Buy the basics; they're not going out of style Run your finger down a list how the stock market's various industry groups have performed this year and you'll find a case for strong worldwide economic growth. The top four groups have, not coincidentally been featured prominently among our Emerging Leaders portfolio. In order of returns, they are: Energy (up 25.5 percent this year), Industrials (18.4 percent), Materials (15.4 percent) and Telecommunications (13 percent). Conversely, we've been underweighted in the worst performing groups: Financials (up 1.6 percent), Consumer Staples (4.6 percent) and Utilities (6.9 percent). Looking ahead to the remainder of the year and beyond, we envision a similar disparity between these top- and bottom-performing groups. With worldwide growth expanding at a better than 5 percent annual clip, basic economic inputs will remain in great demand. And the earnings of the companies that supply them will continue to soar. Russia's Private Armies Russia is one of the world's largest crude oil producers and is second to only Saudi Arabia in its oil and gas exports. Not surprisingly, fossil fuel exports are crucial to the Russian economy. To ensure the protection of these resources, yesterday the Russian Duma (parliament) approved by a three-to-one margin a law to allow the country's two largest energy monopolies the right to form armed units to patrol their oil and gas pipelines. Gazprom, state-controlled natural gas, media and banking giant and Transneft, the state-controlled oil pipeline monopoly are being granted the right to create their own corporate armies to protect their business interests against possible militant attacks. The bill still has to get through the Federation Council (upper house of parliament) and be approved by President Vladimir Putin before it becomes law. But with Putin widely expected to assume the role of Gasprom's CEO once his term in office is up next year, approval appears to be a done deal. Private armies have essentially existed in Russia for some time now, so this move is more of a formality than anything. But it sets a precedent that other corporations may follow. Moreover, while the weapons that the Gazprom and Transneft security units will be allowed to carry under the law are limited to just hand-guns and pump action shotguns, the eventual adoption of even greater firepower can't be dismissed. And although the units can only be used to protect company infrastructure, given how extensive their networks are throughout the country, they will effectively be deployed state wide. Sounds like something out of James Bond film. China's Empty (Crowded) Streets Pollution has long been a problem in China. The World Bank estimates that about 750,000 people die prematurely each year from breathing polluted air and drinking dirty water. The problem as gotten so bad that, according to the Financial Times, Chinese authorities have asked the World Bank not to publish the estimates of the physical and economic cost of pollution out of fear that the information could trigger social unrest. The government there has tried various measures, including the creation of pollution police squads to crack down on heavy polluters by temporary shutting down their operations. But the desire to placate the populous though economic growth has so far outweighed the commitment to clean up the environment. The government is contemplating other measures to do the trick, none of which seem likely to be effective. For instance, the nation's environmental watchdog, the State Environmental Protection Administration (SEPA), is considering working with China's Bank Regulator Commission, to give companies eager for business loans preference based on their environmental performance. Yet inefficient state-run industries that employ tens of millions, which simply can't afford to lay off workers, remain among the worst polluters. With the government eager to put on a good front for next summer's Olympic Games in Beijing, authorities will make a test run next month of a plan to ban 1 million of the capital's 3 million cars from the road for two weeks. The move may help lift the constant haze over Beijing briefly, but with auto sales in China exceeding 25 percent annually the solution will prove to be merely transitory on air quality.