Voices and Trends in International Business-December 2013

Snack food vendor Mondalez International is being crushed by PepsiCo and its Frito Lay division all over the world,CNBC analyst Jim Cramer pointed out.
A German government agency has cleared Tesla's Model S of being a fire trap.There is no fire issue.They are not bound by the four walls of the earnings per share convention.
Exxon Mobil had a great quarter.It's got Warren Buffet's imprimatur.
BP's been a very strong stock,and I think it can go much higher,Cramer said.*
Ford Motor Company November sales rose 7.2%,versus an Edmunds estimate 0f 3.0%.*
3M was downgraded from hold to sell by JP Morgan.*
IBM provided near real time raw data on the beginning of the Christmas shopping saeson.The growth rate was down by 21%.The size of the shopping cart got smaller.People just weren't buying as much,although more of them were shopping.Mobile sales accounted for 17% of the total,and the iOS platform handled 60-70% of the business versus Android.*
It's expensive to open brick and mortar stores in China,said Shaun Rein,managing director at strategic market consultant CMR China.Ecommerce is more popular there than in the US.Ecommerce will grow 50% a year in China for the next five years.Online merchant Alibaba is a very innovative company.
US companies need to get Chinese managers and get them to react quickly to the Chinese marketplace.A third of purchases are returned in China,and 20% of all sales are from gifting-including gifts for corrupt officials,although there is a crackdown on that.
Mr.Rein is author of the book "The End of Cheap China:Economic and Cultural Trends that Will Disrupt the World."*
PepsiCo(PEP),Tesla Motors(TSLA),Ford Motor Company(F),Exxon Mobil(XOM),International Business Machines(IBM),3M(MMM),Mondalez International(MDLZ),Alibaba.com Ltd(ALBCF)

News Notes August 2013

The US is accelerating;Europe is improving,said Tom Lee,chief US equity strategist at JP Morgan.There's a case for higher earnings.If they start thinking rates are going up,hopefully the money goes into equities.Seek companies with topline growth,the cyclicals.I think Europe is tracking towards an acceleration.I actually think you would be better off buying US blue chips exposed to Europe,but also to US private expansion.*AIG is reinstating a 0.10 a share dividend and a 1.0 billion dollar buyback.Its Q2 earnings were 1.12 a share versus an 0.85 estimate,while revenue was 8.35 billion dollars versus an 8.62 billion estimate.*If you really want to be contarian,buy European stocks,said Nick Colas of Convergex Group.There are better opportunities around the world,than there are here in the US.*Japan is joining negotiations to form the Trans-Pacific Patnership.The TPP will be the world's largest free trade zone,also including the US,Canada,Mexico,Peru,Chile,Malaysia,Vietnam,Singapore,Brunei,Australia and New Zealand.Besides free trade,the TPP will produce a common framework for dealing with the services trade;foreign investment;government procurement;domestic regulations;and intellectual property.It is expected to have a huge impact on both global trade and investment patterns.

News Notes:Citi's Internet Calls;Best Investment Banks 2013

The IMF has reduced its estimate of world growth to 3.1%,down from 3.3% in April.For 2014,it sees China growth at 8.2% and India at 6.2%. Citigroup has initiated coverage of major Internet stocks.LinkedIn,Netflix and Facebook are rated neutral. Facebook is a relatively young company going through a transition,said Citi analyst Mark May.Amazon,Google,eBay and AOL are buys.Yelp is a sell. Key Internet themes are the shift from PCs to mobile;the emergence of adtech;and the proliferation of data. The US-China Strategic and Economic Dialogue has begun,led by Secretary of State John Kerry.BMW sees China as its top 2013 market,based on its growth in small cities. GE Oil and Gas is establishing its global headquarters in London. Global Finance magazine has named its Best Investment Banks 2013.Global winners include J.P.Morgan,Best Investment Bank;Bank of America Merrill Lynch,Best in Emerging Markets;Qatar National Bank,Best in Frontier Markets;and Goldman Sachs,Best M&A Bank. Global Finance said J.P.Morgan grew market share across the board because of its loyal client base;a long term startegy of embracing regulatory reform;a legendary corporate lending legacy;and the integration of equity underwriting talent from Bear Stearns,which it acquired in 2008. It made a world-leading 465 billion dollars for its clients through 2,164 bond deals;and earned more than 5.6 billion in investment banking fees,the best in class. JP Morgan Chase(JPM),Amazon(AMZN),Goldman Sachs(GS)

