February 7, 2013 Update

DJIA:13,986 NASDAQ:3,168 10-YR TRS: 13/32, yield 1.967% Oil:$1,677 EURO:$1.3523 YEN:93.64

The New Colonial Imperialist

For the past decade, China has been developing land that Western countries have failed to modernize. Millions of Africans are now educated at schools, treated at hospitals, and travel on modern bridges and roads that the Chinese have either built or funded themselves. Since African governments have allowed direct foreign investment, the Chinese have taken a special interest in modernizing Africa. China is one of the biggest owners of African debt, but not because they are taking on a social entrepreneurial role. In fact, China imports 35% of its oil from Africa (and no doubt at an inexpensive price). In 2010, two-way trade between China and Africa rose 39%! Alas, China’s presence in Africa is not entirely welcomed. China has chosen not to invest as heavily in human capital on the African continent, leaving many natives confused about technology. Although China is making leaps no country has achieved before, if Africans cannot make use of the innovations the entire project is not only counterproductive, but completely wasted.

Domestic News

• Market Update. Futures trading up from optimism from today’s jobless claims. 
• The Post Office is ending Saturday first-class mail delivery beginning August 5th of this year. 

International Updates

Asia

• Market Update. Japanese shares are retreating from the 2008 high. Stocks in China and Hong Kong slip ahead of the Lunar New Year holiday. 
• India’s growth will decelerate for this FY to 5% from 2012’s 6.2% due to continued problems in manufacturing and farm output. The Indian economy is being hampered by a lack of reform, large deficits, and high inflation. 

Europe

• Market Update. Trading in a choppy fashion, but mostly in the green nonetheless, as investors remain weary about the Bank of England’s and the European Central Bank’s policy meetings, as well as the Spanish debt sale later today.  

Corporate

• Costco’s (COST) January comparable sales rose 4% (+3% in the US and +5% internationally). Net sales up 7% to $9.35B.
• Microsoft’s (MSFT) new XBox will include technology that will block used games, bad news for EA Games (EA) and Gamestop (GME) indeed!
• New Corp’s (NWSA) profits has topped analyst estimates on high advertising and subscriber fees on its cable networks. 
• Blackstone (BX) is adding to its retail property. The private-equity group just closed a deal to acquire a 2/3 stake in 40 shopping malls in the U.S. for $247M and $462M in debt from UBS (UBS). Kimco Reality (KIM) manages the centers and is an 18% owner will raise its holdings to 33% for $61M in cash and $104M in debt. 
• Today’s earnings: