SkyIG

SKY News Summary 5-08-08

There was plenty of economic news reported this week. The Federal Reserve reported yesterday that Consumer borrowing increased at an annual rate of 7.2% or $15.3 billion in March which was twice the rate of February. Consumer borrowing on credit cards and auto loans were responsible for most of the growth.
http://www.courant.com/news/nationworld/ats-ap_top10may08,0,3071268.story

http://www.courant.com/business/hc-credit0508.artmay08,0,1216491.story

Investment Company Institute, which represents the mutual-fund industry, will release its 2008 Investment Company Fact Book today. The data shows that retirement assets rose by 7%, or $1.1 trillion in 2007, which was a smaller increase than the 12% increase in 2006. According to the ICI, “Investors held $9.2 trillion in IRA and defined-contribution plans at year-end 2007, which accounted for about half of the entire retirement market, the ICI said. IRA assets rose 12% to $4.7 trillion, with $2.2 trillion of that invested in mutual funds. Investors held $4.5 trillion in defined-contribution plans, up 8% from the previous year, with mutual funds accounting for $2.4 trillion of that, the ICI found. And $3 trillion was held in 401(k)s at the end of 2007, making them the most popular type of defined-contribution plan.”
http://online.wsj.com/article/SB121020982749675801.html

Council of Economic Advisers Chairman Edward Lazear held a meeting with editors and reporters from the Wall Street Journal and Dow Jones Newswires yesterday. In his interview, he expressed optimism for the economy. He stated, “I think there are some signs of optimism out there in terms of credit markets and the aggregate indicators, as well…When people talk about the economy being bad, I think they don’t have what most economists and most people who are talking about a recession have in mind, namely these indicators — profits, industrial production, tightness in credit markets. That’s not what they’re thinking about. When they’re thinking about problems in the economy, they’re thinking primarily about gasoline prices and food prices, to some extent. Those are as consistent with an expansionary period as they are with a recessionary period.”
When talking about the high price of oil, he said, “it’s significant, no question.” He added that a $10 increase in the price of oil subtracts roughly a quarter-percentage-point from annual GDP.
http://online.wsj.com/article/SB121019473822674751.html

Clearwire and SprintNextel announced they will combine their wireless broadband units to create a new $14.55 billion communications company, also called Clearwire. The new entity will receive $3.2 billion from Intel, Google, Comcast Time Warner Cable and Bright House Networks. It also will receive an investment from John Stanton, the wireless industry guru, who heads Trilogy Equity Partners. The new Clearwire is being formed to get WiMax, which is similar to Wi-Fi but is available everywhere and operates on an Intel chip, into the market. AT&T and Verizon have their own broadband network for the future, called Long Term Evolution.
http://www.courant.com/business/hc-wimax0508.artmay08,0,4177085.story

Sources: The Wall Street Journal, The Hartford Courant, USAToday

SKY News Summary 5-6-08

The Nuclear Energy Institute has re-elected John W. Rowe, chairman, president and chief executive officer of Exelon Corp., as chairman of its board of directors
http://www.nei.org/newsandevents/

P&G has sued J&J for patent infringement. P&G alleges that J&J’s Listerine Whitening Strips infringe on patents relating to Crest Whitestrips.
http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1139235&highlight=

Web searches through AT&T’s Yellowpages.com increased by 70% over last year. There are now over 125 million searches each month, making it number 31 in comScore’s top 100 Web properties for March 2008.
http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25638

There is an article by Erik Lacitis from the Seattle Times, in the Hartford Courant today. The article is about Art Pearson, 89, America’s oldest active Fuller Brush salesman. He has 4,000 to 5,000 active customers and has made about 100,000 cold calls. What I find interesting is his sales method, honed over 70 years in the business. First, he always wears a coat and tie and carries a suit case with his products. He puts the suitcase on the right-hand side of the door. Then he’d knocks on the door, and steps back two paces, so as not to appear overbearing. When the homemaker opens the door, she sees Pearson holding a vegetable brush and a spatula. “Which gift would you like? he asks. “May I step in and give it to you?” “When I go into a house, my eyes wander through the house quickly. I suggest, “Maybe you need a wall brush for those cobwebs, or window cleaner”. Then he demonstrates his products and almost always makes a sale. Trivia for the day: Billy Graham, Dennis Quaid, and Dick Clark were all Fuller Brush salesmen.
http://seattletimes.nwsource.com/html/localnews/2004361380_fullerbrushman20m.html

