Month: June 2013

By www.CentralBankNews.info     Russia’s central bank held its policy rate steady but once again cut some of its long-term rates by 25 basis points, saying there “remain risks of further economic slowdown given the weak investment activity and the sluggish recovery in external demand.”
    Although inflation is still above the Bank of Russia’s target and this may affect inflationary expectations if it remains high for “a prolonged period,” the central bank said it still forecasts that inflation will return to the target range in the second half of 2013.
    At its previous meeting in May, the central bank also noted the risk of economic slowdown and its expectation that inflation would return to its target in the second half of the year.
    Russia’s central bank last cut its policy rate by 25 basis points in September 2012 to 8.25 percent but has been cutting long-term rates in recent months to bring the cost of obtaining liquidity from the central bank closer to the main rates and strengthen the bank’s transmission mechanism.
    On the central bank’s standing facilities, the REPO rate for up to 12 month loans was cut to 7.25 percent, on loans secured by gold the rate was cut to 7.25 percent for loans from 181-365 days, and on loans secured by non-marketable assets and guarantees, the rate on loans form 181-365 days was cut to 7.50 percent. The rate for 12 months open market operations was cut to 7.25 from 7.50 percent.

    Last week Bank of Russia Governor Sergei Ignatyev, who retires later this month, said today’s policy decision was going to be very difficult given the rise in inflation while the economy remains weak.
    Russia’s headline inflation rate rose to 7.4 percent in May from 7.2 percent in April, continuing its rise since hitting a recent low of 3.6 percent in May 2012, and well above the central bank’s 5-6 percent range. Core inflation in May was 5.9 percent.
    The central bank said the rise was mainly due to higher prices of food and certain regulated prices and tariffs and noted that there were planned increases in the tariffs of certain natural monopolies.
    Russia’s economy slowed down last year with growth slowing to an estimated 3.4 percent from 4.3 percent in 2011 and the central bank said that indicators point to continued low growth.
    “The growth rates of industrial production remain subdued, investment in production capacity continues to decrease,” while consumers have been resilient, and labor and credit markets still provide support to domestic demand.
    Ignatyev, who has been central bank governor since 2002, will be handing over the reins of the bank to Elvira Nabiullina, aide to President Vladimir Putin, later this month.
    Last week he also noted that the continued outflow of capital from Russia has heavily impacted the depreciation of the ruble, which has complicated the central bank’s efforts to reduce inflation.
    Earlier this year he said some 2.5 percent of national income, or $49 billion, illegally left Russia last year.
    Since May, the ruble has lost another 3.5 percent against the U.S. dollar, just as most other emerging market currencies on fears of reduced global liquidity from the U.S. Federal Reserve’s tapering of asset purchases. This year the ruble has lost 5.6 percent and was trading around 32.3 to the U.S. dollar today.

        www.CentralBankNews.info

By Profit Confidential

With all the financial engineering that’s been going on over the last several years, it’s great to actually find good businesses that are growing based on their own fundamentals.

There’s always a continuing flow of earnings reports, and one company I’ve followed for years just beat the Street again.

Earnings growth rates might not be as robust as they once were, but modest business growth is out there.

One growing company that continues to execute well is AAON, Inc. (NASDAQ/AAON) out of Tulsa, Oklahoma. This company manufactures and installs heating, ventilation, and air conditioning (HVAC) equipment for commercial and residential customers.

The company was founded in 1988 and now has approximately 1.5 million square feet of office and manufacturing facilities, with over 1,300 employees at two plants.

AAON’s first-quarter revenues grew three percent to $66.8 million, mostly based on higher prices. Earnings grew a substantial 56% to $7.1 million, or $0.29 per diluted share, compared to earnings of $4.6 million, or $0.18 per diluted share.

The company said that both its revenues and earnings made new records in the first quarter of 2013.

AAON’s cash balance tripled and the company’s backlog increased 22% to a record $71.7 million comparatively.

On top of this modest but successful business growth, the company boosted its semi-annual cash dividend by 25% and declared a new three-for-two stock split.

