Learn forex trading and expand your investment opportunities. Widely unknown to common investors, the forex trading system is the largest, by volume, in the world. Moving as much as 1.5 trillion dollars a day, forex traders nearly quadruple the daily activity of the New York Stock Exchange. As the world markets continue to come closer together, now is the time to get your foot in the door of currency trading.
Anyone who holds a basic understanding of how money is converted and exchange rates work can learn forex trading. The sale or trading of currency is at the heart of what forex is. Using one currency to buy another means that your counterpart is using their currency to buy yours. As exchange rates fluctuate and the economies of nations surge and recede, these investments in cash behave in value very much like a traditional stock.
As with any new venture, you will need to master the vocabulary that is an inherent part of forex. When you begin to learn forex trading you will be introduced to terms like pip, spread, cross, base currency and trade currency. Foreign exchange trading does have some unique terminologies. While they may be new to you, you will learn them quickly because they describe certain parts of forex quotes that you will need to understand in order to trade.
There are quite a few resources available to those who wish to learn forex trading. The reliability of internet access has opened the door to online forex trading, which means that more investors have the ability to participate in trading activity. Since the foreign exchange trade is considered a spot market, the ready availability of internet access is crucial. Business is done on the “spot,” thus the name.
You can capitalize on many benefits when you learn forex trading. The availability of a 24-hour a day market is one. Since forex involves the trade of currency at banks across the globe, the market never closes. The market is also remarkably liquid, meaning that you will never have trouble finding trading partners. Since most of your trading partners are banks and the medium is cash, you will never be at a loss for customers. Another benefit is the lack of commissions. Since you make the trades on your own, you don’t have to spend part of your profit on brokerage commission fees.
Taking the time to learn forex trading opens one more investment door for you. As you continue to realize the importance of diversifying your investment portfolio, it may be a good idea to begin looking at what kinds of opportunities are available to you in foreign exchange trading. You may be surprised to see who else is capitalizing on this market and just how easy it is.
Thursday, July 31, 2008
Top 100 Great Employers - Part 16
UNITED STATES GOVERNMENT
FBI (Federal Bureau of Investigations)
Washington, D.C.
Investigative and enforcement arm of the U.S. Justice Department. Also engages in domestic and foreign counterintelligence and counterterrorism. Special agent candidates required to undergo 16 weeks of intensive physical and academic training.
NSA (National Security Agency)
Ft Meade, MD
Uses satellites and global listening posts to gather signal intelligence bearing on U.S. interests. Also develops advanced cryptographic techniques to deny signal intelligence to other nations. Seeks top mathematicians, physicists, engineers, linguists, computer scientists and analysts. College and high school programs for future.
U.S. Secret Service
Washington D.C.
Provides protection for President, vice-President, foreign dignitaries and the integrity of the U.S. financial system against counterfeiting and other financial crimes. Special agent candidates required to undergo intensive physical and academic training.
U.S. State Department
Washington, D.C.
As the lead U.S. agency for foreign affairs, operates embassies, consulates and offices in 265 cities around the world. Recruits foreign service officers and specialists to conduct diplomacy overseas and civil servants and students to staff Washington D.C. headquarters.
FBI (Federal Bureau of Investigations)
Washington, D.C.
Investigative and enforcement arm of the U.S. Justice Department. Also engages in domestic and foreign counterintelligence and counterterrorism. Special agent candidates required to undergo 16 weeks of intensive physical and academic training.
NSA (National Security Agency)
Ft Meade, MD
Uses satellites and global listening posts to gather signal intelligence bearing on U.S. interests. Also develops advanced cryptographic techniques to deny signal intelligence to other nations. Seeks top mathematicians, physicists, engineers, linguists, computer scientists and analysts. College and high school programs for future.
U.S. Secret Service
Washington D.C.
Provides protection for President, vice-President, foreign dignitaries and the integrity of the U.S. financial system against counterfeiting and other financial crimes. Special agent candidates required to undergo intensive physical and academic training.
U.S. State Department
Washington, D.C.
As the lead U.S. agency for foreign affairs, operates embassies, consulates and offices in 265 cities around the world. Recruits foreign service officers and specialists to conduct diplomacy overseas and civil servants and students to staff Washington D.C. headquarters.
Top 100 Great Employers - Part 15
SOFTWARE & MULTIMEDIA
Adobe Systems
San Jose, CA
Industry leader in graphics and multimedia software with over $2 bil. revenues and consistent growth. Employees enjoy top pay and total health care coverage. 3,600 of 5,700 employees located in U.S., mainly the Bay Area.
Ariba Inc
Mountain View, CA
The leading provider of spend-management business software for major corporations, connecting to 100,000 suppliers. 1,700 employees in U.S., Asia and Europe.
Autodesk
San Rafael, CA
The leader in 3-D software for architectural, engineering and other design firms survived stagnation, then turmoil to return to building a rosy future. 3,600 employees.
Electronic Arts
Redwood City, CA
As top U.S. video gamemaker, EA competes head on with the likes of Nintendo and Sony. Has developed over 100 titles and distributes 1,000 titles for other developers. Operates online games channel for AOL/Time Warner. 3,600 employees.
Hyperion Solutions Corporation
Sunnyvale, CA
Developer of the industry standard in accounting and financial reporting and consolidation software. Boasts a hip, cutting-edge work environment for its 2,700 employees. (Acquired by Oracle in August 2007)
i2 Technologies
Irving, TX
i2 Technologies is the leading provider of supply chain optimization software to faciliatate e-business. 40% of i2 is owned by founder/chairman and CEO Sanjiv Sidhu. 6,000 employees.
Macromedia
San Francisco, CA
Maker of industry-leading graphics applications for the internet, including Flash, Shockwave, Dreamweaver and Fireworks. Also makes interactive educational software. Underwent massive downsizing but well positioned for future growth. 1,300 employees.
Microsoft
Redmond, WA
World's leading software company has consistently enjoyed growth in profits and work force. Tries to provide employees a sense of privilege with perks like grocery delivery, valet parking and cry-cleaning service. About 44,000 of 72,000 employees are in U.S.
NVidia Corp
Santa Clara, CA
A leading maker of leading-edge graphics processing chips and boards for PCs, workstations, DVD players and popular game machines for the world's biggest computer-makers. Co-founder and CEO is Jen-Hsun Huang. 4,100 employees.
Oracle
Redwood Shores, CA
Pioneer in relational database software is now the world's no. 2 independent software company, focusing on developing enterprise software. 55,000 employees worldwide, with 5,000 engaged in software development. Acquired Hyperion in August 2007.
PeopleSoft, Inc.
Pleasanton, CA
A leading provider of enterprise resource planning software that handle back-office functions of business operations like accounting, manufacturing, and supply chain management. Two-thirds of revenues from providing software consulting and maintenance services. Recently began expanding into customer relationship management software. 8,400 employees.
Siebel Systems, Inc.
San Mateo, CA
Leading developer of customer relationship management software for automating big business sales and customer service operations, tying together call centers, websites, sales teams, resellers and retailers. 7,500 employees.
Verizon Info Systems
New York, NY
World's leading print and online directory publishers and content provider for communications products and services, producing more than 2,300 directories worldwide. Its SuperPages in print and online is a global leader in directory advertising. Division of a telecom giant with 250,000 employees worldwide.
Adobe Systems
San Jose, CA
Industry leader in graphics and multimedia software with over $2 bil. revenues and consistent growth. Employees enjoy top pay and total health care coverage. 3,600 of 5,700 employees located in U.S., mainly the Bay Area.
Ariba Inc
Mountain View, CA
The leading provider of spend-management business software for major corporations, connecting to 100,000 suppliers. 1,700 employees in U.S., Asia and Europe.
Autodesk
San Rafael, CA
The leader in 3-D software for architectural, engineering and other design firms survived stagnation, then turmoil to return to building a rosy future. 3,600 employees.
Electronic Arts
Redwood City, CA
As top U.S. video gamemaker, EA competes head on with the likes of Nintendo and Sony. Has developed over 100 titles and distributes 1,000 titles for other developers. Operates online games channel for AOL/Time Warner. 3,600 employees.
Hyperion Solutions Corporation
Sunnyvale, CA
Developer of the industry standard in accounting and financial reporting and consolidation software. Boasts a hip, cutting-edge work environment for its 2,700 employees. (Acquired by Oracle in August 2007)
i2 Technologies
Irving, TX
i2 Technologies is the leading provider of supply chain optimization software to faciliatate e-business. 40% of i2 is owned by founder/chairman and CEO Sanjiv Sidhu. 6,000 employees.
Macromedia
San Francisco, CA
Maker of industry-leading graphics applications for the internet, including Flash, Shockwave, Dreamweaver and Fireworks. Also makes interactive educational software. Underwent massive downsizing but well positioned for future growth. 1,300 employees.
Microsoft
Redmond, WA
World's leading software company has consistently enjoyed growth in profits and work force. Tries to provide employees a sense of privilege with perks like grocery delivery, valet parking and cry-cleaning service. About 44,000 of 72,000 employees are in U.S.
NVidia Corp
Santa Clara, CA
A leading maker of leading-edge graphics processing chips and boards for PCs, workstations, DVD players and popular game machines for the world's biggest computer-makers. Co-founder and CEO is Jen-Hsun Huang. 4,100 employees.
Oracle
Redwood Shores, CA
Pioneer in relational database software is now the world's no. 2 independent software company, focusing on developing enterprise software. 55,000 employees worldwide, with 5,000 engaged in software development. Acquired Hyperion in August 2007.
PeopleSoft, Inc.
Pleasanton, CA
A leading provider of enterprise resource planning software that handle back-office functions of business operations like accounting, manufacturing, and supply chain management. Two-thirds of revenues from providing software consulting and maintenance services. Recently began expanding into customer relationship management software. 8,400 employees.
Siebel Systems, Inc.
San Mateo, CA
Leading developer of customer relationship management software for automating big business sales and customer service operations, tying together call centers, websites, sales teams, resellers and retailers. 7,500 employees.
Verizon Info Systems
New York, NY
World's leading print and online directory publishers and content provider for communications products and services, producing more than 2,300 directories worldwide. Its SuperPages in print and online is a global leader in directory advertising. Division of a telecom giant with 250,000 employees worldwide.
Top 100 Great Employers - Part 14
MEDIA/ENTERTAINMENT
Bloomberg
New York, NY
The world's leading provider of business news, data and analysis delivered via TV, newspapers, the internet and radio. Also provides international market data and communications tools to corporations, media and financial professionals. 8,000 employees.
Google Inc
Mountain View, CA
World's most popular search engine, with 200 million searches a day. Uses a proprietary system for ranking sites based on the number of links they attract. Used by major portals like Yahoo! and AOL. Added a news site and a shopping site. 900 employees and growing at a 40% annual clip.
Pixar Animation Studios
Emeryville, CA
Produced kiddie hits Toy Story and Monsters, Inc. using proprietary Marionette and RenderMan software for 3-D digital animation. Now positioned to squeeze even better distribution deals with Disney or other major studios. Founder/CEO Steve Jobs owns 60%. 900 employees.
The Walt Disney Co.
Burbank, CA
The world's #2 media giant enjoys exceptional profits and steady growth from movies, music, magazines, TV, radio and theme parks. 133,000 employees.
Yahoo! Inc
Sunnyvale, CA
Pioneering ad-supported web directory with 200 million monthly visitors, six times the number of AOL; expanding array of guides for various age and demographic segments; Founded in 1984 by Stanford grad students Jerry Yang and David Filo but top shareholder is Berkeley alumnus Masayoshi Son. 3,100 employees
Bloomberg
New York, NY
The world's leading provider of business news, data and analysis delivered via TV, newspapers, the internet and radio. Also provides international market data and communications tools to corporations, media and financial professionals. 8,000 employees.
Google Inc
Mountain View, CA
World's most popular search engine, with 200 million searches a day. Uses a proprietary system for ranking sites based on the number of links they attract. Used by major portals like Yahoo! and AOL. Added a news site and a shopping site. 900 employees and growing at a 40% annual clip.
Pixar Animation Studios
Emeryville, CA
Produced kiddie hits Toy Story and Monsters, Inc. using proprietary Marionette and RenderMan software for 3-D digital animation. Now positioned to squeeze even better distribution deals with Disney or other major studios. Founder/CEO Steve Jobs owns 60%. 900 employees.
The Walt Disney Co.
Burbank, CA
The world's #2 media giant enjoys exceptional profits and steady growth from movies, music, magazines, TV, radio and theme parks. 133,000 employees.
Yahoo! Inc
Sunnyvale, CA
Pioneering ad-supported web directory with 200 million monthly visitors, six times the number of AOL; expanding array of guides for various age and demographic segments; Founded in 1984 by Stanford grad students Jerry Yang and David Filo but top shareholder is Berkeley alumnus Masayoshi Son. 3,100 employees
Top 100 Great Employers - Part 13
MANAGEMENT CONSULTING
Accenture
New York, NY
Broke off from Anderson Consulting in 2001 to establish itself as an admired consulting firm in both business strategy and IT. Also provides outsourcing services. 150,000 employees in 150 cities around the world.
Booz Allen Hamilton
McLean, VA
Global consulting firm that works with corporate and governmental clients on six continuents to enhance performance. Family-friendly flex hours for most of its 19,000 employees, 16,800 in U.S.
Boston Consulting Group
Boston, MA
Takes pride in maintaining work environment that nurtures individual potential and integrity. Top pay for associates and consultants. Truly international clientele with only 1,500 of 4,200 employees based in U.S.
McKinsey & Company
New York, NY
Prestigious, well-established global management consulting company with an emphasis on technology. Employs 13,000 in 80 offices in over 40 countries.
Accenture
New York, NY
Broke off from Anderson Consulting in 2001 to establish itself as an admired consulting firm in both business strategy and IT. Also provides outsourcing services. 150,000 employees in 150 cities around the world.
Booz Allen Hamilton
McLean, VA
Global consulting firm that works with corporate and governmental clients on six continuents to enhance performance. Family-friendly flex hours for most of its 19,000 employees, 16,800 in U.S.
Boston Consulting Group
Boston, MA
Takes pride in maintaining work environment that nurtures individual potential and integrity. Top pay for associates and consultants. Truly international clientele with only 1,500 of 4,200 employees based in U.S.
McKinsey & Company
New York, NY
Prestigious, well-established global management consulting company with an emphasis on technology. Employs 13,000 in 80 offices in over 40 countries.
Top 100 Great Employers - Part 12
LAW
Bingham McCutchen
Boston, MA
An international corporate-law firm with high per-lawyer revenues and rapid growth. About 1,000 lawyers in 13 offices throughout U.S., Asia and Britain.
Irell & Manella
Century City, CA
Elite, top-paying national firm based entirely in Southern California. Known for patent and labor litigation. About 220 lawyers based in Century City and Newport Beach.
Latham & Watkins
Los Angeles, CA
California's largest firm has passed L.A. rivals in revenue and growth during the past decade through vigorous international mergers. Top salaries for associates topped off by generous bonuses for high billable hours. About 1,800 lawyers around the world.
Morrison & Foerster
San Francisco, CA
San Franscico's largest firm offers the lifestyle attractions of the Bay Area with the opportunities of a world-class corporate practice with a technology focus. About 1,000 lawyers.
Paul Hastings Janofsky & Walker
Los Angeles, CA
Keeps a balance between high-pressure international practice and a family-like atmosphere while growing rapidly to 1,200 lawyers in 18 offices around the world.
Bingham McCutchen
Boston, MA
An international corporate-law firm with high per-lawyer revenues and rapid growth. About 1,000 lawyers in 13 offices throughout U.S., Asia and Britain.
Irell & Manella
Century City, CA
Elite, top-paying national firm based entirely in Southern California. Known for patent and labor litigation. About 220 lawyers based in Century City and Newport Beach.
Latham & Watkins
Los Angeles, CA
California's largest firm has passed L.A. rivals in revenue and growth during the past decade through vigorous international mergers. Top salaries for associates topped off by generous bonuses for high billable hours. About 1,800 lawyers around the world.