ExxonMobil is hoping to reduce the cost of carbon dioxide removal from produced natural gas with its new Controlled Freeze Zone (CFZ) technology. The company is committing more than $100 million to build a commercial demonstration plant near LaBarge, Wyoming. Construction will start this summer, with completion in late 2009. “Using the CFZ process, the carbon dioxide and other components are discharged as a high-pressure liquid stream for injection into underground storage or for use in reservoir management to enhance oil recovery. Besides reducing the cost of separation, transportation and reinjection, the CFZ process can eliminate the use of solvents, sulfur plants and carbon dioxide venting in processing of the natural gas.”
http://www.businesswire.com/portal/site/exxonmobil/index.jsp?ndmViewId=news_view&ndmConfigId=1001106&newsId=20080505006145&newsLang=en

Fannie Mae plans to raise $6 billion in new capital through underwritten public offerings of new securities. Today, the company offered $4 billion of common stock and non-cumulative mandatory convertible preferred stock.
http://www.fanniemae.com/newsreleases/2008/4357.jhtml;jsessionid=35L1OFUKBDULZJ2FQSHSFGI?p=Media&s=News+Releases

GE Hitachi Nuclear Energy selected Wilmington, NC as the site for a commercial uranium enrichment facility. It will now pursue a license with the Nuclear Regulatory Commission. Start-up date is planned for 2012. GE already has a joint venture with Hitachi and Toshiba in Wilmington called Global Nuclear Fuel-Americas, which receives low enriched uranium and fabricates fuel bundles for nuclear power plants. GE Hitachi Nuclear Energy could become the supplier of low enriched uranium to Global Nuclear Fuel-Americas.
http://genewscenter.com/Content/Detail.asp?ReleaseID=3471&NewsAreaID=2&MenuSearchCategoryID=

GE Healthcare signed an agreement with Merck to share technology on imaging of the lungs so that Merck can use the technology in its therapy trials. The new technology uses xenon, a gas that can be modified with Spin Signal Technology to be detectable with MRI. Princeton University originally licensed this technology to GE Healthcare.
http://genewscenter.com/Content/Detail.asp?ReleaseID=3494&NewsAreaID=2&MenuSearchCategoryID=

Mobile devices, including cell phones, outnumber PCs three to one. Dr. Daniel Dias, Director, IBM India Research Laboratory is promoting IBM projects that will allow the cell phone to do anything that a PC can do. Specifically:

- “The Spoken Web – Allowing mobile commerce to be conducted by voice.
- Instant Translation – Real-time communication between multiple languages through mobile devices.
- SoulPad – Software that separates a computer’s “soul” – the programs, settings and data – from its body, the disks, keyboard and other hardware. Once stored on a storage device, that “soul” can be reincarnated in any other computer.
- Social networking on-the-go – Letting social network users connect via mobile devices.
- Good Samaritan – Combining mobile phones, “presence” technology and health records to provide a potential “good samaritan” with information on how to aid people in a critical medical situation.”
http://www.ibm.com/news/us/en/2008/04/2008_04_21.html

Merck is reducing its sales force by 15% or about 1,200 people due to slowing sales of Vytorin and Zetia, and FDA’s rejection of Cordaptive, a cholesterol drug. The company has eliminated 9,300 jobs since a reorganization plan was announced in 2005.
http://www.merck.com/newsroom/press_releases/corporate/2008_0505.html
http://online.wsj.com/article/SB121002063418168565.html?mod=todays_us_marketplace

