Month: July 2013

By www.CentralBankNews.info     Colombia’s central bank held its benchmark interest rate steady at 3.25 percent and while it trimmed its growth forecast for this year the Central Bank of Colombia struck a slightly more confident tone about the country’s economic prospects.
     Economic growth in the second quarter is forecast to be between 2.5 and 4.0 percent, with 3.4 percent the most likely outcome, above the first quarter’s annual growth rate of 2.8 percent, the bank said, noting that exports were stronger, consumer confidence was up along with retail sales, indicating an acceleration in private consumption.
    On the supply side, mining, agriculture and trade accelerated and the decline in industry was less pronounced, the central bank said.
    Colombia’s central bank has held rates steady since April after cutting them by 200 basis points since July 2012, but it repeated that economic growth should strengthen during the year in response to past rate cuts and the government’s $2.7 billion stimulus program from April.
    The central bank’s staff trimmed its 2013 growth forecast to between 3.0 and 4.5 percent, with the most likely outcome between 4.0 and 4.3 percent due to slower global growth and weaker-than-expected private spending.

    The central bank previously forecast growth in a range of 3.0-5.0 percent, with 4.3 percent the most likely outcome, compared with 2012 growth of 4.0 percent, down from 2011’s 6.6 percent.
    As other emerging market currencies, Colombia’s peso dropped in May and June and bond yields rose, but the central bank said this was partially reversed in July along with lower risk premiums and rates on government debt.
    Last year the central bank embarked on a program to intervene in foreign exchange markets to keep the peso from rising – it rose by 10 percent against the U.S. dollar – but a 6.3 percent depreciation this year so far has brought the peso back to the around the level of January 2012 when it was trading at 1,938 to the U.S. dollar compared with 1,887 today, a depreciation of only 2.6 percent.
     This year the central bank renewed its intervention program and in May it said it would continue to buy foreign exchange worth at least $30 million a day through September to keep the peso from rising and thus help its exporters.
    Colombia’s inflation rate rose to 2.16 percent in June, the highest in six months, and up from 2.0 percent in May, but the bank said inflation expectations were anchored around its 3.0 percent target.

    www.CentralBankNews.info

By Profit Confidential

Carlo and I went to high school together about 30 years ago. We remained friends after we left school even though we went our separate ways. Our common thread is that we are both entrepreneurs running our own businesses. After years of not seeing each other, last night we spent a couple of hours together discussing the economy and investing.

Carlo’s complaint last night, which is characteristic of many investors today, was that he worked hard all his life, watching what he spent and saved. “But I’m being punished for it,” he lamented. Why? Carlo looks at other investors who had less than him, but who borrowed heavily after the credit crisis of 2008 to either buy stocks or buy real estate. And they’ve done remarkably well.

“I worked hard, saved, and bought bonds. Meanwhile, I lost money because the return I’ve gotten over the years hasn’t kept up with real inflation. What the government tells me is the inflation rate is a lie. I’m upside down!”

Carlo went on and on: “I know people with no education, people who have never ran a business, people who never saved, but they made millions since 2008 because they bought properties, interest rates went down, and real estate prices went up.”

The government, by lowering interest rates so aggressively since the credit crisis and keeping them low, “punished savers but boosted speculators,” he noted.

Yes, Carlo would have been better off to close his business in 2008 or 2009, take all his money, borrow as much as he could and either have bought stocks or real estate. He would be further ahead by millions of dollars today.

Investing is about risk and reward. The higher the risk you are willing to take, the greater the return. But it can go against you, too. If you borrow heavily to get into an investment and it turns against you, you can easily get wiped out.

By this point in this story, my readers are probably asking, “What should Carlo do now?” That’s because I assume many of my readers are in Carlo’s situation, too.

If I were Carlo, the first thing I would recognize is that the greatest investor fortunes of our lifetime have been made by getting into investments when they are the most depressed and holding on until they come back.

Today, investors can go out and buy a share of Amazon.com, Inc. (AMZN/NASDAQ) at $300.00 a share. The company lost money in the most recent quarter. It trades at 100-times expected earnings for 2014 and doesn’t pay a dividend. There is huge demand for Amazon.com shares, which explains why the price has hit a new record high.

