January 26, 2011 2011 issue 2

On Track… Really ?
Many companies and investors have embraced the improving economic data and positioned accordingly, although there is an underlying concern regarding a long list of
issues, including the job outlook, the European sovereign crisis, runaway commodity prices, awkward exchange rate regimes, the ungainly growth in several emerging
economies, and the overall fiscal position of the U.S. or even muni crisis. Imbalances in the growth outlook are plentiful, yet markets continue to dismiss these concerns,
focusing better on the massive liquidity still injected into the markets, especially by the Fed. Refinancing has become a boon for many companies, especially the larger
firms. As far as business planning, however, there’s plenty of evidence of caution. Firms in most major economies see slow long term growth and uncertainty over
government budget and regulatory policies; they continue to cut costs and are proceeding cautiously in the advanced economies. Many continue to face headwinds from
high unemployment, cautious consumer spending, constrained credit and growing inflation across a variety of input costs and end products. But this only exacerbates
the sluggish growth trajectory. By sharp contrast, in many emerging markets, it's as if the Great Recession never happened or they have taken advantage of it. In China,
annual purchases of cars and trucks have soared from five million in 2005 to more than 18 million in 2010. In the U.S. and Europe, sales are way off pre‐crisis peaks, and in
the U.S. itit is doubtful that such peaks can be revisited anytime soon… Just consider that General Motors Co. sold more cars in China last year than it sold in the U.S.
Money has been pouring into the hot emerging economies, boosting inflationary pressures that policy makers are having trouble containing. Currency and commodity
markets are askew. Policy makers from Brazil to Taiwan are intervening directly in foreign exchange markets to hold down their strengthening currencies. The
International Monetary Fund estimates that emerging markets could see an annual economic growth rate averaging more than 6.0% in 2011 and 2012, while the world's
advanced economies will struggle to grow at rates under half of that… While enjoying the fruits of such rapid growth, developing countries face risks from this period of
unbalanced growth. One threat is overconfidence, a key ingredient in the technology and housing bubbles that plagued the global economy during the past decade and
in the financial excesses in Asia in the 1990s. Money flows and asset prices reflect such confidence. Second, policy makers in the fast‐growing emerging world are old‐
hands at modulating policy. Many are having a hard time stemming such asset price increases, or fermenting inflationary pressures.

Japan, the third‐largest economy in

the world after the United States
and China, was downgraded by a
leading credit ratings agency on
Thursday, in a sharp reminder of the
seemingly intractable debt levels
that are plaguing many of the
world’s developed, and often slow‐
growing, economies.

Many firms continue cost‐cutting Muni Bond funds are gushing ‐

net withdrawals climb… IMF Raises 2011 Global Growth Outlook
But Instability Threatens Recovery…
Gold Falls to Two‐Month Low as Wealth‐Protection Demand, ETP Assets Drop The uneven global recovery continues apace but sovereign
The latest gain in existing home
sales owes, in large part, to a pickup debt and financial sector risks, particularly in Europe, could
in sales of distressed properties. threaten global stability, the International Monetary Fund
US home building stuck near 50 year lows... said Tuesday.

How Much Have the Central Banks Distorted the Markets?

The Fed has been the prime agent of stimulus for both the economy
and the markets
Emerging Mkt Borrowers Tap U.S. in Issuance Surge
Borrowers from China to Brazil to Nigeria are boosting dollar-
Policy makers are working
bond sales, taking advantage of investor demand for assets from to find a way to let states
the fastest-growing economies amid growing concern that U.S. declare bankruptcy and get
junk debt is overpriced. Nigeria is offering $500 million of 10- out from under debts
ABRAHAM GULKOWITZ year debt in its first international bond sale. Petroleo Brasileiro including the pensions they
SA raised $6 billion yesterday in Brazil’s largest corporate debt promised public workers.
[email protected] offering.Emerging-market borrowers are poised to raise at least
917-402-9039 $13.9 billion in the U.S. corporate bond market this month,
Potholes Gape From Los Angeles to
New York as US Stimulus Fades
compared with the record $19 billion in October. . .
January 26, 2011 The PunchLine...

