varagur perumal temple

A village panchayat with a very old perumal temple and a Bank near the pilliayar kovil.

The name of the god is Sri Venkatesa Perumal Temple at Varagur  in Thanjavur district.

Devotees may send their donations or Kanikkai directly to The Managing Trustee, Village Varagur, Dist. : Thanjavur – 613 101 – T.N and obtain receipt.

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Corporate Learning & Development

Our soon to be published research on corporate L&D spending in 2008 shows a definite slowdown in spending on corporate training.  (This research will be published in October.)  This is certainly not a surprise – in August our research panel shows that today’s corporate talent managers cite “a need to reduce costs” as their #1 business challenge (54% of all respondents, up from 51% in May and 36% in January).

One of our long-term research clients is a large pharmaceutical company which has grown by leaps and bounds over the last decade.  This company, like many others in this industry, invests heavily in R&D and has benefited from the tremendous success of many of its blockbuster best-selling products.

In the last 18 months, however, growth has slowed – so this organization is now looking for ways to better rationalize its spending on corporate training and other business support functions.  A few recommendations to consider, based on this organization’s situation:

1.  It’s time to build a truly federated spending model for training.  Centralize the programs and functions which are repeatable and scalable (typically these include leadership development, career development, LMS and training technology, vendor operations, and advanced e-learning.

In this industry companies typically have strong functional business leaders in sales, manufacturing, research and development, and corporate functions.  These business units are going to have to give up some autonomy and rely on a shared services or corporate university function.  Such a move can save 10-15% or more of a company’s training spending with little or no real reduction in effectiveness.

2.  Rely heavily on informal and collaborative learning.  One of the least expensive ways to improve programs like onboarding, management and supervisory development, and career development is by focusing heavily on building collaborative programs which rely on communities of practice, social networking, and coaching.  David Mallon’s recent research (and soon to be published study in this are) shows that among all the social networking program in companies today, the most prevalent and successful are communities of practice.

Pharmaceutical research teams, sales teams, manufacturing teams, and technical teams can all learn rapidly and easily from each other.  And the L&D spending on such programs is minimal.

3.  Rationalize external spending.  Most big companies (like large pharmaceuticals) have many suppliers.  In a decentralized L&D environment it is almost impossible to efficiently manage these contracts.  While many excellent learning solution providers deliver high value (e.g. supervisory training companies, content development firms), they also look for opportunities to sell services to multiple business units in a global company.  When you centralize vendor operations you often find 20-30% extra spending in many program and functional training areas.

4.  Consolidate the LMS and build a talent management systems strategy.  Finally, focus on the area which most companies have been focused on for a few years, consolidation of the corporate LMS.  Our research shows that almost 70% of large corporations (more than 10,000 employees) are now focused on LMS consolidation.  This process, in conjunction with the development of an integrated talent management systems strategy, will save millions in IT and technical expenses.

Today nearly every major LMS vendor also has an integrated talent management (e.g. performance and succession management) suite.  Look carefully at it, because our research clearly shows that organizations which buy their LMS from the same supplier as their talent management system are seeing 3-4X the return from those who buy them from different companies.

I know cutting costs is not always easy.  But it is something we must deal with continuously, and today it is probably one of the most important things you will be asked to do.

Market for HR Software?

One of the things we regularly do as an analyst firm is estimate the size and growth rate of various corporate software markets.  Without giving away our proprietary methodology, I’d like to point out something which should make software providers think twice about their business strategy.

In the United States, only 38% of all employees work for companies with more than 1,000 employees, and only 22% work for companies with more than 10,000 employees.  So if you focus your software sales and product strategy toward the biggest companies, you are likely to find a saturated market quickly.  In fact, there are only 912 companies with more than 10,000 employees headquartered in the United States.

The “mid-market” is actually shaped like a dumbell.  In other words, there are a very large number (nearly 6 million) of tiny companies in the US (startups, small businesses), but far fewer companies of a medium size (companies from 500-2,500 employees only make up 8% of total US employment).  My guess is that the reason for this is that it is very hard for a business to grow above a few hundred employees, and those that manage to doso are solid enough to either grow much bigger or become acquired.

What this data essentially means is that HR software companies that target the large, global enterprise buyers are going to run into a lot of competition as their market matures.  For example, the market for performance and talent management software has already become very competitive, with more than 22 software providers including Oracle and SAP.  When this occurs it becomes a “replacement” market, which slowly favors the largest most established vendors.

On the other hand, if you can find a way to tap into the small business market, you are likely to find a goldmine.  Look at ADP and Paychex, for example.  These companies dominate the market for small business payroll and both are very large, profitable, and growing.  ADP’s revenues are nearly $9 Billion and Paychex’s is over $2 Billion.  Both are highly profitable and continue to grow rapidly.