I like these kinds of small businesses.

AAON is a company making real products that the marketplace requires. The HVAC industry isn’t the fastest-growing sector, but AAON’s ability to grow its business in a diligent and consistent manner is demonstrable.

The company’s stock market performance is also noteworthy. AAON’s long-term stock chart is featured below:

Chart courtesy of www.StockCharts.com

With the stock market around its all-time high, I’m reticent about new positions. But there are plenty of companies out there that are worth keeping on your radar in anticipation of more attractive entry points. (See “Why You Should Add Two Medical Stocks to Your Watch List.”)

AAON is about to effect its fifth stock split since listing.

Small-cap stocks have performed similarly to blue chips. Their run-up has been pronounced.

Second-quarter earnings season is quickly approaching, and the marketplace will still bid those companies that beat consensus. Corporations have been deliberately subdued with their earnings outlooks. This has been going on for several years now, and it makes it easier to “outperform.”

Companies like AAON are worth adding to a watch list. Proven track records of business success, earnings growth, and stock market success are golden.

A company like AAON would make a welcome addition to a larger HVAC manufacturer if the company’s management wanted to cash out. AAON’s latest earnings report was solid.

Article by profitconfidential.com

By Profit Confidential

We all know that consumer spending and the performance of the retail sector dictates the direction of economic renewal in the U.S. It’s quite simple—if consumers spend, the economy and the retail sector will grow.

Now, with home prices nationwide continuing to rise and the jobs creation picture showing signs of improvement (though it is still slogging along), the end result has been a rise in consumer spending, which has helped to drive the retail sector.

Spending on durable goods is a good indicator on how positive consumers are in the retail sector, as this spending is on nonessential goods. So when consumers spend on this group, you know there’s some confidence in the overall economy. In April, durable goods surged 3.3%, which was well above both the Briefing.com estimate calling for a 1.5% decline and the 5.9% decline in March. On an ex-transportation basis, durable goods increased 1.3%.

Retail sales edged up 0.1% in April, which was above both the Briefing.com estimate calling for a 10.7% drop and the 0.5% decline in March.

In May so far, 10 U.S. retail chains have reported, and the results have been good, with the key same-store sales surging up 3.9% versus the 3.7% estimate. (Source: Wahba, P., “Retailers’ sales rise in May, spending stays moderate,” Reuters, June 6, 2013.)

Results from the big-box stores continue to be healthy in the retail sector.

Market leader Costco Wholesale Corporation (NASDAQ/COST) reported sales growth of seven percent in May, while its key same-store sales increased by five percent.

A big surprise was delivered by American Apparel, Inc (NYSE/APP), which reported an impressive 10% surge in its same-store sales in May. (Read more on American Apparel in “A Real ‘Made in the USA’ Retail Stock That Supports Your Portfolio, Not Sweatshops.”) American Apparel remains an excellent speculative play that has moved up over 10% since my review. The best thing about this company is that its clothes are all manufactured in the U.S., which will cater to the patriotic looking for real “made in the USA” stocks.

The stock chart of the S&P Retail Index below shows the steady climb of the retail sector since the beginning of the year; the chart is also indicating that the retail sector is currently facing some stalling.

Chart courtesy of www.StockCharts.com

Much of the consumer buying has been largely due to the availability of cheap money and financing. People are saving less, given the low yields, and are spending more.

In my view, the retail sector continues to show promise, but the easy money has been made. For the aggressive trader, you need to consider contrarian retail opportunities, including bebe stores, Inc. (NASDAQ/BEBE), Chico’s FAS, Inc. (NYSE/CHS), Ascena Retail Group, Inc. (NASDAQ/ASNA), and Saks Incorporated (NYSE/SKS).

Article by profitconfidential.com

EURUSD stays above a upward trend line on 4-hour chart, and remains in uptrend from 1.2796, the fall from 1.3305 is treated as consolidation of the uptrend. As long as the trend line support holds, the uptrend could be expected to resume, and one more rise towards 1.3500 is still possible after consolidation. On the downside, a clear break below the trend line support will suggest that lengthier consolidation of the uptrend is underway, then deeper decline to 1.3100 area could be seen.