Morrison & Foerster
San Francisco, CA
San Franscico's largest firm offers the lifestyle attractions of the Bay Area with the opportunities of a world-class corporate practice with a technology focus. About 1,000 lawyers.
Paul Hastings Janofsky & Walker
Los Angeles, CA
Keeps a balance between high-pressure international practice and a family-like atmosphere while growing rapidly to 1,200 lawyers in 18 offices around the world.
Top 100 Great Employers - Part 11
IT CONSULTING
Bearingpoint
McLean, VA
Spun off from KPMG in 1999, shored up image as an industry leader, with about a third of revenues from federal government and rest from major corporations. 17,000 employees.
Computer Sciences Corp.
El Segundo, CA
Pioneer in IT consulting with nearly half century history. Innovated by integrating disparate areas into unified business service management contracts. Gets a third of revenues from defense contracts. 77,000 employees.
Infosys Technologies
Fremont, CA
A fast-growing company with a relaxed culture adapted to modern business climate. Relies heavily on Indian workers for its 55,000 global workforce.
SRA International
Fairfax, VA
An IT consulting firm enjoying solid growth and a growing reputation. Able to pay top dollar to its 4,900 employees based mostly in the NoVa-Washington D.C. area.
Unisys
Blue Bell, PA
Founded on long history building and servicing mainframe computers that were the operating backbones of major corporations. Has evolved toward a more nimble consulting company, overcoming transitional pains to reshape and invogorate its 33,000 workforce.
Bearingpoint
McLean, VA
Spun off from KPMG in 1999, shored up image as an industry leader, with about a third of revenues from federal government and rest from major corporations. 17,000 employees.
Computer Sciences Corp.
El Segundo, CA
Pioneer in IT consulting with nearly half century history. Innovated by integrating disparate areas into unified business service management contracts. Gets a third of revenues from defense contracts. 77,000 employees.
Infosys Technologies
Fremont, CA
A fast-growing company with a relaxed culture adapted to modern business climate. Relies heavily on Indian workers for its 55,000 global workforce.
SRA International
Fairfax, VA
An IT consulting firm enjoying solid growth and a growing reputation. Able to pay top dollar to its 4,900 employees based mostly in the NoVa-Washington D.C. area.
Unisys
Blue Bell, PA
Founded on long history building and servicing mainframe computers that were the operating backbones of major corporations. Has evolved toward a more nimble consulting company, overcoming transitional pains to reshape and invogorate its 33,000 workforce.
Top 100 Great Employers - Part 10
HEALTHCARE
Community Health Systems
Franklin, TN
Has become top publicly-traded hospital company in U.S. after acquiring Triad Hospitals. Operates 130 hospitals in 28 states as well as providing management consulting services to 180 independent hospitals.
Health Management Associates Inc
Naples, FL
Operates 60 hospitals in 15 mainly southeastern and southwestern states. $4 bil. revenues with consistent growth of small towns in sunbelt. About 34,500 employees seeking a non-urban work environment.
Kaiser Permanente
Oakland, CA
Non-profit operates 30 medical centers and 430 medical offices staffed by a network of 11,000 physicians. Its health plan covers over 8 million, mostly on the west and east coasts.
Kindred Healthcare
Louisville, KY
A healthcare services conglomerate that that focuses on long-term health care through 81 LTAC hospitals in 23 states, 227 nursing centers and a nationwide contract rehabilitation services business. 51,000 employees.
Methodist Hospital Systems
Houston, TX
Its 80-year history and reputation for quality care attracts patients from around the world. Has become a leading Texas employer with a reputation for taking care of its 9,600 employees.
Tenet Healthcare Corp.
Dallas, TX
2nd largest hospital chain in U.S. Operates 60 large acute-care hospitals, primarily in Texas, California and Florida. About 70,000 employees.
Wellpoint Inc (Anthem)
Indianapolis, IN
Created by the merger of Anthem and Wellpoint (Blue Cross, Blue Shield) at the end of 2004, Anthem is the nation's leading health benefits company, with 28 million medical members and 38,000 associates in 13 states. Focuses on providing affordable coverage.
HOSPITALITY
Four Seasons Hotels and Resorts
Toronto, Canada
Nearing 50th years as one of the world's prestige hotel chains for high-end travelers, with 74 deluxe properties in 31 countries. Likes to cultivate in-house talent for property management assignments.
Hyatt Corporation
Chicago, IL
Hyatt operates and manages 212 hotels and resorts in 39 countries. Has acquired a reputation for catering to well-heeled and business travelers. Currently developing 22 hotels around the world. A separate company called Hyatt Hotels Corporation operates, leases and franchises 124 hotels and resorts in the United States, Canada, and the Caribbean. 20,000 employees.
Starbucks
Seattle, WA
A chain of coffee shops that has mushroomed into a phenomenon of modern global culture with over 13,000 outlets in 40 countries. Aggressively growth-oriented. 145,000 employees worldwide.
Community Health Systems
Franklin, TN
Has become top publicly-traded hospital company in U.S. after acquiring Triad Hospitals. Operates 130 hospitals in 28 states as well as providing management consulting services to 180 independent hospitals.
Health Management Associates Inc
Naples, FL
Operates 60 hospitals in 15 mainly southeastern and southwestern states. $4 bil. revenues with consistent growth of small towns in sunbelt. About 34,500 employees seeking a non-urban work environment.
Kaiser Permanente
Oakland, CA
Non-profit operates 30 medical centers and 430 medical offices staffed by a network of 11,000 physicians. Its health plan covers over 8 million, mostly on the west and east coasts.
Kindred Healthcare
Louisville, KY
A healthcare services conglomerate that that focuses on long-term health care through 81 LTAC hospitals in 23 states, 227 nursing centers and a nationwide contract rehabilitation services business. 51,000 employees.
Methodist Hospital Systems
Houston, TX
Its 80-year history and reputation for quality care attracts patients from around the world. Has become a leading Texas employer with a reputation for taking care of its 9,600 employees.
Tenet Healthcare Corp.
Dallas, TX
2nd largest hospital chain in U.S. Operates 60 large acute-care hospitals, primarily in Texas, California and Florida. About 70,000 employees.
Wellpoint Inc (Anthem)
Indianapolis, IN
Created by the merger of Anthem and Wellpoint (Blue Cross, Blue Shield) at the end of 2004, Anthem is the nation's leading health benefits company, with 28 million medical members and 38,000 associates in 13 states. Focuses on providing affordable coverage.
HOSPITALITY
Four Seasons Hotels and Resorts
Toronto, Canada
Nearing 50th years as one of the world's prestige hotel chains for high-end travelers, with 74 deluxe properties in 31 countries. Likes to cultivate in-house talent for property management assignments.
Hyatt Corporation
Chicago, IL
Hyatt operates and manages 212 hotels and resorts in 39 countries. Has acquired a reputation for catering to well-heeled and business travelers. Currently developing 22 hotels around the world. A separate company called Hyatt Hotels Corporation operates, leases and franchises 124 hotels and resorts in the United States, Canada, and the Caribbean. 20,000 employees.
Starbucks
Seattle, WA
A chain of coffee shops that has mushroomed into a phenomenon of modern global culture with over 13,000 outlets in 40 countries. Aggressively growth-oriented. 145,000 employees worldwide.
Top 100 Great Employers - Part 9
FINANCIAL SERVICES
Allstate
Northbrook, IL
Nation's largest publicly held personal lines insurer. 13 major lines of insurance include auto, property, life and commercial. 39,000 employees and 13,000 agents and financial specialists.
American Family Insurance
Madison, WI
With insurance and financial product lines in 18 states and $15.5 bil. in assets AFI is the nationÕs third-largest mutual property and casualty insurer. Staffed by 8,000 employees and 4,000 independent agents.
American Express
New York, NY
Established in 1850, AmEx has grown to become the world's most respected travel-related services and global payments company with revenues of over $25 bil. 30,000 of its 68,000 employees are based in the U.S.
AXA Financial Inc
New York, NY
Life insurance, financial planning and asset management. The company was formed by the acquisition by French insurance giant AXA of Equitable. Operations have been refocused to provide a comprehensive range of financial services and products. 18,000 employees.
Bank of America
Charlotte, NC
BOA has grown rapidly through recent acquisitions to become the 2nd largest bank in the U.S. with 5,700 branches. $117 bil. revenues and over 200,000 employees in the U.S.
Comerica
Detroit, MI
Financial services giant that provides businesses lines of credit and international trade financing as well as traditional retail banking services like consumer deposits and lending and mortgages. Also offers private banking and asset management in areas like trusts, insurance and retirement services. 11,000 employees.
Goldman Sachs
New York, NY
Founded in 1869, grown into one of the world's leading investment management firms servicing corporations, governments and high net worth individuals. Enjoys solid growth. 13,000 well-paid employees in the U.S.
Merrill Lynch
New York, NY
Investment services, including stock brokerage, mutual funds, life insurance, annuities, trust services, investment banking, asset management and clearing services. Workforce underwent drastic streamlining following 9/11. 70,000 employees.
State Farm
Bloomington, IL
America's leading home, auto and life insurance, with 72 million policies in force. Leveraging its brand image for financial strength to expand into mutual funds, banking, online banking and credit cards. 79,000 employees.
The Vanguard Group
Valley Forge, PA
Mutual funds company with $560 billion in assets. Fast growth due to an efficient coporate structure that keeps managements costs among the industry's lowest. Emphasis on recruiting IT talent. 10,500 employees.
Washington Mutual
Seattle, WA
Super-successful thrift that has branched successfully into commercial and consumer banking. 2,000 branches in 40 states, with California the top market. Expanded aggressively in late 90s by buying up banks in growth states. Strong in mortgages and home equity loans. 32,000 employees.
Wells Fargo
San Francisco, CA
With $540 billion in assets, a giant that's fifth in assets and sixth in market valuation among all U.S. corporations. Admired as one of the world's most profitable, well-run companies. 25th biggest employer in the U.S. with 150,000 workers.
Allstate
Northbrook, IL
Nation's largest publicly held personal lines insurer. 13 major lines of insurance include auto, property, life and commercial. 39,000 employees and 13,000 agents and financial specialists.
American Family Insurance
Madison, WI
With insurance and financial product lines in 18 states and $15.5 bil. in assets AFI is the nationÕs third-largest mutual property and casualty insurer. Staffed by 8,000 employees and 4,000 independent agents.
American Express
New York, NY
Established in 1850, AmEx has grown to become the world's most respected travel-related services and global payments company with revenues of over $25 bil. 30,000 of its 68,000 employees are based in the U.S.
AXA Financial Inc
New York, NY
Life insurance, financial planning and asset management. The company was formed by the acquisition by French insurance giant AXA of Equitable. Operations have been refocused to provide a comprehensive range of financial services and products. 18,000 employees.
Bank of America
Charlotte, NC
BOA has grown rapidly through recent acquisitions to become the 2nd largest bank in the U.S. with 5,700 branches. $117 bil. revenues and over 200,000 employees in the U.S.
Comerica
Detroit, MI
Financial services giant that provides businesses lines of credit and international trade financing as well as traditional retail banking services like consumer deposits and lending and mortgages. Also offers private banking and asset management in areas like trusts, insurance and retirement services. 11,000 employees.
Goldman Sachs
New York, NY
Founded in 1869, grown into one of the world's leading investment management firms servicing corporations, governments and high net worth individuals. Enjoys solid growth. 13,000 well-paid employees in the U.S.
Merrill Lynch
New York, NY
Investment services, including stock brokerage, mutual funds, life insurance, annuities, trust services, investment banking, asset management and clearing services. Workforce underwent drastic streamlining following 9/11. 70,000 employees.
State Farm
Bloomington, IL
America's leading home, auto and life insurance, with 72 million policies in force. Leveraging its brand image for financial strength to expand into mutual funds, banking, online banking and credit cards. 79,000 employees.
The Vanguard Group
Valley Forge, PA
Mutual funds company with $560 billion in assets. Fast growth due to an efficient coporate structure that keeps managements costs among the industry's lowest. Emphasis on recruiting IT talent. 10,500 employees.
Washington Mutual
Seattle, WA
Super-successful thrift that has branched successfully into commercial and consumer banking. 2,000 branches in 40 states, with California the top market. Expanded aggressively in late 90s by buying up banks in growth states. Strong in mortgages and home equity loans. 32,000 employees.
Wells Fargo
San Francisco, CA
With $540 billion in assets, a giant that's fifth in assets and sixth in market valuation among all U.S. corporations. Admired as one of the world's most profitable, well-run companies. 25th biggest employer in the U.S. with 150,000 workers.
Top 100 Great Employers - Part 8
FASHION/APPAREL
Coach Inc
New York, NY
Has enjoyed spectacular recent growth on the popularity of its purses, the success of its aggressive licensing efforts and fast-growing international chain of retail outlets. 7,500 employees.
Jones Apparel Group Inc
Bristol, PA
National fashion designers, marketer, wholesaler and retailer. Owns brands like Anne Klein, Nine West, Gloria Vanderbilt and Evan-Picone. Has recently been restructuring 16,000 employees for better profitability.
Nike
Beaverton, OR
Began as a company making running shoes but is expanding into a fashion conglomerate by snapping up companies like ColeHaan, Hurley & Bauer. $15 bil. revenues and 29,000 employees.
Polo Ralph Lauren Corporation
New York, NY
Global upscale empire founded on the fantasy of the "American" lifestyle with a gracious western accent. Markets fashion, accessories, fragrances and home furnishings. Also operates about 300 stores in U.S. Consistently healthy growth for its 14,000 employees.
Coach Inc
New York, NY
Has enjoyed spectacular recent growth on the popularity of its purses, the success of its aggressive licensing efforts and fast-growing international chain of retail outlets. 7,500 employees.
Jones Apparel Group Inc
Bristol, PA
National fashion designers, marketer, wholesaler and retailer. Owns brands like Anne Klein, Nine West, Gloria Vanderbilt and Evan-Picone. Has recently been restructuring 16,000 employees for better profitability.
Nike
Beaverton, OR
Began as a company making running shoes but is expanding into a fashion conglomerate by snapping up companies like ColeHaan, Hurley & Bauer. $15 bil. revenues and 29,000 employees.
Polo Ralph Lauren Corporation
New York, NY
Global upscale empire founded on the fantasy of the "American" lifestyle with a gracious western accent. Markets fashion, accessories, fragrances and home furnishings. Also operates about 300 stores in U.S. Consistently healthy growth for its 14,000 employees.
Top 100 Great Employers - Part 7
ENGINEERING/ CONSTRUCTION
Bechtel Group Inc
San Francisco, CA
4th-generation family firm that is the largest in the U.S. Tackles some of the world's most complex building and infrastructure projects. 40,000 employees.
Fluor Corporation
Irving, TX
2nd largest civil engineering firm in U.S., specializing in design, buildingg and maintenance of facilities for petrochemicals, healthcare, telecom and chipmaking. 37,000 employees.
Jacobs Engineering Group Inc
Pasadena, CA
Provides technical expertise to build plants for the biotech, pharmaceutical, chemical and petroleum industries, infrastructure projects and military and aerospace facilities for the U.S. government. Consistently impressive growth to 32,000 employees.
Bechtel Group Inc
San Francisco, CA
4th-generation family firm that is the largest in the U.S. Tackles some of the world's most complex building and infrastructure projects. 40,000 employees.
Fluor Corporation
Irving, TX
2nd largest civil engineering firm in U.S., specializing in design, buildingg and maintenance of facilities for petrochemicals, healthcare, telecom and chipmaking. 37,000 employees.
Jacobs Engineering Group Inc
Pasadena, CA
Provides technical expertise to build plants for the biotech, pharmaceutical, chemical and petroleum industries, infrastructure projects and military and aerospace facilities for the U.S. government. Consistently impressive growth to 32,000 employees.
Top 100 Great Employers - Part 6
ENERGY
Chevron
San Ramon, CA
With acquisitions of Texaco and Unocal, has become the no. 2 integrated oil company in U.S. $210 bil. in revenues and solid growth. 62,500 employees, mostly in U.S.
