Sao Paulo Shoppers Send Emerging Consumer Stocks to Lone Gain

Emerging-market consumer stocks are posting the only gains among 20 industry groups since MSCI Inc.’s gauge of global shares peaked in April as investors bet shoppers from Moscow to Sao Paulo will provide a haven amid signs the global recovery is faltering.

The MSCI Emerging Markets Consumer Staples Index rose 2 percent and the MSCI Emerging Markets Consumer Discretionary Index gained 1.2 percent since April 15, leaving both measures within 5 percent of their all-time highs. Every other emerging and developed-nation industry group fell, led by a 15 percent drop in the MSCI World Information Technology Index.

While the MSCI All-Country World Index has slid 11 percent from this year’s peak on stagnant U.S. jobs growth and spending cuts by European governments, retail sales are surging at an 18 percent pace in China, 11 percent in Brazil and 5 percent in Russia. The gains sent Russian grocer OAO Magnit to the highest ever price-earnings ratio relative to London-based J. Sainsbury Plc and lifted Brazilian fashion retailer Lojas Renner SA to its most expensive level compared with San Francisco-based Gap Inc.

“People are willing to buy these sectors even though they have some concerns on valuations,” said Gareth Morgan, a London-based emerging markets money manager at F&C Asset Management Plc, which oversees about $156 billion worldwide. “You’re looking for stocks and sectors with a higher degree of certainty and some of these consumer stocks fit the bill.”

Rising Incomes

Investors are counting on rising incomes in developing nations to boost demand for everything from food and cigarettes to designer shoes and cars even as increased saving rates in the developed world pare spending.

Emerging nations will account for 93 percent of the global “middle class” by 2030 -- up from 56 percent in 2000 -- and half of a projected 800 million new middle-income consumers will come from India and China, according to Citigroup Inc.

Developing countries will expand 6.4 percent as a group next year, almost three times faster than the 2.4 percent growth in advanced economies, according to International Monetary Fund estimates. Retail sales will climb an average 7.5 percent in 12 major emerging markets during 2011, compared with 2 percent growth in advanced countries, forecasts by research and consulting firm Euromonitor International show.

The savings rate in the U.S. reached the highest level in almost 18 years in June, climbing to 6.4 percent, the Commerce Department said on Aug. 3.

Growing Middle Class

The MSCI AC World index has retreated 4.1 percent this week after the Federal Reserve said the economic recovery is weakening and U.S. initial jobless claims unexpectedly climbed. The emerging consumer staples index of food, beverage and household products companies lost 1.6 percent during the period, while the discretionary gauge of clothing retailers, real-estate companies and automakers lost 3.1 percent.

“Valuations are not cheap anymore, so we may see some profit-taking here and there,” said Ivo Kovachev, a senior emerging markets money manager in London at JO Hambro Capital Management Ltd., which oversees about $6.3 billion including shares of Krasnodar-based Magnit. “But the long-term story is still there. The emergence of the middle class is the main driver.”

Emerging-market fund managers had their top “overweight” positions in consumer stocks last month, according to a survey by Bank of America Corp.

Investors are bullish even after the companies failed to post the best returns during six global equity retreats tracked by Bloomberg since MSCI’s industry indexes began in 1995. When the MSCI AC World Index tumbled 60 percent through March 2009, both the emerging-market consumer staples index and the consumer discretionary index sank more than their developed-world counterparts.

Recession Threat

Should the global economy slip back into recession, even developing-nation consumer stocks may not be a haven, said Deborah Medenica, the global head of emerging-market equities at PineBridge Investments LLC, which has about $90 billion under management in New York.

“What this downturn has shown is that market correlations are high,” Medenica said. “If there’s a fear of double dip re- emerging no one is safe from that.”

Magnit, which operates a chain of discount supermarkets in Russia, is trading at 31 times per-share earnings during the past 12 months, almost triple the ratio of 11 at U.K. grocer Sainsbury, according to monthly data compiled by Bloomberg. Renner of Porto Alegre, Brazil’s biggest publicly traded clothing retailer, has a price-earnings ratio of 26, compared with 10.3 for Gap, the operator of Old Navy and Banana Republic clothing chains. The 152 percent premium is near the record 162 percent reached on July 30, data compiled by Bloomberg show.

‘Domestic Society’

India’s ITC Ltd., a Kolkata-based producer of cigarettes and snack foods, is trading at 25 times analysts’ estimates for next year’s earnings, near the highest since Bloomberg began compiling the data in May 2009. Belle International Holdings Ltd., a Hong Kong-based seller of women’s shoes, is valued at 30 times profit estimates, the highest since its May 2007 initial public offering, data compiled by Bloomberg show.

“We’re seeing favorite opportunities specifically in China because the government is steadily shifting from an export society to a domestic society,” said Audrey Kaplan, who helps oversee $337 billion as a New York-based money manager at Federated Investors Inc. The Federated Intercontinental Fund held 1.7 million shares of Belle as of June 30, according to data compiled by Bloomberg.

