Briefing.com: Themes

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DATE

RESEARCH REPORT

19-Dec-08	The Drybulk Industry A comprehensive view and outlook.
21-Aug-08	The Commodity Reckoning Analysis of the 2006 and 2008 commodity corrections.

26-Oct-09	The Preemptive Demise of the Dollar Professional investors have had to protect themselves against declines in the dollar this year given the unprecedented quantitative easing cycle in the United States. The general contention is that the dollar is being fundamentally debased. But that protection has risen to such magnitudes that there may now also be heightened risk that shorting the currency has become an over-crowded, one-sided trade.
23-Oct-09	Are Junk Bonds Getting Too Much Credit? In depth analysis of whether professional investors are putting too much faith in a high-yield corporate bond recovery.
06-Oct-09	The Appeal of Build America Bonds In an effort to help stimulate the economy -- and with a tip of the hat to municipalities that implied they might know best how to address their fiscal needs and to keep people working -- the United States government announced a new subsidy program to help states lower their borrowing costs. The program is popularly known as Build America Bonds (BABs).
28-Sep-09	Bail Bonds Stocks are up. Treasuries and oil are up (or at least stable). Corporate bonds are up. Gold is up. Historically, all major assets classes do not rally together, but the market seems complacent. Instead, participants should at least pause to consider what the anomaly might mean.
28-Sep-09	Crude Oil Outlook -- Bearish Fundamentals Remain Our target range for the year is set at $60-80 per barrel based on expectations that third quarter gross domestic product data will support higher prices, coupled with a weaker dollar and strong non-OECD secular demand growth.
25-Sep-09	When Will the Fed Raise Interest Rates? The market is anticipating a swift jump in rates starting in April 2010. However, using Taylor Rule estimates we believe the first rate hike will probably not take place until at least the end of 2011.
24-Sep-09	China Leveraging Up, but Near-Term Bubble Concerns Overblown The Chinese government already intervened to stop a potential credit bubble, but a subsequent rise in the country's equity and real estate markets has led to fears of an asset bubble. These fears are overblown as banks are still lending and participants have not cashed out of China's equity and real estate markets.
12-Aug-09	China's Booming Auto Market; Its Implications on Oil Demand Americans may love their cars but China is the hottest automotive market in the world today. The country's urbanization and the rising standard of living over the last decade have created millions of new car owners, the impact of which is being manifested in many ways.
11-Aug-09	Long-Term Corporate Spreads Corporate bonds have been on a tear this year. Much of the rally has been built on the back of dramatically low prices that were reached during the fall of 2008 when participants went running for the exits on the thought that the United States might be headed for the next Great Depression (or worse, if that is possible).
26-May-09	Peak Oil -- Mexico's Economic Reality Peak oil is a highly controversial and hotly-debated subject that was amplified last year by record oil prices... Peak oil theorists may garner all the headlines, but resource nationalism has been a much more destructive force in the sustainability of natural resources and economic welfare. One country already suffering the harsh economic reality of peak oil is Mexico.
04-May-09	Crude Oil Outlook -- May 2009 Oil is a boom/bust business. We are in the latter phase and it did not take long to get there.

28-Dec-10	Unconventional Wisdom: Poking a Hole in Rosy 2011 GDP Views Following the passage of the temporary Social Security payroll tax break, some prominent economists immediately updated their 2011 forecasts and included an additional 0.7 to 1.0 percentage points to GDP growth as a result of the stimulus. Historical precedent suggests, however, that the contribution to GDP growth from the tax cut will most likely be less than half of what those economists are expecting.
17-Dec-10	Seeking Yield: How the Sovereign Market Got Its Sanity Back For a time, the market seemed to forget one of life's great lessons: you cannot forget the fundamentals. From little league baseball, to basic math, to driving a car, disregarding the fundamentals more than likely leads to mistakes and erratic performance. With the introduction of the euro, the market, until recently, appeared to believe that there was an unseen emperor in Europe -- one that implicitly guaranteed sovereign debt. As such, yields of the eurozone members converged to the point where the various debt issues essentially traded as if they were basically the same.
15-Dec-10	Agriculture - A Rationale for a Market in Transition A strained global agricultural market over the past few years has culminated in sharp increases in soft commodity prices. While periods of high prices are not remarkable, the concurrent escalation underscored a global agricultural market in the midst of a transformation influenced by population growth and global economic and policy shifts. Population growth, greater calorie and protein consumption, and biofuels production together are increasing global demand for agricultural commodities and food products.
08-Dec-10	Commodities -- A Structural Imbalance: Chart Book From energy to metals, the global commodity market is expansive and complex. In light of this fact, we have put together a chart book to supplement our "Commodities -- A Structural Imbalance" investment theme research, covering all the major producing and exporting countries.
02-Dec-10	Unconventional Wisdom: A Case for Employment Growth It may be in a firm's best interest to forgo capital spending and instead increase its labor inputs. Since firms already own the necessary capital that is needed to keep capital intensity levels at the current trend, hiring growth can occur immediately and the jobless recovery could give way to a full-blown labor recovery.
08-Nov-10	Seeking Yield: All Is Well. Nothing to See Here. "It could have been worse" appears to have become the post-recession victory cry and that mentality is contributing to what we believe is a sense of complacency in the fixed income market with regards to corporate debt. We would agree that the short-term default risks have been reduced dramatically. However, what defines short-term is debatable and what has supported this yield recovery is not guaranteed to continue in the coming years. While high-yield corporate debt may perform well in the coming days and months, we believe it is prudent for managers to start thinking about their allocation choices.
04-Nov-10	Despite Jumping the QE2 Gun, Risks Remain to Upside for Oil The unintended consequences of "QE2" may sound like a bad sequel, but the reality of the Federal Reserve's liquidity injection is the potential for another commodity price shock. While the Fed's aim is to spur economic demand and job creation, QE2 will serve to weaken the dollar further and push commodity prices higher. While prices are more macro-centric versus fundamentals, the latter is tightening. The swing factor will be the pace and trajectory of OECD demand, coupled with non-OPEC production growth.
29-Oct-10	The Ripple Effects from Structural Changes in Corn The agricultural sector made headlines this summer after a record-setting drought in Russia disrupted global wheat and barley supplies. The event served as a catalyst for the recalibration of fundamentals in a market that had become beset by complacency. Structural demands including socioeconomic-supported dietary changes, ethanol production and expanding retail gasoline blends in the U.S. and Europe, coupled with near-term supply stresses will remain constructive for agricultural prices over the near to medium term.
