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Chain Bridge Investing: Financial and Stock Investing News for 11-19-09

cb — Thu, 19 Nov 2009 11:13:33 +0000

Good morning, investors and traders! You are reading the Daily Download (”Daily DL”), which includes summaries and links to the day’s selected economic and stock investing news. The Daily DL is maintained by Chain Bridge Investing, which is a financial blog at www.chainbridgeinvesting.com. Chain Bridge Investing is constantly improving and adding new financial and investing content to the website. Please let us know if you have any suggestions at the following email address: .

Today’s news tended to be either (1) very political in nature or (2) shallow in the depth of the topic. Thus resulting in a generally uninteresting day regarding market news. The main news of this morning and yesterday was the decline in housing starts, which raised more data fueled questions regarding the strength of the recovery. Some of the topics mentioned in the news not covered below are the following: (1) there is speculation that online broker TD Ameritrade Holding Corp. could be making a bid for E-Trade Financial Corp.; (2) Aetna stated that it will cut more than 1,000 jobs through this year and into the first quarter of 2010; (3) Wells Fargo has agreed to buy back $1.4 billion in auction-rate securities to settle a lawsuit; (4) Campbell Soup has decided to increase its dividend 10% to 27.5 cents per share for the second quarter; (5) the Carrier Corp. has acquired three building management control businesses from i2S Group; (6) Kenneth Griffin, founder of Citadel Investment Corp., is having trouble regaining investors trust and raising money critical to the growth and operations of Citadel; (7) hedge fund manager John Paulson has decided to start a gold themed investment fund that will invest in gold related securities with the goal of outperforming the gold commodity; (8) companies, in general, are taking advantage of the generous market climate and issuing more debt, which indicates that they believe the debt markets might become weaker in the near future; and (9) the lumber market has surged recently as (a) market participants were expecting continued growth in housing and (b) people that were shorting lumber had to cover their shorts, thus helping to further increase the price.

Upcoming Economic Data for the Day (all times EST)

8:30 AM Jobless Claims

10:00 AM Leading Indicators

10:00 AM Philadelphia Fed Survey

10:30 AM EIA Natural Gas Report

4:30 AM Fed Balance Sheet

4:30 AM Money Supply

Initial Public Offerings (”IPOs”) for the Week of November 16-20, 2009

11-17-09 Fortinet – Network security and IT security (“FTNT”)

11-18-09 HealthPort – Healthcare technology (“HPRT”)

11-19-09 7 Days Group Holdings – Company of hotel chains in China. (“SVN”)

11-19-09 Archipelago Learning – Online eduction company (“ARCL”)

11-19-09 Cloud Peak Energy – coal mining (“CLD”)

11-20-09 Global Defense Technology Sys. – Engineering service provider (“GTEC”)

Source: WSJ Market Data Group.

For Daily Market Performance Data, Please Visit the Daily Market Sheet

List of Selected Companies with Third-Quarter Earnings for 11-19-09

News

Fear of Double Dip in Housing – The Wall Street Journal

Summary: According to the Commerce Department, new-home starts dropped 10.6% in October from September, while starts of single-family houses dropped 6.8%. Some analysts believe this drop in housing starts results from uncertainty regarding the extension of the home-buyer tax credit. Home builders such as Pulte Homes believe that difficulties will continue through 2010. Separately, nearly 3.4% of U.S. households are 120 days or more overdue on their payments, which is an increase from the 1.5% of last year. This data indicates that more foreclosures will be occurring in the future, thus increasing the already large supply of homes on the market. Although the number of homes listed for sale in September was 3.63 million, or nearly 8 months of inventory, some analysts expect another 7 million houses to be foreclosed and added to the market during the next couple years. Such additional supply would likely keep pressure on home prices. As a result of the decline in housing data mentioned above, some firms like Macroeconomic Advisers have reduced their GDP estimates for the fourth quarter. Finally, in October approximately 12.4% of American households with mortgages were 30 days or more delinquent or in the foreclosure process, an increase from 12.3% in September and 8.6% in October 2008.