Target is selling a 47% stake in its $8.2 billion credit card receivables to J.P. Morgan Chase for $3.6 billion. The deal is more like a loan than a sale, in that Target retains control of its credit-card operations.
http://investors.target.com/phoenix.zhtml?c=65828&p=irol-newsArticle&ID=1139845&highlight=
http://online.wsj.com/article_print/SB121002172162968681.html

Sources: The Wall Street Journal, USA Today, Seattle Times, Hartford Courant, Target.com, Merck.com, IBM.com, GE.com, FannieMae.com, ExxonMobil.com, AT&T.com, NEI.com, PG.com.

SKY News Summary 05-05-08

Economists had forecast a decline in the service industry for the Month of April. In fact, when the Institute of Supply Management’s non-manufacturing index was released today, the numbers showed that the service industry experienced relatively strong growth, reversing a three-month downward trend. The index registered 52.0 in April, compared to 49.6 in March.
http://www.usatoday.com/money/economy/2008-05-05-ism-services_N.htm

Economists predicted that April’s unemployment numbers would show a loss of 85,000 non-farm jobs, or unemployment numbers of 5.2%. In fact, only 20,000 jobs were lost, leaving the unemployment rate unchanged at 5%.
http://www.bls.gov/news.release/empsit.nr0.htm

An analysis by Bespoke Investment Group showed that in the past 50 years, the S&P 500 benchmark has risen an average “12.3% in the period from the last rate cut in an easing cycle to the first rate increase….The average duration of the Fed’s pause in those 12 interest rate cycles in that period was 329 days, or almost 11 months.”
http://www.usatoday.com/money/markets/2008-05-04-fed-rates-stocks_N.htm

The Nuclear Energy Institute holds its annual convention today. This year’s theme is “Energizing a Low-Carbon Future.”

General Motors’ spokesman, Robert Peterson, expects that new vehicles “will make utilities more important than the oil companies” to drivers. The short term solution to power shortages, as drivers power their new plug-in electric cars, is to install “smart” utility meters. The meters will track power use by purpose and time enabling a graduated pricing schedule.
http://online.wsj.com/article/SB120969297862161675.html

The Chairman of the Financial Accounting Standards Board, Robert Herz, outlined proposed changes to banks’ loan vehicles accounting in response to a request by the Securities and Exchange Commission earlier this year. Mr. Herz indicated that banks may have to report securitized loans that were previously held off-balance sheet.
http://online.wsj.com/article/SB120969084241961495.html

Sources: The Wall Street Journal, USA Today, and Hartford Courant, Bureau of Labor Statistics

Today’s Banking Structure - What happened? How can it be fixed?

Today’s Banking Structure – What happened? How can it be fixed?

Background: In 1988, The Basel Committee, consisting of representatives from central banks and regulatory authorities of the G10 countries, Luxembourg and Spain, produced guidelines for bank capital. In essence, the committee, meeting in Basel, Switzerland, introduced a global standard that based capital needs on the weighted risk of assets. Assets, like cash, were given a zero risk weight, while mortgages generally were given a risk weight of 35-50%, and commercial loans, a risk weight of 100%.

In the 1990s bank regulators came to New England to review loan and balance sheet strengths after reviewing banks in Texas. Regulators were uncomfortable with New England banks’ heavy exposure to real estate. After banks wrote down their exposures, they implemented new risk-based capital standards of the Basil Accord. These new standards created incentives for banks to be active in the mortgage banking business and to focus on asset-based lending.

By pooling and securitizing different asset classes (car loans, mortgages, commercial loans, etc.) bankers could sell these loans to insurance companies, mutual fund companies, or even municipalities as bonds. Mortgages were broken into different categories – prime and sub prime – with prime loans meeting Fannie Mae and Freddie Mac guidelines levels. Sub prime, as a term, is often used to describe people with shaky credit scores that had to stretch to get a mortgage. But sub prime can also be used to describe borrowers who chose not to provide documents and full disclosure. These sub prime borrowers have lower FICO scores and higher interest rates than other borrowers. An article in the Wall Street Journal last December points out that about 61% of people who ended up with sub prime loans had “top-notch” credit scores. (See http://online.wsj.com/public/article_print/SB119662974358911035.html).

