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News Analysis for the Investor on November 12, 2012

Oil prices expected to drop

| BY Catherine McBreen


Oil prices may ease due to favorable supply

Oil prices are expected to fall this week because of a favorable supply outlook, as reported by CNBC.  US crude oil production climbed 8,000 barrels a day to 6.68 million barrels, the highest since 1994.  Crude inventories remain at a 5 year high.  The impact of political factors is predicted to remain calmer this week than recent weeks with reports that China is doing better than expected and the belief that a compromise can be reached regarding the fiscal cliff.  Asian markets were mixed on Monday while European markets are mostly positive.  The Dow closed Friday up 4 points to end at 12,815.

Greece passes 2013 austerity budget

The Greek Parliament approved the country’s 2013 austerity budget early Monday which should guarantee that creditors pay the next installment of $40 billion of their loan. The Associated Press reports that Greece will be out of cash on Friday when $6.35 billion of treasury notes mature.  While the European Finance ministers meet this week, they won’t promise that the funds will be released this week.  Approximately 15,000 people were protesting outside Parliament immediately before the vote.  Last week, 80,000 people protested the austerity measures that were passed on Wednesday.

US airlines face pilot shortage

The Wall Street Journal is reporting that US airlines are facing the most serious pilot shortage since the 1960s just as higher experience requirements take hold.  The challenge is caused by the fact that numerous pilots are facing retirement age.  The newly hired pilots must have at least 1500 hours of prior flight experience, six times the current amount.  This is difficult when rising costs and extended training time are exacerbated by a career in which pay cuts and more demanding schedules are becoming more common.  The airlines are also challenged because in 2014 the daily rest time required for pilots will be increased requiring the airlines to increase their pilot ranks by at least 5 percent.    Today there are about 96,000 pilots and the airlines will need to hire more than 65,000 within the next eight years.  In the past eight years, only 36,000 pilots have passed the FAA’s test and requirements.

KKR to launch investment funds

KKR, the private equity firm immortalized as the Barbarian at the Gate, is launching two investment funds to be distributed by Charles Schwab.  According to CNBC, this move is a sign of the pressure on private equity firms to become more like traditional asset management firms. Firms such as KKR are looking to increase assets under management and earn revenue through traditional asset management fees rather than taking profits through buyouts and the sale of companies in their portfolios.  KKR will be launching a high yield credit fund with a minimum investment of $2500. It is also offering a distressed opportunities fund with a minimum investment of $25,000.

IMF awaiting economic plan from Egypt

Egypt has requested a $4.8 billion loan from the International Monetary Fund, or IMF, but has yet to present a detailed economic reform plan, according to the Wall Street Journal.  Egypt has been receiving economic aid from both Saudi Arabia and Qatar.  Currently Egypt lacks a Parliament and is in the process of debating a new constitution but they don’t see these issues as impacting a potential agreement with the IMF.

Skyfall is record debut for Bond

The new James Bond movie “Skyfall” opened with a record debut bringing in $87.8 million, according to the Associated Press.  Worldwide the movie has brought in over $518 million since it opened in overseas markets in late October. While Skyfall marked a new high for Bond’s opening weekend, if adjusted for inflation, Sean Connery’s Bond adventures, Thunderball and Goldfinger, would have beat Skyfall.  This is the 50 year anniversary for the Bond franchise.

Alaskan ice may hold the next new energy source

The Associated Press indicates that the US Department of Energy and industry partners have drilled into a large reservoir of methane hydrate, which looks like ice but burns like a candle if a match warms its molecules.  While the recent success of fracking has eliminated the need for methane, the main ingredient of natural gas, for now…the DOE and others want to test and have ready the methane for the future.  Researchers will begin testing how the reservoir responds to extraction of the gas.  One of the concerns of using methane hydrate for fuel is the impact it might have on the environment.

As the Arctic melts, Antarctica grows

Northward winds are driving record growth of winter sea ice around Antarctica, according to the Wall Street Journal.  New research, based on 19 years of daily ice motions measurements recorded by four satellites from the US Defense Meteorological Satellite Program, documents for the first time that long term changes in the drift of annual sea ice is impacted by winds. While the ice around the Arctic Ocean was the lowest since 1979, the sea ice in the Antarctic has been increasing by 6600 square miles every year during the same time.  Scientists do not know whether there is a link to global warming.

International student enrollment increases

USA Today reports that the number of international students enrolled in US colleges climbed 6 percent to a record 764,495 this year.  The largest increases came from China and Saudi Arabia.  The number of US students earning credit abroad also continues to increase but at a slower rate.  In 2010-11, 273,996 US students studied abroad, up 1.3 percent from the previous year.  About 14 percent of US students earning bachelor’s degrees this year studied abroad.  A study indicates, however, that 38 percent of international students felt they did not develop strong friendships in the US and 27 percent were not satisfied with the friends they had made.  International students contributed $22.7 billion to the US economy last year in tuition, fees and living expenses.

About the Author

Catherine McBreen

Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.