In This Issue

• On Track … Really? • Moving Off the Bottom… (pg 7)

Many companies and investors have embraced the improving economic data and
positioned accordingly, although there is an underlying concern regarding a long • You Can’t Handle the Truth… (pg 8)
list of issues, including the job outlook, the European sovereign crisis, runaway
commodity prices, awkward exchange rate regimes, the ungainly growth in • Households?
several emerging economies, and the overall fiscal position of the U.S. or even Numerous questions for a once free-spending sector whose housing and
muni crisis. Imbalances in the growth outlook are plentiful, yet markets continue mortgage finance machinery have not just collapsed but are severely
to dismiss these concerns, focusing better on the massive liquidity still injected damaged…The previous boom cannot and should not be recreated… (pg 9)
into the markets, especially by the Fed. Refinancing has become a boon for many
companies, especially the larger firms. As far as business planning, however, • Credit Concerns (pg 10)
there’s plenty of evidence of caution. Firms in most major economies see slow
long term growth and uncertainty over government budget and regulatory policies; • US. Job Growth (pg 11)
they continue to cut costs and are proceeding cautiously in the advanced
economies. Many continue to face headwinds from high unemployment, cautious • Complacency in Europe… (pg 12)
consumer spending, constrained credit and growing inflation across a variety of
input costs and end products. But this only exacerbates the sluggish growth • The New Geography of Business (pg 13)
trajectory. By sharp contrast, in many emerging markets, it's as if the Great
Recession never happened or they have taken advantage of it. In China, annual
• The DNA of Business… (pg 14)
purchases of cars and trucks have soared from five million in 2005 to more than
18 million in 2010. In the U.S. and Europe, sales are way off pre-crisis peaks, and
• Media Clips (pg 15)
in the U.S. itit is doubtful that such peaks can be revisited anytime soon… Just
consider that General Motors Co. sold more cars in China last year than it sold in
• Pumping Iron (pg 16)
the U.S. Money has been pouring into the hot emerging economies, boosting • Real Estate and Construction (pg 17)
inflationary pressures that policy makers are having trouble containing. Currency
and commodity markets are askew. Policy makers from Brazil to Taiwan are • Will Life Ever be the Same? (pg 18)
intervening directly in foreign exchange markets to hold down their strengthening
currencies. The International Monetary Fund estimates that emerging markets
could see an annual economic growth rate averaging more than 6.0% in 2011
and 2012, while the world's advanced economies will struggle to grow at rates
under half of that… While enjoying the fruits of such rapid growth, developing
countries face risks from this period of unbalanced growth. One threat is
overconfidence, a key ingredient in the technology and housing bubbles that
plagued the global economy during the past decade and in the financial excesses
in Asia in the 1990s. Money flows and asset prices reflect such confidence.
Second, policy makers in the fast-growing emerging world are old-hands at
modulating policy. Many are having a hard time stemming such asset price
increases, or fermenting inflationary pressures. (pg 1)
• In This Issue (pg 2)

• The Return to Normal… (pg 3)

• Dimensions of Risk… (pg 4)
• Trust Me on This… (pg 5)
• Engines…
Despite the many signals that the recession ended in 2009, there will be ongoing
repercussions from the historic bust, and we worry about the likely contours of the
recovery path. And let’s not forget that it’s clearly an international affair… (pg 6)

Contact information:

Abe Gulkowitz
phone: 917-402-9039 email: [email protected]

Headlines and data appearing in The Punch Line came from widely available publications including
national and international newspapers, trade journals, economic and industrial bulletins and news websites.

2
January 26, 2011 The PunchLine...

The Return to Normal !

US Home Prices Remain Weak… Moreover, on the aggregate

measure of the Case‐Shiller price tier index, prices have hit new cycle
lows at the low‐end and middle parts of the market. The recent price
falls have been sharpest at the low‐end of the market.

THE BIG EASY… Carlyle Group and KKR & Co. are getting
leveraged loans for buyouts at terms similar to those before the
credit crisis as investors plow record amounts into funds that
buy the debt, driving prices to a three-year high. The private-
equity firms are obtaining so-called covenant lite loans, which
lack typical protections for creditors, to back their leveraged
buyouts of CommScope Inc. and Del Monte Foods Co.,
according to people familiar with the deals.

HY within a Striking Distance to Yield Record…

The ML HY bond index currently stands at 7.14% on a yield
to worst basis, which puts it just 20 bps away from its all
time record of 6.94%, registered in December 2004.

Uneven Global Growth Bedevils CEOs

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January 26, 2011 The PunchLine...

