Tuesday, August 31, 2004

August 31 Philippine Stock Market Daily Review: August Ennui

August 31 Philippine Stock Market Daily Review: August Ennui

For the last day of the month, the major Philippines Stockmarket benchmark, the Phisix rambled about the entire session to close with a marginal loss down a paltry .58 points or .04% on very light volume of P 381.930 million (US $6.808 million).

In contrast to yesterday’s activities, local investors who took up about the same ratio (two thirds of the day’s trading activities) as yesterdays, were in a slightly bearish state as measured by the dominance of declining issues against advancing issues (39-33). Nonetheless, based on the industry indices and the distribution of gains/loss among the major cap issues or the blue chips, both were evenly mixed with 3 industry indices up (Commercial-Industrial, Mining and Banking and Finance) vis-à-vis 3 indices down (ALL, Property and Oil) while 2 heavy caps gainers (Bank of the Philippine Islands +1.21% and San Miguel A +.86%) against 2 losers (Ayala Land –1.85% and SM Primeholdings –1.72%) while the rest were unchanged.

Foreigners upped the tempo of their acquisitions to post a positive capital inflow in the amount of P 54.208 million or about 14.20% of the day’s aggregate Peso turnover. However, the buying was limited to select issues mainly the telecom heavyweights PLDT and Globe (both unchanged) and to Bank of the Philippine Islands and DM Consunji (unchanged). Meralco B (-1.16%) absorbed the most liquidations from foreigners (6th straight session) followed by Ayala Land, San Miguel B and Metrobank. As measured by the bluechips 4 issues saw inflows against an equal 4 issues that had outflows.

Apparently the month of August lived up to its reputation; a seasonal month of ennui. The Phisix is down by a slim .31% compared to the previous month and posted one of the least declines since 1997.

In the past twenty years the August scorecard including this year has been 8 years up against 12 years down. In essence, for every 3 years the Phisix was up a countervailing four years of losses was recorded, although not sequentially. During the bear market that began in 1997, the month of August scored only a single month-on-month gain in 2000 while recording 7 years of losses which includes the two largest successive August losses in 1997 down by 22.74% and in August 1998 down 25.84%. In other words, August bore the brunt of the selloffs during the bear market and has thus far been adrift in the bottom-advance cycle of the market.

The ennui that August produced was most probably due its seasonal performance relative to its historical movement. And since the market is still on an upslope and remains on its major trendline path, it could safe to construe that the current market movements has been influenced by the seasonal monthly performance, and still is in search for a stimulus to goad the Phisix higher over the yearend.

The Washington Post: Dominicans' Swift Step Into Crisis

Dominicans' Swift Step Into Crisis
Banking Troubles Ruined Country's Envied Economy
By Kevin Sullivan
Washington Post Foreign Service
Friday, August 27, 2004

SANTO DOMINGO, Dominican Republic -- When Sandro Batista smashed his banana truck into a tree in April, leaving him with two hideously shattered legs and a broken arm, his orthopedic surgeon sent his sister shopping.

The country's largest public hospital, Hospital Dario Contreras, didn't have painkillers or the steel pins, screws and plates needed to put Batista's bones back together, or even the blood to get him through the operation. So the surgeon gave Alicia Batista a list and sent her on her way.

"The quality of our medical care has deteriorated tremendously," said Guillermo Garcia Lorenzo, the surgeon who operated on Batista. "A year ago, we had a storeroom filled with everything we needed, but now, nothing."

Batista's ordeal, which cost his family about six times his monthly income as a truck driver, illustrates how quickly this country has been transformed from the envy of Latin American economies into a nation in the midst of its worst economic crisis in decades. Analysts here trace the fall largely to a single event: a banking scandal that last year cost the government $2.2 billion, or about 15 percent of the country's gross domestic product, which sent inflation soaring and severely devalued the peso, the national currency.

The result has been an almost overnight reversal in fortunes in this steamy Caribbean country, a top U.S. tourist destination just east of Cuba that shares the island of Hispaniola with Haiti. What was until recently a dependable bright spot in a region of economic and political uncertainty is now another vulnerable nation on the U.S. front porch.

So many Dominicans are trying to flee the desperate conditions that the U.S. Coast Guard is intercepting far more Dominicans at sea than Cubans or Haitians. Nearly 5,000 Dominicans have been picked up trying to reach the United States since October, compared with 1,748 in the entire year before that and fewer than 200 two years before. Earlier this month, 55 Dominicans died at sea trying to reach Puerto Rico in a small open boat.

After a decade of strong growth, the Dominican economy shrank in 2003 for the first time since 1990. Joblessness is soaring and inflation has averaged 56 percent in the past year, according to the central bank. The peso has lost more than half its value against the dollar, causing deep pain in a nation that imports most of what it consumes. Prices have more than doubled in the past year for food, milk, propane gas for cooking and other daily necessities. Worker strikes and fuel shortages are adding to the sense of paralysis.

The government inherited by President Leonel Fernandez, who was sworn in Aug. 16, is hobbled by nearly $6 billion in foreign debt, making it nearly impossible to provide even the most basic services, from medical supplies at public hospitals to trash pickup.

Power outages lasting up to 20 hours a day are causing growing frustration as the cash-strapped government is unable to provide $400 million in past-due payments to private energy companies. Without reliable power, families are unable to keep food refrigerated or fans running. Traffic lights are dark, babies are often delivered by flashlight at the country's largest maternity hospital, and surgeons at Dario Contreras said they often must stop in the middle of operations when the lights go out.

"The country is drowning," said Jorge Cela, a Jesuit priest who works in the poor neighborhoods of this capital city, where nearly a quarter of the country's 8.8 million people live.

Miguel Ceara-Hatton, an economist with the United Nations Development Program here, said his agency will soon release a report concluding that at least 1 million Dominicans have slipped below the poverty line in the past three years, meaning that close to 5 million people, or nearly 60 percent of the population, live in poverty.

In La Cienaga, a poor riverside neighborhood in the capital where most men hang around the corners waiting for someone to offer them odd jobs, Belgica Amador, 53, said that in the past year or two her life has become "100 percent worse in every way."

She said that the cost of an egg has gone from one peso to five, while the prices of chicken and powdered milk have roughly tripled. She tries to cook several meals at a time to conserve propane, and her power is out about 15 hours a day.

"If you talk to young people here, they all want to get out and go to the United States," Amador said.

Analysts here said the cause of much of the trouble was the collapse and government bailout of Banco Intercontinental SA, then the country's third-largest bank. In September 2002, investigators discovered that the bank had kept two sets of books for more than a decade, covering up massive bad loans and lavish spending.

Bank President Ramon Baez Figueroa was one of the most powerful and flamboyant men in the nation, with a private fleet of yachts, planes and helicopters, and a long record of generous giving to those in power, according to analysts. Central bank investigators discovered that Baez's bank provided a free credit card to the office of then-president Hipolito Mejia, and Mejia often borrowed Baez's jets for presidential trips.

In May 2003 the central bank stepped in and paid $2.2 billion to cover all the bank's deposits. The massive bailout was widely seen as political payback to save the bank's wealthy and well-connected depositors. Ceara-Hatton said that 1 percent of the bank's customers accounted for nearly 80 percent of the deposits and that Mejia's government "decided to save them." No one has been convicted of a crime in the case, and several analysts here said the Dominican justice system is not strong enough to fully investigate a case that involves so many of the nation's political elite.

With the devaluation and economic chaos that resulted from the central bank's decision to flood the market with newly printed pesos, the nation's GDP fell from $21.7 billion in 2002 to $16.8 billion in 2003, according to central bank numbers, and analysts predict a further decline this year.

"They destroyed everything," Ceara-Hatton said. "Everyone in this country is now paying for that decision."

Despite all the grim statistics, many here are optimistic that things could start improving with the inauguration of Fernandez, a lawyer and university professor whose first term as president, from 1996 to 2000, coincided with the country's most robust economic growth in a generation. Fernandez, whose first term was tainted by a scandal involving the disappearance of $100 million in government funds, was barred from seeking reelection by term limits that have since been abolished.

In his inaugural address last week, Fernandez, who defeated Mejia by a landslide in May elections, vowed a new period of government austerity and sharp cuts to the heavy spending, borrowing and government hiring that marked Mejia's term.

"The challenge for Leonel Fernandez is to convince people that the worst is over," said Bernardo Vega, a former Dominican ambassador to the United States and former head of the central bank.

Vega said Fernandez must keep his vows to get spending under control, win passage of a tax-increase package in the National Congress and come to terms with international lenders, including the International Monetary Fund, which suspended payments on a $600 million loan package earlier this year. If he does, Vega said, the country's underlying economic engines -- tourism, more than $2 billion in annual remittances from the 1 million Dominicans in the United States and the assembly-for-export plant sector -- are still powerful enough to drive a recovery.

Tourism to Dominican resorts has never been stronger, bringing in record income in 2003 after a slowdown after the Sept. 11, 2001, terrorist attacks. Tourism officials said at least 860,000 Americans visited the country last year, although most of them went to all-inclusive beach resorts walled off from the reality of daily Dominican life.

"I personally think that in a year or a year and a half, we're going to have a change for the better," Vega said.

But other analysts, and many ordinary Dominicans, don't share Vega's optimism. In an outlying neighborhood of Santo Domingo, Batista sat on his bed, his right leg still held together with an orthopedic contraption of steel braces and screws that his family bought secondhand. He said it was hard to imagine how things are going to get better.

"Poor people are going out of their mind," he said. "It makes no difference if you work, because even if you do, you still can't afford anything."

