Retail Stores Reported December Gains

For the 2009 holiday season it appears that retailers won. Retailers kept tight control over their inventories and avoided deep discounting; consumers bought what they needed in a sales surge right before Christmas.

Retailers have reported good December sales gains, suggesting the beginnings of a sales comeback. Overall the industry turned in a 2.9% sales increase from 2008 and 75% of retailers beat analysts' estimates, the highest percentages of companies to do so since March 2007.

The holiday results are amongest some of the latest signs that the economy, while still a long way from pre-recession levels, has turned a corner.

U.S. GDP Affirms Economic Progress

The U.S. GDP had a 5.7% growth rate for the fourth quarter of 2009, reaffirming the idea that the United States is on the road to economic recovery. The 5.7% growth rate is the highest it has been in 6 years. This increase also represents 2 quarters of increase after 4 quarters of decline. Although the growth is positive, most experts believe that it will once again begin to slow down and that the 1st quarter of 2010 will experience only 2.5-3% growth and that the total for 2010 will be around 2.5%. Unfortunately, these numbers are not enough to reduce the U.S. unemployment rate but it is expected to improve over time.

Book Claims China Will Not Be Next Superpower

Joel Kotkin's, a presidential fellow at Chapman University in Orange, Calif. and an adjunct fellow with the Legatum Institute in London, new book, which is due out in February, claims that China will not overtake the United States as the world's next superpower. One of the major reasons that Kotkin believes in the United States' continued reign is due in part to the aging populations of currently powerful nations. According to Kotkin, over the next 40 years the United States will not suffer as much as its competitors from the burden of having to take care of an aging population.

In terms of the United States, Kotkin tells that the country's fertility rates remain the highest of advanced nations and that continued immigration will allow for a 100 million population increase by 2050. According to those calculations only 1/5th of the population will be over 65 by then so it will not be too hard of a problem to offset the burden of the aging population.

Approximately 1/3 of China's population, on the other hand, will be over 60 by 2050. Kotkin claims that China's lack of democracy, cultural homogeneity, historic insularity and the rapid aging of its population that will start in the 2020s will combat any global preeminence.

This could all be good news; however, although success of nations in terms of an aging population may mean that the United States will maintain global dominance I find this overall theory hard to believe. There may always be technological advances but I don't think that a 100 million person population increase will be highly beneficial to the United States as it will put a huge strain on natural resources, making disease and competition for resources more prevalent. But who is to say who is right and wrong just yet?

Spyker to Announce Purchase of Saab

Dutch carmaker Spyker is expected to announce the purchase of Saab. Spyker has been in negotiations with GM and is seen as being close to clinching the deal. Spyker is not relying on financing from the Russian Antonov family to make the bid.

China's Economy Grows 8.7% in 2009

China's economy grew 8.7% in 2009 which was ahead of the official growth target of 8% and yet less than the 9.6% growth recorded in 2008.

Calculations show that China has narrowed the trade gap to $4.909 trillion but has yet to supersede Japan's $5.126 trillion.

During the 4th quarter of 2009 China's GDP expanded 10.7% from a year earlier.

Oracle Wins EU Support of Sun Acquisition

Oracle has won the EU's unconditional approval of its bid for Sun Microsystems. The EU has determined, after Oracle offered public pledges to sooth regulatory concerns, that the deal would not be a major barrier to competition in Europe.

Although there remains the risk that third parties will challenge the EU decision the deal has already received the U.S. Department of Justice's approval. China and Russia are still left to grant approval for the deal.

Clinton Puts Internet Companies on Notice

Secretary of State Hillary Clinton has essentially put American internet companies on notice in their dealings with China. Clinton has stated that she hopes U.S. companies will follow Google's lead, putting an end to the censorship of the internet.

Although she did not outright propose regulations the stronge urgings for this type of action and her praise of the Global Network Initiative, a consortium of companies and organizations that is designed to provide guidelines for operating in countries with authoritarian governments founded by Google, Microsoft and Yahoo; tells enough of how the U.S. government may react to companies that do not comply with her urgings.

