Month: February 2013

By www.CentralBankNews.info

Next week (week 7) nine central banks are scheduled to decide on monetary policy, including the Philippines, Mozambique, Indonesia, Russia, Georgia, Sweden, Japan, South Korea and Sri Lanka.

By MoneyMorning.com.au

Most of last year was pretty rotten for energy stocks, as you can see from the following chart of the S&P/ASX 200 Energy Index:

But since November – like almost all stocks – energy has taken off. And according to the Wall Street Journal, investors can’t get enough of a new energy stock that’s set to hit the Aussie market:

‘Toronto-listed Strata-X Energy Ltd is rapidly progressing towards a dual listing, with its Australian initial public offering heavily oversubscribed according to joint lead manager Helmsec Global Capital Ltd.

‘The company, which has oil and gas exploration projects in the United States and Australia, is seeking a minimum of 10 million Australian dollars (US$10.4 million) but will close its books Friday with A$4 million in over subscriptions.’

As the old saying goes, ‘It takes more than one swallow to make a summer’, so we won’t get too carried away that this is the start of a new bull-run for energy stocks. But with eight oil and gas stocks on the Australian Small-Cap Investigator buy list, we’re certainly backing the sector to come good soon.

What can we say about gold that we haven’t already said?

For the past year the price action has been painful…or rather, painfully boring. Today, gold priced in Aussie dollars is almost exactly where it was a year ago.

Between then it has been up and down, but without doing anything spectacular. We still like gold, and always will. But we can’t help feeling that punters will soon get bored holding it, which could lead to a short-term sell-off.

Long term, gold remains a buy. You only have to look at the state of most national economies and the comment from Lord Turner, former head of the UK’s Financial Services Authority (the UK equivalent of ASIC) to see the thought processes of those in charge of the financial system.

Here’s what the Financial Times reported:

‘Lord Turner, the departing chairman of the Financial Services Authority has defended financing government spending by printing money arguing that, within limits, it “absolutely, definitely [does] not” lead to inflation.’

At $1,624 an ounce, gold still looks like a great bargain.

According to the New Scientist:

‘Glance down at the interactive floor in Patrick Baudisch’s lab and you will not see your reflection in the glass. Instead, you will find your computer-generated doppelganger, wearing a facsimile of your clothes, which walks and moves just like you do. It seems to be stuck to your feet.’

We’ll reiterate. It isn’t a reflection. It’s a computer-generated image of the person standing above. If you can imagine looking into a mirror and instead of seeing your reflection, you saw a computer-generated version of you looking back.

We’ll admit, that feels a little creepy. But still, it’s pretty amazing technology. What’s the practical use of this technology? Again, according to the New Scientist:

‘For instance, to play a version of indoor soccer, the floor generates a CGI football that can be kicked about by the people in the room. Or if someone sits on the floor, the system recognises who they are by their precise weight and flips a TV on to their favourite channel. Similarly, an elderly person’s activity levels could be monitored.’

We’re sure the actual applications will be different to those imaged. And as with any new technology, a small part of us worries about what could happen if this stuff gets into the wrong hands, i.e. the government.

But still, who would have predicted flat screen TV’s 30 years ago? Yet today, they’re in almost every home. Who’s to say these CGI-enabled floors won’t be in every Aussie home by the year 2043?

It’s that time of year…for health insurance premiums to rise.

While biotechnology and health companies struggle to finance key projects (see the Walter & Eliza Hall Medical Institute’s fundraising for a new diabetes drug), opticians and dentists continue to rake in the cash thanks to compulsory health insurance.

It’s a bugbear of ours. We’re forced to pay for something we really don’t need, and at an inflated cost because the government makes it compulsory. The latest report from ABC News says:

‘The Federal Government has approved an average 5.6 per cent increase in the cost of health insurance premiums.’

It’s nice of the government to do that, seeing as the government doesn’t have to pay it…you do. Unlike other industries where you can just refuse to pay the higher costs, you can’t do that with private healthcare.