26-Oct-10	National Broadband Plan -- The Cloud Computing Spark Plug? The FCC's National Broadband Plan aims to build the world's largest, fastest, and most widely-adopted network. If enacted as envisioned, there is no question that it would indeed be a strong stimulating force in the telecommunications sector. The increase in capacity and coverage in the wireless spectrum would enable cloud computing applications of much greater impact than are now seen. However, the political environment will likely determine how effective the plan becomes and which recommendations are adopted given the demand, legal, financial and political hurdles that currently exist.
21-Oct-10	Caterpillar Sets up for a Breakout Year in 2011 Caterpillar plays a central role in our "Commodities -- A Structural Imbalance" investment theme. The company's machines and engines are involved in all aspects of the global economy, from mining raw materials to harvesting agriculture, powering electrical systems and off-shore rigs, and building roads, bridges and damns across every terrain around the globe. As such, we take particular interest in its quarterly results as a means to navigate global demand trends and end-market growth.
20-Oct-10	Unconventional Wisdom: A Look at Inflation Expectations Since the Federal Reserve's implied inflation target is 2.0% - 2.5% in the CPI, the 5-year, 5-year forward breakeven should hold between those bounds as long the market believes the Fed is able to maintain its inflation target. Over the past several days that rate has spiked to 3.5%, the highest level in the history of the index, which calls into question the market's perception about the Fed's ability to keep inflation stable.
14-Oct-10	Seeking Yield: Munis - Real Value or Capitulation? In the current environment, fixed-income purchases can often feel like an exercise in futility for relative-value buyers. Certainly, what qualifies as and, just as importantly, what defines a relative-value investment changes over time. In the not too distant past, munis were considered reasonably valued when their yields were around 85% of Treasury yields. As Treasury yields have moved ever lower, that relationship has broken down. Between June 22 and Oct. 1, the ratio exceeded 100% 31 times while falling below 96% only seven times. If yields are indeed converging, it is possible that munis have long been too cheap and are still cheaper than they should be. Indeed, investors might be hard pressed to find a better value.
23-Sep-10	Commodity Price Shocks: Futures Prices & Inflation Commodity futures prices provide the most up-to-date pricing on commodity inputs, yet the pass-through of futures prices to firm costs and consumer prices are not that obvious.
23-Sep-10	Commodity Price Shocks: Agricultural Stocks & Futures Prices The pricing environment has been a volatile one for the past few years, so we thought it would be interesting to look at the data to see what statistical impact supply estimates have on futures prices. What we find is not too shocking. The WASDE ending stocks estimates calculated by the USDA have very little effect on changes in futures prices.
23-Sep-10	Seeking Yield through Dividends The U.S. stock market could be facing a low-return environment for some time as the legacy of the Great Recession is felt through higher tax rates and a protracted recovery in the labor and housing markets. Nonetheless, a dividend-based approach has merit at this time given that the corporate sector has the means to pay increasing dividends and given that shareholders will be increasing their demands for dividend income.
21-Sep-10	The Economics of Commodity Price Shocks The rapid price appreciation in agricultural commodities this summer triggered concerns that commodity inflation could lead to broader inflation. At the same time, there was also a belief that the price appreciation in agricultural commodities could temper deflationary forces. The data suggest neither connection is valid.
10-Sep-10	Unconventional Wisdom: No Double-Dip in the Treasury Market A lot has been made of the rally in the Treasury market, so much so that the precipitous drop in yields has been said to be a harbinger of a double-dip recession in the U.S. economy. The economic data and other key indicators, however, suggest otherwise.
07-Sep-10	Seeking Yield: One Man's Trash Is Another Man's Treasury The concept of relative value should be reformulated in the aftermath of the Great Financial Crisis. In this low-yielding, uncertain environment, where spreads are quickly disappearing and corporate balance sheets look healthier than most sovereigns, considering the relative value of historically non-comparable credits is prudent. For the foreseeable future, participants should be willing to cast aside formerly reliable starting points and paradigms in order to unlock real and measurable relative value opportunities not just within, but across, fixed-income asset classes.
01-Sep-10	Legally Avoiding Taxes: MLP Closed-End Funds As a follow-up to our July 23, 2010, article "Legally Avoiding Taxes," we take a brief look at MLP closed-end funds as a way to gain exposure to MLPs in retirement accounts without raising tax issues.
13-Aug-10	The Shale Rush -- An Investment Framework There is a paradigm shift taking place in natural gas. Abundant supplies from unconventional resources, and near- and medium-term carbon dioxide emission policies, imply greater gas usage and an increased share of the energy mix. Shale gas has the potential to be game changing. The resource will continue to be the single largest contributor to production growth in natural gas over the next decade -- more than offsetting declines in other production. The risk is that the shale boom turns into a bust. There is considerable uncertainty surrounding the marginal costs of supply, well economics, production rates, and the environmental impact and potential regulations.
28-Jul-10	Unconventional Wisdom: Short-Term Greek Debt a Safe Haven? Considering that the market has been punishing Europe's riskier sovereigns for the past few months -- and with good reason -- it might seem a bit ridiculous to suggest Greece's short-term debt is a "safe haven." However, market participants may be discounting debt that is maturing in 18 months or less from now too much and, in doing so, could be creating a nice buying opportunity. For participants who believe that Greece will do what is necessary to satisfy the "required" austerity measures, short-term Greek debt may indeed offer an enticing opportunity, if not a safe-haven of sorts.
23-Jul-10	Seeking Yield: Legally Avoiding Taxes As income and investment taxes are all but assured to go up in the near future (at least for those in the top brackets), money managers will want to take a hard look at tax-advantaged vehicles. Investments to consider for taxable accounts include general obligations bonds from out-of-favor states, certain municipal revenue bonds, as well as Master Limited Partnerships. Higher-yielding (but not necessarily high-yield) bonds, including Build America Bonds (BABS), and stocks with higher dividend yields, have a place in tax-exempt accounts. For such accounts, we take a look at the dividend yields from a few companies, several corporate bond offerings, as well as some BABS issues. We note that while interest rates may move sideways over the near term, there is substantial interest-rate risk over the longer term.
15-Jul-10	Cloud Computing Defined The inevitable implementation of cloud computing will transform the entire information technology industry. In the process, many of the largest vendors of technology equipment will be hurt, as the paradigm shift makes much of the underlying infrastructure a commodity item. We believe that the cloud computing revolution, over the next five years, will cause value to accrue to application vendors and data distributors, and away from the more traditional giants of the technology industry. Professional investors can benefit by viewing this shift using our definition of "the cloud" and not the one presented by technology vendors.
12-Jul-10	Unconventional Wisdom: An Unstable Stability Plan The €440 bln European Financial Stability Facility is expected to begin operating in late July or early August. It acts as a backstop for the eurozone, but in reality it is a tool for building market confidence. While creating the illusion of a safety net, its viability hinges on need... Since the EFSF does not have its own revenue stream to guarantee its debt, the facility is backed by eurozone countries. If more and more countries need aid, the number remaining to provide support could dwindle to an untenable level... The facility's support must come from the larger eurozone nations, in particular Germany and France. Its viability hinges on their willingness, and the willingness of their citizens, to participate.
