On Tuesday in Hong Kong Christopher Wood said gold prices could surpass $3,400 an ounce in the next three years. The analyst said that the precious metal would be a safe haven for investors seeking cover from volatility in financial markets.
Quadruple in three years may be optimistic, but to be sure, prices are on the rise. Since 2005, gold has recorded a 60% gain, to $721 where it was on mid-day trading on the New York Mercantile Exchange on Wednesday.
Everybody knows China is the world's biggest factory for blue jeans, sneakers, TVs and cell phones. Soon it could be the world's biggest generator of IPOs. Chinese entrepreneurs are turning wealth made in manufacturing into new companies, and China already rivals the U.S. and Japan for spending on research and development. Those investments in R&D are leading to new companies in biotech and computer tech. A huge number of China Inc. startups are picking the Shanghai or Shenzhen markets to take their companies public. They're racing to go public to take advantage of the booming domestic market -- the main Shanghai index has tripled since 2005. Capital raised by new listings in China is set to exceed $52 billion this year, putting the mainland on track to become the world's leading center for public offerings this year, according to the Financial Times.
The popularity of local stock markets for new offerings has exchange managers in Hong Kong, London and New York nervous that they'll no longer benefit from hosting Chinese IPOs. According to Richard Sun, a partner with PwC quoted in the Financial Times article, capital raised by A-share listings in Shenzhen and Shanghai will reach Rmb400 billion ($52.6 billion) this year. That prediction is double a January forecast by PwC. The consulting firm reports that the value of Chinese A-share listings reached Rmb169 billion in the first six months of 2007. It sees an even stronger market for the second half of the year.
Can anybody get in on the deals? Not easily. Mainland A-shares are traded in renminbi and are open only to local Chinese and designated foreign institutions. Most non-Chinese investment firms are locked out of underwriting and trading local stocks. The exceptions are Goldman Sachs Group (NYSE: GS) and UBS (NYSE: UBS). Beijing has given both the go-ahead to participate in mainland IPOs. Meanwhile, Washington is lobbying China to ease restrictions.
The story has all the stuff of a steamy summer novel. A large British defense contractor pays millions to a Saudi prince, and now Washington regulators are trying to figure out if U.S. banks played a role. A BBC investigative report reveals that a Saudi prince who worked out an $80 billion arms arrangement between Britain and Saudi Arabia took secret payments for at least a decade. According to the probe, BAE Systems ADR (OTC: BAESY), one of Europe's largest arms dealers, distributed hundreds of millions of dollars to the ex-Saudi ambassador to the U.S., Prince Bandar bin Sultan. Evidently, money changed hands with the full knowledge of the U.K.'s Ministry of Defence. Neither the Prince, nor the Defense Ministry would comment on the arrangement.
Former BAE chief executive Sir Raymond Lygo told the BBC there was "nothing untoward" about the arms deal, but he had nothing to say about the payments to the Prince. Britain's Serious Fraud Office first revealed the payments. It was trying to figure out whether or not they were illegal under British law when the office's investigations were halted out of fear of angering Saudi authorities, according the the BBC. They stopped in 2006. Prince Bandar is well connected. His father is the Saudi defense minister. The Prince now runs the Saudi national security council. He served as U.S. ambassador for two decades and the payments allegedly were funneled through Washington bank accounts.
The American connection: Marketplace reports that there are two key U.S. links to this story. The U.S. Department of Justice is taking an interest in the imbroglio because if it's true that money went through American banks, the case would fall under scrutiny of U.S. authorities. What's more, there's a political connection. The Pentagon is a huge customer of BAE. If anyone can think of a better plot line than the one threading this story, send us your ideas.
BP officials at America's largest oil field -- Prudhoe Bay on Alaska's North Slope -- cut oil production by a quarter last week after they found a hole about the diameter of a pencil in a water pipe. On Sunday, after several days of round-the-clock repair work and tests to the damaged area, they restored full production. BP is in the process of replacing 16-miles of pipe after corrosion caused the North Slope's largest oil spill in August of 2006.
A detailed report in the Chicago Tribune traces problems at BP to cutbacks during the days of cheap oil in the late 1990s. Tribune chief business correspondent David Greising says that the scrimping of a decade ago has left the oil industry ill-prepared to deal with even small problems, such as pencil sized holes in pipes in the wilds of Alaska. He writes that the company's inability to handle technological challenges has forced it to delay pumping from one of its best prospects for the future -- the Thunder Horse platform on the Gulf of Mexico.
The AFL-CIO, the nation's largest labor group with 10 million members, on Tuesday made a bold move. It asked the Securities and Exchange Commission to stop the $40 billion Blackstone IPO.