If you don’t like the price of beef or pork, you can stop buying it. If you don’t like the price of private healthcare, well, we guess you could give it up, but then the government will just slug you with a tax.

All the while, the opticians and dental firms wallow in cash. We have personal experience of this. Each year we trot off to the opticians to get two new pairs of glasses. Why? Is it because our eyesight is deteriorating so badly that we need them? No, it’s because our health fund covers two pairs of glasses each year for no cost.

We’d be mad not to at least get something back for what we pay in health insurance. So there you have it, another example of the State helping blood-sucking companies to forcibly take money from your pocket and put it in the pocket of corporate Australia.

And what will they do with it? Probably buy a $12,000 cocktail!

With Dr Alex Cowie out of the office this week, we haven’t had anyone to chew the fat with on the latest mining news. We know that Doc Cowie loves gold mining stocks – he tipped a bunch of them towards the end of last year.

And we could see why; despite the fairly resilient gold price, gold stocks took an absolute hammering. As you can see from the following chart of the Doc Cowie’s favourite gold stock ‘index’, the Market Vectors Gold Miners ETF [NYSE: GDX]:

Click here to enlarge

But the Doc reckons the market is on the turn and gold stocks should beat the market this year. It makes sense to us, although we do note that the GDX is still 139% above the 2008 low, despite the current slump.

Cheers,
Kris

From the Archives…

Make Sure You’ve Updated Your ‘Stock Insurance’ Policy
1-02-2013 – Kris Sayce

Here’s Why We’re Still Buying This Stock Market
31-01-2013 – Kris Sayce

Revealed: Inside the Mind of a Share Trader
30-01-2013 – Murray Dawes

Buy Silver – the War Against the China Bears Begins
29-01-2013 – Dr. Alex Cowie

China’s Economy: Enter or Exit the Dragon?
26-01-2013 – Callum Newman

By MoneyMorning.com.au

Buy food, buy oil and buy a gun.

Former banker Satyajit Das made that suggestion at the Port Phillip Publishing conference After America in Sydney. The reason is someone asked him what they should do – after he’d shown everyone in the room that the global financial system was a basket case.

His other suggestion (serious this time) was a model on how to invest in markets that are characterized by volatility. As he said at the time:

‘What’s my first priority – capital preservation. Second priority is income. Third priority is capital gains. Whereas for most of the last 20 years I’ve seen the inversion of that. You have most of your assets in high quality, capital preserved, income-producing assets and you create what I call tail exposure. You have a U-shaped portfolio.’

Part of that strategy involves taking advantage of big rallies (like we’ve seen recently) without forgetting the first job of investing (especially now) is to not lose money.

But the conference was almost a year ago, so does the advice still stand?

We’ll explore that question in today’s Money Weekend…

The Same, But Different

A year isn’t supposed to be that long in investing. But news sure moves fast. In early 2012 it was Greece and the wider European sovereign debt crisis dominating headlines.

Now it’s Japan.

Prime Minister Shinzo Abe wants 2% inflation. He’s urging the Bank of Japan into printing huge sums of money to get it.

Since then the Nikkei index has rallied and the yen has fallen. According to the Wall Street Journal, since November the Nikkei is up 32% while the yen is down 14% against the US dollar.

Everything is going to Shinzo’s plan then…except the rally in the stock market can’t obscure the motherlode of debt the Japanese economy has hanging over it. The logic given for the rally is that Japanese corporations will increase their earnings via higher sales with a cheaper currency. Maybe they can for a while.

There are plenty of people who are still prepared to short sell Japan. Hedge fund guru Kyle Bass says buying Japanese stocks is like picking up dimes in front of a bulldozer. This is because Japanese government debt is over 200% of GDP and interest payments already consume 25% of tax revenue at very low interes rates.

His position is that this cannot last much longer, and that significant trouble in the Japanese bond market would kill the Nikkei rally.

