As NATO Nears Exit, Construction Dries Up

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KABUL, Afghanistan — Jalalabad Road, the heart of what might be called the Afghan capital’s military-industrial complex, has also become the place where heavy construction equipment comes to die.

Lined with Afghan and NATO military facilities and the contracting firms that serve them, the road is also garlanded with miles of brightly colored holding yards — in the yellows, oranges, blues and reds of backhoes and diggers, forklifts and bulldozers, cranes and cherry pickers, graders and rollers.

Most of them are new, or newish, and nearly all are idled. Nowhere is the impending collapse of Afghanistan’s construction industry more evident than here, where Afghan companies that hire out heavy equipment to construction firms have hit hard times.

“In the past two months nobody has rented a single piece of my machinery,” said Shafiq Ahmad Sidiqi, 28, who owns a construction company and rents out hydraulic lift platforms, of which he has 30 in various sizes. “The foreigners are leaving, and the money is drawing down.”

Precise figures on the falloff of construction in Afghanistan are difficult to come by, but those in the business say the impending American and NATO withdrawal has not only slashed military spending, but also depressed construction spending generally.

“The decline of investment in construction started at the beginning of 2012 as soon as the 2014 deadline was announced,” said Ghulam Ali Danish Kamal, the executive manager of the Afghan Builders Association.

Mr. Kamal said the number of construction companies in Afghanistan had fallen to at most 3,000, compared with 10,000 at one time. “Already there has been a 30 to 40 percent drop in investment in construction this year, and some of the projects that you see here are from 2011, which will be completed by the end of this year,” he said. “In 2013, most of the companies will be out of a job, and even if there are some projects they will be small ones.”

Afghan government officials insist things are not as bad as all that. “We don’t confirm the decline in the number of construction companies,” said Wafiullah Iftikhar, president of the Afghanistan Investment Support Agency, who maintained that the drop in military financing would be made up for in long-term foreign investment. “We do accept that there has been a dramatic reduction in the number of projects and contracts awarded by NATO forces in 2012, but it does not necessarily mean the construction sector would collapse,” he said. “We are hopeful that in the near future the construction sector would boom once again, since the international community has pledged billions of dollars to spend on infrastructural and economic development projects.”
http://www.nytimes.com/2012/11/05/world/asia/as-nato-nears-exit-afghan-construction-dries-up.html?partner=rss&emc=rss

It’s the Earnings, Stupid: “Atrocious” Q3 Turns Josh Brown Cautious

Josh Brown won't make any big calls on the outcome of the presidential election. Brown, the author of widely read "The Reformed Broker" blog and a vice president at asset management firm Fusion Analytics, says market reaction to the next president will be "huge" and some people will be rewarded handsomely for their bets. Hospital REITs could see a 10% pop if Obama wins, Brown believes, while a Romney victory means a boost for traditional pharmaceutical stocks.But that momentum will fade and investors will redirect their attention back to the looming crisis in Washington: the convergence of massive automatic tax increases and spending cuts — more commonly referred to as the "fiscal cliff." These concerns, coupled with decelerating corporate earnings, have convinced Brown to reduce exposure to equities and take a cautious investing approach as the year comes to a close."This third quarter earnings season was just atrocious and the guidance was not that much better," Brown says in an interview with The Daily Ticker. "The top line is slowing noticeably and no one is immune to what's going on overseas."Fusion Analytics sent a letter to clients at the end of October explaining the bearish tone.

"We are seeing increasing signs that the cyclical bull market that began in March 2009 may be -- finally -- coming towards its end. In light of this, we have cut back on some major holdings, and raised our cash levels to 25% in the asset allocation models. We removed half of our energy positions, and eliminated our emerging markets exposure. We never know for sure when a cycle ends, but when we see early warning signs that put us on alert, we take proactive steps to protect capital and manage risk. We always make gradual and infrequent moves, highly cognizant of the possibility we will be wrong. A move above the September highs will cause us to rethink this defensiveness."

Brown says the firm still has exposure to the market but he's moved a larger portion of clients' money into cash. The only sector he continues to see view positively is healthcare, but that's because other areas of the market are underperforming.http://finance.yahoo.com/blogs/daily-ticker/earnings-stupid-atrocious-q3-turns-josh-brown-cautious-171634569.html?l=1

Awaiting the End of Uncertainty? Don’t Hold Your Breath

A well worn adage about Wall Street suggests that markets can adjust to almost any circumstance, as long there are no surprises. "We don't like the idea of higher taxes," investors often say, "but we can deal with it (within reason) as long as you leave things alone after that."While this degree of flexibility may seem, to some, totally out of sync with an otherwise polarized world of entrenched partisan positions, it really is laudable for the "we'll find a way" optimism and attitude it implies."Elect whoever you want, just leave us alone" the battle cry goes, but the problem is, there's always something else to worry about. Just as Superman buckled at Kryptonite and vampires implode in the light, markets loathe the smell of uncertainty as much as they refuse to wait for news before reacting.What's interesting, as SocGen forex strategist Kit Juckes points out in a note to clients this morning, is that stock and bond investors have drawn different conclusions. "Romney cuts taxes and spending and eventually replaces Bernanke with someone less dovish. This helps stocks, is bad for bonds," Juckes writes, adding that "Obama raises taxes and healthcare, bad for stocks and therefore good for bonds."As insightful as this disparity is, it is also troubling in that it also means a lot, as in half, of investors are about to be proven wrong and therefore will need to adjust 180-degrees.But beyond Tuesday, as much as markets will presumably have a clear vote tally, there will be several other near and medium term obstacles that could keep investors in a funk.http://finance.yahoo.com/blogs/breakout/awaiting-end-uncertainty-don-t-hold-breath-134234414.html?l=1