AUDUSD fails to break below 1.0410 support, and rebounds to as high as 1.0543, suggesting that a cycle bottom has been formed on 4-hour chart. Further rise to test 1.0612 previous high resistance could be expected, a break above this level will signal resumption of the longer term uptrend from 0.9581 (Jun 1 low), then next target would be at 1.0800 area. Support remains at 1.0410, only break below this level could trigger another fall towards 1.0300.
Article by Investment U
In ancient and medieval times, castles and even entire towns often built a moat – a deep ditch filled with water – as a preliminary line of defense to deter the enemy.
The same technique is essential in the world of equity investing, too. In a capitalistic society likes ours, you can be sure that if someone has found a profitable niche, it isn’t long before others show up to exploit it. This is generally a positive development for consumers who quickly see prices plunge. But it’s a different matter for business owners who just as regularly see profit margins wither up and die.
Two prime examples are Circuit City and Borders. The first sold consumer electronics, the latter books, music and DVDs. Both had razor-thin operating margins and virtually nothing to protect them from competitors, either online or in the brick-and-mortar world. Selling commodity products available from anyone, both wound up in bankruptcy.
What provides an effective moat in our competitive marketplace? A few examples are patents, trademarks, brand names, regulatory complexity and huge economies of scale.
Take patents, for example. One of the reasons for Apple’s (Nasdaq: AAPL) extraordinary success is that most of its products are patent-protected. The Mac operating system is not licensed to other vendors. And iPods, iPhones and iPads have many patent protections, too. (Some of these are currently being disputed in court with Samsung.) Likewise, a former big winner in The Oxford Club’s Trading Portfolio was Intuitive Surgical (Nasdaq: ISRG), a company with a patented monopoly on the manufacture and sale of surgical robots.
Another effective moat is early adoption. This has been a huge benefit for Amazon (Nasdaq: AMZN) and Google (Nasdaq: GOOG). When I shop online, I don’t even bother checking other retailers. If I do a search, it’s always through Google. A service becomes increasingly valuable as more people adopt it.
Coca-Cola (NYSE: KO) is a company whose business is protected by brand names. Coke offers quality and reliability in all its products, something that isn’t generally established with upstart soda companies.
Altria (NYSE: MO) actively supports much federal government regulation of the tobacco industry. Why? Because it knows regulatory hurdles and liabilities deter potential competition. Tough regulatory oversight is itself a moat.
Other companies benefit from sheer economies of scale. Wal-Mart (NYSE: WMT), BHP Billiton (NYSE: BHP) and General Electric (NYSE: GE) are just a few examples. Their bargaining power with suppliers, state-of-the-art technology and access to ultra-low-cost financing allow them to underprice – and thereby deter – a lot of potential competition.
Investment great Warren Buffett declares that he seeks “economic castles protected by unbreachable ‘moats.’” He once bought shares of Guinness PLC because, as he put it, “It’s easier to break into the semiconductor industry than into the spirits industry.”
Buffett knows that wide-moat companies can parlay their moats into higher returns on capital. Indeed, you would be hard-pressed to find a better list of wide-moat companies than to simply look at Berkshire Hathaway’s list of long-term equity holdings.
In short, we live in a Darwinian economic world where companies compete to survive. Businesses without moats are vulnerable. And the last thing you want to do is own a vulnerable company in a weak economy.
Good Investing,
Alex
Article by Investment U
Article by Investment U
Just about everything is going Monsanto’s (NYSE: MON) way.
They are the largest genetically engineered seed producer in the world. And in case you missed my other segments on Monsanto, genetically engineered seed is about the only chance the world has of feeding itself over the next five decades.
The worldwide strains on the food and water supplies I mentioned in last week’s segment are only getting worse and producing enough food will fall squarely on seeds and fertilizer.
Monsanto also announced a new share repurchase of up to $1 billion of their common stock. The CFO said their strong financial position allows them to prioritize the value.
Last week a federal grand jury awarded Monsanto $1 billion in a patent infringement suit against the monster company DuPont.
They expect to see a 5% to 10% jump in corn seed prices in 2013, and if that’s not enough, they increased their dividend by 25% last week.
About the only thing I don’t like about Monsanto is the fact that they are within $3 of their 52-week high. The 200-day chart is on the screen now.
As you can see, it appears to be fully priced. A pull back toward the 200-day price would be nice.
This is one great company!
Speaking of dividends, a recent Barron’s article was touting companies in the emerging markets as a better source of higher payers.
The article said the emerging markets have it all, income, a little growth and reasonable prices.
Emerging market income yields are in the 3% range while the U.S. benchmark is about 2.2%. Most investors focus on the U.S. for income stocks and that focus has driven them sky high.