© 2004 The Washington Post Company

Monday, August 30, 2004

The Economist: The future's a gas

The future's a gas
Aug 26th 2004 From The Economist print edition
Why worry about high oil prices, when a boom in natural gas may be on the way?
EVEN as headlines scream about $50 a barrel oil, energy firms and their investors are becoming increasingly excited about its likeliest replacement: not wind nor wave nor solar power, but gas—or, to be precise, gas that is frozen and transported as liquefied natural gas (LNG). This is expected to become as ubiquitous and crucial to the global economy as petroleum is today. Scenario planners at Royal Dutch/Shell think that gas may surpass oil as the world's most important energy source by 2025.

While oil became increasingly important during the past century, for much of that period natural gas was seen as its ugly stepsister: burnt off or “stranded” when discovered by accident, and rarely sought after. Demand for gas has taken off in recent years, thanks chiefly to its greenness—it burns far cleaner than oil or coal, making it ideal for new power plants from California to China. And burning gas is much less carbon-intensive than burning coal—making it helpfully less easy to blame for global warming.

Until recently, the development of a global gas market has been hindered by one inconvenient fact. Gas is, by definition, gaseous at room temperature; oil is a liquid that can easily be transported. Gas traditionally needed elaborate systems of pipelines to get it from the wellhead to the customer. That meant it was typically used fairly close to where it was produced, shipped at great expense via pipeline—or, more often, simply wasted.

The rise of LNG promises to change that. Put simply, gas can be frozen into liquid form near its source, shipped to market in refrigerated tankers, warmed back into gaseous form on foreign shores and injected into the local pipeline system. Thanks to this technological advance, gas has the potential to be a fungible, global commodity like oil.

True, energy-poor countries such as Japan and South Korea have long relied on a rather clunky form of LNG. But soaring demand for gas has unleashed rapid innovation and investment that is driving down the capital cost of LNG. Tanker ships are getting bigger and more affordable. One-off project planning is giving way to economies of scale. Even so, shipping gas remains much more capital intensive than shipping oil. Building typical 5m tonne “trains” of LNG—which include liquefaction plants, tankers and regasification terminals—can cost $5 billion. Thus, as one senior gas executive puts it, “only a few firms can play in this game.” Still, leading executives now expect the energy industry to invest a massive $100 billion in expanding LNG over the next decade.

This expansion of LNG is being driven by America, the world's largest energy market. As demand for gas has taken off in recent years, North American supply has not kept pace, causing a spike in prices (see chart) that, last year, alarmed even Alan Greenspan, chairman of the Federal Reserve, America's central bank.

America's market is clearly ripe for imported gas. On one estimate, North America's now puny gas imports could soar over the next decade or so to be as large as today's entire global LNG market.

Yet already energy pundits in America are ringing alarm bells about rising gas imports. In particular, they point to three long-standing worries about oil that they now think may be true of gas, too: scarcity, ever-rising prices and oligopoly power.

It has become fashionable to claim that the world is running out of oil and gas. Several alarmist books have just been released, ranging from “The End of Oil” to “Out of Gas”, claiming that the hydrocarbon age is drawing to a close. To the doomsday crowd, the spike in natural gas prices is permanent, the result of scarcity.

From OPEC to OGEC?

This is not the first natural gas “crisis.” In the 1970s, fears of global gas scarcity led many governments to ban the use of gas in electricity generation. Price controls at the wellhead in America held back the development of new supplies. Yet, in fact, there was never a genuine shortage of gas, merely a disincentive for firms to find it. When America deregulated its gas markets in the 1980s, unleashing the incentive to discover and market gas, prices collapsed—and stayed low for more than a decade.

This time prices have soared because—with the exception of Alaska, which is distant from most consumers—North America is indeed running out of gas. Yet the rest of the world is awash in gas. The reason that this was not recognised sooner, says Joseph Naylor, who runs Chevron Texaco's gas efforts, is because “firms simply never looked for gas before.” As energy liberalisation gathers pace, from Spain to South Korea, argues BP's Anne Quinn, “fungible markets will attract supply.”

If scarcity is not a serious worry, what of ever-rising prices? Certainly, there are plenty of experts who expect prices to remain high for many years, even if rising supply pricks today's gas bubble eventually. That is because, with LNG capacity taking years to build, supply will rise slowly. Sara Banaszak of PFC Energy, a consultancy, says that “LNG cannot prick the price bubble in the next 6-8 years.”

Still, it will be surprising if LNG imports do not ultimately lower American gas prices below $5 per mBtu from today's over $6. LNG is usually profitable at $3.50 (BG, a British firm, says it is profitable at $2.50), so there is plenty of incentive to invest in capacity at today's prices—as long as local planning rules and safety fears do not stop LNG terminals being built.

What gives Saudi Arabia power over the oil markets is its massive investment in spare capacity, says David Victor of Stanford University. Indeed, the main reason oil prices are now surging beyond OPEC's control is that the Saudi buffer is precariously low. The capital expenditure needed to build spare LNG capacity is so much larger than that for oil that nobody with any sense will do this. Firms with control over local pipelines may well exercise some market power, argues Mr Victor, but a global gas cartel seems unlikely.

Moreover, gas reserves are in fact more widely dispersed and more abundant than oil reserves. That means that the potential troublemakers, from Iran to Russia, are not guaranteed to attract investment. Rather, Mr Victor and Ms Jaffe agree, western capital will probably flow to those countries with the most investor-friendly policies. That is why Trinidad is being developed as an LNG producer before its turbulent neighbour, Venezuela, and why Qatar is emerging as the Middle-Eastern Goliath of LNG even as massive gas reserves in investor-unfriendly Iran and Saudi Arabia remain largely untapped.

Despite the current optimism, the huge political and financial risks inherent in the LNG business mean that the boom is not yet certain to happen. The capital required is huge, the number of firms with deep enough pockets very small, and the memory of the earlier gas-price collapse induced by America's deregulation is fresh. As Malcolm Brinded of Shell puts it, “our hopes have been dashed before.”

Yet, at today's prices, the potential rewards are fabulous for those firms with the courage, capital and competence needed to complete LNG projects. As Mr Brinded himself concludes, “gas will be the fuel of choice for at least the first half of this century (and) flexible, long-distance supplies of LNG are the key.” Get ready for a $100 billion investment boom, the prelude to the “century of natural gas”.

August 30 Philippine Stock Market Daily Review: Market Inertia

August 30 Philippine Stock Market Daily Review: Market Inertia

Talk about market inertia…investors practically stayed on the sidelines. Just consider: today’s lean volume of P 399.888 million (US$ 7.14 million) incorporates cross transactions to the tune of P 111.447 million ($US 1.99 million) which represents about 28% of today’s trades, meaning that net of cross trades market volume in domestic currency would amount to a scanty P 288.441 million (US$5.15 million). Moreover, even as foreign capital registered an inflow worth P 29.038 (US$ 519,000), foreign trades accounted for about only a third of the aggregate peso turnover, suggesting that local investors were at helm of today’s activities.

Even as the market was in a state of lethargy which is typical during the week’s start, market internals emitted mixed signals with slightly bullish undertones. First, there were more advancing issues than declining issues (40-32) even as industry subindices were mostly in the red (4 up, 2 down) led once again by the Mining Sector. Second, aside from the net foreign buying, which mostly centered on PLDT (about 75% of the company’s trades accounted for foreign support), on the broader market, foreign capital bought more issues than it sold by almost 2 to 1. In other words, in spite of the ‘crisis’ talk foreigners are still infusing capital to the local equity market although on a cautious pace. Lastly the performances of the major market cap issues or the blue chips were evenly mixed with three advancers (PLDT +.39%, SM Primeholdings +1.75%, and Globe Telecoms +.57%) against three decliners (Metrobank –1.96%, Bank of the Philippine Islands –1.43% and San Miguel B –1.43%) and three unchanged (Ayala Corp., San Miguel A and Ayala Land). The relatively mixed output resulted to the slight decline of the Phisix by 1.63 points or .1%. Well, the Phisix is not alone, Asian bourses are, as of this writing, trading mixed.

Some of last week’s best gainers among the second tier Phisix components issues saw brisk activities with most of them posting continued gains for the day, namely Union Cement +5.66%, Ionics Corp +8.25%, Metro Pacific +6.06%, Music Corporation +8.79%. Only DM Consunji declined by 1.92%.

While foreign money remained at the cautious side of the trade, local investors persisted with speculations on the second tier issues that catapulted these to the top 20 most traded issues. Obviously the market awaits a catalyst or a leader for it resume its climb over a ‘wall of worry’.

The Guardian: China's farmers cannot feed hungry cities

China's farmers cannot feed hungry cities

No longer self-sufficient in food, the country today increasingly has to buy abroad, raising global prices

Jonathan Watts in Beijing
Thursday August 26, 2004
The Guardian

China's leaders have raised the alarm about their country's ability to feed itself as rapid development sucks land, water and people from the food-producing countryside into increasingly large and hungry cities.

After a steady fall in grain harvests, the world's most populous nation recently became a net importer of food for the first time in its history, raising domestic political concerns and driving up international prices of wheat, rice and soya.

Hu Jintao, the president, has commissioned studies on food security. The prime minister, Wen Jiabao, has visited a farm to urge peasants to boost production with a warning that grain security is a matter of social stability. Ministers have hurriedly cancelled plans to develop farmland and the agricultural ministry is offering tax incentives to farmers who switch to grain production.