29-Jun-10	Unconventional Wisdom: Time to Be Discreet The S&P 500 Consumer Discretionary sector was a much-loved sector during the market's recovery rally. Lately, though, the market has been less infatuated with the sector. That is for good reason as headwinds on the horizon are raising the risk of downside earnings surprises in the back half of 2010. Accordingly, we recommend reducing exposure to the sector.
11-Jun-10	Seeking Yield: The Convergence of Yields The now casual comparison of the safety and/or relative value of sovereign debt to corporate bonds may now expand to U.S. municipal debt. Not only is the comparison unusual by historical standards, but it also reflects a trend that we believe has real staying power -- the pursuit of the best relative-value yield regardless of the debtor. We believe state-backed debt has been unfairly categorized in the press as increasingly risky. This has created some solid relative value plays across the municipal landscape.
19-May-10	Deepwater Horizon Disaster - Recovering from the Unthinkable The Deepwater Horizon catastrophe and oil spill will rank as one of the worst blowouts on record in the U.S. and in the world. Until now, deepwater platform drilling has been without incident for nearly twenty-five years. The disaster will serve as a cautionary event for the industry and will result in regulatory consequences. It will alter offshore drilling, however, not limit it. Rising production from the Gulf of Mexico has been the key driver of increased U.S. oil output and a renewed energy policy. (Republished due to minor change.)
11-May-10	Cloud Computing -- The Impact on Domains The potential of the smartphone revolution is that all of the technology needs of an individual can be controlled and accessed through a single device. The iPad hints at this direction, but since it is really just a touch-screen version of the laptop model, it is more properly viewed as evolutionary, not revolutionary. This is the potential in the cloud computing revolution that nearly all of the mass media, most analysts, and many investors are missing: The current incarnation of smartphones is only a precursor to the soon-to-arrive new style of computing.
07-May-10	Sovereign Debt: 'Cause Breaking Up Is Hard To Do European officials find themselves confronted with the notion of whether Greece's fiscal crisis leads to a convergence of the eurozone or a divergence of the eurozone. The fate of the euro is at hand and how policy makers handle Greece will set a precedent for the rest of the PIIGS.
07-May-10	Sovereign Debt: Is Portugal Next? Portugal is in a better economic situation than Greece, but the issue is whether it can successfully conduct bond offerings at affordable interest rates to buy time for its austerity measures to take place. For European leaders, the ultimate question will be whether they allow declining confidence to further unravel fiscal conditions or stem the crisis by solidifying the eurozone, eradicating contagion fears that are undermining their efforts.
26-Apr-10	Caterpillar -- The Momentum Continues Caterpillar not only exceeded consensus estimates by $0.11 in the first quarter, but raised both the revenue and profit estimates for FY10. The main driver of their recovery lies outside the U.S., principally Asia and Latin America, driven by the mining industry and the end of the inventory liquidation cycle.
29-Mar-10	Hope Springs Eternal for Oil. Gas? Not So Lucky. The prospects of spring and summer demand have completely defied rising crude oil inventories. Oil has retained the $80 level despite overtly bearish fundamentals including potential demand destruction in gasoline. As for natural gas, bearish fundamentals have not escaped the market's view, pushing prices below $4.
25-Mar-10	Unconventional Wisdom: The Agency MBS Market after the Fed An inflection point is waiting for the capital markets at the end of the first quarter when the Federal Reserve steps aside from the agency MBS market. Many fear this move will be the catalyst for higher agency MBS yields and higher mortgage rates as private demand is unable to fill the purchase void left by the Fed. We examine why that may not be the case.
18-Mar-10	Seeking Yield: A Return to Dividends Our expectation is that the S&P 500 will achieve a low single-digit to low double-digit percentage return in 2010. Many share those modest expectations. Therefore, we expect a dividend-based investment strategy to regain appeal as equity money managers seek out steady income streams in order to provide a positive return to counterbalance modest, or even nonexistent, price appreciation this year.
11-Mar-10	Crude Oil Outlook -- March 2010 The global economy is gradually recovering, but demand growth remains beset by structural hurdles in developed countries. Oil demand growth in the West is stagnant. The burden of future consumption falls squarely on the shoulders of Asia, led by China and India, and the Middle East.
01-Mar-10	TIC Data Adjusted by New Survey The TIC survey saw an approximately $140 bln upward revision to China's holdings, to $894.8 bln. That means the country is by far the largest holder of Treasuries, ahead of Japan by approximately $130 bln.
17-Feb-10	Misinterpreting the TIC Data The Web has been inundated with stories since the release of yesterday's TIC Data that foreign demand for U.S. Treasuries has fallen, particularly in China. However, the data are being misinterpreted. There is more to China's holdings of U.S. Treasuries than just the decline seen in December.
27-Jan-10	Caterpillar Shows Signs of Improvement The near and long-term growth prospects for CAT remain centered on rising demand from developing economies for commodities.
25-Jan-10	Unconventional Wisdom -- Investment Premise When events unfold to challenge conventional wisdom, opinions can change in a hurry along with the investment landscape. The aim of "Unconventional Wisdom" is to consider the alternative view to conventional wisdom and to explore potential investment ramifications if, or when, conventional wisdom shifts.
25-Jan-10	Seeking Yield -- Investment Premise When allocating funds to fixed-income assets, the goal is to minimize the risk associated with the return that is being sought. Ultimately, managers are "seeking yield" for the end user regardless of a specific risk profile. This goal does not change in the wake of evolving micro and/or macro factors. What does change is the pursuit of yield in the face of those evolving factors, which can range from geopolitical risk to demographic patterns to economic cycles. It is this change in demand that impacts yields and allocation strategies. The ongoing challenge is to be ahead of those shifts in demand and to unearth reallocation opportunities before they become commonplace. In "Seeking Yield," that is exactly what we aim to do for money managers.
25-Jan-10	Commodities: A Structural Imbalance -- Investment Premise The demand growth borne out of the industrialization and urbanization of the developing markets, and the complacency in the inevitability of production growth, have been the root causes of this century's commodity super cycle. The financial crisis caused a mid-cycle correction, but it did not alter the course set by the rise of the BRIC middle class. The demand curve has already been altered and it will take time for the commodity complex to adjust.
25-Jan-10	Cloud Computing -- Investment Premise Cloud computing is the most transformational evolution of technology since the introduction of the PC. But to truly understand the transformational nature of the cloud computing concept, it is necessary to separate the meaningful from the minor and inconsequential aspects.

