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May 28, 2010 - Why Dividend Stocks Rock

Fri, 28 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Dividend Growth Investor. You can read the full article on DividendGrowthInvestor.com. According to Ned Davis Research, $100 invested in all dividend payers of the S&P 500 index in 1972, would have grown to $2,266 by the end of 2009. The same $100 invested in non-dividend paying stocks in the S&P 500 returned a negative 39% over the same period. The performance of dividend payers and initiators was even better, returning $2,945 on the initial investment in 1972. Dividend investors should utilize every edge they could find in order to deliver above average total returns. As a result, the findings of the Ned Davis study should not be ignored. The reason why dividend growers outperform is that they represent an elite group of companies which grow earnings, reinvest some of it in the business, and distribute the rest to stockholders. Rising profits equal rising stock prices over the long run, and rising dividends as well. Error creating thumbnail Dividends.JPG Some of the companies which raised distributions over the past week include: The Clorox Company (CLX) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company raised dividends by 10% to 55 cents/share. This was the thirty-third consecutive year of dividend increases for this dividend aristocrat. The stock yields 3.40%. (analysis) First Financial Corporation (THFF) through its subsidiaries, provides various financial services in Indiana and Illinois. The company raised its semi-annual dividend by 2.20% to 46 cents/share. This dividend achiever has managed to increase dividends to shareholders for 22 consecutive years. The stock yields 3.20%. Bunge Limited (BG) engages in the agriculture and food businesses worldwide. The company approved a 9.5% increase in the company's regular quarterly cash dividend, from $0.21 to $0.23 per share. The company, which is a member of the international dividend achievers, has consistently raised dividends since 2003. The stock yields 1.90%. Transatlantic Holdings, Inc. (TRH), through its subsidiaries, offers reinsurance capacity for a range of property and casualty products, directly and through brokers, to insurance and reinsurance companies, in domestic and international markets. The dividend was raised by 5% to 21 cents/share. The Board of Directors has raised the quarterly distributions of this dividend achiever every year since TRH became a public company in 1990. The stock yields 1.80%. Canadian Pacific Railway Limited (CP), through its subsidiaries, provides rail and intermodal freight transportation services. The company increased its next quarterly dividend to 27 Cents/share from 24.75 cents per share. This international dividend achiever has consistently raised distributions since 2004. The stock yields 1.90%. Click here to continue reading this article on the Dividend Growth Investor blog... » Read more[...]



May 27, 2010 - Why Dividend Stocks Rock

Thu, 27 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Dividend Growth Investor. You can read the full article on DividendGrowthInvestor.com. According to Ned Davis Research, $100 invested in all dividend payers of the S&P 500 index in 1972, would have grown to $2,266 by the end of 2009. The same $100 invested in non-dividend paying stocks in the S&P 500 returned a negative 39% over the same period. The performance of dividend payers and initiators was even better, returning $2,945 on the initial investment in 1972. Dividend investors should utilize every edge they could find in order to deliver above average total returns. As a result, the findings of the Ned Davis study should not be ignored. The reason why dividend growers outperform is that they represent an elite group of companies which grow earnings, reinvest some of it in the business, and distribute the rest to stockholders. Rising profits equal rising stock prices over the long run, and rising dividends as well. Error creating thumbnail Dividends.JPG Some of the companies which raised distributions over the past week include: The Clorox Company (CLX) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company raised dividends by 10% to 55 cents/share. This was the thirty-third consecutive year of dividend increases for this dividend aristocrat. The stock yields 3.40%. (analysis) First Financial Corporation (THFF) through its subsidiaries, provides various financial services in Indiana and Illinois. The company raised its semi-annual dividend by 2.20% to 46 cents/share. This dividend achiever has managed to increase dividends to shareholders for 22 consecutive years. The stock yields 3.20%. Bunge Limited (BG) engages in the agriculture and food businesses worldwide. The company approved a 9.5% increase in the company's regular quarterly cash dividend, from $0.21 to $0.23 per share. The company, which is a member of the international dividend achievers, has consistently raised dividends since 2003. The stock yields 1.90%. Transatlantic Holdings, Inc. (TRH), through its subsidiaries, offers reinsurance capacity for a range of property and casualty products, directly and through brokers, to insurance and reinsurance companies, in domestic and international markets. The dividend was raised by 5% to 21 cents/share. The Board of Directors has raised the quarterly distributions of this dividend achiever every year since TRH became a public company in 1990. The stock yields 1.80%. Canadian Pacific Railway Limited (CP), through its subsidiaries, provides rail and intermodal freight transportation services. The company increased its next quarterly dividend to 27 Cents/share from 24.75 cents per share. This international dividend achiever has consistently raised distributions since 2004. The stock yields 1.90%. Click here to continue reading this article on the Dividend Growth Investor blog... » Read more[...]



May 26, 2010 - How Connected Are Oil Majors To The Price Of Oil?

Wed, 26 May 2010 00:00:00 GMT

Today’s Daily Angle comes fromWikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. Error creating thumbnail Price comparison of Crude Oil (CL) and the six oil majors (click to enlarge) I've written previously about the problems with using ETFs as an oil proxy. We don't need to get into all of that again, but the primary takeaway is that even though most energy ETFs are composed exclusively of oil derivatives, the funds themselves track the price of their benchmark poorly, especially when said benchmark is in contango. No, I've always been an advocate of a more direct energy play: specifically, using futures contracts to invest in the energy markets. Of course, this has its own problems, particularly the inability to make long-term plays, due to futures contracts' expirations. So what's a would-be energy maven to do? If the ETFs don't track the derivatives properly, and the derivatives don't allow you to invest the way you want anyway, what option do you have? Enter the oil companies. Oil companies, obviously, depend upon the price of oil to remain profitable. Intuitively, when oil goes up, so too should oil companies' stock. Realistically, however, you can't expect the current price of a barrel of oil to be entirely responsible for today's value of an oil company's share price, as there's obviously a bit of a lag, and these companies have other facets to their business. So, more accurately, a share price reflects that company's ability to make a profit from oil, rather than simply to follow oil prices up and down. If you want to make a play purely in oil, an oil company may not be for you. However, if you want to make a more nuanced long-term bet on the oil industry in general, while concurrently investing in oil itself, one of the oil majors could work ... but which one? To answer this question, I've done a statistical regression comparing the continuous front-month prices of crude oil over the last four years with the stock prices of the six oil-majors: BP (NYSE: BP), Exxon Mobile (NYSE: XOM), Total SA (NYSE: TOT), Royal Dutch Shell (Nasdaq: RDSA), ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX). Let's see how they stack up. First, take a look at this chart comparing all six companies with continuous front-month crude oil futures (marked by CL): The most important thing to notice is that even though the charts are moving more or less together, it's not that tight a correlation. I don't need to break out the logarithmic chart to show you that the movements aren't exactly coupled at the hip. That said, the prices still do ebb and flow together. Now, let's compare the prices one by one to see just how strong the relationship is. Click here to continue reading this article on the Hard Assets Investor Blog... » Read more[...]



May 25, 2010 - How Connected Are Oil Majors To The Price Of Oil?

Tue, 25 May 2010 00:00:00 GMT

Today’s Daily Angle comes fromWikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. Error creating thumbnail Price comparison of Crude Oil (CL) and the six oil majors (click to enlarge) I've written previously about the problems with using ETFs as an oil proxy. We don't need to get into all of that again, but the primary takeaway is that even though most energy ETFs are composed exclusively of oil derivatives, the funds themselves track the price of their benchmark poorly, especially when said benchmark is in contango. No, I've always been an advocate of a more direct energy play: specifically, using futures contracts to invest in the energy markets. Of course, this has its own problems, particularly the inability to make long-term plays, due to futures contracts' expirations. So what's a would-be energy maven to do? If the ETFs don't track the derivatives properly, and the derivatives don't allow you to invest the way you want anyway, what option do you have? Enter the oil companies. Oil companies, obviously, depend upon the price of oil to remain profitable. Intuitively, when oil goes up, so too should oil companies' stock. Realistically, however, you can't expect the current price of a barrel of oil to be entirely responsible for today's value of an oil company's share price, as there's obviously a bit of a lag, and these companies have other facets to their business. So, more accurately, a share price reflects that company's ability to make a profit from oil, rather than simply to follow oil prices up and down. If you want to make a play purely in oil, an oil company may not be for you. However, if you want to make a more nuanced long-term bet on the oil industry in general, while concurrently investing in oil itself, one of the oil majors could work ... but which one? To answer this question, I've done a statistical regression comparing the continuous front-month prices of crude oil over the last four years with the stock prices of the six oil-majors: BP (NYSE: BP), Exxon Mobile (NYSE: XOM), Total SA (NYSE: TOT), Royal Dutch Shell (Nasdaq: RDSA), ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX). Let's see how they stack up. First, take a look at this chart comparing all six companies with continuous front-month crude oil futures (marked by CL). The most important thing to notice is that even though the charts are moving more or less together, it's not that tight a correlation. I don't need to break out the logarithmic chart to show you that the movements aren't exactly coupled at the hip. That said, the prices still do ebb and flow together. Now, let's compare the prices one by one to see just how strong the relationship is. Click here to continue reading this article on the Hard Assets Investor Blog... » Read more[...]



May 24, 2010 - Hedge Funds Register with SEC

Mon, 24 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Richard Wilson of HedgeFundBlogger.com. You can read the full article on Richard’s blog.

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Hedge funds will have to register with the Securities and Exchange Commission now. The Senate and House versions of the financial reform bill both require hedge funds over a certain size to register with the regulatory agency.

The Senate and House versions of the bill require all hedge-fund advisers over a certain size to register with the Securities and Exchange Commission. That would give the agency a greater window into the trading positions and investment strategies of hedge funds, typically secretive firms that cater to wealthy individuals and big investors.

"There will definitely be an increased level of reporting," said Steve Nadel, a hedge-fund lawyer in New York, adding that the registration requirement "has the most immediate impact" of any hedge-fund-related provision in the bill.

Lawmakers also are aiming to give the SEC more discretion in its authority over hedge funds, likely leading to deeper scrutiny of the industry's client base and trading partners, as well as its investments. Although hedge funds have successfully resisted much oversight, some regulators say additional scrutiny is needed to reflect the increased influence of hedge funds on financial markets. Source

» Read more




May 22, 2010 - More European Companies Delist from the NYSE

Sat, 22 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member David Hunkar of TopForeignStocks.com. You can read the full article on David’s blog. The exodus of European firms from delisting their stocks on the New York Stock Exchange continue to climb. On Friday German auto maker Daimler AG (DAI) became the latest company to announce plans to delist from the NYSE. This follows the announcement of Deutsche Telekom AG (DT) two weeks ago to delist from the exchange. After these two delistings, just four of the large German companies will trade on the NYSE. French insurer AXA SA already trades on the OTC markets. Hellenic Telecom (OTE) of Greece has also announced plans to delist from the Big Board. According to a Wall Street Journal article, some of the reasons for the delistings from the NYSE include: Many European firms view US listing as a liability Foreign investors are able to invest directly via electronic trading platforms in their domestic markets Listing requirements have risen on overseas markets Cost of complying to U.S. regulations such as the Sarbanes-Oxley Act has become burdensome The prestige of a US listing has faded since Enron and the financial crisis The daily trading volume of stock relative to global trading volume is lower for some companies With the removal of Daimler and Deutsche Telekom, the only four German companies that will continue to trade on the NYSE are Siemens (SI), Deutsche Bank (DB), Fresenius Medical Care (FMS) and SAP AG (SAP). Other European firms that have already delisted their stock from the NYSE are: Allianz (OTC:AZSEY) Infineon Technologies (OTC:IFFNY) Qimonda (OTC:QMNDQ) Altana Epcos Bayer (OTC:BAYRY) Pfeiffer Vacuum Technology E.ON AG (OTC:EONGY) BASF Group (OTC:BASFY) SGL Carbon However some firms such as E.ON continue to trade on the OTC markets as noted above. The full list of German stocks that trade on the US markets can be found here. » Read more[...]