The Financial Times reports that the request will stir political heat on private equity firms and threaten efforts by other buy-out groups to go public. In a letter, seen by Financial Times reporters, the union argues that Blackstone's executives are trying to evade the coverage of the Investment Company Act of 1940. The article explains that the labor attack points up new concern among union leaders and elected officials over the wealth of executives who run private equity funds in a time of increased wage inequality. They argue that private equity firms apply their generous tax status to wildly enrich an elite few while taking away jobs from millions of American workers.
Summer brings long nights, barbecues, vacations and, for some, cheap hotels. A new survey by the University of Michigan suggests that consumers with a few extra pennies to spend on trips should consider putting them into high-end hotels over bargain accommodations.
Across the board, the hotel industry dropped from last year in the University of Michigan's American Customer Satisfaction index, released Tuesday. USAToday reports that despite ambitious upgrades and new goodies at luxury chains, the hotel industry scored 71 out of 100, down from 75 last year, in the Michigan survey, which is compiled annually and based on responses from 80,000 U.S. consumers. Blame the budget and mid-priced chains -- including those lining favorite summer tour routes -- for the drop. According to the study, chains such as Days Inns Worldwide Inc., Best Western International Inc. and Red Roof Inns helped pull down the overall hotel industry.
One hotel expert suggests that poor franchisees are to blame for consumer disappointment in some cheap accommodations. Some large hotel companies performed well in the survey, thanks to investments in finer pillows, duvets, in-room technology and other amenities. Marriott International Inc. (NYSE: MAR), and Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) scored well above the industry average. Among the biggies, only Hilton Hotels Corp., (NYSE: HLT) fell in survey results from last year. There may be some good news for the hotel industry: business travelers say they're happier with customer service among hotel chains than they are with rental car operators or commercial airlines.
In the last week or so junk mail targeting Mom has piled up. There's a Costco Wholesale Corp.'s (NASDAQ: COST) magazine with a story titled Mom Inc. on the cover. Tiffany & Co. (NYSE: TIF) is selling some lovely trinkets between baby blue covers. 1-800-flowers.com, Inc.(NASDAQ: FLWS) has a catalog full of roses, chocolate and other things that "Mom wants." The local taxidermist even sent me a coupon for a deal on moose stuffing (this is Alaska) for the special day.
Is it my imagination or has the amount of junk mail increased?
It's up. In 2006 companies sent more than 114 billion direct -mail pieces. That's about 15% more than five years earlier, according to the United States Postal Service. The Postal Service and I don't see eye to eye when it comes to credit card offers, coupons and bulky catalogs. The federal agency loves direct mailers because they generate big bucks for the service. It even has a magazine, Deliver, whose mission is to help direct mailers find faster, better ways to my mailbox, and wallet. In 2006, for the first time ever, the volume of bulk mail, which is another name for direct mail, exceeded all first class.
But there is a fledging company taking on the Postal Service and the giants of direct marketing. Hollywood celebrity Matt Damon sits on its board Greendimes.com will take your name off direct mail lists, unwanted credit card solicitations, and the dozens or hundreds of catalogs that arrive yearly. It will keep tabs on direct marketers to keep you off the lists and even plant a tree for you every month, but not on your property. The cost: $36 a year.
Sounds like a good gift for Mom. It's a lot less than diamonds from Tiffany's. Or a stuffed moose.
Joe Nocera in The Trouble with Socially Responsible Investing in the International Herald Tribune explains the problem. He says ethical investment experts oversimplify the world's problems. They give investors a false sense that they're putting money into companies that consistently perform in ethical ways. They rarely do. "It allows investors to believe that their money is only being invested in the good guys, and they take foolish comfort in that belief," he writes.
To illustrate the dilemma Nocera points to the oil industry. Exxon Mobil Corp. (NYSE: XOM) -- the company that socially responsible investors love to hate -- has a strong worker safety record, but it employs executives who until recently failed to admit global warming existed. Then there's the Valdez, whose crash resulted in one of the largest human-made environmental disasters on record. Exxon still owes the state of Alaska a couple of billion dollars in punitive damages for that debacle.
Are violence and murder part of global business? Some overseas labor leaders say yes, and they're suing American companies in U.S. courts. Several lawsuits alleging violation of the revolutionary era law are awaiting trial in federal courts, according to an article in USA Today.
"The lawsuits have set up a showdown over whether boardrooms in the USA should pay big-money verdicts for crimes not prosecuted in countries where corruption and violence are often seen as a cost of doing business," writes Alan Gomez.