CB:Other economic news for the Wednesday included the Labor Department reporting that the Consumer Price Index rose .3% , driven primarily by higher fuel and vehicle costs. When the cost of food and energy were excluded from the Consumer Price Index it rose .2%.

Hershey, Ferrero Face Obstacles – The Wall Street Journal

Summary: The details behind the potential Hershey and Ferrero offer for Cadbury are in yesterday’s Daily DL. The potential offer faces the following headwinds: (1) a number of large hedge funds have taken positions in Cadbury and pushed its price beyond the offer by Kraft Foods, thus indicating the expectation of a bidding war and a higher price per share payout; (2) Hershey would have to issue another £4.7 billion of equity to raise £2.4 billion in debt and maintain its investment-grade rating; (3) Cadbury owners will probably not accept the non-voting Hershey shares, thus forcing the Hershey Trust to create a single share class and cede control rights over Hershey; and (4) it is unknown which company would gain access to Cadbury’s high margin chewing-gum business, which is valued at nearly £5.3 billion

CB: As discussed yesterday, leverage was always going to be an issue in this potential offer. Hershey doesn’t have the cash and the operations to support the leverage required by the deal, while maintaining its investment grade rating. The issue of the large-hedge funds taking positions is important primarily due to the fact that if the next offer is not higher than the share price, then the hedge funds could use their newly acquired shares to urge the board to reject the offer.

Japanese Bank Plans $11.2 Billion Share Sale – The New York Times

Summary: Despite improving earnings, Japan’s largest bank, the Mitsubishi UFJ Financial Group, stated that in order to meet potentially stricter capital regulations, it plans to raise as much as $11.2 billion in a jumbo share sale. Earlier in the year the company raised $4.5 billion. Other Japanese banks have been raising money in the markets throughout the year. While the Japanese banks did not have the large write-downs experienced in the U.S. and Europe, they were exposed to an anemic economy with ultra low interest rates, thus making them less profitable and financially stable than the banks in other countries.

Luxury Stores Trim Inventory and Discounts – The New York Times

Summary: Luxury retail stores like Saks and Neiman Marcus are intentionally keeping inventory levels low to create a scarcity of supply for their goods. The goal of the strategy is to shift consumer expectations from buying luxury goods at a discount to buying luxury goods at full price. With low inventory levels and the inability to frequently restock, these stores are forcing consumers to buy the product they want on the spot, instead of risk waiting for it to go on sale when it might no longer be available. This is one of the reasons the stores are advertising to consumers to do their holiday shopping early this year. Consequently, these luxury stores are noticing that the total quantity of items sold has decreased compared to last year, but sales look to be increasing due to customers paying full price than last year.

CB: This strategy is an interesting one, but these luxury retailers may simply be shifting their increased sales numbers to October and November, while December suffers. With the focus on advertising early, these retailers run the risk of depleting supply early, then their competitors are bound to benefit. Also, one does not know if consumer sentiment takes a turn for the worst come December. The retailers have also capped their potential gains by limiting their inventory. If there is a surge in demand, they will not be able to capture it. Yet, the strategy is compelling because it keeps prices high, thus when a recovery occurs these stores will not have to worry about increasing prices to where they normally would have been.

Mutual Funds’ ‘Buy’ Streak Hits 35 Consecutive Weeks – The Wall Street Journal

Summary: The following figures are reported weekly by the Investment Company Institute regarding the flow of money amongst various funds for the week ended November 11 (”this week”):

(1) Mutual funds witnessed net inflows for the 35th consecutive week, with total inflows estimated at $8.42 billion during this week and $357 billion for the entire streak.

(2) The stock funds experienced outflows of $1.24 billion this week, compared to outflows of $4.78 billion in the prior week. However, U.S. stock funds had $2.7 billion of outflows this week, while foreign funds had $1.46 billion of inflows.

(3) Bond funds had estimated inflows of $8.88 billion this week, an increase from the $7.5 billion inflows from the prior week.