Daily Forex Analysis

By MoneyMorning.com.au

Australia has a reputation as ‘the lucky country’. And this is thanks to the abundance of natural resources we have. Our mining and resources boom has put Australia on the map and taken us forward economically as a nation.

But mining (and sport) isn’t the only thing Australians are good at. When it comes to having some of the best and brightest minds in the world, well, we’ve certainly got our fair share.

Some of the most world-changing technological advancement happened right here at home. Here we’ve highlighted four of Australia’s Greatest Technological Achievements.

Aussie Tech Achievement #1:

You’re Connected Thanks to This Accidental Invention

Not many people realise that a government organisation gave the world one of the most widely used technological inventions.

In 1992 and 1996 the CSIRO patented the technology that created Wi-Fi in its current form. Researcher John O’Sullivan is the man credited with this invention. He came across the mathematics of modern day Wi-Fi thanks to a failed experiment he was performing on atoms and black holes at the time.

Just about every mobile device in the world has Wi-Fi in it. Your smartphone, tablet, TV and even your fridge is likely to have Wi-Fi. (On a not-so-high-tech based point, it was an Australian invention that pioneered the mechanical refrigeration process too.)

The CSIRO’s invention has helped to define the mobile world we live in today. It’s also partially kept the CSIRO funded. A court ruling in 2009 and 2012 entitled the CSIRO to unpaid Wi-Fi royalties from giant tech companies like HP and Dell. The total awarded was over $470 million.

The CSIRO will now continue to receive royalties estimated to be worth over a billion dollars. Thanks to their invention the world is able to connect like never before. Their simple, accidental discovery has literally shaped the future of the world.

Aussie Tech Achievement #2:

The Home Grown App That Helps You Find Your Way

With the rise of applications came the rise of many application developers. The ‘App Economy’ has led to many amazing, helpful apps, and made a few millionaires along the way.

In 2003, two Danish-born brothers that had immigrated to Sydney were working on an application at their business, Where 2 Technologies. The application was a downloadable app from app stores. They were confident that it would be reasonably successful as long as they could get it to market.

In trying to launch their app, Where 2 Technologies needed some venture capital to get it off the ground and out to the public. They pitched their idea to a number of companies. One of the companies they pitched was Google.

At the Google pitch they sold the idea as a web-based application rather than a downloadable one. The product they pitched was mapping technology that allowed a user to not only see a map and get directions, but also to find things they liked or needed nearby.

Google liked it…a lot. In 2004 Google bought Where 2 Technologies for an undisclosed amount (you’d think it’d be in the hundreds of millions). Subsequently Google Maps was born and the way we navigate around the world changed forever. 

Aussie Tech Achievement #3:

Pioneering Biotech from a Frustrated Plastic Surgeon

In 1992 a man arrived at Royal Perth Hospital with 90% burns to his body. He was lucky that his treating surgeon was Dr. Fiona Wood.

Dr. Wood had been working on a development in skin repair techniques for a number of years. She was frustrated that skin grafts took so long to create. Science knew that if burns victims could be treated faster they had a better chance of survival.

So she worked away at faster methods of treatment. This led to the discovery that skin cultures created in less than 10 days healed wounds better than skin cultures which typically took 21 days.

Dr. Wood and her colleague Marie Stoner invented a pioneering technique of ‘spraying’ skin cells onto skin wounds. This let the wounds heal faster and more efficiently than any other type of skin repair treatment. Spray-on-skin was born.

The man in 1992 treated by Dr. Wood and her spray on skin survived. And he wasn’t the only one.

Years of using the spray on skin technique came to public attention in October 2002 when the Bali Bombings occurred.

The Royal Perth Hospital and Dr. Wood treated 28 patients from the bombings. Most of them had over 92% burns to their bodies. Using spray-on-skin, they had saved the lives of those 28 people.