When the bank sold the packaged loans, as securities, it no longer carried the risk of the credit and was able to avoid allocating capital. Instead, the bank obtained a fee from selling the bond, as well as originating the mortgage. The bank might or might not service the loan, collecting the interest payments from the borrower and paying interest to the bond holder. The bond holder received a secure asset (people normally pay their mortgage or car loan) at a higher yield over U.S. Treasury bonds. And homeowners got their mortgages. The lender got the money from the bond holder and was able to lend this money again and again and again, now that no risk or capital was involved. Thus, the process accelerated and was driven by the consumer – either by the would-be homeowner that needed a way to finance that big house, or by the bond buyer that wanted a higher yield. In this process multiple regulators were involved at various levels. The states regulated mortgage originators, the SEC regulated the issuance of the bonds, the Federal Reserve and the FDIC regulated the banks so that no one regulator was overseeing the whole process. Everyone everywhere bought these bonds, from four towns in Norway (see http://www.iht.com/articles/2007/11/28/business/bank.php) to Merrill Lynch and Washington Mutual, to the Bank of Japan.

The problem: The homeowner was happy because he got his mortgage, the bond holder was happy because he got his high yield, and the banker was happy because he got his fee, without allocating capital. He could make as many mortgage loans as he wanted. Until…the bond market questioned the strength of the home mortgage market. With the bond market not interested in buying more bonds, bankers were left holding mortgages that weren’t saleable and, in turn needed more capital to hold these credits. The whole system collapsed on nothing more than a lack of trust and the expectation of future write-downs.

The fix: The solution lies in regaining trust by supporting capital markets with liquidity and greater trading activity. Federal Reserve Chairman Bernake has been taking steps to actively combat trust issues: His first steps tried to address the problems in the credit market. If bond investors are not interested in buying mortgages then bankers cannot make mortgages. So the Fed took steps to increase liquidity and expand types of collateral they would accept at the discount window. These steps reopened the bond market, increased the level of trust, allowing investors to trade securities. With a healthier credit market, bankers should be able to underwrite mortgages again.
The good news is that everyone everywhere bought these securitized loans, spreading the risk of default globally. But certainly, the problem of the U.S. banking industry will be most felt within the U.S. And most of the fixes in progress will take time to legislate and implement. In the interim, banks are getting capital injections so that lending does not cease altogether. So far, banks have raised nearly $100 billion in equity by various methods to continue making loans and build trust.
The trust and willingness to trade are probably more important than the legislation and regulatory changes that naturally follow a crisis. However changes in the works include:
o Treasury Secretary Paulson’s recommendation of the creation of a federal Mortgage Origination Commission to oversee the licensing of mortgage lenders.” (See http://www.forbes.com/2008/03/29/paulson-finance-reform-biz-wallst-cx_lm_0329paulson.html
o Congress and the administration, hoping to spur mortgage lending, have temporarily loosened restrictions on Fannie Mae and Freddie Mac as well as the Federal Reserve. The size of mortgages that Fannie and Freddie can guarantee was increased from $417,000 to as high as $729,750 in some areas. (See http://online.wsj.com/article/SB120805134086510643.html).
o At the same time, the Basel committee is looking at recommending stricter capital requirements for structured credit requirements like the mortgage packages that created the banking problem. (See http://online.wsj.com/article/SB120846965830924359.html ).

Whatever the legislation proves to be, two things remain certain: In the short term, banks will shy away from riskier loans, and we will be seeing and feeling the effects of the banking problem for many years to come.