In addition, the HR software solution providers must realize that the real needs of small businesses (those with more than 10-20 employees) are not much different than the needs of large companies.  Functionally, they still need payroll, performance management, learning, succession, and compensation management systems.  While they need a very simple, easy to use interface, one will find that once you start to fill their needs their requirements are very similar to big companies.  Halogen Software and Kronos are two of the best  examples of companies that understand this.  Their products are widely used by small and mid-sized companies and both have grown successfully and profitably in this huge market.

In the coming months we are going to introduce two major research reports on enterprise software markets, one discussing the marketplace for corporate social networking software (a very exciting and rapidly changing space) and the other focused on the exploding market for performance and talent management software.   In each report we will point out the current market size, growth rate, and potential penetration in each segment.

Finally, one more important thing to consider.  Two seperate but also large markets for HR software are the federal and the state and local government markets.  In the US both are very big:  the Federal Government employs over 2.2 million employees and state and local governments employ more than 23 million employees.  As you consider your growth strategy, think about when and how you will target these segments as well – both of which need precisely the same software as profit-making businesses.

Learning part of your Business Strategy

One of the important lessons we have learned from our High Impact Learning Organization® research is the simple but profound fact that learning is part of a corporate business strategy.   While many HR and business leaders still believe that “training” is department which improves workforce productivity and should be treated as an expense item, our research clearly finds otherwise.  Corporate learning is a critical part of any enduring business strategy, similar to finance, marketing, sales, and manufacturing.

Consider the following:

Change is the biggest challenge organizations face:  There are five distinct phases of any business – startup, rapid growth, maturity, decline, and rebirth (or death).
Figure 1:  The Lifecycle of a Business

Every company we talk with is going through this cycle – whether its Apple with the i-Pod, Starbucks in Coffee, AIG with its insurance business, Fidelity in 401k, or Target in retail.  The lifecycle takes place across its entire organization or across its individual products and services.  (We will be talking much more about the way talent management strategies vary across these phases in upcoming research.)

The reason for this cycle is the nature of competitive markets.  Whenever a company finds a profitable market, others eventually find new ways to serve it.   This process creates competition and buyers become more savvy.  Prices go down, and the leaders must now find a way to climb further “up the value chain.”  Today we see this happening to Starbucks, for example.  This process of continual evolution is not something you do occasionally, in today’s rapidly changing markets you have to do it all the time!

Caterpillar, one of our best practice research companies, is a good example here.  The company has evolved from steam tractors into a highly diversified global manufacturer of engines, machines, tractors, equipment,  services, and apparel.  During its  100+ year history Caterpillar’s people have had to “learn” a lot – and the company views learning as a strategic part of its business planning and execution process.

We call the companies which succeed over these cycles “enduring organizations,” and they are the focus of a major research effort we have been working on this year.
Learning is the core of Adapting to Change.

If you accept the fact that change is one of the biggest issues a business faces, then the ability to continuously adapt to change (organizational and individual learning) is one of the most important parts of a long term business strategy.   Unfortunately, many organizations don’t internalize this.

For example:  One of the most frequent questions we discuss with L&D leaders is the question of how to measure the value of training.  They ask this question because their leaders (VPs of HR or business leaders) question the investment in L&D and want to do a “zero based budget” each year.

The critical issue here is the top finding in our High Impact Learning Organization research:  the biggest driver of impact from learning investments comes from the development of an organizational “learning culture.”

A learning culture has many elements, including the organization’s:

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Ability to face up to its mistakes
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Ability to use errors as a learning process, not a punishment process
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Ability to sustain workforce development through bad times and good
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Ability to break things that seem to work and improve them before they really break
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Ability to coach people (the #1 high impact talent process)
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Ability to rotate people into development roles at all levels.

These “cultural” processes in companies go far beyond the L&D organization – they infiltrate leadership, management, operations, rewards and recognition programs, and values.  (The top 50 elements of such a learning culture are part of our HILO research.)

We are just about to announce our HILO Top 80®, the 80 Leading organizations in our High Impact Learning Organization research.  When you look at this list, you will see many iconic brand names – but you will also see many small and mid-sized companies which are highly profitable, highly successful, and owners of their markets.  These organizations realize that learning is part of a business strategy.

Learning vs. Execution Culture

Many organizations call us to ask for help in “measuring training” or “reorganizing L&D” or “building a blended or collaborative learning strategy.”  These are critically important parts of executing the learning strategy of an organization.  But the learning culture goes further – it means that you must balance learning with execution in every single business process.  And we must be careful to balance the focus between “learning” and “execution.”  Many companies think they compete against each other, while in reality they are totally aligned.