Without the use of the spray-on-skin technique, it’s likely the 28 would have died. Her invention was literally saving lives, and continues to do so today.

Aussie Tech Achievement #4:

The Research That’s Brought Sight and Sound to The World

The next Australian technology success is one of the best inventions of all time. It gives to people something priceless. Without it they would be missing something that in inherently human to have…the sense of sound and hearing.

Of course this great tech achievement is the Bionic Ear. Also known as the Cochlear Implant. It was at the University of Melbourne in the late 70′s and early 80′s where a team of researchers changed the world.

Professor Graeme Clark in 1978 gave Rod Saunders the first cochlear implant. The company Cochlear Ltd to this day holds about 70% of the market share of the world’s bionic hearing devices.

Professor Clark describes the attitude of the scientific community prior to his discovery. ‘99% of the scientific community said it was not possible. I was seen as somewhere between a dreamer and a clown.‘

But this didn’t stop him. And the belief that nothing was impossible led to this world changing invention. The lives of millions of people have changed thanks to this invention. To see for yourself just YouTube search ‘Cochlear Activation’ and see the impact it has on people that previously have never heard sound.

A Small Nation With Giant Achievements

Australia has a population of just 23 million. But Australia has some of the world’s best and brightest minds. The examples above illustrate just some of the great technological achievements from the land down under.

These four examples are all world changing advancements in technology, but as you can see they cover a whole range of industries. It’s not just computers that technology covers, but importantly medicine and manufacturing also.

There is more research happening now in Australia than ever before. A lot of this is in the field of biotech.

Aussies are starting to get a name as pioneers of great tech advancement in medicine. And as these advancements start to come to market and there will be chances to capitalise on these.

It’s an exciting time to be alive as technology advances the world. And it’s just as exciting to know that many great new technologies are more than likely to come from our own backyard.

Sam Volkering
Technology Analyst
Join me on Google+

From the Archives…

Keep One Eye on Resource Stocks and the Other on the NASDAQ
31-05-2013 – Kris Sayce

Getting in on the ’99 Cent Craze’ with Crowdfunding
30-05-2013 – Sam Volkering

Buyer Beware: Japanese Government Bonds are Moving
29-05-2013 – Murray Dawes

The Best Contrarian Play on Gold I’ve Ever Seen…
28-05-2013 – Dr Alex Cowie

A Revolution in the Share Market is Coming…
27-05-2013 – Kris Sayce

By MoneyMorning.com.au

Whatever your view on the global economy right now, put that to one side.

We ask you to do that because we’re pretty certain what thoughts are going through your mind: global economic depression, money printing, recession, slowing economic growth…and all the rest of it.

Now don’t get us wrong. We’re not saying you should ignore all that. We’re not telling you not to worry, or that everything is rosy.

But we are asking you to keep things in perspective. Because despite the scary stories about economic collapse and banker bailouts, private wealth has never been higher.

And you can bet your bottom dollar it’s not thanks to earning interest on cash savings…

For the past two years we’ve told you to buy stocks.

That wasn’t a popular stance. Especially among the perma-bears who felt cheated because we’d had a bearish to neutral stock market view for the previous year.

And it continues to be an unpopular view. There are those who still say we should tell people to stay away from stocks due to all the macro-economic problems facing national economies.

But as we showed you last week, the Bloomberg Billionaires Index doesn’t contain a single individual who made their fortune investing in cash.

It doesn’t contain a single individual who made their fortune investing in gold.

And it doesn’t contain a single individual who made their fortune investing in fixed interest investments.

How did they make their fortune? That’s right, by investing in businesses…

Fortunes are Still Made in Recessions

Now, remember what people tell you. The world is going to pot and you’ll soon be eating canned hotdogs or two-minute noodles. But what if that isn’t true? Or what if there was a simple way to avoid it?