Food security is a visceral issue for a generation that grew up during the famines of the 40s and 50s, when an estimated 40 million people died of starvation largely as a result of the headlong charge towards industrialisation known as the Great Leap Forward.

Although China's hefty foreign exchange reserves make it unlikely that there will be another famine any time soon, elderly leaders have watched with concern as the country's agricultural surplus has disappeared just as the appetites of its increasingly affluent population has grown.

During Mao Zedong's era, every local district was supposed to be self-sufficient in grain, which often necessitated diversion of scarce water resources into arid areas. Now, however, the priority for the water and the land is industrial and urban development.

With economic zones opening up across the country and more than 10 million peasants moving into cities every year, the amount of arable land in China has shrunk by 6.7m hectares (16.75m acres) since 1996.

According to Lin Yueqin, an economic researcher at the China Social Science Academy, the growth of cities is largely to blame for last year's record drop in grain supply.

"Urbanisation has eaten into the size of the nation's arable land. Farmers feel there is little profit to be had from their traditional crops so we've seen a long decline in grain output," he said.

Since 1998's record harvest of 512m tonnes, grain production has fallen every year to just over 400m tonnes.

At the same time, appetites are growing. The 9% annual growth of the economy is pushing up wages and pushing out waistlines. Urbanites are more likely to eat meat - which is fattened on grain - and they are more likely to be fat. According to one study of children in Shanghai, 8% of three- to six-year-olds are obese.

To feed this increasingly hungry population, China has had to look overseas. In the first six months of the year, the value of food imports surged 62% to $14.4bn (£8bn). Although the harvest may improve this year, it is thought unlikely to be enough to match rising demand. Soyabean imports, which doubled last year to 20.3m tonnes, are expected to double again this year. The World Bank forecasts a rise in net grain imports from 14m tonnes next year to 32m tonnes in 2020.

Even rice - the traditional staple - is more likely to come from neighbouring countries. Such is the demand that Thai farmers report entire crops being bought long before har vests. Vietnamese authories blame food-smuggling for a record 20% increase in the price of rice. For the first time, Pakistan is being approached as a rice supplier. In one novel experiment, the Chongqing municipal government is leasing land in Laos to grow food for its urban population.

This has lead to a surge in global food prices. Grain futures are up 30% this year thanks largely to the China factor.

Although Beijing's leaders are concerned that the growing dependence on imports - particularly grain from the US, Canada and Australia - is a strategic vulnerability, many economists argue that it makes sense to import because China must feed 20% of the world's population with only 7% of the planet's arable land.

China can also afford more imported food than in the past. Thanks to a booming manufacturing sector, the country has healthy foreign exchange reserves of $470bn. Most farmers would rather produce high-value, labour-intensive export crops like fruit and mushrooms than wheat and barley, which can be produced more cheaply in the US.

Sunday, August 29, 2004

Daily Reckoning: Only Dead Fish Swim With the Stream by Christopher Mayer

Only Dead Fish Swim With the Stream
Christopher Mayer
for the Daily Reckoning

Most people want to buy strong companies with growing sales and expanding markets and a bright future. No one wants to buy a company that has problems to work through, that has been hit with one setback or another and where the near-term outlook is murky and uninviting.

Yet it is in these latter opportunities where the greatest investors have plied their trade and milled their fortunes. Warren Buffett bought The Washington Post in the throes of the 1973 - 74 bear market, when it was struggling. He bought 10% of the company for about $10 million. At the time, the company had revenues of over $200 million. Ten years later, his stake was worth a quarter of a billion dollars.

He bought GEICO when, in his words, "It wasn't essentially bankrupt, but it was heading there." It was one his greatest acquisitions.

Not just Buffett, but scores of wealthy investors have enjoyed incredible returns by buying when other investors were fearful, by seeing through the temporary setbacks.

The greatest investors did not fear to go against the consensus. As writer Malcolm Muggeridge used to say, "Only dead fish swim with the stream."

I've recently completed a book, which brought to mind many of these thoughts on the paradoxical nature of market returns. The book is titled Capital Account: A Money Manager's Reports on a Turbulent Decade 1993 - 2002, and it is edited with an introduction by Edward Chancellor (author of the acclaimed Devil Take the Hindmost). The book collects financial reports written by Marathon Asset Management's partners and delivered to its clients over the boom years. Marathon is an investment advisory firm based in London that manages over $24 billion in assets for institutional investors.

The book was interesting because it illustrates Marathon's unconventional investment style and provides a number of useful ideas and examples of investments that succeeded by bucking consensus opinion.

Consider General Dynamics, a company that Marathon backed in the early 1990s. General Dynamics was in bad shape at the time, suffering from a declining backlog of business in the wake of the Soviet Union's demise.

New management took the company in a different direction in 1991 – by closing or selling unprofitable businesses and buying back its own depressed shares.

The stock of General Dynamics increased six fold between 1990 and 1993, even though its sales were reduced by half.

Yes, sales declined by 50% and the stock rose six fold!

Marathon used the example to highlight a couple of key points regarding their "capital cycle approach" (which we'll get to in a minute). First, investment returns can have less to do with sales and growing markets than they have to do with the efficient allocation of resources.

In this case, the management of General Dynamics took the existing resources of the company and dramatically changed the way those resources were deployed. Instead of frittering them away on unprofitable business lines, management focused on its core business. Even though this involved effectively making the business smaller, investors were rewarded with an outsized gain in the stock price during a relatively short amount of time.

Secondly, Marathon pointed out that General Dynamics benefited from a decline in competition, as money was withdrawn from the defense sector or diverted to other areas and the existing businesses consolidated. As Chancellor writes, "It is better to invest in a mature industry where competition is declining than in a growing industry where competition is expanding."

Marathon has named its approach the "capital cycle approach." The approach is based on a simple yet compelling idea. High returns on capital, or the prospect of high returns on capital in one area of the market, will attract additional investment. This additional investment will put downward pressure on returns in that market.

Think about the Internet bubble. When the Internet was still new, the first few firms in the space commanded large market caps relative to the amount of capital invested in the business or the amount of money required to start the business. As a result, more money kept pouring into dot-com businesses.

Let me give you Chancellor's distillation of this idea, and you will never forget it.

He wrote, "When a hole in the ground costs $1 to dig but is priced in the stock market at $10, the temptation to reach for a shovel becomes irresistible."

Using the capital cycle approach, you would become suspicious when shares are priced on the assumption that existing returns are going to be maintained or improved in light of rapidly expanding new investment and growing capacity in a business or industry. In other words, the approach helps guard against the error of simply extrapolating prior returns into future years. Capital cycle forces you to think about competitive pressures.

The process works in reverse as well. As share prices decline, investment capital moves off to find greener pastures and competition declines. As excess capacity is sweated off, though, returns are likely to improve. Here is where there is opportunity, as share prices in these situations are often priced assuming the pessimistic present conditions are permanent. But as things improve, as the market naturally adjusts, these companies may provide outsized returns for far-seeing investors. General Dynamics did exactly that. Target may be able to do that with Hudson's Bay.

Saturday, August 28, 2004

InvestmentRarities: BEST OF KURT RICHEBACHER February 20, 2004

February 20, 2004

Our differences of opinion with the bullish consensus about the economic and financial situation in the United States have many reasons. One of them is a radically different apprehension of wealth and wealth creation. America’s policymakers and economists view asset inflation as wealth creation as if this were a self-evident fact. What this asset inflation truly generates is phony collateral for runaway consumer indebtedness, luring the consumer into unprecedented debt excesses. It is phony wealth creation because unlike the real wealth creation through capital investment, both its creation and its use involve no income creation.

This perception of wealth creation, actually, runs completely counter to traditional thinking in economics. It has always been apodictic in economics that there is but one way to create genuine wealth for an economy as a whole, and that is to consume less than current production or income. Wealth creation from the macroeconomic perspective essentially occurs through saving and investment in tangible, income-creating plant, equipment, and commercial and residential buildings.

Guided by the Greenspan Fed, America is practicing a radically different pattern of "wealth" creation. An extremely loose monetary policy forces up asset prices, providing both the impetus and collateral for higher borrowing. Being offered almost limitless credit at rock-bottom interest rates, the consumer responds with a frenzied borrowing and spending binge.

The crucial thing about this new American way of wealth creation is that it takes places entirely outside the national product. Its gist is to inflate asset prices by inflating credit. But what gives it such great dynamics is the conventional practice to value the vast mass of existing shares and houses in line with movement of the price of the last, marginal trade.

It is really like printing wealth.

The crucial concern is the inherent effects of this so-called wealth creation to the economy. Asset inflation by itself has no effects at all. Its economic effects arise only from the associated increase in consumer borrowing and spending. But that has two highly malign effects. An endless escalation of unproductive debt is one. The other is that consumption takes an ever-greater share of GDP. Overconsumption is, really, America’s deep-seated, structural disease, and asset inflation is worsening it.

Grossly distorted economic growth at the expense of saving and investment is one dangerous legacy of America’s asset inflation. The exponential rise in the consumer’s indebtedness in relation to his badly lagging income growth is the other. A savage debt deflation is the inevitable outcome. But this kind of deflation does not lower interest rates. It boosts them. Basically, the Fed has lost control.


U.S. economic growth is no longer based on saving and investment. Its essence is that credit excess provides soaring collateral for still more credit excess creating still more asset inflation for still more borrowing and spending excess. It seems like a perpetual motion machine that just goes on cranking out wealth and spending. It is important to see that the true name of this game is bubble-driven growth, and all bubbles end by bursting. America is the next Japan.

