Defense Suppliers Compete for a Piece of India’s Multibillion-Dollar Military Revamp
The Boeing Co. (NYSE: BA) is in talks with India for a $5.8 billion military aircraft deal as the country triples its defense budget, leading defense suppliers to compete for a piece of the multibillion-dollar action.
India is negotiating with Boeing over the purchase of 10 C-17 Globemaster III aircraft, which would be the largest defense order from India for Boeing, the second-largest U.S. defense contractor. India's Finance Minister Pranab Mukherjee said in February the government would spend $33 billion on defense in the fiscal year starting April 1.
The Asian country's "defense procurement budget is quite huge," Laxman Kumar Behera, a research fellow at the Institute for Defense Studies and Analyses in New Delhi, told Bloomberg. "The U.S. arms industry has become quite interested in the Indian defense market."
Boeing expects to bid for as much as $31 billion of military contracts in the next 10 years as India looks to replace aging Russian-made equipment.
Prosperity Piquing Investor Interest in India
In the investment world, there's often so much talk about China in the United States that the tremendous success in India gets short shrift. But business there is booming.
The world's third-fastest growing economy is set to expand by 8.5% this year, the most in the past half-decade. Such rapid growth has compelled the central bank to lift interest rates four times in the past six months.
Compare that with the U.S. Federal Reserve, which has made clear it intends to keep rates low through at least the middle of next year due to limp demand and negligible inflation.
While American consumers are burdened by high levels of debt and joblessness, India's urban middle class and farmers – who have enjoyed a year of ample but not over-abundant rainfall and rising prices – are eager to spend their newfound wealth.
Equitymaster: How to invest in an infra stock?
Money Morning Mid-Year Forecast: India is on the Path to Double-Digit Growth
India could be well on it's way to becoming the world's most appealing opportunity… if it learns how to control inflation and cut it's debt. Read this report to discover the opportunities and challenges facing India's economy right now. And, find out the best ways to make a bundle on India's growing economy.
Misguided Policy Paving the Way for a Double-Dip Recession
With unemployment still hovering near 10%, policymakers should be doing all they can to combat joblessness and reinvigorate a recovery that is showing signs of weakness.
But they're not.
Instead, they're reeling in stimulus measures and enabling a double-dip recession, simply for the sake of fiscal austerity.
The Labor Department is expected to report today (Friday) that the unemployment rate held steady at 9.7% in June, or worse, edged up to 9.8%. That would follow yesterday's (Thursday's) disappointing report that showed new claims for jobless benefits jumped by 13,000 to a seasonally adjusted 472,000. The four-week moving average, which smoothes out volatility, rose by 3,250 to 466,500 – its highest level since March.
India Says Economy Will Grow by 8.75% This Year, but Obstacles Remain
The Indian economy will grow by as much as 8.75% in the coming fiscal year, the country's finance ministry predicted on Thursday. But concerns about inflation and a growing deficit have some analysts worried.
The annual Economic Survey released in parliament yesterday (Thursday), one of New Delhi's most important policy documents, said Asia's third largest economy will return to a high rate of growth as it stages a "remarkable recovery" from the global recession. Economic growth this year is estimated at about 7.5%.
The comprehensive annual assessment of India's economic performance was released a day before the government is scheduled to reveal its national budget, which is widely expected to outline policy changes to wind down fiscal stimulus measures and reduce the country's worst deficit in 20 years.
Despite India's Optimism, There May Be a Better Time to Buy
The Indian government announced Monday that the country's economy was expected to expand by 7.2% during the fiscal year that ends next month.
Agriculture – which had been expected to be a major drag on the economy because of a poor monsoon season – contracted a mere 0.2%. That is a truly stellar performance, showing that India – like China – has emerged almost unscathed from the global economic meltdown. It would pretty well justify the Bombay Stock Exchange Ltd.'s rich Price/Earnings multiple of 20 and would make Indian stocks a "Buy" even at these levels.
Unfortunately, when looked at closely, the picture is not quite so rosy.
How to Profit From the "Next" Dubai
The Dubai World default is a matter of only $60 billion – mere peanuts when compared to other elements of the global financial crisis. It's thus of concern only to those silly enough to invest in real estate there (and the European banks foolish enough to finance it.) For the rest of us, it is a useful reminder that sudden collapses don't really come out of nowhere – they can be foreseen, and smart investors can plan for them.
You see, I did foresee this one, for Money Morning readers – 16 months ago, before the global banking crash. Back in July 2008, I wrote that Dubai's economy was "more bubble than boom," that it had "a construction bubble worse than the Florida market and a monetary policy looser than Ben Bernanke's" and that "its return to earth will be painful and probably not long delayed."