Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - India is in a sweet spot. The central government budget which set the tone for reducing fiscal deficit and an unexpected increase in the policy rate to rein in inflation has convinced the markets and economists that India is on its way to having a robust economic growth. Industrial output also continued to grow at a fast pace in January as companies produced more cars and cement. In the fiscal year 2011 that ends in March 2011, GDP growth of 8.5% is achievable. Long-term predictions for the southwest monsoons are expected to be normal, giving a boost to agricultural production and domestic demand.

Fisher Capital Management Seoul Korea- Inflation in India has been surging, driven by a low base and high food prices as the weakest monsoon rains in 37 years last year hurt farm output. Inflation running at 8.5% may have peaked and it is expected to ease by April as the winter-sown crop comes to market. The year-on-year inflation rate for food articles was 16.22% in the week ending March 13, far above the comfortable zone for the central bank and the government. In order to manage the inflationary expectations, the central bank increased overnight lending and borrowing rates by 0.25 percentages point each, making it one of the first major central banks to raise rates. The central bank further announced that it would continue to roll back its loose monetary policy to manage prices, as the country can’t have sustained strong growth with high inflation. We expect a 0.25-percentage-point rate hike in mid-April and another increase of one percentage point through March 2011.

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - The rebound in industrial activity also saw a surge in India’s exports for the third month running in January. Exports in January rose 11.5% from a year earlier to $14.34 billion, after having increased 9.3% to $14.61 billion in December. Imports increased 35.5% in January to $24.70 billion while oil imports rose by 56% to $7.05 billion. Non-oil imports, a barometer of investment activity, grew 28.8% to $17.65 billion.

On the back of robust economic numbers and policy pronouncements, the rating agency Standard & Poor’s raised its rating outlook to stable, expecting the fiscal situation to recover and growth to remain strong in the coming years. The government’s commitment to follow the recommendations of the 13th Finance

Commission, as well as its move to reduce fertilizer subsidies and raise domestic fuel prices were taken as positive indicators. The country’s external position continues to be in a comfortable zone.

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - It is unlikely that India will benefit from the Google-China spat as the Indian government will not provide the kind of benefits China extends to the manufacturing sector in China. But some relocation is likely to emerge. For example, American companies GoDaddy and Dell have threatened to pull out of China and relocate themselves in India.

Fisher Capital Management: Market Performance

Market Performance: Fisher Capital Management - Stocks closed lower in October for the first time in seven months, as investors questioned whether the huge rally off the March lows had exceeded the economy’s ability to generate growth in output and profits.

Indeed, equities capped off a volatile month (the Dow Jones Industrial Average (DJIA) experienced triple-digit moves in ten trading sessions!) with a volatile week, as the S&P 500 Index experienced its worst five-day span since early July.

For the month, the DJIA eked out a fractional gain, while all the other major equity market indices suffered losses. Small cap stocks, which had been among the performance leaders of the seven-month rally, experienced the worst hit, with the Russell 2000® Index falling by almost 7%. In another sign that the market may be growing skeptical of the “higher risk, higher reward” strategy, the NASDAQ Composite Index, dominated by technology holdings, declined 3.6% for the month.

Market Performance: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the markets recently, growth stocks outperformed value in October, contradicting the idea that the pursuit of “risk” had become out of favor over the past several weeks. Moreover, the weakness in U.S. markets failed to extend beyond our borders last month, as developed markets (MSCI EAFE) experienced just a fractional loss, while the emerging markets (MSCI EM) managed to rise by up to 1%, adding to their impressive year-to-date (YTD) returns.

From a sector perspective, two of the three leading performers off the March lows (financials and materials) declined by the largest amounts in October, as investors appeared to lock in gains of approximately 150% for the financials sector and 75% for the materials sector. Despite the weakness in the technologyladen NASDAQ Composite last month, the higher-quality and larger-cap tech names comprising the S&P 500 Index’s information technology sector simply dropped fractionally. Rising oil prices pushed the energy sector higher by 3%, and the “defensive trade” was still evident within the consumer staples sector, which held on for a 1% gain.

Market Performance: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The yield on the 10-year Treasury note backed up by seven basis points, as traders likely moved funds elsewhere as the Federal Reserve concluded its $300 billion Treasury purchase program. The dollar continued to weaken, hovering near 14-month lows, which helped drive up the prices for oil, gold, and most commodities.

Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

Fisher Capital Management Reports: International Equities

The third quarter saw double-digit returns for the world¹s equity markets. U.S. large-cap stocks, as measured by the Russell 1000 Index, rose 16.07%, bringing that index’s year-to-date return to 21.08%. Mid-cap stocks were the best performers overall, with the Russell Mid-Cap Index gaining 20.62% for the third quarter and 32.63% for the year. Value stocks bounced back during the quarter, outperforming growth stocks across the full range of market capitalizations. Small-cap value stocks were the best performers for the quarter but still lagged their small growth counterparts by almost 13 percentage points for the year.