May 21, 2010 - More European Companies Delist from the NYSE

Fri, 21 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member David Hunkar of TopForeignStocks.com. You can read the full article on David’s blog. The exodus of European firms from delisting their stocks on the New York Stock Exchange continue to climb. On Friday German auto maker Daimler AG (DAI) became the latest company to announce plans to delist from the NYSE. This follows the announcement of Deutsche Telekom AG (DT) two weeks ago to delist from the exchange. After these two delistings, just four of the large German companies will trade on the NYSE. French insurer AXA SA already trades on the OTC markets. Hellenic Telecom (OTE) of Greece has also announced plans to delist from the Big Board. According to a Wall Street Journal article, some of the reasons for the delistings from the NYSE include: Many European firms view US listing as a liability Foreign investors are able to invest directly via electronic trading platforms in their domestic markets Listing requirements have risen on overseas markets Cost of complying to U.S. regulations such as the Sarbanes-Oxley Act has become burdensome The prestige of a US listing has faded since Enron and the financial crisis The daily trading volume of stock relative to global trading volume is lower for some companies With the removal of Daimler and Deutsche Telekom, the only four German companies that will continue to trade on the NYSE are Siemens (SI), Deutsche Bank (DB), Fresenius Medical Care (FMS) and SAP AG (SAP). Other European firms that have already delisted their stock from the NYSE are: Allianz (OTC:AZSEY) Infineon Technologies (OTC:IFFNY) Qimonda (OTC:QMNDQ) Altana Epcos Bayer (OTC:BAYRY) Pfeiffer Vacuum Technology E.ON AG (OTC:EONGY) BASF Group (OTC:BASFY) SGL Carbon However some firms such as E.ON continue to trade on the OTC markets as noted above. The full list of German stocks that trade on the US markets can be found here. » Read more[...]



May 20, 2010 - General Motors: On the Road to Recovery, but Moving Slowly

Thu, 20 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire members MoneyMorning.com. You can read the full article on the Money Morning blog. General Motors Corp. just logged its first quarterly profit since 2007. The company also claims to have paid back its government loans "in full," and is rumored to be interested in buying back its financing arm. But the truth of the matter is that GM isn't as far down the path to recovery as it would like the public to believe. The company's strong first quarter was greatly aided by Toyota Motor Corp.'s (NYSE ADR: TM) highly publicized recalls. Its claims that it has paid back government debt have been greatly exaggerated. And the United Automobile Workers (UAW) union is already pushing for restoration of many of the perks that it lost during the auto industry's near collapse. General Motors reported first-quarter profit of $865 million as its revenue surged 40% to $31.5 billion. That made for the company's first quarterly profit in three years. GM - a company that took millions in taxpayer money to remain viable and came close to running out of money in 2008 - reported free cash flow of $1 billion. GM in April repaid the balance of its $6.7 billion loan from the U.S. government, as well as smaller loans from Canadian authorities. The company aired several ads with GM Chief Executive Officer Ed Whitacre touting that achievement. Whitacre claimed that his company repaid the government loans "in full" and "with interest five years ahead of the original schedule." But what Whitacre didn't mention in the ads is that the loans were paid back with money from another government kitty. The government extended $43 billion in bailout funds to GM in addition to the nearly $7 billion in loans the company claims to have repaid. At this point, the U.S. taxpayer still owns a 61% stake in General Motors and a 56.3% stake in Ally Bank, formerly known as GMAC LLC. GM won't be able to pay off its debt until it launches an initial public stock offering - the timetable for which is still unclear. GM Chief Financial Officer Chris Liddell said the IPO could come later this year, but it's just as likely to be pushed off into next year. "The IPO will happen when the market's ready and when the company is ready," said Liddell. "It could happen by the end of this year, that's a possibility. It could happen next year, that's a possibility as well." GM's first-quarter profit "is a good, useful step on the road to the IPO," he said. "I'd like to think the first quarter demonstrates we're making good progress. Now that we've achieved profitability, the next step is to achieve sustainable profitability." Sluggish sales in Europe will be one of the major roadblocks to that effort. GM in the first quarter earned $1.2 billion before interest in North America compared to a $500 million loss in Europe, according to Liddell. GM plans to cut 8,000 jobs at its European unit, Opel, and reduce its capacity by 20%. Continued restructuring costs at Opel will almost certainly lead to losses beyond the $506 million pretax first-quarter deficit. Still, even if GM does turn its business around, the taxpayer is likely to remain on the hook for a substantial sum of money. The U.S. Treasury has $43 million tied up in the carmaker, which means GM would need to have a total value of about $80 billion after dilution for the government to break even, BusinessWeek reported. The old GM's market capitalization peaked at about $53 billion in April 2000, according to Global Financial Data. Fortunately, the loss on the government's investment is now expected to be less than $8 billion, which is significantly less than the $30 billion projected in 2009. Click here to continue reading this article on the Money Morning blog... » Read more[...]



May 19, 2010 - Why Euro is Falling Despite the EU/IMF Plan

Wed, 19 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Kathy Lien of KathyLien.com and FX360.com. You can read the full article on her blog. The big story in the financial markets is the mammoth EU/IMF rescue plan. A lot has been written about the plan on many sites including our own. Given that the plan which in many ways is just as significant as the TARP will be the focus of the financial markets for weeks to come, it is important to have a good understanding of the details and their implications for the foreign exchange market. Over the past few weeks, uncertainty in the Eurozone has affected risk appetite in assets across the globe and even with the rescue plan developments in Europe will continue to dominate trading in the coming weeks. The price action in the forex market indicates that even though investors are relieved to see this major announcement from EU/IMF/ECB, they are not completely confident that it will be a game changer. The goal was to spread calm through the financial markets and if you look at the VIX which fell sharply or equities which rose significantly, you could say the goal was achieved, but if you look at the move in currencies, you would be more skeptical. How much money is involved? In U.S. dollar terms, the rescue package is worth approximately $1 trillion. In euro terms, the EU/IMF have agreed to a EUR750 billion plan that would involve up to EUR440 billion in loan guarantees, EUR60 billion in emergency funding from the European Union and EUR250 billion from the IMF. The ECB also started to buy government bonds but failed to provide any specifics. Although 27 different nations are involved in the bailout, most of the money will come from the 16 members of the Eurozone. What was announced? In a nutshell, the following was announcements were made: New EU Special Purpose Vehicle to distribute the new loans – this is where the big questions remain (see below) New Swap Lines with Fed, BoE, SNB and BoC to ease liquidity – in other words, the Fed will ease demand for dollars by reopening the spigot vis a vis other central banks. ECB Government Bond and Corporate Debt Purchases Undermines credibility of central bank The EUR60 billion in emergency funding will be made available immediately but it could be sometime before the larger loan guarantee package is made available. According to the ECB: In view of the current exceptional circumstances prevailing in the market, the Governing Council decided: To conduct interventions in the euro area public and private debt securities markets (Securities Markets Programme) to ensure depth and liquidity in those market segments which are dysfunctional. To adopt a fixed-rate tender procedure with full allotment in the regular 3-month longer-term refinancing operations (LTROs) to be allotted on 26 May and on 30 June 2010. To conduct a 6-month LTRO with full allotment on 12 May 2010, at a rate which will be fixed at the average minimum bid rate of the main refinancing operations (MROs) over the life of this operation. To reactivate, in coordination with other central banks, the temporary liquidity swap lines with the Federal Reserve, and resume US dollar liquidity-providing operations at terms of 7 and 84 days. These operations will take the form of repurchase operations against ECB-eligible collateral and will be carried out as fixed rate tenders with full allotment. The first operation will be carried out on 11 May 2010. What are the unanswered questions? With Angela Merkel’s Party losing majority, it will take a few days if not a few weeks to get the rescue plan through the upper and lower houses of Parliament. We saw how long it took to get to get the Greek bailout plan approved and we can only imagine how long it will take for this plan to be passed. What will be the exact mechanics behind how the Special Purpose Vehicle that wi[...]



May 18, 2010 - Filling The Switch & Data Gap

Tue, 18 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Rob Powell of TelecomRamblings.com. You can read the full article on Rob’s blog. For a sector that has been on fire for several years now, the colocation and data center space has had relatively few companies available for investment by the general public in the US marketplace. And with Switch and Data now part of the growing Equinix (EQIX) empire, there are suddenly fewer still. There are of course the two REITs: Digital Realty Trust (DLR) and [[DuPont Fabros (DFT), and there are Terremark Worldwide (TMRK) and Savvis (SVVS), but nevertheless there has been a common perception amongst some that Equinix is the only big game in town. That era seems about to end as a group of dynamic companies are rapidly moving to restore depth to the field. Coresites is apparently planning an IPO worth some $230M to which it will add senior debt and a credit facility to amass a warchest of $500M or more. The company will apparently be a REIT, in the vein of Digital Realty and Dupont Fabros and lists some 2M square feet of rentable space in its portfolio. Telx made their S-1 filing in March, offering details on their own $100M plans after raising money for expansion last year as well. European colocation specialist Interxion is also apparently taking the US IPO plunge. This one has been rumored for years, but apparently the time is finally ripe. The company generated $226M in revenue in 2009, which makes it somewhat larger than Switch and Data was. I suspect there will be more as well. Amongst other private companies who are aggressively expanding in US markets are QTS, which bought that monster Qimonda facility in Richmond, and Telehouse which has been rather noisy as well over the past year. Are there others that we should be keeping an eye on? Oh yes, there’s also Cincinnati Bell, which appears to be moving into position with its purchase of Cyrus One from ABRY. More? » Read more[...]



May 17, 2010 - You Say You Are a Market Maker? Great, Act Like One

Mon, 17 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Yves Smith of Naked Capitalism. You can read the full article on NakedCapitalism.com The drama of financial regulatory reform is, to a considerable degree, playing right into the industry’s hands. I have several pet theories as to why this has happened. One is the fact that the drafting of new rules and the related horse-trading started before there had been any meaningful investigations, and more important, there did not seem to be much in the way of forensics in the offing. We had the FCIC, with a limited budget for this sort of exercise, tight timetable, and questionable structure, and SIGTARP, with real prosecutorial powers, but limited resources and a narrow mandate. Attitudes shifted markedly with the disclosure of the Lehman bankruptcy report by Anton Valukas, and underwent a sea change with the SEC’s suit against Goldman over Abacus 2007 AC-1. But rather than use the sudden change in public perceptions (and perhaps more important, media coverage) to reopen the scope of regulation, Team Obama is hell bent to get Something Done well before mid-term election, presumably to appease “populist anger”. We seem to be missing a key lesson of the Great Depression, and that is likely by design, given the power of the financial services lobby. The abuses brought to light by the Pecora Commission helped secure the passage of securities reforms. And perhaps as important, it made clear to the banking industry that far-reaching changes were to be implemented. The 1933 and 1934 securities acts reflect a sophisticated understanding of market operations, precisely because some insiders were involved in the drafting of legislation. They recognized they were either going to be on the bus, or under the bus, and chose accordingly. By contrast, the industry has done a very good job in maintaining a united front against reform. One example: a colleague, who has written a few articles that have appeared on the Internet related to credit derivatives. He has been asked to do expert witness testimony, both for plaintiffs (meaning against the big dealer banks) and for a big bank. Even though his work has been pretty technical in nature and does not implicate the bank in question, the bank and its attorneys are very uncomfortable with the fact that he has exposed tradecraft, and have made it clear that they do not want him publishing at all if he is to work with them. It is one thing to ask an expert witness to review articles pre-publication to make sure they do not compromise a client; quite another to put a gag order on someone who has a long-standing publishing history. Similarly, I have run across others who clearly believe abuses occurred, yet are unwilling to break ranks (and I don’t mean outing themselves, simply talking to an investigator or reporter on an deep background basis). So the result is that we’ve had proposals come in late in the game that are crowd-pleasing but either ineffective or ill thought out, and that works to the industry’s benefit (they can beat them back, and the existence of a flawed proposal that is taking up legislative and press bandwidth makes it harder for other, better conceived measures to move forward). One example of the ineffective sort is the so-called Volcker rule, to require depositaries to exit the proprietary trading business. On paper, this is a good idea, but the initial Volcker definition was to distinguish trades executed with end customer versus those that were not, which is not a helpful distinction (bond king Salomon Brothers did a tremendous amount of speculation in its regular trading books, long before there were separate prop desks). Although the language is still in play, banking expert Josh Rosner has said, via e-mail, “the Volker rule has holes [...]