Dimensions of Risk
Distortions, Distortions, Distortions
GLOBAL INSTABILITY… Is China a bubble at risk of bursting ?
ƒ Crippled US Recovery
ƒ EU turmoil EU Crisis: Tackling contagion will be Europe's defining moment
ƒ Muni pressures
ƒ Tightening in emerging markets
ƒ Pressures in Commodity Mkts Spanish bond yields rose and
ƒ Geopolitical Issues… bank stocks fell, indicating the
blueprint Finance Minister
Elena Salgado outlined to
Trade war looming, warns Brazil
Brazil has warned that the world is on course for a full-
strengthen the financial system
blown “trade war” as it stepped up its rhetoric against failed to calm investor
exchange rate manipulation as a form of veiled export concerns.
subsidy. Guido Mantega, finance minister, said Brazil
was preparing measures to prevent further appreciation GE Results Portend Stronger Economy
of its currency, the real, and would raise the issue of
exchange rate manipulation at the World Trade
Organisation and other global bodies. The US and
China were among the worst offenders, he said. “This is
a currency war that’s turning into a trade war.”

Cocoa Prices Rise Over Ivory Coast's Export Ban

Weak Yuan as Big a Brazil Worry as Dollar

The real’s 38 percent gain against the dollar since 2008 has increased
concerns Brazilian industry is losing ground to Chinese imports, which
benefit from the yuan’s peg to the dollar.

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 January 26, 2011 The PunchLine...

Trust Me on This…

Deadly Rainfall in Brazil Adds to Fastest Inflation in 2 Years

Brazil raises interest rates to 11.25%
Brazil's central bank has raised its key interest rate to 11.25% in a bid to cool
inflation in one of the world's fastest growing economies. The rise, from 10.75%, is the
first under President Dilma Rousseff and central bank head Alexandre Tombini, both of
whom took office this month.

But the rate rises risk sucking in foreign money, adding to pressure on the already
overvalued Brazilian real. The central bank warned that the rate hike may be just the start
of a series of rises to curb inflation. Capital inflows from outside Brazil have soared as
investors flee record‐low rates in more developed countries. The strengthening of the real
has hit Brazil's manufacturers hard because their exports have become more expensive.

President Hu Jintao says inflation won't force yuan appreciation. But maybe it
should. Prices are rising at 4.6 percent, and the economy is growing at an above-
trend 12 percent. The undervalued yuan is drawing money into China, undermining
efforts to tighten.
Worries that China may hike its interest rates are driving commodities and the
companies that produce them lower in the markets…

Huge Cuts are Needed

Federal deficit will hit almost $1.5 trillion this year, a new record…
CBO – US Budget Forecasts
Source: Congressional Budget Office
Billions of U.S. dollars unless otherwise noted
2011 2012
---------------------------------------
Receipts 2228.0 2555.0
Outlays 3708.0 3655.0
Deficit -1480.0 -1100.0
---------------------------------------
As % of GDP: -9.8 -7.0
Receipts (pct of GDP 14.8 16.3
Outlays (pct of GDP) 24.7 23.3

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 January 26, 2011 The PunchLine...

Engine Drivers…
Asian exports that helped power the world recovery US growth still reliant on policy stimulus Year ahead looms as toughest yet
last year are poised to grow more slowly as the for US state and local budgets…
region’s manufacturing rebound eases and U.S. ƒ US Public Pensions Face $2,500 Billion
unemployment restrains consumption after a post‐ Pension Shortfalls
Germany leads way… The German economy rebounded last ƒ The Good News ‐ the benefits of default
recession spending spree. year from its worst slump since the Second World War thanks to are relatively low for local governments
significant contributions from both domestic demand and from ƒ NY Gov Cuomo Weighs More Than
foreign trade, the Federal Statistical Office reported. In real terms, 10,000 Layoffs… Governor Andrew
China Working Hard to Slow… Real estate construction
GDP grew by 3.6% last year, the FSO estimated. After adjusting for Cuomo is threatening the largest layoffs in
spending to weaken and many stimulus projects likely to
the number of workdays, that the increase was 3.5%. The full-year New York state history since the early
reach completion
estimates suggest that growth remained robust at the end of last year. 1990s. The 10,000 to 12,000 proposed
layoffs would amount to 5% of the state’s
work force.
ƒ Other proposed cuts include cutting
billions of dollars in aid to public
schools, freezing overall spending, and
eliminating $2.1 billion from the state’s
Medicaid budget.

Is everyone going tech IPO crazy again?

And volatility has died…

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January 26, 2011 The PunchLine...

Moving off the Bottom…

Although US GDP growth has now been positive for

6 successive quarters, unemployment has remain
stubbornly stuck at amazingly high levels…

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 January 26, 2011 The PunchLine...