Marathon Oil
Houston, TX
5th largest refiner in U.S. and integrated energy company that conducts exploration, production, transportation and marketing of oil and gas around the world with $65 bil. revenues and $5 bil. income in 2006.
Valero Energy
San Antonio, TX
North America's top refiner and one of the world's fastest-growing energy giants with $75 bil. in revenues and over 20,000 employees.
Chevron
San Ramon, CA
With acquisitions of Texaco and Unocal, has become the no. 2 integrated oil company in U.S. $210 bil. in revenues and solid growth. 62,500 employees, mostly in U.S.
Marathon Oil
Houston, TX
5th largest refiner in U.S. and integrated energy company that conducts exploration, production, transportation and marketing of oil and gas around the world with $65 bil. revenues and $5 bil. income in 2006.
Valero Energy
San Antonio, TX
North America's top refiner and one of the world's fastest-growing energy giants with $75 bil. in revenues and over 20,000 employees.
Top 100 Great Employers - Part 5
COMPUTING & TELECOMMUNICATIONS
Advanced Micro Devices
Sunnyvale, CA
A distant second to Intel in microprocessors but gaining steadily in market share by focusing on less costly alternatives for sub-$1,000 PCs. On occasion beats Intel at coming to market with new generation processors. Now selling its own brand of PCs. 13,000 employees.
Applied Materials
Santa Clara, CA
Global leader in wafer processing systems and chip fabrication technology, including chemical vapor deposition (CVD), physical vapor deposition (PVD), epitaxial and polysilicon deposition, rapid thermal processing (RTP), plasma etching, ion implantation, metrology, inspection and chemical mechanical polishing (CMP). 20,000 employees.
Cisco Systems
San Jose, CA
Global leader in hardware, software and services for building networks across the internet. Founded in 1984 by Stanford scientists. 47,000 employee worldwide with 27,000 in U.S.
EMC Corporation
Hopkinton, MA
EMC Corporation is the world's leading supplier of intelligent enterprise storage systems for mainframes and midrange computers. Its RAID software has become the industry standard, making it one of the hottest growth companies in the software industry as well. 25,000 employees.
IBM
Armonk, NY
World's leading maker of computer hardware and number two software powerhouse. 35% of revenues come from providing consulting services to corporation. Striving to maintain an entrepreneurial environment to keep pace with internet development. 310,000 employees.
Intel
Santa Clara, CA
The world's pioneer and leading maker of processors for personal computers. Also competing in memory and other chip sectors. 94,000 employees in 48 countries. Most U.S. employees based in S.F. Bay Area.
Juniper Networks Inc
Sunnyvale, CA
Number two makes and seller of Internet Protocol (IP) routers to telecom service providers and corporations. Has made some prescient moves toward wireless networking and aggressive outsourcing of manufacturing to made rapid gains on market leader Cisco. 1,100 employees.
LSI Logic Inc
Milpitas, CA
Makes chips that serve as the brains behind next-generation broadband CDMA phones and other telecom and entertainment devices. After recent lean years, is poised for explosive growth through at least 2005 as it assumes leadership position. Needs topnotch IC designers and software engineers as well as people to sell to Asian customers who will soon make up 35% of sales. 7,400 employees.
Qualcomm
San Diego, CA
Founded in 1985 to develop next-generation wireless technology. Global leader in mobile phone technology. Has enjoyed impressive growth over two decades. 9,000 employees in U.S.
Science Applications Int'l Corp (SAIC)
San Diego, CA
Sells software development, consulting and systems integration services to the U.S. government and major corporations. Made a prescient $5 mil investment in internet registrar Network Solutions in 1995 and sold it in 2000 for $17 bil to VeriSign. Most of the money went to enrich employees because SAIC is 80% employee-owned. Attractive work environment. 45,000 employees.
Texas Instruments
Dallas, TX
The invention of the integrated circuit by a TI engineer sparked the digital revolution. Continues to be a leading-edge global chipmaker employing top electrical engineers. 32,000 workers around the world, with 16,000 in U.S.
Xerox
Stamford, CT
Aggressively diversified business from traditional reliance on copiers. Now offers consulting services in addition to printers, scanners, fax machines, software, and supplies for larger businesses and U.S. government. Nearly half of sales come from outside U.S. Completed aggressive streamlining campaign and is poised for growth. 92,000 employees.
Advanced Micro Devices
Sunnyvale, CA
A distant second to Intel in microprocessors but gaining steadily in market share by focusing on less costly alternatives for sub-$1,000 PCs. On occasion beats Intel at coming to market with new generation processors. Now selling its own brand of PCs. 13,000 employees.
Applied Materials
Santa Clara, CA
Global leader in wafer processing systems and chip fabrication technology, including chemical vapor deposition (CVD), physical vapor deposition (PVD), epitaxial and polysilicon deposition, rapid thermal processing (RTP), plasma etching, ion implantation, metrology, inspection and chemical mechanical polishing (CMP). 20,000 employees.
Cisco Systems
San Jose, CA
Global leader in hardware, software and services for building networks across the internet. Founded in 1984 by Stanford scientists. 47,000 employee worldwide with 27,000 in U.S.
EMC Corporation
Hopkinton, MA
EMC Corporation is the world's leading supplier of intelligent enterprise storage systems for mainframes and midrange computers. Its RAID software has become the industry standard, making it one of the hottest growth companies in the software industry as well. 25,000 employees.
IBM
Armonk, NY
World's leading maker of computer hardware and number two software powerhouse. 35% of revenues come from providing consulting services to corporation. Striving to maintain an entrepreneurial environment to keep pace with internet development. 310,000 employees.
Intel
Santa Clara, CA
The world's pioneer and leading maker of processors for personal computers. Also competing in memory and other chip sectors. 94,000 employees in 48 countries. Most U.S. employees based in S.F. Bay Area.
Juniper Networks Inc
Sunnyvale, CA
Number two makes and seller of Internet Protocol (IP) routers to telecom service providers and corporations. Has made some prescient moves toward wireless networking and aggressive outsourcing of manufacturing to made rapid gains on market leader Cisco. 1,100 employees.
LSI Logic Inc
Milpitas, CA
Makes chips that serve as the brains behind next-generation broadband CDMA phones and other telecom and entertainment devices. After recent lean years, is poised for explosive growth through at least 2005 as it assumes leadership position. Needs topnotch IC designers and software engineers as well as people to sell to Asian customers who will soon make up 35% of sales. 7,400 employees.
Qualcomm
San Diego, CA
Founded in 1985 to develop next-generation wireless technology. Global leader in mobile phone technology. Has enjoyed impressive growth over two decades. 9,000 employees in U.S.
Science Applications Int'l Corp (SAIC)
San Diego, CA
Sells software development, consulting and systems integration services to the U.S. government and major corporations. Made a prescient $5 mil investment in internet registrar Network Solutions in 1995 and sold it in 2000 for $17 bil to VeriSign. Most of the money went to enrich employees because SAIC is 80% employee-owned. Attractive work environment. 45,000 employees.
Texas Instruments
Dallas, TX
The invention of the integrated circuit by a TI engineer sparked the digital revolution. Continues to be a leading-edge global chipmaker employing top electrical engineers. 32,000 workers around the world, with 16,000 in U.S.
Xerox
Stamford, CT
Aggressively diversified business from traditional reliance on copiers. Now offers consulting services in addition to printers, scanners, fax machines, software, and supplies for larger businesses and U.S. government. Nearly half of sales come from outside U.S. Completed aggressive streamlining campaign and is poised for growth. 92,000 employees.
Top 100 Great Employers - Part 4
BIOTECH & HEALTHCARE
Allergan Inc
Irvine, CA
Makes surgical and pharmaceutical products for eyecare, also contact lenses and medication for acne, wrinkles and muscle spasms. 6,500 employees.
Amgen Inc
Thousand Oaks, CA
Leader in biotech; develops medicines to fight cancer, hepatitis, degenerative nerve diseases and stem-cell therapies. 7,000 employees.
Applied Biosystems
Foster City, CA
Provides tools and services for mapping the human genome, research into genes and proteins, drug interactions with bodily systems and genetic make-up, testing for contaminants and performing DNA-based identification. 4,600 employees.
AstraZeneca
Wilmington, DE
This British pharmaceutical giant has enjoyed remarkable stability during a difficult time for the industry. $24 bil. revenues. 12,400 of its 54,000 employees are based in the U.S.
Genentech
San Francisco, CA
Thanks in part to its Bay Area location Genentech has succeeded in becoming the powerhouse in unlocking the human genome to help develop diagnostic and therapeutic techniques. $7 bil. revenues. 10,700 employees.
Genzyme Corporation
Cambridge, MA
Comprises 3 divisions: Genzyme Molecular Oncology for gene-based cancer diagnosis and treatment products; Genzyme Biosurgery to make orthopedic and cardiothoracic medical and surgical products; Genzyme General to market the leading treatments for a rare enzyme-deficiency condition and to provide genetic testing and other services. 4,600 employees.
GlaxoSmithKline
Triangle Park, NC
Global pharmaceutical giant with many leading prescription and over-the-counter brands of antibiotic, antidepressant, gastrointestinal, dermatological, respiratory, cancer and cardiovascular medications. 108,000 employees.
Humana
Louisville, KY
A top health care provider in the U.S., with over 6 million members in 15 states; about 30% of revenues from Medicare HMO accounts. 18,000 employees.
Johnson & Johnson
New Brunswick, NJ
Leading maker and marketer of a broad range of health care products including headache tablets, toothbrushes, bandages, birth control pills, shampoos, contact lenses, surgical instruments and pharmaceuticals. 100,000 employees.
Medtronic
Minneapolis, MN
Leading maker of medical devices has enjoyed consistently healthy growth with industry-leading compensation. Employs 22,000 in U.S.
Allergan Inc
Irvine, CA
Makes surgical and pharmaceutical products for eyecare, also contact lenses and medication for acne, wrinkles and muscle spasms. 6,500 employees.
Amgen Inc
Thousand Oaks, CA
Leader in biotech; develops medicines to fight cancer, hepatitis, degenerative nerve diseases and stem-cell therapies. 7,000 employees.
Applied Biosystems
Foster City, CA
Provides tools and services for mapping the human genome, research into genes and proteins, drug interactions with bodily systems and genetic make-up, testing for contaminants and performing DNA-based identification. 4,600 employees.
AstraZeneca
Wilmington, DE
This British pharmaceutical giant has enjoyed remarkable stability during a difficult time for the industry. $24 bil. revenues. 12,400 of its 54,000 employees are based in the U.S.
Genentech
San Francisco, CA
Thanks in part to its Bay Area location Genentech has succeeded in becoming the powerhouse in unlocking the human genome to help develop diagnostic and therapeutic techniques. $7 bil. revenues. 10,700 employees.
Genzyme Corporation
Cambridge, MA
Comprises 3 divisions: Genzyme Molecular Oncology for gene-based cancer diagnosis and treatment products; Genzyme Biosurgery to make orthopedic and cardiothoracic medical and surgical products; Genzyme General to market the leading treatments for a rare enzyme-deficiency condition and to provide genetic testing and other services. 4,600 employees.
GlaxoSmithKline
Triangle Park, NC
Global pharmaceutical giant with many leading prescription and over-the-counter brands of antibiotic, antidepressant, gastrointestinal, dermatological, respiratory, cancer and cardiovascular medications. 108,000 employees.
Humana
Louisville, KY
A top health care provider in the U.S., with over 6 million members in 15 states; about 30% of revenues from Medicare HMO accounts. 18,000 employees.
Johnson & Johnson
New Brunswick, NJ
Leading maker and marketer of a broad range of health care products including headache tablets, toothbrushes, bandages, birth control pills, shampoos, contact lenses, surgical instruments and pharmaceuticals. 100,000 employees.
Medtronic
Minneapolis, MN
Leading maker of medical devices has enjoyed consistently healthy growth with industry-leading compensation. Employs 22,000 in U.S.
Top 100 Great Employers - Part 3
ARCHITECTURE/DESIGN
Callison Architecture Inc
Seattle, WA
Specializes in retail, mixed-use, hotels and apartments. Also a division for consulting and technical audit services. Private firm with 600 employees
Gensler & Associates Inc
San Francisco, CA
Known for clean corporate workplace designs that optimize natural lighting and open spaces. Significant international clientele. Offices in 28 cities staffed by about 2,100.
Perkins Eastman Architects
New York, NY
Specializes in hotels, corporate interiors and mixed-use corporate centers. Substantial share of projects in China, overseas. Seven U.S. offices plus Shanghai, Toronto and Dubai. About 500 employees.
RTKL Associates Inc
Baltimore, MD
Prominent in urban planning and architectural design and restoration on public sector projects. Offices in six top U.S. cities and in Madrid, London, Tokyo and Shanghai. 900 employees. Subsidiary of civil engineering firm Arcadis since 2007.
Wimberly Allison Tong & Goo
Honolulu, HI
Highly regarded for hotel and resort designs, with offices in Honolulu, Newport Beach, Calif., Orlando, Fla., Seattle, London, Cairo, Egypt, and Dubai. Appealing corporate culture. 350 employees.
Callison Architecture Inc
Seattle, WA
Specializes in retail, mixed-use, hotels and apartments. Also a division for consulting and technical audit services. Private firm with 600 employees
Gensler & Associates Inc
San Francisco, CA
Known for clean corporate workplace designs that optimize natural lighting and open spaces. Significant international clientele. Offices in 28 cities staffed by about 2,100.
Perkins Eastman Architects
New York, NY
Specializes in hotels, corporate interiors and mixed-use corporate centers. Substantial share of projects in China, overseas. Seven U.S. offices plus Shanghai, Toronto and Dubai. About 500 employees.
RTKL Associates Inc
Baltimore, MD
Prominent in urban planning and architectural design and restoration on public sector projects. Offices in six top U.S. cities and in Madrid, London, Tokyo and Shanghai. 900 employees. Subsidiary of civil engineering firm Arcadis since 2007.
Wimberly Allison Tong & Goo
Honolulu, HI
Highly regarded for hotel and resort designs, with offices in Honolulu, Newport Beach, Calif., Orlando, Fla., Seattle, London, Cairo, Egypt, and Dubai. Appealing corporate culture. 350 employees.
Top 100 Great Employers - Part 2
AEROSPACE/DEFENSE
General Dynamics
Falls Church, VA
Makes nuclear submarines, missile cruisers, tanks, battle management systems for the U.S. military. Also makes business jets. 52,000 employees and growing.
Lockheed Martin
Bethesda, MD
Aeronautics; electronics; energy & environment; space & missiles systems, telecommunications. 175,000 employees.
Raytheon
Waltham, MA
Leading defense contractor specializing in creating hi-tech electronics capabilities for battlefield management, communications, systems integration and imaging and sensing. Employs 73,000, concentrated on the East Coast.
General Dynamics
Falls Church, VA
Makes nuclear submarines, missile cruisers, tanks, battle management systems for the U.S. military. Also makes business jets. 52,000 employees and growing.
Lockheed Martin
Bethesda, MD
Aeronautics; electronics; energy & environment; space & missiles systems, telecommunications. 175,000 employees.
Raytheon
Waltham, MA
Leading defense contractor specializing in creating hi-tech electronics capabilities for battlefield management, communications, systems integration and imaging and sensing. Employs 73,000, concentrated on the East Coast.
Top 100 Great Employers - Part I
ACCOUNTING
Deloitte & Touche USA
New York, NY
Deloitte Touche USA is a part of an international professional association based in Switzerland and providing accounting, auditing and financial consulting services in 80 U.S. cities through 30,000 professional staff.
KPMG
Montvale, NJ
The Big Four firm with the strongest growth record over the past decade, KPMG offers clients the scale, global reach, industry insights, and multidisciplinary range of services they demand. KPMG LLP is the U.S. member firm of KPMG International. KPMG International's member firms have nearly 100,000 professionals, including 6,600 partners, in 150 countries.
PricewaterhouseCoopers LLP
New York, NY
The U.S. branch of an international network providing accounting, auditing and businesss performance enhancement services in 149 countries through a network of individual local offices. 30,000 U.S. employees with $18 bil. revenues.
