It’s time for another quick look at the United States banking system. Whoops! Nothing happening there. Are they still alive?

Federal Reserve Bank Credit has increased by $1.2 trillion over the past twelve months. What has increased in the banking system? Excess reserves in the commercial banking system have increased by about $800 billion. Tracing this “stuff” a little further, in round figures, the currency in circulation outside of the banking system has increased about $100 billion over the past year, about $100 billion has gone to foreign central banks in liquidity swaps, so there is another $200 or so in funds that the Fed has pumped into the system that is somewhere in Treasury accounts. But who is counting?

When most investors think of the telecom sector and wireless providers, Verizon [(VZ): 28.62, -0.02 (-0.07%)] and AT&T [(T): 23.44, +0.06 (+0.26%)] come to mind first. These two companies form a duopoly of the domestic market. Market penetration is nearing 90% in the US, so growth is limited, as these two companies are forced to compete for existing clients to survive as well as continue to steal market share from Sprint-Nextel [(S): 4.36, -0.10 (-2.24%)] and T-Mobile.

They are also attempting to jump into unique markets every day in hopes of adding revenue and improving margins. For instance, VZ and T have been rolling out fiber optic backbones for even faster internet speeds and enhanced TV picture quality. While this appears to be the new generation and face of telecom, there is one company that continues to dominate its traditional market. China Mobile [(CHL): 47.60, -0.35 (-0.73%)] has exerted itself as the largest provider in the world, and has dominated its local Chinese market as well as surrounding regions. This company has proven to be best of breed with a solid fundamental business core, but has great growth potential as its 3G network is still in its initial stage.

I’m sure quite a few eyes rolled when reading the title of this article. “Green Shoot” has been thrown around the financial media incessantly over the past few months, to the dismay of many. The thought that a new menu item at McDonald’s (MCD) [57.05, +0.28 (+0.49%)] is a glimmer of hope for the economy is, admittedly, a little preposterous. While I don’t believe the 1/3 pound premium sandwich signals a recovery, it does say something about the future of consumer spending. If there is one company that knows a little something about the everyday consumer, it is McDonald’s.

There’s been a slew of good news lately, including improved consumer sentiment, lower than expected job losses, increasing wages, and a contracting TED spread. The stock market has been up for 12 of the past 14 weeks, and the Dow recently broke even for 2009. Public officials including President Obama and Fed Chairman Bernanke have declared the worst to be over.

Unfortunately we are not yet in the clear. The yield on the 10-Year Treasury Note increased 60 basis points during the one-month period from May 12 to June 12. Oil prices rose 23% over the same period. Keynesian economists argue that interest rates and oil prices are higher due to the expectations of economic recovery. While the recovery may partially explain the increase in these prices, it doesn’t explain all of it. The Treasury continues to auction billions of dollars, and auction demand has been less than great. The rate on the 10-year recently skyrocketed to 4.00%.

Through the '90s, Cisco Systems (CSCO) was known as one of the “4 Horsemen of IT” and was even the largest company by market cap ($500 B) at the peak of the tech bubble in early 2000. The web is the driver of all information worldwide over the past two decades, thus all recent tech trends revolve around the internet: mobilization, cloud computing, virtualization, social networking and much more. Consequently, Cisco is the dominant provider of the networking gear that runs the internet. More specifically, Cisco’s bread and butter has been the ethernet switches and overall router markets with approximately 70% and 50% of the market share, respectively. To sustain revenue growth, companies like CSCO must adapt to tech trends and enter new markets outside of its core business.

Breaking Ties

The week of June 26th was very bad to Boeing (BA). After continued reassurance from CEO Jim McNerney that the company’s much anticipated (and previously delayed) Dreamliner 787 would be delivered by the 23rd, Boeing once again came up short. To investors, this was simply one slip-up too many… and a company that cannot fulfill promises is a company worth selling.

Making matters worse, the next day, the U.S. Department of Defense terminated the land warfare weapons program headed by BA’s Integrated Defense Systems unit worth an estimated $160 billion. Thinking that there was no possible way to add more grief onto shares of Boeing, Qantas Airways canceled orders for 15 Boeing 787 Dreamliners after being “disappointed” by Boeing’s management.

