McDonald's Catches Up With Consumer,Industry Trends

We serve the vast majority of the population in all our markets,McDonald's CEO Steve Easterbrook,who is British,told CNBC.There are some who come in for a burger,but we can also innovate at the premium end of the menu.What we're seeing is,incremental purchase of all day breakfast food.It's growing margins and generating a lot of enthusiasm amongst our customers and out team.We have very ambitious plans in tech and across the whole area of helping to make consumers' lives more convenient and more fun.*
In relation to McDonald's as a company,we made the conscious decision to go one dollar above the minimum wage.With health care inflation,it's tough.That's why we've got to increase the bottom line.We're seeing a reduction in crew turnover.That improves the customer experience.*
We're going to cage-free eggs in the US.It's going to take us 10 years to get there because of supply.We use two billion eggs a year.*
Our owner-operators are wonderful,an animated bunch that helps us make the decisions,and we help them make their decisions.When we took the all day breakfast,we got a 98% approval by the owner-operators.Traditional industries are being transformed,and we should not be blind to that.We have a 1+ billion dollar delivery business in Asia.We are building up our digital programme to offer more ordering and payment options and customer loyalty programmes.A number of our regions have been selling mozzarella sticks and they do sell well,Mr.Easterbrook observed.*
McDonald's (MCD)

Monday Newsline:Analysing Asia's Prospects;British Cycling Double Win

Asian stocks fell Monday on a decline in China's GDP and in its housing price growth.The GDP fell from 2.9% in Q4 to 2.5% in Q1.Housing prices rose in only 44 of 70 cities.There were no cities in China where real estate outperformed the money market.Gary Evans,head of equity strategy at HSBC,said that's pretty negative for Chinese growth.Real estate is the single biggest driver of domestic demand.*
Thailand's GDP declined on political unrest,dropping 2.1% on the quarter and 0.6% on the year.These factors,plus a fall in iron ore prices hurting Australian miners,sent the MSCI Asia Pacific index down 0.26%.*
I think the Thai problem is gonna rumble on for a long time,Mr.Evans continued.The appetite of many investors is for restructuring-as in Mexico.China is getting a little nervous about how fast home prices are coming down.We like Indonesia and China's state-owned enterprises.The thing is,whether a market is moving in the right direction.It doesn't take much to move Indonesia in the right direction.*
I'm underweight on Japan.Everyone is sitting on a loss-making position,thinking it will get better,but it isn't going to happen.In every country there are vested interests resisting change,and Japan is such a place.*
India's Nifty Fifty Index rose 0.88% on Monday becuase of euphoria over their new prime minister,Narendra Modi,who was first minister of Gujarat state.India is the most over-owned market globally,Mr.Evans pointed out.There will be a shift to Indian energy,utilities and infrastructure stocks.I think the selloff starts maybe today.Then people will buy back in because India is still a good story.The rupee is probably getting close to an equilibrium.
How Mr.Modi will react to Pakistan is uncertain so far.He gets things done:that's what people have bought into,because we don't know what his policy is gonna be.To me,India is like the EU with its many states.Running the central government is different from running just one state as Mr.Modi did.I think inflation is gonna be the key issue,HSBC's Gary Evans noted.*
In sport,Great Britain scored a cycling double victory in the Amgen Tour of California Sunday.The Tour's Stage 8 ended in Thousand Oaks and was won by the current British Champion,and former World Champion,Mark Cavendish from the Isle of Man.To be fair really,I'm in the form of my life,Cavendish said.I just had some French toast for breakfast-I wasn't expecting a tour.Im super happy about that.*
Britain's Bradley Wiggins won the overall yellow jersey for the Amgen Tour,and had previously won both the Tour de France and London Olympics gold medal in 2012.It's right up there as a satisfaction,Sir Bradley said.It's nice to still be winning at this age,34.
His wife and two children were on hand in Thousand Oaks to help him celebrate.*
Amgen(AMGN),HSBC Holdings(HBC)