And the MSCI Emerging Market Index is trading at 20% below the U.S.’ PE ratio.
Baxter Hines of the Allianz NFJ International Fund said in the article that Copel, the real name is on the screen now (Companhia Paranaense de Energia), the Brazilian electric company trades at 10 times next year’s earnings and pays a 4.2% dividend.
Hines also likes the growth prospects for this one. He sees the middle class in Brazil expanding with increasing use of appliances and electric gadgets.
Favorable demographics, lower debt levels and favorable economic tail winds are expected to drive the growth of dividends in the EM and that has many fund managers focusing on them.
According to Barron’s, in just three years assets in emerging market dividend funds have grown by 78%.
One problem with this approach is that Brazil, Taiwan and Chile do not have tax treaties with the U.S., so the dividends are treated as ordinary income and do not get favorable dividend tax treatment.
For that reason, the fund managers suggest you hold these in a tax deferred accounts, IRAs, or 401(k)s.
Ryan Wibberley of CIC Wealth Management said there are some concerns about the reliability of numbers that come for the emerging markets but you cannot fake dividends. I like that…
This week it has to go to the newest design of aircraft that can fly from New York to Los Angeles in one hour. One hour!
The X51A WaveRider can reach speeds of 3,600 miles, that’s mach 6, for 300 seconds before, I’m not making this up, before breaking into pieces and falling into the ocean.
This is described as the equal of going from props to jets, but I don’t remember any of the jets breaking up into small pieces on their test runs.
The Pentagon has spent $2 billion on research for this one, $2 billion!
I wonder what a ticket costs to ride something that breaks into pieces before you land.
I don’t get it.
Good Investing,
Steve McDonald
Article by Investment U
By Central Bank News
The Bank of Namibia cut its benchmark repurchase rate by 50 basis points to 5.50 percent to counter the potential negative drag on the domestic economy from lower global growth.
The central bank of Namibia said inflationary pressures were rising but its monetary policy committee had concluded that inflation would remain within tolerable, single-digit ranges and official reserves remained sufficient to support the currency peg.
The uncertain state of the global economy was casting a shadow over Namibia’s economy and some leading indicators had suggested a moderation of growth going forward, the bank said.
“In view of the above, the MPC finds that a measure of monetary policy easing is necessary to support the ailing sectors of the economy and further shore up the subdued growth outlook,” the bank said in a statement.
The central bank has held its repo rate unchanged at 6.0 percent since December 2010.
Inflation in Namibia rose to 6.0 percent in July from 5.6 percent in June, reversing a declining trend. But the bank said the rise reflected higher prices reflected recent hikes in the cost of food and administered prices that were implemented in July.
Namibia’s economy performed better in the first half of this year compared with last year, the bank said, with GDP growth up 0.8 percent in the first quarter from the previous quarter.
“On the other hand, a slowdown of external demand is likely to put pressure on export earnings and overall GDP growth going forward, notwithstanding some positive developments observed during the first half of the year,” the bank said.
www.CentralBankNews.info
By TraderVox.com
The market is expecting a rise in the Home Sales and Goods Orders in the month of July in a report to be released this week. This is expected to be confirmed later in the week showing that the US economy is starting to strengthen after slowing down in the second-quarter…
Tradervox.com (Dublin) – The market is expecting a rise in the Home Sales and Goods Orders in the month of July in a report to be released this week. This is expected to be confirmed later in the week showing that the US economy is starting to strengthen after slowing down in the second-quarter. According to a market survey, the rate purchases of new and existing houses climbed to 4.89 million annual rate in July from 4.72 million in June. Another report is expected to show that the bookings for long lasting goods increased this year.
The housing and goods data is used by the Federal Open Market Committee in making decisions regarding the US economy. In its recent meeting, the FOMC is expected to have considered the developments in this sector. This will be confirmed when the Meeting Minutes are released later this week. The positive Homes Sales and Goods Orders reports have been boosted by cheaper property prices and low mortgage costs. Investors will be waiting on this report it helps to shape sentiment about quantitative easing. According to Omair Sharif, there is a positive outlook for the US economy in the third quarter compared to the second quarter. The Home Sales and Goods orders data will point to this improvement.
Housing data from National Association of Realtors is expected to show that existing house sales climbed by 3.3 percent to 4.52 million annual rate after registering a 4.37 million rate in June. New Homes Sales data which will be released a day later by the Department of Commerce is expected to show a rebound to 365k annual rate from July’s 350k rate.
There is evidence that the housing sector is improving, with reports last week indicating a rise in residential construction permits. However, the housing starts fell from its fastest rate in three years in July, but National Association of Home Builders /Wells Fargo Index showed a rise in builder confidence in August.
Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management.
Article provided by TraderVox.com
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If the definition of insanity is doing the same thing over and over again and expecting different results, then Congress and the Administration must both be stark raving mad.
It was just four years ago that the world found itself facing a food crisis. If you are reading this article, you may very well not remember the food crisis of 2007-2008. By virtue of being a MarketWatch reader, chances are very good that your income was sufficient to cover rising food costs without making any major lifestyle adjustments. But in many poorer countries, the spikes in the cost of basic food staples were enough to cause riots and social unrest, not to mention hardship and misery on those struggling to put bread on the tables. Readers may recall the infamous “Tortilla Riots” in Mexico City, which brought more the 70,000 people to the streets.
The causes of the food crisis were varied. Weather conditions were a factor. And taking a long-term macro view, rising incomes in China and other developing countries have led to higher-protein diets (i.e. more meat), which in turn means more demand for grains to be used for animal feed. This is certainly a trend that no one would want to stop; Chinese diners deserve to eat steak too, after all.
But then as now, one of the drivers of high food prices was government policy and specifically the U.S. corn-based ethanol program. The United States is the biggest producer and exporter of corn in the world, and roughly 40% of the crop is used to make ethanol for American cars.
At a time of rising food prices, this is madness. The price of corn recently hit an all-time high and at time of writing is up 57% over the past month. As corn prices rise, so do the prices of substitutes; wheat, soybeans and most other staple crops have seen large price spikes.
Every kernel of corn used to make fuel is a kernel of corn that can’t be ground into tortillas or used as feed for a cow. (You’ll have to excuse me; I’m from Texas and had beef fajitas for lunch). And while it may sound like I’m making light of it, it is anything if not serious. The United Nations considered it important enough to request that the Obama Administration to cease all government-mandated ethanol production, following similar pleas from the G20, China, India and France.
This puts the Administration and Congress in a bad place. Do they abandon their environmental goals of producing green energy and also risk causes prices to rise at the pump? (Biofuels account for roughly 5% of U.S. oil consumption according to estimates by the Financial Times, or an amount roughly equivalent to the annual production of Libya or Algeria.) Or do they risk causing mass suffering among the world’s poorest citizens?
These are broad moral and political questions, but as investors our concerns are far more specific: What are our risks during a food crisis, and how do we position our portfolios?
I see no obvious buys today. The would-be obvious move—to trade corn futures—is not one I would recommend to an individual investor. The volatility is unacceptably high.
Food stocks—companies like General Mills ($GIS) and Kellogg ($K)—might eventually be good contrarian bets, though I would hesitate to buy them just yet. Their margins are sure to be crimped in the short term, which will force them to raise prices. But once their input costs start to fall again (say, following a reversal of U.S. ethanol policy) they are less likely to lower their prices. This could mean a nice boost to margins, say, a year from now.
As for risks, my fear is that rising food prices will put a brake on what I consider to be the most important trend of the next decade: the rise of the new emerging market middle class. The opportunities I see in up-and-coming markets such as Africa (see “Africa: The Last Investment Frontier”) could easily evaporate if spending on basic necessities crowds out discretionary spending.
For now, I remain an emerging markets bull. But Food Crisis Part II is something that has my attention. If we see a return of the social unrest and instability we saw four years ago, it might make sense to reevaluate some of your more speculative emerging market positions.
Disclosures: Charles Sizemore has no position in the stocks mentioned. This article first appeared on MarketWatch.
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Source: ForexYard
Despite a slight setback yesterday, the EUR resumed its appreciation against the USD as risk appetite returned, crossing the 1.4800 price level during today’s trading day.
The EUR has been benefiting from the recent deterioration in sentiment towards the Dollar as well as improving economic indicators across the Euro-Zone that helped support positive sentiment towards this common currency. This week several important economic news releases are expected from the Euro-Zone that will likely determine the currency’s trend for the remainder of the week. With the expectation for a continuation of improvement, the EUR will like maintain its strength versus its major counterparts.
The Japanese Yen has been experiencing a slight downtrend against its major currency rivals recently, except the USD. However, this might change throughout the rest of this week’s trading as the bank holiday in Japan ends, and Yen trading returns to regular volumes. The Yen has been keeping steady recently over improving economic conditions and optimism from the Bank of Japan (BOJ). While the Yen seems to be at a disadvantage against its riskier, higher yielding counterparts, the losses seem to be quite minimal. Furthermore, the JPY continues to gain versus the USD.
With the recent surge in optimism it is unlikely that the EUR’s recent rally versus the Yen will reverse itself this week. While gains may be mitigated once Japanese markets return early Wednesday, the upward trend for the pair is likely to continue.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Source: ForexYard
· Below is the 4-hour chart and the daily chart for the EUR/JPY by ForexYard.