Deloitte & Touche USA
New York, NY
Deloitte Touche USA is a part of an international professional association based in Switzerland and providing accounting, auditing and financial consulting services in 80 U.S. cities through 30,000 professional staff.
KPMG
Montvale, NJ
The Big Four firm with the strongest growth record over the past decade, KPMG offers clients the scale, global reach, industry insights, and multidisciplinary range of services they demand. KPMG LLP is the U.S. member firm of KPMG International. KPMG International's member firms have nearly 100,000 professionals, including 6,600 partners, in 150 countries.
PricewaterhouseCoopers LLP
New York, NY
The U.S. branch of an international network providing accounting, auditing and businesss performance enhancement services in 149 countries through a network of individual local offices. 30,000 U.S. employees with $18 bil. revenues.
Monday, July 28, 2008
Oil Lead Big Profits
As giant oil companies like ExxonMobil and ConocoPhillips get set to report what will probably be another round of eye-popping quarterly profits, just where is all that money going?
The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.
It's good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel.
The five biggest international oil companies plowed about 55% of the cash they made from their businesses into stock buybacks and dividends last year, up from 30% in 2000 and just 1% in 1993, according to Rice University's James A. Baker III Institute for Public Policy.
The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits.
Oil prices are set on the open market, not by the oil industry. But that hasn't stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.
In the first three months of this year, ExxonMobil Corp., the world's biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.
ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion — nine times what it spent on exploration.
Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.
But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.
And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.
"If you're not spending your money finding and developing new oil, then there's no new oil," said Amy Myers Jaffe, an energy expert at Rice University who's studied spending patterns of the major oil companies.
Investor-owned companies like ExxonMobil and Chevron hold less than 10% of global oil and gas reserves, way down from past decades. And finding new oil has become harder and more expensive.
State-run oil companies, like those in Saudi Arabia and Venezuela, control about 80% of oil reserves — and at today's prices, it's not surprising they're keeping a tight grip on what they have. Scarce equipment and hard-to-find labor also pose problems.
No one questions that Big Oil is rolling in cash. The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.
"It becomes a management decision," said Howard Silverblatt, a senior index analyst at Standard & Poor's. "It's not like they're going to the board and saying, 'Well, I can do one or the other or the other.' The balance sheets are flush with cash."
So what's Big Oil to do?
The companies say they are doing what they can to find more fossil fuels around the world, but the easy oil is gone. Exploring these days may mean expensive projects in thousands of feet of water in the Gulf of Mexico or costly ventures pulling petroleum from Canada's vast oil-sands deposits.
TransCanada Corp. and ConocoPhillips Co. just said they'd spend $7 billion to nearly double the amount of crude flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast.
And analysts point out that because there's no guarantee oil prices will stay in the stratosphere, oil companies should approach exploration projects with caution.
"There's only so much money you can throw at it without being ridiculous," said Joseph Stanislaw, a senior adviser to Deloitte LLP's Energy & Resources practice. "I think they're doing what they can."
It's also important to remember it can take several years before a company produces the first barrel of oil from a new field.
One example is an oil field in the Gulf of Mexico called Thunder Horse. Operated by BP and partly owned by ExxonMobil, the platform only last month began producing oil and gas — nine years after the field's discovery.
At its peak, the multibillion-dollar project is designed to produce 250,000 barrels of oil and 200 million cubic feet of natural gas each day, which would make it the Gulf's largest producer.
"When you look at the spending that's going on, the companies are bringing on a lot of long-term discoveries," said John Parry, a senior analyst with John S. Herold Inc.
At ConocoPhillips, the capital spending budget for 2008, which includes exploration and production, is $15.3 billion, more than double the spending of five years ago.
"Could we spend $20 billion or $25 billion? Absolutely," spokesman Gary Russell said. "Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not."
ExxonMobil, known for its disciplined approach to investing in energy projects, has drawn criticism for its reluctance to invest in alternative energy sources like wind and solar power.
The company expects to spent $25 billion to $30 billion on capital and exploration projects each of the next five years. Last year, it spent about $32 billion on share buybacks.
"You fund your investments that make sense," said spokesman Alan Jeffers. "You have criteria, and you have to meet that to be a good investment for the shareholder. And then if you've got cash that's left over, you're going to return it to the shareholder because it's theirs."
ExxonMobil often touts its $100 million contribution to Stanford University's Global Climate and Energy Project. By contrast, BP says it plans to spend $8 billion over the next decade developing alternative energy using wind, hydrogen and other means.
Big Oil isn't alone buying back large amounts of stock, but the companies are certainly some of the biggest indulgers.
A boom in stock buybacks has been underway in corporate America since 2004. In the first quarter of this year, Exxon, ConocoPhillips and Chevron were all among the top 10 companies for share buybacks in the S&P 500.
In Washington, one Democratic proposal would impose a 25% tax on "unreasonable" profits of the top five oil companies, which together made more than $120 billion in 2007, and put the money toward a trust fund for investment in alternative energy sources. Republicans say it's a gimmick that won't help at the pump and will discourage domestic oil production.
But Sen. Charles Schumer, D-N.Y., said the fervor for stock buybacks is a clear sign Big Oil isn't interested in new production or alternative energy.
The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.
It's good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel.
The five biggest international oil companies plowed about 55% of the cash they made from their businesses into stock buybacks and dividends last year, up from 30% in 2000 and just 1% in 1993, according to Rice University's James A. Baker III Institute for Public Policy.
The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits.
Oil prices are set on the open market, not by the oil industry. But that hasn't stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.
In the first three months of this year, ExxonMobil Corp., the world's biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.
ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion — nine times what it spent on exploration.
Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.
But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.
And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.
"If you're not spending your money finding and developing new oil, then there's no new oil," said Amy Myers Jaffe, an energy expert at Rice University who's studied spending patterns of the major oil companies.
Investor-owned companies like ExxonMobil and Chevron hold less than 10% of global oil and gas reserves, way down from past decades. And finding new oil has become harder and more expensive.
State-run oil companies, like those in Saudi Arabia and Venezuela, control about 80% of oil reserves — and at today's prices, it's not surprising they're keeping a tight grip on what they have. Scarce equipment and hard-to-find labor also pose problems.
No one questions that Big Oil is rolling in cash. The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.
"It becomes a management decision," said Howard Silverblatt, a senior index analyst at Standard & Poor's. "It's not like they're going to the board and saying, 'Well, I can do one or the other or the other.' The balance sheets are flush with cash."
So what's Big Oil to do?
The companies say they are doing what they can to find more fossil fuels around the world, but the easy oil is gone. Exploring these days may mean expensive projects in thousands of feet of water in the Gulf of Mexico or costly ventures pulling petroleum from Canada's vast oil-sands deposits.
TransCanada Corp. and ConocoPhillips Co. just said they'd spend $7 billion to nearly double the amount of crude flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast.
And analysts point out that because there's no guarantee oil prices will stay in the stratosphere, oil companies should approach exploration projects with caution.
"There's only so much money you can throw at it without being ridiculous," said Joseph Stanislaw, a senior adviser to Deloitte LLP's Energy & Resources practice. "I think they're doing what they can."
It's also important to remember it can take several years before a company produces the first barrel of oil from a new field.
One example is an oil field in the Gulf of Mexico called Thunder Horse. Operated by BP and partly owned by ExxonMobil, the platform only last month began producing oil and gas — nine years after the field's discovery.
At its peak, the multibillion-dollar project is designed to produce 250,000 barrels of oil and 200 million cubic feet of natural gas each day, which would make it the Gulf's largest producer.
"When you look at the spending that's going on, the companies are bringing on a lot of long-term discoveries," said John Parry, a senior analyst with John S. Herold Inc.
At ConocoPhillips, the capital spending budget for 2008, which includes exploration and production, is $15.3 billion, more than double the spending of five years ago.
"Could we spend $20 billion or $25 billion? Absolutely," spokesman Gary Russell said. "Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not."
ExxonMobil, known for its disciplined approach to investing in energy projects, has drawn criticism for its reluctance to invest in alternative energy sources like wind and solar power.
The company expects to spent $25 billion to $30 billion on capital and exploration projects each of the next five years. Last year, it spent about $32 billion on share buybacks.
"You fund your investments that make sense," said spokesman Alan Jeffers. "You have criteria, and you have to meet that to be a good investment for the shareholder. And then if you've got cash that's left over, you're going to return it to the shareholder because it's theirs."
ExxonMobil often touts its $100 million contribution to Stanford University's Global Climate and Energy Project. By contrast, BP says it plans to spend $8 billion over the next decade developing alternative energy using wind, hydrogen and other means.
Big Oil isn't alone buying back large amounts of stock, but the companies are certainly some of the biggest indulgers.
A boom in stock buybacks has been underway in corporate America since 2004. In the first quarter of this year, Exxon, ConocoPhillips and Chevron were all among the top 10 companies for share buybacks in the S&P 500.
In Washington, one Democratic proposal would impose a 25% tax on "unreasonable" profits of the top five oil companies, which together made more than $120 billion in 2007, and put the money toward a trust fund for investment in alternative energy sources. Republicans say it's a gimmick that won't help at the pump and will discourage domestic oil production.
But Sen. Charles Schumer, D-N.Y., said the fervor for stock buybacks is a clear sign Big Oil isn't interested in new production or alternative energy.
Saudi willing to increase crude output
JIDDAH, Saudi Arabia (AP) - Facing strong U.S. pressure and global dismay over oil prices, Saudi Arabia said Sunday it will produce more crude this year if the market needs it. But the vague pledge fell far short of U.S. hopes for a specific increase and may do little to lower prices immediately.
For now, the current ``oil shock'' leaves Western countries with little choice but to move toward nuclear power and change their energy-consumption habits, Britain's prime minister warned at a rare meeting of oil-producing and consuming nations.
Saudi Arabia - the world's top crude exporter - called the gathering Sunday to send a message that it, too, is concerned by high oil prices inflicting economic pain worldwide.
Instead, the meeting highlighted the sharp disagreement between producers like Saudi Arabia and consuming countries like Britain and the United States over the core factors driving steep price hikes. Oil closed near $135 a barrel on Friday - almost double the price a year ago.
The cost of gasoline also has become a sore point in the U.S. presidential race, with President Bush and presumed Republican nominee John McCain calling on Congress to lift its long-standing ban on offshore oil and gas drilling. Barack Obama, the presumptive Democratic nominee, has said such moves will do nothing to ease American consumers' pain short-term.
The U.S. and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar.
Saudi Oil Minister Ali al-Naimi said the kingdom is willing to produce more than the 9.7 million barrels of oil a day it had already planned to produce in July - if the market requires it.
But the Saudi oil minister also blamed speculators and asserted supply is not the problem.
``In today's environment, I am convinced that supply and demand balances and crude oil production levels are not the primary drivers of the current market situation,'' al-Naimi said. Officials and energy executives from more than 35 countries thronged a large hall where he spoke.
King Abdullah also said Saudi Arabia is not the culprit.
The king cited several factors driving ``the unjustified, swift rise in oil prices'' including ``speculators who play the market out of selfish interests,'' plus higher consumption by developing countries and higher taxes in some countries.
U.S. Energy Secretary Samuel Bodman, however, said earlier that U.S. officials had found no evidence speculators are driving up prices.
Saudi officials have consistently said the country would provide enough oil to supply the market. The kingdom announced a 300,000 barrel per day production increase in May and said before the start of the Jiddah meeting that it would add another 200,000 barrels per day in July, raising total daily output to 9.7 million barrels.
Both announcements had already been factored into oil prices before Sunday's meeting - and neither did much to stem their rise. Total worldwide crude production is about 85 million barrels per day.
The Saudi output increase is ``going to help a little bit, maybe reduce prices just a little,'' New Mexico Gov. Bill Richardson, a Democrat and former President Bill Clinton's energy secretary, said on CNN's ``Late Edition'' program. ``It won't be significant.''
It remained unclear if Sunday's announcements would have any greater effect.
At least one analyst said he thought they would only spur prices higher.
The oil market has been in a holding pattern to see if Saudi Arabia would take more aggressive steps toward boosting output, said Stephen Schork, an oil market analyst and trader in Villanova, Pa. The market's likely to view the announcement as a sign it will not, he said.
``We don't know anything more today that we didn't know Friday,'' said Schork, who predicted ``$150 (a barrel) here we come.''
Linda Rafield, senior oil analyst at energy trade publication Platts, said she expected the reaction to be less dramatic.
``I don't see prices going into freefall at the start of trading this evening, but I don't see the bulls being given any reason to bid prices back up to the $140 level,'' she said.
Bush has visited Saudi Arabia twice this year to push the country's king to increase oil production but has little to show for the effort.
To address long-term concerns about supply, al-Naimi said Saudi Arabia also is willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009 - again, if the market requires it.
That reversed previous indications the country would not go beyond that figure.
British Prime Minister Gordon Brown echoed U.S. officials' calls for commitments of specific production increases. Such actions would help ensure that ``instead of uncertainty and unpredictability, there is greater certainty, and instead of instability, there is greater stability,'' he said.
But he and Bodman also urged consuming countries to increase energy efficiency and invest in alternative sources of fuel. Brown said the high prices - what he termed an ``oil shock'' - leave industrialized countries with few choices but turning more to nuclear power and lowering energy consumption.
A joint statement issued by participants also urged countries to improve energy efficiency. The vaguely worded statement also promoted investment in spare capacity and called for improved transparency and regulation of financial markets, but provided few specifics - again highlighting the confusion and disagreements over the core causes of oil's price surge.
Abdullah called for the creation of a $1 billion energy initiative to help poor countries combat fuel prices and said Saudi Arabia would contribute $500 million to provide loans to finance development and energy projects.
Associated Press reporters Donna Abu-Nasr in Jiddah and Adam Schreck and John Wilen in New York contributed to this report.
For now, the current ``oil shock'' leaves Western countries with little choice but to move toward nuclear power and change their energy-consumption habits, Britain's prime minister warned at a rare meeting of oil-producing and consuming nations.
Saudi Arabia - the world's top crude exporter - called the gathering Sunday to send a message that it, too, is concerned by high oil prices inflicting economic pain worldwide.
Instead, the meeting highlighted the sharp disagreement between producers like Saudi Arabia and consuming countries like Britain and the United States over the core factors driving steep price hikes. Oil closed near $135 a barrel on Friday - almost double the price a year ago.
The cost of gasoline also has become a sore point in the U.S. presidential race, with President Bush and presumed Republican nominee John McCain calling on Congress to lift its long-standing ban on offshore oil and gas drilling. Barack Obama, the presumptive Democratic nominee, has said such moves will do nothing to ease American consumers' pain short-term.
The U.S. and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar.
Saudi Oil Minister Ali al-Naimi said the kingdom is willing to produce more than the 9.7 million barrels of oil a day it had already planned to produce in July - if the market requires it.
But the Saudi oil minister also blamed speculators and asserted supply is not the problem.
``In today's environment, I am convinced that supply and demand balances and crude oil production levels are not the primary drivers of the current market situation,'' al-Naimi said. Officials and energy executives from more than 35 countries thronged a large hall where he spoke.
King Abdullah also said Saudi Arabia is not the culprit.
The king cited several factors driving ``the unjustified, swift rise in oil prices'' including ``speculators who play the market out of selfish interests,'' plus higher consumption by developing countries and higher taxes in some countries.
U.S. Energy Secretary Samuel Bodman, however, said earlier that U.S. officials had found no evidence speculators are driving up prices.
Saudi officials have consistently said the country would provide enough oil to supply the market. The kingdom announced a 300,000 barrel per day production increase in May and said before the start of the Jiddah meeting that it would add another 200,000 barrels per day in July, raising total daily output to 9.7 million barrels.
Both announcements had already been factored into oil prices before Sunday's meeting - and neither did much to stem their rise. Total worldwide crude production is about 85 million barrels per day.