Interestingly, at the same After America conference Dan Denning said the current (at that time) fixation on Europe was a misdirection. Investors should watch Japan. And they should watch for trouble.

The fact is Japan can’t print its way to prosperity. And neither can the United Sates. Even so, stocks are up in both countries, as the debt crisis is pushed to the sidelines.

As Dan Denning said in the Daily Reckoning yesterday, ‘We’re either headed higher in an inflationary melt-up driven by currency depreciation, or we’re over-bought already and on the verge of a hard fall. Line up. Take your bets.’

But the fundamentals haven’t changed. There’s a lot of debt in the system that won’t generate the income to pay it off.

Government deficits are rising, pension obligations stretch into billions, but financial returns are shrinking as governments lock in financial repression by holding down interest rates.

That means After America might as well have been yesterday. You’re still investing in the same world, it’s only the headlines that look different.

On that basis, you’d think the odds stay tilted toward lower economic growth. That was the scenario Satyajit Das described at the conference. That brings us to Das’s U-shaped portfolio…

Outlying Bets for Tail Exposure

There seems to be no change in the financial markets and economic outlook from a year ago. That means the strategy stays the same. You’ll get big melt-ups and big melt-downs as governments around the world juice-up the market on financial steroids while markets correct what’s not sustainable.

That means you should expect volatile markets. And that’s why Das’ position was that your first priority should be capital preservation, followed by income, then lastly capital gains.

We know Kris Sayce, editor of Money Morning and Australian Small-Cap Investigator, suggests a similar approach, looking for dividend producing stocks that can grow their cash flow over time. Lower share prices are an invitation to buy more shares in that cash flow.

But the U in the portfolio is to go after exposure at either end of the bell curve. Kris says one way is to buy deep out-of-the money options. These are outlying bets both ways: you can gain from the big run up in stocks, and the big slides. The premium is fixed but the gains aren’t.

Options aren’t for everyone. But Kris says you can use smaller portions of your capital to try and catch the volatile swings with products like ETF’s (exchange traded funds).

As an example, he likes the Japan ETF that trades on the ASX under the ticker IJP. Look at its strong rally since the market began pricing in Shinzo Abe’s power transition.

Kris says riding moves like this is another way to try and benefit from the volatility, but it takes active investing and never taking your eye off the exit point. He says these type of plays are not ‘stocks for the long run’.

As Das said at After America, ‘You’re going to have to have a plan to survive and just be very careful about your risk.’

Callum Newman
Editor, Money Weekend

Ed Note: Attendees at the Port Phillip Publishing conference After America voted Satyajit Das best speaker. We’ve nearly run down our final inventory of the six disc DVD set. But there are some copies left if you want to grab your copy now.

From the Port Phillip Publishing Library

Special Report: The Big Money Secret of Ironstone Mountain

Daily Reckoning: Japan’s Spring Offensive Against the Yen

Money Morning: Two Questions to Ask Before You Buy Another Stock

Pursuit of Happiness: Exchange Traded Options: A Way to Boost Your Retirement Income

By www.CentralBankNews.info      Azerbaijan’s central bank cut its benchmark refinancing rate by 25 basis points to 4.75 percent, “given a low level of inflation, growth rate of money supply as well as the priorities for diversification of the national economy,” the Central Bank of the Republic of Azerbaijan (CBA) said.
    The central bank, which cut its rate by 25 basis points in 2012, said the inflation rate declined considerably in 2012 and the manat’s exchange rate had remained stable.
    The inflation rate has been declining steadily since early 2011 when it was approaching 10 percent and fell to 1.10 percent in December from 1.2 percent in November and 4.8 percent in January.
    The CBA’s objective for monetary policy in 2013 is to maintain inflation at 5-6 percent and the pace of wage growth is currently exceeding the inflation rate by over 7 percent.
    In December, when the central bank last cut its rate, the central bank’s chairman said the bank could cut its rate again this year if the inflation trend continued.

    www.CentralBankNews.info
   
   

By The Sizemore Letter

From Jeff Reeves’ The Slant:

After blowing out its earnings report after the bell on Thursday, LinkedIn (NYSE:$LNKD) popped 18% intraday on Friday and is challenging $150 a share. After offering at just $45 for its May 2011 IPO, shares have tripled in a little more than a year and a half for insiders — and for those who bought during a brief dip to around $70 after profit taking from the IPO, LNKD has been a doubler in short order.