YouCan’t Handle the Truth…

Let's Take the “Con” out of Economics

Aggressive Ease May Backfire Soon if Not Reversed

Philadelphia Federal Reserve Bank President Charles Plosser
warned Tuesday morning that the Fed's "aggressive"monetary
easing "may soon backfire" if the Fed does not "begin to
reverse" it. Plosser, who will be voting this year on the Fed's
policymaking Federal Open Market Committee, said that the Fed's
large‐scale asset purchase program ‐‐ or quantitative easing
(QE) ‐‐ "will need to be reconsidered" along with the Fed's
overall accommodative monetary policy stance if the recovery
quickens or "continues to gain traction."

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 January 26, 2011 The PunchLine...

Households – Brave New World

Housing starts declined in December, ‐4.3% to an annualized

pace of 529,000 units from 553,000 in November (previously
555,000), which is a disappointment.

Big Increase in Existing Home Sales… An increase in

the number of foreclosed homes in December may account for some
of the drop in home prices. Foreclosed homes are frequently sold at
significantly lower prices than homes for comparable non-distressed
properties. The percentage of distressed homes accounted for 36% of
the market share in December, up from 33% in November, and 32%
in December 2009.
The impressive increase in new home sales in December is mainly
due to the rush to beat the deadline of a tax credit in California.
Without that boost, new sales would have been broadly unchanged.

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January 26, 2011 The PunchLine...

Credit Matters
A strange contagion - corporates keep tightening
Europe's woes… Euro high‐grade Despite the relentless climb in SovX and senior financial spreads,
credit spreads are now wider than US corporate spread behaviour has been completely the opposite.
Spreads for many "core" corporates in Europe have continued
high‐grade spreads for the first time ever to tighten over the last few months. In fact, corporate spreads have
been negatively correlated to the iTraxx Senior Financials index
since Ireland's bail-out. This marks a radical departure from what
was observed around the times of Bear Stearns, Lehman and
Greece's bail-outs, when the correlation between corporate and
financial spreads was generally very high.

Japan has hit a “critical point”

where it risks losing investor
confidence if politicians fail to
reach agreement on how to rein in
the ballooning national debt, a
cabinet minister has warned. “We
face a dreadful dream that one day
the long-term interest rate might
rise,” Kaoru Yosano, the new
minister for economic and fiscal
policy, told the Financial Times. “So
we have to be very careful [to]
ensure the credibility of our
Business loans… Investors are directing economy and the credibility of our
record sums of cash once again to loans government.” His stark comments
highlight government determination
to introduce a sweeping reform of
the tax system that would include a
hike in the 5 per cent consumption
tax

SEC OKs asset-backed securities disclosure rules

U.S. securities regulators adopted new rules on Thursday that
aim to give investors better information before they decide to
invest in asset-backed securities, a market still struggling to
recover from the financial crisis. The two rules, required under
last year's Dodd-Frank financial reform law, are designed to
address issues that arose in the financial crisis when investors
lost money on securities backed by subprime mortgage loans.
The first rule, which was approved unanimously by the
Securities and Exchange Commission, aims to give investors a
way to review the track record of asset-backed issuers like Bank
of America. Specifically, the rules would let investors see how
often the issuers were asked to buy back assets such as those
linked to toxic mortgages because they failed to meet the
underwriting criteria laid out in the prospectus. Issuers would
also need to disclose how often they fulfilled the repurchase
requests from investors. The second rule approved by the SEC
on Thursday would require issuers of asset-backed securities to
conduct a review of the loans underlying the securities and
disclose it to investors.

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 January 26, 2011 The PunchLine...

U.S. Job Growth

TWO MEASURES OF US UNEMPLOYMENT

Dec. May June July Aug Sept Oct Nov Dec
2009 2010 2010 2010 2010 2010 2010 2010 2010
---------------------------------------------------------------
Normal 9.9 9.7 9.5 9.5 9.6 9.6 9.7 9.8 9.4%
Broad Measure U6 17.2 16.6 16.5 16.5 16.7 17.1 17.0 17.0 16.7%
---------------------------------------------------------------
U‐3 Normal Unemployment Rate ‐ The popular measure… Total unemployed, as a percent of the
civilian labor force (official unemployment rate.)
U‐6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part
time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached
to the labor force.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary
part‐time workers) was little changed over the month at 9.0 million. These individuals were working
part time because their hours had been cut back or because they were unable to find a full‐time job.
The number of workers only able to find part time jobs (or have had their hours cut for economic
reasons) declined slightly to 8.972 million in November. This has been around 9 million since August
2009 ‐ a very high level.