What To Buy in Asia;Ford's China Position

Several financial markets were closed for the Easter Monday holiday,including Australia,New Zealand and Hong Kong.The MSCI Asia Pacific index declined 0.10% in early trading,while US stock futures rose.*
Japan's trade deficit widened more than expected as exports slowed.There was a 1.5% rise in exports versus an estimate of 1.8%.Imports climbed 18%.The figures may complicate Prime Minister Shinzo Abe's plan to reflate the economy.*
We're buying businesses with strong net cash,said Maquarrie Group's Sam LeCornu.Some sectors in China are doing quite well,with March retail sales up 12.2%.We had a massive overweighting in health care,but have taken a lot off the table in the past six months.
China and Korea are standout buys.Chinese stocks are undervalued.We completely avoid property developers and banks.If we can't project the downside,we just don't invest.It's too risky.We have nine mainland midcaps in our New Stars portfolio.There's a huge discount.We're in two Citic affiliates.
We really like Korea.It's very cheap.We're looking at companies with net cash.We like Hotel Shilla with its duty free shopping and good airport concession chances.Chinese visitor numbers are up 37% in Korea.A number of Korea stocks are trading well below their intrinsic value.*
Ford Motor is the fastest growing foreign automaker in China.I think it's gonna continue,said CEO Alan Mulally at the Beijing Auto Show.We are bringing the entire Ford Win Plan with all our vehicles available.We think our preferred status will continue.Our sales are continuing to increase.It sure is nice to see the Ford preferred in the sales decision.
I think these new Lincolns are gonna be very well received here.We'll bring them here first,then make and design them here as sales pick up,Mr.Mulally explained.*
Petronas AMG Mercedes continued its dominance of the Formula One series as Great Britain's Lewis Hamilton secured his third straight victory at the Chinese Grand Prix Sunday.His teammate Nico Rosberg of Germany was second,and Spain's Fernando Alonso got Ferarri to its first podium of the season with his third place finish.The series continues in Barcelona in three weeks' time.

Asia This Day:Bernanke Succession;Syrian Framework

Asian markets were cheered by developments in the US and Geneva Monday morning,sending the MSCI Asia Pacific index up 0.55%.The withdrawal of former US Treasury Secretary Larry Summers from consideration to head the Federal Reserve is being seen as a definite plus by Asia,as it will supposedly make the tapering of supportive Fed policies a little less severe.
We're seeing the rally as being based on Summers being a litle more agressive on tapering,said Philip McNicholas,ASEAN economist at BNP Paribas.Broadly speaking,we do see down side risks to the region with this tapering.We actually think Malaysia is more sensitive.Malaysian markets are closed for a national holiday today.
In the Philippines,the government is being more effective in its spending.That process is still ongoing and showing improvement.Overall,the fundamental story is still there.In Indonesia,the government was able to implement fuel price reform in June.We do think that Thailand can ride this out.
Markets are expecting the Federal Reserve to make an announcement on tapering this week.Mr.Summers' prospective nomination to be Fed Chairman had become highly politicised,and even Democrats opposed him in an open letter supporting the nomination of Janet Yellen,who has become the consensus candidate.
Bill Gross of PIMCO tweeted that Summers' exit makes Monday a huge day for the risk-on trade,i.e.,the buying of equities.
Another positive influence on world markets is the agreement in Geneva on Saturday of a framework for Syrian chemical weapons disarmament by the US and Russia.This will now go to the UN for the final formulation of a Security Council resolution spelling out the details.The framework gives Syria one week to provide a complete inventory of its stockpile;stipulates the first inspection of the weapon sites in November;and the destruction of all the weapons by mid-2014.
US forces will remain on standby in the region to back the agreement up with military action.