Charles Sizemore of Sizemore Capital Management was good enough to chat about LinkedIn with me, and we both agree that LNKD has a much better model than Twitter or Facebook (NASDAQ:$FB) thanks to the focus on corporate customers and a more educated and wealthy consumer base. There’s also the potential for long-term disruption to the entire job-seeking process online as it steals market share from other job posting/seeking services like Monster Worldwide (NYSE:$MWW).

The problem, however, is that the valuation is just way too rich right now. After all, if Apple Inc. (NASDAQ:$AAPL) has taught us anything it’s that growth doesn’t always equal big returns for shareholders.

While there are companies like Amazon (NASDAQ:$AMZN) that continue to see nosebleed valuations for the long-term, I think it’s a risky game — and not one that I would participate in considering the alternatives as the Dow tops 14,000 and investors start talking about a friendlier bull market in 2013 and beyond.

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The post Jeff Reeves and Charles Sizemore Discuss LinkedIn Earnings on The Slant appeared first on Sizemore Insights.

By Bill Bonner

Who are the bigger liars? Argentine feds? Or American feds?

News flash from the pampas. From the Associated Press:

Argentina announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation.

The price freeze applies to every
product in all of the nation’s largest supermarkets — a group including
Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The
companies’ trade group, representing 70% of the Argentine market,
reached the accord with Commerce Secretary Guillermo Moreno.

The Argentine government moved to stop the price increases it previously denied were happening. It said inflation was running at only 10% a year. Turns out, it’s more like 30%.

But our focus today is not on the land of the gauchos; it’s on the
land of honchos, HoJos and bozos. The land north of the Rio Grande.

Before we come to it, though, another glance south of the Rio de la Plata. From Russia Today:

The International Monetary Fund has
issued Argentina with a “declaration of censure” for providing
inaccurate inflation and GDP data and has given it until September 29 to
amend the problems or will impose sanctions.

The IMF Friday called on Argentina to fix its statistics “without further delay.”

The IMF said it would review
Argentina’s progress in November and warned that if the problems are not
sorted then it could impose sanctions on the country. This would bar
one of South America’s biggest economies from voting on IMF policies and
accessing financing.

America’s Own Funny Numbers

When will the IMF look at America’s inflation figures?

We never paid much attention to the claims that our own feds were
intentionally falsifying the numbers. Too many honest statisticians at
the Bureau of Labor Statistics. Many of them Republicans. A few
Tea-Partiers, even. Too many different points of view to pull off a real
conspiracy.

Instead, the feds try to report the number correctly. Still, with so
much fudge in the kitchen, they were bound to get some on their fingers.
Not that anyone intended to defraud the public. It’s just that institutions have biases of their own. Often the people working in them don’t even notice.

Adding up the cost-of-living numbers has built-in complications.
People of reasonable intelligence and ordinary goodwill can come to
different conclusions about how it should be done. Then even a small
institutional bias — like an old watch near a compass — can lead you
in the wrong direction.

At first, the results differ little — one way from another. And
then, the institution takes “ownership” of the method used. Reputations
are on the line. Careers depend on it. A whole legion — with its own
hierarchy, creed, orthodoxy, pensions — develops.

And then there is no retreating… no second-guessing…no arrieres
pensees. Because now too much depends on it. Changing it would cost
billions… or trillions… of dollars to the state. And it would change
the way people think too. Fessing up becomes unthinkable.

That is what happened with America’s consumer price index. Small,
innocent distortions grew to become grotesque and monstrous. But the
feds can’t admit it. There’s too much at stake.