The Saudi output increase is ``going to help a little bit, maybe reduce prices just a little,'' New Mexico Gov. Bill Richardson, a Democrat and former President Bill Clinton's energy secretary, said on CNN's ``Late Edition'' program. ``It won't be significant.''
It remained unclear if Sunday's announcements would have any greater effect.
At least one analyst said he thought they would only spur prices higher.
The oil market has been in a holding pattern to see if Saudi Arabia would take more aggressive steps toward boosting output, said Stephen Schork, an oil market analyst and trader in Villanova, Pa. The market's likely to view the announcement as a sign it will not, he said.
``We don't know anything more today that we didn't know Friday,'' said Schork, who predicted ``$150 (a barrel) here we come.''
Linda Rafield, senior oil analyst at energy trade publication Platts, said she expected the reaction to be less dramatic.
``I don't see prices going into freefall at the start of trading this evening, but I don't see the bulls being given any reason to bid prices back up to the $140 level,'' she said.
Bush has visited Saudi Arabia twice this year to push the country's king to increase oil production but has little to show for the effort.
To address long-term concerns about supply, al-Naimi said Saudi Arabia also is willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009 - again, if the market requires it.
That reversed previous indications the country would not go beyond that figure.
British Prime Minister Gordon Brown echoed U.S. officials' calls for commitments of specific production increases. Such actions would help ensure that ``instead of uncertainty and unpredictability, there is greater certainty, and instead of instability, there is greater stability,'' he said.
But he and Bodman also urged consuming countries to increase energy efficiency and invest in alternative sources of fuel. Brown said the high prices - what he termed an ``oil shock'' - leave industrialized countries with few choices but turning more to nuclear power and lowering energy consumption.
A joint statement issued by participants also urged countries to improve energy efficiency. The vaguely worded statement also promoted investment in spare capacity and called for improved transparency and regulation of financial markets, but provided few specifics - again highlighting the confusion and disagreements over the core causes of oil's price surge.
Abdullah called for the creation of a $1 billion energy initiative to help poor countries combat fuel prices and said Saudi Arabia would contribute $500 million to provide loans to finance development and energy projects.
Associated Press reporters Donna Abu-Nasr in Jiddah and Adam Schreck and John Wilen in New York contributed to this report.
Friday, July 25, 2008
Attacks shake oil and gold prices
Crude oil and gold bullion prices have lost some of the sharp gains seen immediately after the devastating terrorist attacks in the US.
Gold is often bought up as a safe option for investors facing great uncertainty in the stock markets.
And the oil price typically moves higher when there is a rise in tension in the Middle East, because of fears over security of supply.
The Middle East holds two-thirds of the world's crude oil reserves, but the threat of an immediate supply shortage eased on Wednesday.
Asia prices
Thursday saw crude prices fall back from prices established on Monday, with October Dubai - the benchmark for Asian oil operators - dropping about 60 cents to $25.75. Wednesday trading had pushed the price up to $31 a barrel
None of these things change Opec's decision to guarantee the stability of the oil market
Ali Rodriguez
In London, crude futures slid lower on Wednesday after a massive surge on Tuesday.
By the close, October crude oil was trading 3.6% lower at $28.00 after having leapt 13% at one point on Tuesday.
"The US may need to take action against the perpetrators of this act and the uncertainty lies in the fact that the violators may lie within or nearby oil-producing countries," said Peter Cockcroft, corporate adviser to the UK's Premier Oil.
Further significant movements in oil prices on expected to depend on indications of what form any retaliation from the US will take.
But the oil producing cartel Opec has already said it is committed to ensuring stable oil supplies following the attack and that Middle East supplies are not affected at present.
And analysts have confirmed that the cartel has plenty of spare capacity to meet demand, soothing the markets.
It's going crazy here. It's worse than the Gulf War
Rob Laughin, oil trader, on Tuesday
"None of these things change Opec's decision to guarantee the stability of the oil market," said Ali Rodriguez, secretary general of the cartel.
Tuesday's trading had been characterised by panic, with one London-based oil broker, Rob Laughin telling BBC News Online: "It is going crazy here. It is worse than the Gulf War."
Rush for gold
Gold had been out of favour for some years, seeing steady price falls. But the crisis recreated its status as a safe alternative for investors.
There was pure panic. The gold price went through the roof
Neil Stacey, trader at Cazenove
Still, the initial surge on Tuesday began to settle back, with volumes slowly returning to normal.
The markets were subdued: "It's just a case of waiting and seeing...a lot of liquidity has been taken out of the market because there is no trade in the US now," said one trader.
In Asia, the bullion price at 0117 GMT was $279.25 an ounce, steady from the close in London.
Joburg price leap
On Tuesday, gold had soared nearly 6% after the attacks, with the London benchmark price climbing to $287 in the afternoon from $271 in the morning.
Robin Bahr, metals analyst at Standard Bank, London, said: "There is panic buying of metals, gold and oil - it is complete pandemonium."
In Johannesburg, a big world centre for gold trading, gold prices had leapt to $289.9 an ounce on Tuesday, from $271.15.
Nymex evacuated
The New York Mercantile Exchange (Nymex) - the world's largest physical commodities exchange - will not open for trade on Wednesday following Tuesday's attacks, although no decision has yet been made on whether to start electronic screen trade in the US.
A Nymex spokeswoman said she understood there had been no damage to the exchange building itself which is situated just a few hundred metres from the World Trade Center.
The exchange had not yet opened for business when the planes hit the World Trade Center at about 0900 local time, but its trading floor was immediately evacuated and trade suspended.
Nymex is mulling whether to start electronic trade of crude oil, petroleum products and precious metals on its electronic system later on Wednesday, and has consulted with the industry to make a decision.
Gold is often bought up as a safe option for investors facing great uncertainty in the stock markets.
And the oil price typically moves higher when there is a rise in tension in the Middle East, because of fears over security of supply.
The Middle East holds two-thirds of the world's crude oil reserves, but the threat of an immediate supply shortage eased on Wednesday.
Asia prices
Thursday saw crude prices fall back from prices established on Monday, with October Dubai - the benchmark for Asian oil operators - dropping about 60 cents to $25.75. Wednesday trading had pushed the price up to $31 a barrel
None of these things change Opec's decision to guarantee the stability of the oil market
Ali Rodriguez
In London, crude futures slid lower on Wednesday after a massive surge on Tuesday.
By the close, October crude oil was trading 3.6% lower at $28.00 after having leapt 13% at one point on Tuesday.
"The US may need to take action against the perpetrators of this act and the uncertainty lies in the fact that the violators may lie within or nearby oil-producing countries," said Peter Cockcroft, corporate adviser to the UK's Premier Oil.
Further significant movements in oil prices on expected to depend on indications of what form any retaliation from the US will take.
But the oil producing cartel Opec has already said it is committed to ensuring stable oil supplies following the attack and that Middle East supplies are not affected at present.
And analysts have confirmed that the cartel has plenty of spare capacity to meet demand, soothing the markets.
It's going crazy here. It's worse than the Gulf War
Rob Laughin, oil trader, on Tuesday
"None of these things change Opec's decision to guarantee the stability of the oil market," said Ali Rodriguez, secretary general of the cartel.
Tuesday's trading had been characterised by panic, with one London-based oil broker, Rob Laughin telling BBC News Online: "It is going crazy here. It is worse than the Gulf War."
Rush for gold
Gold had been out of favour for some years, seeing steady price falls. But the crisis recreated its status as a safe alternative for investors.
There was pure panic. The gold price went through the roof
Neil Stacey, trader at Cazenove
Still, the initial surge on Tuesday began to settle back, with volumes slowly returning to normal.
The markets were subdued: "It's just a case of waiting and seeing...a lot of liquidity has been taken out of the market because there is no trade in the US now," said one trader.
In Asia, the bullion price at 0117 GMT was $279.25 an ounce, steady from the close in London.
Joburg price leap
On Tuesday, gold had soared nearly 6% after the attacks, with the London benchmark price climbing to $287 in the afternoon from $271 in the morning.
Robin Bahr, metals analyst at Standard Bank, London, said: "There is panic buying of metals, gold and oil - it is complete pandemonium."
In Johannesburg, a big world centre for gold trading, gold prices had leapt to $289.9 an ounce on Tuesday, from $271.15.
Nymex evacuated
The New York Mercantile Exchange (Nymex) - the world's largest physical commodities exchange - will not open for trade on Wednesday following Tuesday's attacks, although no decision has yet been made on whether to start electronic screen trade in the US.
A Nymex spokeswoman said she understood there had been no damage to the exchange building itself which is situated just a few hundred metres from the World Trade Center.
The exchange had not yet opened for business when the planes hit the World Trade Center at about 0900 local time, but its trading floor was immediately evacuated and trade suspended.
Nymex is mulling whether to start electronic trade of crude oil, petroleum products and precious metals on its electronic system later on Wednesday, and has consulted with the industry to make a decision.
Oil spill plan
The commercial ship-to-ship transfer of crude oil in the bay is a matter of ongoing concern for both authorities.
The type of crude oil transferred in Lyme Bay is similar to that of the tanker the Prestige which caused widespread environmental damage when it foundered off the coast of Spain last year.
Staff from both county councils, the Department of Transport and the Maritime and Coastguard Agency are meeting to discuss how best to protect the World Heritage Site.
This type of oil is very difficult to tackle once it gets into the marine environment
Richard Hill, Devon County Council
Recently Lyme Bay has been used extensively by tankers travelling from the Baltic to the Far East, with each operation transferring up to two million barrels of oil over a two-week period.
Richard Hill from Devon County Council believes oil trade coming out of the Baltic is likely to double to 80 million tons every year.
"This is obviously going to have a knock on effect in areas like Lyme Bay where ship to ship transfers take place," said Mr Hill.
"We've seen from the Prestige that this type of oil is very difficult to tackle once it gets into the marine environment and will require large scale emergency arrangements to clean up any oil spill in the event of a disaster."
The type of crude oil transferred in Lyme Bay is similar to that of the tanker the Prestige which caused widespread environmental damage when it foundered off the coast of Spain last year.
Staff from both county councils, the Department of Transport and the Maritime and Coastguard Agency are meeting to discuss how best to protect the World Heritage Site.
This type of oil is very difficult to tackle once it gets into the marine environment
Richard Hill, Devon County Council
Recently Lyme Bay has been used extensively by tankers travelling from the Baltic to the Far East, with each operation transferring up to two million barrels of oil over a two-week period.
Richard Hill from Devon County Council believes oil trade coming out of the Baltic is likely to double to 80 million tons every year.
"This is obviously going to have a knock on effect in areas like Lyme Bay where ship to ship transfers take place," said Mr Hill.
"We've seen from the Prestige that this type of oil is very difficult to tackle once it gets into the marine environment and will require large scale emergency arrangements to clean up any oil spill in the event of a disaster."
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Oil prices at 10-year high
Oil prices have risen to their highest level in a decade, with Brent crude oil trading at around thirty-two dollars a barrel in London.
The rise follows a series of reports indicating low oil stocks in the United States and north-western Europe -- the main oil-consuming countries.
Further problems have been caused by confusion over how much oil is available from OPEC, the Organisation of Petroleum Exporting Countries.
Saudi Arabia said in June it was increasing its production to stabilise prices, but lately there have been expectations that the Saudis might cut back their output. The BBC business reporter says the prices could continue their rise until it is known what OPEC members are going to do about their production levels.
The rise follows a series of reports indicating low oil stocks in the United States and north-western Europe -- the main oil-consuming countries.
Further problems have been caused by confusion over how much oil is available from OPEC, the Organisation of Petroleum Exporting Countries.
Saudi Arabia said in June it was increasing its production to stabilise prices, but lately there have been expectations that the Saudis might cut back their output. The BBC business reporter says the prices could continue their rise until it is known what OPEC members are going to do about their production levels.
Oil trade strengthen US-Russian ties
The first ever direct shipment of Russian oil to the US has reached the port of Houston.
The delivery of 2 million barrels of crude oil, which arrived on the super tanker Astro Lupus, was organised by Yukos, Russia's second largest oil company.
In the 1970s, Moscow used Venezuela as an intermediary for reaching North America's oil market.
The current deal is the first ever direct sale, and Russian and US officials hope it will not be the last.
"Experimental" delivery
Yukos' chief executive, Mikhail Khodorkovsky, said the shipment was "merely experimental" and that its profitability had yet to be estimated.
The firm sees the shipment as part of the Russia-US "energy dialogue" launched in May when US President George Bush visited Moscow.
Yukos' oil well
Russia's oil industry needs money
Mr Bush and Russian President Vladimir Putin promised to work together to "reduce volatility and enhance predictability" in world oil markets.
Both countries are seen as wanting more Russian oil to enter the US, which has been reliant for imports mostly on countries in the Opec producers' cartel.
But Russia, which is not an Opec member, is believed to have mapped a future in denting the cartel's market share.
The US, meanwhile, is seen as keen on decreasing its dependence on the Middle East for oil.
Mr Khodorkovsky told BBC News Online that Yukos and its rivals would be able to fill the gap in the market if Opec cut its production.
Growing contender
A recovery in production in the past three years has elevated Russia to third place in the world oil production league, with exports narrowly behind those of Saudi Arabia.
And production is likely to rise further, by 7-8% this year, after Russia this month ends an output restriction imposed as part of a global effort to boost the crude price.
Yukos itself expects a 20% increase in production this year to 1.4 million barrels per day.
The company, praised by investors for its unusual - by Russian standards - transparency and corporate governance practices, is looking for new markets.
Projects outside Russia range from oil refineries in Germany to a pipeline in China.
Yet, while linked to Europe by pipelines, the continent is not seen by Yukos as its main target for expansion.
The EU is cautious in letting Russia increase exports to Europe, Mr Khodorkovsky says.
Expensive project
Even exporting to the US is not quite as straightforward as it might seem.
According to some estimates, the cost of transportation may be as high as $1.50 per barrel, leaving producers with a profit of $1-$1.50 per barrel at best.
Russia has no deep-water ports, so the oil was transported from Black Sea terminals in small tankers to an Aegean Port where it was loaded onto the Astro Lupus.
It not surprising that Yukos has failed to promise more US shipments in the near future.
The firm's rivals have dismissed the venture as a "public relations action".
Cash squeeze
Not that shipment represents Russia's only challenge.
The country's currently explored oil fields are expected to run dry in 20-25 years, and Russia's oil industry does not have enough money to explore new ones.
And amid all the talk of opening up the country, Russian officials are seen as trying to keep foreign investors away from the most profitable oil projects.
The level of direct foreign investment in Russia's oil industry is a mere $4.5bn.
Most of that goes to high-risk and costly offshore projects in the Pacific, and the construction of a pipeline connecting Caspian oil fields to Black Sea ports.
The Russia-US "energy dialogue", of which the Yukos' shipment to Huston was the first visible sign, might yet see the country's oil industry open up for future investors.
The delivery of 2 million barrels of crude oil, which arrived on the super tanker Astro Lupus, was organised by Yukos, Russia's second largest oil company.
In the 1970s, Moscow used Venezuela as an intermediary for reaching North America's oil market.
The current deal is the first ever direct sale, and Russian and US officials hope it will not be the last.
"Experimental" delivery
Yukos' chief executive, Mikhail Khodorkovsky, said the shipment was "merely experimental" and that its profitability had yet to be estimated.
The firm sees the shipment as part of the Russia-US "energy dialogue" launched in May when US President George Bush visited Moscow.
Yukos' oil well
Russia's oil industry needs money
Mr Bush and Russian President Vladimir Putin promised to work together to "reduce volatility and enhance predictability" in world oil markets.
Both countries are seen as wanting more Russian oil to enter the US, which has been reliant for imports mostly on countries in the Opec producers' cartel.
But Russia, which is not an Opec member, is believed to have mapped a future in denting the cartel's market share.
The US, meanwhile, is seen as keen on decreasing its dependence on the Middle East for oil.
Mr Khodorkovsky told BBC News Online that Yukos and its rivals would be able to fill the gap in the market if Opec cut its production.
Growing contender
A recovery in production in the past three years has elevated Russia to third place in the world oil production league, with exports narrowly behind those of Saudi Arabia.