More Spending

Chinese retailers are benefiting from increased spending by the nation’s 1.3 billion people as the economy expands at an annual rate near 10 percent. Belle may boost earnings before interest, taxes, depreciation and amortization at a 19 percent pace over the next two years, more than double the rate of global peers, according to analysts’ estimates compiled by Bloomberg.

Magnit’s earnings are forecast to climb at a 30 percent pace next year and 26 percent in 2012, analysts’ estimates compiled by Bloomberg show. Renner’s long-term growth rate is estimated at 23 percent, while ITC may increase earnings at a 12 percent annual pace, according to analysts’ estimates.

ITC shares have climbed 21 percent in Mumbai trading since April 15, while Renner has gained 31 percent in Sao Paulo, Belle is up 20 percent in Hong Kong and Magnit’s London-listed shares have gained 13 percent.

Growing Confidence

JO Hambro’s Kovachev says rising incomes in emerging markets are boosting companies outside MSCI’s consumer indexes. He cited Ankara-based Turk Traktor & Ziraat Makineleri AS, which surged 8 percent yesterday after saying second-quarter profit more than tripled. The tractor maker is benefiting from higher spending by farmers, Kovachev said.

Turk Traktor shares are valued at 8.3 times earnings, less than half the ratio of 18 for MSCI’s global consumer discretionary index, data compiled by Bloomberg show.

“People are more confident in the domestic growth in emerging markets,” said Greg Lesko, the head of emerging-market equity at Deltec Asset Management in New York, which oversees $750 million. “If you can find companies that are uniquely taking advantage of this growth it’s an opportunity.”

Via:

www.bloomberg.com

Sao Paulo Shoppers Send Emerging Consumer Stocks to Lone Gain

School Bans Viagra When 1,000 Teachers Prescribed Erectile Dysfunction Drug

Two years ago, the Milwaukee school district decided that it was more interested in enhancing teacher performance in the classroom than the bedroom.

The district cut Viagra and other erectile dysfunction drugs like Cialis and Levitra from its health insurance plan, hoping to save $786,000 a year.

Officials said too many teachers were using the expensive drugs for recreation, swelling their insurance rates. An estimated 1,000 of the 10,000 school's staff, which includes employees, dependents and retirees, were using the drugs.

Now, teachers are fighting to get the benefit back with a lawsuit. The Milwaukee Teachers' Education Association (MTEA) argues that the new policy discriminates unfairly against men and "creates barriers" to receiving necessary medical treatment.

In recent years, several lawsuits have claimed that health plans discriminate against women by not providing contraceptives, but now medications like Viagra -- which can cost $20 a pill -- are being viewed as so-called "lifestyle" drugs.

Drug companies have invested more than $20 billion in research into drugs like weight loss pills, smoking cessation medications, hair restoration products and erectile dysfunction drugs since the 1990s, according to the scientific journal Nature.

But as budgets tighten, federally funded programs like Medicare are dropping their coverage of these expensive drugs and some employers are following suit.

In 2002, Milwaukee's school district agreed to cover six tablets a month. But when the bill skyrocketed to $207,000, the benefit was ended in 2005.

Kris Collett, spokesman for the MTEA, said the union had filed a complaint with the Wisconsin Equal Rights Division in 2008, but it was dismissed on procedural grounds in 2009. Now, the union has appealed to the Labor and Industry Review Commission to go forward with the lawsuit.

"The health plan provides medications to women for similar medical conditions, but men are excluded from pharmacy treatment," said Collett, referring to insurance coverage for female sexual dysfunction treatments like vaginal creams, estrogen and anti-bacterial medicine.

The health plan still covers options such as penile pumps and implants, but the union says they are "far less desirable than oral medication," according to the filing.

As sparks fly, even a union-endorsed gubernatorial candidate is getting into the fray. Democrat Tom Barrett, whose wife lost her job as a teacher, has asked the union to drop the lawsuit.

Viagra for Recreation, Not Medicine

"I know you agree there are fewer issues more important to the future of our communities and our state than the education of our children," wrote Barrett in a letter to the MTEA this week. "In tough budgetary times, it's even more essential that we invest our precious education resources wisely."

"As governor I will work to invest more resources to strengthen education in Wisconsin," he wrote. "However, I believe education dollars should be devoted to enhance performance in the classroom."

"The reality is that in other places across the country, millions of school districts are facing enormous budget crunches," said Phil Walzak, spokesman for the Barrett campaign. "Here we have a situation in Milwaukee where 490 teachers were laid off recently causing constraints."

Although 89 teachers were reinstated, "it impacts what happens in the classroom and individual attention for students," he said. "We have seen increasing property tax rates in the past several years. When they saw the costs, one has to reconsider."

"These drugs were identified as recreational, as opposed to a medical necessity," said Walzak.

But other men take exception. Texas divorcee Paul Franco said the erectile dysfunction drug Levitra saved his mental health. Ten years ago, as a stressed-out car salesman, he had difficulty performing.