Issues in Money Management

BlackRock is the world's largest money manager,owning the iShares exchange traded funds.Consumer confidence is up,but manufacturing is down,BlackRock CEO Larry Fink noted.Private sector deleveraging is still going on.
I actually believe we can't find enough good investments.Bonds are no longer providing sufficient return.
Emerging markets are probably today relatively cheap compared to where they were a few years ago.
We need a mandatory savings policy in the US.Retirement is an even bigger issue than tax policy.We need to educate Americans about the longevity of life.
I'm not worried about retirees.I'm worried about the young people who are not putting money away for retirement.We have men and women who should have more choice-maybe with the mandatory savings plan as a backup.
Everything that we face today is more short-termism.Most market partcipants make money on the velocity of money,on quick trades.It's the 24/7 news cycle,the annual election of board members.Some form of elongation is needed.
One of the big issues is confidence.We're sitting with a trillion dollars in money market funds by corporations.
Five years is the average term of CEOs.You see more short term changes in their behaviour.
BlackRock is the largest shareholder of JP Morgan Chase,and is among the top three shareholders of many other firms.Less pressure on board members means better outcomes,Mr.Fink suggested.
BlackRock(BLK)

The China Trade:Outlook For Equities

The last four years,stocks have done pretty well,but with volatility,according to Chris Blum,head of Global Equities at JP Morgan Private Bank.The volatility will be much less than in the last couple of years.Global coordinated central bank action will lower volatility and get people into equities.
People expect a 15-20% pullback,but those days are history.They will be in the mid-single digits.The key is that people have rules and follow them when things get tough.
We like China.That equities market has lagged the US by 30%.China has a much better balance sheet as a country.They are deficient in human rights.As it relates to fostering growth,I think it is a fantastic system.They reach decisions behind closed doors and implement them.
Citigroup says Chinese stocks will beat those of the G20 in 2013.The Shanghai stock index has risen 3.4%,the most since June 2012.
China is burning as much coal as the rest of the world combined,notes The Washington Post.The HSBC China PMI shows manufacturing expanding at the fastest pace in two years.
iShares FTSE China 25 Index Fund(FXI)

Betting On Banking:Should You Invest in Chase and Citigroup

JP Morgan Chase reported earnings of 1.48 versus a consensus estimate of 1.16,and revenue of 24.37 billion dollars versus an estimate of 24.41 billion.We think that the numbers were good,in line,said Jason Goldberg,CFA,an analyst at Barclays.Mortgage results continue to be the story.Asset management and commercial banking also had a good quarter.
We have an overweight on the stock.We think you'll see several metrics in the right direction.They're growing the top and bottom lines.Not too bad.It is trading well below tangible book value.
The stock has outperformed the market and the sector since Jamie Dimon joined as CEO.It's certainly one of our favourites in 2013.We also like Citigroup and US Bank.
Gerard Cassidy of RBC Capital Markets thinks Citigroup is in a good position to obtain some capital return for shareholders.Their Q4 report as well as their reducing exposure to risky assets over the past 2-3 years will support their case with regulators.
JP Morgan Chase was at 46.14 in afterhours Wednesday trading,down 0.09;while Citigroup was at 41.85,down 0.17;and US Bank was at 32.70,down 0.39.
JP Morgan Chase(JPM),Citigroup(C),US Bank(USB)

Should You Invest in the Big Banks

Citigroup is viewed favourably by Todd Hagerman,Managing Director and Head of the Multinational and Regional Bank Group at Sterne Agee.Citi just announced a major restructuring,setting themselves up for the capital review programme.As well,there will be major actions over the next 6-12 months by new CEO Mike Corbat.
Citi is also well-positioned to return capital to shareholders.It has an improved regulatory situation.The ongoing US budgetary problems will cause increased volatility in the market.Buy on the dips and take advantage of it.
Sterne Agee has a buy rating on Citi,with a price target of 52.00.It has also raised JP Morgan Chase from a hold to a buy.Their regulatory risk has subsided.I don't think the risk is too high.We certainly think there will be a buyback and a dividend increase.
TD Bank has topped the Royal Bank of Canada as the leading arranger of syndicated loans among the Canadian banks.
Citigroup(C),JP Morgan Chase(JPM),Toronto Dominion Bank(TD)