Peter Schiff describes what happened:

Since the 1970s the preferred
government inflation metrics have changed so thoroughly that they bear
scant resemblance to those used during the “malaise days” of the Carter
years.

Government and academia defend the
integrity and accuracy of the modern methods while dismissing critics as
tin hat conspiracy theorists.

But given the huge stakes involved,
it’s hard to believe that institutional bias plays no role. Government
statisticians are responsible for coming up with the methodology and the
numbers, and their bosses catch huge breaks if the inflation numbers
come in low. Human behavior is always influenced by such incentives.

Beginning in the early 1980s the
methodologies were altered to compensate for a variety of consumer
behavior. The new “chain weighted CPI” for instance incorporates changes
in relative spending, substitution bias, and subjective improvements in
product quality.

Essentially these measures report not
just on price movements, but on spending patterns, consumer choices, and
product changes. This is fine if the goal is to measure the cost of
survival. But that is not the purpose for which these metrics are meant
to be used.

From New York to Buenos Aires

The good intentions were there. But so was the road to Hell. Schiff
took out the fiddles and tried to calculate how much prices had actually
changed:

We randomly identified price changes of
10 everyday goods and services over two separate 10 year periods, and
then compared those changes to the reported changes in the Consumer
Price Index (CPI) over the same period. The 10 items, which we selected
are: eggs, new cars, milk, gasoline, bread, rent of primary residence,
coffee, dental services, potatoes and electricity.

Between 1970 and 1980 the officially
reported CPI rose a whopping 112%, and prices of our basket of goods and
services rose by 121%, just 8% faster than the CPI.

In contrast, between 2002 and 2012 the
CPI rose just 27.5%. But our basket rose by nearly double that rate —
52.1%! So the methods used in the 1970s to calculate CPI effectively
captured the price changes of our goods, but only got half of those
movements more recently. How convenient.

Just to make sure, we ran the same
experiment with 10 different goods and services. This time we chose:
sugar, airline tickets, butter, store bought beer, apples, public
transportation, cereal, tires, beef and veal and prescription drugs. The
results were notably similar. The basket increased 1% faster than the
CPI between 1970 and 1980 and 32% faster between 2002 and 2012. In both
cases we selected a random array of food and non-food items.

Today, thanks to small course changes by the Bureau of Labor
Statistics back in the 1980s, the CPI is far from where it ought to be.
It set out for New York… and it arrived in Buenos Aires.

If other alternative calculators — such as John Williams and
Chapwood Finance — are right, the U.S. CPI is more off-course than the
Argentines’ heavily criticized numbers. Real price increases in
Argentina are believed to be three times the official number. In the
U.S., the feds say prices are going up at a 2% rate. Williams and
Chapwood say the real rate is 10% — or five times as much!

But wait. If these numbers are correct, it changes everything. The
feds use these crooked CPI numbers to deflate GDP. They use them to
adjust Social Security and government pensions. They use them to tell
you if you’re making money on your investments… or losing money. They
use them to keep tax rates even with inflation too.

Like True North, every household financial pilot depends on them. And
if the official CPI were significantly understated, the results would
be catastrophic!

Just for openers, the GDP would be in severe decline — revealing
that the U.S. economy has been in a depression for the last four years.

More to come!

Regards,

http://www.billbonnersdiary.com/

Most people think building long-term wealth is difficult to do. But what they don’t realize is that it’s really just a matter of what you do with your money.

You see, truly wealthy people… I’m talking about the ultra-rich… don’t think like most ordinary Americans. Because they don’t think in ordinary ways, that also means they don’t do the same things with their money as “normal” folks do.

It’s all about protecting and building capital. And they take steps to avoid what I call “capital killers” — conventional habits that can have devastating effects on long-term wealth building.

Here’s a simple example of what I’m talking about…

If you have money in a regular bank, let’s say one of the “too big to fail banks,” your capital is being eaten away in fees. I’m talking about the wealth-killing fees they charge you every single day. On checks. On ATM usage. On balance requirements. And on dozens of other bogus “services.”

