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Economic Committee Report

The Mizzou Investment Fund Management ProgramThe Mizzou Investment Fund Management Program

Thursday, November 9, 2006

Presented by:

Priya J. Kapila



Federal Reserve Bank

Former Fed Chief Greenspan: Worst housing woes behind us

Dallas Fed Chief Fisher encouraged by slowed inflation



Exchange Rates

The dollar fell, slipping to a six-week low against the Euro as uncertainty over the result of the U.S. elections gave traders an excuse to take profits on the currency

The dollar was poised for its biggest daily loss against the yen in more than six weeks after comments on interest rates from the Bank of Japan



Exchange Rates

Dollar VS Yen

Dollar VS Euro



International Markets

A European Commission report criticizes China on fair-trade issues, including piracy, and notes a growing trade deficit of €106 billion a year

In Europe, fast-rising prices and household debt levels could lead to trouble -- at least in some countries

Soaring demand for generics and competitive pressures are making the region a hotbed for Big Pharma deals to swallowing eastern Europe’s drugmakers

The world's second-biggest economy, Japan, is expected to announce record expansion. But it's mostly based on exports, and wages have not kept pace



Stock Index - Asia



Stock Index - Europe



Sector Performance

Leaders1. Energy (1.46%)

2. Health Care (1.14%)

3. Telecommunications (0.89%)

Losers1. Utilities (-1.01%)

2. Consumer Goods (-0.11%)

3. Financials (-0.01%)



Consumer Staples

Both P&G and Clorox report good quarters but uncertainty leads them down

Altria faces uncertainty going into the election

Leggett & Platt down on poor outlook going forward



Consumer Staples

Consumer Goods -0.11%

Food & Beverage -0.95%

Beverages 0.04%

Brewers -0.34%

Soft Drinks 0.11%

Food Products -2.43%

Personal & Household Goods 0.18%

Household Goods -0.01%

Durable Household Products 0.72%

Personal Goods 0.77%

Personal Products 1.33%

Tobacco -0.94%



Consumer Discretionary

Honda sales down for the month of October

Coach’s 3Q earnings up 40%



Consumer Discretionary

Automobiles & Parts -0.11%

Automobiles 2.41%

Tires 0.98%

Personal & Household Goods 0.18%

Nondurable Household Products 0.82%

Furnishings -0.95%

Home Construction -4.18%

Leisure Goods 2.91%

Consumer Electronics -5.72%

Recreational Products 2.54%

Toys 5.96%

Personal Goods 0.77%

Clothing & Accessories -0.11%

Footwear 0.54%



Consumer Goods – Staples & Discretionary

Market Cap: 2670.9B (2645.1B)

P/E: 25.52 (31.31)

ROE: 17.44% (17.20%)

Dividend Yield: 2.07% (2.00%)

Long Term Debt to Equity: 1.26 (1.15)

Price to Book Value: -10.68 (-3.19)

Net Profit Margin: 6.83% (6.74%)

Price to Free Cash Flow: 83.32 (122.20)



Industrial - Goods

Even as Texas Industries Inc. maintains its silence regarding buyout talks instigated by a major shareholder, insiders are selling company shares, suggesting a deal isn't on the horizon.

Mexican cement giant Cemex(CX) said Friday it planned to make a $12.8 billion offer to buy Rinker Group Ltd., an Australian firm that derives the bulk of its profits from selling construction materials in the United States, even as the domestic housing market continues its recent slump.



Industrial - Goods

Industrials 0.82%

Construction & Materials 1.37%

Building Materials & Fixtures 0.76%

Heavy Construction 3.01%

Industrial Goods 0.78%

Aerospace & Defense 2.44%

General Industrials 0.74%

Electronic & Electrical Equipment 1.01%

Industrial Engineering -0.32%

Commercial Vehicles & Trucks -0.38%

Industrial Machinery -0.24%



Industrials - Goods

Market Cap: 1092.8B (1390.5B)

P/E: 16.29 (20.44)

ROE: 15.02% (15.29%)



Price to Book Value: 70.32 (-22.33)


Price to Free Cash Flow: 93.76 (-36.94)



Industrial - Services

Sears Holdings Corp. said on Monday that its subsidiary, SHLD Acquisition Corp., filed a revised proxy circular in connection with a Nov. 14 meeting of Sears Canada Inc. shareholders.

