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Reliance Industries plan for new 4G telecom network in India using the latest technologies.

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Vehicle sales in the U.S. market went up by 18% in April 2011. There was a significant shift fuel efficient vehicles and small cars with gasoline running at over $4 per gallon. Sales are running at an annual rate of over 13 million vehicles for the February-April 2011 period. Helping sustain sales momentum is the aging of the U.S. vehicle fleet- average for vehicles in the U.S. is above 10 years according to G.M. vice president, Don Johnson. GM sales were up 27% in April 2011 over the prior year- with only a 2% increase for pickup trucks and a 50% increase in sales for passenger cars. There was strong demand for the Chevy Cruze compact and smaller fuel efficient sport utility vehicles. Ford had a 16% increase in sales, with strong demand for the new Fiesta, Focus small cars and the new lighter version of the Explorer SUV. Ford's Ken Czubay, head of sales and marketing, says dealers are selling the Focus right off the convoy truck, which gives some indication of the shift in consumer preferences. Chrysler vehicle sales increased 23%, with car sales up 41% in April over the prior year. Some indication of the shift can be seen in the incentives dollars- the largest rebates of $3200 were given for large trucks, according to Edmunds.com. At the same time overall dollars per vehicle for incentives dropped from $2600 in April 2010 to $2100 in April 2011. Toyota sales increased by only 1% because of shortages as a result of the earthquake, especially for the smaller cars like the Corollas and the Prius....

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Using a new methodology India's statistics agency revises growth for 2013 to 5.1%, for 2014 fiscal year to 6.9%. Growth for 2015 is forecast at 7.4%. For the 3 months Oct-Dec. 2014 the growth in GDP was at 7.5%. Changes in methodology include computing it at market price, not at factor cost. This adds up consumer and firm spending instead of producer costs.

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Brett Arends cites several factors for his skepticism about the 4th quarter 2010 US stock market rally. Cyclically adjusted price to earnings ratios that are 75% above their average value. A market value for US equities excluding financial stocks, that is within 15% of the October 2007 peak. Fed data that shows nonfinancial corporations have debt of $7.4 trillion at the end of the third quarter 2010, an increase of $250 billion in one year, and up from $5.5 trillion in 2005. This Fed data shows the debt for nonfinancial US corporations is 58% of their net worth, up from 41% five years ago. US consumers are still have the kind of debt burdens they had in 2008, with US households having reduced their debt by only about 3.5%. Arends says the leveraging is through the roof when you add up the debt that government and corporations have run up. Total debt has risen to $36 trillion, up 15% from the fall of 2007. He cites other experts who were right for the last decade who are skeptical this time- Rosenberg at Gluskin Sheff, Albert Edwards at S.G. Securities, John Hussman at Hussman Funds. The latest analysis by Jeremy Grantham at GMO is that large cap US stocks are not likely to beat inflation by much over the next 7 years. Arends has not mentioned global risk indicators such as the asset price bubbles developing in emerging markets, and the sovereign debt restructuring needed in debt burdened countries of the European Union. Analysis by the Economist in year-end 2010 points to the diverging directions of austerity in Europe, spending in the US and asset price bubbles in emerging markets, as a disturbing sign for 2011-2012. Risks in the US that Arends has not mentioned include problems in housing. Nouriel Roubini sees problems in housing in 2011. ...

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Petrobras and the discovery 200 miles offfshore of the Tupi field with estimated reserves of 5-8 billion barrels of light crude oil. As Brazil is self sufficient in energy with its own ethanol industry helping substitute ethanol for oil at the pump, it can become a major exporter with this find. However even with Petrobras technology and expertise in offshore drilling its a challenge as the oil is 4.5 miles below the oceans surface, and involves drilling through 7000 feet of water and 17000 feet of sand rock and massive salt layer. Cost could approach $20 billion according to analysts with current inflation in oil drilling rig costs. It involves challenges like building floating liquefied natural gas plants. Gabrielli, the Petrobras CEO thinks Petrobras has the expertise to develop it on its own. If oil majors are given the chance to join in the development the investment terms will be ones that favor Brazil. Gabrielli pointed this out saying that Brazil had already incurred most of the risk in exploration offshore so the oil majors have far less risk and Brazil should invite them only on its own terms if needed. The Tupi field puts Brazil ahead of Canada in oil reserves and in the leagues of China and Nigeria, with new Brazilian reserves at 17.2 billion from the 12.2 billion barrels currently. Brazil has invested in refineries with 2 new refineries coming up in 2010 and 2014 to increase refining capacity by 40%. It is also investing to convert heavy crude oil into diesel and $8.6 billion to reduce sulfur at 11 refineries. The Tupi field will take about 7 years to develop. Similiarly the Kashgan field in the Caspian in Kazakhstan is also in difficult in this case icy and gases filled environment that will take years for a Eni led consortium to develop. When oil does come will the demand situation have changed with new conservation taking hold in the developed world and the cars in developing countries more like the Tata Nano at 54 miles per gallon consuming less gasoline? Even with increase in energy needs of developing countries, improved efficiency and new technology for conservation brought into developing countries could if not significantly reduce, at least moderate demand. To the point where prices drop from $100 a barrel to something more affordable to developing countries....