Consider the following.  Are the two columns competitive or complimentary?

Figure 2:  Execution Culture vs. Learning Culture

One may argue that “we don’t have time for learning,” we have a job to do.  Well that is true.  But of course if you are not “learning” while you “execute,” you are likely to “execute” yourself into oblivion.  Learning and Execution go together.

Examples of Learning as a Business Strategy

Consider Toyota.  How can Toyota manage to be first-to-market in hybrid automobiles, yet still continously compete against GM in trucks, mid-sized cars, and other existing markets.  Are the engineers at Toyota smarter than the engineers at GM?

Absolutely not.  I have met several GM executives and they are among the smartest and most focused leaders of any business.  But somehow they have not built the same culture of continuous learning which Toyota has.  Toyota has many well documented processes which build and reinforce this culture of learning:  quality programs, Kaizan, career development, experimentation, and empowering line workers to identify problems and fix them.

Consider GM.  GM, for all its challenges, is an amazing company.  As they fight their high labor and medical costs and work to trim products, they are instituting many innovative new learning programs – and I sense that their learning culture is undergoing tremendous change.

For example, GM has recently created a program called its “JumpStart” program for younger employees.  These GenX and GenY engineers and marketeers get together and have created career paths and development strategies in conjunction with the top 72 leaders at GM.  Recently the JumpStart team created a “car of the future” and went out and purchased a wide variety of electronic devices, music players, cell phones, and PC’s to demonstrate the opportunity for GM leaders to further innovate on user design and consumer electronics integration.  These initiatives are being thrust upon the “old guard” at GM to shake up complacent thinking and encourage innovation in products like the Volt, GM’s new electric vehicle.

Consider Bank of New York/Mellon.  In this organization, as in many other strong learning organizations, there is an assigned organizational effectiveness consultant located in each major business area.  This individual monitors and evaluates all work processes to look for opportunities to measure job effectiveness, find errors, and implement new opportunities for learning and performance improvement.  In effect, this role is a “learning culture” manager.

Consider EMC, one of the most successful high technology companies ever founded.  EMC sells a wide variety of disk storage, enterprise software, and IT services.  EMC has a business manager role entitled “Director of Business Performance” who serves as the performance consulting manager in each and every major business unit.  This person reports to the corporate university structure, but their job is to help the business unit implement continuous learning in all aspects of the business — including identifying processes with errors and flaws.

Learning Culture means Honestly Identifying Errors

Once an organization considers learning part of the business strategy, they look at “execution” differently.  They rigorously measure performance, constantly looking for errors and variances, and reward and incent managers and employees to fix errors.  They empower line workers to fix things immediately, and they provide a wide variety of formal and informal learning solutions at all levels.

Our research identifies the top 50 elements of a strong learning culture, and you find that every one of these elements is “good business.”  If you are an HR or L&D leader, you can promote and spearhead this philosophy through your programs and organization and approach.  If you are a line manager or leader, you can think about how “learnign and execution” are both different sides of the same coin, not necessarily in conflict with each other.

Corporate Talent: Where the US Labor Market is Going

One of the important things senior business and HR leaders must consider is the availability of labor – that is not just “people” but “the right people.”  Right now, with a 6.1% unemployment rate, the US labor market has undergone some major changes…. and such changes in the availability of work directly affect the skills and capabilities of people.  For example, when I graduated from college in 1978, there was a dearth of engineers and a tremendous interest in energy (as there is now).  So, I studied Mechanical Engineering.  In the decades since, that particular area of study dropped out of favor – but now it’s back.

Consider the following changes which have happened in the last 9 months:

* The number of jobs in construction has dropped by 4.3% (323,000 jobs lost)
* The number of jobs in manufacturing has dropped by 2.7% (366,000 jobs lost)
* The number of jobs in natural resources/energy has increased by 8.6% (64,000 jobs gained)
* The number of jobs in education and health services has risen by 2.1% (394,000 jobs gained)
* The number of jobs in government has grown by 1.1% (254,000 jobs gained).

So what we have experienced is a fairly dramatic drop in the need for manufacturing and construction roles and a very dramatic increase in the demand for energy, education, healthcare, and government roles.  Interestingly, working for the government is more popular among young people now than it has been since the 1960s.

The second economic factor to consider is where industry growth is occurring.  Today, despite the recent drop in the stock market, some industries continue to be doing very well:  our new TalentWatch® research (to be published this month) shows that many Aerospace, Business Services, Defense, High Technology, and Healthcare companies are still growing rapidly.  And when we ask business leaders what roles they need to grow, companies tell us that their biggest shortages are in:

* Line Managers:  43% of organizations cite severe or major shortages
* Engineering / technical professionals:  42% of organizations cite severe or major shortages
* Skilled labor:  30% of organizations cite severe or major shortages
* Sales:  30% of organizations cite severe or major shortages
* Top executives:  yes, believe it or not, 34% of organizations cite severe or major shortages.