(4) Hybrid funds, funds that invest in both equity and fixed income, had estimated inflows of $782 million this week, an increase from the $358 million inflows from the prior week.

(5) Money-market funds saw their assets decrease by $8.01 billion for the week ended Tuesday, for a total of $3.292 trillion in assets.

More Links of Note

Societe Generale tells Clients how to Prepare for ‘Global Collaspse’ – Telegraph

Goldman on the Dollar Carry Trade – ZeroHedge

Forget $100 Oil. $80 Oil is a Problem – Fortune

SocGen on Gold Mania, and Why Gold is Very, Very Cheap – ZeroHedge

Sphere: Related Content

Chain Bridge Investing: Financial and Stock Investing News 11-12-09

cb — Thu, 12 Nov 2009 11:25:44 +0000

Upcoming Economic Data for the Day (all times EST)

7:00 AM MBA Purchase Applications

8:30 AM Jobless Claims

9:00 AM RBC CASH Index

11:00 AM EIA Petroleum Status Report

2:00 PM Treasury Budget

4:30 PM Fed Balance Sheet

4:30 PM Money Supply

Initial Public Offerings (”IPOs”) for the Week of November 9 -13, 2009

11-12-09 Dollar General – Broad selection of discount merchandise (”DG”)

11-12-09 rue21 – Teenage apparel retailer (”RUE”)

Source: WSJ Market Data Group.

For Daily Market Performance Data, Please Visit the Daily Market Sheet

List of Selected Companies with Third-Quarter Earnings for 11-12-09

News

World Tries to Buck Up Dollar – The Wall Street Journal

Summary: Analysts estimate that during the last two months emerging economies have spent as much as $150 billion on currency intervention to prevent their currencies from appreciating against the U.S. dollar. If these foreign currencies continue to appreciate against the U.S. dollar, then it constrains their ability to compete in the global markets. Also hindering their ability to compete is China’s monetary policy, which allows its currency to decline with the U.S. dollar. Part of the relative appreciation of the emerging economies’ currencies has been due to the flow of foreign capital to their stock and bond markets. Central banks can try to prevent these inflows of foreign capital but success is not guaranteed. Despite a lack of U.S. Treasury action to stop the U.S. dollar’s slide, which is directly benefiting the U.S. economy, U.S. officials still maintain their commitment to a strong U.S. dollar. A rise in the U.S. dollar would not only benefit the emerging economies, but also Europe. Meanwhile, Pacific Rim countries are putting pressure on China to allow its currency to rise in value against the U.S. dollar.

Little Cargo, Loads of Debt – The New York Times

Summary: At present, the European banks hold over $350 billion in shipping-industry loans and could face significant write-downs as charter rates drop due to: (1) a 25% decline in global trade; (2) a glut of newly built ships entering the market in 2009 and 2010; and (3) declining ship values. In general, defaults tend to lag an economic downturn by nearly a year. The following banks currently have significant exposure to the shipping industry: (1) Royal Bank of Scotland; (2) Lloyds; (3) HSH Nordbank; and (4) Commerzbank. In some sectors of the shipping industry the numerous unused ships have caused rates to drop below costs, thus probably resulting in shipping companies struggling to make operational and financial payments. Furthermore, the shipping industry, which is one of the oldest industries, is likely to experience longer down cycles of three to 10 years depending, in part, on the strength of the preceding trade-driven boom. One analyst believes that the industry will feel the worst of the down cycle within the next six months.