Citi Likes Emerging Market Stocks

Citigroup predicts a nearly 27% upside to emerging markets stocks in the next year.Our main reasons for optimism:consensus is too bearish/underweight emerging markets,liquidity is ample,economic surprises are improving,earnings are outperforming developed markets,and valuations look cheap,Citi said in a note. The Federal Reserve program has propped up emerging market currencies,equities and bonds as it pumped liquidity into the financial markets. The emerging markets central banks' balance sheets should provide enough liquidity to take up the slack of a Fed withdrawal.In aggregate,the balance sheets of growth emerging markets central banks are still expanding by 6.1% on a year-on-year basis .A strong relationship exists between the growth rate of the asset side of central banks' balance sheets and price to book valuations.Expand the central banks' balance sheets and price to book valuations follow,the note goes on to say. Citi favours Asia over the Middle East and Latin America.It prefers China,South Korea and Taiwan in Asia. iShares China 25 Index Fund(FXI),iShares Emerging Markets Index Fund(EEM)

John Kerry Departs for Middle East,Asia

Secretary of State John Kerry is departing for an eleven day trip to the Middle East and Asia later today,June 21.He will visit Doha,New Delhi,Jeddah,Kuwait City,Amman,Jerusalem and Bandar Seri Begawan,according to Spokesperson Jen Psaki.
In Doha,Qatar,Kerry will meet with senior Qatari officials to discuss bilateral and regional matters.He will also meet with the London 11 foreign ministers to discuss the Syrian conflict,including support for the opposition and the search for a political settlement.
While in New Delhi,the Secretary will chair the interagency delegation to the fourth annual US-India Strategic Dialogue.It will cover the full spectrum of bilateral and regional concerns,from economic engagement to security and defence,as well as climate change and space cooperation.
In Jeddah and Kuwait City,Mr.Kerry will discuss a number of bilateral and regional issues with Saudi and Kuwaiti officials.
In Amman and Jerusalem,he will meet with Jordanian,Israeli and Palestinian officials on advancing the Middle East peace process.
Finally,the Secretary will participate in ASEAN regional meetings and the 3rd East Asia Summit Foreign Ministers Meeting in Bandar Seri Begawan,Brunei,as well as hold bilateral talks with the Sultan of Brunei and other Brunei officials.

Should You Invest in the Wintergreen Fund

The direction in the West is improving.People are beginning to buy,said David J.Winters of Wintergreen Advisers LLC in Mountain Lakes,New Jersey.We still believe the future of the world is in the Asia Pacific.
We own a lot of Berkshire Hathaway BRK b shares.
The public are still hiding under their desks.They haven't gone back to the equity market.At some point,the bond markets are gonna go up and people will get crushed.People are still scared,both companies and individuals.
The US is a mature economy with lots of debt,unlike Asia.The EU in general is in deep,deep trouble and we just don't want to play because it's too hard.We love companies with no debt-you don't have a lot of risk.
Hong Kong is one of the great,great places.
David J.Winters manages the Wintergreen Fund,a global value mutual fund with much of the flexibility of a low risk hedge fund.It is #23 out of 287 World Stock funds as rated by US News.Morningstar Associates gives it four out of five stars.
The Wintergreen Fund has returned 13.26% over one year;and 4.85% over five years.Its expense ratio is 1.89%,which is considered Above Average in its category.In Mornngstar's opinion,however,the fund is Below Average in risk.
Wintergreen Fund(WGRNX)

Malaysian Election,US Jobs Lift Asian Markets

Asian markets were up in early Monday trading on optimism over Malaysian election results and the apparent US recovery,with the MSCI Asia Pacific index rising 0.24%.The encouraging employment report on Friday reinforces the idea that the US economy is going along at a decent clip,said Binay Chandgothia, a portfolio manager at Principal Global Investors.
By and large,we expect the US economy will grow in the second half.Natural gas is cheaper and corporates are spending on buybacks and dividend increases.The US energy markets long term do look to be positive.
People have been taking money out of emerging Asia and putting into the US and Japan.Over the next three months,China could provide growth as they are letting their economy take its own course.
The Kuala Lumpur Composite Index soared 3.0% along with the ringgit,the Malaysian currency,as the government of Prime Minister Najib Razak was re-elected,albeit by a smaller majority this time.Opposition leader Anwar Ibrahim bitterly criticised the ruling party for rigging the election by busing foreign voters in to slant the results,as well as playing the racist card against the country's Chinese minority.
India's Nifty Fifty futures index rose,indicating that a three week rally would be extended.
The Reserve Bank of India is restricting the purchase of gold on consignment by banks.It is to be allowed only for jewelry exporters with a genuine need,in order to bring down the current accounts deficit.The RBI had previously halted banks from lending for the purchase of gold in any form.
India is the world's largest gold consumer.Gold has been scarce there recently on strong demand.The Akshaya Tritiya festival on May 13 is the traditional day for buying precious metals in India.
Japanese stock markets are closed Monday for Children's Day.