As our Talent Management Factbook® research supports, organizations are still suffering from shortages in their leadership pipelines, shortages in technical skills, and a never-ending need to find the right sales and executive roles to run their businesses.

What does this mean to you?  Despite the dire economic news, more than 40% of the companies we surveyed told us they are limited by the inability to hire key people.  And based on the information above, our economy is slowly but surely shifting to one of services, government, healthcare, and energy workers.

Further supporting this trend is the following data.  According to the Bureau of Labor Statistics, the fastest growing jobs over the next five years will be:

* Network systems and data communications analysts – 53% increase
* Home health aids – 49% increase
* Software engineers and applications programmers – 45% increase
* Financial advisors (!!! really?  yes) – 41% increase
* Medical assistants and nurses – 35% increase
* Substance abuse and other counselors – 34% increase (I wont even try to guess the reasons for this).

Bottom line is this:  if your organization needs technical, managerial, or healthcare workers to grow, you should plan ahead.  You are likely going to need to further invest in career development, tuition reimbursement, and increases in training in order to obtain the skills you need.  Our research shows a fevered interest in complete career development programs among corporations – programs which help young workers build their skills in professional, technical, and service roles – not only leadership.

I personally believe that the next administration in Washington is going to wake up to these shifts in labor skills and availability and start a massive emphasis on technical, energy, and health training and education in the US.  WIthout such a shift our businesses are going to be increasingly forced to invest in these skills internally.  Either way, we have no choice but to watch these trends – it’s a critical part of our role as strategic talent managers in our organizations.

The US economic calendar is very light this week

The financial crisis has only started and the wild gyrations in the stock markets may provide better levels to liquidate stocks. Hedge funds and pensions funds will probably face further distress. The outlook is extremely grim. But we focus on currencies, and this is and will remain the island of profitability for months and probably longer. The dollar should remain strong in the medium to long term, especially versus the European and the commodity currencies. But this week, the US currency could see some consolidation with a bearish tone.

United States
Dollar money-market rates fell after the European Central Bank, Bank of England and Swiss National Bank, plus the Bank of Japan, offered lenders unlimited dollars for the first time in a coordinated effort to thaw the frozen credit markets. Overnight money market conditions are improving slowly, but not in further out periods despite massive liquidity injections by central banks along with other steps to restore market conditions to a more normal state. After Lehman’s bankruptcy last month, no bank will rush to lend.

The dollar basically paused last week, as the FX market became a sideshow to the battered asset market. But EUR/CHF, which tracks pretty closely the US indices, got hurt. This lull is just a pause; the contraction of our life time is only gathering strength.

The US economic data is getting scarier by the day, and this means inflation will slow naturally. And I’m sure you’ve noticed the drop in energy prices, even though speculators keep gas pump prices still at ridiculously high prices.

Retail sales contracted 1.2 percent in September, nearly double the expectations, on top of a 0.4 percent decline the prior month. The weakness was accelerated by a 3.8 percent fall in auto sales. Ex-autos, sales fell 0.6 percent after falling 0.9 percent the prior month.

The producer price index fell 0.4 percent in September, as expected. The decline was helped by a 8.2 percent slide in natural gas prices, while gasoline prices fell by only 0.5 percent. The core PPI, however, surged by 0.4 percent, which confirms that food prices really surged again.

The consumer price index was unchanged in September after a 0.1 percent drop in August, while the core CPI rose 0.1 percent. CPI slowed to +4.9 percent on the year from 5.4 percent in August, and the core rate increased 2.5 percent, the same as in the prior month.

The TIC data showed a net overall capital outflow of $0.4 billion in August after a $33.6 billion outflow in July.

Initial jobless claims fell 16,000 to 461,000 in the week that ended Oct. 11 after the Gulf Coast hurricanes subsided.

Industrial production fell 2.8 percent in September, the most since December 1974, after a revised 1 percent decrease in August. Capacity utilization fell to 76.4 percent from 78.7 percent the prior month.

Confirming the deterioration in the factory sector, the Empire State Manufacturing Index collapsed to -24.6 in October from -7.4 in September.

Adding to the pile of bad news, the Philly Fed showed a manufacturing collapse to 37.5 in October from a +3.8 in September. This is the worst report since 1990.

Housing starts fell more than expected by 6.3 percent to 817,000 in September from August’s downwardly revised 872,000. Building permits shrank 8.3 percent to 786,000 pace, the lowest level since November 1981, from 857,000.

The preliminary University of Michigan sentiment index tanked to 57.5 in October from 70.3 in September. The lowest level was registered in June at 56.4.Well, what can one expect?