CB: The shipping industry is capital intensive and heavily leveraged. During the most recent trade-driven boom, many new and old operators attempted to expand their fleets as well as their competitiveness by placing orders for new ships to be built. In the shipping industry, there is a preference for newer ships that are more effective during operations and are likely to be compliant with the changing operational and environmental regulations. With the surge of new shipbuilding activity, many of the shipping companies took on large amounts of debt, especially as prices and demand for new ships increased. As a result, many of those that overleveraged themselves now face the risk of bankruptcy and asset sales. This situation is a typical credit bubble. As stated in the article the pain has not been fully experienced yet. Several management teams that are looking at purchasing ships at discounted prices, believe the ships are being sold at good prices but aren’t at the great prices yet. Consequently, the better capitalized and operational shipping companies are waiting for more bankruptcies and more decreases in asset prices before enlarging their fleets. However, the reader should be aware that not all sectors of the shipping industry are feeling the impact of the downturn evenly. Some sectors, while they have a lot of new ships coming into the global market, also have relatively old fleets that are being retired as the new ships enter, thus partiality offsetting the effect of the new ships. Nevertheless, the shipping industry has been severely hammered by the market and continues to trade at industry averages of between 5 to 7 times price to earnings ratios. With the potential bankruptcies and distressed situations, the better capitalized companies should be able increase their operational asset base that will improve their financial results when the industry recovers.

Insight: Reclogging the U.S. Credit System - The Financial Times

Summary: Over the next five years $4.2 trillion of primarily speculative-quality debt matures in the commercial real-estate and non-investment grade debt markets. The maturing of this debt will probably strain credit capacity, or worse, it will increase the credit crunch and constrain economic growth. The primary risk year is 2012 when a large portion of corporate debt begins to mature, thus possibly forcing the Fed to resort to easing of monetary policy at a time when the Fed will probably be removing prior stimulus from the economy. Unlike prior credit cycles, the debt maturities are staggered allowing lenders more time to work through the loans, but also allowing the loan losses to remain in the system for a longer period. These staggered maturities result from the increased popularity of securitization, which enticed buyers to purchase longer-term loans than those a bank would have made for its own portfolio. Yet, with the currently resilient markets some borrowers have been able to improve their debt positions through restructuring, refinancing, and selling assets. If markets cease being buoyant, then the attempts to manage the $4.2 trillion debt may not meet much success. Consequently, the more lending capacity that remains tied to non-performing loans, then the less credit that available to healthy businesses to finance their growth and the more pressure the Fed faces to continue to support the system.

Barrick Gold Remains Wary Amid Price Rises – Financial Times

Summary: On Wednesday, the chief executive of Barrick Gold cautioned that although the probability of the long-term price of gold dropping below $900 an ounce was small, gold is a commodity and is susceptible to sell offs. In September, Barrick Gold decided to raise $4 billion to begin closing out its hedge contracts indicating that the company does not foresee a high probability of gold dropping below $1,000 an ounce. Barrick Gold believes that the gold price will most likely continue to increase as: (1) currencies weaken; (2) investment demand increases; and (3) supply tightens. With the average cash cost of gold near $456 per ounce during the third-quarter, Barrick Gold is looking forward to a profitable fourth quarter. Separately, gold closed the day at $1,113.50 a troy ounce, while the SPDR Gold Trust reported that holdings increased 6.1 tonnes on Monday, implying that investors continue to invest in gold despite its high levels.

Hewlett-Packard Buys 3Com in Run at Cisco – Financial Times

Summary: Hewlett-Packard’s (“HP”) purchase of 3Com for $2.7 billion in cash ( a 39% premium) makes HP the top computer maker and the number two for networking gear, which is Cisco’s core business. HP intends to utilize its large sales force to increase global distribution of 3Com gear. Furthermore, HP’s acquisition makes it the only vendor that can provide a company with computers for all levels of operations. In addition, analysts believe that HP with 3Com can provide a stronger product offering that will present a stiff challenge for Cisco. While 3Com trails Cisco in most markets, 3Com has a very substantial position in China with nearly half of its revenue coming from China. Yet, more product development and marketing investment is needed for HP to compete against Cisco in large data-centers.