Wednesday, August 25, 2004

August 25 The Philippine Stock Market Review: Dead Cat Bounce?

August 25 The Philippine Stock Market Review: Dead Cat Bounce?

After being spooked by the ‘Crisis’ talk, local investors regained some sensibilities and bargain hunted on the domestic equity market, as officials moved to assuage concerns of the investing public on the country’s ability to meet its debt payments. The Phisix climbed a measly 6.07 points or .39% after yesterday’s brutal thrashing. While your analyst is disinclined to oversimplify the recent events to the market’s short-term movements, the shocking admission by no less than the Philippine President on the gravity of the country’s chronic economic conditions cast a pall on the attractiveness of investments in the country, hence in the short-term the ‘risk’ issue becomes the primordial wall of worry from which the bulls has to climb.

Today’s market activities reflected such skepticism. As we earlier mentioned first to ever react would be foreign investors as lugubrious prospects would increase risk considerations of their portfolio relative to benefits hence any shocking revelations could spur a sudden exodus from the market. While yesterday’s activities manifested a tempered reaction from the foreigners, today we noticed significant volume increase of these liquidations, which amounted to P 71.648 million, or almost equivalent to 11.9% of aggregate volume. Foreign trades constituted 61% of today’s output while selling two times more issue than it bought.

SIX of the eight heavyweights scored a net outflow from foreign capital with the most notable outflow seen in Ayala Corp (unchanged), almost 45% of its output and represents about 50% of the net outflow, joined by moderate selloffs in SM Primeholdings (+1.75%), PLDT (-.39%), and Ayala Land (-1.88%) while Bank of the Philippine Islands (+1.25%) and Metrobank (+2.0%) posted negligible selling. Only Globe Telecoms (unchanged) recorded positive flows from overseas money while San Miguel B (unchanged) had no foreign trades.

Other noteworthy foreign activities are the continuing intensive selling on Filinvest Land (-1.07%) accounting for 75% of its trades, and the modest accumulations in ABS-CBN Preferred shares (unchanged) representing about 17% of its output and First Philippine holdings (+2.06%) about 27.58% of the firms trades.

Sentiment was biased towards the bulls with advancing issues ahead of declining issues by 35 to 20 and the major industry indices were higher led by the rebound of the mining sector while Oil and the property index posted losses.

Yesterday’s major trendline breach was a cause of concern, while today’s rally hardly made a significant headway to regain lost grounds, meaning that today’s run up could be construed as temporary or a dead cat bounce. As gauge, the former support level is now its resistance level and has to be credibly taken out backed by sizable volume. However, with the past two day’s performance of having foreign money taking on the selling side of the trade equation, it would need a lot of firepower from the locals to repulse the seemingly strengthening bears, and to hold or buoy the index from its current levels.

Tuesday, August 24, 2004

August 24 The Philippine Stock Market Review: A Reign of Fear?

August 24 The Philippine Stock Market Review: A Reign of Fear?

Well with the dirty little word out as officially promulgated by no less than the highest authority of the land…what do you expect? Massacre, Bloodbath carnage…yes, the PHISIX was clobbered by 34.17 points or 2.17% as foreign and local investors stampeded out of the Philippine equity assets to register its biggest loss since the post election May 11 and is the largest decliner among the Asian bourses, as of this writing.

It was a sea of blood out there today as declining issues routed advancing issues by 8 to 1, ALL major subindices hemorrhaged led again by the mining index which fell by 2.82% and foreign money saw an outflow of P 21.847 million. Aside, foreign investors sold slightly more issues than they bought.

Of the nine heavy cap mainstays of the Phisix, 6 issues contributed to the steep decline of the Phisix mostly due to foreign led sell-offs, namely Ayala Corp (-5.46%) Globe Telecoms (-3.46%), Bank of the Philippine Islands (-2.44%), Metrobank (-1.96%), PLDT (-1.56%) and San Miguel B (-1.43%) while the remaining three, Ayala Land, SM Primeholdings and San Miguel A were unchanged.

Aside from the tormented heavyweights foreign money also saw heavy liquidations in Pilipino Telephone (-8.46%) and Union Cement (unchanged), while unassumingly providing support to First Philippine Holdings (-3.0%), ABS-CBN Preferred Shares (-2.43%) and DM Consunji Inc (-7.69%).

Today’s market action calls for us to raise our alert levels to orange, meaning that the Phisix based on its chart has manifested a strong warning reversal signal after having successfully breached its major trendline. Put differently, we have yet to confirm the negative signals emitted today, if it is simply a knee jerk reaction or the onset of the market’s reversal to a declining phase in the immediate term. The sustainability of the critical 1,518-support level should give us a clearer picture where the market is headed for.

Will investors flee the market on thoughts of an Argentina-like upheaval or will they construe that such official acknowledgement of the existing problem, instead of a denial, as government’s resolve to confront the dilemma and stave off a full blown crisis? Today’s market action points toward the former however it remains to be seen how investors would react in the coming days. Will the market's psychology now be enveloped by a reign of fear?

Monday, August 23, 2004

Kitco.com: Gold - the Instinctive Protection of Wealth By Barry Downs and Bill Matlack

Gold - the Instinctive Protection of Wealth
By Barry Downs and Bill Matlack
August 18, 2004
Nowhere in the mainstream conventional-wisdom discussion of economics is there any concern shown for the cumulative negative impact on society of the past many decades of inflation. In fact, Federal Reserve inflation has become institutionalized to the point where, if inflation prospects lessen or deflation threatens, the Fed becomes quite aggressive to bring back inflation. We have seen this happen over the past three years. Aside from the minute group of economists and investment managers concerned with the unsound nature of the money credit system, the masses at this time remain blissfully ignorant, complacent, and unprotected; and still see gold as only relevant for baubles and bangles.

Dollar inflation (i.e., the loss of purchasing power) has grown in intensity since the establishment of the Federal Reserve in 1913. By year-end 2003, based on CPI inflation, the dollar had lost 96% of its purchasing power. In the period from the early 1940s to 2003, 91% of that loss occurred. Since President Nixon closed the gold window to foreigners in 1971, ending any tie to gold, the dollar by year-end 2003 had lost 78% of its purchasing power.

One has to ask how long the inflating can go on before a serious breakdown in the money credit system occurs, perhaps sending the dollar shuffling off to the dust bin of money history or, as some would say, to money heaven. History has shown that, in the world of defunct currencies, past French inflations, as an example, have lasted around six decades or until the currency had lost 99 1/2 % of its value. On that timetable, the US dollar's day of reckoning may be fast approaching. Fed governor Ben Bernanke minced no words over a year ago when he stated that when threatened with falling costs and prices, money printing could reach the point where there could be helicopter dollar distributions. A panicky Fed is quite capable of anything!

The French provide a very good example of a society with an inborn instinct when it comes to surviving monetary turmoil. It's standing French folklore that every French peasant has some savings in gold coins under the mattress or in the floorboards, and that in past generations gold has enabled survival amongst a succession of great disasters under various forms of government. In a little over two centuries the French had to survive a profligate king and John Law's Mississippi bubble, which ended in a worthless currency; a few decades later, it was the guillotine for a tyrannical government and again worthless paper; Napoleon's war and nation building brought hardship and monetary turmoil to the country; the French were defeated twice in the 1800s; there was a succession of weak and vacillating governments including a monarchy and several republics; and finally, two destructive world wars were both won, but the aftermath still produced economic disaster.

Throughout European history, there have been similar instances where a gold hoard has been the difference between financial survival and ruination. The reichsmark at the end of WWI was exchanged for the dollar at the rate of one hundred to one, but by the fall of 1923 it went to one trillion to one, wiping out the savings of Germans or any other holders of the currency.

There has never been a fiat paper money system which has survived. The US dollar, through its circulated Federal Reserve notes, represents a fiat paper money cut loose from the discipline of gold money over 30 years ago. The reserve currency concept was sold to the rest of the world on the presumption that a paper money, issued by a country as successful as the US, must be sound. Confidence has been built around the full faith and credit of the US, but as America has lived beyond its means and leveraged itself to the hilt, confidence in America's eventual solvency is eroding.

Unfortunately, US finances have been so mismanaged by the Keynesian and Monetarist micro managers that the country sits with record trade and budget deficits, beholden to foreigners for financing with a total credit market debt pyramid of over 300% of GDP and coming off a period of unprecedented debt stimulus where $4 is being spent to get a miserly $1 of growth. Added to US financial woes is the $45 trillion of unfounded liabilities looming in the period not far ahead, and the war against America and its way of life being waged by the Islamic Fundamentalist world. The cost of a prolonged terrorist war could alone bankrupt the country.

The cumulative dollar inflation since WW II has wiped out 90% of the dollar's purchasing power and trillions of dollars of savings of Americans, but few Americans so far seem to realize what has happened to their store-of-value money, and even fewer have contemplated how the inflation eventually ends.

Americans had a brief encounter with gold in the late 1970s, which took the dollar price per ounce to $600 for a short time in 1980. But for more than 20 years, the flood of paper by the Federal Reserve and the focus on paper assets have mesmerized the general public, causing them to forget about the importance for a sound money credit system. The 8,000% plus increase in NYSE average volume since the 1970s and the 18,000% increase in NASDAQ volume over the same period illuminate the interest in paper assets in roughly 30 years. A very small percentage of Americans from time to time will speculate in gold via the futures market or in paper gold, or will speculate in a limited way in gold stocks. But as far as holding physical gold for monetary reasons as the rest of the world holds gold, there is virtually no interest, at least at this time.