And production is likely to rise further, by 7-8% this year, after Russia this month ends an output restriction imposed as part of a global effort to boost the crude price.
Yukos itself expects a 20% increase in production this year to 1.4 million barrels per day.
The company, praised by investors for its unusual - by Russian standards - transparency and corporate governance practices, is looking for new markets.
Projects outside Russia range from oil refineries in Germany to a pipeline in China.
Yet, while linked to Europe by pipelines, the continent is not seen by Yukos as its main target for expansion.
The EU is cautious in letting Russia increase exports to Europe, Mr Khodorkovsky says.
Expensive project
Even exporting to the US is not quite as straightforward as it might seem.
According to some estimates, the cost of transportation may be as high as $1.50 per barrel, leaving producers with a profit of $1-$1.50 per barrel at best.
Russia has no deep-water ports, so the oil was transported from Black Sea terminals in small tankers to an Aegean Port where it was loaded onto the Astro Lupus.
It not surprising that Yukos has failed to promise more US shipments in the near future.
The firm's rivals have dismissed the venture as a "public relations action".
Cash squeeze
Not that shipment represents Russia's only challenge.
The country's currently explored oil fields are expected to run dry in 20-25 years, and Russia's oil industry does not have enough money to explore new ones.
And amid all the talk of opening up the country, Russian officials are seen as trying to keep foreign investors away from the most profitable oil projects.
The level of direct foreign investment in Russia's oil industry is a mere $4.5bn.
Most of that goes to high-risk and costly offshore projects in the Pacific, and the construction of a pipeline connecting Caspian oil fields to Black Sea ports.
The Russia-US "energy dialogue", of which the Yukos' shipment to Huston was the first visible sign, might yet see the country's oil industry open up for future investors.
GDP Growth
Discussions of GDP growth at both national and international levels often get carried away by relatively recent trends, but it is important to situate recent income growth in the longer term context. In this article the authors examine the evidence on GDP global and regional growth in the second half of the twentieth century and beyond.
World Economy Oil Prices
The past months have witnessed soaring oil prices in international markets, which have come on top of increases in the previous three years. In the third week of August world trade prices of crude oil nearly touched $50 per barrel before settling somewhat lower. But further increases are not ruled out in the near future.
While crude oil prices have been rising since March this year, thus far the month of August has seen the most rapid increase, as Chart 1 shows. The most recent increases have been driven by a number of factors. The most important factor, of course, is the continued resistance of the Iraqi people to the US military occupation. The inability thus far of the US army to contain the armed struggle of the militia of Muqtada al Sadr and others despite using blatant violence even against civilians, along with the growing sabotage of oil facilities and destruction of oil pipelines in Iraq, has reduced exports and led to expectations of uncertain future supplies from that country.
In addition, the threats of terrorist attacks in the world's largest oil producer, Saudi Arabia, are growing and also have been increasingly realised in recent months. The nervousness this has created in world markets has not been neutralised by OPEC's promises of boosting production. More recently, the travails of the giant Russian oil company Yukos have also contributed to rising oil prices.
Normally, some of this supply uncertainty would be considered as inevitable and would have only a marginal effect on markets. At present, however, these factors, as well as other potential issues such as instability in Venezuela or strikes in Norway, or indeed any changes in any oil-producing country, can have substantial effects on prices at the margin and cause sudden price spikes. This is because world demand for oil rules very high at present. In consequence, current oil production is extremely close to current capacity, and there is little margin for major increases in supply in the near future.
World demand for oil has been fuelled not only by growth in the US, but also by strong demand from other countries. China's imports of crude oil have increased by more than 40 per cent since the beginning of 2004. This is not all for current consumption rather it reflects stockpiling by the Chinese government, a shift from holding excess dollar reserves to holding oil reserves.
Even the US government is continuing to add to its Strategic Petroleum Reserve, rather than depleting it in order to reduce oil prices. The Bush administration has made it clear it would not intervene to release any of these stocks unless the oil prices goes to levels of $55-60 per barrel before the November elections.
Market analysts do predict that the current high levels of OPEC production (which was 29.8 million barrels per day in July, only 0.5 million barrels below total OPEC crude oil production capacity) are likely to push prices below $40 per barrel by the last quarter of 2004. Nevertheless, it is unlikely that 2005 will witness a sharp decline in crude oil prices, simply because world demand is expected to continue to grow and keep inventories tight. Global oil demand is currently projected by the US Department of Energy to exceed 2 million barrels per day this year as well as in 2005.
So if oil prices do continue to rise, what are the implications? Some observers have already sounded the alarm bells. OPEC itself has predicted that the global economic recovery could be in jeopardy in prices remain at current levels (around $40 per barrel) for the next two years. An OPEC report projects that this would reduce growth in Europe and the US by between 0.2 and 0.4 percentage points.
Asian economists have been even more pessimistic. Kim Hak-Su, the Executive Secretary of UN-ESCAP (the United Nation's Economic and Social Commission for Asia and the Pacific) has suggested that oil prices of around $40 per barrel would mean a 0.5 percentage point reduction of growth in the region, and $50 per barrel would mean a 1 percentage point reduction.
Such projections usually hinge around the perceived trade-off between growth and inflation, and are predicated on the assumption that oil prices increases will lead to more general inflation. Governments attempting to combat inflation will then embark upon contractionary fiscal and monetary policies, which will bring down inflation but also imply lower rates of aggregate economic growth.
It is correct to assume that governments across the world remain obsessed with inflation control, because the political economy configurations that have led to the domination of finance still persist. However, the prior assumption, that oil price hikes necessarily lead to higher inflation, may not be so valid any more.
Certainly it is true that for a very long period in fact almost the whole of the second half of the 20th century oil prices showed a strong relationship to aggregate inflation rates in the world economy. Between 1970 and 2000, for example, world trade prices and oil prices were strongly positively correlated and in the largest economy, the US, the Consumer Price Index inflation tracked movements in world oil prices.
However, there is evidence that such a relationship may be changing. Chart 2 indicates the annual percentage changes in world oil prices and average inflation rates in industrial and developing countries, especially since 1996.
Two things stand out quite sharply in this chart. The first is that oil prices were exceptionally volatile over this period, rising and falling dramatically. The second is that such fluctuations appear to have had little impact on aggregate inflation rates in either developed or developing countries. Rather, such inflation rates have been relatively stable and even fallen slightly compared to the earlier decade.
So what has changed in the world economy to cause such an apparently established relationship to break down? To begin with, it is worth remembering that even the currently high oil prices are still well below their real levels in the 1970s, when the oil price shocks generated stagflation. But there are other forces which have reduced the responsiveness of the general price level to energy prices.
The first important factor is the reduced dependence of the industrial economies upon oil imports, at least in quantitative terms. For the group of industrial countries in the OECD, net oil imports accounted for 2.4 per cent of GDP in 1978, but have since fallen continuously, to amount to only 0.9 per cent of GDP in 2002.
But the second factor may be even more significant. This is a distributional shift, whereby the burden of adjustment to higher oil prices is essentially borne by workers across the world and non-oil primary commodity producers in the developing countries. This means that even though energy is a universal intermediate good, its price rise does not cause prices of many other commodities and especially the money wage - to increase accordingly. This in turn enables aggregate inflation levels to remain low even though oil prices may be increasing.
It is well-known that the period since the early 1990s has been once of a substantial decline in the bargaining power of workers vis-à-vis capital in most of the world, and this has been reflected in declining wage shares of national income and real wages that are either stagnant or growing well below productivity increases. This provides a significant amount of slack in terms of the ability of employers to bear other input cost increases. In addition, this disempowerment of workers also means that such input cost increases can be passed on without attracting demands for commensurate increases in money wages in the current period.
Along with the working class, the peasantry and other non-oil primary commodity producers have also been adversely affected and been forced to take on some of the burden of adjustment. Indeed, even manufacturing producers from developing countries have been forced in a situation where intense competitive pressure has ensured that they cannot pass on all their input cost increases.
Chart 3 indicates the annual changes in the world trade prices of oil, non-oil primary commodities and manufactured goods. It is evident that the prices of other primary commodities have generally been more depressed, falling between 1995 and 1999, and barely increasing even in years when world oil prices rose sharply. Similarly manufactured goods prices also have hardly increased, and have also been falling in absolute terms over much of this period. Only in the period since 2001 is there some evidence of all three sets of prices moving together.
So does this mean that the oil price is no longer an issue of concern for those interested in the aggregate growth of the world economy? Not at all; in fact, such a conclusion would not only be unwarranted, it could also be extremely misleading.
It is clear from the preceding argument that the adverse impact of oil prices upon inflation can only be contained by suppressing and reducing the incomes of workers everywhere and peasants in the developing world. But there are limits to the extent to which such incomes can continue to be reduced, since such a process has already been under way for some years, and it cannot be intensified in most countries without causing social unrest and political instability.
This means that continuing high prices of oil are likely to place governments across the world in a dilemma. If they continue with the practices of the recent past of forcing the majority of the people to bear the burden, they risk losing legitimacy with the people. In any case these policies have become so unpopular and are meeting with more and more distrust and resistance. This is of special significance in those developed countries (including the US and UK) where elections are due in the near future. But it is also true of some developing countries (including India) where the balance of political forces may be shifting in some small degree in favour of the working class and peasantry after more than a decade of extreme tilt in the opposite direction.
So this particular strategy has its limits. However, the alternative strategy, of using contractionary monetary policies to bring down aggregate inflation, would also be extremely unpopular since it would add to unemployment and material insecurity which are already at high levels.
It appears that if governments are to take into account this requirement of popular legitimacy, they must be prepared to live with higher inflation in the medium term. How far this is compatible with the domination of international finance capital is something that remains to be seen.
While crude oil prices have been rising since March this year, thus far the month of August has seen the most rapid increase, as Chart 1 shows. The most recent increases have been driven by a number of factors. The most important factor, of course, is the continued resistance of the Iraqi people to the US military occupation. The inability thus far of the US army to contain the armed struggle of the militia of Muqtada al Sadr and others despite using blatant violence even against civilians, along with the growing sabotage of oil facilities and destruction of oil pipelines in Iraq, has reduced exports and led to expectations of uncertain future supplies from that country.
In addition, the threats of terrorist attacks in the world's largest oil producer, Saudi Arabia, are growing and also have been increasingly realised in recent months. The nervousness this has created in world markets has not been neutralised by OPEC's promises of boosting production. More recently, the travails of the giant Russian oil company Yukos have also contributed to rising oil prices.
Normally, some of this supply uncertainty would be considered as inevitable and would have only a marginal effect on markets. At present, however, these factors, as well as other potential issues such as instability in Venezuela or strikes in Norway, or indeed any changes in any oil-producing country, can have substantial effects on prices at the margin and cause sudden price spikes. This is because world demand for oil rules very high at present. In consequence, current oil production is extremely close to current capacity, and there is little margin for major increases in supply in the near future.
World demand for oil has been fuelled not only by growth in the US, but also by strong demand from other countries. China's imports of crude oil have increased by more than 40 per cent since the beginning of 2004. This is not all for current consumption rather it reflects stockpiling by the Chinese government, a shift from holding excess dollar reserves to holding oil reserves.
Even the US government is continuing to add to its Strategic Petroleum Reserve, rather than depleting it in order to reduce oil prices. The Bush administration has made it clear it would not intervene to release any of these stocks unless the oil prices goes to levels of $55-60 per barrel before the November elections.
Market analysts do predict that the current high levels of OPEC production (which was 29.8 million barrels per day in July, only 0.5 million barrels below total OPEC crude oil production capacity) are likely to push prices below $40 per barrel by the last quarter of 2004. Nevertheless, it is unlikely that 2005 will witness a sharp decline in crude oil prices, simply because world demand is expected to continue to grow and keep inventories tight. Global oil demand is currently projected by the US Department of Energy to exceed 2 million barrels per day this year as well as in 2005.
So if oil prices do continue to rise, what are the implications? Some observers have already sounded the alarm bells. OPEC itself has predicted that the global economic recovery could be in jeopardy in prices remain at current levels (around $40 per barrel) for the next two years. An OPEC report projects that this would reduce growth in Europe and the US by between 0.2 and 0.4 percentage points.
Asian economists have been even more pessimistic. Kim Hak-Su, the Executive Secretary of UN-ESCAP (the United Nation's Economic and Social Commission for Asia and the Pacific) has suggested that oil prices of around $40 per barrel would mean a 0.5 percentage point reduction of growth in the region, and $50 per barrel would mean a 1 percentage point reduction.
Such projections usually hinge around the perceived trade-off between growth and inflation, and are predicated on the assumption that oil prices increases will lead to more general inflation. Governments attempting to combat inflation will then embark upon contractionary fiscal and monetary policies, which will bring down inflation but also imply lower rates of aggregate economic growth.
It is correct to assume that governments across the world remain obsessed with inflation control, because the political economy configurations that have led to the domination of finance still persist. However, the prior assumption, that oil price hikes necessarily lead to higher inflation, may not be so valid any more.
Certainly it is true that for a very long period in fact almost the whole of the second half of the 20th century oil prices showed a strong relationship to aggregate inflation rates in the world economy. Between 1970 and 2000, for example, world trade prices and oil prices were strongly positively correlated and in the largest economy, the US, the Consumer Price Index inflation tracked movements in world oil prices.
However, there is evidence that such a relationship may be changing. Chart 2 indicates the annual percentage changes in world oil prices and average inflation rates in industrial and developing countries, especially since 1996.
Two things stand out quite sharply in this chart. The first is that oil prices were exceptionally volatile over this period, rising and falling dramatically. The second is that such fluctuations appear to have had little impact on aggregate inflation rates in either developed or developing countries. Rather, such inflation rates have been relatively stable and even fallen slightly compared to the earlier decade.
So what has changed in the world economy to cause such an apparently established relationship to break down? To begin with, it is worth remembering that even the currently high oil prices are still well below their real levels in the 1970s, when the oil price shocks generated stagflation. But there are other forces which have reduced the responsiveness of the general price level to energy prices.
The first important factor is the reduced dependence of the industrial economies upon oil imports, at least in quantitative terms. For the group of industrial countries in the OECD, net oil imports accounted for 2.4 per cent of GDP in 1978, but have since fallen continuously, to amount to only 0.9 per cent of GDP in 2002.
But the second factor may be even more significant. This is a distributional shift, whereby the burden of adjustment to higher oil prices is essentially borne by workers across the world and non-oil primary commodity producers in the developing countries. This means that even though energy is a universal intermediate good, its price rise does not cause prices of many other commodities and especially the money wage - to increase accordingly. This in turn enables aggregate inflation levels to remain low even though oil prices may be increasing.
It is well-known that the period since the early 1990s has been once of a substantial decline in the bargaining power of workers vis-à-vis capital in most of the world, and this has been reflected in declining wage shares of national income and real wages that are either stagnant or growing well below productivity increases. This provides a significant amount of slack in terms of the ability of employers to bear other input cost increases. In addition, this disempowerment of workers also means that such input cost increases can be passed on without attracting demands for commensurate increases in money wages in the current period.
Along with the working class, the peasantry and other non-oil primary commodity producers have also been adversely affected and been forced to take on some of the burden of adjustment. Indeed, even manufacturing producers from developing countries have been forced in a situation where intense competitive pressure has ensured that they cannot pass on all their input cost increases.
Chart 3 indicates the annual changes in the world trade prices of oil, non-oil primary commodities and manufactured goods. It is evident that the prices of other primary commodities have generally been more depressed, falling between 1995 and 1999, and barely increasing even in years when world oil prices rose sharply. Similarly manufactured goods prices also have hardly increased, and have also been falling in absolute terms over much of this period. Only in the period since 2001 is there some evidence of all three sets of prices moving together.
So does this mean that the oil price is no longer an issue of concern for those interested in the aggregate growth of the world economy? Not at all; in fact, such a conclusion would not only be unwarranted, it could also be extremely misleading.