International Equities: Fisher Capital management, Korea reports: International equities posted double-digit gains for the third quarter as well. The MSCI EAFE IMI Index gained 19.82% in the third quarter, with local-currency average market returns of 15.10% boosted by the weak performance of the U.S. dollar.

Emerging markets produced another strong quarter, but one that was more in line with developed market returns than was the case during the second quarter of 2009, as the MSCI Emerging Market IMI Index rose 21.30% for the third quarter. Both developed and emerging markets were driven higher by the strong performance of European equity markets, while Asian markets, particularly in Japan, lagged.

Fisher Capital Management Outlook: At the end of the quarter, markets reacted negatively to mixed economic news, signaling a potential correction off the recent highs. The strong rally since the market’s low of March 9, 2009 has left observers wondering whether rapidly-rising stock valuations have become prematurely rich and earnings expectations somewhat stretched.

While we are cautious about the performance of the market in the short term, we continue to expect a slower, but more robust and sustained, “smile-shaped” economic recovery in the long run.

Many financial institutions talk about wealth management.

Few have the resources to deliver an integrated solution. We are among the few.

Providing a client service that is second to none.  Learn how your Investment Advisor, with the support of the team of professionals at Fisher Capital, can help address the issues you face while preserving, enhancing and transferring your wealth...Diversification and quality are our research guidelines. At Fisher, we are committed to a long-term investment philosophy that emphasizes quality and diversification. We do business this way because years of experience have convinced us that...

We find the right investment balance for our clients. Fisher leads the way in the provision of first class advisory services across the investment spectrum. Our clients range from private individuals, to intermediaries and global institutions...

Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

Fisher Capital Management Investment Strategies: A debt deal that solves the wrong problem

http://strategies.fishercapitalmanagementstrategies.com/2011/08/09/fisher-capital-management-strategies-a-debt-deal-that-solves-the-wrong-problem/

By Lawrence H. Summers
The opinions expressed are his own.

At last Washington has reached a deal that raises the debt limit and averts a default that would have been a national embarrassment and an economic and geopolitical catastrophe.   The forces shaping the deal and the deal itself are multifaceted–and so is the right reaction to it.  Mine has a number of elements.

Relief. There will be no first default in U.S. history; no economy-damaging short-run austerity; no attack on the nation’s core social protection programs or on universal health care; and no repeat of the last month’s shabby spectacle for at least 15 months.  All of this was in doubt even a week ago as Congressional intransigence threatened to make the problem of acceptably raising the debt limit insoluble.  The Hippocratic Oath applies in economics as well as medicine and so it is no small thing for the Administration to have reached an agreement  that does no immediate harm.  It may well be that no better agreement was achievable given the political dynamics in Congress.

Cynicism. An objective observer would predict larger U.S. budget deficits in the outyears than he or she would have predicted a few months ago.  The economic forecast has deteriorated (see chart below), and it is reasonable to estimate that even a half-a-percent reduction growth averaged over 10 years adds well over a trillion dollars to the national debt in 2021.

Despite claims of spending reductions in the $1 trillion range, the actual agreements reached so far likely will have little impact on actual spending over the next decade.   The deal confirms the very low levels of spending already negotiated for 2011 and 2012, and caps 2013 spending about where most would have expected this Congress to end up.  Beyond that outcomes are anyone’s guess—the reality is that Congress votes discretionary spending  annually and the current Congress cannot effectively constrain future actions.  True, there are caps and sequester threats present in the debt limit legislation, but these are virtually certain to be reformulated in 2013 so the reality was and still is that discretionary spending going forward will largely reflect the will of future Congresses.

Remarkably for a matter so consequential the agreement that the Supercommittee will seek to reduce the deficit by $1.5 trillion comes without any agreement on what the baseline is from which the $1.5 trillion is to be subtracted.  Is the $1.5 trillion from a baseline that includes or excludes the Bush tax cuts? Includes or excludes tax extenders and the annual AMT fix?  These and other similar questions are unresolved at this moment.

Baseline arguments are mind-numbing but highly consequential.  Perhaps a current-law baseline will be employed, assuming a phaseout of the Bush tax cuts, in which case there will be no motivation to assure repeal of the high-income tax cuts because it will not count toward the goal.  Perhaps, and more likely, in an effort to make deficit reduction easier a baseline following current policy will be adopted.  This would treat the nonextension of the Bush high-income tax cuts as a $1 trillion tax increase—hardly a likely outcome given the probable composition of the Supercommittee.

