Market & Economic Commentary

Holiday

Approximately 7,000 publicly owned companies report dividend information to Standard & Poor's Dividend Record. In Q2'10, 34 companies decreased their dividend distributions – a significant improvement from the 250 cuts in Q2’09, according to S&P. The number of companies that increased their dividendpayouts totaled 355 – up from the 233 increases registered in Q2’09. Howard Silverblatt, Senior Index Analyst at S&P, reported a net increase in annual dividend rates of $13.4 billion in the first half of 2010, compared to a $48.6 billion decline in rates in the first half of 2009.

The first of the 79 million Baby Boomers will turn 65 years old next year –what is now considered retirement age. Investment Company Institute data shows that when the first Boomers turned 25 in 1971 the fund industry had $55 billion in assets, according to USA TODAY. Today, total assets are $10.7 trillion ($4.7 trillion in retirement accounts). Around 42% of fund IRA money is invested in U.S. stock funds, compared to 46% for defined-contribution plans.

Global M&A activity is poised to ramp up in the second half of 2010, according to Ernst & Young Transaction Advisory Services. Deal volume reached about $810 billion in the first half of this year, similar to the $814 billion last year. Market fundamentals though are improving and those companies that have been conserving cash are now looking to implement growth strategies that were shelved during the recession. The companies that comprise the Fortune 1000, for example, are currently holding $1.8 trillion in cash and equivalents. Ernst & Young also expects more activity from the BRIC countries and private equity firms moving forward.

Akio Shibata, chief representative for trading company Marbubeni Corporation’s research institute, believes the demand for corn in China is about to surge to the extent it could boost imports 10-fold by 2015, according to Bloomberg. He sees imports growing from an estimated 1 million tons in 2010 to 10 million in 2015. The corn would likely be used for feed production. China has not been a net importer of corn in 14 years. The U.S. is expected to account for 57% of global corn trade in 2010-2011, according to the U.S. Department of Agriculture.