In this insightful piece, James K. Glassman of Tech Central Station ran an interesting analysis of U.S. companies that CNN financial commentator Lou Dobbs has criticized on his website and television show as “either sending jobs overseas or choosing to employ cheap foreign labor, instead of American workers.” Mr. Glassman calculated that the annual return for a hypothetical stock fund of these companies over the past year (12 months ending Feb. 23, 2004), was a remarkable 72.44 percent, which compares with a return of 39.11 percent for the benchmark Standard & Poor’s 500-Stock Index over the same period.
Outsourcing tech and other white-collar jobs is a common political canard that misguided or disingenuous demagogues promote to frighten voters. Accordingly, we will have to endure a great deal of this drivel over the next several months of this election year.

This NY Times article describes a fascinating situation that has developed regarding a fight for control of the Manchestor United soccer club — the New York Yankees of England professional sports — that also involves a racehorse named Rock of Gibralter and Malcolm Glazer, the owner of the NFL’s Tampa Bay Buccaneers.

This NY Times article is about Amory B. Lovins, who makes a very good living by telling the oil and gas industry that the demand for oil is likely to tumble more rapidly than the industry has projected. Mr. Lovins then helps the oil and gas companies figure out how they can profit from leading the transition away from today’s main uses of their core product. Interesting reading.

This NY Times article reports on the consortium of international oil and gas companies that have formally agreed to proceed with a $29 billion development of the Kashagan oil field in Kazakhstan, the largest oil discovery since Prudhoe Bay in Alaska more than 30 years ago.
ENI of Italy leads the consortium, which includes Royal Dutch/Shell, Exxon Mobil, Total of France, ConocoPhillips and Inpex of Japan.
Total oil reserves in the Kashagan field are now estimated to be 13 billion barrels, several billion barrels higher than original estimates. One major production hurdle is the field’s location under the Caspian Sea, which freezes over in winter. Initial production is expected to be 75,000 barrels a day, Shell said in a statement. Mr. Idrissov said production was expected to rise to more than 400,000 barrels a day by 2013.By 2015, the field is expected to yield more than a million barrels a day, about a third of Kazakhstan’s target for oil production.
The announcement is a major step forward for oil and gas production in Kazakhstan, which is considered one of the United States’ most promising alternatives to the Middle East for energy supplies. However, development has slowed in recent years because of the risk of investment in the region and the Kazakh government’s desire to renegotiate contracts with foreign oil companies that had been entered into during the early 1990’s.

In an expected move, Parmalat‘s dairy subsidiaries in the United States filed for bankruptcy protection yesterday in New York City. Included in the filing yesterday were the Parmalat USA Corporation and its Farmland Dairies and Milk Products of Alabama units. The move was expected after Parmalat, the food and beverage giant, sought bankruptcy protection in Italy in December amid an accounting scandal.

My law practice mostly involves lawsuits over business transactions, and I am constantly reminded in my practice that most non-business people dramatically underestimate the difficulty involved in running a business successfully. This NY Times article reports that 34 percent of businesses with 500 or fewer employees close within two years of opening, and 50 percent fold after four years. These business difficulties highlight the importance of sound business reorganization and bankruptcy law, and the United States is blessed to have the best business reorganization and bankruptcy system in the world. More on this point later, but it is not a feather in the hats of either the Bush Administration or the Republican Party that they are currently urging Congress to amend the United States Bankruptcy Code.

The NY Times has a couple of interesting articles in its Sunday business section. In this one, Times business reporter Ken Gilpin notes that the stock market has moved steadily higher since last summer, even though insider stock sales have far outnumbered purchases. Mr. Gilpin interviews Jonathan Moreland, a money manager and the director of research at InsiderInsights.com, as to the reason for this apparent contradiction.
Another Times article reports on a recent academic study that challenges the popular reason for not worrying about the high price-to-earnings ratio in the stock market today — i.e., the idea that the ratios should be high when interest rates are low. According to the traditional Fed Model, stock earnings growth should be slower when Treasury note rates are high and faster when those rates are low. However, that has not been the case historically, according to the new study, “Inflation Illusion and Stock Prices,” by Harvard finance professors John Y. Campbell and Tuomo Vuolteenaho. According to the study, the stock market has tended to become significantly undervalued in times of high inflation and overvalued in times of low inflation. As a result, the situation in the market today may be the mirror opposite of what prevailed in the late 1970’s — that is, stocks may be as overvalued today as they were undervalued then.