Business inventories rose 0.3 percent in August from July’s +1.1 percent and sales fell 1.8 percent from +0.1 percent.

The budget deficit hit a record $455 billion in fiscal 2008 amid high war spending, bank failures and unemployment-related benefits.

As widely expected, economic activity weakened in September as businesses revised capital investments, consumers cut spending and the general outlook slowed, the Beige Book said.

The Eurozone
The euro/dollar consolidated last week, but the downtrend remains in place.

German investor confidence worsened to -63 in October, the second low ever, from -41.1 in September, according to the ZEW Center for European Economic Research. In the same vein, the Eurozone ZEW survey of economic sentiment fell to -62.7 in October from -40.9.

Eurozone industrial production expanded +1.1 percent in August after contracting 0.3 percent in July, but fell 0.7 percent on the year on top of the previous decline of -1.7 percent.

The French business sentiment worsened to 87 September from 94 in August.

The Eurozone CPI rose 0.2 percent in September after declining 0.1 percent in August. On an annual basis, it remained at +3.6 percent and the core CPI at +1.9 percent.

The German CPI fell 0.1 percent in September, the same as in August, and was unchanged at +2.9 percent on the year.

Also, the French CPI slipped 0.1 percent in September from flat in August. On a yearly basis, it slipped to +3.0 percent from +3.1 percent.

Moreover, Italy’s CPI fell 0.3 percent in September, the same as in August.

Finally, the Eurozone trade deficit came in at 6.1 billion euros in August from July’s revised to a record high of 6.7 billion euros. Exports fell 0.7 percent and imports by 1 percent.

Japan
Dollar/yen edged higher in an inside range as the liquidation of carry trades paused.

Producer prices slowed to 6.8 percent in September from a year earlier from a 7.2 percent increase in August.

The Japanese domestic CGPI fell 0.4 percent in September from -0.1 percent in August and slipped to +6.8 percent on the year from +7.2 percent y/y.

Surprisingly, the consumer confidence rose to 31.8 in September from 30.5 in August.

The current-account surplus narrowed 52.5 percent to 988.8 billion in August, as imports climbed 20.2 percent and exports rose only 0.9 percent.

The industrial production was confirmed at -3.5 percent in August from +1.4 percent in July, and remained at -6.9 percent on the year.

The final machine tool orders was revised to -20.1 percent in September from the initial -20.7 percent.

Elsewhere, the tertiary index fell 1.4 percent in August.

The UK
The pound consolidated in an inside range, but sits near the low of the downtrend.

PPI output fell 0.3 percent in September and expanded 8.5 percent on the year after contracting -0.6 percent in August and rising 9.7 percent y/y on the year. The core PPI output slipped to 5.4 percent from +5.6 percent on a yearly basis. Meanwhile, PPI input slipped to 24.5 percent from 28.8 percent on an annual basis.

The UK CPI slipped to 0.5 percent September from 0.6 percent in August, but rose to +5.2 percent on a yearly basis from +4.8 percent. Along these lines, the retail price index rose to 218.4 in September from 217.2.

As the UK housing sector remains under pressure, DCLG UK house prices declined 3.4 percent August on a yearly basis from -0.3 percent in July.

The claimant count rate edged up to 2.9 percent in September from 2.8 percent in August.

Canada
The Canadian dollar paused last week after collapsing a week earlier. With the Bank of Canada expected to cut rates on Tuesday, the selling pressure should continue. But more sideways trading is likely. Switzerland

The dollar/Swiss franc consolidated last week near the top of its recent uptrend.

Australia
The Australian dollar made a weak recovery within an inside range, but the specter of long liquidation of carry trades continues.

The leading index declined 0.1 percent to 259.2 points in August, according to Westpac Banking and the Melbourne Institute.

This Week’s Data and Events

United States
D Date GMT Event Period UBS Previous Market

The US economic calendar is very light this week.

It will start on Monday with the release of the leading indicators report for September.

Friday will see the release of the existing home sales.

The Eurozone
The Eurozone economic agenda will start with the release of the German Producer Prices report for September.

Friday will see the release of the Eurozone PMI manufacturing and services reports for October, and also of the Italian consumer and business confidence indices for October.

Japan
The Japanese agenda will start on Tuesday with the release of the Industry Activity Index.

Thursday will see the release of the trade balance.

The UK
The UK economic agenda will open on Tuesday with the release of the CBI industrial trends for October

The Bank of England’s minutes are due on Wednesday.

The retail sales report for September is due on Thursday.

Friday will see the release of the third quarter GDP and of the index of services report for August.

Canada
On Tuesday, the Bank of Canada is expected to cut rates by a minimum of 25 basis points.