MedImmune and Progenics Combat Deadly Bacteria

MedImmune,the biotech division of British pharma titan AstraZeneca,has signed an in-licensing agreement with Progenics Pharmaceuticals,Inc for Progenics' Clostridium difficile late stage preclinical program.Clostridium infections are the leading cause of hospital acquired infections in the US,resulting in 20,000 deaths and 1 billion dollars in health care costs annually.
Clostridium causes severe diarrhea and significantly lengthens hospital stays,leading to poorer outcomes.MedImmune will assess the efficacy and treatment of the disease with monoclonal antibodies that target toxins which mediate it.
MedImmune Senior Vice President and Infectious Disease iMed Head Steve Projan said the program fits strategically within our infectious disease portfolio and adds to our existing programs that aim to prevent and treat serious bacterial infections,particularly among high risk patients.Progenics CEO Mark R. Baker added that Progenics is pleased to have this potential candidate in MedImmune's hands,where it has the potential to improve human health.
About 500,000 cases of Clostridium are diagnosed in the US annually,mostly affecting hospital patients.Up to 28% of cases are community-acquired through contaminated soil,water,pets,cattle and foods.The bacteria not only damage the gut lining;but prevent the regrowth of normal,healthy bacteria in the gut as well. Progenics' antibodies are highly potent against most strains found in the US and Asia,and potent against hypervirulent strains,which are largely responsible for the disease's growth rate,preliminary findings suggest.
MedImmune,based in Gaithersburg,Maryland,employs about 3500 people worldwide.Progenics is a biotech firm located in Tarrytown,New York.
AstraZeneca(AZN),Progenics(PGNX)

Luxury Retail:Coach Versus Kors

Luxury goods retailer Coach was severely punished by an earnings miss recently.Although net sales and earnings rose 4% on the year,they fell 2% in the US.The holiday season was challenging for the chain as competition has heated up from the likes of Michael Kors.
Kors is a relatively young enterprise in comparison to the more mature Coach.It has more potential for growth in the developed world.While Coach has more than 800 stores,Kors has only 237.Plus,the American designer's business is more diversified,selling clothing as well as shoes,handbags and accessories.It is better positioned to be a lifestyle brand.
On the other hand,Coach is concentrating on expanding Asian operations at the moment,which is capital intensive.Even so,margins are stable.Once those costs have been absorbed,the company stands to do well from emerging Asia and its upward mobility.
As well,the spending patterns of Asia are different.The Asian stores will prosper more at the Asian New Year season than at Christmas.That means the earnings for Q1 may be enhanced significantly.Wall Street docked Coach stock 15% in a knee jerk way,failing to take this subtlety into account.
In addition,Coach is paying a decent dividend of around 2.3%,while Kors is paying nothng.Coach's run may not be over after all.
Investor sentiment was 98% bullish for Kors on Monday,and neutral for Coach,according to MarketWatch.
Coach Inc(COH),Michael Kors Ltd(KORS)