CB: One of the reasons that technology companies are considered by some to be risky investments is primarily due to the rapid change in products and market positions that can occur. For instance, HP is an excellent example of a company that was struggling in 2005 and four years later is now on top of the computer industry and has significantly expanded into new industries with positive results. In addition, until Cisco decided to publicly announce that it was entering HP’s product space within the last year, HP and Cisco were essentially long-term allies. For HP this acquisition is: (1) a step to further vertical integration and operational efficiencies; (2) an increase in both economies of scale and scope; (3) a defensive and offensive maneuver against Cisco; (4) access to 3Com’s already established Chinese network and a stake in China’s future growth; (5) an improved sales bundle for customers; and (6) a chance for HP to become stronger and take market share during a downturn where many companies are not aggressively expanding. A move like this was probably foreseen by those close to the industry, especially as Cisco continued to use its war chest to acquire many different companies over the last several months. There are many investors like certain Tiger Fund managers that believe HP is a great company and a great investment. CB has not analyzed HP in depth for a while now, but has observed that the company was very resilient during the down turn and was able to rely on its operational efficiencies to minimize the negative impact to profits. Since HP is a large company, it has the ability to play with accounts and operations in various divisions, thus it can better tailor its results to Wall Street expectations.

Mutual Funds’ Streak Extends to 34 Weeks – The Wall Street Journal

Summary: The following figures are reported weekly by the Investment Company Institute regarding the flow of money amongst various funds for the week ended November 4 (”this week”):

(1) Mutual funds witnessed net inflows for the 34th consecutive week, with total inflows estimated at $3.14 billion during this week and $349 billion for the whole streak.

(2) The stock funds experienced outflows of $4.7 billion this week, compared to outflows of $840 billion in the prior week. However, U.S. stock funds had $5.25 billion of outflows this week, while foreign funds had $546 million of inflows.

(3) Bond funds had estimated inflows of $7.49 billion this week, a decrease from the $10.19 billion inflows from the prior week.

(4) Hybrid funds, funds that invest in both equity and fixed income, had estimated inflows of $358 million this week, an increase from the $239 million inflows from the prior week.

(5) Money-market funds saw their assets decrease by $13.13 billion for the week ended Tuesday, for a total of $3.3 trillion in assets.

More Links of Note

Guru Outlook: Jim Rogers – PragCap

3 Reasons Not To Believe in Gold’s Recent Rally – Graham Summers

China is Headed for a Huge Crash – Jim Chanos

Sphere: Related Content

Chain Bridge Investing: Financial and Stock Investing 11-5-09

cb — Thu, 05 Nov 2009 11:07:32 +0000

Upcoming Economic Data for the Day (all times EST)

8:30 AM Jobless Claims

8:30 AM Productivity and Costs

9:00 AM RBC Cash Index

10:30 AM EIA Natural Gas Report

3:00 PM Treasury STRIPS

4:30 PM Fed Balance Sheet

4:30 PM Money Supply

Initial Public Offerings for the Week of November 2 -6, 2009

11-03-09 Aviv REIT – REIT for healthcare properties (”AVI”)

11-04-09 Ancestry.com – Online services for genealogy. (”ACOM”)

11-05-09 Plains Capital – Banking services (”PCB”).

11-05-09 Duoyan Printing – Provides printing equipment (”DYP”)

11-05-09 STR Holdings – Solar power module manufacturer (”STRI”)

Source: WSJ Market Data Group.

For Daily Market Performance Data, Please Visit the Daily Market Sheet

List of Selected Companies with Third-Quarter Earnings for 11-5-09

News

Fed to Keep Rates Low Despite Pickup – The Wall Street Journal

Summary: On Wednesday, the Fed announced that it voted unanimously to keep interest rates low for an extended period of time, but indicated that rates could increase if (1) the unemployment rate begins to decline or (2) expectations of inflation begin to increase. The Fed believes that the economy’s growth is being constrained by: (1) continuing job losses, (2) tighter credit; (3) reduced wealth; and (4) continued business spending reductions. Nevertheless, the Fed noted that the economy appears to be showing signs of improvement through (1) improved consumer spending and (2) increased housing activity. One of the primary reasons the Fed has kept rates low is the large amount of economic slack in the system. Such slack could continue to put downward pressure on inflation even after the recovery. Yet, there has been so much money placed in the financial system that if the Fed is not careful in its maneuvering, then inflation could run rampant and create new financial bubbles.