The belief that the dollar and the debt-based paper wealth surrounding it are somehow blessed with some special spiritual permanent protection is residing in a fool's paradise. The world has always been a crime and punishment place, and the Federal Reserve has created the ultimate financial crime, which has been the orchestrated destruction of wealth through inflation. The punishment ultimately will be dished out by the market place to the dollar and its holders. Market forces in the final analysis will also likely dictate the return of paper money tied to gold, but not until bitter lessons have been learned.

Human instinct to seek protection in gold seems likely to explode when the time comes, probably first among Europeans and Asians where gold to this day has its tradition. If history has taught us anything, interest in gold and indirect investments in gold will eventually spread to the US as well, adding to the demand for something in very limited supply and sending gold prices soaring.

The gathering economic storm and approaching money/credit inflection point is providing holders of wealth, dominated in the dollar or any other fiat paper money, a chance to secure protection in the gold arena at historically low price levels. Whether it be a position in the physical metal (the ultimate) or gold in the ground via a well-chosen portfolio of gold mining stocks, or both, some significant diversification away from a world of pure paper fiat money has never been more appropriate.

Those with wealth centered only in paper assets, including real estate, should perhaps begin to ask themselves if they will end up having been as smart as a French peasant.

Mineweb.com: Philippines wants Chinese mining investment

Philippines wants Chinese mining investment
By: Dorothy Kosich
Posted: '23-AUG-04 05:00' GMT
© Mineweb 1997-2004

RENO--(Mineweb.com) For the second time this month, a top economic development official of the Philippine government has publicly declared the nation's intention to attract Chinese investment in mining in the Philippines.

Philippine Socio-Economic Planning Secretary Romulo Neri said that his nation considers China "a potential huge investor" in domestic mining. However, under the Filipino Constitution, mining and exploration are limited to local investors. Nevertheless, Neri believes that the mining sector could become the main engine of the nation's economic growth in the nation if foreign investors are permitted to invest. Neri is also director general of the National Economic Development Authority, which is the social and economic development planning and policy coordinating body for the Executive Branch in the Philippines.

Last January, President Gloria Macapagal Arroyo issued Executive Order 270, a National Policy Agenda on Revitalizing Mining in the Philippines, aimed at reviving the mining industry and developing the mineral potential of the country. The government, through the Mines and Geoscience Bureau, is now promoting mining investment.

"If the Philippines promulgates proper policies, it has a great opportunity of attracting China, which has exchange reserves of more than 400 billion U.S. dollars," Neri declared. He said that foreign investors are badly needed since the development of a single large-scale mining operation would require between $850 million to $1.2 billion in investment, well beyond the reach of Filipino investors.

Neri said the mining industry is critical in stabilizing the nation's macoeconomy and that the sector is expected to increase tax collection, reduce risk perception, and improve the country's credit rating. He also insisted that reform of the Filipino mining sector would also generated a substantial increase in exports and boost the country's precarious foreign exchange reserves, as well as strengthen and stabilize the peso.

Meanwhile, many foreign mining and exploration companies tend to believe that the Philippines does not have exceptional geology. The country also suffers from business policies viewed as unfavorable to foreign investors, a perception of being corrupt and politically unstable, and of being a haven for terrorists.

"The growth of the mining industry is critical in inducing greater economic growth, attracting more investments, creating more jobs and reducing poverty," Neri declared, predicting that mining could create 10,000 jobs. The former director of the Philippines Congressional Planning and Budget Office, Neri said mining had a six-time multiplier effect on the economy, which would generate up to 36% of GDP. He estimated the Philippines' potential mining wealth at $840 billion, which is ten times the country's GDP.

Among the foreign mining and exploration companies doing business in the Philippines are TVI Pacific and Crew Gold of Vancouver, Mindoro Resources of Edmonton, and Oxiana and Climax Mining of Australia. ,p aling="justify"


Despite Neri's overtures to foreign mining investment and the Chinese, the Philippine government still must prove successful in its challenge of a Supreme Court ruling that threatens millions of dollars in foreign investment in the mining industry. The Supreme Court of the Philippines last February overturned portions of a law, originally aimed at opening up country's mining industry to foreign investment. The Natural Resources Department, the President and the mining industry have submitted a motion asking the Supreme Court to reconsider its ruling.

The Supreme Court ruled that portions of 1995 Mining Act, which allowed 100-percent foreign ownership in the exploitation of the country's mineral resources, were unconstitutional. The law had been challenged in court by an anti-mining environmental group, backed by the Roman Catholic church. The ruling may impact as many as 13 foreign companies involved in 15 mining projects, the majority in exploration. Business leaders claim that the Supreme Court order has further harmed the nation's image as a country that welcomes foreign investment and will scare off foreign capital from the mining sector and other key industries.

August 23 The Philippine Stock Market Review: Stock market drivels

August 23 The Philippine Stock Market Review: Stock market drivels

Surely today’s decline will be attributed by so-called ‘stock market analysts’ to the forecast prepared by a group of illustrious economist from UP presaging an Argentina and Turkey like crisis brewing in our midst. Well of course, while your analyst do respect the outlook of these pundits, and agree with them on economic risk the country is facing (What more under the FPJ stewardship?), although today’s activities in the stockmarket does not confirm the anxieties impressed upon by the UP study.

First thing in order is to know who would react to such dour outlook, foreigners or locals? Naturally the foreign investors. Since this is an alien land to them learning of such dicey prospects would probably compel them to adversely react on their portfolio holdings in the country. However, given that most of the foreign money invested in the Philippines comes from money institutions, the risk variables to the country, such as political, economic, cultural and others, have already been imputed to their investment decisions as part of the risk premiums. Yet given the still accommodative monetary environment the world is into, such institutions would probably still have the optimal tolerance for risk appetites in the quest for higher yields.

Second, the plight of the Philippines is not an isolated case, even the largest and the most influential economy of the world is almost embroiled in the same quagmire. But of course, one would argue that they are privileged and less affected being that they hold the backbone to the world’s monetary system, the US dollar.

But going back to today’s trading activities, while the locals probably cringed at the “wake up call” (for me) or gloom and doom (for the ‘rationalizing’ analysts) prospects of the Philippine economy, foreign investors infused P 53.882 million ($962 million) to the Philippine Stock Exchange and bought the broader market (bought more issues than it sold by almost 2 to 1). These hard data flies in the face of those who would dare call on today’s decline due to probability of an economic Armageddon which is simply a call to action to those concerned (authorities) that the Philippines has long been walking on a tightrope and is tilted towards losing control.

The Phisix closed lower by 6.66 (bad sign?) points or .42% on lean volume of P 441.395 million or $7.823 million and is one of the minority decliners in the Asian region, whose bourses are mostly higher following the Friday’s rally in Wall Street.

Market sentiment was inclined towards the bears, with declining issues ahead of advancing issues by a tight 35 to 27 and major industry indices are all in the red except for the Oil issues which jumped 6.06% even as crude oil prices corrected from its Friday’s record high of $49.40 per barrel. The Mining sector was the biggest loser even as Gold and Silver rose to their April high levels. What irony! Well, extractive issues are supposedly no brainer investments given that the underlying prices of the commodity/ies should actually determine the economic value of the company that owns or produces them. Unfortunately our market is so puerile that it thrives on gossips and rumors instead of valuations. So much for no brainer investments.

With PLDT (+.39%) the only gainer among the heavyweights, there are three decliners responsible for the drop of the Phisix, namely SM Primeholdings (-1.72%), San Miguel A (-1.72%) and Globe Telecoms (-.59%). Bank of the Philippine Islands, Metrobank, San Miguel B, Ayala Land and Ayala Corp closed neutral.

In sum, foreign capital supported today’s index despite a lower close primarily by locals who sold on some index issues and partially the broader market. As to what compelled the locals to sell is probably out of profit taking or sheer lethargy. So much for the stock market drivels.

Saturday, August 21, 2004

Chris Temple: Bonds or gold - which market is wrong?

Bonds or gold - which market is wrong?
August 20, 2004
The Prudentbear.com
by Chris Temple
As we all know, financial markets now and then send mixed signals on what the future might hold. Especially these days, with investors on edge over soaring oil prices, terrorism fears, uncertainty over the upcoming election and a growing belief that the U.S. economy’s surge since early 2003 might be flaming out, it’s hard to know whether to “zig” or “zag.”

One of the most curious anomalies of the last few weeks has been the fact that both U.S. Treasury securities and gold have been rallying. While not unprecedented, this is a situation that is inherently contradictory, and is unlikely to last. To be sure, some are arguing that the rallies in each are due, in part, to terrorism fears and the inevitable flight of some capital to traditional safe havens; on this score, both bonds and gold qualify. At the end of the day, however, both markets will be supported or shunned based on their underlying fundamentals.

Let’s start with the bond market. Virtually everyone at the beginning of the year believed that long-term interest rates had nowhere to go but up from their lowest levels in half a century. The economy and corporate earnings were strong, and it appeared inevitable that the Federal Reserve would finally have to respond at least somewhat to the extraordinary inflationary pressures it has fostered in the recent past by taking some of them away via, at last, raising short-term interest rates. Topping off an environment which was already pointing to higher rates and lower bond prices has been the inexorable rise in the price of crude oil to fresh all-time nominal highs. No matter how the Bureau of Labor Statistics tries to gloss over its implications, higher oil prices still—Fed Chairman Greenspan’s “new economy” notwithstanding—have inflationary implications. In fact, through 2004’s first half, even the substantially understated numbers from the BLS showed U.S. consumer prices rising by a 5% annualized rate during the first half.