Also, today, investors can go out and buy the shares of Goldcorp Inc. (NYSE/GG) at $28.00 a share. Goldcorp is down 50% from its 2011 high, the stock trades at 14-times earnings, and it pays a dividend equal to a yield of 2.13%. The company produces about 600,000 ounces of gold a quarter at a cost of between $1,000 and $1,200 an ounce. Demand is falling for Goldcorp shares as gold prices have fallen and the company has taken some write-offs to recognize the lower price of gold. By the way, the shares of gold companies relative to earnings are selling at the lowest level in decades.

Sure, there is risk if gold prices fall below $1,000 an ounce. But there is also a huge reward if gold prices go to $2,000 an ounce.

Hence, the risk/reward play is always there for an investor like Carlo to act upon. He just needs to eventually take action on one of those plays when the opportunity is presented.

Michael’s Personal Notes:

The second-quarter earnings reporting season is underway, and mainstream stock advisors have high hopes. But what we are seeing is “more of the same” of what we saw in last quarter’s S&P 500 company corporate earnings: revenues are lower; corporate earnings are mediocre, and share buyback programs are boosting per-share income.

Take E. I. du Pont de Nemours and Company (NYSE/DD), a constituent of both the S&P 500 and the Dow Jones Industrial Average, as an example. The chemical giant reported corporate earnings of $1.03 billion, or $1.11 per share, for the second quarter. These earnings were 12% lower than the same period one year ago.

Caterpillar Inc. (NYSE/CAT), the mining and construction company that is also a component of both the Dow Jones Industrial Average and the S&P 500, reported a decline of 43.5% in its second-quarter corporate earnings compared to the same period one year earlier; Caterpillar slashed its outlook for the entire 2013 year. The company’s profit fell to $960 million in the second quarter from $1.7 billion a year earlier. On a per-share basis, the company’s corporate earnings declined from $2.54 to $1.45. (Source: Reuters, July 24, 2013.)

This April, Caterpillar announced its first share buyback in more than four years. The company has or will purchase $1.0 billion worth of its own shares at market prices. (Source: Associated Press, April 25, 2013.) And, of course, this will boost per-share earnings.

Halliburton Company (NYSE/HAL) is one company that reported corporate earnings slightly above estimates at $0.73 per share compared to $0.72 expected. But the company’s profit actually went down for the second quarter to $679 million compared to $737 million from a year ago—a decline of almost eight percent.

So how did Halliburton beat the Street with its per-share profit? In the second quarter, Halliburton purchased $1.0 billion worth of its own shares; hence it reduced the number of shares in circulation, pushing up per-share earnings even though actual profits were lower. Halliburton recently announced it raised its share buyback authorization to $5.0 billion.

Pfizer Inc. (NYSE/PFE), the major drug maker included in the S&P 500, has announced another share repurchase program valued at $10.0 billion—the fourth increase in its share buyback program in two and a half years, bringing its total share buybacks to $39.0 billion.

This is not what you call real corporate earnings growth, dear reader. S&P 500 companies are barely meeting already-lowered analyst corporate earnings expectations in the second quarter. Hence, these companies are resorting to stock buybacks to prop up per-share profits.

Companies cannot continue the practice of buying their own shares to increase per-share corporate earnings for the simple reason that sooner or late, they will run out of cash to make the stock buybacks. You really have to look at this from the outside in, as they say. If big public companies can’t achieve real profit growth, and they resort to share buyback programs to boost per-share profits as a result, how far away can the end really be for the stock market rally?

Article by profitconfidential.com

By Profit Confidential

The second-quarter earnings reporting season is underway, and mainstream stock advisors have high hopes. But what we are seeing is “more of the same” of what we saw in last quarter’s S&P 500 company corporate earnings: revenues are lower; corporate earnings are mediocre, and share buyback programs are boosting per-share income.

Take E. I. du Pont de Nemours and Company (NYSE/DD), a constituent of both the S&P 500 and the Dow Jones Industrial Average, as an example. The chemical giant reported corporate earnings of $1.03 billion, or $1.11 per share, for the second quarter. These earnings were 12% lower than the same period one year ago.

Caterpillar Inc. (NYSE/CAT), the mining and construction company that is also a component of both the Dow Jones Industrial Average and the S&P 500, reported a decline of 43.5% in its second-quarter corporate earnings compared to the same period one year earlier; Caterpillar slashed its outlook for the entire 2013 year. The company’s profit fell to $960 million in the second quarter from $1.7 billion a year earlier. On a per-share basis, the company’s corporate earnings declined from $2.54 to $1.45. (Source: Reuters, July 24, 2013.)