This of course leads to a dilmenia for the U.S. based companies as voluntarily adhering to Clinton's standards will require corporations to do decrease revenue, increase costs, and reduce profits. In the case of China, this could mean a lot of profits as China already has the most internet users in the world, despite the fact that only 25% of the population are online and are thus a huge source of potential growth; however, not complying with Clinton's standards could lead to less government contracting and possible future taxes.

Though I doubt that many companies will be detracted from doing work in such a large market it will be interesting to see how companies will react.

World Bank Predicts Global Economic Growth

The World Bank has released its annual economic report. The organization predicts that the global economy will grow 2.7% in 2010.

The figures suggest that China is also growing much faster than previously expected; the country is poised to overtake Japan as the second largest economy. There however is fear about the bursting of Chinese asset bubbles and the negative effects of the nation's stimulus packages.

Cyber Attacks Will Lead to More Strain

The United States and China already have a strained relationship due to trade issues, the countries' views on Taiwan and human rights; now we can add the recent cyber attacks to that list.

Secretary of State Clinton has now stated that those who carry out cyber attacks should face consequences and condemnation as "an attack on one nation's networks can be an attack on all". This statement is likely to lead to a build up of tension.

Google Postpones Cell Launch in China

Admist the claims of being cyber-spied on by the Chinese government, Google, in addition to threatening to pull out of China completely, has postponed the launch of its cell phone in China. Google has said that they feels that currently releasing the phone amid such high tension would be difficult.

Cadbury Accepts Kraft

Cadbury has accepted a deal, worth $19.5 billion, from Kraft. The deal ultimately makes Kraft the world's largest chocolate maker, as well as the second largest gum manufacturer.

After 4 months of struggle on the part of Cadbury's board, the company recommended that shareholders accept the deal that would amount to $13.78 a share.

Retail Sales Drop, Jobless Claims Up

The Commerce Department announced that retail sales dropped 0.3% in December, the first decline in retail sales in 3 months. Analysts had believed that sales were going to raise 0.5% in December after a 1.8% increase in November.

Unemployment claims also rose from 11,000 to 444,000 last week; analysts had believed that only 437,000 claims were going to be filed.

North Korea Calls for Peace Treaty

North Korea has asked to develop a peace treaty with the South and the United States in the effort to replace the ceasefire that was drawn up after the Korean War. The United States has replied by saying that in order to create this new treaty, North Korea must first resume the six-country nuclear negotiations and work on developing better human rights standards.

We will see over time if the involved countries choose to follow up on this, but knowing that North Korea is interested in developing a peace treaty is definitely a step in the right direction.

Heineken to Buy FEMSA

In a deal worth $7.9 billion Dutch brewer, Heineken, will be buying Mexico's FEMSA. In the deal Heineken will secure Dos Equis, Tecate and Sol as well as an operation with a 43% share of the Mexican beer market and 9% of the Brazilian market. Gaining such large amount of this market is incredibly useful considering the United States, Brazil and Mexico are the first, second and fouth largest beer profit pools.

FEMSA will now have a 20% share in Heineken's boardroom.

China is Largest Merchandise Exporter

Up until very recently Germany was the world's largest merchandise exporter, however, as of October 2009 China has become the largest exporter.

During the first 10 months of 2009 China exported $957 billion worth of goods while Germany exported $917 billion. It is expected that November and December's numbers will not change China's position. Numbers for all of 2009 are expected shortly.

Chinese Censorship Even More Repressive

It is already well-known that China has committed many freedom of speech violations, but apart from than the continued internet censoring measures that China has been undertaking are quite likely founded in protectionist ideas; ideas that may get the nation in trouble with the WTO.