After topping out twice around the 4.9% area, though, the yield on the government’s current bellwether 10-year note has plunged lately; it now stand at around 4.25%. Ignoring much of the above, bond traders seemingly are voting now that a weakening economy and the apparent peak in corporate earnings growth demonstrate that interest rates can’t go up much more. They ignore the inflationary pressures of rising oil prices to instead reinforce their belief that this additional “tax” on the economy means that the Fed will neither have the ability or the nerve to raise rates much farther. Combined, this suggests to them that we have already seen what rise we’re going to in long-term market rates; and that, before much longer, we’ll be fretting over recession/deflation anew.

Longer-term, that is certainly where we’re heading to some extent (though whether everything goes down in price or, in the alternative, at least some items such as commodities buck the coming unwinding is yet to be determined.) For the time being, however, gold is begging to differ with some of this hypothesis. Gold traders also see soaring energy costs; they realize to some extent, however, that such an event has always meant higher eventual inflation.

In addition, those tiptoeing back into the yellow metal with increasing conviction seem to recognize something stock traders and the cheerleaders on financial television incredibly continue to dismiss; and that is—terrorist premium or not—high (and rising) energy costs are here to stay. Now, there’s no question that at least some of the rise in oil’s price (and today was a good example, as a barrel of black gold closed at $48.75, up $1.48 on the day) does indeed owe itself to speculators. And I’ll even concede here that, if peace suddenly broke out in the world, oil’s price would likely plunge, as some speculators exit their recent bets.

However, listening to the shills for Greenspan and the Bush Administration, you’d think that under this scenario oil would go back to $25 per barrel and stay there. This is nothing but fantasy. There is nothing “transitory,” to use one of Greenspan’s favorite words, about countries like China and India having embarked on major growth trends not unlike that of the United States at the beginning of our own Industrial Revolution. If and when oil does settle down for a while, it will later be looked back on as nothing but an interlude in what is otherwise a long trend to substantially higher U.S. dollar prices for crude.

I stress U.S. dollar prices because that’s another thing seemingly understood by those re-entering gold that is utterly lost on those again willing to loan money to Uncle Sam for 10 years at 4.22%, as of today’s close. Though the greenback has spent most of 2004 successfully holding its own against most other currencies, it’s inevitable that its secular bear market will soon resume (if it in fact has not done so already.) Our nation’s external debts continue to mount. Eventually, a trade deficit now running in excess of $600 billion annually and a combined current account deficit of even more means that the currency with which that “nut” must be serviced has to go down in value.

The disconnect between bonds and gold was especially stark when it was announced a few days ago, in fact, that the U.S. trade deficit for June had surged to a new record of $55.8 billion, smashing the old mark. The dollar sank, gold rose—and bonds yawned.

Smug bond traders, out in front of their belief that, like they did in Japan, long-term interest rates have to decline ultimately to even new lows as the U.S. economy weakens further, are taking a heck of a gamble on two fronts. First, they’re betting we’re headed straight to that outcome; and that, in between here and there, nothing will cause long-term rates to, at the least, challenge their old highs (on yields) first. I respectfully disagree.

Secondly, they fail to realize that there is at least one clear, HUGE difference between the U.S. today and the Japan of the 1990’s; namely, that they cut interest rates to the bone from a position of having current account and foreign exchange surpluses. In short, nobody from the outside had to “ratify” their policy of massively inflating their monetary base and taking rates down to virtually nothing, in order to cushion their long unwinding. America is not in such a position, but instead has the largest external debts of any country in recorded history. In spite of what remains a large appetite for U.S. paper around the world, at some point our creditors will decide that their excess savings might better (and more safely) be put elsewhere. The long-term implications for interest rates, therefore, is much less sanguine than bond traders seem to grasp; and could hit us sooner rather than later, depending (among other things) on how quickly China moves to revalue its currency.

For our present purposes, in addition to betting that bond traders are wrong in the near term, I’m increasingly willing to bet that gold traders are correct. Gold has managed to move above $400.00 per ounce again and, in the last couple days, has additionally moved above a down trending resistance line in place since its peak around April 1. The most leveraged basket of gold stocks, as measured by the HUI Index of the American Stock Exchange, has today managed to close sufficiently above overhead resistance in the 200-202 area to mark an important breakout point as well.

Unlike the false starts of late May and late June/early July, this last few days has seen volume increase smartly as well. In fact, even in the last week, it was typical to see volumes for most gold stocks traded on the major exchanges remain below their 30-day averages even on days they were rising. Today, as this apparent breakout was occurring, those I follow were not only up strongly, but traded on average DOUBLE their recent normal volume.

At the least, we are on a course to shortly challenge the April high in the gold price, and last December’s high in the HUI. In the end, I have to take sides with either the bond bulls or the gold bugs; and for the time being, I’m choosing the latter.
Chris Temple is editor of The National Investor newsletter and founder of The Foundation for American Renewal.

Friday, August 20, 2004

Guardian Unlimited: World faces population explosion in poor countries

World faces population explosion in poor countries

Rich nations will downsize, but Britain will grow at the fastest rate in Europe

John Vidal, environment editor
Wednesday August 18, 2004

The world is heading for wildly uneven population swings in the next 45 years, with many rich countries "downsizing" during a period in which almost all developing nations will grow at breakneck speed, according to a comprehensive report by leading US demographers released yesterday.

They predict that at least an extra 1,000 million will be living in the world's poorest African countries by 2050. There will be an extra 120 million more Americans, and India will leapfrog China to become the world's most populous country. One in six people in western Europe will be over the age of 65 by 2050.

But the populations of some countries will shrink. Based on a number of factors, including analysis of birth and death rates, Bulgaria is expected to lose almost 40 per cent of its population.

Britain is expected to grow faster than any other major European country. Within 20 years, the authors expect it to have four million more people, at which point its growth is expected to tail off, adding only a further 1.5 million in the next 25 years to eventually reach 65 million. By then it will have overtaken France as Europe's second or third largest country, depending whether Russia is classed to be in Europe or partly in Asia.

The changes, considered inevitable given present trends, will transform geo-politics and fundamentally affect the world's economies, people's lifestyles and global resources, suggest demographers with the Washington-based Population Reference Bureau.

Countries such as Nigeria and Japan, which today have similar sized populations of about 130 million people, could be unrecognisable by 2050, say the authors. By then, Nigeria is expected to have more than doubled its numbers to more than 300 million people. But Japan, which has only 14% of its current population under 15, may have shrunk to roughly 100 million people.

Among the major industrialised nations, only the US will experience what the authors call "significant" growth. It is expected to have reached a population of 420 million by 2050, an increase of 43%. But Europe is expected to have 60 million fewer people than today and some countries could lose more than a third of their populations.

Eastern Europe is leading the world's down shifters. Bulgaria is expected to return to pre-1914 population levels, losing 38% of its people, while Romania could have 27% fewer and Russia 25 million fewer people. Germany and Italy are expected to shrink by about 10%.

The projections are based on detailed analysis of infant mortality rates, age structure, population growth, life expectancy, incomes, and fertility rates. They also take into account the numbers of women using contraception and Aids/HIV rates, but do not allow for environmental factors.

Climate change and ongoing land degradation are widely expected to encourage further widespread movements of people and pressure for migration away from rural areas towards cities and richer countries.

The population changes are causing growing alarm among experts, who believe sustained growth in developing countries can only be managed with economic help from rich countries. "World population is going to grow massively in some of the most vulnerable countries in the world. We have to ask how rich countries are going to help", said Kirstyen Sherk, of the Planned Parenthood Federation of America.

The former World Bank economist Herman Daly believes globalisation and the uncontrolled migration of cheap labour could put potentially catastrophic pressures on local communities and national economies. "The sheer number of people on Earth is now much larger than ever before in history. Some experts question whether Earth can even carry today's population at a 'moderately comfortable' standard for the long term, let alone 3 billion more".

The report, based on countries' own statistics, confirms trends identified earlier by the UN, and more recently by the US Population census report. While the world's few developed countries are expected to grow about 4% to over 1.2 billion, population in developing countries could surge by 55% to more than 8 billion.

Africa and Asia will inevitably be transformed. Western Asian nations are expected to gain about 186 million people by 2050 and sub-Saharan African countries more than one billion people. By 2050, India will be the largest country in the world, having long passed China.

How some countries will cope with the changes is debatable. Bangladesh, one of the poorest, most crowded and disaster-prone countries, may have doubled numbers to more than 280 million.

Overall, says the report, world population is growing by about 70 million people a year, and will likely reach 9.3 billion by mid-century from 6.3 billion today.

However, a separate report, to be published soon by the Washington-based Worldwatch Institute, will argue that fertility rates in poor countries could drop if there is a world fuel crisis. The thinktank says people usually have as many children as they think they can afford, and the motivation to have fewer comes from anticipating hard times ahead.

Increases in food production per hectare, it will say, have not kept pace with increases in population, and the planet has virtually no more arable land or fresh water to spare. As a result, per-capita cropland has shrunk by more than half since 1960, and per capita production of grains, the basic food, has been falling worldwide for 20 years.

Losers in a numbers game
Five countries are likely to lose a substantial proportion of their population by 2050. These are:

· Bulgaria -38% (7.8 to 4.8 million)
· Moldova -28% (4.2 to 3 million)
· Romania -27% (21.7 to 15.7 million)
· Russia -17% (144 to 119 million)
· Latvia -24% (2.3 to 1.8 million)

A dozen countries are forecast to more than double in numbers. They are all politically, socially or environmentally volatile.