May 14, 2010 - Candor Counts

Fri, 14 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Saj Karsan of BarelKarsan.com. You can read the full article on Saj’s blog. When reading through the press releases that most companies issue to announce their quarterly financial results, one can get a pretty good idea of which companies are pleased with their earnings and which are not. Unfortunately, however, it often requires reading between, or in this case below, the lines. When the earnings are positive, the company will usually lead with a statement listing its net income and describing how strong it is. When the earnings are negative, a whole slew of issues are likely to be discussed before the earnings number is deemed relevant. Consider Nu Horizons (NUHC), a company we have previously discussed as a potential value investment. Two years ago, when earnings were positive, the company reported net income in the 3rd sentence of the press release, in a candid and matter-of-fact manner: "Net income for the quarter was $1,155,000" Fast forward to last week's results where the negative earnings number is not reported until the 7th paragraph, getting trumped by such items as sequential sales results, supplier updates, an update with respect to the strategy for Asia (this is a company based in NY), workforce reductions subsequent to the quarter end, a statement amount debt reduction expectations, sales by geographic region, and a discussion of the company's tax assets! Managers of public corporations are just as human as the rest of us: nobody likes giving bad news. When management is not candid with its shareholders, however, it leaves a poor impression with investors. Here are Warren Buffett's comments on candor: "We will be candid in our reporting to you, emphasizing the pluses and minuses important in appraising business value. Our guideline is to tell you the business facts that we would want to know if our positions were reversed. We owe you no less. Moreover, as a company with a major communications business, it would be inexcusable for us to apply lesser standards of accuracy, balance and incisiveness when reporting on ourselves than we would expect our news people to apply when reporting on others. We also believe candor benefits us as managers: The CEO who misleads others in public may eventually mislead himself in private." This topic may be similar to one we've previously seen where managers blame externalities for negative surprises, and credit themselves when positive surprises occur. Disclosure: Author has a long position in shares of NUHC » Read more[...]



May 13, 2010 - 2009-2010 Gold Bubble Still Just a Baby

Thu, 13 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Tim Iacono of TimIacono.com. You can read the full article on Tim’s blog.

Despite all the hoopla about a new all-time high in U.S. dollar terms, the 2009-2010 version of the recurring gold bubble is still quite modest by historical measure, a point that should be clear to see in the graphic below that was in dire need of updating.


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Surely, the current move up would be much more impressive than the last two if the metal were priced in euros. It now seems to be only a matter of time before the important €1,000 an ounce milestone is reached – with spot gold now trading at €977 an ounce, it looks to be just a matter of just days, if not hours.

» Read more

Related Commodities: Related Concepts:



May 12, 2010 - What’s The Global Value Of A Barrel Of Oil?

Wed, 12 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. The value of a nation's currency has tremendous effect upon its standing in global trade. Sure, a strong currency is good for a country's purchasing power, but it also hurts exports, due to the relatively higher prices consumers in other nations must pay for their goods (priced, of course, in the exporting nation's currency). You may remember this topic came to a serious head back in 2007, when the Canadian and American dollars reached parity for the first time ever and Canada's largely export-based economy (lumber, oil, wheat, etc.) saw a whole new kind of pressure. I'd like to say that pressure has abated since then, but with the crazy movements in the forex markets over the last several months, the dollars appear to be pushing toward sustained parity. Of course, the situation gets more complex—and for my money, more interesting—when you expand your focus outside bi-national trade in only two currencies to huge global markets, with basic economic inputs traded in multiple currencies. Of course, I'm talking about oil. Pricing Oil Around The World As Americans, we're used to seeing crude oil priced in U.S. dollars. Even those barely keeping up on the economy can tell you that oil has bounced around $75-$85 for the past several months. And for us, the pricing structure is easy to understand; we can generally explain price drivers in terms of basic supply and demand. But consider our British brethren, who pick up their daily paper and, after sifting through dozens of extraneous vowels, get two prices for their oil: one for the price of a barrel of Brent crude (the typical British standard), and one for the price of a barrel of West Texas intermediate—as well as a description of price movements as compared to the value of the British pound. Slight compositional differences aside, Brent and WTI crude are essentially the same commodity. Yet once you go overseas and introduce currency effects, simple supply/demand is no longer sufficient to describe the system. The reason for this discrepancy is that the United States has the honor/duty/privilege of trading WTI crude, the world's oil benchmark (more properly known as light, sweet crude), in U.S. dollars on the New York Mercantile Exchange. That contract is bought and sold by hedgers and speculators the world over, from Los Angeles to Dubai to Shanghai to Chicago to Quebec to Buenos Aires. When the global supply/demand system for oil is sluggish—that is, when neither force is particularly dominant in the market in the short term—oil prices have a tendency to depend largely on dollar strength. But since everyone the world over uses oil, how does the price of WTI change relative to the currencies of other nations? This question has been particularly relevant over the last year, as we've seen the dollar get weaker while other currencies go crazy amid Greece's debt woes. So we set out to ask: How much is a barrel of oil really worth? Click here to continue reading this article on the HardAssetsInvestor Blog. » Read more[...]



May 11, 2010 - 3M Company (MMM) Dividend Stock Analysis

Tue, 11 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Dividend Growth Investor. You can read the full article on DividendGrowthInvestor.com.

3M Company, together with its subsidiaries, operates as a diversified technology company worldwide. It operates in six segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications.

3M Company is a major component of the S&P 500 and Dow Industrials indexes. The company is also a dividend aristocrat, which has been consistently increasing its dividends for 52 consecutive years. Over the past decade this dividend growth stock has delivered an annual average total return of 7.90% to its shareholders.

At the same time company has managed to deliver an impressive 7.70% average annual increase in its EPS since 2000. In 2009 earnings per share fell by 7.60% to $4.52. The expectations for 2010 are for increase EPS to almost $5.15/share and an increase in EPS to $5.69 in 2011. Over the long run however, earnings for this conglomerate are relatively diversified which is a decent buffer during recessions. As the economy rebounds, revenues and profitability would improve. The company also invests almost 6% of its revenues in research and development each year, in order to deliver new products to consumers worldwide. Future growth is expected to also come from acquisitions as well as growth in emerging markets such as China and India. Sales are increasing partly due to strong demand of coatings for TV and Computer displays as well as demand for masks in response to the H1N1 virus.

Click here to continue reading this article on the the Dividend Growth Investor Blog...

» Read more...




May 10, 2010 - Euro: Headed to 1.25?

Mon, 10 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Kathy Lien of KathyLien.com and FX360.com. You can read the full article on her blog.

The euro blew through its prior support level of 1.2960 easily as contagion fears grow. Bailouts don’t prevent contagions and that is what investors are deeply afraid of.

Moody’s has put Portugal on review for downgrade sparking fears that there will now be TWO countries poised for same downward spiral as Greece.

Fear is an aggressive behavior especially when it seeps into the core of the financial markets. Part of the reason why currencies are so trending is because when uncertainties grow, investors won’t hesitate to sell. However realistically, the risk of rating agencies downgrading Spanish and Portuguese debt to junk is minimal. Spain and Portugal do not have the same funding problems as Greece. The premium that investors demand to hold 10 year Greek debt over German bonds hit a record high of 700bp while the premium for Portuguese debt is 280bp and 121bp for Spanish debt, far below Greek levels. Yet these facts are not be enough to sooth investors who are preparing for the worst and will cringe at even a one notch downgrade.

There are still Unanswered Questions:

  1. Will all Governments approve the package
  2. Greek public unrest likely to continue /worsen
  3. Will it work / does it solve the underlying problem ( probably not)
  4. Contagion to other euro zone members.

As a result, its worthwhile to take a look at the next support levels in the euro. Here’s a weekly technical chart illustrating the strong possibility of the euro falling to 1.25.

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Technical Chart of the EUR/USD currency pair
» Read more




May 1, 2010 - New ADR Listing: Brazilian Railroad-based Logistics Operator

Sat, 01 May 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member David Hunkar of TopForeignStocks.com. You can read the full article on David’s blog.

ALL-America Latina Logistica S.A, the Brazil-based Latin America’s independent rail-based logistics operator, listed its ADR on the OTCQX market in Level 2 category with the ticker ALLAY.

From the press release:

“ALL is currently Latin America’s largest independent rail-based logistics operator, offering a complete range of logistics services with domestic and international intermodal door-to-door transportation operations, local pick-up and delivery, port terminal services, dedicated fleet services and warehousing services, including inventory and distribution-center management. ALL owns and operates a large asset base, including a rail network that extends 21,300 kilometers of rail tracks, 1,095 locomotives, 31,650 rail cars, 650 highway vehicles, distribution centers and warehousing facilities.”

ALL’s shares were listed in the BOVESPA exchange in 2004. Since its listing, the shares have returned an average of 18% annually in local currency terms.

The Brazilian rail network is the seventh largest in the world but the current infrastructure is not enough to meet the demand for freight transportation. Hence ALL is well-positioned to profit from the demand for rail transportation in both Brazil and Argentina. ALL currently operates in Brazil, Argentina, Chile and Uruguay. ALLAY has a very light daily trading volume and the stock closed at $8.97 yesterday.

For more information, go to their corporate website here.

» Read more




April 30, 2010 - New ADR Listing: Brazilian Railroad-based Logistics Operator

Fri, 30 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member David Hunkar of TopForeignStocks.com. You can read the full article on David’s blog.

ALL-America Latina Logistica S.A, the Brazil-based Latin America’s independent rail-based logistics operator, listed its ADR on the OTCQX market in Level 2 category with the ticker ALLAY.

From the press release:

“ALL is currently Latin America’s largest independent rail-based logistics operator, offering a complete range of logistics services with domestic and international intermodal door-to-door transportation operations, local pick-up and delivery, port terminal services, dedicated fleet services and warehousing services, including inventory and distribution-center management. ALL owns and operates a large asset base, including a rail network that extends 21,300 kilometers of rail tracks, 1,095 locomotives, 31,650 rail cars, 650 highway vehicles, distribution centers and warehousing facilities.”

ALL’s shares were listed in the BOVESPA exchange in 2004. Since its listing, the shares have returned an average of 18% annually in local currency terms.

The Brazilian rail network is the seventh largest in the world but the current infrastructure is not enough to meet the demand for freight transportation. Hence ALL is well-positioned to profit from the demand for rail transportation in both Brazil and Argentina. ALL currently operates in Brazil, Argentina, Chile and Uruguay. ALLAY has a very light daily trading volume and the stock closed at $8.97 yesterday.

For more information, go to their corporate website here.

» Read more




April 29, 2010 - Sprint Finally Sprints Forward

Thu, 29 Apr 2010 00:00:00 GMT

&Today’s Daily Angle comes from Wikinvest Wire member Rob Powell of TelecomRamblings.com. You can read the full article on Rob’s blog.

Well, perhaps ’sprints’ is a bit too strong but it has been such a long time in coming... Sprint Nextel (S) finally returned to sequential revenue growth in its earnings report for the first quarter of 2010. Revenues of $8.085B were up 3% sequentially and a bit better than the consensus estimates. Loss per share was also a bit better than expected at $0.17 not including a $0.12 non-cash charge related to valuation of deferred tax assets. The pain still isn’t over at Sprint, but perhaps they have finally turned the corner they have been promising us they would turn.

On the wireless side, the company added 348,000 pre-paid customers plus another 155,000 wholesale and affiliate customers, while losing 578,000 post-paid customers. That’s a net loss of just 75K, which may be a far cry from the increases being put up by AT&T and Verizon but is an improvement nonetheless. Sprint forecasts that both post paid and total subscriber losses will be better in 2010 than 2009, which isn’t quite as good as saying subscribers will actually start rising again – but investors will take what they can get.

The company’s wireline business continued on the same trajectory it has been on. Revenues declined by the usual 2.1% sequentially to $1.297B. EBITDA rose sequentially to $279M for the quarter, returning EBITDA margins to just under 22%. Capex was just $56M, or just 4.3% of revenues, as the company continues to manage this segment for cash flow rather than expansion.

What exactly the company will do with its wireline business remains an open question. They aren’t investing capex in it, and we know they considered various strategic alternatives last summer when the credit markets were uncooperative. Now that CenturyTel and Qwest are getting hitched, the field of potential suitors/partners has narrowed. It’s probably just a matter of time before another Level 3 joint venture rumor hits the streets IMHO.

