FAT-USA-22806 Aug 10

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    Market Comment

    Global growth is a story of contrasts between east and west. In China, the problem is too much growth and how best to cool the economy without dousing the fire too much. In the US and Europe, the approach is diametrically opposite with not enough growth and worries about falling back into recession, particularly in the US.

      Barrick Gold

      Gold miners are leveraged plays on the price of gold with this illustrated by the strong increase in Barrick Gold's second quarter profits. The realized gold price for the group rose by 29% on a year ago but net income jumped by 59%. As we continue to be bullish on the gold price we expect Barrick Gold to see further strong profits growth and therefore rate the group a hold.

        BHP

        Most production periods for the large diversified miners have one or two areas of weakness which is only to be expected. Where it counts, in its high margin businesses, BHP Billiton had a solid 2Q10 (4QFY10) and a good twelve months with lots of production records.

          Citigroup

          Citigroup's result was pretty much in line with the rest of "the Street's" major banks. Revenue was down on the back of a tough quarter for investment banking and trading. There was a significant release from loan-loss reserves, but we are not seeing the extent of credit growth that we would expect to associate with a normal recovery. This is of course not a normal recovery and it is going to take some time for conditions to normalise.

            McDonald's Corporation

            The new menu items continue to help McDonald’s to increase operating earnings in a tough environment. European sales looked a little sluggish as did US company-owned restaurants, but once again, tight control of expenses lifted operating income by 9.7% over the prior comparable quarter.