Recently the Chinese government have either blocked access to or shut down 700 plus websites in addition to the tens of thousands of already blocked sites. Freedom of speech violations is one thing, but in blocking many of these sites including Google, YouTube and Twitter, China is damaging foreign commerce and trade. China is also preventing the use of mobile applications which is/was a $29 million industry there and should be a steadily growing industry, blocking even its own innovation.

With 300 million people using the internet in China, China has become almost irresistible to foreign tech companies, however as China only allows access to companies that they deem as being politically reliable this cuts off a lot of international business. If China doesn't change its policies and allow more businesses to penetrate its firewall, they very likely could have a WTO dispute on their hands.

Clean Tech Gets Large Share of Venture Capital

Although venture-capital funding dropped overall in 2009 the Clean Tech industry seems to be doing alright for itself. Funding for the industry may have dropped 33% from 2008 but clean tech firms received approximately 25% of venture-capital funding or a little over $5.6 billion.

In 2002 clean tech firms only received $0.9 billion.

Job Losses Slow in December

United States job loss rates slowed to its lowest point in two years this December. 84,000 jobs were lost in December, compared to 145,000 in November, which was considered to be a remarkable low. The 84,000 jobs lost did however exceed the predicted 73,000.

2009 and the Big Four

As in most industries 2009 was a tough overall year for the Big Four accounting firms of Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. The combined revenue of the four firms dropped 7% from 2008 to 2009. Deloitte lost 5%, Ernst & Young and PricewaterhouseCoopers both lost 7% and KPMG lost 11%.

There, however, was a combined revenue of $94 billion this year for the 4 firms. The Americas represented 40% of global revenues; Europe, the Middle East and Africa represented 45% and Asia Pacific represented 15%. Auditing accounted for nearly 50% of the revenues.

M&A Recap of 2009

Overall 2009 was a bad year for M&A. In 2009 private equity backed M&A totaled $133.8 billion, a 43.5% decrease from 2008. U.S. targeted M&A decreased 24% from 2008, down to $783.4 billion. Overall M&A activity generated by bankruptcy or distressed situations reached a record $320.2 billion. European M&A was down 44 per cent at $718.5 billion.

Asia, however did relatively well considering. Asian (excluding Japan) volumes climbed 9% to $493.1 billion. Japan-targeted M&A activity fell 4% to US$142.2 billion, with 92% of volume generated by domestic deals.

Chinese Steel to Face New U.S. Tariffs

First China placed tariffs on European steel, now the United States is placing tariffs on Chinese steel. The U.S. is planning on imposing duties valuing $2.8 billion on Chinese steel-pipe imports. The tariff was sent into action in order to protect American steelmakers as the U.S. International Trade Commission unanimously voted for the tariff to pass.

Large Premiums for Takeovers

American companies are currently paying the largest premiums for acquisitions ever on record. Company executives seem to be so confident in an economic recover that they are currently buying for prices that are 37% higher than the average amount since records on these transactions have been compiled (2001).

According to Sanford C. Bernstein, there also exists the possibility that mergers will rise 35 percent in 2010 and 23 percent in 2011. The forecast is based on an analysis using data since 1980 that incorporates growth in GDP, corporate earnings and commercial loan volume. These figures have about a 72 percent correlation to takeovers.

New Tariffs on European Steel

China has now imposed new anti-dumping regulations on some European steel products. China is accusing Europe of protectionism as the EU has been extending curbs on the importation of Chinese shoes. The new tariffs of European carbon steel ranges from 16.8 to 24.6%.

China to Overtake Japan in 2010

Taking into consideration changes to China's GDP figures, it is now to be noted that China's economy will be overtaking Japan's by the end of 2010. China's GDP at the end of 2008 was originally noted to have a 9% growth, however new figures tell that China's economy actually grew 9.6% in 2008. The .6% change is due to an initial underestimation of China's service sector.

China also believes that, despite the global recession, their economy grew at least 8% in 2009 and will do so again in 2010. Given that China's GDP at the end of 2008 was approximately $4.6 trillion and that Japan's GDP is continuing to shrink it should be expected that China's economy will quickly overcome Japan's.