SKY News Summary 5-1-08

The Federal Reserve lowered interest rates from 2.25% to 2% yesterday, bringing the total reduction to 3.25% since September. It indicated, however, that further reductions may not be forthcoming.
http://online.wsj.com/article/SB120957689231356771.html?mod=todays_us_page_one

The GDP rose slightly (0.6% annual rate) in the first quarter, due mainly to a rise in exports and inventories. Consumer spending amounts to about two-thirds of GDP and rose only 1% (annual rate), its weakest showing since 2001. Some feel that the rebate checks being distributed now by the government could spur consumer spending,. http://online.wsj.com/article/SB120955760584356061.html?mod=todays_us_page_one

In an interview with the Wall Street Journal’s Russell Gold and Ana Campoy, Chevron’s CEO, David O’Reilly states that Chevron’s role in developing alternative fuels is to “come up with a nonfood source of biofuels that can make a meaningful contribution at (commercial) scale, because if it isn’t at scale, it isn’t going to make a significant difference.” In speaking about oil independence, he says, “We are actually going steadily in the opposite direction. We are not incentivizing investment in oil-and-gas exploration in this country. We are turning down coal-fired power plants because of concerns about the environment. We are slow to renew the use of nuclear power, so we are digging ourselves into a deeper hole here….We’ve got to look at opening up OCS – the outer continental shelf – to oil-and-gas exploration. We can explore for and produce oil off (the coast) of Norway, Denmark, the Netherlands, the U.K., but we can’t off 85% of the United States outer continental shelf. Why is that?”
http://online.wsj.com/article_print/SB120958882073757383.html

The Senate subcommittee on Energy and Water Development will hold a hearing tomorrow on the fate of funding for the Integrated Gasification Combined Cycle pilot project. This project, which provides “clean” coal energy production, has the cooperation and participation of China (http://www.china-embassy.org/eng/gyzg/t276776.htm), and AEP, Duke Energy and 11 other companies in conjunction with the EPA, and was a highlight of Bush’s energy plan of 2001. The IGCC pilot project, authorized in Section 413 of EPAct, included tax credits for advanced coal technologies. The Honorable Byron Dorgan, Chairman of the Subcommittee on Energy and Water Development is considering not funding the project in the coming year because of its cost and the viability of other renewable energy sources.
http://www.westgov.org/wga/testim/fy08-energy-water-appropriations.pdf

Exelon announced today that it is the first U.S.-based utility to take part in a process that analyzes greenhouse gas emissions the company’s supply chain. The company wants to encourage its suppliers, including IBM, to measure their carbon footprint.
http://www.exeloncorp.com/aboutus/news/pressrelease/corporate/Press+Release+-+050108.htm

Japan Steel Works, located on Japan’s northernmost island of Hokkaido, is currently the only company in the world capable of producing the central part of a nuclear reactor’s containment vessel in a single piece, according to a recent Bloomberg article. The containment vessel is a 600-ton steel ingot shaped into a tube with 12-inch walls. (Originally, the company manufactured 18-inch gun barrels for the World War II battleship Yamato). The company can produce four steel forgings a year. But with 237 reactors planned globally in the next twenty-five years, the company’s lack of production capacity may thwart the rise of nuclear energy.
http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aaVMzCTMz3ms

Sources: The Wall Street Journal, Westgov.org, the Chinese Embassy web site, Bloomberg News, and the Exelon web site.

SKY News Summary 4-28-08

USA Today has an article by Adam Shell on tax expectations and their effect on the stock market. Mr. Shell quotes Dan Clifton, head of policy research at Startegas Research Partners as saying, “ If the current 15% tax rate on both capital gains and dividends, which has been in force since President Bush pushed them through in 2003, are made permanent beyond the 2010 expiration date, the estimated fair value of the Standard & Poor’s 500-stock index would be 1523, nearly 9% higher than Friday’s close of 1398. In contrast,if Democrat Barack Obama wins and boosts the capital gains tax rate to 28% and dividends to pre-Bush levels of 39.6%, the fair value dips to 1375, or 1.6% below the market’s current level.”

http://www.usatoday.com/money/perfi/taxes/2008-04-27-tax-capital-gains-stocks_N.htm