Asia This Day:Japan's New Prime Minister;Has China Turned The Corner

Shinzo Abe(pronounced ah-bay) has been elected the new Prime Minister of Japan.His LDP Party has a 61% majority in Parliament;with a partner,the LDP will have a 68% majority.Mr.Abe had served as Prime Minister three years ago.
The question now is how they use that majority,said Mohammed Apabhai of Citi Global Markets Asia.The priority at the moment is actually controlling deflation and getting growth back on track.Reflation trades include insurers,banks and real estate.
Abe will restore nuclear power to provide affordable energy to the Japanese economy.Only two of Japan's nuclear reactors are currently on line,down to public outrage after last year's tsunami and nuclear accident.Japan's debt to GDP ratio is 237%,the highest in the world.
It's undeniable that China has really turned the corner.There's a lot of scepticism about that from clients internationally.The upside in the rest of Asia is actually a lot higher.
The Chinese Politburo will keep policy stable with adjustments as needed,accepting slower growth.It will fully deepen reforms and firmly promote opening up,the Xinhua news agency reported.
China has submitted documentation on its territorial dispute with Japan in the South China Sea to the United Nations.
Indian investors are awaiting the Royal Bank of India interest rate decision.The Nifty Fifty futures index was down 0.08%.
Australia is in talks with Sri Lanka to curb people smuggling.
The Nikkei index was up a strong 1.54% on Abe's election,while the MSCI Asia Pacific index was up by only 0.04% in early Monday trading.
Citigroup(C)

Academic Positions,Hong Kong

The City University of Hong Kong is conducting a worldwide talent search for 100 scholars over the next 2 years.The University is seeking to fill openings in the following disciplines:science;engineering;business;social sciences;humanities;law;creative media;energy;environment;and other strategic growth areas in life sciences.There are also opportunities to teach and conduct research in collaboration with the University's scholars for periods of 1 month to 1 year.
City University is ranked 95th in world university rankings,and 12th in Asia.
A senior delegation from the University led by President Way Kuo will make a presentation of City University's vision for the future on October 2,2012 from 5:30-7:30 pm at
The Dupont Circle Hotel
1500 Pennsylvania Avenue
Washington,DC 20036
To register,and to make an appointment to meet the delegation,please email http://www.cityu.edu.hk

Job Market Clues:Where Executives Are Being Sought

The financial crisis has had a big impact on the job market.Companies are reorganizing,according to Jeanne Branthover of Boyden Global Executive Search.Many of our clients have changed what they want people to do.There are not a lot of these people around to fill the jobs of today,such as software engineers. Asia is hiring and busy,but they want local talent,and there is not a lot of it.Clients say their growth is gonna be in the emerging markets,including South Africa,so our office there is very busy also,as well as in Latin America,where there has been a 300% increase in business.U.S. business has increased by only a little as companies implement plans.In Europe,things are slowing down-particularly in London,which has selective hiring,and they are worried. Ms.Branthover is Managing Director of Boyden's New York office and Head of its Global Financial Services Practice.The company has 70 offices around the globe.

Shop Talk

A special greeting to South Korea.Dear allies,it's good to have you here today.We will always be especially close,bound together by the Korean War history.That was 1950-1953,for the younger readers.This weekend the attention will be on Capitol Hill,where America's leaders are stuggling to contain the financial crisis.Democracy is contentious in the best of times,and this certainly isn't one of those.Congress hopes to have legislation for the crisis ready by 6PM Eastern on Sunday,when the Asian markets begin to trade.Tonight,though,most Americans will watch the presidential debate,which will cover the financial crisis,but probably other issues as well.There will be plenty to fill all the reporters' notebooks this weekend.

Citigroup Trends Better

Citigroup(C),the largest U.S. financial company,has reported its Q2 results.The firm suffered a loss of 2.5 billion dollars,or .54 a share.For the past three quarters,Citi's losses have been shrinking.In recognition of this ,Deutsche Bank(DB) has upgraded Citi's stock.Its Q2 results were in line with most banks that have reported earnings,says Richard Bove of Ladenburg Thalmann.Its other sources of income are great enough to cover the losses in its loan portfolio.The banks as a group are lending plenty of money;their margins are not in distress;and they are gaining deposits.The industry is in much less trouble than people think.It has more equity,more reserves,more loans and more deposits,Mr.Bove indicated.Shares of Asian regional banks rose on Monday,their first chance to respond to Citigroup's news.On the other hand,there can still be setbacks for Citi and the other banks,investors should realize.The financial system has been shaken hard,so recovery will be a jagged process.

