Money & Business
Money Watch: In China, U.S. Firms Shop Till They Drop
Ever since China's state-owned oil giant CNOOC made a splashy bid for California-based Unocal, questions have been raised about the fairness of such an acquisition. Critics say that while Chinese firms can freely shop for U.S. companies, American firms can't make similar deals in China. Well, a recent study has found that the playing field is indeed tilted--but the United States has the upper hand. According to Bank of America's Investment Strategies Group, U.S.-based companies had made direct investments totaling more than $15 billion in Chinese firms as of last year. Meanwhile, Chinese companies' direct investments in U.S. firms came to only $314 million as of 2003 (the last year for which data are available). While CNOOC' s bid has garnered headlines, less attention has been paid, for instance, to Goldman Sachs's interest in buying a major stake in China's biggest state-owned bank. Says Joseph Quinlan, chief market strategist for the Bank of America group: "It's no contest--U.S. firms enjoy an outsize investment advantage."
Money Watch: Surf's Up for Workplace Slackers
Wasn't the Internet supposed to make workers more efficient? As it turns out, surfing the Internet is the single biggest thing employees do to waste time on the job, according to a new study by the compensation firm Salary.com. And it's one of the primary reasons Americans fritter away 2.1 hours each working day--not counting lunch breaks. This means upwards of $759 billion in salaries is wasted each year. So much for the boom in worker productivity. While some slacking off is built into salaries, "workers on average are wasting a little more than twice what their employers expect," says Bill Coleman, senior vice president of Salary.com.
Money Watch: Could the Stock Market Be Going, Going, Gone?
Say it ain't so, Miguel. Named most valuable player in last week's All-Star Game, the Baltimore Orioles' Miguel Tejada helped the American League beat the rival National League. But he may have also unwittingly reduced the odds of a come-from-behind finish for the stock market this year. How's that? Well, researchers at Standard & Poor's say that since 1933, in years when the National League wins the midsummer classic, stocks have surged 5.3 percent on average in the last half of the year. And the market has posted second-half gains 76 percent of the time. But when the AL wins, equities rise only about half as much on average--2.6 percent. What's more, stocks have gone up in the second half of those years only 58 percent of the time. That, says Sam Stovall, S&P's chief investment strategist, is really "no better than the results of a coin toss."
The Week Ahead: Pivotal Profits
The stock market goes as earnings grow. This means the second-quarter corporate reporting season--which kicks off in earnest this week--will be pivotal to the equity market's performance for the rest of the year. Among companies due to report quarterly profit numbers this week are Citigroup, Johnson & Johnson, and Yahoo! Clearly, the overall rate of profit growth is decelerating. After soaring nearly 20 percent in the fourth quarter of 2004, compared with a year earlier, earnings grew 14 percent year over year in the first quarter of 2005 and are estimated to have increased 7.5 percent in the second. But Jonathan Golub, U.S. equity strategist with J.P. Morgan Funds, notes that profits aren't tumbling so much as "they're slowing to a more sustainable average. If you go from 20 percent to 8 percent, you're not moving backward; you're moving forward at a reasonable pace."
The Week Ahead: Sentiment Test
Despite a surprisingly strong spring for stocks, investor confidence weakened in the second quarter. This week, Wall Street will find out if sentiment improved in July as the latest results of the State Street Investor Confidence Index are released.
INVESTOR CONFIDENCE INDEX
Dec. 2003 109
June 2005 84.5
[Other labels]
0
75
85
95
105
June 2004
Dec. 2004
Source: State Street Global Markets
Chart by USN&WR
This story appears in the July 25, 2005 print edition of U.S. News & World Report.
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