to resolve them.

Nyrstar to Cut Zinc Output 28% at Belgian, Dutch Smelters to Conserve Cash Nyrstar NV, the world's largest zinc producer, will slash output of the metal at smelters in Belgium and the Netherlands by 28 percent and may extend cuts next year to reduce costs and debt.

China May Need to Offer Grain Export Rebates to Ease Glut, Researcher Says China may need to introduce rebates to boost grain shipments and ease a glut of wheat, rice and corn as a cut in export taxes announced last week won't be sufficient to have an impact, a commodity researcher said.

Elephant Talk (ETAK.OB) Starts Operations in Netherlands Using T-Mobile Antenna Network

QualityStocks — Mon, 10 Nov 2008 12:52:53 +0000

Elephant Talk seeks to become a supplier of choice for Business-to-Business telecommunications and content services. By combining fixed line and wireless access services through contractual arrangements with an unrestricted number of first/last mile telecom providers, Elephant Talk is able to offer innovative Mobile, Content, VoIP and Media Streaming as well as more traditional telecom services [...]

M3 Money Supply Chart, Baltic Dry Index Chart

Alex Stanczyk — Sat, 08 Nov 2008 14:11:32 +0000

M3 Money Supply Chart M3 Money supply represents the amount of money added to the money supply. The Federal Reserve stopped reporting this (gee I wonder why) but it is still tracked by private firms. I have watched this closely over the last few months, as I wanted to see if we were going to see a [...]

Strong Earnings Don’t Make Genesee & Wyoming (GWR) A Buy

Contrarian Profits — Fri, 07 Nov 2008 12:22:01 +0000

If you had the opportunity to visit a German city over the past decade and a half, I bet you’d have noticed it, too: The thickets of bicycles leaning, standing, interweaving in front of schools and places of business.

You’d have to look hard for a bright racing bike, or the Hummer-like overkill of the mountain bikes my boys like to ride. Most are “Holland bikes”… boring, black, unadorned tubular donkeys with wire baskets to carry a half gallon of milk, three yoghurts and some frou-frou vegetables from the supermarket to an immaculate 2-bedroom apartment with balkony overlooking the pedestrian zone and a purgatory of multi-colored garbage cans to sort wheat from chaff, paper from plastic, glass from household waste… and…

EU Confidence Levels On The Decline

Edward Hugh — Thu, 30 Oct 2008 21:01:00 +0000

European economic confidence saw its biggest ever fall in October as the global bank crisis generated the bleakest outlook since the early 1990s, according to the findings of this months European Commission economic sentiment survey. The survey results give us just one more dramatic illustration of the devastating impact the financial turmoil is having on the real economy. Pessimism has risen dramatically on all fronts - from manufacturers' expectations about exports to consumers' fears about unemployment.

These gloomy results now make it almost a certainty that the European Central Bank will cut its main interest rate by at least half a percentage point to 3.25 per cent when it meets next week.

The European Union executive's "economic sentiment" indicator for the 27-country bloc fell by 7.4 points in October to 77.5 points. The latest index reading was the lowest since 1993 and marked the largest month-on-month decline ever recorded.

Among the largest EU members, confidence deteriorated most markedly in the Netherlands followed by France, Italy, the UK and Poland.

At the same time, the increasingly-worrying outlook for previously fast-growing eastern European economies is hitting business and reducing export opportunities across the rest of the continent. Details of the latest survey showed EU manufacturer reported export order books at their thinnest since June 2005. Consumers' expectations about unemployment trends in the next 12 months were the gloomiest since March 1994.

The Future Of Portfolio Construction?

Roger Nusbaum — Wed, 29 Oct 2008 12:10:00 +0000

Well, maybe.

IndexUniverse.com had an article about Bank of NY creating a bunch of GDR indexes (similar to ADRs but traded in the UK) for quite a few countries and a couple of broad based indexes too.

The list;

Bahrain
Croatia
Egypt
Estonia
Georgia
Hungary
India
Israel
Kazakhstan
Kuwait
Lebanon
Netherlands
Nigeria
Oman
Pakistan
Poland
Romania
Russia
South Korea
Taiwan
Turkey
UAE
Ukraine
Eastern Europe
Easter Europe ex-Russia
MENA
Middle East
Africa
Emerging Markets

It is a good bet that these indexes are being created in the hope that someone will license them into some sort of investment product like an ETF.

I've long been of the opinion that portfolio construction is in the middle of a rather swift evolution and have expected/hoped that the world of investment products would generally keep up with that need. Accessing individual stocks from these countries is very difficult and even if they were easily accessible the task of stock picking would be difficult too.

Chances are that when things get healthier in Poland just owning the WIG 20, or something close, would be sufficient for a US based investor.

