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On Monday, the first trading day of 2011, global stocks rallied in response
to strong December manufacturing data and the rally continued Tuesday - -
see links to manufacturing stories below.
Copper hit a fresh all-time high, while oil in New York surged to as much as
$92.58 a barrel in intra-day trading - - its highest level since October 2008.
Goldman Sachs: The US investment bank on Monday issued 2011 upbeat outlooks
for the global and US economies.
GS said the world economy can
expect another strong year of growth in 2011,
according to its annual economic forecast. The
United States can expect substantial acceleration in
real GDP growth over the next two years to a 4% pace
The revised US forecasts for 2011 and first forecasts for 2012 tell a
story of continued global recovery. Most striking, given the investment
bank's long-standing downbeat view on the US, it now shows a substantial
acceleration in its US growth view.
Underneath this robust story is a gradual shift in the mix of growth. GS
expects a pick-up in GDP growth in the advanced economies through the year
and even more clearly into 2012, led by the US. And, while it expects
emerging markets (EM) and BRICs (Brazil, Russia, India and China) growth to
remain solid, it sees a mild deceleration in growth through 2011 and stable
but high growth in 2012.
The result is a modest narrowing of the performance gap between the
developed and EM economies, in absolute terms and relative to their trends.
With lots of spare capacity in the US and other large developed
economies, GS expects monetary policy to remain very accommodative, with no
interest rate increases in the US in 2011/12 and a slow pace of tightening
But the emerging world has a lot less economic slack and diminishing US
recession risk may serve to reinforce the tightening of policy that is
already underway in some quarters.
An optimistic view on the economy, with Jan Hatzius, Goldman Sachs chief US economist:
The New York Times reported on Monday that
Goldman Sachs had reached out to its wealthy private
clients, offering them a chance to invest in Facebook, the hot social networking giant that is
considering a possible public offering in 2012.
The NYT said on
Sunday night, a number of Goldman clients received an
email from their Goldman broker, offering them the
opportunity to invest in an unnamed “private company
that is considering a transaction to raise additional
capital.” Another person briefed on the deal said that
Goldman clients would have to pony up a minimum of $2m to invest and would be prohibited from selling
their shares until 2013.
A Goldman spokesman declined to comment.
Facebook has raised $500m from Goldman Sachs
and a Russian investor in a transaction that values the
company at $50bn, according to people involved in
the transaction. As part of its deal with Facebook,
Goldman is expected to raise as much as $1.5bn
from investors for Facebook.
Goldman's high net worth clients to get access to Facebook shares, with Andrew Ross Sorkin, The New York Times:
Irish Equities: Opening Call 2011;
Goodbody's Eamonn Hughes comments
-- "We published our 2011 Investment Strategy and Key Stock Picks note in mid
December, but for those of you who missed our note and as we open our account in
the New Year, here are the themes and key picks again.
As we move into 2011, the peak in economic growth momentum globally frames our
investment approach. We have tried to map the stocks to four key investment
themes. We are setting a preference for: (i) structural over cyclical; (ii)
improving returns, from widening margins or improving asset utilisation, over
leverage; (iii) non-Irish rather than Irish exposure, though where a particular
Irish stock looks to have real value, we put it on our radar, given the marginal
trade may well be on the buy side; and (iv) for stocks with valuations that have
lagged or where corporate activity may represent a valuation driver in
Our key picks in the year ahead, on the basis of market capitalisation
are; Ryanair, Dragon Oil, Travis Perkins, Aryzta, DCC, Paddy Power and
FBD.Ryanair: A 1.5x rise in ROAs to FY13 due to tighter fleet growth, the
use of more mainstream airports in the mix and operational trends. Dragon Oil:
Undemanding value (EV/boe of $4.30), production growth, and the potential for
corporate activity continue to attract. Travis Perkins: Medium-term growth
prospects coupled with the self-help of the BSS deal, underpin our mid-cycle
valuation of 1390p.