Wal-Mart's Woes Could Deflate Prices on Competitive Products



Industrial - Services

Industrials 0.82%

Industrial Transportation 0.41%

Delivery Services 0.02%

Marine Transportation -1.99%

Railroads 0.86%

Transportation Services -0.54%

Trucking 1.40%

Support Services 0.86%

Business Support Services 1.79%

Business Training & Employment Agencies 2.04%

Financial Administration 0.39%

Industrial Suppliers -4.02%

Waste & Disposal Services 1.40%



Industrials - Services

Market Cap: 3174.3B (3169.4B)

P/E: 23.37 (26.24)

ROE: 14.52% (14.09%)



Price to Book Value: 1.21 (3.25)


Price to Free Cash Flow: -7.20 (69.36)



Financials

According to UBS, Wells Fargo, and other underwriters, subprime mortgages are deteriorating rapidly.

Berkshire Hathaway shares climbed to a record on Monday after the insurance-focused conglomerate reported big third-quarter profits that were fueled by a benign hurricane season.



Financials -0.01%

Banks 0.27%

Insurance 1.26%

Nonlife Insurance 1.15%

Insurance Brokers 3.42%

Life Insurance 1.58%

Financial Services -1.10%

Real Estate -3.94%

General Financial 0.30%

Asset Managers -1.07%

Consumer Finance 1.29%

Specialty Finance 0.22%

Investment Services 0.05%

Mortgage Finance 1.15%

Financials



Financials

Foreign Regional Banks

Life Insurance



Financials

Market Cap: 7258.1B (5925.2B)

P/E: 13.04 (14.58)

ROE: 17.03% (16.8%)








Utilities

Duke Energy Corp. posted lower profits than expected in its latest earnings release. Earnings were 48 cents/share, below the 56 cents/share estimates of Reuters' analysts. Executives for the company still claim a 4-7% earnings growth is expected following the spin-off of the natural gas division to Spectra Energy Corp., but that remains to be seen.

The French Parliament on Wednesday adopted a bill to privatize state-owned Gaz de France, clearing an obstacle to its proposed combination with the utility Suez SA that would create an energy powerhouse.



Utilities

Utilities -1.01%

Electricity -1.03%

Gas, Water & Multiutilities -0.94%

Gas Distribution 0.47%

Multiutilities -1.79%

Water -3.87%



Utilities

Market Cap: 1059.1B (1053.6B)

P/E: 36.03 (33.91)

ROE: 15.08% (16.28%)





Price to Free Cash Flow: -264.0 (-64.59)



Health Care

Democrats dislike the new Medicare plan that has been benefiting big Pharma and may revoke the law that bars Medicare from negotiating prices directly with drug companies.

Abbot Labs to buy Kos Pharmaceuticals for $3.7 billion, a 56% premium over market price.

Novartis unveils plans to build a $100 million research center in Shanghai, China



Health Care

Health Care 1.14%

Health Care Equipment & Services 1.05%

Health Care Providers 0.43%

Medical Equipment 1.82%

Medical Supplies 1.39%

Pharmaceuticals & Biotechnology 1.19%

Biotechnology 0.23%

Pharmaceuticals 1.50%



Health Care

Market Cap: 2630.2B (2647.0B)

P/E: 28.13 (34.62)

ROE: 14.73% (14.56%)








Information Technology

Microsoft is reported to be entering an unusual partnership with Novell that gives a boost to the Linux operating system, a rival to the software giant's Windows software and work toward developing technologies to make it easier for users to run both Suse Linux and Microsoft's Windows on their computers.