"It caused my divorce," said Franco, 61. "My wife kept saying, 'How come you don't love me anymore?"

"I was wondering why I can't have an erection with my wife," said Franco, a father of five. "I have a beautiful wife."

Now, his insurance covers his Levitra and he has a girlfriend. 'I feel great," said Franco, who now sells insurance. "I feel 100 percent better."

Franco said he cannot understand why Milwaukee teachers can't have the same benefit, especially considering the stress they face daily in the classroom.

Why Can't Stressed Teachers Get Benefit of Viagra?

"It definitely sounds unfair to me because of the male teachers," he said. "You hear about a lot of stuff going on in school these days. I bet you have a bunch of teachers where the marriages go wrong. Having a sexless marriage doesn't work at all."

Insurance plans generally cover prescription drug treatments for erectile dysfunction, according to Susan Pisano, spokeswoman for America's Health Insurance Plans.

"The underlying principle is if you want something covered and it's not outright harmful, typically it's covered, if the purchaser is willing to pay for it," she said.

State laws vary in what coverage they can mandate -- emergency room care, for example -- and the new federal health care law will also determine new requirements. Even prescription drug coverage is not universally required by law.

"Some employers purchase a health plan more or less off the shelf, and others want to have something more tailored to their needs," said Pisano. "Where there is not a state law, the employer's decision plays heavily into it."

How many in a group plan use a prescription drug can affect the employer's costs.

"It may be that a drug for a very rare disease costs a lot of money and is not used that much and something less expensive is used more extensively," she said. "Drug costs are going to keep going up and hospitals, doctors and employers are going to face tough choices."

But the American Urological Association says these drugs are medically appropriate for erectile dysfunction, and with more than one-third of all Americans obese, some doctors agree.

"Look at demographics of our society," said Dr. Robert Davis, clinical professor of urology at the University of Rochester Medical Center. "Erectile dysfunction goes with hypertension, diabetes, metabolic syndrome with a waist over 40 inches in men and high cholesterol. There is an obesity crisis in this country and a third of Americans are overweight."

As for those who may use these drugs recreationally, Davis said doctors have no way of knowing whose claim is legitimate -- and he said the school district probably does not either.

The Viagra Wars: Milwaukee Teachers Fight for Insurance Coverage

"I don't knowingly prescribe them that way, but patients can present stories and manipulate us," Davis said. "We have no truth serum and have to accept stories as they are related."

Some pharmaceutical-funded studies have shown Viagra is effective for treating depression, according to Davis.

"People who can't sexually function often lose their self esteem and a part of life they value and regain with Viagra," he said.

Such was the case with Charles, a 41-year-old from Alaska, who did not want his last name used. He said he uses these drugs and they "work very well."

"I believe health insurance should cover the cost of Viagra because when you are unable to get an erection your confidence is destroyed, you are unhappy and depressed, which will lead to more health risk," he wrote ABCNews.com. "It has been proven that a happy person is a healthier person. Saving the money will make you even more happy."

Via:


abcnews.go.com

School Bans Viagra When 1,000 Teachers Prescribed Erectile Dysfunction Drug

Jennifer Aniston vs. Bill O'Reilly: The Family Factor

There's one man who won't be sitting down for Jennifer Aniston's "Switch" next weekend:

Bill O'Reilly

The Fox News talking head took the actress to task this week on "The O'Reilly Factor," calling recent comments she made about single motherhood "destructive to our society."

While promoting her upcoming movie "The Switch," about a single woman seeking a sperm donor, Aniston told reporters at a press conference in Los Angeles Sunday that "times have changed" when it comes to thinking about the traditional family.

"Women are realizing more and more that you don't have to settle. They don't have to fiddle with a man to have that child," she said. "They are realizing if it's that time in their life and they want this part they can do it with or without that."

She also challenged the idea that a single woman having a baby without a father is selfish.

"I don't think it's selfish," she said. "It's quite beautiful, because there are children that don't have homes that have a home and can be loved. And that's extremely important."

In O'Reilly's eyes, Aniston's comments make her a threat to the American family.

"She's throwing a message out to 12-year-olds and 13-year-olds that 'Hey, you don't need a guy. You don't need a dad.' That is destructive to our society," he said on Tuesday's "O'Reilly Factor."

Fox News contributor Margaret Hoover and Fox News anchor Gretchen Carlson chimed in on the topic, agreeing with O'Reilly that teens and tweens can't understand the difference between a mature woman raising a child on her own (Aniston is 41) and a teen having a baby.

"She is glamorizing single parenthood," Carlson said.

Aniston's representative did not immediately return ABCNews.com's request for comment.

Jennifer Aniston Wants Kids
But it seems that regardless of what O'Reilly thinks, and despite her single status, Brad Pitt's former flame is determined to have kids of her own one day.

Via:

abcnews.go.com

Brief and to the Point:

Should Ms. Aniston need a real man to handle the task, Bill would never be up to the job anyway...

Jennifer Aniston vs. Bill O'Reilly: The Family Factor