Farmers switched from planting soybeans to planting corn last year, increasing prices for soybeans by 97.3%. Corn prices rose by 41.2% for different reasons. Many of these farmers are switching back to soybeans, which cost less per acre to produce than corn. This rotation should lower soybean prices, but increase corn prices, which, in turn, will increase food prices further. Food prices are expected to rise 5% in 2008, on top of the 4.5% increase in 2007. Food inflation averaged about 2.4% in 2000-2004.

http://www.usatoday.com/money/industries/food/2008-04-27-eggs-prices_N.htm

Members of the House and Senate are putting together a mammoth, $280 billion nutrition/farm policy bill, paid for by increases in fees on imports. Corn-based ethanol subsidies will be reduced, allowing for tax credits for biofuels made from wood chips, switch grass and agricultural waste.

http://online.wsj.com/article/SB120915315026145569.html

Mars, with the help of Berkshire Hathaway, may purchase Wrigley for $22 billion. Berkshire may provide the financing and retain a stake in Wrigley. Mars is the largest chocolate maker by sales, with a market share of 15%. Wrigley, which bought Kraft’s candy business in 2003 for $1.5 billion generates most of its sales outside the U.S..

http://online.wsj.com/article/SB120935192240148985.html?mod=todays_us_nonsub_page_one

In his interview with The Wall Street Journal, Paul Otellini, CFO of Intel, sees Intel’s future in Netbooks, that cost $300 or less. He notes that this generation uses the laptop as its student device, but complains that Apple is benefiting from the fact that his daughter has gone through four laptops because she keeps dropping them. Netbooks will be phones and mobile Internet devices (MIDs) small enough to fit in the pocket, and inexpensive. He thinks Intel will prosper in this market because the company is “good at small, we’re good at integration, we’re good at high performance. The Internet all runs on Intel architecture.”

http://online.wsj.com/article/SB120933812530448269.html?mod=todays_us_nonsub_marketplace

Sources: The Wall Street Journal, USA Today, and Hartford Courant

SKY News Summary 4-25-08

Entrepreneurship is alive and well according to report by the Ewing Marion Kauffman Foundation and Robert Fairlie, an economics professor at the University of California at Santa Cruz. Last year, 300 out of every one hundred thousand adults created a new business each month. 495,000 businesses were created each month. The rate of new businesses increased over that of 2006. The new businesses tended to be either in the construction or service industries. Most of the growth in entrepreneurship was in the Midwest and West, while the rate of increase declined in the Northeast.
http://www.kauffman.org/item.cfm?item=1037
USA Today, Edward Iwata, “No Slowing for Start-ups”.

British Prime Minister Gordon Brown stated before the opening of the world food crisis summit in London that the EU may have to “back off its goal of having ethanol account for 20% of motor vehicle fuel burned on Europe’s roads by 2020.” His statement comes on the heels of a similar statement, in a commentary in Monday’s Financial Times, by the head of International Monetary Fund, Dominique Strauss-Kahn, that the biofuel effort is “well-intentioned, but yet misguided.”

http://www.ft.com/cms/s/0/2a7621ae-0f3d-11dd-9646-0000779fd2ac.html

http://www.usatoday.com/money/industries/energy/2008-04-24-biofuels_N.htm

Commercial banks’ usage of the Federal Reserve’s discount window increased to $13.46 billion from last week’s $8.83 billion. Average daily borrowings were $10.73 billion, which was the highest rate since just after the attacks of Sept. 11, 2001. However, investment banks reduced their usage of the credit facility to $18.56 billion, down from $25.66 billion the previous week.
http://online.wsj.com/article/SB120908104038343315.html?mod=hps_us_whats_news

Sources: The Wall Street Journal, the Hartford Courant, USA Today, Financial Times, and the Ewing Marion Kauffman Foundation web site.