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The lower oil prices in 2015 helps lower the current account deficit, which reached 7.9% in 2013, to 5% projected for 2015. Inflation is projected at 6.8%. GDP growth of 3.5% is expected for 2015. Turkey imports oil amounting to about 6% of GDP making for a large impact. Weakness is in the area of manufacturing, as Turkey's high tech exports are only 2% of manufactured exports, according to the Economist. About 1% of Turkish students have advanced computer skills. With problems in Brazil and Russia, money flowing into emerging markets is giving Turkey a second look after the emerging markets crisis in early 2014, when the lira slumped and interest rates had to be increased. The economy is recovering in 2015 from that situation. Two major beneficiaries of lower oil prices in emerging markets are India and Turkey in 2015, as both economies struggled with a large oil import bill.

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Russia's government lowers its forecast for GDP growth in 2013 to 1.8%. Like other emerging markets Russia is facing a slowdown in economc growth. Government forecasts are for 3% growth for 2014 and 2015. About 50% of revenues in the budget come from oil exports and Russia is still dependent on higher oil prices. The budget is likely to have a 1% of GDP deficit in 2015. President Putin is not inclined to run a large deficit to increase growth. Budget revenues are expected to come lower for 2014 and 2015 by 3.3% and 6.9% compared to forecasts. Finance ministry policy is for hiking taxes on mineral extraction 16% by 2015, and increasing excise taxes on cigarettes and alcohol. State run firms will be asked to pay out 35% of profits as dividends compared to the current 25%, providing $39 billion from this action, according to the Finance ministry.

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The WSJ's Juan Montes, in an exceptional report from Mexico City, tells the story behind a landmark achievement for Mexico- Pacto Por Mexico of Dec. 2, 2012. The major political parties of the right, centre and left forge an agreement for the way forward for Mexico- beyond monopolistic pricing and industry structures in Mexico that hurt consumers, to increase foreign investment and new technlogies to modernize the national oil company Pemex operations, change labor laws, and create a climate for higher growth. The pact is broad ranging, shows a grasp of the problems facing modern Mexico, and ranges from anti-monopoly laws to getting junk food out of schools considering Mexico's high obesity and diabetes rate. It covers 95 goals. It is hard to overstate the significance of this achievement for modern Mexico. Montes describes the initiative of the PRD leader Zambrones in rebranding his PRD party as a moderate left wing party open to new ideas. This happened after the departure of Lopez Obrador from the PRD to form his own party in September. Zambrano and PRD moderates brought up the idea based on what happened in a landmark deal in Spain in 1977, that helped transform Spain after decades of stagnation under the Franco dictatorship. Around July after the presidential election, PRD president Zambrano, and the PRD's Jesus Ortega, held meetings in Mexico City with Jose Murat, a senior PRI politician, and PRI president elect Nieto's top advisor, economist Luis Videgaray. The decision was made by president Nieto and economist Luis Videgaray to pursue the discussions for joint agreement on vital issues facing Mexico. The PAN party was brought into the discussions. By mid-September nine people from the PRD, PRI and PAN started work on a draft agreement at Murat's home. The ground rules were set for discussions to be private, to have agreement on all points or assume nothing had been agreed, and not let current events disturb the talks. The nine participants set up the broad principles, and then a group of three, one from each party was given the task of coming up with the right language for the pact. By the end of November a 34 page draft was put together. A night of intense work to 2 a.m. followed the inauguaration of president Nieto on Dec. 1, with the Pact ready for announcement on Dec. 2, 2012. The Pact is a landmark achievement in its potential for changing Mexico and creating decades of economic progress similiar to that envisioned by the Spanish parties for Spain in 1977. ...