» Read more




April 28, 2010 - Earnings Persistence

Wed, 28 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Saj Karsan of BarelKarsan.com. You can read the full article on Saj’s blog. Value investors love finding stocks trading at low P/E values, as this means the price that must be paid for the stock is low relative to the company's earnings. But the investor cannot assume that current or recent earnings will persist forever, as this could result in an overpayment for a stock. One warning sign in particular that may indicate that earnings may not persist are abnormally high returns on equity. The same feature of capitalism that has provided continuous improvements in productivity and our standards of living will also erode the earnings of investors who do not pay attention to its power: competition. When firms are able to generate abnormally high returns, a plethora of copy-cats will attempt to replicate its success. Consider Cambrex Corporation (CBM), maker of active ingredients for pharmaceutical products. In 2009, the company generated operating income of $26 million against a market cap of just $128 million. But can it keep those levels of earnings going? That depends on whether the company has any advantages that the competition cannot erode. As a producer of commodity products, the company has at least 25 competitors in Western Europe and the United States, and many more in low-cost regions such as Asia and Eastern Europe. It's important to note that every company will claim to have a competitive advantage. In the case of Cambrex, it has patents covering various processes and claims to have superior manufacturing know-how. However, only someone who understands the industry and the companies within it quite well will be able to determine if these advantages are real, and if they may result in strong returns that are sustainable. This once again highlights the need for investors to restrict themselves to areas within their circle of competence. Barring a competitive advantage, competition will erode the returns of a successful operation. Companies like Coke (KO), Intel (INTC), and Google (GOOG) clearly have competitive advantages that have allowed them to generate abnormally high returns for sustained periods. Of course, there are many more companies with competitive advantages, even small ones. But if the investor is counting on such returns to be persistent, he should be able to identify that advantage, lest he overpay for a company that is soon to see its earnings return to more normal levels. » Read more[...]



April 27, 2010 - The New Futures Contracts

Tue, 27 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. Unlike stocks, bonds, or funds (mutual or otherwise) there are very few different futures contracts. Most serious traders, given a few minutes, could probably name all of them. (If you’ve started doing this yourself, you can stop, there’s not going to be a quiz.) But markets rarely stand still, and the menu of commodities futures contracts available does change. The addition of a futures contract to an exchange is typically driven by the desire provide industry participants with price stability and a means of hedging against volatility. So when a new contract is launched, it means that the demand for and use of the commodity in question is significant enough that the spot market no longer gets the job done. In other words, an exchange doesn’t just add a new futures contract because it thinks it’d be nice, or convenient. Rather, new contracts are added because industry demands price stability. What follows is a brief rundown of some of the new or impending futures contracts that have been recently added to various commodities exchanges, along with a rundown of the fundamentals and contract specifications. As always, be careful out there—volumes on many of these contracts can be expected to stay light for a time. Cobalt Exchange: London Metals Exchange (LME) Initiated: 2/22/2010 Symbol: CO Contract Specifications: Click here. Overview: Most consumers are likely familiar with cobalt as a major input in rechargeable batteries. Specifically, cobalt is used in the production of lithium-ion batteries, used largely in cell phone and laptop batteries. Cobalt is also used extensively in the production of aircraft engines, due to its stability at high temperature and resistance to corrosion. Thus, the primary hedgers (and therefore the space to keep an eye on for those interested in investing) are going to be from the aerospace and technology hardware industries (computer and cell phone manufacturers). Also, as battery technology evolves in other areas (i.e. automotive and/or electric utilities) cobalt stands to take on a more prominent role. Molybdenum Exchange: London Metals Exchange (LME) Initiated: 2/22/2010 Symbol: MO Contract Specifications: Click here. Overview: Molybdenum, which resembles lead and has a silvery luster, is used primarily as an alloy in steel. Molybdenum has one of the highest melting points of any metal on Earth (or elsewhere, as far as we know), and as such is used in steel alloys when performance and stability at extremely high temperatures is a must. The primary hedgers are therefore heavy-duty industrial manufacturers, specifically the makers of high-performance engines, such as jet engines and industrial motors. Distillers’ Dried Grain Exchange: Chicago Mercantile Exchange (CME) Initiated: 4/26/2010 Symbol: DDG Contract Specifications: Click here. Overview: Distillers’ Dried Grain (DDG for short) is a by-product of corn-ethanol production, and is typically sold as livestock feed. For ethanol producers, DDG is a waste product, yet it is an important part of the ethanol equation. For ethanol distillation to be cost effective, the price at which the ethanol AND distiller’s dried grain can be sold must be greater than the costs of corn plus distillation. In other words, it would be possible to run a profitable ethanol distillation outfit by losing money on ethanol sales, so l[...]



April 26, 2010 - Yep, It's Starting to get 1999ish Out There - Analyst Upgrades Mercadolibre (MELI) and Slaps 60x Forward PE Ratio

Mon, 26 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Mark H of FundMyMutualFund.com. You can read the full article on the Fund My Mutual Fund blog. First let me preface this by saying PE ratio is not the end all, be all of valuation methods. But it's the 'common man's' way to look at things, even with the caveat that there are multiple ways to slice 'earnings'. The more important take away is we are now seeing the same behavior we saw in 1999 -at least with companies that actually had earnings back then. I called it the relative comparison valuation. This is when analysts can no longer find valid reasons to justify prices, so to upgrade a stock they used the "it's not as expensive as company ABC" methodology. This is a lot like how we pay CEOs nowadays... "well if Chuck at company XZY is earning $X than I should be paid $X+10". And so on and so forth you can go on forever, in a permanent spiral upward. Unlike CEO compensation where there is no market force to keep this nonsense in check (board of directors are just rubber stamps in American corporatism), the market eventually washes out this "valuation method" in stocks. Key word... eventually. Last week, one of our old stocks Mercadolibre (MELI) was upgraded. I eagerly went to see the reasoning behind it. And our 1999 reasoning was here "it's one of the top 5 stories out there in internet land!" (hey I happen to agree with that idea, but that does not mean you should slap any valuation on it). The real reasoning said analyst should have used is "it's cheaper than Baidu (BIDU)" Then when MELI passed BIDU in valuation the BIDU analysts can come out and upgrade Baidu with reasoning "it's cheaper than MELI". And so and so the two bands of analysts can go at each other, ever increasing valuation on "it's cheaper than the other guy and a top franchise to boot!" as Greenspan morphs into Bernanke, and we repeat the same reindeer games. Heck we don't have to even wait a generation or 2 anymore to revisit old lessons forgotten. Thanks Bubble Makers in Chief. The only difference (thus far) is in 1999, the stock price would have jumped from $50 to $70 in the opening 15 minutes of the session it was upgraded. And then the next analyst could have come out with his $90 target within days. This means we are not yet at Code Red status of bubble making... still in Orange. Thomas Weisel Partners analyst Jordan Rohan has launched coverage of Latin American e-commerce play MercadoLibre (MELI) with an Overweight rating and $70 price target. The stock closed yesterday at $50.14. “We believe MELI is one of the top-five secular growth stories on the Internet due to the growth in users, usage and monetization,” he writes in a research note. “While valuation appears high today, (translation: "don't worry about it, we'll come up with a new valuation method" or "cheaper than Baidu!") we forecast upside to near-term estimates and strategically the Pago payments platform distances MercadoLibre from competition.” Rohan expects MELI to post profits of $1.14 this year. » Read more[...]



April 24, 2010 - Johnson & Johnson and Procter & Gamble Deliver Consistent Dividend Increases

Sat, 24 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Dividend Growth Investor. You can read the full article on DividendGrowthInvestor.com. Some of the best dividend stocks provide investors with the right to share ownership in some of the best managed companies in the world. Those companies are characterized by strong leadership as well as solid competitive advantages and products or services which have lasting pricing power. Such companies generate enough cash flows to not only invest back in the growth of the business but also to share the prosperity with shareholders by raising distributions as well as by making share buybacks. Two such companies which have raised distributions for decades like clockwork include Johnson & Johnson (JNJ) and Procter & Gamble (PG). Both companies raised distributions last week. The Procter & Gamble Company (PG) engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. The company raised its quarterly distribution by 9.50% to 48.18 cents/share. This is the fifty-fourth consecutive annual dividend increase for this dividend aristocrat. The stock yields 3%. (analysis) Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company raised its quarterly dividend by 10.20% to 54 cents/share. This is the forty-eight consecutive annual dividend increase for this dividend aristocrat]. The stock yields 3.30%. (analysis) The ten year annual dividend growth rates for Procter & Gamble (PG) and Johnson & Johnson (JNJ) are 11.60% and 12.90% respectively. This consistency of rewarding shareholders has made them must own stocks for dividend investors. They are both attractively valued at the moment. Click here to continue reading this article on the Dividend Growth Investor Blog... » Read more[...]



April 23, 2010 - 5 Ways to Get Started with Forex Trading

Fri, 23 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member StockTradingToGo.com. You can read the full article on the StockTradingToGo blog. There was a day when no one but big business had access to the forex market. The dawn of online forex trading changed all of that. Since that time, forex has been becoming more and more accessible to new entrants, but it’s still far from clear or easy. If you are interesting in exploring this opportunity, here are a few pointers to get you started. 1. Take the time to understand before trading This is by far the most common problem for new investors. If you can’t explain to your brother-in-law what exactly you hope to do, how it works, and why you think you can make money, you aren’t ready yet. In this respect, buying and holding stocks is far more simple and transparent. Forex isn’t for you if you aren’t ready to get an education in complex financial systems. For starters, investigate any terms you might not know like currency pairs, pips, scalping, swing trading, Fibonacci analysis, and more. Most of this information is available online at sites such as Wikinvest or Wikipedia. 2. Pick a good broker There was a day when computer users experienced everything through a monochrome monitor. That was their only window in the world of computers. In the same way, a broker is your window into the world of forex. Pick a bad broker, and your entire experience will be bad. It pays to investigate by looking at forex broker ratings. See what other people think; compare between multiple brokers yourself; ask the hard questions. A single factor like wide spreads (the difference between what you pay and what you get), can make a strategy completely impossible. Of course, the reality is that brokers need to make money too. If your broker is going to stay open, he’ll need to include some type of charge. But a number of “brokers” maintain trading desks that trade against their own customers, and others use practices that are essentially fraudulent. Never open an account with any brokerage without carefully reviewing and verifying their legitimacy. 3. Be willing to pay for a forex education You can get away with scrimping on some things. But forex education will help you establish a personal strategy and good tradings habits from the beginning. Unfortunately, the sudden expansion of the forex marketplace has caused a flood of educational offerings—some of them quite unhelpful. This points to the next tip. 4. Find someone you can trust who is an experienced trader Your best bet for a smooth entrance into this investment style is to find a good mentor. There’s a huge value in having someone to go to with your questions. This is also the best way to choose a broker or an education program. 5. Start with a demo account Too few people realize that demo accounts are available for free at most brokerages. These systems give you the opportunity to practice without actually putting any money on the line. This means that you can find out whether forex trading really is for you. Once you can consistently produce positive results over a period of time, you are probably ready to get started in forex. Too many people have entered the forex market without understanding these basic foundations and historical currency rates so in turn lost their money. Their conclusion is usually that the entire system is a scam. But following a careful and deliberate method, you can get started and be[...]