SKY News Summary 4-24-08

Medtronic purchased Pillar Palatal Implant System, maker of an implantable device to treat the soft palate component of sleep breathing disorders, for $29 million.
http://wwwp.medtronic.com/Newsroom/NewsReleaseDetails.do?itemId=1208882503881&lang=en_US

The Union of Concerned Scientists reported that, according to their survey of 1,600 Environmental Protection Agency scientists, 60% of the scientists felt “…their scientific findings are tossed aside when it comes time to write regulations.”
http://ucsusa.org/assets/documents/scientific_integrity/Interference-at-the-EPA.pdf
http://www.courant.com/news/nationworld/hc-epa0424.artapr24,0,4467169,print.story

Praxair and Samsung announced that Praxair will build a new air separation plant with a 2,000 ton-per-day capacity in order to provide Samsung with enough nitrogen, oxygen, argon, helium and hydrogen to increase Samsung’s production of thin film transistor, liquid crystal displays to 3,300 tons per day.
http://www.praxair.com/praxair.nsf/AllContent/0E15070116C553A08525742F005FED59?OpenDocument

GE and Conoco Phillips will collaborate in Qatar to provide water for petroleum and petrochemical sectors, as well as treated water for irrigation, livestock watering, and industrial cooling, leaving more fresh water for domestic use. According to ConocoPhillips, “Our vision is for the Water Sustainability Center in Qatar to become ConocoPhillips’ global corporate center of excellence for water-related research and expertise. GE’s leading-edge technologies in chemicals, equipment and advanced membranes, coupled with ConocoPhillips’ industrial applications and test facilities, will help us achieve this goal.”
http://www.ge.com/news/index.html

GE has been chosen by Petroleum Development Oman to supply 16 electric motor-driven centrifugal compressors for high-pressure injection of gas into four depleted wells in Oman. Last year, the company received two contracts from PDO for centrifugal compressors in two other fields. This contract, which lasts seven years, is worth about $250 million.
http://www.ge.com/news/index.html

CBS acquired International Outdoor Advertising Group, with outdoor advertising business in Argentina, Brazil, Chile, and Uruguay, for $110 million in cash. South America is a fast-growing market, and these four countries account for more than 2/3 of the continent’s population, GDP and advertising-spending growth.
http://www.cbscorporation.com/news/prdetails.php?id=3183

Sources: Wall Street Journal, USA Today, Hartford Courant, and CBS, GE, Praxair, UCSUSA, and Medtronic web sites.

SKY News Summary 4-22-08

Carbon credits are facing a more difficult road to approval. The United Nations body that grants the credits, according to the Kyoto Protocol’s Clean Development Mechanism (CDM) has become increasingly stringent about approving only projects that would not be done anyway. A CDM credit is worth about $25 and every credit granted represents a ton of Carbon Dioxide emitted. A British company, Agrinergy Ltd., is one of the brokers that puts projects together, end-to-end, to qualify for CDMs.

http://online.wsj.com/article/SB120882900634733527.html
http://ec.europa.eu/environment/climat/kyoto.htm
http://www.agrinergy.com/index.htm

Halliburton is involved in Aramco’s highly technical gas project, Khurais. The company is drilling more than 300 wells, over a mile deep, that connect horizontally. Each drill can be guided electronically within a few feet of the oil reserve. The company will also drill 125 water-injection wells and install dozens of electric submersible pumps to flush 2.4 million barrels of seawater a day through the well.
http://online.wsj.com/article_print/SB120881050953632313.html

Sources: Wall Street Journal, USA Today, Hartford Courant

SKY News Summary 4-17-08

The index of leading indicators rose (by 0.1% in March) for the first time in five months, according to the New York-based Conference Board. However, the index has dropped 3.3% since March of last year. The index is based on ten economic components including stock prices, building permits and initial claims for unemployment benefits. http://www.courant.com/business/nationworld/wire/sns-ap-leading-economic-indicators,0,6343514,print.story
http://www.reuters.com/article/comktnews/idUKN1742974820080417?rpc=77

