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Economic Forecasts

Lehman Brothers on Infrastructure Spending

In this week's "Portfolio Strategy" note (excerpted below), Lehman Brothers' Chief U.S. strategist Chip Dickson discusses the impact of projected increases in business infrastructure expenditure.

"By 2007, the energy sector should be the largest source of capital expenditures in the SP 500 in order to meet the growing global demand for energy. Energy equipment and drilling companies should continue to provide attractive investment opportunities.... Lehman Brothers oil service and drilling analysts James Crandell and Angeline Sedita are currently forecasting 20% growth in oil related capital expenditures in 2006 and double-digit growth rates through the end of the decade. Pricing power among oil and gas drilling and services firms is evident in day rates charged."