April 22, 2010 - 5 Ways to Get Started with Forex Trading

Thu, 22 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member StockTradingToGo.com. You can read the full article on the StockTradingToGo blog. There was a day when no one but big business had access to the forex market. The dawn of online forex trading changed all of that. Since that time, forex has been becoming more and more accessible to new entrants, but it’s still far from clear or easy. If you are interesting in exploring this opportunity, here are a few pointers to get you started. 1. Take the time to understand before trading This is by far the most common problem for new investors. If you can’t explain to your brother-in-law what exactly you hope to do, how it works, and why you think you can make money, you aren’t ready yet. In this respect, buying and holding stocks is far more simple and transparent. Forex isn’t for you if you aren’t ready to get an education in complex financial systems. For starters, investigate any terms you might not know like currency pairs, pips, scalping, swing trading, Fibonacci analysis, and more. Most of this information is available online at sites such as Wikinvest or Wikipedia. 2. Pick a good broker There was a day when computer users experienced everything through a monochrome monitor. That was their only window in the world of computers. In the same way, a broker is your window into the world of forex. Pick a bad broker, and your entire experience will be bad. It pays to investigate by looking at forex broker ratings. See what other people think; compare between multiple brokers yourself; ask the hard questions. A single factor like wide spreads (the difference between what you pay and what you get), can make a strategy completely impossible. Of course, the reality is that brokers need to make money too. If your broker is going to stay open, he’ll need to include some type of charge. But a number of “brokers” maintain trading desks that trade against their own customers, and others use practices that are essentially fraudulent. Never open an account with any brokerage without carefully reviewing and verifying their legitimacy. 3. Be willing to pay for a forex education You can get away with scrimping on some things. But forex education will help you establish a personal strategy and good tradings habits from the beginning. Unfortunately, the sudden expansion of the forex marketplace has caused a flood of educational offerings—some of them quite unhelpful. This points to the next tip. 4. Find someone you can trust who is an experienced trader Your best bet for a smooth entrance into this investment style is to find a good mentor. There’s a huge value in having someone to go to with your questions. This is also the best way to choose a broker or an education program. 5. Start with a demo account Too few people realize that demo accounts are available for free at most brokerages. These systems give you the opportunity to practice without actually putting any money on the line. This means that you can find out whether forex trading really is for you. Once you can consistently produce positive results over a period of time, you are probably ready to get started in forex. Too many people have entered the forex market without understanding these basic foundations and historical currency rates so in turn lost their money. Their conclusion is usually that the entire system is a scam. But following a careful and deliberate method,[...]



April 21, 2010 - Nice try US government, we're still not buying natural gas

Wed, 21 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Asset Prime. You can read the full article on the AssetPrime blog.

Two weeks ago the Wall Street Journal ran an article with the headline: "Natural-Gas Data Overstated". Apparently, the Energy Department has for some while been screwing up its statistical projection for natural gas and significantly overestimating the country's gas supplies.

Basic economics tells us that when demand stays constant and supply diminishes, prices go up. And according to this report, supplies, in fact, have diminished, albeit somewhat artificially. And how did the market react? It didn't.

Other than that spike the day of the announcement (April 5) natural gas investors apparently couldn't care less about the US Government's overstated inventory figures.

This highlights the fact that in the US we have access to about as much natural gas as we could ever want. Granted, a lot of it is underground, but unless gas stocks were actually low (like, in danger of running out) knowing that our stocks are slightly less than previously thought doesn't actually affect the price. At some point, the functional supply of gas changes from a number of mmBTUs to the categorical figure "plenty". If we got to a point where we were consuming enough natural gas to see stocks diminishing the gas drillers could ramp up production so quickly that no blip would be seen.

So, nice try government, but the market knows better.

» Read more




April 20, 2010 - Canadian Dollar Setback

Tue, 20 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member CreditWritedowns.com. You can read the full article on the CreditWritedowns blog. Falling commodity prices amid general position adjustment in the foreign exchange market is weighing on the Canadian dollar today. The Loonie is trading at its lowest level since late March. The near-term risk seems to extend toward CAD1.03, but the underlying favorable fundamentals remain intact. On top of the softer commodity story and unwinding of positions in the currency market, the volcanic ash that has shut airports in Europe is beginning to impact the east coast of Canada. Specifically, the main airport in Newfoundland has already begun cancelling some flights. Canada did report that foreign investors bought slightly less Canadian assets in Feb than had been expected, while Canadians themselves stepped up purchases of foreign assets. Non-residents bought C$6.7 bln of mostly Canadian bonds. They were buyers of Canadian bonds for the 14th consecutive month. Half of the flows went into Canadian government bonds, and the remaining half was roughly divided equally between corporates and provincial issues. Canadians bought C$1.8 bln of foreign bonds, mostly US Treasuries (2/3) and the remainder corporate US bonds and some non-US bonds. Canadians bought about C$1.4 bln of foreign equities, mostly non-US. Canadian purchases of foreign assets in Feb was the highest in about a year. The fundamental case for the Canadian dollar remains intact. It is predicated on current interest rate differentials and the likelihood that the Bank of Canada hikes rates in the June/July period, before the other G7 countries. The Bank of Canada meets tomorrow. No one expects a rate hike of course, but the guidance from the central bank is awaited. Given the recent string of somewhat softer than expected data, the risk is that the BOC’s statement encourages expectations of a July rate hike than June. Specifically, employment, housing starts, senior loan officer survey, and manufacturing sales all came in below expectations this month. Looking forward, CPI and retail sales are the economic highlight of the week. The pace of inflation may moderate slightly and retail sales excluding autos cannot sustain the 1.8% pace seen in Jan. The consensus calls for less than 1/4 of that pace. Speculators at the IMM marginally extended their long positions in the ending last Tuesday. Since then the US dollar bottomed near CAD0.9950. It would not be surprising to see more momentum traders throw in the towel and look for better levels to buy the Loonie again. We suspect potential exists toward CAD1.03. Support now is pegged near CAD1.0120. » Read more[...]



April 19, 2010 - Was Greece Rescue Futile, and is Portugal Next?

Mon, 19 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Yves Smith of Naked Capitalism. You can read the full article on NakedCapitalism.com We met last week with a savvy German investor, one who unlike many of his peers, is well aware of the German bank exposure to Greek and other Club Med debt. He argued that Greece will default within six months. That view might have seemed extreme a week ago, but as Wolfgang Munchau points out today in the Financial Times, the markets also appear not to be buying what the EU and Greece are selling: The European Union finally agrees a bail-out, and the much-predicted rally of Greek bonds turns into a rout. A week later, spreads on Greek bonds had reached their highest levels since the outbreak of the crisis. The financial markets have recognised that, bail-out or no bail-out, Greece is in effect broke. Yves here. Munchau is at least more optimistic than my German contact, since Munchau believes Greece will not default in 2010. But the only difference in their views is of the timing, not the eventual outcome. The austerity programs demanded of Greece are by some measures more than twice as severe as those imposed on Argentina at the turn of this century. And remember, Argentina defaulted: To avoid long-run insolvency, Greece will need to find a way to stabilise the debt-to-GDP ratio. This would in turn require a multi-annual deficit reduction plan and a programme of structural reforms to raise the potential growth rate. The Greek government has so far presented a one-year plan to cut the deficit from 13 per cent of GDP to about 8.5 per cent. While this sounds ambitious, it is not very credible, as it is based heavily on tax increases, with no structural reforms. But even if the Greek government were to present a credible long-term stability plan, the risk of default would remain high. This means that some form of debt restructuring is unavoidable. Restructuring is a form of default, except that it is by agreement. It could imply a haircut – an agreed reduction in the value of the outstanding cashflows for bond holders. The Brady bonds of the late 1980s, named after Nicholas Brady, a former US Treasury secretary, worked on a similar principle. An alternative to restructuring would be a debt rescheduling, whereby short and medium-term debt is converted into long-term debt. This would push the significant debt rollover costs to well beyond the adjustment period. Ambrose Evans-Pritchard turns to Portugal, and argues that while it is in better shape than Greece, it too is at risk, and were Portugal to suffer funding problems too, the eurozone might not survive the test: The long-drawn saga in Athens can perhaps be deemed a case apart. Greece lied. Its budget deficit was egregious at 16pc of GDP last year on a cash basis. It wasted its EMU windfall, the final chance to bring public debt back from the brink of a compound spiral... Brussels admitted last week that Portugal’s external accounts have switched from credit in the mid-1990s to a deficit of 109pc of GDP. This has been caused by the incentive structures of EMU itself. “The more broadened access to credit induced a significant reduction in the saving rate, while consumption kept growing faster than GDP. This development led to an increase in Portuguese indebtedness,” it said. The IMF’s January r[...]



April 17, 2010 - From Here, Everything Looks Up

Sat, 17 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Tim Iacono of TimIacono.com. You can read the full article on Tim’s blog.

The Commerce Department reported(.pdf) that housing starts and permits for new construction both rose more than expected last month, however, similar to recent data on new home sales that just sunk to new all time lows, it doesn’t take much for the homebuilders’ leading indicators to show improvement from current levels.

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Housing starts rose 1.6 percent in March to an annualized rate of 626,000 units and are now more than 20 percent higher than a year ago. Permits for new construction rose to their highest level in 17 months, up 7.5 percent to a rate of 685,000, a full 34 percent higher than a year ago when this data series was making a bottom.

» Read more




April 16, 2010 - From Here, Everything Looks Up

Fri, 16 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Tim Iacono of TimIacono.com. You can read the full article on Tim’s blog.

The Commerce Department reported(.pdf) that housing starts and permits for new construction both rose more than expected last month, however, similar to recent data on new home sales that just sunk to new all time lows, it doesn’t take much for the homebuilders’ leading indicators to show improvement from current levels.

Error creating thumbnail

Housing starts rose 1.6 percent in March to an annualized rate of 626,000 units and are now more than 20 percent higher than a year ago. Permits for new construction rose to their highest level in 17 months, up 7.5 percent to a rate of 685,000, a full 34 percent higher than a year ago when this data series was making a bottom.

» Read more




April 15, 2010 - Investing in Recession-Proof Alcohol

Thu, 15 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member David Hunkar of TopForeignStocks.com. You can read the full article on David’s blog.

The “Numbers” column in the latest edition of Bloomberg BusinessWeek discusses the impact of recession on the alcohol business.

Sales of alcholic beverages are proving to be recession-proof. Sales of expensive wines,beers and spirits have been flat to down compared to one year earlier. However sales of beer in the cheapest category have been up a solid 7.3%. Sales of imported beers fell by 3.8%. Cheaper brands which usually tend to have the biggest market shares have shown solid growth in the recession.

The world’s five biggest alcohol companies by market cap are listed below:

  1. Anheuser-Busch Inbev (BUD)
    • Belgium
    • Market cap as of March: $81 billion
    • Top Brands: Budweiser, the Busch and Michelob families,Natural #*Light,Ice, etc.
  2. Companhia de Bebidas das Américas (ABV)
    • Brazil
    • Market cap as of March: $57 billion
  3. Diageo plc (DEO)
    • U.K.
    • Market cap as of March: $42 billion
    • Top Brands: Jamaican lager Red Stripe, Ireland’s Kilkenny red ales and Senator Keg in Africa, etc.
  4. Heineken (OTC: HINKY)
    • The Netherlands
    • Market cap as of March: $25 billion
    • Top Brands: Heineken and Amstel
  5. Pernod-Ricard (OTC: PDRDY)
    • France
    • Market cap as of March: $22 billion
    • Top Brands: ABSOLUT VODKA, Jacob’s Creek, Havana Club, Martell, etc.
» Read more




April 14, 2010 - Building A Better Gold/Silver Ratio

Wed, 14 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. Commodity traders love spreads. Not only do spreads (intra- or intercommodity) provide guidance for entry and exit points in our trades, they also make a lot of sense. When comparing different types of commodities, it's a straightforward mental leap to understand that a barrel of oil is worth so many mmBTUs of natural gas, or that a bushel of corn is worth about 1 1/2 bushels of oats, and so on. Furthermore, these spreads tend to be easy to derive; all you need is a few years' worth of data and an Excel spreadsheet, and voila, you've calculated your spreads. No such spread is followed with as much zeal as the gold/silver ratio. We've talked about this ratio before in some depth, but suffice to say, over the past 100-plus years, the gold/silver spread per ounce has remained relatively constant at 30:1—meaning one ounce of gold can buy 30 ounces of silver. However, over the last 12 years or so, that spread has widened to about 60-to-1. William Jennings Bryan would not be pleased. Now, many traders closely track where the spreads are on any given day; that is, if you think the 60-to-1 spread of recent years is accurate and stable, you want to know when the spread moves significantly away from that, and play accordingly. Be it 70-to-1, 30-to-1, etc., you can always play the spread by shorting one metal and going long the other. However, if you're like me, it's not the spread that's the most interesting part of this picture, it's what causes the spread to move one way or the other. Correlations Between Gold, Silver And The U.S. Dollar Since they're both the precious metals investors tend to flock to as "safe haven" assets, gold and silver prices are highly correlated. Over the last five years, more than 75 percent of the change in value of gold can be explained by the change in value of silver. When looking at a scatter plot of the two metals' prices, there appear to be two partially unique trend lines, but in general, when the price of silver goes up, so too does gold's. Gold also has a high negative correlation to the U.S. dollar; as we've covered before, when the dollar improves, gold's appeal as a safe haven diminishes. But what's interesting is that even though gold and the dollar are highly correlated, and gold and silver are highly correlated, silver and the dollar, in fact, do not have as strong a correlation. Click here to continue reading this article on the HardAssetsInvestor Blog... » Read more[...]