The retail sales report for August is due on Wednesday.

Friday will see the release of the CPI report for September.

Overview

Euro/dollar
Last week’s range: 1.3349 – 1. 3767 (Mixed)
Previous range: 1.3261 – 1.3784 (Down)

Euro/dollar traded mostly sideways in an inside range after falling to a 1 ½-year low the previous week. My model went long but only the medium-term bias remains bearish. The short term is bullish.

Above 1.3515, resistance is seen at 1.3620. This is followed by 1.3705, 1.3785 and1.3845. Above 1.3935, resistance is pegged at 1.4200.

Immediate support is at 1.3400. The next level is 1.3350. Below 1.3261, support remains at 1.3040 and 1.2935. Distant support is at 1.2490.

NEAR-TERM:Mixed with upside risk
MEDIUM-TERM:Bearish
LONG-TERM: Bearish

Dollar/yen
Last week’s range: 99.27 – 103.06 (Mixed)
Previous range: 97.92 – 105.39 (Down)

Dollar/yen made an inconclusive recovery after branding a seven-month low a week before. My model went long. The medium-term outlook is still bearish, as the pair remains in a head-and-shoulders formation. The short term is slightly bullish.

Immediate resistance is at 102.30 from a 50-point pivot, which targets 101.80 and 102.80. Above 103.00, distant resistance is at 103.40 from another 50-point pivot, which targets 102.90 and 103.90.

Good support is at 101.25 from another 50-point pivot, which targets 100.75 and 101.75. The next level is 100.25 from a 50-point pivot, which targets 99.75 and 100.75. This is followed by 99.25 from another 50-point pivot, which targets 98.75 and 99.75. The next level is 98.25 from a 50-point pivot, which targets 97.75 and 98.75. Distant support follows at 97.30 from another 50-point pivot, which targets 96.80 and 97.80.

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bearish
LONG-TERM: Mixed

Sterling/dollar
Last week’s range: 1.6926 – 1.7630 (Mixed)
Previous range: 1.6790 – 1.7719 (Down)

Sterling/dollar made a mild recovery after kneeling to a near-five year low a week before, but my model went long.  The downside remains favored in the medium term, but there still is upside risk in the short term.

Initial resistance is at 1.7380. Above the strong level at 1.7500, distant resistance is now seen at 1.7765.

Immediate support is at 1.7230. The next levels are 1.7140, 1.7020, 1.6920 and 1.6790. Below 1.6710, support now comes at 1.6540 from a pivot low. Distant support is seen at 1.6075.

NEAR-TERM:Mixed
MEDIUM-TERM: Bearish
LONG-TERM:Bearish

Dollar/Swiss franc
Last week’s range: 1.1240 – 1.1490 (Mixed)
Previous range: 1.1130 –1.1489 (Mixed)

Dollar/Swiss made little progress last week after climbing to an eight-month high the previous week but my model went short. Again, the risk remains on the upside, but a pause is due.

Immediate support is at 1.1283. The next level is 1.1220. Below 1.1140, support is seen at 1.1055. Distant support comes 1.0800.

Good resistance is pegged at 1.1445. Above 1.1490, the next level remains at 1.1605 from a pivot high. This is followed by 1.1767. Distant resistance is at 1.1865.

NEAR-TERM: Slightly bearish
MEDIUM-TERM:Bullish
LONG-TERM: Bullish

Dollar/Canada
Last week’s range: 1.1307 – 1.1996 (Up)
Previous range: 1.0815 – 1.2119 (Up)

Dollar/Canada consolidated after surging to an over three-year high last week, and my model remains long. The outlook remains bullish, but a pause is due.

Below 1.1755, support is seen at 1.1700 and 1.1655. This is followed by 1.1520. Below 1.1440, distant support now comes at 1.1280.

Initial resistance remains at 1.1890. The next level is 1.2119. Above 1.2225, resistance follows at 1.2495.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Euro/yen
Last week’s range: 133.39 – 141.72 (Mixed)
Previous range: 132.25 – 145.28 (Down)

Euro/yen made a choppy consolidation last week after collapsing to an over three-year low the week before. The medium-term outlook remains bearish, but my model went long. The short term outlook is only slightly bullish.

Good resistance remains at 137.70. The next level is 139.70. This is followed by 141.85. Distant resistance is now seen at 147.30.

Immediate support is now seen at 135.15. The next levels are 134.10 and 132.25. Below 129.97, distant support is now at 124.20.

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish

Euro/sterling
Last week’s range: 0.7735 – 0.7965 (Down)
Previous range: 0.7702- 0.8069 (Up)

Euro/sterling fell in an inside range and remains under pressure. The initial outlook is slightly bullish.