CB: Nothing new here as the debate between inflation and deflation continues to play out in the economy. The Fed realizes that the U.S. is a fragile economy. Consequently, it does not want to remove stimulus from the system before it must. Again, most of the economic progress the country is experiencing results from the actions of the government and the Fed. Until there is proof that the economic recovery is sustainable without the stimulus, monetary tightening is unlikely. Furthermore, as discussed in other Daily DLs, by not increasing interest rates the Fed helps maintain downward pressure on the U.S. dollar, which is likely to help reduce the trade imbalance and further aid the U.S. recovery.

Job Losses Continue, but Pace Slackens – The Wall Street Journal

Summary: According to the Automatic Data Processing, Inc. report released on Wednesday, private-sector employment declined 203,000 in October and represented the smallest decline in jobs since July 2008. Yet, the decline in jobs was greater than the economists’ consensus estimate of 175,000 jobs, which included government jobs. Furthermore, Challenger, Gray & Christmas reported that employer announced job cuts decreased 16% from September to 55,679, which represented the best results since March 2008. Separately, the Institute for Supply Management’s (”ISM”) nonmanufacturing survey reported that the overall index dropped to 50.6 in October from 50.9 in September. Moreover, the ISM’s employment index declined to 41.1 in October from 44.3 in September primarily due to more layoffs and hiring freezes. Meanwhile, the following service sectors of the economy reported employment increases for October: (1) mining; (2) rental and leasing: and (3) management of companies and support services.

CB: Also, on Wednesday, the Mortgage Banker’s Association reported that for the week ending October 30, 2009 the Market Composite Index (the measure of mortgage loan application volume) and the Refinance Index increased by a seasonally adjusted 8.2% and 14.5% , respectively, from the prior week, while the Purchased Index decreased by a seasonally adjusted 1.2% from the prior week. Meanwhile the average 30-year fixed-interest rate decreased to 4.97% from the 5.04% reported a week earlier.

CB: With unemployment and underemployment continuing to increase from this time last year, one must wonder what forces account for the increase in retail sales that were reported for last week and are estimated for the month of October. Are the retail sales increases primarily driven from the unemployed individuals continuing to spend or greater spending by the employed? Or was last year’s drop in retail sales more a result of panic and less the result of actual employment and credit fundamentals? Since this topic seems to be recurring, perhaps CB will conduct some additional research on this topic.

World Bank Warns East Asia on Asset Prices – Financial Times

Summary: Surging equity and house prices in east Asia have confirmed the World Bank’s concern that asset bubbles are beginning to emerge in these countries. The World Bank further stated that these countries’ central banks may have to begin tightening monetary policy “sooner rather than later.” Moreover, the World Bank believes that the first step of tightening would consist of scaling back on stimulus and government supports , which would then be followed by increases in interest rates. Finally, the World Bank revised its growth estimates upwards for the east Asia and the Pacific region to 6.7% this year, which is up 1.4 percentage points from the bank’s estimate in April. Yet, growth is not expected in all countries as the gross domestic product is expected to continue to contract in Cambodia, Malaysia, and Thailand.

CB: This is the second time in the last two days that east Asia has been warned about potential asset bubbles. On Tuesday, the International Monetary Fund reported similar concerns for east Asia. On the surface, it appears that the bubbles have already formed to an extent. Can these countries tighten without causing the bubbles to crash? If these countries do have bubbles, and these bubbles crash they will have consequences on the rest of the world, especially with the foreign capital inflows these countries have been receiving. Such events will not only cause significant reductions in wealth, but could lead to the U.S. dollar assets being seen as a safe haven again, which could hinder the U.S. recovery as the U.S. gains strength again. There are many uncertainties.