Advisor:Moving From Market Pessimism-plus the nuanced view from Chase

Anticipation is the key word in the market today,according to Michael Yoshikami,CEO of YCMNET Advisors in Walnut Creek,California.The sentiment is so pessimistic,even meeting expectations will be seen as victory.I think analyst sentiment will shift to more positive.
Stock prices have been based on a catastrophic scenario.The news has been getting better.Europe might actually be stabilising.The economy is slowly recovering.
I think banks are beaten down right now.They're extraordinarily cheap.They have really deleveraged their balance sheet.I think they're poised for a rebound,Mr.Yoshikami noted.
JP Morgan Chase and Qualcomm are among Mr.Yoshikami's top picks.
Jamie Dimon,JP Morgan Chase CEO,thinks it's a mild recovery,but that it seems to be broadening.Charles Gasparino of Fox Business has a lot of respect for Mr.Dimon as being one of the smartest people on Wall Street.Although he's optimistic,there are a lot of hedges in Jamie Dimon's position.For example,although portrayed by the media as predicting a housing recovery in 2012,Mr.Dimon believes we still have a little ways more to go down in housing.With regard to the new financial regulations,although Mr.Dimon doesn't mind banks being required to put more capital aside,he feels the Dodd-Frank bill is squeezing a lot of business out of Wall Street,Fox Business analyst Charlie Gasparino points out.
JP Morgan Chase disappointed Wall Street with its recent Q4 earnings report,missing the Street's estimates.
JP Morgan Chase(JPM),Qualcomm(QCOM)

Managing Director:Where To Shelter Now

We're still very concerned about the situation in Europe,said Adrian Mowat,Managing Director and Chief Emerging Markets Strategist at JP Morgan Chase.What's gonna happen with France and Germany as they recapitalise their banks?We look forward to the G20 meeting November 3-4 in Cannes.
Our advice would be to reduce into that rally.We're concerned because the European Central Bank doesn't seem to get it.At the moment,they're still concerned about regulatory matters and they don't want to grow their capital base.
We need to look out for Chinese inflationary numbers.Inflation will eventually come off there.Our belief is that Europe will get worse before it gets better.Think about capital preservation at this point in time,keeping to U.S. dollar cash,Mr.Mowat advised.
JP Morgan Chase(JPM)

A World Bank Perspective

With regards to the European debt crisis,my guess is,the International Monetary Fund and the European Union will muddle through,says World Bank President Robert Zoellick.The developed markets have obviously been stumbling along.China does seem to be slowing a little bit,but I think it's appropriate so as to avoid a bubble situation.
People are gonna be moving at different speeds with different issues.That's the nature of the new global market we are in.
Food prices are about 50% higher,but the risk is,the stocks for wheat and grain are very,very low,making them vulnerable to price shocks.The low income countries and big wheat importers in the Middle East are hurt the most.We've launched a pilot with JP Morgan Chase providing some additional credit support and access to commodities markets derivatives to insure some of these players.
The European Union is pretty slow,with its low population growth.As they muddle through,the question is whether they will make the necessary structural changes,Mr.Zoellick wonders.
The World Bank offers financial and technical assistance to developing countries worldwide.It provides resources,shares knowledge,builds capacity and forges partnerships in the public and private sectors.Founded in 1944,it has more than 10,000 workers in over 100 offices around the globe.
JP Morgan Chase(JPM)

Assessing China

China is currently experiencing an export downturn because of poor economic conditions in the U.S. and Europe.Jing Ulrich of JP Morgan Chase(JPM) notes that the infrastructure and banking sectors are still strong in China.More power plants,ports,railroads and water works are being built.The Chinese financial markets are extremely volatile.In 2007,they were the best;in 2008,they are the worst.One has to keep a long term horizon,Ms.Ulrich feels.British bank HSBC is doing just that,with expansion plans in China.It is opening branches in 3-4 new cities a year.It already has 74 branches in 17 cities.