April 13, 2010 - Equinix Formally Launches Its Carrier Ethernet Exchange

Tue, 13 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Rob Powell of TelecomRamblings.com. You can read the full article on Rob’s blog. After testing the waters for 6 months, Equinix (EQIX) has formally launched its new Ethernet exchange service. The idea of course is to bring together the various Ethernet networks out there in a direct and reliable way, such that the whole is greater than the sum of the various parts. And of course that each of those parts shares in those benefits, as does Equinix itself. I’m still looking for details on how the workflow on this sort of exchange will operate and then how it will scale, but with Ethernet exploding throughout the sector the time does seem ripe to give it a go. The initial participant list is quite impressive: AboveNet BroadbandONE Easynet Global Services euNetworks Exponential-e Hibernia Atlantic, RCN Metro Internet Solutions KPN International Level 3 PacketExchange PCCW Global Reliance Globalcom SSE Telecoms TeraGate AG Tinet Virgin Media Business Everyone on that list of course would benefit from wider and simpler scope of its Ethernet capabilities, allowing them to serve customers that would otherwise be difficult to serve. Who is not there? Well, the only western ILEC or PTT on the lists is KPN. AT&T, Verizon, BT, FT, NTT, Teliasonera – perhaps none of these companies feels the urgency because they already go most of the places they want to go. Or perhaps they are just biding their time, and will join later on if the concept proves viable. The service is initially live in Los Angeles, New York, Silicon Valley, Chicago and London – the last one giving Equinix the ability to claim the first ‘global’ Ethernet Exchange. Over the next year, another 14 sites will be added. No doubt this story will continue to develop throughout the year, as Equinix and its competitors in this space – CENX, Neutral Tandem, and perhaps more – continue to jockey for position. » Read more[...]



April 12, 2010 - How to Profit from the New Iranian Sanction

Mon, 12 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire members MoneyMorning.com. You can read the full article on the Money Morning blog. Growing up in Massachusetts, my mother used to say, "Live long enough, and you'll see just about anything happen in politics." And she was right. A wrestler, a standup comic, several movie actors, and former sports figures have been elected to office; tea parties are back as a way of challenging leadership; even a disgraced former governor makes it onto "Celebrity Apprentice." But she never saw this one coming - a U.S. sanctions move against Iran that may actually work... and make you some money in the process. You see, today I'm going to make two rare suggestions. First, that one recent geopolitical decision will present a real investment opportunity, and second, that you should short a specific security to capitalize on it. And here's why... A Profitable Short-Term Exception I have generally avoided talking about how geopolitical discussions influence oil. Politics is the all-too-available scapegoat to explain jumps in prices or translate what occurs in the oil market into an overly simplistic (and usually incorrect) view of how the theory of the week will change the world as we know it. Certainly, what happens in international politics, if it is significant enough, can have an impact on what happens in the global oil market. Usually, however, it is merely a talking point for a droll media mouthpiece or somebody looking to get elected. A crisis somewhere can increase jitters among traders and ratchet up the price of oil futures. As soon as the "crisis" dies down, however, so does the effect. Other factors, such as genuine demand, the strength of the dollar, or what is actually being extracted at fields worldwide, should have a greater weight in determining NYMEX pricing in New York or Brent pricing in London. With all the rhetoric and spin expended, international politics rarely has the result that TV's talking heads say it will. Short of quite rare events, like a war, some populist demagogue nationalizing my oil investment, or a politico waking up one morning and fundamentally changing the rules, I have rarely found exceptions to the actual muted impact of geopolitics on prices. Welcome to one of those exceptions.... and a chance to make some relatively fast money. Geopolitics is about to become profitable for the little guy. Click here to continue reading this article on the Money Morning Blog... » Read more[...]



April 9, 2010 - Three Dividend Strategies to pick from

Fri, 09 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Dividend Growth Investor. You can read the full article on DividendGrowthInvestor.com. Most new investors typically tend to focus on the companies with the highest dividend yields. I am often being asked why I never write about companies such as Hatteras Financial (HTS) or American Agency (AGNC), each of which yields 16% and 19% respectively. While some of my holdings are higher yielding companies, I typically tend to invest in stocks with strong competitive advantages, which have achieved a balance between the need to finance their growth and the need to pay their shareholders. After looking at my portfolio, I have been able to identify three types of dividend stocks. The first type is high yield stocks with low to no dividend growth. Realty Income (O) (analysis) Enbridge Energy Partners (EEP) Kinder Morgan Partner (KMP) (analysis) Consolidated Edison (ED) (analysis) It is important not to fall in the trap of excessive high yields, caused by the market’s perceptions that the dividend is in peril. Recent examples of this included some of the financial companies such as Bank of America (BAC) (analysis). While current dividend income is important, these stocks would produce little in capital gains over time. The second type is low yielding stocks with a high dividend growth rate. Wal-Mart (WMT) (analysis) Aflac (AFL) ([analysis) Colgate Palmolive (CL) (analysis) Archer Daniels Midland (ADM) (analysis) Family Dollar (FDO) (analysis) One of the issues with this type of strategy is that it might take a longer time to achieve a decent yield on cost on your investment. It is difficult to achieve a double digit dividend growth rate forever. Once you achieve an adequate yield on cost on your investment, it might slow down dividend increases. The positive side of this strategy is that many of the best dividend growth stocks such as Wal-Mart (WMT) or McDonald’s (MCD) (analysis) never really yielded more than 2%-3% when they first joined the Dividend Achievers index. The main positive of this strategy is the possibility of achieving strong capital gains. The third type is represented by companies with an average yield and an average dividend growth. Some investors call this the sweet spot of dividend investing. Johnson & Johnson (JNJ) (analysis) Procter & Gamble (PG) (analysis) Clorox (CLX) (analysis) Pepsi Co (PEP) (analysis) Automatic Data Processing (ADP) (analysis) There is a common misconception that buying the stocks in the middle, would produce average returns. Actually finding stocks with average market yields, which also produce a good dividend growth could produce not only exceptional yield on cost faster, but also capital gains as well. At the end of the day successful dividend investing is much more than finding the highest yielding stocks. It is more about finding the stocks with sustainable competitive advantages which allow them to enjoy strong earnings growth, which would be the foundation of sustainable dividend growth. A company like Procter & Gamble (PG) which yields almost 3% today but raises dividends at 10% annually would do[...]



April 8, 2010 - Why Fitch Downgrade of Portugal is So Damaging for Euro

Thu, 08 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Kathy Lien of KathyLien.com and FX360.com. You can read the full article on her blog. With rating agency Fitch downgrading Portugal’s sovereign debt rating and Germany continuing to whine about bailing out Greece, who can blame forex traders for dumping euros? A flight to quality pushed the euro to a 10 month low against the U.S. dollar and now there is no major support in the EUR/USD until 1.30. Why a Downgrade is so Damaging Downgrades of sovereign debt ratings are a very big deal but in an environment where investors are already weary of holding let alone buying euros, Fitch’s decision to lower Portugal’s rating added salt to the wound. It served as a harsh reminder that even if EU leaders come to an agreement on a bailout package for Greece, other countries in the Eurozone still need assistance. This may even be a good reason why EU leaders need to craft the financial aid mechanism very carefully because if it is too generous, other countries could ask for similar support. Fitch’s decision also reminds everyone that there is always more than one cockroach in the closet. Last week, Fitch lowered its rating for Portugal from AA to AA- with a negative outlook which means further downgrades are possible. Their reason for the downgrade is the same as the reasons for every sovereign downgrade that we have seen over the past few months - “significant budgetary underperformance” in 2009. According to the Associate Director of Fitch’s sovereign team “A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal’s creditworthiness,” “Although Portugal has not been disproportionately affected by the global downturn, prospects for economic recovery are weaker than [euro-zone] peers, which will put pressure on its public finances over the medium term.” Although Portugal is much healthier than Greece who has a Fitch rating of BBB+, the downgrade is further embarrassment for the Eurozone and gives investors another reason to bail out of euros. A credit rating reflects the risk of default. Therefore a lower credit rating means that a country is at greater risk of defaulting on their debt. The greater the default risk, the more it will cost the country to borrow. On a local level, we expect investors to shift their money out of Portuguese debt and into countries with a higher credit rating such as Germany or even outside of the Eurozone. At the same time, downgrades in other countries is positive for the U.S. dollar because the greenback attracts anyone looking for quality. Room for Euros to Fall The euro has plenty of room to fall on a technical basis and last week, short euro positions in the futures market decreased significantly on profit taking. These same traders who have moved to the sidelines could return, providing the EUR/USD with new sellers. Even though the EUR/USD is vulnerable to a short squeeze after such a deep sell-off, we still believe that the currency pair could continue to fall. » Read more[...]



April 7, 2010 - Just Don't Sell Us (JDSU) Continues Lazarus Like Move

Wed, 07 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Mark H of FundMyMutualFund.com. You can read the full article on the Fund My Mutual Fund blog. Back in the day (1999) there used to be a stock that was viewed as Apple (AAPL) is today... it was called JDS Uniphase (JDSU). Actually since it was a Canadian firm (now changed to US), perhaps Research in Motion (RIMM) would be an even better fit since it came to dominate the Toronto Index in the last part of the 90s. A "can't miss" stock that had a decade+ of growth ahead of it as the internet buildout revolutionized the world. Unlike Pets.com or other stocks that were valued on # of eyeballs or cuteness of its sock puppet, JDS Uniphase actually was a legit company that seemed a threat to the Cisco Systems (CSCO) of the world. JDS Uniphase: Its stock price doubled three times and three stock splits of 2:1 occurred roughly every 90 days during the last half of 1999 through early 2000, making millionaires of many employees who were stock option holders, and further enabling JDS Uniphase to go on an acquisition and merger binge. Those were the days when I was a genius who could do no wrong in the stock market (so were many others!). Traders affectionately called it (J)ust (D)on't (S)ell (U)s. Many people made many bucks on this stock; I assume it had to be one of the most widely owned stocks by the retail crowd... and then March 2000+ happened. I don't know what its market cap topped out of (I am sure hundreds of billions of dollars) but surely something much higher than the current $3 billion - by multiples. Set the chart at right to ten years or "full" to see the stock price over the last decade... frankly even this amazing "inverse V" does not do it justice. As I scroll my mouse across its profile page, I see JDSU topped out near $1050. [accounting for a large reverse split in mid 2000s] Today's price is $13... and that's after a huge run the past year. After a decade of swimming in its own cesspool, Just Don't Sell Us is back... in Lazarus like fashion. (Apr 1, 2010: 52 Stocks Returning 50%+ in 2010) If it can rally a few thousand percent from here, a few investors still holding from 1999 might even make it back to even. I've actually been reading up a lot on the name the past month since many of the same themes that worked in the late 90s are true again today in Web 2.0 (slash) mobile web, and it still has an intoxicating story to tell. For 99% off the old price. ;) It was highlighted about 5 weeks ago, around $11 in (Mar 1, 2010: Fantastic Action in Small and Mid Cap Networking Space) Just Don't Sell Us is even back to causing pitter pattering in analysts' hearts. An analyst raised his price target on shares of communications equipment provider JDS Uniphase Corp., sending the stock modestly higher to a 52-week peak Tuesday. RBC Capital Markets analyst Mark Sue increased his price target to $16 from $12, based on prospects that the company will integrate its acquisition of the network testing equipment business of Agilent Technologies Inc. earlier than previously expected. The Agi[...]



April 6, 2010 - Commercial Real Estate Investments Returns

Tue, 06 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Richard Wilson of HedgeFundBlogger.com. You can read the full article on Richard’s blog.