These fees are “capital killers.” And without capital, it is almost impossible to create lasting wealth.

If you don’t have capital, you end up on a treadmill… always trying to keep enough cash coming in to pay the bills. That’s where 90% of American households are. You need to avoid it.

This is why I urge you to do everything possible to get out of their clutches now. Giving away free money to the “too big to fail” crowd may be OK for some folks. But serious wealth builders NEVER allow their costs to drain their capital.

Instead, they continually reinvest their capital in new business or investment profits. Capital is the key to creating lasting wealth. Reinvesting your profits and keeping your costs low is the way to build capital.

Bank of America, for example, charges a $12 monthly fee for a standard checking account, subject to conditions such as
direct-depositing your money or maintaining a balance above $1,500.

Then you pay $2 each time you use a non-Bank of America ATM. It’s $10 if you need to visit a branch for a cashier’s check. You pay $5 if your card gets cracked or stops working.

Individually, none of these fees will sink you. The fees your bank charges you are nickel and dime size. But they mount up.

Consider too that you’re also not making anything on your deposits (which are essentially loans to your bank). If you have a common yield-bearing checking account, you make pennies per year. If you’re lucky.

A “Tiered Interest Checking” account with Bank of America pays you 0.02% on deposits between $10,000 and $99,999.

One step you can take to free yourself of these wealth killers is to switch to a credit union.

Credit unions are member-owned. Members elect the directors. The directors set rates and fees. With a credit union, you’re dealing with a local institution. Not a faceless corporate board on Wall Street.

I found a credit union near where I live offering accounts that pay 0.15%. That’s seven times the interest a “too big to fail bank” like Bank of America will pay you.

You will also save money on fees. For example, some credit unions reimburse your ATM fees. The one I found has none of the “account minimums” that tend to trip extra fees in banks.

Credit unions also have far fewer “nickel and dime” fees than banks: no check fees, overdraft protection, free online bill pay.

And depending on the credit union you find you’re eligible to join, you could receive discounts on homeowners or auto insurance.

You could also be eligible for special deals on rental cars or accidental death and dismemberment (AD&D) insurance. Taking advantage of these local “ins” will save you even more money.

It took me only a few minutes to find a way to save myself hundreds of dollars a year and make over seven times the interest on my deposits than I’d get with Bank of America.

You can do the same by investigating a local credit union today.

In future dispatches, I’ll show you more ways to rid yourself of hidden wealth killers and switch from conventional to unconventional ways of building wealth.

As Bonner & Partners chairman and colleague Bill Bonner puts it, “You’re either a contrarian or a victim.” And that goes for the way you bank too.

Best Regards,

Aaron

http://www.insideinvestingdaily.com/

By The Sizemore Letter

Back in December, I recommended that readers “watch their ash” when investing in tobacco stocks.  In their hunt for yield in a seemingly yield-less world, investors had bid the price of most tobacco stocks to levels that no longer made sense.

Tobacco is a no-growth business and an industry in terminal decline.  As a case in point, American teenagers are more likely to use illegal drugs that to light up a cigarette.

In the circular logic of the stock market, the lack of growth is part of what has made tobacco stocks such fantastic investments in recent years.  Management doesn’t have to reinvest in the business or to fund an expensive marketing budget.  And there are no white elephant projects or unrealistic management spin.  They understand the economics of their business, and they do the only things that make sense: they pay out gargantuan dividends and aggressively buy back their shares.

But the key here is investor expectations.  Investors had low expectations for the sector and were unwilling to pay up for earnings. Ultimately, the success of any investment depends on the price you pay, and tobacco investors were able to enjoy monster returns precisely because the stocks were cheap.

Well, they’re not anymore.  Not by a long shot.  By Wall Street Journal estimates, the forward P/E on the S&P 500 is 13.5.  Philip Morris International (NYSE:$PM) is significantly more expensive than that, and Altria (NYSE:$MO) and Lorillard (NYSE:$LO) are essentially at the same valuation.