Over and over again, I’ve reiterated the fact that the world is shifting to a mobile realm for on-demand information. The four companies listed below are IT leaders in innovation, the key driver of all tech companies, for the increasingly mobile world. For instance, netbooks are riding the same wave smartphones did just a few years ago. Apple has yet to jump into the field, Qualcomm (QCOM) is developing the chips and Google (GOOG) provides the Android operating system. Keep in mind, tech remains hot in this bear market rally; the IT SPDR (XLK) is up 18.20% YTD, outperforming the S&P 500 by 16.21% (as of 6/21/09). Throughout this article, I have embedded many links to read further on these revolutionary technologies.

I always get excited when changes to the Dow Jones Industrial Average (DJIA) occur. I don’t really know why. But you can bet I was glued to my TV when Chevron, Bank of America, and Kraft replaced Honeywell (HON), Altria (MO), and AIG (AIG) last year. This year, the DJIA has changed yet again, with Cisco (CSCO) and Travelers (TRV) replacing GM (GM) and Citi (C).

If you have not read the first and second parts of this article, please follow the links. By now, you should be getting a quick glimpse of the trends that are influencing health care companies operations and decisions. In my first article I discussed how the government’s and FDA’s agendas are affecting the health care industry, and in my second article, I examined recent M&A activity, generic competition, and trends within the CRO industry. In this article, I will touch over the things that are plaguing Managed Care Organizations (MCO) and Medical Supplies companies and forces that are inspiring growth in Health Care IT.

Decline in Hospital Admissions

The NASDAQ has finished up 11 of the last 12 weeks, proving that tech is hot in this market rally. It’s no hidden secret that semiconductors are cyclical and should rebound with the economy. However, timing the market to buy at the bottom is a difficult task for any investor. QUALCOMM, Inc. (QCOM) is a great semiconductor play on the secular growth of smartphones and wireless network upgrades from 2G to 3G, and eventually to 4G. QCOM manufactures code-division multiple access (CDMA) based integrated circuits and system software used in mobile phones, data cards and infrastructure equipment. They also license over 10,100 U.S. granted and pending patents for CDMA and related wireless technology to more than 150 third party wireless equipment and cell phone makers. QCOM continues to see royalties ranging from $4 to $8 for the sale of each 3G phone.

On April 27th, QUALCOMM reported revenues of $2.46 billion, beating analysts’ estimates of $2.33 billion. However, the big news was $891 million will be paid to Broadcom (BRCM) from a litigation settlement charge over the next four years. However, this will save QCOM $100 million in annual operating expenses as well as pay off the litigation charge with offshore cash, thus saving QCOM about 25% instead of repatriating that cash as profits as well as $100 million annually in operating expenses. This ongoing legal battle has hindered QCOM’s performance and distracted management, but with these issues now behind them, I believe QCOM will outperform the broader semiconductor market in the near future.

If you have not read part one of this three part article, please find the link here.

As I have already highlighted, the health care industry is subject to many swings that are caused by macroeconomic variables, regulation, trends, and beliefs. These changes can be hard to pick up on, especially if you are new to the health care industry or if you are not as familiar with it as with more experienced investors. In the first part of this article, I explained how the Obama Administration and the FDA are shaping the environment for health care companies. It is very important to understand the relationship between companies and their stakeholders and the major forces in the industry in order to properly evaluate a health care company.

American Express (AXP) has outperformed its sector and performed very well to start 2009. They have beaten out all credit card companies year to date, and are up nearly 34%. This strong performance in the beginning of ‘09 may be hindered, however; as recent legislation changes led by President Obama may permanently change the outlook of the credit card industry. While this legislation should certainly benefit the average consumer, it will hurt the entire industries’ profitability.

The Obama legislation will protect the average consumer from rate increases on accounts that would have previously been considered for delinquency. It will take longer for accounts to be considered past due, and companies must give their clients 45 days notice before they can hike rates. While this immediately affects major issuers, this will also be detrimental to every company in this industry. While this change certainly favors other companies such as Visa (V) and MasterCard (MA) over American Express, is it possible for AXP to hold on to its strong YTD numbers and remain a serious contender as the premiere card company?