About 35 of sub-Saharan Africa’s 53 countries have recurring power outages, according to the World Bank. The outages, as well as the rising prices of electricity and food have spawned large protests, especially in South Africa, where the energy company, Eskom, plans to increase its prices by up to 53%. The outages are the result of growing economies, without a corresponding increase in the production of power plants. Only recently have African governments sought to rectify this situation. Botswana, for example, will be expanding its sole, coal-fired, power plant and is soliciting bids from independent power producers. http://online.wsj.com/article/SB120838247003120827.html?mod=hps_us_pageone
http://news.bbc.co.uk/2/hi/africa/7352756.stm

India is formulating a gas-use policy. The country’s demand of natural gas grossly exceeds its supply. Natural gas is used to power India’s power plants. It is also needed to produce nitrogen fertilizer used heavily for corn and wheat crops. (Natural gas is the main input used to produce ammonia, which in turn is the main input used to make all nitrogen fertilizers). http://www.upi.com/International_Security/Energy/Briefing/2008/04/17/india_to_formulate_gas-use_policy/3108/

A report by Wen-yuan Huang, of the U.S. Department of Agriculture, called “The Impact of Rising Natural Gas Prices on U.S. Ammonia Supply” dated August 2007, explains why the cost of fertilizer is so high, and may go higher. The abstract reads, “The volatile and upward trend in U.S. natural gas prices from 2000-2006 has led to a 17-percent decline in the Nation’s annual aggregate supply of ammonia, During the period, U.S. ammonia production declined 44 percent, while U.S. ammonia imports increased 115 percent…. Ammonia prices paid by farmers increased from $227 per ton in 2000 to $521 per ton in 2006, an increase of 130 percent….Additional increases in U.S. natural gas prices could lead to a further decline in domestic ammonia production and an even greater rise in ammonia imports.”
http://www.ers.usda.gov/publications/WRS0702/wrs0702.pdf

The national debt is expected to jump from $11 trillion to $61 trillion in the next twenty years, according to David M. Walker, who is resigning as comptroller general and head of the federal Government Accountability Office.
http://www.courant.com/news/opinion/editorials/hc-walker.artapr17,0,7730209.story

Foreign tourists visiting the U.S. rose about 10%, to 24 million last year. This is a 32% increase since 2003.
http://www.courant.com/business/hc-tourism0417.artapr17,0,2207645.story

Museums have been especially hit by recent problems in the bond market where the large museums get their financing. The museums have relied on auction rate securities, which were initially an inexpensive way for them to borrow, gave investors tax advantages and were backed by bond insurers. Prices on these bonds were reset in auctions every week or month. But when investors discovered that the bond insurers were saddled with the subprime mortgage mess, they were unwilling to bid at auction and museums have ended up paying much higher interest rates. According to Roger Goodman of Moody’s, 90% of the borrowers are trying to get out of the auction-rate market, and 25% are out already.
http://www.usatoday.com/money/economy/2008-04-16-art-museum-bonds_N.htm

Cisco is changing its acquisition tactics. It is no longer acquiring many small start-ups, but rather acquires large companies, which it tends to keep autonomous. The company’s quarterly growth rate has slowed to 15% year-to-year, from between 30% to 40% or more early this decade, according to the Wall Street Journal.
http://online.wsj.com/article/SB120839835016421829.html?mod=hps_us_pageone

EnergySolutions, a Salt Lake City-based disposal company is hoping to get Congressional approval to import nuclear waste from Italy to dump into the western-Utah desert. The company already imports small amounts of nuclear waste, but passage of a bill to be brought before Congress this year, would ban the importation of low-level radioactive foreign waste.
http://www.iht.com/articles/ap/2008/04/16/america/NA-GEN-US-Nuclear-Waste.php

Sources: Wall Street Journal, Forbes, USA Today, Hartford Courant, United Press International, Associated Press, International Herald Tribune, British Broadcasting Corp., and a report by Wen-yuan Huang, of the U.S. Department of Agriculture, called “The Impact of Rising Natural Gas Prices on U.S. Ammonia Supply”, dated August 2007.