20-Dec-11	Unconventional Wisdom: Rethinking Tail Risk for the Eurozone A popular line of thinking is that a default by Greece is inevitable and that others may follow suit. Meanwhile, it is not an unconventional thought that a breakup of the eurozone is inevitable. Anything is possible we suppose, although we currently think the breakup of the eurozone is the least likely development. With all of the negative commentary on the debt crisis fully digested by the market and urging positions that deal with worst-case scenarios for the eurozone, we discuss in this note the unconventional view that the tail risk for many now is not things going wrong in the eurozone but things going right.
06-Dec-11	The U.S. Economy Not in the Eurozone There are natural concerns, based mostly on anecdotal views, that the eurozone is already in a recession that will end up being more than mild. That thought has been disconcerting for some market observers who recognize the size of the euro area economy is roughly 80% of the U.S. economy. The EU economy, meanwhile, is the largest in the world, according to IMF data. Naturally, there is a belief that a recession in the eurozone will pull the U.S. economy back into recession. Is that possible? The answer is “no” and “maybe.” In this note, we address those answers ahead of the latest "make or break" EU Summit.
21-Nov-11	Flow Reversal -- Oil, Pipelines and Politics Enbridge and its partner, Enterprise Products Partners, announced on November 15 that they had agreed to reverse the direction of crude oil flows on the Seaway Pipeline to enable it to transport oil from the crude storage hub at Cushing, Oklahoma, to the U.S. Gulf Coast. The immediate reaction in the oil markets was a further narrowing of the spread between Brent, the global price point, and WTI crude oil prices, based on expectations the reversal would relieve Cushing bottlenecks. But there is more to this story than just price differentials for oil. The flow reversal of the Seaway Pipeline reflects a new era in oil production in the U.S.
16-Nov-11	BR Agriculture & Food-Related Enterprises Equity Basket To request the complete basket, please contact your Institutional Salesperson, Jason Green at 312-281-5484 or jgreen@briefing.com.
10-Nov-11	The Flow of Oil South Total petroleum consumption is running under 19 mln bpd with gasoline demand continuing to trend downward, reflecting the economic realities of a low-growth environment. While consumption has peaked for the medium term, the U.S. has the potential to become a key regional petroleum product exporter, leveraging the new wave of production growth to serve the high-growth economies of Latin and South America.
08-Nov-11	The Changing Consumer: Beyond the BRICs The countries behind the acronym 'BRIC' are well known. What is not well known is which countries are on course to follow in their growth footsteps. In this research note, we present the first of a multi-step process for identifying the next generation of developing markets that could soon command an acronym of their own that has deep, economic meaning. This undertaking is a data-driven exercise that looks at economic and demographic growth metrics for a universe of developing economies – 46 to be exact. Indonesia scored highest in our analysis. The Middle East was also well represented – Iraq, Iran and Saudi Arabia – while other interesting names included Bangladesh, Colombia, Ghana, Nigeria and Pakistan. Whether those countries continue to make the grade will be decided in upcoming reports linked to the Briefing Research investment theme, "The Changing Consumer."
25-Oct-11	Is it Good Policy to Demand a Stronger Yuan? It seems like it is that time of year again when populism controls Congress and laws subjecting China to tariffs and penalties for manipulating its currency are discussed. China being labeled a currency manipulator, however, does not mean that the U.S. will see greater benefits from a stronger yuan. Subjecting China to penalties may be counterintuitive for encouraging a stronger economic recovery. This is especially true today when the U.S. is muddling through a low-growth environment.
24-Oct-11	Pricing in the Potential for Cloud Computing Traditional "giants" in technology are seeing their multiples shrink toward overall market levels if they do not have a clearly visible strategy toward the cloud. This valuation shift is not correlated to fundamentals: companies showing movement toward the cloud are receiving higher multiples than companies with similar fundamental growth trends, but no visible cloud strategy. In this report, we illustrate this point looking at 15 selected stocks that are commonly viewed as "cloud computing" stocks.
12-Oct-11	China's Burgeoning Luxury Goods Market The quest for luxury is the result of a decade of economic prosperity for the Chinese consumer. One of the underpinnings of our investment theme, "The Changing Consumer," is this structural change taking place across the income frontier in the developing world. Certain markets are already emblematic of that shift. China's luxury goods segment is one such market, where expectations of double-digit growth will aid it in surpassing Japan by the middle of this decade and eventually challenging the U.S. As retailers expand in China, they are focused on improving the customer experience. Ultimately, winners and losers among retailers will be decided by consumer tastes, and their current tastes are sheer luxury.
04-Oct-11	Seeking Yield: A Broader Dividend Focus Since March 18, 2010, we have been highlighting the appeal of dividend-paying U.S. stocks as a long-term investment. We refined that view in mid-2010, placing a narrowed emphasis on blue-chip multinationals. Through Sep. 30, 2011, the S&P 500 Dividend Aristocrats index has returned 2.4%. In that same period, the S&P 500 is down 3.0%. We continue to see added investment appeal in dividend-paying U.S. equities, but we are broadening our focus today. As such, we ran screens to identify companies in each of the major U.S. indices that pay dividends, have an established market position and a strong financial standing.
23-Sep-11	Here We Go Again: Another Look at the Payroll Tax Cut In an effort to boost employment before the 2012 election, President Obama announced a joint infrastructure spending and tax break stimulus plan that he hopes will be passed before the end of the year. While the details on the spending side remain hazy, one of the elements of the tax break plan consists of lowering the Social Security payroll tax rate from 6.1% to 3.1%. Unfortunately, our estimates show that the payroll tax cut alone may not be enough to drive economic growth above potential (2.7% - 3.0%) in 2012.
16-Sep-11	Seeking Yield: The "Gold" That Missed the Rally Although the financial sector is still struggling to recover from the economic turmoil that began in 2008, we believe that Goldman Sachs can rebound fairly quickly because its issues are tied more to execution and perception than they are to structural challenges. While it may take a while for Goldman to rebuild its reputation, we believe the investment bank will continue to attract and retain some of the best talent available given the historical cachet of its brand. This should allow Goldman to generate the income that is necessary to make good on its bonds, which our analysis leads us to believe are underappreciated.
09-Sep-11	Q3 2011 Commodity Views There has been much written about the expanding financial interest in commodities in the latter part of this decade. But viewing the commodity complex only through the lens of the speculators under appreciates the change that has occurred both fundamentally in terms of supply and demand and financially as investors flock to hard assets. The net result is commodities as an asset class have matured and become more established. Our vantage point has changed little over the last decade. We continue to argue that the supply-demand fundamentals remain constructive for commodities and will so through this decade, providing an attractive investment prospect.