The instability of commercial real estate has been blamed for the slow recovery of the economy. While commercial real estate investors in most places are struggling to hold onto their property and many are having to sell at a price lower than they would like, one hedge fund is making a killing off the unstable market. Barry Sternlicht and his firm Starwood Capital reaped huge gains buying commercial real estate in the Savings and Loan crisis and now he is making similar profits in a hedge fund hub: Greenwich, Connecticut.

The biggest slient drama: the return of Barry Sternlicht, who runs the $14 billion-in-assets Starwood Capital and who built his name buying properties on the cheap after the Savings and Loan crisis. Sternlicht's current focus is on one of Greenwich's prime downtown office buildings, 100 West Putnam. The building once housed two hedge funds: Plainfield Asset Management and Duff Capital; both have run into serious financial trouble due to the financial crisis. Unable to pay their rents, their predicaments have placed 100 West Putnam's property manager, Antares, a few missed mortgage payments away from possibly losing control of the building to Starwood Capital. According to people involved in the deal, Starwood Capital purchased the $30 million mezzanine loan and certain rights on the rest of the debt on the building, in a play to seize control of it. Mezzanine debt is the commercial equivalent of a second mortgage, with a few key differences. Source

» Read more




April 5, 2010 - So were the jobs numbers mediocre?

Mon, 05 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member CreditWritedowns.com. You can read the full article on the CreditWritedowns blog. Here are my thoughts on last Friday's unemployment report. Before the numbers came out, I said I was looking for a mediocre report because that is the sort of not too hot, not too cold kind of report which won’t force the Fed’s hand. By in large, I think that is what we got. First of all, I’m not really stressed about the census workers issue. A lot of people have been subtracting them to get to the underlying trend of job growth. That exercise is fraught with peril. It may give you a read on where job growth is trending. However, it may mislead us because census jobs add income to the economy right now and that’s what is needed. Ultimately, what is important right now is that we see enough of a kick on employment in order to maintain cyclical factors like inventory builds which will overcome the threat of a double dip. So, when I see non-farm payrolls at +162,000. My initial reaction is positive. Goldman is out with a note saying that the +162,000 was due mainly to the hiring of temporary census workers (48,000) and an improvement in weather. We’ll see next month if that is indeed true. However, Goldman had an aggressively high +275,000 NFP number before the ADP dashed their hopes. Even after Wednesday’s disappointing ADP report, Goldman was expecting a 200K print. So, their analysis does indicate that this was not a robust number despite the headline. One positive data point was the increase in weekly hours worked, something that presages more hiring. Two negative data points: the underemployment rate (U-6) moved higher to 16.9% and average hourly earnings fell. As I have been saying, unless people are making more money, any increase in consumption is unsustainable except through the accumulation of debt. Bottom line: this jobs report was mediocre. the headline number is the kind of thing you like to see and supports increased consumption over the short-term. However, the details were a bit murky and that means the Federal Reserve is off the hook; easy money rates will continue for now. Net-net, this is about as good as it’s going to get right now. » Read more[...]



April 3, 2010 - Revenge Of The Options

Sat, 03 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Saj Karsan of BarelKarsan.com. You can read the full article on Saj’s blog.

As the stock market crashed in late 2008 and early 2009, many stock options held by managements of both large and small caps were made worthless. Even today, after most stocks have rallied strongly from their lows, many stocks still remain far below their pre-recession levels, effectively reducing (after-the-fact) salaries of managements during the boom years. But it appears that many managements will not take these salary hits lying down, choosing instead to make up for them by increasing option payouts now that prices are recovering.

Consider Quest Capital (QCC), which offers financing to commercial and residential builders. On a single day in January 2010, the company issued over 4 million options to management, more than it has in the previous five years! Has management done such a great job that it deserved more options this year than it has ever before deserved?

What is happening here appears to be a sidestep of the extremely unpopular practice of re-pricing options. As Quest Capital's share price has dropped significantly, the underwater options are expiring worthless. More than ten million options were cancelled or have expired in the last two years, but a big chunk of them have now been replaced at a much lower price! More may be on the way, as the company has a plan that allows it to issue options for up to 10% of the company's outstanding shares.

The value of options outstanding for many companies has dropped significantly since the stock market crashed over a year ago. Shareholders must be on the lookout, however, for companies that are recycling those options at much lower prices. Not only does this lower the value of a company's shares, but it sends a message that management wants all the upside that options have to offer, without taking any risk that the upside may not materialize.

Full Disclosure: As of writing, author has a long position in shares of QCC

» Read more




April 2, 2010 - Revenge Of The Options

Fri, 02 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Saj Karsan of BarelKarsan.com. You can read the full article on Saj’s blog.

As the stock market crashed in late 2008 and early 2009, many stock options held by managements of both large and small caps were made worthless. Even today, after most stocks have rallied strongly from their lows, many stocks still remain far below their pre-recession levels, effectively reducing (after-the-fact) salaries of managements during the boom years. But it appears that many managements will not take these salary hits lying down, choosing instead to make up for them by increasing option payouts now that prices are recovering.

Consider Quest Capital (QCC), which offers financing to commercial and residential builders. On a single day in January 2010, the company issued over 4 million options to management, more than it has in the previous five years! Has management done such a great job that it deserved more options this year than it has ever before deserved?

What is happening here appears to be a sidestep of the extremely unpopular practice of re-pricing options. As Quest Capital's share price has dropped significantly, the underwater options are expiring worthless. More than ten million options were cancelled or have expired in the last two years, but a big chunk of them have now been replaced at a much lower price! More may be on the way, as the company has a plan that allows it to issue options for up to 10% of the company's outstanding shares.

The value of options outstanding for many companies has dropped significantly since the stock market crashed over a year ago. Shareholders must be on the lookout, however, for companies that are recycling those options at much lower prices. Not only does this lower the value of a company's shares, but it sends a message that management wants all the upside that options have to offer, without taking any risk that the upside may not materialize.

Full Disclosure: As of writing, author has a long position in shares of QCC

» Read more




April 1, 2010 - Which is Better for Investment: Chile or Brazil ?

Thu, 01 Apr 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member David Hunkar of TopForeignStocks.com. You can read the full article on David’s blog. Chile and Brazil are two of the hottest destinations for foreign investors in Latin America. Though Chile has had tremendous economic growth over the last 20 years, Brazil beats Chile in terms of attracting foreign capital. Chile’s economy growth has slowed in recent years. The chart below shows the performance of Chile Vs. Brazil over the last 10 years: Error creating thumbnail Source: Trustnet In the last 10 years, the MSCI Brazil index has grown by 470% while the MSCI Chile index has increased by only 270%. Both the countries performed very well when compared to the MSCI World index which fell by about 5% during the same period. Despite the strong performance of the Brazilian market, some investors prefer Chile over Brazil. In 2008, during the global financial crisis the MSCI Brazil index crashed over 60% whereas the MSCI Chile index fell only 20%. In addition, the annualized volatility rates for the past 10 years for Chile and Brazil are 16.3% and 25.4% respectively. However it must be noted that unlike Brazil, Chile is heavily dependent on commodity exports, particularly copper. The Brazilian economy is much more diversified compared to the Chilean economy. With a larger population and rising income levels among the middle class, Brazil offers a wide range of opportunities for investors. But since a huge amount of foreign investment dollars is flowing into the country, Brazil is prone to higher volatility. Overall as emerging economies both Brazil and Chile have strong potential for growth but they must be evaluated based on the economic factors unique to each of them. The iShares MSCI Brazil ETF (EWZ) offers exposure to the Brazilian market. The fund has an asset base of $10.4B and 76 holdings in the portfolio. Investors can access Chilean equities via the iShares MSCI Chile Investable Market ETF (ECH) . This ETF has an asset base of $365.0M and 32 holdings in the portfolio.The difference in net assets between the two ETFs is huge since more investors choose Brazil over Chile. » Read moreRelated Concepts: Brazil Chile Latin America Emerging Markets Related Funds: IShares MSCI Brazil Index Fund (EWZ) IShares MSCI Chile Index Fund (ECH) [...]



March 31, 2010 - Fortress Investment Group Fails To Knuckle Newcastle Preferreds

Wed, 31 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member REITWrecks.com. You can read the full article on the REIT Wrecks blog. Newcastle Investment Corp. (NCT) a Mortgage REIT managed by Fortress Investment Group, will continue to contribute management fees to FIG’s income statement for at least another year. But whether NCT makes it out of 2010 is an another question. Newcastle is suffering from a host of balance sheet issues, including a portfolio full of CDOs that are struggling to meet their O/C tests and an inability to raise fresh capital. Newcastle is externally managed by Fortress, and Fortress owns 2.3% of the Newcastle common, so it’s no surprise that one of the first moves Fortress made was to threaten the preferred holders with de-listing unless they agreed to convert into common at about $0.20 on the dollar (cheers: Richard52). However, it turned out that the preferred holders, who were primarily retail investors with limited ability to organize, ultimately prevailed. Their ace in the hole was the right to appoint two members to NCT’s Fortress-sponsored board if NCT failed to pay their dividends for six consecutive quarters. Last week, after two previous attempts to strong-arm the preferred holders and about one month before six consecutive quarters would have elapsed, Fortress and NCT both blinked. However, with those pesky preferred shareholders now finally out of the way, NCT still faces an incredibly difficult task. After the preferred redemption, which will cost Newcastle $27 million in cash (in addition to the issuance of 9.1 million in new common shares), Newcastle will be left with about $31.5 million in unrestricted cash. (As February 17th, Newcastle had $58.8 million of unrestricted cash available, down from $68.3 million at year end.) This is not a healthy cash cushion for a highly leveraged company that’s in the business of manufacturing net interest income, even if most of that leverage is now non-recourse. The reason is that in 2010 Newcastle, like Northstar, is going to have an increasingly difficult time managing its CDO overcollateralization tests (see “CDOs Explained“) . However, because its ability to manage the tests is even more limited, Newcastle appears to be at even greater risk than Northstar. NCT’s CDO re-investment periods are not only coming to an end, eliminating Newcastle’s ability to rebalance the CDO asset cushions, but NCT’s CDO trustee also recently notified NCT that it can no longer repurchase individual CDO notes without the approval of senior noteholders (see “CDO Buybacks Explained, Step By Step“). With at least $1.1 billion of CDO assets under negative watch for possible downgrade by at least one of the rating agencies as of January 31st, and with CDOs IV, V, VI and VII already out of in compliance with their applicable over collateralization tests as of February 17, 2010, NCT’s margin for error is slight. To the extent Ne[...]



March 30, 2010 - Using Grains to Diversify Your Portfolio

Tue, 30 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. As far as the major classes of commodities go, grains tend to be the forgotten stepchild. We hear about crude oil and precious metals such as gold nearly every day, but for some reason, grains, those most basic of economic inputs, are all too often neglected in financial news. But when it comes to using commodities to diversify your portfolio, you can't beat grains. The Case For Grains The whole point of diversification is to provide exposure to varied and diverse markets so as to reduce your overall risk. Therefore, you should naturally demand that whatever commodities you invest in for the purpose of diversification have very little to no correlation with an otherwise broadly diversified stock portfolio. It's here where grains excel. We've compared the continuous front-month prices of the five major grains traded on the Chicago Board of Trade-corn, oats, rice, soybeans and wheat-with the SPDR S&P 500 ETF (NYSE:SPY), which tracks the S&P 500, the world's favorite benchmark for diversified stocks. The following charts show the correlations between the two from January 2004 to March 2010. (A quick review: "R_Squared" indicates the degree to which the change in one factor—in this case, a grain commodity's price—can be explained by the change in the other; here, the value of SPY.) Click here to see the scatter plots and continue reading this post on Hard Assets Investor.com » Read moreRelated Commodities: Corn Wheat Soybeans Oats Rice Related Concepts: Commodities Grains [...]