It is clear from the preceding argument that the adverse impact of oil prices upon inflation can only be contained by suppressing and reducing the incomes of workers everywhere and peasants in the developing world. But there are limits to the extent to which such incomes can continue to be reduced, since such a process has already been under way for some years, and it cannot be intensified in most countries without causing social unrest and political instability.
This means that continuing high prices of oil are likely to place governments across the world in a dilemma. If they continue with the practices of the recent past of forcing the majority of the people to bear the burden, they risk losing legitimacy with the people. In any case these policies have become so unpopular and are meeting with more and more distrust and resistance. This is of special significance in those developed countries (including the US and UK) where elections are due in the near future. But it is also true of some developing countries (including India) where the balance of political forces may be shifting in some small degree in favour of the working class and peasantry after more than a decade of extreme tilt in the opposite direction.
So this particular strategy has its limits. However, the alternative strategy, of using contractionary monetary policies to bring down aggregate inflation, would also be extremely unpopular since it would add to unemployment and material insecurity which are already at high levels.
It appears that if governments are to take into account this requirement of popular legitimacy, they must be prepared to live with higher inflation in the medium term. How far this is compatible with the domination of international finance capital is something that remains to be seen.
Sunday, July 20, 2008
London Market Reports
Leading shares rallied slightly by midday, with the FTSE 100 supported by top-of-the-range figures from BP Amoco, but trading continued to be overshadowed by the prospect of a sharp fall in Microsoft shares when trading commences in the US.
On Friday, the initial finding in the US anti-trust case against Microsoft was that it had exploited its position in the market and traded unfairly.
At 1200 GMT, the FTSE 100 index was trading down 2.6 points at 6354.3.
BP Amoco shares rose 35 pence to 576p after a clean net income figure of $1.955bn came in at the top end of the range of analysts' expectations.
Rugby Group was most heavily traded stock with close to 90m shares changing hands after a raid by ABN Amro and SBC Warburg on behalf of RMC Group at 137.5p. Rugby rose 15p to 133p, while RMC fell 52p to 858p.
British Airways' second quarter figures were better than expectations and October traffic numbers were reassuring, analysts said, and the stock rose 13p to 343p.
Rentokil gained 8p to 215p after press reports of a possible £700m share buy-back, and Unilever rallied 14p to 480p in the wake of disappointing figures on Friday.
Bid stories were also evident with NatWest up 20p to £14.62 as Royal Bank of Scotland registered its interest in the bank.
And Orange gained 21p to £15.86 as France Telecom said it would be interested in buying the mobile telecoms operator in the event that the Mannesman deal did not go through, or there was a counter-bid for Mannesman.
But most leading stocks were marginally weaker, especially utilities after a JP Morgan downgrade on the sector. United Utilities fell 19p to 580p.
On Friday, the initial finding in the US anti-trust case against Microsoft was that it had exploited its position in the market and traded unfairly.
At 1200 GMT, the FTSE 100 index was trading down 2.6 points at 6354.3.
BP Amoco shares rose 35 pence to 576p after a clean net income figure of $1.955bn came in at the top end of the range of analysts' expectations.
Rugby Group was most heavily traded stock with close to 90m shares changing hands after a raid by ABN Amro and SBC Warburg on behalf of RMC Group at 137.5p. Rugby rose 15p to 133p, while RMC fell 52p to 858p.
British Airways' second quarter figures were better than expectations and October traffic numbers were reassuring, analysts said, and the stock rose 13p to 343p.
Rentokil gained 8p to 215p after press reports of a possible £700m share buy-back, and Unilever rallied 14p to 480p in the wake of disappointing figures on Friday.
Bid stories were also evident with NatWest up 20p to £14.62 as Royal Bank of Scotland registered its interest in the bank.
And Orange gained 21p to £15.86 as France Telecom said it would be interested in buying the mobile telecoms operator in the event that the Mannesman deal did not go through, or there was a counter-bid for Mannesman.
But most leading stocks were marginally weaker, especially utilities after a JP Morgan downgrade on the sector. United Utilities fell 19p to 580p.
Banks to launch EU share market
The world's biggest investment banks are to create a new pan-European system for trading shares to rival Europe's top stock exchanges.
They intend to create a system "within months", before a new EU directive on trading in financial products comes into force next November.
They believe they are paying too much to the London Stock Exchange (LSE) and other European markets to trade shares.
"The cost of trading in the US is 80% lower than in Europe," said a banker.
The new business will be owned by US firms Citigroup, Morgan Stanley, Goldman Sachs and Merrill Lynch, Swiss banks UBS and Credit Suisse, and Germany's Deutsche Bank.
Secret meetings
They have been meeting in secret for months to plan their new market, always under the scrutiny of a leading London law firm.
"We've always had lawyers present, so that no-one could accuse us of anti-competitive collusion," added a banker.
We think the resistance of individual European countries to what we want to do is less than it has ever been
Investment banker
They believe that competition from their new system will drive down charges and also deliver keener buying and selling prices.
That would benefit the many millions of people who have savings in a pension funds or investment schemes, because it would reduce the trading costs of those funds.
The new system would almost be guaranteed vast amounts of business, because the seven banks estimate that they are responsible for 50% of all trading in leading European companies.
The value of such transactions would run to many hundreds of billions of pounds every year.
LSE threat
The initiative may be a particular concern to the LSE, which has been building its defences against an expected takeover attempt by Nasdaq, the US exchange.
Nasdaq owns 25% of the LSE and has made plain its desire to buy it outright.
The LSE's ability to remain independent would be undermined if it were perceived to be weakened by the investment banks' determination to compete with it.
LSE headquarters
The London Stock Exchange could find its business under threat
The banks are partly motivated by the coming into effect of the new Markets in Financial Instruments Directive (mifid).
This directive actively encourages the creation of competitors to the domestic exchanges, which have effectively been monopolies since their creation.
"We think the political climate is right, that the resistance of individual European countries to what we want to do is less than it has ever been," said one leading investment banker familiar with the plan.
Cost frustration
Another factor is that the investment banks believe they have been paying too much to the LSE.
They have seen business on the exchange surge over the past two years and they feel that the LSE has not cut its charges sufficiently to take account of all the extra business they are winning.
"We've seen business at the exchange go up and up, and its share price go up and up," a banker said.
"And we've thought to ourselves - we're paying for that. That's our money going to the LSE".
The new trading system will be a competitive threat to the LSE, Germany's Deutsche Boerse and to Euronext, the Franco-Dutch stock market business.
There have been attempts in the past to create new exchanges and trading systems, but none of them have succeeded.
But the banks believe theirs will take off, in part because the pressure for lower charges has intensified following the explosive growth in share trading by hedge funds.
The banks are currently refusing to quantify the costs of the new system and some may see their plans as simply an extreme way to force European exchanges to cut their charges.
They intend to create a system "within months", before a new EU directive on trading in financial products comes into force next November.
They believe they are paying too much to the London Stock Exchange (LSE) and other European markets to trade shares.
"The cost of trading in the US is 80% lower than in Europe," said a banker.
The new business will be owned by US firms Citigroup, Morgan Stanley, Goldman Sachs and Merrill Lynch, Swiss banks UBS and Credit Suisse, and Germany's Deutsche Bank.
Secret meetings
They have been meeting in secret for months to plan their new market, always under the scrutiny of a leading London law firm.
"We've always had lawyers present, so that no-one could accuse us of anti-competitive collusion," added a banker.
We think the resistance of individual European countries to what we want to do is less than it has ever been
Investment banker
They believe that competition from their new system will drive down charges and also deliver keener buying and selling prices.
That would benefit the many millions of people who have savings in a pension funds or investment schemes, because it would reduce the trading costs of those funds.
The new system would almost be guaranteed vast amounts of business, because the seven banks estimate that they are responsible for 50% of all trading in leading European companies.
The value of such transactions would run to many hundreds of billions of pounds every year.
LSE threat
The initiative may be a particular concern to the LSE, which has been building its defences against an expected takeover attempt by Nasdaq, the US exchange.
Nasdaq owns 25% of the LSE and has made plain its desire to buy it outright.
The LSE's ability to remain independent would be undermined if it were perceived to be weakened by the investment banks' determination to compete with it.
LSE headquarters
The London Stock Exchange could find its business under threat
The banks are partly motivated by the coming into effect of the new Markets in Financial Instruments Directive (mifid).
This directive actively encourages the creation of competitors to the domestic exchanges, which have effectively been monopolies since their creation.
"We think the political climate is right, that the resistance of individual European countries to what we want to do is less than it has ever been," said one leading investment banker familiar with the plan.
Cost frustration
Another factor is that the investment banks believe they have been paying too much to the LSE.
They have seen business on the exchange surge over the past two years and they feel that the LSE has not cut its charges sufficiently to take account of all the extra business they are winning.
"We've seen business at the exchange go up and up, and its share price go up and up," a banker said.
"And we've thought to ourselves - we're paying for that. That's our money going to the LSE".
The new trading system will be a competitive threat to the LSE, Germany's Deutsche Boerse and to Euronext, the Franco-Dutch stock market business.
There have been attempts in the past to create new exchanges and trading systems, but none of them have succeeded.
But the banks believe theirs will take off, in part because the pressure for lower charges has intensified following the explosive growth in share trading by hedge funds.
The banks are currently refusing to quantify the costs of the new system and some may see their plans as simply an extreme way to force European exchanges to cut their charges.
Leaders cling to trade talk hopes
The US and the EU have blamed each other for the deadlock in world trade talks as leaders struggled to find a way to revive the stalled negotiations.
World Trade Organization head Pascal Lamy rejected the idea that the talks had collapsed on Monday and insisted they were merely in "suspension".
EU trade commissioner Peter Mandelson said he would "push hard" to restart the Doha Round of negotiations.
But the US accused the EU of "false and misleading" efforts to divert blame.
After five years of talks, disagreement over agricultural subsidies and tariffs caused the Doha talks to be suspended in Geneva.
Brussels blamed US inflexibility, while the US said Europe failed to match its promises in opening up its markets.
'Time out'
"If the consequences are clear to them...then I think that the American, European and Japanese negotiators could return, with positions a bit more compatible," said Mr Lamy.
Speaking on French radio station France-Inter, Mr Lamy drew a parallel with sport, saying: "It is like in basketball, a time out."
Developing countries would be the worst hit if trade talks failed, said Mr Lamy.
But he added that European consumers would also be negatively affected, because prices would remain higher than necessary.
Blame game
For his part, Mr Mandelson blamed the US, saying it had shown "no flexibility" on the issue of domestic subsidies for agriculture.
Washington hit back at accusations that it was not willing to negotiate and said that such criticism "could not stand uncorrected".
US negotiators accused the EU of backsliding on its agricultural liberalisation proposals by introducing further loopholes, "while at the same time insisting on the right to lavish more than twice as much trade-distorting subsidies on its farmers" as the US.
Leaders in South Korea and India expressed regret about the collapse of the talks, and said that they would now put more emphasis on negotiating bilateral trade deals.
Indian trade minister Kamal Nath said he was considering free trade deals with the EU and Japan.
Regional deals
Mr Mandelson said he was planning a "new agenda" to discuss more open trade with China and other developing economies in October. However, there are as yet no plans to meet with other trading partners before then.
Although disagreement persists in areas including trade in services, Mr Mandelson said it should be possible to reach consensus on aid and trade for the poorest developing countries.
However, Mr Lamy has said the Doha round, billed as the "development round", will certainly not be concluded this year.
Pressure to reach a deal has been mounting, as US President George W Bush's special "fast-track" authority to negotiate trade deals expires next year.
After 30 June 2007, Trade Promotion Authority will expire, giving the US Congress the right once again to change such agreements.
World Trade Organization head Pascal Lamy rejected the idea that the talks had collapsed on Monday and insisted they were merely in "suspension".
EU trade commissioner Peter Mandelson said he would "push hard" to restart the Doha Round of negotiations.
But the US accused the EU of "false and misleading" efforts to divert blame.
After five years of talks, disagreement over agricultural subsidies and tariffs caused the Doha talks to be suspended in Geneva.
Brussels blamed US inflexibility, while the US said Europe failed to match its promises in opening up its markets.
'Time out'
"If the consequences are clear to them...then I think that the American, European and Japanese negotiators could return, with positions a bit more compatible," said Mr Lamy.
Speaking on French radio station France-Inter, Mr Lamy drew a parallel with sport, saying: "It is like in basketball, a time out."
Developing countries would be the worst hit if trade talks failed, said Mr Lamy.
But he added that European consumers would also be negatively affected, because prices would remain higher than necessary.
Blame game
For his part, Mr Mandelson blamed the US, saying it had shown "no flexibility" on the issue of domestic subsidies for agriculture.
Washington hit back at accusations that it was not willing to negotiate and said that such criticism "could not stand uncorrected".
US negotiators accused the EU of backsliding on its agricultural liberalisation proposals by introducing further loopholes, "while at the same time insisting on the right to lavish more than twice as much trade-distorting subsidies on its farmers" as the US.
Leaders in South Korea and India expressed regret about the collapse of the talks, and said that they would now put more emphasis on negotiating bilateral trade deals.
Indian trade minister Kamal Nath said he was considering free trade deals with the EU and Japan.
Regional deals
Mr Mandelson said he was planning a "new agenda" to discuss more open trade with China and other developing economies in October. However, there are as yet no plans to meet with other trading partners before then.
Although disagreement persists in areas including trade in services, Mr Mandelson said it should be possible to reach consensus on aid and trade for the poorest developing countries.
However, Mr Lamy has said the Doha round, billed as the "development round", will certainly not be concluded this year.
Pressure to reach a deal has been mounting, as US President George W Bush's special "fast-track" authority to negotiate trade deals expires next year.
After 30 June 2007, Trade Promotion Authority will expire, giving the US Congress the right once again to change such agreements.
Wednesday, July 9, 2008
Reliance, MTN Extend Merger Talks
Reliance Communications of India and MTN of South Africa have extended their period of exclusive negotiations to July 21 in their bid to merge the two telecommunications companies.
Reliance Communications announced May 26 that it had entered into exclusive negotiations with MTN for a period of 45 days for a potential combination of their businesses. The exclusivity of the negotiations meant that MTN would not negotiate a merger with any other company during this period.
The merger talks came under fire from Reliance Industries, a rival company, which said that it had the right of first refusal to the disposal of the controlling stake held in Reliance Communications.
Backed by the Ambani family, Reliance Communications and some other related companies came under Anil Ambani, after he and his brother Mukesh Ambani divided the business empire built by their father. Mukesh Ambani is the chairman and managing director of Reliance Industries.
The dispute over the proposed merger with MTN came to a head Monday, with Reliance Industries threatening legal action.
Anil Ambani had planned to swap his controlling stake in Reliance Communications with MTN in return for a significant stake, which would still leave him in control of the merged entity, according to sources close to the situation.
With Reliance Industries threatening to challenge in court any plan involving transfer of the controlling equity in Reliance Communications, Anil Ambani will have to look at restructuring the deal in a manner that will not disturb his controlling stake in Reliance Communications. The extension of the negotiation period between MTN and Reliance Communications may also be an occasion for winding down the talks, before finally abandoning the merger plan some sources said.
Earlier merger talks between MTN and another Indian telecommunications company, Bharti Airtel, broke down after disagreement on the structuring of the merger. MTN had insisted that after the merger, Bharti Airtel should be a subsidiary company of MTN. Key shareholders in Bharti Airtel like the Bharti family and Singtel would in return hold a majority stake in MTN, Bharti Airtel said in May.
Reliance Communications announced May 26 that it had entered into exclusive negotiations with MTN for a period of 45 days for a potential combination of their businesses. The exclusivity of the negotiations meant that MTN would not negotiate a merger with any other company during this period.
The merger talks came under fire from Reliance Industries, a rival company, which said that it had the right of first refusal to the disposal of the controlling stake held in Reliance Communications.
Backed by the Ambani family, Reliance Communications and some other related companies came under Anil Ambani, after he and his brother Mukesh Ambani divided the business empire built by their father. Mukesh Ambani is the chairman and managing director of Reliance Industries.
The dispute over the proposed merger with MTN came to a head Monday, with Reliance Industries threatening legal action.
