February 2010, Issue #45

China Sells Treasuries

The foreign holdings of US Treasury bills fell by a whopping $53 billion in December of 2009, the largest amount ever in history. Among T-bill holding entities, China and Japan have the largest positions. Now that China is eliminating some positions in US debt, this would be yet another challenge for the Treasury.

According to US Treasury's data, in December China sold $38 billion of US Treasury bonds, reducing its total holdings to $755 billion. On the other hand, Japan just bought $11 billion, bringing its total to $768 billion. For the first time in many years, Japan surpassed China to become the top US debt holder. China, with the world's largest central bank reserves, could be moving its money to other investments. This is likely because the U.S. has been creating record budget deficits in the past few years.

Surprisingly, after a quick bit of research, the last time the U.S. suffered a reduction in demand of Treasury securities was right before a tremendous rise in the stock market. While history is not necessarily reflective of today's market, it's nevertheless an interesting phenomenon.

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A Quick Look @ Lockheed Martin Corporation (NYSE:LMT)
In every issue we take a quick look at a stock that has been in the news. Feel free to make suggestions as to what stock you would like to see covered next by sending an email to editor@firstrade.com, or the editor will pull a random symbol out of a hat.

This month we take a look at Lockheed Martin Corporation, a global security company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems and products. The Company provides a range of management, engineering, technical, scientific, logistic and information services. It serves both domestic and international customers with products and services that have defense, civil and commercial applications, with its principal customers being agencies of the United States Government. The Company operates in four segments: Electronic Systems, Information Systems and Global Services (IS&GS), Aeronautics, and Space Systems. Let's take a look at some key events.



Key Events:

1. 1995: The company was formed through the merger of Lockheed Corporation and Martin Marietta.
2. 1996: Completed the acquisition of Loral Corporation's defense electronics and system integration businesses for $9.1 billion.
3. 1998: Abandoned plans for a $8.3 billion merger with Northrop Grumman on July 16, 1998, due to government concerns over the potential strength of the new group.
4. 2000: Sold Lockheed Martin Control Systems to BAE Systems in May.
5. 2000: Completed the sale of its Aerospace Electronic Systems business to BAE Systems for $1.67 billion.
6. 2001: Awarded the contract to build the F-35 Lightning II (joint strike fighter); this was the largest fighter aircraft procurement project since the F-16, with an initial order of 3,000 worth $200 billion before export orders.
7. 2001: Settled a nine year investigation conducted by NASA's Office of Inspector General with the assistance of the Defense Contract Audit Agency.
8. 2006: Awarded a $3.9 billion contract from NASA to design and build the CEV capsule.
9. 2008: Acquired the government business unit of Nantero, Inc., a company that had developed methods and processes for incorporating carbon nanotubes in next-generation electronic devices.