March 29, 2010 - Top ten reasons you know China has a financial bubble on its hands

Mon, 29 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Edward Harrison of Naked Capitalism. You can read the full article on NakedCapitalism.com Edward Chancellor, author of the seminal book on financial speculation and manias “Devil Take The Hindmost,” is now turning his eyes to China. He sees a number of red flags which point to excess in China. Chancellor writes: In the aftermath of the credit crunch, the outlook for most developed economies appears pretty bleak. Households need to deleverage. Western governments will have to tighten their purse strings. Faced with such grim prospects at home, many investors are turning their attention toward China. It’s easy to see why they are excited. China combines size – 1.3 billion inhabitants – with tremendous growth prospects. Current income per capita is roughly one-tenth of U.S. levels. The People’s Republic also has a great track record. Over the past thirty years, China’s Gross Domestic Product has increased sixteen-fold. So what’s the catch? The trouble is that China today exhibits many of the characteristics of great speculative manias. The aim of this paper is to describe the common features of some of the great historical bubbles and outline China’s current vulnerability. Everyone knows there is extreme levels of excess. The latest report from Andy Xie on local governments shows that governments are now depending on asset prices for revenue, much as they did in places like California during America’s housing bubble. How can we identify a speculative mania? Chancellor says: bubbles can be identified ex ante, as the economists like to say. There also exists an interesting, if rather neglected, body of research on leading indicators of financial distress. A few years ago, many of these indicators were pointing to rising economic vulnerability in the United States and other parts of the globe. Today, those red flags are flying around Wall Street’s current darling, The People’s Republic of China. James Rickards thinks this is the greatest bubble in history. Even Sino-enthusiast Stephen Roach is pointing to a bubble in China. He just thinks the government will be able to prevent its dragging down the real economy. That’s because Beijing was vigilant in preventing asset and credit bubbles from spilling over into the real side of the Chinese economy. This was very different from the Japan endgame of the late 1980s, where the confluence of equity and property bubbles led to a massive overhang of excess capacity. Roach’s confidence sounds an awful lot like blind faith in the Chinese authorities to me – exactly the opposite of what Roach’s former colleague Andy Xie is saying. Chancellor includes this blind faith in the 10 signposts of manias and financial crises (very reminiscent of Kindelberger, by the way). "Great investment debacles generally start out with [...]



March 27, 2010 - Gold as an Insurance Policy (and When to Sell It)

Sat, 27 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire members MarketFolly. You can read the full article on the Market Folly blog. Societe Generale is out with some well thought out research on everyone's favorite precious metal: gold. The global strategy research piece is called "Popular Delusions: When to sell gold." In it, the argument is made that gold is not really an investment, but rather a speculative tool. The most intriguing thing about this precious metal is perhaps the vast array of reasons that investors are purchasing it. Some use it to hedge, some are making a speculative wager, while others use it to bet against fiat currency or protection from inflation. In SocGen's research, they examine gold primarily as an insurance policy. And they interestingly point out that, "Indeed, during the '6000 year gold bubble' no one has defaulted on gold. It is the one insurance policy which will pay out when you really need it to." The author is using gold as an insurance policy against developed market governments failing. They note that the crises we've seen in Dubai and now Greece are just the first few drops in the bucket. In the end, they conclude that it will be time to sell gold when "political winds change direction and become blustering gales forcing us onto the course of fiscal sustainability." So, there you have their argument for gold as an insurance policy. In another corner, you have hedge fund rockstar John Paulson who is using his new gold fund to bet against fiat currency, and in particular, the US dollar. We also just recently examined the dynamic between gold, the dollar & gold equities. Global macro hedge fund Woodbine Capital, on the other hand, sees gold as the anti-goldilocks. They've owned gold as well as out of the money puts on the metal. They're not using it as a hedge for inflation or deflation. Instead, they're wagering on it as part of their theme of increased emerging market demand. Additionally, we've also see John Burbank's Passport Capital's rationale for owning physical gold. They own it because of its supply/demand dynamic as well as central bank action, among other reasons. David Einhorn's hedge fund Greenlight Capital was one of the first to store physical gold. We've also seen others use it as a diversification tool in their portfolio. Lastly, we saw Dan Loeb's Third Point at one time use gold as a fat tail risk and doomsday trade. Obviously, the reasons to own gold vary. The research below now presents gold as an insurance policy. Click here to continue reading this article on the Market Folly blog... » Read more[...]



March 26, 2010 - Gold as an Insurance Policy (and When to Sell It)

Fri, 26 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire members MarketFolly. You can read the full article on the Market Folly blog. Societe Generale is out with some well thought out research on everyone's favorite precious metal: gold. The global strategy research piece is called "Popular Delusions: When to sell gold." In it, the argument is made that gold is not really an investment, but rather a speculative tool. The most intriguing thing about this precious metal is perhaps the vast array of reasons that investors are purchasing it. Some use it to hedge, some are making a speculative wager, while others use it to bet against fiat currency or protection from inflation. In SocGen's research, they examine gold primarily as an insurance policy. And they interestingly point out that, "Indeed, during the '6000 year gold bubble' no one has defaulted on gold. It is the one insurance policy which will pay out when you really need it to." The author is using gold as an insurance policy against developed market governments failing. They note that the crises we've seen in Dubai and now Greece are just the first few drops in the bucket. In the end, they conclude that it will be time to sell gold when "political winds change direction and become blustering gales forcing us onto the course of fiscal sustainability." So, there you have their argument for gold as an insurance policy. In another corner, you have hedge fund rockstar John Paulson who is using his new gold fund to bet against fiat currency, and in particular, the US dollar. We also just recently examined the dynamic between gold, the dollar & gold equities. Global macro hedge fund Woodbine Capital, on the other hand, sees gold as the anti-goldilocks. They've owned gold as well as out of the money puts on the metal. They're not using it as a hedge for inflation or deflation. Instead, they're wagering on it as part of their theme of increased emerging market demand. Additionally, we've also see John Burbank's Passport Capital's rationale for owning physical gold. They own it because of its supply/demand dynamic as well as central bank action, among other reasons. David Einhorn's hedge fund Greenlight Capital was one of the first to store physical gold. We've also seen others use it as a diversification tool in their portfolio. Lastly, we saw Dan Loeb's Third Point at one time use gold as a fat tail risk and doomsday trade. Obviously, the reasons to own gold vary. The research below now presents gold as an insurance policy. Click here to continue reading this article on the Market Folly blog... » Read more[...]



March 25, 2010 - How To Play Rising Uranium Demand

Thu, 25 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. Uranium is still a niche fuel, but it's an extraordinarily important one. As of Feb. 1, 2010, the metal, which is crucial for the generation of nuclear power, was used in 436 nuclear reactors in 32 countries around the world, according to the World Nuclear Association (WNA). Those nuclear reactors are responsible for 15 percent of the world's electrical power generation, generating 2,601 billion kWh. And that number is only growing: Currently, 53 reactors are in construction, 142 are on order or planned and 327 are in the proposal stage. Even in the U.S., support for nuclear power is at an all-time high, according to a recent poll by Gallup. But all of those reactors need fuel, and the WNA estimates that 68.6 thousand tonnes of uranium will be required just for the reactors already operational in 2010. As more reactors come online in the future, demand for uranium will rise—and so will prices. Uranium's had a bumpy ride over the past year, with prices wavering between $35/lb and $52/lb. As of March 15, the weekly spot price closed at $41.25/lb. But uranium looks poised to head upward, at least for the foreseeable future. As Energy Resources of Australia (ERA), a subsidiary of Rio Tinto, which owns 68 percent of the company, recently stated, "The supply-demand fundamentals point to the likelihood of stronger prices in the longer term." Supply has tightened recently, because with prices in the relatively low range of $40, only the most cost-efficient operations have been able to function in the current economic climate. Additionally, Mining Weekly reported ERA as saying, "The current spot price of around $40/lb was ‘unlikely to offer the necessary return' for several of the higher-cost projects under development." Which is just a nice way of saying their competition won't be producing much of anything until prices rise. Just how high will prices go, no one can guess. But there's plenty of speculation about where demand will come from: China. (Of course.) China's Nuclear Hunger According to the WNA, only 11 nuclear power plants currently operate in China, and in 2008, nuclear power was only responsible for 2.2 percent of China's electricity needs, well below the global average. But times are changing. As of the beginning of February, 20 new reactors were under construction in China, with another 37 planned and a further 120 proposed. China is not currently a uranium-producing powerhouse—the top three countries producing uranium are Canada, Australia and Kazakhstan—so logic dictates that China will need to get the uranium from abroad for those new plants. Elaine Wu, a Chinese nuclear analyst at Nomura investment bank, n[...]



March 24, 2010 - How To Play Rising Uranium Demand

Wed, 24 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog. Uranium is still a niche fuel, but it's an extraordinarily important one. As of Feb. 1, 2010, the metal, which is crucial for the generation of nuclear power, was used in 436 nuclear reactors in 32 countries around the world, according to the World Nuclear Association (WNA). Those nuclear reactors are responsible for 15 percent of the world's electrical power generation, generating 2,601 billion kWh. And that number is only growing: Currently, 53 reactors are in construction, 142 are on order or planned and 327 are in the proposal stage. Even in the U.S., support for nuclear power is at an all-time high, according to a recent poll by Gallup. But all of those reactors need fuel, and the WNA estimates that 68.6 thousand tonnes of uranium will be required just for the reactors already operational in 2010. As more reactors come online in the future, demand for uranium will rise—and so will prices. Uranium's had a bumpy ride over the past year, with prices wavering between $35/lb and $52/lb. As of March 15, the weekly spot price closed at $41.25/lb. But uranium looks poised to head upward, at least for the foreseeable future. As Energy Resources of Australia (ERA), a subsidiary of Rio Tinto, which owns 68 percent of the company, recently stated, "The supply-demand fundamentals point to the likelihood of stronger prices in the longer term." Supply has tightened recently, because with prices in the relatively low range of $40, only the most cost-efficient operations have been able to function in the current economic climate. Additionally, Mining Weekly reported ERA as saying, "The current spot price of around $40/lb was ‘unlikely to offer the necessary return' for several of the higher-cost projects under development." Which is just a nice way of saying their competition won't be producing much of anything until prices rise. Just how high will prices go, no one can guess. But there's plenty of speculation about where demand will come from: China. (Of course.) China's Nuclear Hunger According to the WNA, only 11 nuclear power plants currently operate in China, and in 2008, nuclear power was only responsible for 2.2 percent of China's electricity needs, well below the global average. But times are changing. As of the beginning of February, 20 new reactors were under construction in China, with another 37 planned and a further 120 proposed. China is not currently a uranium-producing powerhouse—the top three countries producing uranium are Canada, Australia and Kazakhstan—so logic dictates that China will need to get the uranium from abroad for those new plants. Elaine Wu, a Chinese nuclear analyst a[...]



March 23, 2010 - Here Comes Alcatel-Lucent’s CDN

Tue, 23 Mar 2010 00:00:00 GMT

Today’s Daily Angle comes from Wikinvest Wire member Rob Powell of TelecomRamblings.com. You can read the full article on Rob’s blog. Possibly the most surprising CDN acquisition last year was the purchase of Velocix by Alcatel-Lucent (ALU). Just what exactly the telecommunications equipment giant intended to do in the CDN space was unclear. As interesting as content delivery is right now, revenue-wise the whole sector can fit in their back pocket and still leave room for a cell phone. Today though, Alcatel-Lucent announced its Multimedia Solutions initiative, the largest part of which was of course built on Velocix. So what has become of Velocix? Network appliances that a service provider can buy and install in its own network that will give them their own dedicated CDN infrastructure, caching content closer to their own subscribers. The idea is to offer service providers the chance to be a CDN without having to develop all the processes and capabilities internally that standalone CDNs do. In other words, they hope to let service providers deploy and operate their CDN the same way that they deploy and operate their networks right now. Of course, that’s what Velocix was doing before, this is just a different way to say it. Or perhaps it just sounds different because it’s Alcatel-Lucent saying it. What this doesn’t do is enable providers to directly enter the CDN space in the sense of competing with Akamai and Limelight. It’s much more local, geared toward just their own subscribers and with specialized features rather more comprehensive general ones with managed services tacked on. But that specialization still puzzles me, I don’t see how an industry where every service provider has its own free-standing CDN makes much sense. Content providers can’t realistically deal with them all. Unless of course the myriad of free standing CDNs can talk to each other and cooperate automatically somehow parallel to the way the rest of the internet does through transit and peering connections. That’s where I thought Velocix might be heading last year, and there are hints of such cooperation between service providers in Alcatel-Lucent’s press release. For now though, I’m just curious who will be buying the gear and what they will be doing with it. » Read moreRelated Companies: Akamai Technologies (AKAM) Limelight Networks (LLNW) Related Concepts: Telecommunications [...]