A Massive Shift

Prime Minister Gordon Brown,who has been in office a little over a year now,observed that we are witnessing a massive shift in the world economy.It is a shift of power to Asia.The challenge of this global change is to make it both inclusive and sustainable.We are seeing the worst food shortage in 30 years.The worst thing we can do is cut the subsidies to developing countries.It would be a huge mistake to cut that aid,Mr.Brown warned.In Britain's case,we will soon be 80% dependent on other countries for gas.We have a once in a generation chance to reduce our dependence on oil.We will soon become the world's leading offshore wind energy producer.We're dealing with a massive expansion of demand for oil from Asia.China is building 100 airports a year and 1,000 cities a year,while adding 10 million cars a year.We need a new green revolution in the developing countries.You will need a body the size of the World Bank to ensure the flow of money to the developing countries for implementing climate change reform,Mr.Brown estimated.

Rogers Reports

Investor Jim Rogers of Rogers Holdings,who recently moved to Singapore,notes that real estate has been down in Asia,on account of Westeners not coming there as much as they had been.There was too much speculation in China,but China and Taiwan have the best markets now,while there is a slowdown in the U.K.,the Netherlands and Spain.The U.S. recession will be worse than expected,but he's been hearing about an oil bubble since it was 3.00 U.S. a barrel.There has been no major oil field discovery in 40 years.There is no production of commodities.Three billion people in Asia want to live as the West does,and now they're working very hard.They have huge ambition and drive.It's a world that used to exist in America and Europe.It's astonishing,Mr.Rogers observed.

Swedish Firm Rounds Out Sun Micro

The best thing I can do is publish the story I wrote,because it remains true.The companies I mentioned are open for business today,regardless of share prices.That should tell you something about today's flash in the market.Sun Microsystems(JAVA) has purchased Swedish firm MySQL for one billion dollars.MySQL is a vendor of open source database software.Its customers include Google(GOOG),You Tube,IKEA and Facebook.The software itself is free,but integration and maintenance services for it are not.It is with these that Sun,which has a deep commitment to the open source concept,intends to make a profit.MySQL provides platforms for the Web economy,and the Web's enabling of cost reductions and efficiency are making the Internet very attractive to consumers and businesses,according to Sun CEO Jonathan Schwartz.MySQL gives peace of mind to customers.The acquisition of MySQL make's Sun's Solaris the only operating system with database software.Together with Java technology,Solaris and MySQL give Sun a fuller circle of software products to complement its breadwinner server systems.Prior to acquiring MySQL,Sun relied on Oracle(ORCL) for databases.The open source concept championed by Sun is both more economical and flexible for Internet companies.Given these advantages,Sun expects to meet or exceed analysts' expectations for its fiscal second quarter earnings and revenue,which will be reported on January 24.Sun has seen 7% bookings growth,with real strength in Asia,Africa and the Middle East.Its products are in the right phase of their life cycles to generate profits as great as,or greater than,expected.Shares of the Santa Clara,California firm were among the best performers in last week's dismal market.

Sun Micro Faces East

Sun Microsystems(JAVA)is expecting double digit growth in China sales within the next fiscal year.It is providing new products to Asia as the market in the U.S. and U.K. decline,hit by slowing economic growth and the credit crunch.By the fourth quarter,Sun is expecting a 4% increase in profits,and a 10% increase within three years.Kohlberg Kravis Roberts,a private equity firm,has made a large purchase of Sun Micro corporate bonds,which amounts to a big vote of confidence.Sun is the fourth largest producer of server computers.With the aggressive development of virtualization and online telephony,Sun's products will be in growing demand.Sun's earnings rose to .09 cents a share,versus an estimate of .05 cents.Revenue in the software segment was up 6%.Revised profit was 329 million dollars.With the striving for efficiency,its Solaris operating system is especially relevant.The big search and internet companies are likely to demand Sun's products.Sun's expanded margins took the cost of doing business down.With much cash on hand,the company is on the lookout for good acquisitions.The KKR position is not CEO Johnathan Schwartz's focus;his focus is growing Sun,which posted its third consecutive quarterly profit.The firm is based in Santa Clara,California.