Above 0.7795, resistance now comes at 0.7857. Strong resistance follows at 0.7945 and 0.7982. Distant resistance is now seen is at 0.8069.

Initial support is at 0.7735. The next level is 0.7700. This is followed by 0.7702. Distant levels are at 0.7640 and 0.7573.

India’s small IT firms to shift focus from US to new markets

Dubai, Oct 20 (IANS) With the financial crisis hitting the US economy badly, the Middle East is emerging as a key market for the small and medium enterprises (SMEs) of India’s IT sector as they seek to reduce their dependence on the US market.

‘The US accounts for almost 76 percent of India’s total IT exports, but with the slowdown in the US economy, it is very important that we look at alternatives to the US market to diversify the basket,’ Sunil Vachani, vice-chairman of the Electronics and Computer Software Export Promotion Council (ESC) of India, told IANS here.

He is here for the ongoing Gitex-2008, the Middle East’s largest technology show.

Thirty-five Indian companies are participating in the show under the ESC banner. India’s Consul General in Dubai Venu Rajamony inaugurated the ESC section of the show here Monday.

Stating that the current global financial crisis is going to hit India’s IT exports, Vachani said ESC was trying to reduce dependence on the US market.

‘The Indian companies have to be proactive and diversify to other countries and reduce their dependence on the US market so that they are not badly affected (by the economic crisis),’ he said.

‘That is why we are looking at the Middle East as one of the major markets.’

Apart from the Middle East, Europe, South America, Japan and southeast Asia are now the focus markets of the ESC, he added.

Over 2,300 SMEs in the IT sector are members of the ESC.

Of India’s total IT exports of $46 billion in 2007-08 – around $43 billion in software and over $3 billion in hardware – the Middle East accounted for $1 billion, an increase of 17 percent from the previous year.

‘Of this $1 billion, software exports accounted for $600 million while electronic hardware’s share was about $400 million,’ the ESC vice-chairman said.

Electronic hardware comprises IT hardware, consumer electronics and electronic components.

‘In the Middle East, we are now looking at a growth of 25 percent,’ he said, adding: ‘At Gitex, we want to showcase that there is a huge strength in India’s small and medium IT companies also.’

Compared to the share of IT biggies in India like Infosys, Wipro, Satyam and Tata Consultancy Services, SMEs have also emerged as significant players when it came to exports.

U.S Market Update

Stock markets are rebounding around the world after last week’s carnage, with European Bourses headed for closiing at session highs up 8-10%. US indices are reacting enthusiastically to the announcement of multiple financial rescue initiatives in Europe and elsewhere around the world, with the DJIA surging more than 5.5% points. However, market participants remain cautious as it remains to be seen whether this is the beginning of some real traction for stocks or just a typically vicious bear market rally. Various industrial metals that were hit very hard last week are bouncing back including steel, nickel, and copper. Global mining names are recovering some as well, with RTP +12%, RIO+12% and BHP+10% just a few of the names making big gains this morning. Energy futures are also gaining back some ground after last week’s plunge, with crude is trading up more than $3 around $81/bbl. Over the weekend, Goldman cuts its 2008 crude oil price estimate to $70 from $115 and its 2009 estimate to $107 from $125, citing the slowing economy, even noting prices could fall to $50. As late as 8/20, Goldman was saying crude would return to the $149 level by the end of the year. Goldman analysts Jeffrey Currie and Giovanni Serio said “We clearly underestimated the depth and duration of the global financial crisis and its implications on economic growth.” Morgan Stanley and Mitsubishi UFJ sealed their deal over the weekend, with MUFG acquiring $7.8B of perpetual non-cumulative convertible preferred stock with a 10% dividend and a conversion price of $25.25 per share, and $1.2B perpetual non-cumulative non-convertible preferred stock with a 10% dividend. Overnight the New York Times reported that the US government has offered to protect MUFJ’s investment in the firm under pressure from the Japanese government. MS was up nearly 50% in early trading; selected major financials opened higher on this news as well as the Treasury’s pledge to take equity stakes in troubled banks, with GS+8%, BAC+7% and C+7% mid morning. JPM-2% is moving lower in the absence of any particular news. Much commentary circulated in the media over the weekend regarding merger talks between GM and Chrysler, with discussion indicating that Chrysler owner Cerberus Capital was considering swapping Chrysler’s automotive operations for GM’s remaining 49% stake in GMAC (Cerberus owns the other 51% of GMAC). In addition, GM is accelerating previously announced production cuts. Both GM and F are up more than 26% in early trading. Additional rounds of big share buybacks is being announced by leading companies facing historically low share prices, with ABT+6% ($5B buyback, 6.5% of market cap), LTD+2% ($250M buyback, 5.7% of market cap), INT+15% ($50M buyback, 9.8% of the market cap) and PWRD+15% ($100M buyback, 10% of market cap). Various names took the opportunity to report preliminary quarterly numbers or update guidance ahead of their official releases, including PFG, TSO, RE and WMI, all of which are up 10-20%. AFFX-20% is underwater after telling investors that revenues would be well below estimates in their preliminary earnings release.