07-Sep-11	Seeking Yield: A Broader Perspective on Corporate Bonds Investing often demands looking at data from different perspectives. Using the same base data, a single snapshot can provide what appears to be a clear answer. Put two or more snapshots together -- even if they are derived from identical data -- and the perspective can change. Something that looks like a good relative value when judged by one measurement (or more) may ultimately be a poor investment. In this note, we provide data-driven insight that clarifies that important point for fixed-income investors.
26-Aug-11	A Crisis Growing Down on the Farm For sale: land with pristine views, a charming residence, close to nature and outdoor activities, low taxes, and animal friendly. Sound like a home buyers' dream? Maybe except the fact prices are up 200-300% over the last 15 years and...it's farmland in the middle of Iowa. The shocking growth in farmland values has the look and feel of a bubble, especially considering that growth rates have exceeded the most speculative areas of the housing bubble. However, farmland values are in-line with current crop prices. If crop prices suddenly fall, farmland values should tumble along with it. But unlike the 1980s, farmers are better positioned. Investors are betting structural demands will keep price levels elevated to keep them in the green.
09-Aug-11	Seeking Yield: A Corporate Parachute High-grade corporate bonds continue to offer a compelling value in the context of net debt and their spread to Treasuries. The repayment of debt comes down to two things: ability and willingness. Most entities, corporate or sovereign, have the willingness. The question is, do they have the ability?
15-Jul-11	A View from the Corn Belt After improving weather conditions led to higher-than-expected plantings, crushing corn prices in June, the USDA's July WASDE report reset demand and supply estimates, yet again. Our agriculture-related investment strategy has changed little over the last year. We see value currently in U.S. corn futures as the downside is limited by export potential, enhanced by lower prices and a weak dollar. Our equity strategy continues to target industries that benefit from higher corn prices, including fertilizers, farming equipment, corn refiners and processors, and seed producers.
07-Jul-11	Unconventional Wisdom: Does Europe Need an E-Bond? Bailout dollars have been lost or have yet to produce any definitive impact other than helping to avoid defaults. Absent a return to the drachma or an outright default by Greece, the creation of a Eurobond (or E-bond) is not just a potential solution, it is the solution. The creation of an E-bond buys time. And time is the only solution to a debt problem of this magnitude for which solutions (economic prosperity) are predicated on the restructuring of entire economies.
30-Jun-11	A Gas Price View with More Bark than Bite for Retailers Gas prices contribute to shifts in spending behavior, but they are not the predominant factor influencing spending decisions. The latter is admittedly a simple conclusion, yet it is important to consider in the current environment when simple conclusions are being drawn that high gas prices alone are certain to lead to sales and/or earnings disappointments for retailers. In brief, the sum of economic parts is greater than the whole of gas prices when it comes to influencing the sales and earnings prospects for most retailers. In this note, we present a data-driven analysis for a better understanding of that relationship.
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part I A review of the history of the telecommunications industry is helpful in understanding the trends in place today, most of which are essentially unchanged.
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part II The government's antitrust suit against AT&T claimed that while the company was complying with the "sale" of access to its network, it was not making it convenient or easy for those competitive services. The settlement between the government and AT&T set the stage for the telecom industry over the past 20 years.
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part III After the breakup of AT&T in 1984, the phone company became primarily a long distance provider and a computer manufacturer. However, in the late 1980s and early 1990s, a number of new technologies emerged that changed the entire landscape of the industry. These unforeseen events eventually drove the government to "guide" the industry again, with the Telecommunications Act of 1996. Today, we look at how the industry evolved in the 10 years after the AT&T settlement.
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part IV The breakup of AT&T in 1984 was intended to create competition for long distance, which happened. However, the unexpected growth in demand for data transmissions was driving a real need for massive enhancement of the telecom network. Eventually, Congress decided that the government needed to create incentives for investment and shape the emerging "information highway." Here is an outline of the primary conditions in the industry that would eventually drive the passage of the Telecommunications Act of 1996.
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part V In the mid-1990s, the telecom network clearly needed to be enhanced and expanded to accommodate the inevitable demands of the information age. Congress decided to alter the regulatory environment by passing the Telecommunications Act of 1996. At the time, this act was viewed as a revolutionary step toward deregulating the telecom industry. While that objective has certainly been reached, the unintentional results of the Act have proven been the most significant legacy of the "deregulation."
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part VI Legal historians might view the AT&T settlement in 1983 as the most significant regulatory action in history. The most significant shaper of the telecom industry today, however, has been the Telecommunications Act of 1996. Ironically, the Act can only be viewed as having failed in its primary goal of creating brand new competitive telecom companies. Instead, the incentives given to the regulated RBOCs to encourage new competition are now the legacy of this Act.
28-Jun-11	How Regulation Has Shaped the Modern Telecom Era -- Part VII After the passage of the Telecommunications Act of 1996, venture capitalists and the public capital markets funded an incredible number of telecom companies. The Act was viewed as the modern equivalent of the Oklahoma Land Rush, since the Act allowed anyone to have access to the RBOCs local networks at very low regulated rates. Even the most grandiose vision of the future potential for the telecom market was readily accepted. Yet, most of those companies are now long gone.
28-Jun-11	Cloud Computing: A Reflection on Telecommunications The history of the telecommunications industry holds clues for the future evolution and potential winners. Growth of new telecom services has historically been enabled by leveraging an existing network, benefiting the owner of that network. In the digital age, convergence of telecom services onto a single network has proven to be an appealing product to customers. This network will provide the next generation transmission of data that will be integral in the cloud computing revolution.
23-Jun-11	Cloud Computing: A Note on Music in the Cloud Major tech players Google, Amazon.com and Apple all recently announced cloud music offerings. Direct profits from digital music will be slim -- the overall U.S. music industry is expected to derive only $11.5 bln in revenue in 2011; $5.8 bln of that is digital. Instead, the moves are an effort by companies to increase customer integration with their products and services.
21-Jun-11	Seeking Yield: Munis Not Quite Dead Yet The municipal market is alive and kicking after being left for dead by some participants starting in December 2010. In January, we highlighted what we believed "to be some extreme disparities between U.S. Treasury, corporate and muni yields." Since then, the muni TEYs have outperformed by a nice margin. While munis are not the bargains they once were, the spread to the 30-year Treasury may still be compelling to participants looking to put money to work at the long end of curve.
16-Jun-11	A Fracture in the Fertilizer Backbone For an inherently cyclical industry, visibility has improved considerably over the last two years for U.S. agricultural chemical producers. Demand for their product is benefiting from structural changes in consumption, magnified by a strained global agricultural market, while their primary feedstock -- natural gas -- is experiencing a supply renaissance that could alter their cost curve. The net effect has altered the outlook for U.S. fertilizer producers, who have reaped the benefits of rising global demand for their product and now could potentially see their cost advantage improve dramatically, putting them on equal footing with swing producers, particularly those in Eastern Europe.