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The story of Brazil's sugarcane plantation industry, and also of its ethanol producing region. A detailed account of the people who own these plantations and why they are reluctant to sell. The difficulties of getting into the sugarcane planation industry in brazil with its small owners and fragmented nature, and use of labor that violates Brazilian laws and international standards. These sgar cane plantations are located next to the mills because of the available infrastructure, and family owned sometimes handed down for generations, even hundreds of years, as Brazil was once a portuguese colony and a location for the slave trade which provided labor to the plantations. Note that most of the plantations use poorly paid labor and most of the work is done by hand, with the owners living in large ranchlike fazendas. Its probably another world for international investors not used to such a landscape. There are labor and environmental liabilities in owning some of these mills. Then most of these mills do not keep reliable accounting books and have tax and debt issues which cannot be easily resolved in Brazil's slow legal system. There are about 210 companies running 368 sugar and ethanol mills. The five largest companies generate only 17% os sales gives some idea of the fragmentation in the industry. There is also the perception that if large foreign companies like the ADM, Australia's CSR, Germany's Sudzucker AG, or even India's Bajaj Hindusthan, or others gain control over Brazil's ethanol industry Brazil's sugar producing regions would benefit less than if they get loans from large Brazilian or international banks and consolidate and modernize themselves, leading to political pressures in this direction. One such example is given here, one valuable sugar mill Vale de Rosario has been pursued by Bunge with an offer of $640 million for outright ownership, but Vale de rosario's board rejected the offer. Cargill looked at the possiblilty of owning 30% but was also turned away. Attempts at consolidation by Cosan, Brazil's largest sugar manufacturer, which made agreements with relatives owning 50.2 % of the shares in the company which has about a 100 relative clan with shares in the company over generations, also failed. The Biagi and Franco families which run the company made use of a defense under the cooperative's bylaws which allows the smallest shareholder to have 30 days to equal any takeover offer. The Biagis offered their own Santa Elisa mill to secure a $675 million credit line from Brazil's largest private bank Bradesco which was then used to buy out relatives who wanted the money. Now the Vale de Rosario and Santa Elisa mills have merged and are looking for international financing for the new company Santelisa Vale, which becomes the second largest after Cosan. Goldman Sachs plans to invest 200 million in Santelisa Vale.What this shows is the extraordinary lengths these family owned mills would go to to preserve their independent ways of operating and hand over to the next generation. Another difficulty is that industry experts are hard to recruit from these family owned companies as they have spent alifetime working there and remain loyal. With allthese obstacles the logic that the foreign companies can use Brazil to supply the world with ethanol from sugarcane does not take hold. Some of the attraction of sugarcane is that it contributes less to global warming than corn as a source for ethanol because sugarcane absorbs some of the CO2 when it is replanted. With a 51 cent per gallon tax credit subsidy on USA corn based ethanol and a 50 cent tariff on Brazilian ethanol imported into the USA, corn based ethanol can sustain in the US especially with the current high price of gasoline. Brazillian ethanol is more efficient to make from sugarcane and can be made to compete with gasoline even if gasoline prices drop. Instead there may be more years of unstable supply of ethanol from Brazil ahead which is what the Japanese in their negotiations for a supply of ethanol from Brazil have discovered since seeking such an agreeement since 2001. In the 1980's Brazilian sugar producers chasing high sugar prices lowered production of ethanol and left drivers without ethanol at the pumps. One company that is looking at another solution is Brenco, Brazilian Renewable Energy Company, a startup company backed by Ron Burkle and Vinod Khosla. It plans to put up its own green field sugar cane fields away from Sao Paulo state where the Brazilian sugar cane industry is presently concentrated. But this will take six year before the fields are ready for ethanol production. Henri Reichstul, a former head of Petroleo brasileiro, Brazil's national oil company, now leads Brenco. ...

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Lee describes the problems the Russian economy faces with the depletion of the Reserve Fund following collapse of oil prices. Finance minister Siluanov says the Reserve Fund could run out by 2017. The National Wealth Fund hols $73 billion and is used for infrastructure projects and bank bailouts, and pensions. The defense budget is expected to decline by 5% in 2016 as the military buildup slows from a slower economy. The World Bank predicts a poverty rate of 14.2%. The 50% decline in the ruble has hurt imports. The lack of access to international capital markets has also hurt growth, even though Russia has only small debt.

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Jeremy Grantham and Jason Zweig share the view that this market has gone up too fast too quickly. Stocks that went down the fastest of companies in industries like finance and banking, insurance and autos, went back up with government support. And many of these companies that have poor earnings prospects are issuing more shares to raise capital now that the credit markets are working, so that they have some cushion if credit markets tighten again. Grantham thinks this dilution of shares spreads future earnings thin over a larger number of shares. Zweig says whatever was garbage has done good, which suggests that what is seen as a recovery in the stock markets is not perceived as a healthy recovery. Grantham's comment that "the junky companies may be diluted to hell just to keep them alive," and Zweig's comment that these "garbage" stocks are hot, but can be expected to sink for precisely that reason, do not offer a reassuring view of this kind of fragile recovery. Companies with stable businesses and stable earnigs prospects haven't done as well as these so called "garbage" businesses to use Zweig's term. Companies like Microsoft, Procter and Gamble and Johnson, and Wal-Mart which have low debt and stable returns. Grantham sees them as offering value in today's market. ...