We’ll show you what we mean. According to the Boston Consulting Group (BCG):

‘Global private financial wealth grew by 7.8 percent in 2012 to reach a total of $135.5 trillion. The rise was stronger than in either 2011 or 2010, when global wealth grew by 3.6 percent and 7.3 percent, respectively.‘

It reminds us of the saying we came up with a few years ago to describe the phenomenon of building wealth through bad times. We coined the term, ‘Fortunes are Made in Recessions’.

It’s something we apply to small-cap investing each month in Australian Small-Cap Investigator. And right now we’re taking advantage of a recession of another sort; a Japanese yen recession.

And the wealth growth isn’t over. As the following image from BCG shows, global private financial wealth is set to expand by up to 11.4% annually in some economies:

Source: Boston Consulting Group

Not surprisingly the major wealth growth is in Asia and Latin America. More surprisingly perhaps, are the forecast growth rates for Eastern Europe and the Middle East & Africa.

Thanks to those high wealth growth markets, global wealth will grow an estimated 4.8% per year going in to 2017.

So, do you still think you can’t build wealth?

Do you still think you’ll benefit from growth in Latin America, Asia, Eastern Europe and the Middle East by sticking your cash in a 4.25% interest savings account?

Growth Stocks to Make a Comeback

Look, we don’t know how to make this any more clear.

We get it that the monetary system is in a spot of bother (we know, that’s a big understatement). But we also get it that you won’t achieve your wealth goals by sitting on the sidelines and carping about it.

Let’s put it in practical terms. If you had your wealth in gold, cash and stocks, you’ll have made the following respective gains over the past 12 months: -10.5%, +5%, +16.8%.

And that’s only capital growth for stocks. Depending on your split between growth and income stocks, you can add up to another 5-6% on top of that.

This is how you build wealth. You invest in businesses. You look for the stocks and industries you believe will benefit next. Over the past year that has been dividend stocks. Looking ahead, our bet is growth stocks will provide better returns.

That’s why we’re focusing on small-cap stocks, and high-growth technology and biotechnology stocks.

In our view, as the world economy grows, wealth grows, and health improves, tech stocks and biotech stocks in particular will benefit most from this boom.

Like any boom, it won’t happen evenly. Some firms and industries will do better than others. But as a way to boost your wealth as others build theirs around the world, you can’t go past those key wealth-building sectors.

Cheers,
Kris
Join me on Google+

From the Port Phillip Publishing Library

Special Report: Buy These Four Yen Dive Stocks Now

Daily Reckoning: Why it’s Going to Get Ugly When Interest Rates Rise Again

Money Morning: Signs of Stress in the US Bond Markets

Pursuit of Happiness: Improving Your Life Through New Technology

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

Currency Speculators scaled back US Dollar bets last week. AUD bets fall for 10th week

The weekly Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures traders decreased their total bullish bets of the US dollar last week for the first time since April. Prior to last week, total US dollar long positions had increased for four consecutive weeks and to a new highest level since 2008 when Reuters started calculating the total $ amount of positions, according to Reuters.

Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, trimmed their overall US dollar long positions to a total of $39.12 billion as of Tuesday June 4th. This was a decline from the total long position of $43.77 Billion registered on May 28th, according to position calculations by Reuters that derives this total by the amount of US dollar positions against the combined positions of euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

See the full COT report & charts here…

US Dollar lost ground to most majors last week, gained on commodity currencies

The US dollar’s strength had been cooling off for a few weeks and then sharply crystallized last week as the American currency dropped against the euro, British pound sterling, Japanese yen, Swiss franc and the Canadian dollar. The Australian dollar and the New Zealand dollar continued to take it on the chin in the forex markets as these currencies saw more of the same last week in their steep decline.

This week’s fundamental outlook is highlighted by Japan’s monetary policy and interest rate decision on Tuesday which could provide ammunition to the already volatile Japanese yen pairs. Also on the docket for this week is the New Zealand interest rate decision on Wednesday, Australian employment report and US retail sales on Thursday, then Eurozone consumer prices as well as more data out of the United States coming on Friday. See our latest currency pair commentary & major economic highlights below.