01-Jun-11	Seeking Yield: Sell Low, If They Will Buy High A funny thing happened on the way to higher Treasury yields: they never went higher... at least not yet. With the 10-year Treasury and corporate spreads holding at relatively low yields, the current situation is yet another opportunity for corporations to improve their financial position. Many are doing just that, but is the rush by high-grade institutions to issue debt a bottoming indicator for Treasury yields? We answer that question in this note and present a debt-driven rationale for why U.S.-based, multinational companies remain a solid investment option.
12-May-11	Seeking Yield: It's All Relative One of our main tenets with regard to fixed income is to seek out relative value plays on a consistent basis. Selection is more important than ever as the days of throwing darts at the fixed-income dartboard and hitting a winner are all but over. Not only is the easy money gone, the difficult money is even getting harder to find. Our analysis leads us to believe that managers should keep overall duration below their historic targets and that many "second-tier" credits offer the best risk/reward within the corporate bond landscape.
11-May-11	Cloud Computing: A Real and Measurable Trend There is a very real transformational trend occurring in the technology sector that can be described as cloud computing. How you define the trend is important, however, as it is not the type of technology boom that will lift all boats. This transformation is large enough to change the current dynamics of the technology industry, which is very much focused on the IT networked-PC model. Revenue growth is shifting away from the currently dominant technology companies who are still focused on the IT-PC model and toward companies involved in the cloud model. We believe that the current growth rates are only the beginnings of the major market shift that will occur, as evidenced by our analysis of 310 companies.
05-May-11	So the Bond Guy Says to the Equity Guy... We appear to be entering another period in which asset prices are not lining up with each other. All roads point to equities right now and specifically to U.S. blue chips with multi-national exposure, as they have more appealing total return potential than many bonds do -- government-issued or otherwise. Yes, this is a "bond guy" extolling the virtues of equities.
04-May-11	Q2 2011 Investment Views Oil prices have been driven more by geopolitical risk and financial interest than fundamentals. Supply has kept pace with global demand growth despite the loss of Libyan production, as evidenced by ample inventories and OPEC spare production capacity.
02-May-11	Summer Gas Prices Go Back to the Future: 2008 vs. 2011 With oil and gas prices moving back toward prior peaks, it is natural to compare the current period with the summer of 2008. There are some similarities, but while price levels are following the same trajectory, fundamentals are not. It was not until the summer of 2008 that we witnessed real demand destruction. For the first time in history, Americans drove less. There is a risk that we could see the same demand destruction this summer with gasoline prices expected to jump 40% from last year.
28-Apr-11	Cloud Computing: Not All "Cloud" Companies Are Created Equal Earnings growth of so-called "cloud computing" stocks has outpaced non-cloud stocks by approximately 50 percentage points since 2007. Excluding Google and Cisco, the figure triples to more than 150 percentage points. The fact that there is not a consensus definition of "cloud computing" in the marketplace has created an atmosphere where cloud has become the moniker for next generation growth in the technology sector. In this report, we will show the performance trend of a cloud computing index based on companies that the market commonly considers "cloud."
21-Apr-11	The Race for Share in the World's Largest Auto Market China's automotive market is emblematic of a shift in the behavior of the Chinese consumer. The country's auto sector has and will continue to evolve as the consumer base widens through urbanization and China attempts an economic transition into a domestic demand-driven economy. The sector has already become the world's largest in terms of units sold, and this report will break down the international automakers operating in China based on their local joint ventures, market share and expansion plans.
04-Apr-11	China -- A Coal-Fired Secular Growth Story China is completely reliant on one energy source: coal. More than 3 bln tonnes are consumed per year, three times the rate of the U.S. with half the reserves. Coal accounts for 70% of China's primary energy consumption and has sustained its rapid economic growth for the last three decades. Coal will be the primary energy source of its future as well. The Chinese coal sector is in the midst of a major transformation as the government attempts to clean up the country's skies and mines. Asian coal demand, led by China, has sapped global supplies, causing the PRC to seek out supply from the most unlikely of places... the U.S.
30-Mar-11	Seeking Yield: Market Size Matters U.S. Treasuries as a whole are overvalued and have limited appeal beyond safety trades fueled by geopolitical risk and/or European debt issues. The idea of selling the U.S. to buy something else outside the U.S., however, is far easier said than done considering the U.S. accounts for nearly 34% of the world's combined value of equity and par-value debt. There are other options like the BRIC countries, but even those options are limited seeing how their slice of the world's equity and par-value debt is just 9.6% combined. Translation: good luck getting one's hands on the BRIC securities all others seem to covet at reasonable prices. U.S. stocks continue to offer a relative value opportunity. U.S. Treasuries do not. The silver lining for Treasuries is that the dominant position U.S. securities hold in the market should serve to mitigate the downside risk in Treasuries by capping how high yields go. In brief, size matters in a big way for the U.S. market. We examine why that fine point will have to matter, too, for fixed-income managers trying to allocate money outside the U.S. Treasury market.
22-Mar-11	Unconventional Wisdom: Where are the Qualified Workers? Given the sheer size of the unemployment pool, one would think that businesses would have an easy time finding qualified workers. That is not the case. The reality is that firms have been steadily increasing the number of job openings, but have been unable to find qualified workers to fill them.
18-Mar-11	Unconventional Wisdom: A Coordinated Effort of Moral Hazard G7 finance ministers and central bankers agreed to a coordinated intervention to stem the yen's strength. In essence, though, what has been couched as a coordinated move grounded in moral responsibility to Japan is really at its roots another act of moral hazard.
15-Mar-11	Seeking Yield: Bank on Increasing Dividends With macro uncertainty still high and return prospects in question, the merits of a dividend-based investment strategy remain as strong today as they did a year ago when we discussed the advantages of owning high-yielding stocks to boost total return potential in a low-yielding environment. With companies seemingly ready, willing, and able to increase dividend payouts today, we revisited our dividend scans to uncover the best and brightest prospects. Not surprisingly, the financials, and specifically the banks, are featured prominently on the prospect list.
07-Mar-11	The Changing Consumer: Assessing the BRIC GDP Outlook The aggregation of the BRICs into a collective, apart from the remainder of the developing world, served as a means to highlight these fast-growing economies. However, the grouping also serves to mask the unique qualities of each as to drivers and inhibitors of their respective long-term growth. Disaggregation uncovers the differences between each distinctive economy in order to assess the risk -- upside or downside -- to current GDP growth forecasts.