This should not be.  Tobacco stocks should not be more expensive than the rest of the market.

Yes, all pay significantly more in dividends than the S&P 500, which pays a pitiful 2.0%.  But look at the payout ratios.  All pay out the majority of their earnings as dividends, whereas the payout ratio of the S&P 500 is less than 30%.

Meanwhile, take a look at the technology stocks at the bottom of the chart.  Intel (Nasdaq:$INTC), Microsoft (Nasdaq:$MSFT) and Cisco Systems (Nasdaq:$CSCO) all trade for 10 times or less expected earnings, and all have modest dividend payouts with plenty of room for growth.  They pay a little less in dividends than tobacco stocks…but not that much less.  And their dividend growth rates are comparable (with the exception of Cisco, whose growth rate is off the charts).

Last month I joked that chipmaker Intel was my favorite “tobacco stock,” arguing that Intel had quite a bit in common with the likes of an Altria and its peers:

As the Big Tobacco has proven for decades, companies in declining industries can make excellent investments under the right conditions.  If you have a dominant market position (think back to Warren Buffett’s “moats”), a conservative balance sheet, and have ample cash flow for share repurchases and dividends, you can do quite well by your investors even in a shrinking market. It’s worked for Big Tobacco investors, and it will work for Intel investors as well.

The same could be said for Microsoft and Cisco.  Tech is the new tobacco.

To be fair, tobacco companies have certain advantages that “tobacco companies” like Intel lack.  A chemically-addicted clientele, for starters, as well as an unrivaled ability to raise prices virtually at will.  Whenever a progressive-minded (or cash-strapped) city decides to hike the taxes on cigarettes, the taxes flow right through to the customer.  Not too many companies have that ability.

But that said, I’m betting that Big Tech is a better investment than Big Tobacco.  Investors are expecting no growth from Big Tech.  So, if actual results prove to be even marginally better than disastrous, investors should enjoy a decade or more of solid gains.

Microsoft and Intel in particular may or may not ever figure out the mobile market.  But that’s ok.  Given that a zero percent probability is currently priced into shares, mobile success can be thought of as an embedded call option that could end up paying off in a big way.  And if that option is never exercised, you’re still getting the existing businesses at “tobacco” prices.

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The post At Current Prices, Tobacco is No-Go appeared first on Sizemore Insights.

By www.CentralBankNews.info     Pakistan’s central bank kept its policy rate steady at 9.5 percent, saying further rate cuts have limited effect in stimulating growth and there are major risks to the medium-term inflation outlook.
    The State Bank of Pakistan (SBP), which cut policy rates by 250 basis points last year, said it would narrow the width of its interest rate corridor to 250 basis points from 300 points to minimize short-term volatility in interest rates, improve transparency and thus aid the monetary transmission mechanism.
    “A rising trend in monetary aggregates is a key indicator of medium term inflationary pressures,” the SBP in a statement, adding M2 growth in the 2013 financial year is expected to be close to 16 percent.
     “Additionally, high growth in monetary aggregates and upward adjustments in
administered prices are the major risks to medium term inflation outlook,” it added.
     Due to a weakening external position and rising debt levels, the SBP said it would be challenging to anchor inflationary expectations at a low level.
    Pakistan’s inflation rate rose slightly to 8.07 percent in January from 7.9 percent in December, reversing a declining trend seen since June last year.

    The SBP said it had anticipated the trend reversal and average inflation for the current financial year is projected at 8-9 percent, well within the bank’s target of 9.5 percent for 2012/13, which ends June 30.
    In the last 18 months the SBP has lowered its policy rate by 450 basis points due to a faster-than-expected decline in inflation, allowing the bank to address its concern over contracting private investment and thus the prospects of sustainable economic growth.
    The International Monetary Fund forecasts 3.3 percent growth in Pakistan this year, down from a projected 3.7 percent in 2012, but up from 3.0 percent in 2011.

    www.CentralBankNews.info