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January 26, 2011 The PunchLine...

Complacency in Europe?
The Portuguese economy is expected to contract this year under the weight of heavy
budget cutting before eking out a modest recovery in 2012, the Bank of Portugal said in
its most recent economic bulletin published. The central bank predicted the economy
would shrink by 1.3% this year before returning - just barely - to growth, with a rate of
0.6%, in 2012. The expected recession in 2011 would represent a swing of 2.6
percentage points in GDP from estimated 2010 growth of 1.3%.

No Plan on table to solve crisis… But while there is some

encouragement to be taken from the fact that policymakers have
started to think about more radical solutions to the region’s
fundamental problems, we are far from convinced that any of the
proposed plans would bring the crisis to a close.

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 January 26, 2011 The PunchLine...

The New Geography of Business

Chinese automobile sales to dealerships rose 32.37% GM's China sales pass US for first time in history...
to 18.06 million last year, cementing the country's
position as the world's largest market for car sales,
the official Xinhua News Agency reported Monday. Sales
Record auto output in Mexico
significantly outstripped the 13.64 million units shipped last
year, when China surpassed the U.S. as the world's largest Domestic sales remain 20 percent below 2008 levels
market for auto sales, driven by significant government An industry association says Mexico's automobile
subsidy support and sustained demand. Xinhua cited data production rose by 50 percent to a record 2.26 million
from the China Association of Automobile Manufacturers vehicles in 2010, on a 52‐percent increase in exports of cars
(CAAM) as showing that sales rose 17.9% y/y in December to and light trucks. Mexico exported 1.86 million vehicles in
1.67 million units. 2010, 1.27 million of which went to the United States. The
Mexican Automobile Industry Association calls that "a
record in the history of the automobile industry in our
country," but says expectations for 2011 "should be taken
with caution, because of uncertainty about the recovery in
our principle markets." The association said Tuesday that
sales in Mexico's domestic market recovered 8.7 percent as
compared to 2009, reaching 820,406 vehicles in 2010. But
domestic sales remain 20 percent below 2008 levels.

Latam exchanges can punch

above their weight
Linking the stock exchanges of
Japan – Budget nightmares… Colombia, Peru and Chile should
The main point of contention could be create a single bourse for a $500
whether the government goes forward bln combined economy. That's 1
with a plan to hike the consumption tax pct of world GDP, giving the
or begins the process of reigning in group the scale it needs to attract
spending. direct and portfolio investment…

Japan Households – No Confidence…

‐‐ Japan Consumer Confidence Index slides again ‐‐‐ 40.1 Vs Nov 40.4
TOKYO ‐ Japan's Consumer Confidence Survey index fell to 40.1 in December from
40.4 in November, posting the sixth consecutive monthly drop, on lingering
concerns about job security, the Cabinet Office said. Consumers continued to
believe it was not the right time to buy durable goods, also hampering a recovery in
confidence, the survey showed. Meanwhile, the growth outlook for the current fiscal
year was hiked to 3.3% from 2.1%, mainly due to revisions of past GDP statistics.

JAPAN In the BOJ’s latest Regional Economic Report, released on

January 17, economic assessments were revised downward in seven
regions due to a falloff in consumer durables demand following a
surge driven by government stimulus.

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 January 26, 2011 The PunchLine...

The DNA of Business

Workouts to Define Recovery
The future of TV EasyJet is a poor omen for airline results AMAZON.COM HIRING FOR A COMPANY WIDE
The one thing we do know is that the Travel disruption, lower non‐ticket revenue and high
fuel prices trashed full‐year profit estimates for the HOME GROCERY DELIVERY SERVICE
future of TV will be a mixture of UK low‐cost carrier. Rivals face similar pressures, Amazon.com is recruiting staff to grow its Seattle‐based AmazonTote
technologies and delivery methods, and EasyJet could make a comeback. But investors are pilot program. The free weekly scheduled home delivery service, with
which is another reason why we're usure unlikely to give its rookie management much benefit of no minimum purchase, is currently offered to Seattle customers.
how successful these approaches will the doubt.
be. The problem is that they fragment
our content and create silos, each
housed within its own application. Current challenges for food companies… how to
TiVo, Google and Microsoft's approach manage commodity hedges and how much of the rising costs
seems more sound because they each to pass through to consumers, particularly for some of the
attempt to aggregate all the sources into smaller firms…
a single universally searchable
interface. The cable companies have
expressed their hatred for this approach,
claiming it undermines their business New world of retailing…the internet… nearly half
and devalues their product. All that of the gain in core sales since the recession trough has
being said, we do think this could be a been in nonstore retailers.
great step in the right direction towards
consumer choice in both hardware and
software, but remain somewhat Smartphones and Tablet PCs: Shaking Up the IT Sector
skeptical until some of these companies
actually deliver.