25-Feb-11	Turm-Oil in the MENA Region The growing unrest in the MENA region is the most significant geopolitical event in the oil markets in decades. The pro-democracy movements are occurring at a time when global oil supplies are ample and OECD demand has peaked. But risks of production disruptions narrowing the margin between supply and demand will support a higher oil price deck until the region's transformation materializes. Given the broad implications, we consider the effects from the unrest with regard to its impact on oil, economic growth, inflation, and risk assets.
18-Feb-11	Seeking Yield: A Perspective on Relative Value We believe the bond market is at a turning point. Just as the flight-to-safety trade and government support changed the market from late 2008 to late 2010, the "flight-to-risk" -- or simply a flight from Treasuries -- has the potential to push the market decisively in the opposite direction. However, some constants will remain -- the ideas of judging relative value and the ongoing trend of converging yields.
11-Feb-11	Searching in the Cloud -- Defining the Equity Universe Cloud computing is the next potential transformation of technology. Our thesis for cloud computing as a strategic investment theme is it will be a strong driver of growth for the sector, as well as other groups from media to telecom. To determine what companies will benefit, we use fundamental data screening as our primary criteria, not preconceived ideas. Our research approach is explained in this paper. The actual results will follow in a subsequent report.
09-Feb-11	Crude Oil Outlook -- 2011 and Beyond 2010 was the year of recovery for global oil markets. 2011 will mark the resumption of the multi-year crude oil upcycle as global economic growth gains momentum. By the latter part of the year, and into 2012, supply constraints could start to increase as inventories tighten, thereby leading to a constructive environment for oil prices. Our focus, as always, remains on the trend. Barring a global economic reversal, the trend over the medium to longer term remains decidedly higher.
31-Jan-11	The Changing Consumer - Demographic Doomsday Awaits? When most people think about population shifts, they immediately refer to the changing demographics of the Baby Boomer generation in the U.S. or the aging population in Japan. While both are consequential, this isolated attention is misguided. The reality is the aging population shift is not just relegated to the U.S. and Japan. In fact, many countries -- advanced and developing -- are soon going to experience the potential negative economic effects of an aging population.
21-Jan-11	The Changing Consumer: Advanced Economies Change is inevitable in a dynamic, global economy, whether it is population and societal shifts or technological revolutions. For some time now, the U.S. consumer has been the dominant force in global consumption. That will remain the case for the foreseeable future, yet the legacy of the Great Recession and a long-term demographic shift appear ready to drive changes that will lessen the U.S. consumer's role as the major change factor for the global economy. The world's other leading consumers -- Japan and Western Europe -- also have an important demographic evolution underway as aging populations, coupled with ongoing economic headwinds appear ready to alter their position in the global economy. The overriding message is that a long-term demographic evolution will lessen the role of advanced economies in favor of the developing consumer.
10-Jan-11	The Changing Consumer Just as economies evolve, so do consumers. This evolutionary process stems from a multitude of reasons that vary in influence and impact across the globe: economic; political; ideological; technological; societal; and cultural. In advanced economies, that process is reaching a maturing stage as populations age and consumption growth slows. In developing economies, consumption is on the rise as a transition to policies geared toward driving growth through domestic demand has resulted in an increase in per capita income and the broadening of the middle class. As we embark on a new year, we are introducing a new long-term investment theme: The Changing Consumer.

22-May-12	Microsoft -- Is It Still the Atlas of Technology? Part II. There was a time when it was very clear who dominated the technology industry: Microsoft was the undisputed giant of technology. Today, however, it is becoming unclear who is leading the direction of technology. In this report, part two of a two-part series, we reflect on the current state of Microsoft and cover the following main points: The importance of history and the lesson from Digital Equipment An overview of financial trends at Microsoft A comparison of Microsoft to other technology companies of importance
21-May-12	Microsoft -- Is It Still the Atlas of Technology? Part I. There was a time when it was very clear who dominated the technology industry: Microsoft was the undisputed giant of technology. Today, however, it is becoming unclear who is leading the direction of technology. In this report, part one of a two-part series, we reflect on the current state of Microsoft and cover the following main points: A historical review of how Microsoft got to where it is today A review of Microsoft’s strategy of leveraging Windows in other markets A summary of how Microsoft has missed some of the largest developments in technology over the past 10 years The potential of cloud computing to undo Microsoft’s position as the platform of choice for all technology
18-May-12	Seeking Yield: Groundhog Day As the 10-year yield has continued to drop, investors have sought out alternative investments, which in turn has driven down their yields as well. The result is that there has been a notable reduction in relative-value plays that pass the sniff test. Frankly, we find it difficult to turn away from the value that stocks offer at this time relative to USTs and investment-grade corporate bonds. In other words, we hold the same view today we held a year ago.
02-May-12	U.S. Energy Outlook: Crude Oil, Natural Gas and Coal The U.S. is at a transformational moment in its history as an energy producer and consumer. The combination of horizontal drilling and hydraulic fracturing has significantly increased the development of oil and shale gas resources. The net result, in both absolute terms and as a percentage of total energy consumption, is that imports have declined and exports have risen. The U.S. now has the excess capacity in oil products, natural gas, and coal resources to export into the global marketplace. While the market retains its near-term fixation, driven by geopolitically-induced price volatility, participants with broader and longer perspectives are best positioned to navigate and benefit from the structural changes afoot across the global energy landscape.
26-Apr-12	Unconventional Wisdom: How Long Can the Twist-a-thon Last? The long-term impact of the Federal Reserve’s liquidity support measures on the U.S. economy remains the great unknown. Still, there is little doubt that the market has responded favorably to the liquidity support provided by the Fed. While participants weigh the odds of QE3 coming to fruition, some have come to believe that the Fed, if nothing else, could lend additional support by extending Operation Twist should additional aid become necessary. But could it? And if so, for how long?
20-Apr-12	Brazil -- An Easing Cycle, a Credit Story... and Added Risk The central bank of Brazil continued its current easing cycle Thursday, cutting its benchmark Selic rate by 75 bps to 9.00%. Whether it continues to cut rates or holds steady, one thing is clear with the current policy: it will bolster consumer balance sheets since it will lower debt repayment obligations. Brazil's real GDP growth slowed to 2.7% in 2011 and the IMF only expects it to rise to 3.0% in 2012 before returning to its trend rate of around 4%. A refinancing cycle for consumers could quicken that return to trend growth. But it has also increased speculation that a credit bubble is forming in Brazil. In other words, Banco Central do Brasil’s easing cycle is inviting more risks beyond inflation.