ARYZTA: It has strong growth potential, proven management capability,
combined with a substantial valuation discount to peers. DCC: Valuation is
ignoring the quality of profits and the scope to continue growing in fragmented
markets. Paddy Power: It is in an earnings upgrade cycle, driven by significant
competitive advantage in Australia, which is not reflected in the current share
price. FBD: A strong balance sheet where returns are set to outweigh
write-downs, mark an inflection point in NAV. Also, its historically low
dividend payout ratio offers excellent growth potential."
Countries in the Eurozone will have no choice but to cooperate to overcome the debt crisis, Jean-Paul Pierret, strategist at Dexia Securities France, said. "We know now that there is a bill to foot… we know the amount but what we don't know is how each country will be able to pay it," Pierret added:
Economic View: Positive international growth trends provide a decent start to
the year; Goodbody chief economist, Dermot O’Leary, comments -- "The ongoing turmoil in the sovereign debt markets dominated our commentary in
the closing weeks of 2010. This was for good reason of course, given that
Ireland was at the very epicentre of the storm.
This issue is not likely to go away any time soon, but there has also
been more encouraging news in the form of improving economic data on both sides
of the Atlantic. Sustained international growth is of course vital to Ireland
experiencing an export-led recovery. In the US, double-dip concerns started to
surface in the summer of 2010, while in Europe, it was thought that Greece’s
woes in May would threaten the recovery in the region as a whole.
As it turned out, both these fears were misplaced, with an impressive
turnaround in the US data seen in the final few months of the year, while growth
continued at an impressive, albeit uneven pace in the euro-area, powered by
Germany. The opening economic data of 2011, released yesterday, provided further
evidence of this trend. The ISM index of manufacturing activity rose to 57.0 in
December, up from 56.6, and is now at a seven-month high.
Two of the most important sub indices - new orders (60.9) and employment
(55.7) – are well in expansionary territory. In the euro-area, the manufacturing
PMI rose to a similar 57.1 in December, up from 55.3 in November, putting it at
an eight-month high. Ireland has numerous challenges to face in the year ahead,
issues that I am sure we will be returning to, but it is, nonetheless,
encouraging that one part of the jigsaw – growth in international demand –
remains in place."
Manufacturing continues to expand: Davy economist, Conall Mac
Coille, commented - -"Stock markets rose by more than 1%
yesterday following news that the manufacturing sector continued to
expand in December in both the US and euro area. In the US, the
Institute of Supply management (ISM) manufacturing index was 57 in
December, as expected by the market and the highest reading in seven
months. The euro zone purchasing managers index (PMI) was slightly
stronger than expected at 57.1. Yesterday's releases will be
followed today by the release of the UK PMI for manufacturing which
is also expected to post a robust reading at 58, well above the 50
Taken together, these reports indicate that manufacturing
output gathered momentum through the fourth quarter. Within the US
ISM release, the new orders component rose sharply from 56.6 in
November to 60.9 to end the year. This suggests that the momentum in
manufacturing output in Q4 is likely to continue into Q1.
That said, the employment component of the ISM fell back
slightly to 55.7, which although above the 50 no-change level, is
likely to deliver only modest growth in factory payrolls. So for now
the strength of manufacturing output does not appear to have
translated into employment growth sufficiently strong to reduce the
high US unemployment rate. And for that reason markets may focus on
this week's initial and continuing jobless claims numbers to see if
the momentum that the US economy built up towards the end of 2010 is
beginning to deliver improving labour market conditions."
On Monday in
New York, the Dow Jones Industrial Average gained 93.24 points, or 0.8%, to
close at 11670.75, a 28-month high. The Standard & Poor's 500-stock index rose
14.23 points, or 1.1%, to end at 1271.87.
The technology-heavy Nasdaq Composite gained 38.65 points, or 1.5%, to finish at
2691.52, a three-year high.
MSCI Asia Pacific Index climbed 0.7% Tuesday to the highest since June 2008.
Nikkei rose 1.23%; China's Shanghai Composite climbed 1.76%; Australia's S&P/ASX
200 Index dipped 0.23% and India's Sensex added 0.25%.
closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the
35-session losing streak; In December, the BDI closed the year with a 14th
session drop of 22 points, or 1.2%, to 1,773 points, according to the Baltic
Exchange in London because of a surplus of ships competing for cargo. The
exchange was closed on Monday this week.