Yemen (255%) Palestine (211%) Afghanistan (187%) and Kuwait (182%) have all been involved in armed conflicts. Bhutan (113%) and Nepal (105%) are undergoing great changes.

Kiribati (133%), the Solomon islands (112%) Tuvalu (122%) and Vanuatu (124%) are all expected to be devastated by climate change and rising sea levels.

NYT: Financial Firms Hasten Their Move to Outsourcing

Financial Firms Hasten Their Move to Outsourcing
New York Times
BANGALORE, India, Aug. 16 - Last February, when the online lending company E-Loan wanted to provide its customers faster and more affordable loans, it began a program in India. Since then, 87 percent of E-Loan's customers have chosen to have their loans financed two days faster by having their applications processed in India.

"Offshoring is not just a fad, but the reality of doing business today," said Chris Larsen, chairman and chief executive of E-Loan, "and this is really just the beginning."

Indeed, seemingly a myriad of financial institutions including banks, mutual funds, insurance companies, investment firms and credit-card companies are sending work to overseas locations, at a scorching speed.

From 2003 to 2004, Deloitte Research found in a survey of 43 financial institutions in 7 countries, including 13 of the top 25 by market capitalization, financial institutions in North America and Europe increased jobs offshore to an average of 1,500 each from an average of 300. The Deloitte study said that about 80 percent of this went to India.

Deloitte said the unexpectedly rapid growth rate for offshore outsourcing showed no signs of abating, despite negative publicity about job losses. Although information technology remains the dominant service, financial firms are expanding into other areas like insurance claims processing, mortgage applications, equity research and accounting.

"Offshoring has created a truly global operating model for financial services, unleashing a new and potent competitive dynamic that is changing the rules of the game for the entire industry," the report said.

Michael Haney, a senior analyst at research firm, Celent Communications, said: "With its vast English-speaking, technically well-trained labor pool and its low-cost advantages, India is one of the few countries that can handle the level of offshoring that U.S. financial companies want to scale to." .

In a recent report "Offshoring, A Detour Along the Automation Highway," Mr. Haney estimated that potentially 2.3 million American jobs in the banking and securities industries could be lost to outsourcing abroad.

Girish S. Paranjpe, president for financial solutions at Wipro, a large outsourcing company in India, said, "Pent-up demand, recent regulatory changes and technology upgrade requirements are all making global financial institutions increase their outsourcing budgets." His company's customers include J. P. Morgan Chase, for which it is building systems for measuring operational risk, and Aviva and Prudential, the British insurers.

Several recent studies concur that there has been an unexpected and large shift of work since the outsourcing pioneer Citigroup set up a company in India two decades ago. They cite cost advantages as the primary reason. According to Celent, in 2003 the average M.B.A. working in the financial services industry in India, where the cost of living is about 30 percent less than in the United States, earned 14 percent of his American counterpart's wages. Information technology professionals earned 13 percent, while call center workers who provide customer support and telemarketing services earned 7 percent of their American counterparts' salaries.

Experts say that with China, India, the former Soviet Union and other nations embracing free trade and capitalism, there is a population 10 times that of the United States with average wage advantages of 85 percent to 95 percent.

"There has never been an economic discontinuity of this magnitude in the history of the world," said Mark Gottfredson, co-head of the consulting firm Bain & Company's global capability sourcing practice. "These powerful forces are allowing companies to rethink their sourcing strategies across the entire value chain."

A study by India's software industry trade body, the National Association of Software and Services Companies, or Nasscom, estimated that United States banks, financial services and insurance companies have saved $6 billion in the last four years by offshoring to India.

But cheap labor is not the only reason for outsourcing. Global financial institutions are moving work overseas to spread risks and to offer their customers service 24 hours a day.

"Financial institutions are achieving accelerated speed to market, and quality and productivity gains in outsourcing to India," said Anil Kumar, senior vice president for banking and financial services at Satyam Computer Services, a software and services firm. Satyam works with 10 of the top global capital markets firms on Wall Street.

Mastek, an outsourcing company based in Mumbai, is another example. Two years ago, Mastek turned from doing diverse types of offshore work to specializing in financial services. The results are already showing. In the year ended in June, 42 percent of Mastek's revenues, $89.28 million, came from offering software and back-office services to financial services firms, up from 22 percent last June.

Fidelity Investments, the world's largest mutual fund manager, started outsourcing to Mastek 18 months ago and is now among the top five clients in its roster.

Sudhakar Ram, chief executive of Mastek, said, "It is rare that within a year a new customer turns a top customer; this illustrates the momentum in the market."

Another Mastek customer, the CUNA Mutual Group, which is based in Madison, Wis., and is part of the Credit Union National Association, started a project billed at less than $100,000 two years ago. Now the applications that Mastek is building for CUNA, to handle disability claims, amount to a multimillion-dollar deal.

In the transaction-intensive financial services industry, offshoring of high-labor back-office tasks is becoming the norm.

ICICI OneSource, based in Mumbai, has added 2,100 employees in six months and signed on four new financial services clients, including the London-based bank Lloyd's TSB, for which it provides customer service.

In one year from March 2003 to March 2004, ICICI OneSource grew to $42 million in revenues from $17 million. Today, more than 70 percent of its revenues come from the financial services industry, up from 40 percent two years ago.

For India's outsourcing firms, growth has not been without hiccups. Earlier this year, Capital One canceled a telemarketing contract with India's biggest call center company, Spectramind, owned by Wipro, after some workers were charged with enticing the credit-card company's customers with unauthorized free gifts. Weeks earlier, the investment bank Lehman Brothers canceled a contract with Wipro saying it was dissatisfied with its workers' training.

In response, outsourcing companies are improving their offerings. Leading companies are investing in privacy and security due diligence as they handle sensitive customer data, doing reference checks on employees, providing secure physical environments with cameras, and banning employees from using cellphones and other gadgetry on the work floor.

Deloitte forecasts that by the year 2010, the 100 largest global financial institutions will move $400 billion of their work offshore for $150 billion in annual savings. Its survey forecasts that more than 20 percent of the financial industry's global cost base will have gone offshore in that period.

With competence levels rising, Indian companies are tackling more complex tasks. DSL Software, a joint venture of Deutsche Bank and HCL Technologies, a software company, is handling intricate jobs for the securities processing industry. "Indian firms are taking offshoring to the next level; in the banking industry for instance, they are getting into wholesale banking, trade finance and larger loan processing type tasks," said Mr. Haney, the analyst from Celent.

But the relentless demand for skilled workers is putting pressure on wage rates, narrowing the wage gap with the United States and other Western economies. Simultaneously, companies are plagued by higher attrition rates that may lead to quality and deadline pressures.

For the moment, however, there is no indication the industry cannot cope with the unflagging demand to send work offshore. "If India can continuously pull less paid, less educated people into the labor pool," Mr. Haney said, "a substantial wage gap will continue to exist."

Thursday, August 19, 2004

BBC: "Expert slams wave threat inertia"-the coming of the mega tsunami?

Expert slams wave threat inertia
A scientist has attacked the inaction over a threat from a dangerous volcano in the Canary Islands which could send a tidal wave crashing against the US.
Bill McGuire of the Benfield Grieg Hazard Research Centre said no one was keeping a proper watch on the mountain.
If Cumbre Vieja volcano erupts, it may send a rock slab the size of a small island crashing into the sea, creating a huge tidal wave, or tsunami.
Walls of water 300 feet high would travel to the US at the speed of a jet.
Within three hours, the wave would swamp the east coast of Africa, within five hours it would reach southern England and within 12 it could hit America's east coast.
The rock is in the process of slipping into the sea, but the trigger that sends it into the Atlantic is likely to be an eruption of Cumbre Vieja. According to Professor McGuire, Cumbre Vieja could blow "any time".
New York, Washington DC, Boston and Miami would be almost wiped out by the tsunami generated by the insecure rock falling into the Atlantic.
"Eventually, the whole rock will collapse into the water, and the collapse will devastate the Atlantic margin," said Professor McGuire, of the Benfield Grieg Hazard Research Centre.
"We need to be out there now looking at when an eruption is likely to happen...otherwise there will be no time to evacuate major cities."
The two or three seismographs designed to pick up signs of movement in the rock could not detect a volcanic eruption weeks in advance, McGuire said.
He urged the governments of Spain and the US to fund monitoring of the volcanically active La Palma - a project he said could be achieved relatively cheaply.
Global strategy
Professor McGuire and other experts speaking at a news conference on natural disasters on Monday said the global community needs to monitor and develop strategies to cope in the face of a catastrophe such as the one that Cumbre Vieja could cause.
Global Geophysical Events, or "Gee Gees", as they are nick-named, are not being taken seriously enough, they say.
However, good progress is being made in reducing the threat of asteroid impacts, researchers said.
Since 9/11 we have become acutely aware of the threat of terrorism. Governments worldwide are battening down the hatches and ratcheting up the security.
But some scientists believe we are ignoring threats with similar, or greater, potential to devastate human populations.
Giant walls of water that can devastate coastal cities, volcanoes so big that their ash crushes houses 1,500km (932 miles) away, giant earthquakes and asteroid impacts. These are very rare events and, if we are lucky, nothing like them will happen in our lifetimes.
But in the longer term, Gee Gees may be our undoing if we do not take action, say researchers. Careful preparation could potentially save thousands of lives, they say.
Super eruption
Volcanoes and earthquakes are relatively common occurrences, but Gee Gees are on an altogether different scale.
The last "super volcanic eruption" was back in April 1815, when Tambora in Indonesia exploded violently in what was the largest eruption in historic time.
The eruption column reached a height of about 44 km (28 miles), ash fell as far as 1,300 km (800 miles) from the volcano - and an estimated 92,000 people were killed.
Global governments are not entirely ignoring the threat of Gee Gees, however.
Some think the greatest danger to humanity comes from asteroids, but steps are underway to tackle the threat.
The European Space Agency (Esa) and Nasa are planning missions to test how the course of asteroids and comets can be altered by an impact.
Esa's mission Don Quijote will send a spacecraft crashing into the surface of a space rock to measure the effects. In 2005, Nasa's Deep Impact will monitor the outcome of blowing a hole in comet Tempel 1.
Scientists hope this will help them learn how to destroy or deflect an asteroid on a collision course with Earth.
According to Benny Peiser, of Liverpool John Moores University, UK, the threat of cosmic mega disasters will be essentially "abolished within 30 years".
"A quiet and largely unnoticed technological revolution is dramatically accelerating the rate at which near-Earth asteroids (NEAs) are discovered," he said.
In 1995 we knew about 300 NEAs, today we know about 3,000 - and within 20 years we could be aware of 90% of all nearby space rocks, he says.
"For the first time in the history of evolution we are closing this window of vulnerability."