This is part 2 of my Key Telecom Trends article. Part 1 can be read by clicking here. Two other trends in Telecommunications over the past few years that should have a significant impact in the future are:

Voice Over Internet Protocol (VoIP)

It was just a short time ago that the American International Group (AIG) name riddled the papers and news columns with updates on the insurance giant’s troubles and whether they would survive the economic downturn with severe capital issues. They received the biggest bailout in history and seemed to barely get by. Now, a few short months later, they must plan how they will re-pay their TARP money. We now have a clearer vision of exactly what assets may be auctioned off and what the new landscape of the financial sector may be. The next few months for AIG will vastly change its balance sheet and hopefully purge some of its debt owed to the U.S. government. Is it possible for this giant to stay alive, yet alone return to its past prominent state?

AIG’s New Face

The world is seeing a move to on-demand information and mobile computing, evident by the explosion of smartphones in recent years. Furthermore, bandwidth demand has increased drastically as more people are emailing, texting, downloading applications and watching YouTube on their cell phones, thus requiring networks to be upgraded accordingly. Mobile networks have been upgraded both domestically and internationally to 3G and will eventually be revamped up to 4G. In the home, cable networks have been upgraded from coaxial cables to fiber optics by companies like AT&T (T) and Verizon (VZ) to gain access to more HD channels and faster, more reliable internet connections. There has also been a shift on the consumer front as wireless companies have been rolling out unlimited prepaid plans favoring consumers looking to trade down and cut costs in this tumultuous economic environment. I’ll give a brief overview of four recent trends in Telecom:

1. 3G to 4G/LTE
2. Fiber Optics
3. Voice Over Internet Protocol (VoIP)
4. The Postpaid to Prepaid Shift

3G to 4G/LTE

Whenever someone mentions the idea of an economic recovery, I immediately start thinking about what would happen if natural gas rose back towards late 2007 and early 2008 levels. This won’t happen in the near term as it is anticipated that we will be in a weak hurricane season and there are still a few more shoes to drop in the economy. However, long term energy demand predictions and the loose fiscal and monetary policy of the United States have paved the way for another energy bull-run.

Natural gas is currently trading around $3.70. With the forward curve looking at price closer to $5.70 by the end of this year, there is no better time to get in than now if you have faith in the commodity over the long term.

Every time the United States goes through a recession, the pundits all race to be the first to proclaim that “Buy and Hold” is dead. I can’t watch a financial news channel or read a financial website without some mention of this proclamation. Well I’m growing tired of it, and if it were up to me, I’d prohibit anyone else from making this point for the rest of 2009.

Buy and Hold is not dead, and I’m on a mission to prove it. Buy and Hold has worked brilliantly for decades, and it will continue to do so in the future. The stock you bought in 2007 is worth less now than what you bought it for? Oh boohoo, go cry me a river…somewhere else. The economy has peaks and troughs, and we’re in the middle of one of the more serious troughs since the Great Depression.

It’s become clear throughout the past five years that GAAP and financial reporting in the United States are on a clear path toward change in the form of a convergence with the International Financial Reporting Standards (IFRS). World events, most notably the London G-20 Summit, have been calling for a single, high quality set of accounting standards that all companies will use to file. The SEC has recently made definitive steps toward this change, enough to make me believe that IFRS will be here before we know it, so it’s time to get ready.

Background

In my opinion, health care is the most difficult industry for novice investors to understand. With so many stakeholders involved in developing and manufacturing any given medical product, it is often hard to obtain a firm grasp of what is shaping the future of this industry. In this series, I will be analyzing the health care industry using a top-down approach to help you understand the current and future environment that will determine the success or failure of the efforts of health care companies.

Obama’s Health Care Plan

We all know consumption is the most prominent victim of this recession. Not only do we have to deal with soaring unemployment and tightening credit, but also the behavioral shift in America of spending less as a percentage of income. Obviously these factors are going to disproportionately hurt the sub sectors with the highest priced goods, or those considered the most discretionary such as luxury cars, high-end women’s clothing, etc. One sub-sector that will surely feel tremendous pain, however, is teen retail.

It is common knowledge the national unemployment rate is expected to reach 10% or higher in the foreseeable future. This is well known, and priced in to most retail stocks. When you break unemployment down by age, however, a very grim signal for teenage spending in particular emerges. According to the U.S. Bureau of Labor Statistics, the current unemployment rate for men and women between the ages of 16 and 19 is 21.5%, over 141% higher than the current overall national unemployment rate of 8.9%.