- Global markets returned this morning with government assurances that deposits would be insured and banks would be able to lend money with greater confidence. With the biggest package of assistance announced to far outside of the US, Germany said it would provide as much as €500B in loan guarantees to help bolster its banking system, €80B to re-capitalize banks and €20B to cover potential loan losses. In comments that were echoed by many other European officials, the ECB’s Weber noted that the German rescue plan provided a solid foundation to stabilize markets. Credit markets greeted the bailouts with cautious optimism, with three-month dollar libor falling by 70 basis points to 4.75%. Note that there was no overnight dollar libor today due to the Columbus Day holiday in the US. Confidence is also being aided by renewed liquidity operations in which the Fed and other world central banks will offer as much dollar funding as required. The Fed, ECB, Bank of England and Swiss National Bank will hold one-week, one-month and three-month dollar auctions at a fixed interest rates. Again the credit swaps greeted the moves with cautious optimism as dealers noted that the three-month USD rate remains some 325 basis points above Fed target rate of 1.50%.

- The EUR/USD cross was a touch firmer from its opening levels in Asia. The euphoria of the banking sector bailout remains clouded with concerns over future economic prospects. On the European growth front, the German Institutes lowered their 2009 GDP forecast to 0.2% from 0.7% prior view and the inflation at 2.3%. Carry-related currency are modestly firmer as EUR/JPY trades at 137 area and EUR/CHF is steady at 1.5375. The GBP did snap back from its recent bout of weakness following the announcement of the UK bailout package. The GBP/USD is up almost 300 pips at 1.7230 and the GBP/JPY is up 275 pips at 175.40.

- European fixed-income futures were softer as equity markets exhibited strong gains. Dec Bunds down 90 ticks at 114.52 and Dec Gilts off 167 ticks at 110.20. The UK and German yield curves were flatter from their close last Friday. US Bond markets are closed but the 10-year note future is down more than a full point as money finds its way out of government bond markets and into stocks both here and across the pond.

Fancy your chances on this innovative US market?

Ladbrokes have of late become rather more innovative with their political betting markets. No doubt the credit goes to their politics expert, PB regular Matthew Shaddick [Shadsy]. He has come up with an intriguing angle on the US Presidency. The main contest looks pretty moribund now from a betting perspective and most of the value has been drained from the individual States in the Electoral Votes markets. Shadsy has livened things up by offering a McCain Firewall Finder bet. The idea is simple.

Look at the list on the right. How far down do you have to go before finding a State John McCain wins? If for example McCain loses Iowa and Michigan but wins Pennsylvania, Pennsylvania is settled as the winner; all other selections following in the list are settled as losers irrespective of the result in those States.

Easy, no?

Well, superficially no, because it seems a bit of a lottery and you can see why serious punters tend to avoid this kind of bet. You might figure out correctly a State in which McCain does exceedingly well but fail to collect because of some anomalous result higher up the list. No coconuts for coming second in this contest; you get it spot on or lose. So is the market only good for a bit of fun and small stakes? I’m not so sure.

For a start, you have here a good example of a related contingency. The likelihood of McCain exceeding expectations is about the same in all the States. If he starts to prosper generally in the polls, all the prices towards the top of the list will shorten while all those towards the end will lengthen. You only have to guess correctly in general terms how his fortunes are likely to run and you’ll have a pretty good idea where the value is to be found. Furthermore, any PB regular ought to be able put a line straight through at least 60% of the States with barely a moment’s thought. As any punter knows, if you can do that with any field, there has to be some good value amongst the remainder.

It shouldn’t take much more reflection to get the list down to five or so probables and since the shortest price is 10/1, you can afford to back all five and still win nicely, if you have identified the right general area.

My approach would be to identify first all those States which I think McCain would win even on a very bad day and then back the highest of them in the list plus the four above it. So, if you think that in a worst case scenario, he still can’t lose Montana, back that plus West Virginia, Indiana, Missouri and North Carolina. If any of them win, you have a win of at least 6 points to a level one point stake. If they lose, you of course lose 5 points. You are in effect taking odds of approximately 6/5 that you can identify roughly where the tipping point will be. If you don’t think you can do that, you are either not a punter or you don’t read PB.com enough!

I won’t tell you which are my five selections but I can tell you that I have had £50 on each. Shadsy has the slip and will be happy to reveal all, after the event.