02-Apr-12	Natural Gas: The Economical Choice for Commercial Fleets The shale revolution has made natural gas a viable option within the domestic transportation sector, specifically within the commercial vehicle market. Compressed natural gas vehicles could gain marginal share in the consumer market, yet the real game-changer is through a gas-powered electric engine strategy. The critical hurdle in this transformation is the fueling infrastructure necessary to reach a tipping point. We have retained a bearish position on natural gas since the summer of 2008, based on the overwhelming supply imbalance due to the shale revolution. The potential demand usage from the commercial transportation sector, along with LNG exports and an increased share of power generation, has the potential to rebalance the market over the medium term.
29-Mar-12	Seeking Yield: Earnings Up, Dividend Payout Ratios Down From our vantage point, we believe there is a risk of complacency in the market over the near term as earning growth slows and investors lock in gains after a tremendous first quarter. For those concerned that a market correction could occur, high-quality, high-dividend stocks provide a conservative alternative. We adjusted our proprietary dividend model to screen for companies that have liquid balance sheets and low dividend payout ratios. These companies have the balance sheets to sustain any correction, and to potentially increase payout ratios.
28-Mar-12	BR Agriculture & Food-Related Basket -- A Credit Perspective For the complete report, please contact your institutional salesperson, Jason Green, at 312-281-5484 or jgreen@briefing.com.
19-Mar-12	The Impediments to Cloud Computing The cloud computing revolution will gain significant momentum when adopted by enterprise technology users. The current model for cloud computing is a service model, where the cloud computing aspects are offered remotely, and as a subscription-based service. This model is actually unappealing to many enterprise users. There are two major obstacles to adoption: 1) security of data and 2) the difficulty of upgrades. We feel these obstacles will be overcome when a vendor emerges who sells cloud computing tools and components that allow an enterprise to build a pure computing environment under the enterprise’s control.
13-Mar-12	Shale Boom Fallout -- The Survivors The unconventional gas drilling boom has pushed production to levels not seen since the 1970s. But growth has been financed by equity and debt and many producers overpaid in retrospect for leases and acreage. The weaker players with high debt loads, higher costs curves, and weaker balance sheets will be pushed out as financing dries up. Natural gas is the one resource for which we have retained a long-term negative view within our “Commodities – A Structural Imbalance” investment theme. We have been sitting on the sidelines waiting for the inevitable to play out. We now believe we are at that point. Our goal is to identify those producers that have created value during this period and will be able to manage through an extended period of low prices.
28-Feb-12	Retirement vs. Discouragement: The Decline in Unemployment Media pundits have emphasized that the recent decline in the unemployment rate is a product of the drop in the labor force participation rate and not the result of actual employment gains. That is an unjust analysis at best and an oversimplification at worst of a trend that has been unfolding for more than a decade and which is expected to continue over the foreseeable future.
24-Feb-12	Seeking Yield: Can't We Have Both? Even with recent inflows, both investment-grade and high-yield corporate bonds still have their merits. However, there is reason for caution as the strong performance in both increases allocation risks as U.S. economic data continue to improve. For those not interested in trying to time an exit from longer-maturity bonds, we believe it is prudent to stay with bonds that have a maximum maturity of around seven years. Two that stand out to us are Bunge (+330) and Lorillard (+290) – both rated BBB- by S&P. In addition, we evaluated the possible near-term funding needs of some high-yield companies. We looked at the recent trends of their financing costs to determine who might be in a better position to continue to borrow/refinance in a rising interest rate environment. Higher-yielding (but not necessarily high-yield rated) bonds that we currently prefer on a relative-value basis include Goldman Sachs, Whirlpool, DISH Network, Ford Motor and Hanesbrands.
22-Feb-12	Pure Cloud Computing has Arrived In our initial research reports on cloud computing, we envisioned a pure cloud computing environment as a revolutionary and transformational step that would dramatically alter the nature of information technology. At the time, however, that vision had not been fully enabled by technology. Now, with the arrival of agnostic input/output devices for the Droid Razr, the first manifestations of our view of pure cloud computing have become possible. We are not under any illusions that this particular implementation will alter the technology landscape immediately and by itself. But as the first real implementation of a working model, we think it is historically significant.
07-Feb-12	A Resource-Paved Road toward Economic Growth and Consumption Our strategic long-term view of the capital markets is rooted in structural themes. Sometimes these themes converge, raising the long-term investment potential. This is the case with two of our investment themes: "Commodities – A Structural Imbalance" and "The Changing Consumer." Similar to the BRICs, we believe resources will play a transformative role in determining the next generation of developing economies that have the potential to spur development and invigorate the consumer sector. As part of our "Beyond the BRICs" series, we have undertaken a data-driven view of the developing world with the goal of generating what we see as a compelling list of potential next-generation resource players. Argentina and South Africa scored highest in our analysis. Other interesting names include Indonesia, Iran, Kazakhstan, the Ukraine and Venezuela.
07-Feb-12	A Resource-Paved Road toward Economic Growth, Consumption Our strategic long-term view of the capital markets is rooted in structural themes. Sometimes these themes converge, raising the long-term investment potential. This is the case with two of our investment themes: "Commodities – A Structural Imbalance" and "The Changing Consumer." Similar to the BRICs, we believe resources will play a transformative role in determining the next generation of developing economies that have the potential to spur development and invigorate the consumer sector. As part of our "Beyond the BRICs" series, we have undertaken a data-driven view of the developing world with the goal of generating what we see as a compelling list of potential next-generation resource players. Argentina and South Africa scored highest in our analysis. Other interesting names include Indonesia, Iran, Kazakhstan, the Ukraine and Venezuela.
23-Jan-12	Shale-Capped Natural Gas Prices The North American shale boom was heralded as a game-changer for natural gas. It was and still is. Shale gas production has reinvigorated natural gas production growth, transforming gas into a real, viable alternative to fossil fuels. What the boom has not been good for is natural gas prices. Shale production and warmer weather have yielded a supply imbalance in natural gas, causing prices to plunge to a 10-year low. Without a magnitude of coal-to-natural gas fuel switching, production curtailments, and/or plunging temperatures, working gas inventories could end the season at record levels and put enduring pressure on prices.
12-Jan-12	Seeking Yield: Why Does Everyone Hate the French? France's 10-year debt is yielding well above the one- or two-notch downgrade that is widely expected to materialize. In fact, one could argue that it is being discounted from AAA down to A or lower. While we do not disagree with the idea that France should be discounted, the market may have overreached the bounds of sensibility at this point.
11-Jan-12	Copper -- Refining the Future While maintaining a keen eye on headline risks, we recommend an allocation to the metals in 2012, particularly copper, as part of our “Commodities – A Structural Imbalance” investment theme. Copper still has the strongest fundamentals among the metals, despite current macro conditions. Tighter physical markets are the result of de-stocking, as evidenced by shrinking LME inventories and supply disappointments. The latter means that if demand fails to falter in the face of a slowing global economy, then supply dislocations will create risks of price spikes.

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