The gang at Fistful of Euros spell out the problems Poland might be having these days and it does not look good but Poland, or any other country in trouble, will become attractive at some point.

If the US is like Japan in anyway it could be that returns in our domestic market will be below normal (long running theme) so US based investors will have to find another solution besides 75% in domestic equities.

Perhaps the answer will have to be something like one of the do-it-yourself hedgefunds (but heed this warning from Mebane Faber) that gets written about sometimes. I've written about this before of course but some weighting to absolute (I have my favorites), a heavier weighting to TIPS products (after asset deflation ends we could be in for some nasty inflation), a little something in commodities, another little something in currencies, a small weight in maybe two countries from the above list, a small weight in a couple of bigger emerging countries and a slightly larger weight in four or five developed countries could add up to 70% of a portfolio before getting to domestic equities and maybe something to hedge a little bit of all that foreign currency exposure.

I've written a couple of hundred posts over the years about having a plan for defense having thought a bear market less severe than we've actually had was a real possibility. Now I'm writing a lot about figuring out what to do in case the US continues to offer subpar returns because I think that is a real possibility.

There have been comments left of late along the lines of the stock market not working or whatever and while I'm not here to try to talk anyone out of anything, we all need to save for our futures and do something effective with what we save. The issue seems to be that do something effective might be changing. I don't know if it is changing but it might be and I feel it is important to figure something out.

Shanghai’s Economy Grows 10.1 Per Cent

Biz China Update — Tue, 28 Oct 2008 23:05:21 +0000

The economy of Shanghai expanded 10.1 per cent from January to September 2008, the city's Mayor Han Zheng said during a press conference.

Elephant Talk Communications, Inc. (ETAK.OB) To Offer Advanced Multimedia

QualityStocks — Fri, 24 Oct 2008 18:54:49 +0000

Elephant Talk Communications, Inc. (ETAK.OB), telecommunications and content services provider, today announced plans to expand their telecommunication services offerings through the use of converged multimedia services, providing enhanced voice and video communications through mobile phone and Internet connections. The company calls it an important step in the development of converging multimedia applications. The move is [...]

Global Credit Crisis Takes a Toll on Former Titans of Banking

CEO Blogger — Fri, 24 Oct 2008 18:05:56 +0000

It takes more than a globally competitive economy to have a sound banking system. For the third straight year, the United States finds itself at the top of the Global Competitiveness Index (GCI), published by the World Economic Forum (WEF) as part of its annual Global Competitiveness Report.

“Once the global economy emerges from the current financial crisis, which it will, the countries that do well on our index are those that are best prepared to bounce back and perform well in the longer term,” Jennifer Blanke, director of the WEF’s global competitiveness network told The Financial Times.

And the United States is at the top. That’s the good news.

The bad news is that the safety of U.S. banks dropped to 40th this…

Fed Steps in with $600 Billion Plan to Bolster Money Market Funds

CEO Blogger — Wed, 22 Oct 2008 13:30:26 +0000

The U.S. Federal Reserve yesterday (Tuesday) announced a new program that will provide as much as $600 million in emergency funding to money-market funds should the ongoing global financial crisis once again cause the short-term credit markets to freeze out borrowers.

The newly created Money Market Investor Funding Facility (MMIFF) will help money market funds meet redemption needs and keep from “breaking the buck” – dropping below the normal $1 in net asset value – as The Reserve Primary Fund (RFIXX) did after the collapse of Wall Street investment-banking giant Lehman Brothers Holdings Inc. (OTC: LEHMQ). Struggling money-market funds that have seen more than $500 billion in redemptions since Lehman’s demise.

“The short-term debt markets have been under considerable strain in recent…

M3 Money Supply Chart and Gold Shortage Update

Alex Stanczyk — Wed, 15 Oct 2008 11:59:36 +0000

M3 Money through Oct. 10th is sitting at approximately $14 Trillion, and 16% year over year rate of increase. I have said this before, but if you have not figured it out yet, if money supply is expanding at 16% that means your investments MUST grow at more than 16% or you are going backwards. On [...]

Genessee & Wyoming Inc. (GWI) Announces Acquisition of Georgia Southwestern and Ohio Central Railroads

QualityStocks — Tue, 14 Oct 2008 18:15:42 +0000

Genessee & Wyoming Inc. (GWI) owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands. The company, headquartered in Greenwich, Connecticut, also owns a minority interest in a railroad in Bolivia. Operations currently include 63 railroads organized in nine regions, with more than 6,700 miles [...]

Govt to Follow Buffet’s Lead

Contrarian Profits — Tue, 14 Oct 2008 15:35:14 +0000

Good day...And what a day it was! As I stated in yesterday's Pfennig, Columbus day is just sort of a holiday for the markets. These 'semi-holidays' can create some volatile trading, as not all of the markets are open and many desks are short staffed. So with the Federal Reserve and the banking system closed, the equity markets had the largest one day gain in over seven decades.