See the full Technical Currency Pairs post and charts here…

Upcoming Week’s Economic Events Highlights:

Sunday, June 9

Japan — gross domestic product

Monday, June 10

Switzerland — unemployment rate
Switzerland — retail sales data
Canada — housing starts

Tuesday, June 11

Japan — monetary policy statement and interest rate decision
United Kingdom — NIESR GDP estimate

Wednesday, June 12

New Zealand — interest rate decision
United Kingdom — employment data

Thursday, June 13

Australia — May employment data
Switzerland — producer price data
United States — retail sales data
Japan — Bank of Japan minutes
United States — weekly jobless claims

Friday, June 14

Euro zone — consumer price index
euro zone — employment data
United States — University of Michigan confidence survey
United States — current account
United States — producer price index

See our full economic calendar for more events.

By www.CentralBankNews.info
    This week nine central banks took policy decisions with three cutting rates (Uganda, Poland and Serbia) and the other six (Australia, BOE, ECB, Mexico, Sri Lanka and West African States) maintaining rates as global markets continue to adjust to the reality that the U.S. Federal Reserve at some point will cut back on asset purchases.
     Foreign exchange, bond and stock markets worldwide have been hyper sensitive since late May to the eventual decline in global liquidity from a U.S. tapering of bond purchases, a theme that suddenly relegated the Bank of Japan’s massive quantitative easing from early April to second place on the global agenda.
    But both forces are very powerful and will continue to dominate financial markets and influence central banks’ policy decisions in the short term.
    The latest manifestation of how most central banks, especially smaller ones, are in a constant battle to to adapt to the huge flows of capital, came from the Central Bank of Uruguay. From next month it will replace interest rate as a reference tool for monetary policy with monetary aggregates.
    Given the massive influx of foreign capital in recent years to Uruguay to take advantage of high interest rates and a relatively stable economy, the central bank said the benchmark interest rate had lost its signaling capacity and relevance for markets.
    While keeping its inflation target at 5.0 percent, the central bank widened its tolerance band to 2 percentage points, with the new range from 3.0 percent to 7.0 percent from 4-6 percent.

     This week the Bank of Mexico warned that downside risks to the country’s growth had risen after the drop in the peso and the rise in domestic interest rates, while the Reserve Bank of Australia continued its recent policy of talking down its currency.
     Although the Mexican central bank acknowledged that its economy would benefit from stronger growth in the United States, central banks in Latin America remember all too well how a tightening of U.S. monetary policy in the 1980s and 1990s triggered financial crises in the region.
     Mexico’s central bank again held its policy rate steady this week, following its 50-basis-point cut in March, but said further exchange rate volatility is likely even if global liquidity remains abundant following a gradual withdrawal of U.S. asset purchases.
    Last week the peso, along with the currencies of other emerging markets, tumbled in response to fears that the Federal Reserve would soon taper asset purchases.
    Meanwhile in the Eastern hemisphere, Australia’s central bank continued its recent policy of talking down its dollar, adding that the outlook for inflation would afford its scope for further monetary easing.
    Last month the RBA cut its rate for the first time since November 2012, taking the steam off the dollar, which has now fallen some 8 percent against the U.S. dollar since the May rate cut and some 9 percent since the beginning of the year.
    Nevertheless, the RBA last week continued its jawboning campaign, repeating that the Australian dollar was still high, despite its recent depreciation, in light of the lower export prices.