Economic Anxiety. The United States’s current problem is much more a jobs and growth deficit than an excessive budget deficit.  This is confirmed by the fact that a single bad economic statisticmore than wiped out all the stock market gains from the avoidance of default and the fact that bond yields reached new  lows  at the moment of maximum apparent danger on the debt limit.

On the current policy path which involves a substantial withdrawal of fiscal stimulus when the payroll tax cuts expire at the end of the year, it would be surprising if growth was rapid enough even to bring unemployment down to 8.5 percent by the end of 2012.  With growth at less than 1 percent in the first half of the year, the economy is now at stall speed—with the prospects of adverse shocks from a European financial crisis that is decidedly not under control, spikes in oil prices, and confidence declines on the part of businesses and households.  Based on the flow of statistics, the odds of the economy going back into recession are at least 1 in 3 if nothing new is done to raise demand and spur growth.

If these judgments are close to correct, relief will soon give way to alarm about the United States’s economic and fiscal future.  Among all the machinations ahead, two issues stand out. First, the single largest and easiest method of deficit reduction available is the nonextension of the Bush high income tax cuts.  The President should make clear that he will not accept their extension on any terms.  Clarity on that trillion-dollar point, along with very modest entitlement reform, will be sufficient to hit current deficit reduction targets.

Second, it is essential that the payroll tax cut be extended and further measures such as infrastructure maintenance and unemployment insurance extension be taken to spur demand.  There is still time to confirm Churchill’s maxim that the United States always does the right thing after exhausting all the alternatives.

Fisher Capital Equipment Management - Significant Progress on Dulles Metrorail

Avoid internet scams; get the latest news update from Fisher Capital Equipment Management. Construction of the Dulles Corridor Metrorail Extension project, which is being built near Washington, D.C., is moving forward above and below ground. Crews have made significant progress on the elevated guide way structure that will carry the Metrorail over I-495, the region's primary highway, as well as Tyson’s Corner, one of the area's most congested business and retail districts. At the same time, a 2400-foot tunnel is being built under the intersection of Route 123 and International Drive as the traffic continues through Tyson’s Corner, and as the businesses and residents are going about their daily routines.

The progress of the project was highlighted on W-USA 9, a Washington, D.C. area TV station. The report featured interviews with Bechtel construction managers. Watch the video.

Construction of the project began in March 2009, with the signing of a $900 million grant from the U.S. Department of Transportation. The project is being constructed by Dulles Transit Partners, a team of Bechtel and URS, and will include five new Metro stations and 11.5 miles of new track. The project is owned and managed by the Metropolitan Washington Airports Authority.

Fisher Capital Equipment Management - Significant Progress on Dulles Metrorail - Bechtel (BEK tl) is the world's No. 1 choice for engineering, construction, and project management.

Our diverse portfolio encompasses energy, transportation, communications, mining, oil and gas, and government services. We currently have projects in dozens of locations worldwide, from Alaska to Australia. No matter how challenging a project or how remote its location, chances are Bechtel can handle it. That's because we bring an unmatched combination of knowledge, skill, experience, and customer commitment to every job.

We have had record revenues for the past five years, and Engineering News-Record (ENR) has named Bechtel the top U.S. construction contractor for 12 straight years.

While we work for governments and commercial customers, our projects have helped grow local economies and improve the quality of life for communities and people around the world. Time and again our work has demonstrated that the only limits on human achievement are those that we place on ourselves. 

Privately owned with headquarters in San Francisco, we have offices around the world and 49,000 employees. In 2009, we had revenues of $30.8 billion and booked new work valued at $20.3 billion.

What We Do

Airports and seaports; Communications networks; Defense and aerospace facilities; Environmental cleanup projects; Fossil and nuclear power plants; Mines and smelters; Oil and gas field development; Pipelines; Roads and rail systems; Refineries and petrochemical facilities

Ethics 

Bechtel's culture is grounded in integrity and respect. This means adhering to the highest standards of ethics. Our reputation as an ethical company is one of our most valuable assets. We stand by everything we do.  

Quality

At Bechtel, quality means doing the job right the first time.  We've always delivered quality work, and we are continually striving to improve our performance through Six Sigma and other initiatives.

Safety 

Bechtel has a world-class safety program, and it pays off. Nearly 90 percent of our projects complete each year without a lost-time accident. Our philosophy is simple—every accident, and therefore every injury, is preventable. 

Fisher Capital Management: Market Performance – US Economy

Fisher Capital Management Report, Part 1 - Output growth exceeded what were once considered lofty expectations during the third quarter, as real GDP (inflation adjusted Gross Domestic Product) rose by a 3.5% annual pace from the previous quarter. To be sure, this was the first gain in economic activity after four consecutive quarterly declines in GDP. While technically this indicates an end to the recession, we point out that on a year-over-year (YOY) basis, economic activity has still declined 2.3%, yet it represents an improvement from the -3.8% YOY in the second quarter, the worst annual drop in seven decades.  The components of GDP were led by growth in personal consumption, which increased 3.4% as stimulus programs such as “Cash for Clunkers” allowed consumer spending to increase by the largest amount in two years. Home construction surged at an annual rate of 23%, spurred on by the $8,000 tax credit for first-time buyers. Another decline in business inventories also added to output, as did the growth in government spending (2.3%). Though businesses increased spending on equipment and software, fixed investment remained weak.