Cuomo Files Intel Antitrust Suit – The New York Times

Summary: On Wednesday, Andrew Cuomo, New York’s attorney general, filed an antitrust lawsuit against Intel claiming that for years the company has used large rebates as well as co-marketing arrangements to prevent computer manufacturers like Dell from switching to A.M.D products. Allegedly Intel threaten to take away these benefits if additional business was done with A.M.D. Furthermore, when computer manufacturers were thinking of switching to A.M.D products, Intel would then help those manufacturers sell their computers at large discounts. As a result, Cuomo claims that by controlling 80% of the chip market Intel had monopoly power and used illegal actions to maintain its power over the market. Consequently, Intel’s actions constrained innovation within the industry and made consumers pay increased prices for computers. The federal antitrust law allows other states and the Federal Trade Commission to file similar lawsuits against Intel. At present, Intel is involved in the following antitrust situations: (1) Intel is currently appealing a $1.45 billion fine by the European Commission for antitrust violations; (2) Intel is the subject of a antitrust lawsuit filed by A.M.D. in Federal District Court; and (3) Intel is the subject of a continuing investigation by the Federal Trade Commission.

U.S. Media Companies Raise Outlook – Financial Times

Summary: According the results of those media companies that have reported their third-quarter financials, the U.S. consumer remains willing to pay for Cable TV, broadband, and movie tickets. Time Warner and Viacom have both increased their operating outlooks for 2009 due to strong film and cable performances. Particularly, cable, which receives revenue from advertising and fees paid by the cable operators, has performed very well. The strength of the cable performance was primarily driven by: (1) moderation in the advertising declines; (2) significant increases in broadband subscribers; and (3) the deployment of TV Everywhere services to attract more subscribers.

Cisco Sees Recovery Gaining Steam – Financial Times

Summary: On Wednesday, John Chambers, the chief executive of Cisco Systems, stated that he is seeing indications of global economic recovery and will begin to increase headcount as well as spending. Furthermore, Cisco has been receiving increased orders,thus prompting the company to shift its focus on future growth. Yet, Chambers stated that not all his customers agree with his view and that public sector spending is recovering at a faster clip than corporate purchases. Separately, Paul Jacobs, the chief executive of Qualcomm, stated that he was very bullish on the growth of the 3G market in 2010 projecting a 20% increase.

Supply Glut and Lower Prices Forecast – Financial Times

Summary: The International Energy Agency (”IEA”) is reporting that global gas markets are no longer a seller’s market, but now a buyer’s market. The shift results from decreasing demand, while new supply continues to build. Furthermore, if countries implement plans to save energy and develop alternative energy plans, then this glut will only increase. The IEA’s draft report expects overcapacity of gas to reach $250 billion cubic meters by 2015, more than four times 2007’s spare capacity. The IEA also states that environmental policies to reduce carbon dioxide emission would cause gas demand to further decrease. Consequently, these developments would most likely continue to put downward pressure on the price of natural gas. Finally, these developments in the gas markets will likely weaken Europe’s dependence on Russia for energy.

Mutual-Fund Streak Hits 33 Weeks – The Wall Street Journal

Summary: The following figures are reported weekly by the Investment Company Institute regarding the flow money amongst various funds for the week ended October 28 (”this week”):

(1) Mutual funds witnessed net inflows for the 33nd consecutive week, with total inflows estimated at $8.93 billion during this week and $346 billion for the whole streak.

(2) The stock funds experienced outflows of $1.47 billion this week, compared to inflows of $1.93 billion in the prior week. However, U.S. stock funds had $2.56 billion of outflows this week, while foreign funds had $1.09 billion of inflows.

(3) Bond funds had estimated inflows of $10.16 billion this week, a decrease from the $11.18 billion inflows from the prior week.

(4) Hybrid funds, funds that invest in both equity and fixed income, had estimated inflows of $239 million this week, a decrease from the $979 million inflows from the prior week.

(5) Money-market funds saw their assets decrease by $29.33 billion this week to a total of $3.312 trillion in assets.

More Links of Note

Has Buffett Overplayed His Hand? – Barron’s

In Praise of ETFs

More Caution on Leveraged ETFs

The Great Contraction of 2008-2009 – Kenneth Rogoff

Major Indicators Remain Mixed, Forecast Weak Recovery – PragCap

Buffett and India See a Dim Dollar Future – Forbes

Sphere: Related Content