Monday, October 12, 2009

Monday morning

US stocks are up over half a percent in early trading, as stocks try to keep last week's big momentum. The S&P500 rose 4.5% last week. Among shares advancing is Intel (INTC) competitor American Micro Devices (AMD), up 4% on a UBS upgrade.

S&P analysts points out some dire news for Dubai, as they may not be able to cover debt repayments.
The sheikdom and its network of state-controlled companies amassed at least $80 billion in debt on projects like artificial islands and opulent high-rises during a multiyear building boom that helped the city-state fashion itself into the Middle East’s hub of finance, trade and tourism. About $50 billion of debt needs to be covered over the next three years, said Farouk Soussa, S.& P.’s head of Middle East government ratings. A lack of government information has left investors wondering how it all will be repaid or refinanced.

WSJ op-ed on the national debt.
During Jimmy Carter's years in the White House, Treasury yields reached 15%. The 2009 average interest rate on the debt was only 3.2%. With our mounting national debt and budget deficits, it is reasonable to assume that in the near future interest rates on new and refinanced debt could double or triple.

Another reason US stocks could continue their advance is that they're cheaper than ever for non-dollar investors.
“What you’re getting is the opportunity to buy global companies that have become cheaper because of the dollar and more competitive,” said Antony Gifford, a London-based manager at Henderson Global Investors, which oversees $87 billion. “If you can buy global secular growth at a discount because it’s dollar listed, then why wouldn’t you?”

NYTimes looks at which PE firm is cheaper, Blackstone or KKR.

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