Market Performance, US Economy: Fisher Capital Management Report - As the positive effects of federal stimuli diminish, we continue to project an economic recovery that is “less spectacular” than in previous experiences. While output growth has improved as government programs spurred consumption relative to housing and autos, our concern rests on the economy¹s ability to sustain these rates of growth as government programs wane. Indeed, personal spending fell 0.5% in September after the “Cash for Clunkers” program concluded in August. Consumer confidence also weakened in October as the unemployment rate approached 10%. Until we experience a sustainable floor in housing and a ceiling on the unemployment rate, we suspect output growth will rely on exports, inventories, and government outlays, areas that we characterize as “cushions” for growth.

Market Performance, US Economy: Fisher Capital Management Report - As the unemployment rate lingers within the range of 10% and Fed policymakers remain committed to keeping interest rates low for an “extended period,” we look for real GDP to expand at an average rate of approximately 2.5% in 2010.

Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

U.S. Equities: Fisher Capital Management Reports

As mentioned previously, stocks finished a volatile month in October with a volatile final week of trading, as investors began to question whether the market¹s impressive rally had surpassed the economy¹s ability to generate growth in output and profits.

To be sure, throughout the market’s impressive rebound, the technical picture for stocks gathered steam, as excess liquidity helped drive the market higher.

Fisher Capital Management, US Equities Reports: As one technical achievement passed another, we began to postulate that the market’s technicals appeared significantly better than its fundamentals.

Some of these concerns may be coming to fruition over the near term, as a few technical strengths appear to have softened in recent weeks. Indeed, as the S&P 500 Index approached the 1,100 level during the middle of October, the market ran into strong resistance, falling by approximately 5% from that high by month-end.

Fisher Capital Management, US Equities Reports: This may prove to be an important development because at 1,100, the S&P 500 was within about 20 points of achieving a 50% retracement, whereby the market could have recouped 50% of the loss from the October 2007 high of 1565 to the March 2009 low of 666. Given all the cash parked in money markets and shortterm Treasury bills, another surge or two above 1,100 is certainly possible. Yet 1,121 is a number that should be on the radar for all investors, because if it is achieved, very little technical resistance exists on the path to 1200.

In addition to the strong resistance, stocks failed to hold a key support level on the last day of October. The market’s 50-day moving average (DMA) was 1,052 heading into Halloween weekend, but investors were spooked by poor readings on personal spending and consumer confidence, resulting in a close (1,036) below the important 50- DMA level. An important test will be in the first several trading days of November to see whether or not the market can sustain its rally above this key support level.

Fisher Capital Management, US Equities Reports: This weakness was exacerbated by a surge in the market’s “fear gauge” toward the end of October. The Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of using options as insurance against declines in the S&P 500 Index, surged in the final few days of trading last month.

While the VIX had been at a 14-month low in the middle of October, the 25% jump at the end of the month suggests investor skittishness about market direction over the next several weeks, particularly as the catalyst of earnings season draws to a close.

Fisher Capital Management, US Equities Reports: Fortunately, the fundamental picture has brightened. Better than expected economic data suggests the possibilities for an improvement in corporate performance. Interest rates and inflation remain low, providing a healthy backdrop for corporations that have been very aggressive cutting costs from their expense structures.

Indeed, recent earnings news has been somewhat positive, with 70% of the companies in the S&P 500 Index having reported an average decline in earnings per share (EPS) of 12% for the

third quarter, exceeding expectations.

Fisher Capital Management, US Equities Reports: Given our projections for a “less spectacular” economic recovery in 2010, though, we continue to believe that consensus estimates for corporate profit growth of up to 35% next year are too high. Consequently, our operating EPS projections remain more than 12% below consensus expectations ($75.00) for 2010.

Businesses can’t cut costs forever, and at some point we believe revenue growth is a necessity to help justify valuations for a market that is already trading at a price/earnings (P/E) ratio of 16 to 17 times our $65.00 estimate for next year. Until we begin to see an improvement in the longer-term trends for housing, employment, credit, sales, and profits, we suspect the market will be unwilling to pay anything more than historically average P/E multiples (16 to 17 times) for a dollar of earnings. Therefore, we continue to believe the market, as defined by the S&P 500 Index, will likely be fairly valued within the current range of 1,050 to 1,100 over the next six months.

Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world. As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.