· The indicators used are the MACD, Slow Stochastic and RSI.
· Point 1: The Slow Stochastic on the 4-hour chart shows a bullish cross, signaling that the next move may be in an upward direction.
· Point 2: The MACD indicates a bullish cross, which supports the upward notion.
· Point 3: The RSI on the Daily Chart signals that the price of this pair currently sits near the bottom border, suggesting upward pressure.
· If the impending breach is indeed upward, going long with tight stops appears to be preferable strategy in the next few days.
EUR/JPY 4-Hour Chart
EUR/JPY Daily Chart
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
By Central Bank News
The Central Bank of Iceland kept interest rates unchanged but said the recovery of the domestic economy continues to gain momentum, despite a weaker global outlook, and it would be necessary to tighten policy further as spare capacity disappears.
The Icelandic central bank, which has already raised its benchmark overnight lending rate by 100 basis points to 6.75 percent this year, said the degree of tightening of interest rates towards “normalisation” would depend on how inflation evolves.
“The accommodative monetary stance has supported the economic recovery,” the bank said in a statement following a meeting of its monetary policy committee.
“The interest rate increases in May and June, together with reduced inflation, have withdrawn some of that accommodation. As spare capacity disappears from the economy, it is necessary that monetary policy slack should disappear as well,” the bank added.
The bank said the outlook for output growth was “somewhat stronger” than forecast in May but the outlook for 2013 and 2014 was largely unchanged. The labour market had recovered stronger than expected and the economic recovery continues to gain momentum though the global economic outlook remains uncertain which creates potential headwinds for the economy and inflation.
The central bank raised its forecast for 2012 GDP growth to 3.1 percent, up from May’s forecast of 2.6 percent, due to stronger exports. For 2013 growth is forecast at 2.2 percent, down from May’s 2.8 percent forecast and in GDP is forecast to grow by 3.4 percent, up from 2.7 percent.
In 2011 the Icelandic economy expanded by 3.1 percent. 2014 by 3.5 percent.
The 2008 financial crises hit Iceland very hard with its banking sector collapsing as its three major banks could not refinance their short-term debt. The International Monetary Fund, together with several other countries, put together a loan package and two of the country’s major banks are now owned by foreign banks.
The outlook for inflation in Iceland over the next two years has improved due to an 8 percent rise in the Icelandic krona’s trade-weighted index since the May forecast.
The bank forecasts average inflation of 5.4 percent this year, easing to 3.4 percent in 2013 and 3.0 percent in 2014. In July inflation eased to 4.6 percent.
But the central bank cautioned that inflation was not expected to reach its 2.5 percent target until then end of the two-year period and long-term inflation expectations remain far above target.
But the outlook remains uncertain and a further rise of the krona could push down inflation faster and it is uncertain how much for the recent appreciation would be maintained during the winter.
By TraderVox.com
Tradervox.com (Dublin) – Glenn Stevens is facing allegations that he misled the parliament about his knowledge of corruption deals involving Note Printing Australia Ltd staffs who are alleged to have bribed international officials to win currency printing contracts. In a statement to the press, the Reserve Bank of Australia has denied any wrongdoing from its Governor Glenn Stevens. The news was given by the Australian Broadcasting Corp. today. Glenn is accused of misleading the parliamentary panel when he testified before it last year where he claimed that RBA officials were unaware of these allegations prior to media reports in 2009.
The central bank had emailed a statement stating that neither the governor nor its officers have misled the parliamentary panel. It further noted that Note Printing Australia Ltd had responded appropriately to address the concerns of corruption raised against its officials. Some of the officials who have been accused of corruption are the former managers and employees of Note Printing and Securency International Pty, which is partly owned by the central bank. The officials have been accused of bribing foreign officials in Malaysia, Vietnam, and Indonesia between the years 1999 and 2004 to get bank-note printing contracts. The resurgence of this matter has led Adam Bandt to call for public inquiry into this matter. Glenn Stevens will appear before a Parliamentary Panel on August 24 for his semi-annual testimony; he has been the banks governor since 2006.
In his call for a public inquiry, Adam bandt, said that complete confidence is needed in the highest governing authority in RBA. He added that the scandal has touched key financial institution in the country as well as other arms of government. The Note Printing Australia is led by a board of directors that are appointed by the Reserve Bank of Australia while Securency has three members who are chosen by the RBA. After the scandal emerged in 2009, the RBA replaced its members in the two boards in order to allow for investigation. The RBA has expressed interest to contact then-Deputy Governor of NPA Ric Battellino for any comments.
Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management.
Article provided by TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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