    Other decisions this week featured the Bank of England (BOE) and the European Central Bank (ECB), with both banks – as expected – keeping rates steady.
    At the BOE, it was Governor Mervyn King’s swan song as he retires at the end of the month, making room for Mark Carney who left the Bank of Canada to take the reins of the BOE on July 1.
    In addition to leaving rates on hold, the BOE also kept its asset purchase program on hold; the target of 375 billion pounds was last raised in July 2012. In the previous four meetings King, along with two other committee members, have failed in their attempts to boost the asset purchases by 25 billion.
     Whether King again failed to persuade his colleagues at his final meeting will first be known when the meeting’s minutes are released on June 19.
    In Frankfurt, ECB President Mario Draghi downgraded his economic forecast slightly. Although he still expects the suffering euro zone economy to “stabilize and recover” during the year, he admitted the recovery will “subdued.”
    The ECB’s staff trimmed their 2013 forecast for Gross Domestic Product to contract by 0.6 percent, up from the March forecast of a 0.5 percent fall, but still an improvement from 2012’s 1.5 percent shrinkage.
    As in the recent past, Draghi confirmed that the ECB would retain an accommodative policy stance “as long as necessary.”
   
    Through the first 23 weeks of this year, central bank policy rates have been cut 54 times, or 25 percent of the 219 policy decisions taken by the 90 central banks followed by Central Bank News. This is up from 24 percent after 22 weeks.
    The number of rate increases this year was stable at 11, or 5.0 percent of all policy decisions, slightly down from last week’s 5.2 percent but still higher than 4.5 percent after week 21.

    LAST WEEK’S (WEEK 23) MONETARY POLICY DECISIONS:

    NEXT WEEK (week 24) features nine scheduled central bank policy meetings, including Russia, Japan, Iceland, Croatia, New Zealand, South Korea, Indonesia, the Philippines and Peru.

    www.CentralBankNews.info

By Investment U

Intel (Nasdaq: INTC) is lagging the S&P 500 for one-, three- and five-year returns. But recent moves by the chip giant have many analysts looking for a triple-digit gain in as little as the next three years.

Intel has an 80% market share of PC and laptop chips, and while sales for those types of chips have been falling since the advent of smartphones and tablets, the decline is expected to slow from a 7.8% drop this year to 1.2% next.

But the real pop from Intel will be the result of the massive spending it has done to not just catch the current big names in tablet and smartphone chips, but beat them soundly with the company’s new technology.

Last year, Intel spent seven times as much on chip research as No. 2 Qualcomm (Nasdaq: QCOM). And this year it is outspending the No. 1 chip foundry, Taiwan Semiconductor Manufacturing (NYSE: TSM).

The result is that Intel will have the fastest, lowest energy consumption and lowest-cost chips for tablets and smartphones of all its competitors.

This year, Intel launched its 28 nanometer Atom Chips, and next year the company will launch its 14 nm chip. Its competitors will be stuck at 28 nm. The smaller the nanometer, the faster the chip.

Ross Seymore of Deutsche Bank expects to see market share gains for Intel in tablet and smartphone chips as early as next year.

But, where the effect of all this research spending could be seen first is in the need for new servers to address the rising demand of data traffic. One server is needed for every 122 tablets in use and each server requires two chips. Intel’s server revenue alone is expected to grow by low double-digit percentages.

Intel has the resources to be the dominant player in the tablet and chip segment of the chip business, and retain its 80% control of the PC and laptop market. I wouldn’t bet against the company.

Why Bankers Love Steep Rate Curves

Bankers love to charge higher interest rates on loans. That, I’m sure, isn’t a surprise to anyone. And the steepening interest rate curve we have seen in the last few weeks as the 10-year Treasury popped through the 2.0% level will allow them to do just that.

The upside of the inevitable increase in the cost of borrowing is the fact that the numbers go right to the bottom line of banks… and that’s where we can make some money.

These days, banks make their money on net income margin, or the difference between what they pay to borrow money and what they charge in interest. And, there is nothing better for banks than a steepening yield curve to drive net margins higher.

Also, as Treasury yields increase, they tend to do so at a faster pace across the whole yield curve. This feeds bankers’ greatest love – borrowing short and lending long.

When you combine increasing costs to borrow and the highest consumer confidence reading in five years, it’s a screaming opportunity in banks.

Financials were up twice as much as the broad market in May and with the yield curve moving in bankers’ favor we could see more of the same for the rest of this year.

One last point – the steeper the yield curve, the more banks will lend. So we have increasing margins on what is expected to be increasing lending. That’s a one-two punch you need to be part of.