By forging a peace pact with one seller of Linux, Microsoft could raise pressure on Red Hat, the leading provider of Linux, and a Novell rival.

Apple plans to leverage its retail stores as 'launch pads' for the new iTV, using a few LCD televisions to demonstrate the features of the device.



Information Technology

Technology 0.39%

Software & Computer Services 0.36%

Computer Services 0.67%

Internet -0.08%

Software 0.37%

Technology Hardware & Equipment 0.41%

Computer Hardware 0.19%

Electronic Office Equipment 0.27%

Semiconductors 0.01%

Telecommunications Equipment 1.06%



Information Technology Market Cap: 5196.3B (5702.7B)

P/E: 26.13 (22.97)

ROE: 14.87% (14.82%)





Price to Free Cash Flow: 67.67 (-27.16)



Basic Materials

Higher copper prices boost Wolverine Tube sales; stock falls on Q3 loss and the company is considering Chapter 11

Azco Mining Inc. , a U.S.-based mining and exploration enterprise focused on gold, silver, copper and industrial minerals, announced today that it had agreed with a major creditor to terminate a 2002 financing lease and eliminate all the company's outstanding debt under the lease.

Royal Gold Inc., a company that buys rights to collect royalties from mining outfits, said Wednesday it raised its annual dividend 18 percent.

EU regulators on Wednesday reimposed a 10 million euro ($12.7 million) fine on Arcelor SA for a steel beam cartel it took part in from 1988 to 1991.



Basic Materials

Basic Materials 0.34%

Chemicals 0.71%

Basic Resources -0.08%

Forestry & Paper -2.32%

Forestry -0.85%

Paper -3.53%

Industrial Metals 0.47%

Aluminum -0.12%

Nonferrous Metals 2.24%

Steel -0.24%

Mining 0.18%

Coal -1.05%

General Mining 0.41%

Gold Mining 1.45%

Platinum & Precious Metals 6.42%



Basic Materials

Copper

Steel & Iron



Basic Materials Market Cap: 4483.5B (4408.3B)

P/E: 11.64 (13.46)

ROE: 26.98% (26.08%)








Energy

The main reason for the increases in the Energy sector is due to positive earnings releases by a number of companies in the sector. The majority of companies in the sector had a stellar 3rd quarter due to excessively high oil prices. The outlook for the next quarter is not as promising however.

OPEC has sought to cut oil production by 1.2 million barrels per day as of November 1, due to the low prices and excess supplies. Many investors doubt OPEC's ability to cut production as inventories of crude continue to rise.

Chevron reported a $5 billion profit in its earnings release, an increase of 40% from the last quarter.

Big oil companies will be a top target of Democratic lawmakers when they officially take over the House of Representatives early next year.



Energy

Oil & Gas 1.46%

Oil & Gas Producers 1.37%

Exploration & Production 0.32%

Integrated Oil & Gas 1.77%

Oil Equipment, Services & Distribution 1.73%

Oil Equipment & Services 1.82%

Pipelines 1.05%



Energy

Market Cap: 1574.6B (1544.0B)

P/E: 8.50 (8.70)

ROE: 28.50% (27.90%)








Telecommunications Services

FCC Delays Vote on AT&T-BellSouth Deal Shares of the two companies, accounted for about a half of the

industry market capitalization, fell last week, a reaction for the bad news. There was no other big news over past week.

AT&T sees growth in Indian corporate telecoms market AT&T wins contract extension with Reliant Energy

Cingular Wireless unveiled a new phone last week that taps into subscription music services from Napster, Yahoo! and eMusic and streaming radio from XM Satellite Radio



Telecommunications Services - Domestic

Market Cap: 420.2B (428.3B)

P/E: 19.40 (19.00)

ROE: 13.40% (12.40%)








Telecommunications Services

Foreign

Domestic

Telecommunications 0.89%

Fixed Line Telecommunications 0.06%

Mobile Telecommunications 4.29%



Week of 11/3/2006

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