August 19 Daily Philippine Stock Market Review: Locals Dictate Tempo

August 19 Daily Philippine Stock Market Review: Locals Dictate Tempo

Local buying spurred the Phisix higher by 1.09% or 16.9 points on a lean volume of P 412.311 million (US$ 7.363 million).

Even as foreign net capital flows registered a net inflow of P 24.730 million the nub of today’s buying interest was directed at Ayala Corp (+3.7%) which comprised two-thirds of the firm’s output and about a third of the cumulative net buying. Among the Phisix heavyweights and the broader market, foreign money was mostly bearish, as more issues posted outflows against inflows (6-3 for the heavyweights, 18-8 on the broad market). Aside foreign money constituted only 43.96% of today’s turnover.

Market breadth was obviously bullish despite the thin volume, gainers beat losers by 38 to 27 while industry subindices were all positive led by oil and property issues. Index heavyweights were mostly up led by foreign propelled Ayala Corp., Ayala Land (+3.8%), SM Primeholdings (+1.79%), Bank of the Philippine Islands (+1.23%), San Miguel A (+.86%), PLDT (+.8%) and Globe Telecoms (+.56%) while San Miguel B and Metrobank were unchanged.

Compared to the previous sessions, today’s rally was practically in line with the positive outlook seen in the rest of the Asian region where, as of this writing, 12 of the 15 bourses are up, reflecting yesterday’s robust gains in Wall Street. However, the locals being today’s market driver generated a less than convincing upside performance given the scanty volume. Foreign investors, on the other hand, had reversed their positive stance during the past two days leading to the steep fall of the Phisix while today’s activities still mirrors the cautious and selective posture in terms of accumulations, at the same time reducing their portfolio positions in the broader market. In other words, the locals are bullish and providing the cushion to the market while the foreigners are still slightly bearish. Unless we see a tandem of bullishness from both local and domestic investors, the Phisix is likely to trade in a tight range.

In technical terms, the Phisix bounced off its major support trend line, which was tested yesterday, and thus far had been a healthy manifestation of its year long uptrend.

Wednesday, August 18, 2004

August 18 The Philippine Stock Market Review: The Exodus Continues

August 18 The Philippine Stock Market Review: The Exodus Continues

Foreign money once again continued to dump local equity assets as the Phisix fell for the second day by a hefty .67% or 10.46 points, as foreign equity portfolio outflows recorded P 132.747 million (US$2.307 million) or equivalent to 28.67% of accrued output. PLDT (-2.35%) posted the largest outflow accompanied by equally intensive outflows in the Property heavyweights SM Primeholdings (-3.44%) and Ayala Land (-1.88%) and in food conglomerate San Miguel B (-1.42%). Of the eight heavyweights only two scored gains, namely Bank of the Philippine Islands (+1.25%) and San Miguel A (+.87%) while the rest posted losses. Metrobank was unchanged.

In technical lingo yesterday’s downside triangle formation break fortified the correction mode of the market. Today, the 50-day moving average support level was taken out with an attempt to breach the major trendline support at 1,553. The current market moves are manifesting ominous sign of market exhaustion. Any further downside pressures that would break the major trend line support level would spell a possible near-term trend reversal. Again, all eyes on PLDT whom has led the market for over a year and a half.

Market’s mood was relatively somber with declining issues slightly ahead of the advancing issues by 34 to 26, although in a much improved state compared to yesterday. Industry indices were mixed with 3 decliners (Commercial-Industrial, Oil and the Property) against 3 advancers (Mining, Financials and ALL index). Foreign money sold more than they bought while today’s trading activities was slanted towards local support of the general market as well as the Phisix components.

Today’s darling has been the International Container Terminals who braved the tide of foreign selling and was the sole major acquisition by foreign interest amounting to about a third of its output. ICT broke out of its long symmetrical triangle consolidation yesterday and was up 9.45%

Asian markets are currently mixed with the Phisix registering the largest decline in the region. We see no fundamental impetus for the sudden turnaround of foreign investors on the domestic market, except for the aspects of correlation to Wall Street. New York’s key benchmarks are currently showing severe oversold positions and are likely to post substantial rallies in the coming sessions, although this may be limited. Hence, if correlation is the subject of the recent declines we may expect the Phisix to ease further from its current levels, unless of course the locals would be able to match the volume of foreign capital and be aggressive enough to stave off the bearish sentiment.

MarketingProfs.com: Six Ways to Increase Marketing ROI

Six Ways to Increase Marketing ROI
by Marcia Jedd
August 17, 2004

Growing companies need to concentrate on what they do best—which, often, isn't marketing.

Worse yet, paid advertising, direct mail, publicity and event sponsorships are only a few of the channels vying for your marketing dollar. Today's information explosion and proliferation of media outlets add to the squeeze on marketing budgets.

Taking cues from consumer marketing and tested marketing strategies, consider these six ways to increasing your marketing return on investment (ROI):

1. Planning. To reap marketing ROI, the cost of entry is a good marketing plan. The plan needs to incorporate your company's mission and sales and marketing objectives. It profiles your markets and target audiences and identifies your marketing tactics.

Marketing tactics are the individual marketing channels and types of advertising, as well as publicity and marketing initiatives, that will best convey your messages to your markets, achieve sales goals and maintain brand awareness.

Remember, the dog wags the tail: affirm marketing and sales objectives, plan strategy, then select marketing tactics. It's an ongoing cycle.

2. Making a market. What new markets can you create for your brand, product or service? Sometimes new products or services happen spontaneously.

In the 1999 movie Office Space, Milton, a harassed office worker, is bothered by coworkers who pilfer his bright red stapler. Swingline turned down a movie tie-in offer by the film's producers because it didn't make such a stapler and wasn't convinced of the demand. Three years later, out of sheer demand, Swingline put its Rio Red Stapler on the market.

There are few rules in making markets. Leading-edge market makers are tomorrow's cash cows.

3. Snooping. Are you missing market openings and marketing opportunities by failing to snoop on your competitors or fish for trends? Use of competitive intelligence (CI) is on the rise, according to CI firm Fuld & Co.

Consider the minimal time investment it takes to monitor your markets and scour databases and industry news sources for trends that influence your markets. The key is trolling for CI regularly and acting appropriately on the information.

Learn from large companies such as Kraft Foods, which recently announced its plan to reduce portion sizes and pull back on marketing to kids in reaction to studies finding rising obesity rates.

Study the competition by investigating the personalities and background of its management. You can then be prepared for and anticipate its next move.

4. Tooting your own horn. Ten years ago, who would have thought that bathroom stalls gas pumps or the sides of trucks would be hot advertising spaces? What traditional and non-traditional media outlets can you leverage to reach your audiences?

Smart use of PR and alternative marketing methods—no longer just paid advertising—maximize your marketing budget to build your brand and market your product or service. A growing range of consumer products are marketed via word-of-mouth marketing, viral marketing or what's known as “buzz” marketing.

You will increase your chances of placement in print and broadcast media when you grease its wheels: provide broad industry information or statistics that the media can use.

5. Web marketing. How robust is your Web site and Web marketing plan? Opt-in email newsletters, blogging and other Web marketing initiatives can overtly or covertly sell your product or service on the Web.

The good news is that the cost of Web development has come down. Dynamic Web sites with predictive features, or an e-commerce Web site with data-capture capability, aren't only for large companies with big budgets. Web-based marketing techniques such as embedded HTML tracking in emails and newsletters show what happens to your messages.

You are only as good as today's Google search, where holders of the top non-paid keyword placement can change by the minute. Make sure to feature content on your site that accurately reflects your business.

6. Measuring. Are you measuring your marketing programs? Can you determine the percentage increase of sales from a direct-mail campaign or the number of leads generated by a specific marketing program?

The ability to track and measure your results matters to your bottom line and the success of your marketing efforts. This counts for failures, too.

If you marketed to 5,000 and you only received one sale, why? Low-quality lists, poorly developed Web sites and other haphazard marketing communications efforts achieve great results only for the lucky. Top marketing vehicles for measurement include Web sites, lead generation programs, events/tradeshows/seminars and print advertising.

What's in your marketing game plan? When you use these six strategies, you stand to maximize marketing return on investment

Marcia Jedd is president of MJ & Associates (www.marciajedd.com).