Atlantic City’s casino gambling revenue fell

9.6 percent in 2010, the New Jersey seaside resort’s
second-worst annual decline as it competed with new
casinos and expanded gaming in nearby states. Betting
proceeds dropped to $3.57 billion, after 2009’s record 13
percent drop, the New Jersey Casino Control Commission
said today on its website. Annual revenue at the 11
casinos slid 9 percent from a year earlier to $2.48 billion
for slot machines and 11 percent to $1.09 billion for table
games. The second-biggest U.S. casino market after Las
Vegas has posted four straight years of declines since
peak gambling revenue of $5.2 billion in 2006 -- before
Pennsylvania and Yonkers, New York, allowed slot
machines. Since then, new casinos have opened in
Philadelphia and Bethlehem in Pennsylvania, as well as in
Delaware and Maryland, and table games have been added
in Pennsylvania and West Virginia.

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 January 26, 2011 The PunchLine...

Media Clips
Automakers to rev up ad spending in 2011
Automakers stepped on the gas when it came to advertising during
the U.S. industry's comeback last year and the spending will only
accelerate in 2011 as sales rise and companies tout their newest
vehicles. With U.S. auto sales up more than 11 percent to about
11.6 million cars and light trucks last year, and optimism running
high that sales could grow another 12 percent in 2011, consumers
can expect more car ads -- especially on TV and the Internet --
trying to lure them to dealer showrooms, top auto and media
executives said. "Over the holidays, every TV commercial break
had an ad for a car," said Brad Adgate, senior vice president of
research at ad buyer Horizon Media. "They were ubiquitous. In
Small Bookstores Struggle for
some cases, you had more than one car commercial in a pod. I was Niche in Shifting Times
staggered by it.“ The growth is even more pronounced on the Take to the Internet? Sell coffee and
regional level as local broadcast TV advertising through the first
nine months of last year surged 74 percent to almost $701 million, muffins? Independent bookstores are
according to trade association TVB. looking for the right balance as even a giant
ƒ Super Bowl Ads – The Cars Battle it Out… That is because the like Borders finds it difficult.
automotive industry could be buying the most commercial time of
any advertiser category during the game, vying with beverages and
movies for the top spot. There may be as many as nine car brands
peddling their wares during what is typically the most‐watched Commercial time in the Super Bowl has been
television program of the year, from economy makes like Chevrolet, creeping up over the past decade, culminating in
Hyundai and Kia to luxury marques like BMW and Mercedes‐Benz. almost 48 minutes' worth of ads and network
promotions during last year's game, according to
a study of Super Bowl advertising from 2001
through 2010 by Kantar Media.

Over the past few years, theater exhibitors have taken

advantage of the shift away from traditional
advertising media by selling increased amounts of ad
space prior to a film’s start.

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 January 26, 2011 The PunchLine...

Pumping Iron - Old Economy –

New Challenges
China… Even with strong growth in demand from the
world's largest car market, the rush to build new plants could
cause overcapacity and big problems for the auto industry.

Boeing: A Balance Between Cycle

Strength and 787 Challenges

Global Paper Pulp… with high shipment volumes, a substantial

boost in buying by China, lower inventory levels, and stable
prices.. . After spiking to a record high $1,020/tonne in June‐July
2010, the US price of benchmark NBSK pulp fell $60/tonne, to
$960/tonne in December 2010. The price held steady at this level
in January 2011.

Ocean container carriers face overcapacity for at least another 12 months as

the supply of new ships outpaces slowing cargo demand, an industry analyst
forecast. The global container ship fleet will expand by an average annual
rate of 8.7 percent over the next two years, with 1.2 million 20‐foot
equivalent units due to be delivered in 2011 and 1.33 million TEUs in 2012,
Paris‐based Alphaliner said. This falls short of the average annual 1.37
million TEUs of deliveries in 2006‐2008 but "the level of capacity additions
remains a key concern for the industry," Alphaliner said.

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January 26, 2011 The PunchLine...

Real Estate and Construction Outlook

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January 26, 2011 The PunchLine...

Will Life Ever Be the Same?

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