Anil Ambani had planned to swap his controlling stake in Reliance Communications with MTN in return for a significant stake, which would still leave him in control of the merged entity, according to sources close to the situation.
With Reliance Industries threatening to challenge in court any plan involving transfer of the controlling equity in Reliance Communications, Anil Ambani will have to look at restructuring the deal in a manner that will not disturb his controlling stake in Reliance Communications. The extension of the negotiation period between MTN and Reliance Communications may also be an occasion for winding down the talks, before finally abandoning the merger plan some sources said.
Earlier merger talks between MTN and another Indian telecommunications company, Bharti Airtel, broke down after disagreement on the structuring of the merger. MTN had insisted that after the merger, Bharti Airtel should be a subsidiary company of MTN. Key shareholders in Bharti Airtel like the Bharti family and Singtel would in return hold a majority stake in MTN, Bharti Airtel said in May.
Bush Is Said to Have No Plan if GOP Loses
Some Republican strategists are increasingly upset with what they consider the overconfidence of President Bush and his senior advisers about the midterm elections November 7–a concern aggravated by the president's news conference this week.
"They aren't even planning for if they lose," says a GOP insider who informally counsels the West Wing. If Democrats win control of the House, as many analysts expect, Republicans predict that Bush's final two years in office will be marked by multiple congressional investigations and gridlock.
"The Bush White House has had no relationship with Congress," said a Bush ally. "Beyond the Democrats, wait till they see how the Republicans–the ones that survive–treat them if they lose next month." GOP insiders are upset by Bush's seeming inability to come up with new ideas or fresh approaches. There is even a heightened sensitivity to the way Bush talks about advisers who served his father.
At the president's news conference on Wednesday, allies of his father complained that the president seemed dismissive of former Secretary of State James Baker, who remains close to his dad and is cochairman of a bipartisan panel studying the war in Iraq.
"I think it's good to have some of our elder statesmen–I hate to call Baker an elder statesman–but to go over there and take a look, and to come back and make recommendations," Bush said. Baker fans felt this made the former secretary seem part of a bygone era. There is also considerable criticism of Bush for making little or no news in his 63-minute encounter with the press.
"He had nothing to say at the press conference," says a prominent GOP insider. "My question is, why call it?"
"They aren't even planning for if they lose," says a GOP insider who informally counsels the West Wing. If Democrats win control of the House, as many analysts expect, Republicans predict that Bush's final two years in office will be marked by multiple congressional investigations and gridlock.
"The Bush White House has had no relationship with Congress," said a Bush ally. "Beyond the Democrats, wait till they see how the Republicans–the ones that survive–treat them if they lose next month." GOP insiders are upset by Bush's seeming inability to come up with new ideas or fresh approaches. There is even a heightened sensitivity to the way Bush talks about advisers who served his father.
At the president's news conference on Wednesday, allies of his father complained that the president seemed dismissive of former Secretary of State James Baker, who remains close to his dad and is cochairman of a bipartisan panel studying the war in Iraq.
"I think it's good to have some of our elder statesmen–I hate to call Baker an elder statesman–but to go over there and take a look, and to come back and make recommendations," Bush said. Baker fans felt this made the former secretary seem part of a bygone era. There is also considerable criticism of Bush for making little or no news in his 63-minute encounter with the press.
"He had nothing to say at the press conference," says a prominent GOP insider. "My question is, why call it?"
Wednesday, July 2, 2008
Oil Market is Changing - IMF
The International Monetary Fund has published its twice yearly assessment of the world economic outlook.
That means it is the season for worrying about oil prices again.
Of course it is not just the IMF that frets about oil.
But it has been a concern in several of the Fund's global economic health checks in recent years.
So far, the oil price has not done serious economic damage.
'Economic fallout'
The global economy is indeed growing more slowly that last year, and the IMF does hold the oil price partly responsible for what it calls a 'soft patch'.
Consumers and business are spending more on filling their cars and lorries, and on heating their homes, offices and factories.
In spite of that, the IMF's forecast is for pretty robust growth - 4.3% this year and next for the world.
This does not look like the 1970s or early 1980s, when sharp rises in oil prices were followed by recessions.
But there was a warning from the IMF's chief economist Raghuvan Rajan, that the oil market may now be changing in a way that increases the risk of economic fallout.
The main factor driving the oil price higher so far has been strong economic growth.
The US and China for example have needed increasing amounts of energy to fuel their expanding economies. Strong demand for oil has driven prices higher.
'Different world'
Increasingly, though Mr Rajan says "the demand driven price increase is giving way to supply side effects".
He referred to the disruption to oil supplies caused by hurricane Katrina in the southern US and the possibility of further damage from hurricane Rita.
We live in a different world, he says.
There is not much spare capacity in the industry - among crude oil producers and among refiners who turn crude into products like petrol or aviation fuel that people can use.
It means that Mr Rajan is concerned that the oil price "might not have the same benign effect" that it has had up to now.
The oil crises of the 1970s and 1980s were caused by supply disruptions - following political developments and conflict in the Middle-East.
Mr Rajan sees us in a world where supply disruptions are again possible just because there is so little slack in the industry.
He is not predicting a repeat of those earlier crises. But he is clearly keeping a wary eye on the oil market.
That means it is the season for worrying about oil prices again.
Of course it is not just the IMF that frets about oil.
But it has been a concern in several of the Fund's global economic health checks in recent years.
So far, the oil price has not done serious economic damage.
'Economic fallout'
The global economy is indeed growing more slowly that last year, and the IMF does hold the oil price partly responsible for what it calls a 'soft patch'.
Consumers and business are spending more on filling their cars and lorries, and on heating their homes, offices and factories.
In spite of that, the IMF's forecast is for pretty robust growth - 4.3% this year and next for the world.
This does not look like the 1970s or early 1980s, when sharp rises in oil prices were followed by recessions.
But there was a warning from the IMF's chief economist Raghuvan Rajan, that the oil market may now be changing in a way that increases the risk of economic fallout.
The main factor driving the oil price higher so far has been strong economic growth.
The US and China for example have needed increasing amounts of energy to fuel their expanding economies. Strong demand for oil has driven prices higher.
'Different world'
Increasingly, though Mr Rajan says "the demand driven price increase is giving way to supply side effects".
He referred to the disruption to oil supplies caused by hurricane Katrina in the southern US and the possibility of further damage from hurricane Rita.
We live in a different world, he says.
There is not much spare capacity in the industry - among crude oil producers and among refiners who turn crude into products like petrol or aviation fuel that people can use.
It means that Mr Rajan is concerned that the oil price "might not have the same benign effect" that it has had up to now.
The oil crises of the 1970s and 1980s were caused by supply disruptions - following political developments and conflict in the Middle-East.
Mr Rajan sees us in a world where supply disruptions are again possible just because there is so little slack in the industry.
He is not predicting a repeat of those earlier crises. But he is clearly keeping a wary eye on the oil market.
U.S. Stocks Opens Highers Mostly
Stocks rose slightly in early trading ahead of a report on factory orders that could give another glimpse of how the U.S. economy is faring.
The Commerce Department is expected to report that factory orders slowed in May due to shrinking demand. The report is expected to show that orders rose by 0.6 percent, according to a consensus of Wall Street economists surveyed by Thomson Financial.
The concern in the market is that slowing orders will provide further evidence that higher energy prices are eroding consumer demand for discretionary items _ everything from big screen televisions to clothing. Consumer spending accounts for more than two-thirds of the U.S. economy.
Oil ticked higher. A barrel of light sweet crude rose 9 cents to $141.06 in premarket trading on the New York Mercantile Exchange amid concerns about tight supply and tensions in the Middle East.
The Energy Department releases it weekly report on oil and fuel inventories later Wednesday morning; the report generally causes some volatility in oil trading.
In the first hour of trading, the Dow Jones industrial average rose 20.27, or 0.18 percent, to 11,402.53.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 5.09, or 0.40 percent, to 1,290.00, and the Nasdaq composite index rose 7.17, or 0.31 percent, to 2,312.14.
The Commerce Department is expected to report that factory orders slowed in May due to shrinking demand. The report is expected to show that orders rose by 0.6 percent, according to a consensus of Wall Street economists surveyed by Thomson Financial.
The concern in the market is that slowing orders will provide further evidence that higher energy prices are eroding consumer demand for discretionary items _ everything from big screen televisions to clothing. Consumer spending accounts for more than two-thirds of the U.S. economy.
Oil ticked higher. A barrel of light sweet crude rose 9 cents to $141.06 in premarket trading on the New York Mercantile Exchange amid concerns about tight supply and tensions in the Middle East.
The Energy Department releases it weekly report on oil and fuel inventories later Wednesday morning; the report generally causes some volatility in oil trading.
In the first hour of trading, the Dow Jones industrial average rose 20.27, or 0.18 percent, to 11,402.53.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 5.09, or 0.40 percent, to 1,290.00, and the Nasdaq composite index rose 7.17, or 0.31 percent, to 2,312.14.
Share Market Remains
The Karachi share market remained lacklustre during the week ended on June 14, 2008 mainly due to uncertainty on political front in the country, the lawyers long march, and rumours related to negative budgetary measures, as a result of which the KSE-100 index lost 193.00 points to close at 12,941.56 points level from 13,134.56 points of previous week.
The KSE-30 index also declined by 210.01 points at 15,239.55 points against 15,449.56 points of previous week.
The market witnessed dull trading activity and the average daily volume of ready market declined by 28 percent to a 63-week low of 125.987 million shares as compared to 175.750 million a week earlier.
The average daily turnover of futures market declined to 42.452 million shares against 45.554 million shares. Market capitalisation declined by Rs 58 billion to Rs 3.988 trillion from Rs 4.046 trillion.
The market started on a positive note on Monday. However, it failed to continue its momentum due to uncertainty among investors over federal budget, and the KSE-100 index witnessed a decline of 226.33 points to close at 12,908.23 points. The KSE-30 index lost 419.23 points and settled at 15,030.33 points.
On Tuesday, the market remained under heavy selling pressure due to uncertainty regarding budget and judges issue and reports on declining GDP growth and the KSE-100 index witnessed a decline of 220.83 points to hit 12,687.40 points intra-day low. However, late buying, mainly in banking, E&P and cement sector stocks, supported the index to reduce its losses, and the KSE-100 index closed at 12,878.04 points, down 30.19 points. The KSE-30 index, however, managed to close in positive at 15,035.74 points, up by 5.41 points.
On Wednesday, the market took an upward trend due to buying on attractive levels, and the KSE-100 index recovered 138.34 points to close at 13,016.38 points. The KSE-30 index increased by 210.41 points and settled at 15,246.15 points.
On Thursday, the market opened on a positive note, welcoming the budget. However, selling pressure in banking sector forced its momentum and the market slipped into the negative zone. After witnessing a volatile session the KSE-100 index closed at 13,025.64 points level, up by 9.26 points. The KSE-30 index gained 52.88 points and settled at 15,299.03 points.
On Friday, selling pressure continued due to lawyers long march and political uncertainly and the KSE-100 index declined by 84.08 points to close at 12,941.56 points. The KSE-30 index lost 59.48 points and settled at 15,239.55 points.
Umer Ayaz, analyst at JS Global Capital, said that the week started off with a dull note and weak investor confidence, mainly due to lack of clarity on the political scene and long march announced by the lawyer community. Moreover, rumours related to negative budgetary measures such as cut in OMC margins, reduction in deemed duty of refineries, increase in corporate tax rate for banks and hike in NSS rates kept investors on sideline.
Higher oil prices in the international market and neutral budgetary impact kept some investors interest in the E&P sector, which gained 0.9 percent during the week. Similarly, fertiliser sector increased by 0.5 percent on the back of expectations regarding increase in government focus towards agriculture in budget FY09. On the contrary, banking sector remained under pressure due to rumours of increase in corporate tax rate on banks. Though the tax rate remained intact in the budget, increase in NSS rates and changes in tax treatment of NPL provisioning were viewed as negative measures for the banking sector.
According to latest data issued by National Clearing Company of Pakistan Limited (NCCPL), net foreign selling stood at $24.2 million during the week. On year to date basis, cumulative selling in 2008 to date stood at $176.4 million.
Saad Arshad at Invest Capital & Securities said that the index fell by 1.5 percent as the FY09 budget failed to impress market participants. On the positive side of the budget, a higher than expected fertiliser subsidy, coupled with maintenance of status quo in the oil and gas sector, provided some relief. However, the rise in NSS rates by 200bps did not auger well for the index as a higher risk-free return would reduce the appeal of relatively riskier securities. This was reflected in the falling volumes during the week, as the investors interest in the market remained lack lustre. Business Recorder, 2008
The KSE-30 index also declined by 210.01 points at 15,239.55 points against 15,449.56 points of previous week.
The market witnessed dull trading activity and the average daily volume of ready market declined by 28 percent to a 63-week low of 125.987 million shares as compared to 175.750 million a week earlier.
The average daily turnover of futures market declined to 42.452 million shares against 45.554 million shares. Market capitalisation declined by Rs 58 billion to Rs 3.988 trillion from Rs 4.046 trillion.
The market started on a positive note on Monday. However, it failed to continue its momentum due to uncertainty among investors over federal budget, and the KSE-100 index witnessed a decline of 226.33 points to close at 12,908.23 points. The KSE-30 index lost 419.23 points and settled at 15,030.33 points.
On Tuesday, the market remained under heavy selling pressure due to uncertainty regarding budget and judges issue and reports on declining GDP growth and the KSE-100 index witnessed a decline of 220.83 points to hit 12,687.40 points intra-day low. However, late buying, mainly in banking, E&P and cement sector stocks, supported the index to reduce its losses, and the KSE-100 index closed at 12,878.04 points, down 30.19 points. The KSE-30 index, however, managed to close in positive at 15,035.74 points, up by 5.41 points.
On Wednesday, the market took an upward trend due to buying on attractive levels, and the KSE-100 index recovered 138.34 points to close at 13,016.38 points. The KSE-30 index increased by 210.41 points and settled at 15,246.15 points.
On Thursday, the market opened on a positive note, welcoming the budget. However, selling pressure in banking sector forced its momentum and the market slipped into the negative zone. After witnessing a volatile session the KSE-100 index closed at 13,025.64 points level, up by 9.26 points. The KSE-30 index gained 52.88 points and settled at 15,299.03 points.
On Friday, selling pressure continued due to lawyers long march and political uncertainly and the KSE-100 index declined by 84.08 points to close at 12,941.56 points. The KSE-30 index lost 59.48 points and settled at 15,239.55 points.
Umer Ayaz, analyst at JS Global Capital, said that the week started off with a dull note and weak investor confidence, mainly due to lack of clarity on the political scene and long march announced by the lawyer community. Moreover, rumours related to negative budgetary measures such as cut in OMC margins, reduction in deemed duty of refineries, increase in corporate tax rate for banks and hike in NSS rates kept investors on sideline.
Higher oil prices in the international market and neutral budgetary impact kept some investors interest in the E&P sector, which gained 0.9 percent during the week. Similarly, fertiliser sector increased by 0.5 percent on the back of expectations regarding increase in government focus towards agriculture in budget FY09. On the contrary, banking sector remained under pressure due to rumours of increase in corporate tax rate on banks. Though the tax rate remained intact in the budget, increase in NSS rates and changes in tax treatment of NPL provisioning were viewed as negative measures for the banking sector.
According to latest data issued by National Clearing Company of Pakistan Limited (NCCPL), net foreign selling stood at $24.2 million during the week. On year to date basis, cumulative selling in 2008 to date stood at $176.4 million.
Saad Arshad at Invest Capital & Securities said that the index fell by 1.5 percent as the FY09 budget failed to impress market participants. On the positive side of the budget, a higher than expected fertiliser subsidy, coupled with maintenance of status quo in the oil and gas sector, provided some relief. However, the rise in NSS rates by 200bps did not auger well for the index as a higher risk-free return would reduce the appeal of relatively riskier securities. This was reflected in the falling volumes during the week, as the investors interest in the market remained lack lustre. Business Recorder, 2008
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