Look at financials.

The “Slap in the Face” Award: A (Comfortable) Roll in the Hay

Finally, definitive data on an issue I mentioned here last year about space- age foam versus coil-spring mattresses. I knew this would be at the top of your list of priorities.

As you might recall from last year’s piece, foam mattresses had been criticized by their owners as being lousy for sex. The experience was described as like being stuck in quicksand. Some foam users are even having sex less often since they bought their space-age bed.

But Leggett & Platt, a manufacturer of a hybrid foam mattress, now claims to have solved the problem.

A study funded by the same, titled “Sexy Sleep,” asked 255 participants to evaluate the performance of beds after sitting, laying, jumping, rolling, bouncing and even crawling on them. (That should cover about all of it.)

The hybrid won in all categories.

It seems 85% of mattress buyers never considered intimacy when making a mattress choice. Leggett & Platt are doing their best to change that.

So, if you’re in the market for a mattress you might take a look at the Leggett & Platt “Sexy Sleep” study before making a decision.

Thank God someone is on top of the really important issues we face today.

Article By Investment U

Original Article: Finally… A Solution to a Real Problem

By Profit Confidential

How can consumer spending in the U.S. economy rise under these circumstances…

In the first quarter of 2013, hourly compensation of Americans employed in non-farm businesses fell 3.8%. This was the biggest drop since the Bureau of Labor Statistic started to measure this statistic in 1947. (Source: Bureau of Labor Statistics, June 5, 2013.)

Consumer spending is not rising as one would expect in a real economic recovery. In fact, real personal consumption expenditures (excluding food and energy) adjusted for price changes rose less than one percent in the first four months of 2013! (Source: Federal Reserve Bank of St. Louis web site, last accessed June 6, 2013.)

And inventories of businesses in the U.S. economy also paint a grim picture of consumer spending. In March, manufacturing and trade inventories stood at $1.64 trillion, up five percent from March 2012. (Source: Ibid.) In an improving economy, like the one that the majority of media outlets and politicians tell us we are in, business inventories are supposed to decline—not rise!

No, businesses building up inventories are not a good sign.

But in spite of the pressures on consumer spending, the stock prices of companies in the consumer “discretionary” sector—that’s businesses that sell nonessential goods—continue to rise.

Take a look at the chart below of the Consumer Discretionary Select Sector SPDR (NYSEArca/XLY) exchange-traded fund (ETF) to get an idea of what’s happened to the stock prices of companies that sell discretionary nonessential items to consumers.

Chart courtesy of www.StockCharts.com

 Let’s call a spade a spade: the above chart is not an indication that consumer spending is rising. It’s a chart that simply shows that the stock prices of companies that sell consumers nonessential items are rising because investors are bidding up these stocks.

Don’t let the stock market falsely tell you consumer spending in the U.S. economy is improving and that businesses are doing great, because that’s simply not the case! The reality is that the opposite is happening.

Looking at the health of the U.S. economy, it is very, very weak. This is the weakest economic recovery following a recession I have ever lived through—I believe many Americans would agree with me.

Spending by U.S. consumers makes up more than two-thirds of the U.S. gross domestic product (GDP). If consumer spending isn’t increasing, we can’t have a real economic recovery; it’s that simple, regardless of what rising stock prices may allude to.

What He Said:

“For the economy the message from retail stocks is quite clear: Consumer spending, which accounts for roughly 70% of U.S. GDP, is in jeopardy. After having spent like ‘drunkards’ during the real estate boom years, consumer spending is taking the same trend as housing prices, slowing down faster than most analysts and economists had predicted. As news of the recession continues to make headlines in the popular media, the psychological spending mood of consumers will continue to deteriorate, lowering earnings at most high-end retailers and bringing their stock prices down even further.” Michael Lombardi in Profit Confidential, January 28, 2008. According to the Dow Jones Retail Index, retail stocks fell 39% from January 2008 through November 2008.

Article by profitconfidential.com