I guess the stock jockeys figured they weren't going to get any bad news out of the credit markets, which were closed, so no news is good news!! The rally was certainly welcomed, and hopefully some of the gains will stick today as we return to a normal trading environment.

And I guess some of the credit for the stock rally has to go to finance ministers around the globe who finally agreed on a plan which seems to be able to work. The leaders of a majority of the worlds largest economies borrowed a page from Warren Buffet's playbook and decided to invest directly into some of their largest financial institutions. The Bush administration announced it would invest $125 billion in nine of the biggest US banks. The US move came after France, Germany, Spain, the Netherlands, and Austria committed $1.8 trillion to guarantee interbank loans and take equity stakes in European banks.

The investment represents a new approach for US Treasury Secretary Henry Paulson, who first promoted a bailout targeted at buying up illiquid mortgage-related assets. The government will obtain its stakes by purchasing preferred shares with warrants similar to investments that Berkshire Hathaway Inc. made recently in Goldman Sachs and General Electric. The move could be just what was needed to 'unfreeze' the credit markets and restore some liquidity in the markets.

I really think the new president should do all he can to try and convince Warren Buffet to at least take an advisory position in the new administration. Now that we have followed his lead on the $125 billion we should see what he suggests for the rest of the $700 billion 'rescue' package. Just think, with his guidance maybe the US taxpayers can come out of this whole episode with a bit of a profit!

The move got the backing of former Federal Reserve Chairman Paul Volcker who said the inevitable recession in the US would be made 'more manageable' by the new government plans to invest directly into American banks. The bailout measures were 'distasteful' and 'not consistent with a capitalistic system,' Volcker said at a lecture in Singapore today. 'But however distasteful, they are necessary to restore stability to the financial system.' But Volcker also warned that the global financial system is in 'intensive care' and will remain there for a considerable time before things return to normal.

The largest mover in the currency markets yesterday was the Australian dollar which has surged up 12% vs. the US$ since late last week; the biggest two day gain since it began trading freely in 1983. The Australian dollar gained as investor's confidence was restored and stock markets rallied. Australian Prime minister Kevin Rudd announced a A$10.4 billion spending package aimed at bolstering Australia's economy, adding to his Oct. 12 pledge to shore up the nation's banks. These moves by the Prime Minister should provide some support under the Australian dollar which had been falling fast. But the Aussie dollar will likely still be subject to some volatile swings, as investors continue to buy the Aussie dollar on carry trade investments, which have proven to be very erratic.

With investors moving back into carry trades, and some confidence returning to the equity markets, the Japanese yen fell against the higher yeilders. The yen headed for a record decline vs. the Australian dollar, but fell less against the US$. Japan's currency has become an excellent gauge of risk appetite in the markets, and the currency has risen as investors exited highly leveraged 'carry trades' over the past few months. But risk appetite has returned as we have exited the 'panic mode' and investors have started to move money back into these leveraged trades.

The Bank of Japan said it will hold an unscheduled monetary policy meeting today to discuss ways to make it easier to add funds to money markets. The bank said yesterday it's considering offering an unlimited amount of dollars to financial institutions, following a move by European counterparts to provide lenders with as much of the currency as they want to reduce short-term borrowing costs.

This recent flood of US$ into the markets has seemed to stabilize them, but what will it do to inflation in the US? One of the first lessons in Economics is that increasing money supply causes an increase in inflation. The billions or trillions (I can't keep up with all of the 'rescue' packages they keep announcing) of US$ which have been placed into the markets will eventually create a big up tick in inflation. And the huge amount of dollars which are being printed and pumped into the credit system will undoubtedly lead to an erosion of the value of the dollar. Simple supply and demand tells you that if we continue to throw unlimited supplies of US$ into the market, the value of these dollars will decrease in value.

And who is holding most of these dollars? China! China's foreign-exchange reserves rose to a world record $1.906 trillion at the end of September. Currency holdings rose 32.9% from a year earlier, the People's Bank of China said on its website yesterday. These reserves have helped to strengthen China's finances as the credit crisis threatens to trigger a global economic slump. The world's fourth biggest economy can still expand 10 percent this year and 9 percent in 2009 according to the central bank. Close to $2 trillion in foreign reserves provides China with a strong foundation and more room to adjust policies to enable it to maintain relatively fast growth. The worlds economic engine will continue to purr despite the slowdown in the US and Europe. Internal demand among these fast growing Asian economies will take the place of some of the exports which will undoubtedly slow. I look for the Chinese currency to continue to be a rock solid performer, with no big movements either way.