This April, Caterpillar announced its first share buyback in more than four years. The company has or will purchase $1.0 billion worth of its own shares at market prices. (Source: Associated Press, April 25, 2013.) And, of course, this will boost per-share earnings.

Halliburton Company (NYSE/HAL) is one company that reported corporate earnings slightly above estimates at $0.73 per share compared to $0.72 expected. But the company’s profit actually went down for the second quarter to $679 million compared to $737 million from a year ago—a decline of almost eight percent.

So how did Halliburton beat the Street with its per-share profit? In the second quarter, Halliburton purchased $1.0 billion worth of its own shares; hence it reduced the number of shares in circulation, pushing up per-share earnings even though actual profits were lower. Halliburton recently announced it raised its share buyback authorization to $5.0 billion.

Pfizer Inc. (NYSE/PFE), the major drug maker included in the S&P 500, has announced another share repurchase program valued at $10.0 billion—the fourth increase in its share buyback program in two and a half years, bringing its total share buybacks to $39.0 billion.

This is not what you call real corporate earnings growth, dear reader. S&P 500 companies are barely meeting already-lowered analyst corporate earnings expectations in the second quarter. Hence, these companies are resorting to stock buybacks to prop up per-share profits.

Companies cannot continue the practice of buying their own shares to increase per-share corporate earnings for the simple reason that sooner or late, they will run out of cash to make the stock buybacks. You really have to look at this from the outside in, as they say. If big public companies can’t achieve real profit growth, and they resort to share buyback programs to boost per-share profits as a result, how far away can the end really be for the stock market rally?

Article by profitconfidential.com

By Profit Confidential

We’re now into the full-blown earnings blitz. On balance, the numbers are coming in pretty much as expected, often with one financial metric (revenues or earnings) not meeting Wall Street consensus.

It is well known that corporate earnings are managed, but what this market really wants to see is top-line revenue growth. That’s the great indicator.

The pizza business is typically a good one; that’s why there are so many chains. Domino’s Pizza, Inc. (DPZ) has been on fire over the last three years. The company’s domestic same-store sales increased a solid 6.7% in the second quarter. International same-store sales growth was 5.8%, representing the company’s 78th consecutive quarter of same-store sales growth in foreign markets.

Revenues grew 10.1% to $414 million, while earnings grew an impressive 18.4% to $33.3 million in spite of higher costs for cheese.

Restaurant stocks are always a good indicator. (See “How Peter Lynch Got It Right 20 Years Ago.”) Domino’s produced another solid quarter.

Moving to technology, Texas Instruments Incorporated (TXN) used to be a stock market darling, soaring eight-fold in the late-90s technology bubble.

The semiconductor company announced second-quarter numbers that surprised Wall Street, and the company’s management team was upbeat about the third quarter.

Second-quarter revenues actually fell nine percent to $3.05 billion as the company winds down its wireless chip business to focus on core analog chips used in cars and televisions.

Earnings increased to $660 million, or $0.58 a share, up from $446 million, or $0.38 a share, including a $0.16 earnings-per-share gain.

The stock moved solidly higher after the company posted its results.

Lockheed Martin Corporation (LMT) beat Wall Street consensus by a wide margin and raised its guidance even in the face of continuing budget cuts.

Ryder System, Inc. (R) met expectations, guiding third-quarter earnings in line, while narrowing its full-year expectations.

And TD Ameritrade Holding Corporation (AMTD), a really good indicator of business conditions in the brokerage business, reported fiscal third-quarter earnings of $183 million, or $0.33 per diluted share, representing a solid gain over earnings of $144 million, or $0.26 per diluted share generated in the same quarter last year.

The company’s revenues grew to a record $725 million during the latest quarter, up solidly from $679 million on what management said was strength in commissions and asset management.

For equity investors, corporations are generally coming through so far and it’s why the S&P 500 is at a record-high with nowhere left for cash to go.

The key to the current stock market rally is earnings results from smaller U.S. companies (who don’t report as soon). This will be the tell-all for genuine economic growth.

My read is that the numbers will continue to be mildly positive and that the stock market’s near-term uptrend is intact.

Article by profitconfidential.com

By Profit Confidential

We all know how Chinese stocks have underperformed this year and last, but that doesn’t mean there’s no reason to invest in them—just remember that careful and selective picking is the name of the game here.

While I’m neutral in the near-term, my longer-term assessment continues to be bullish in spite of what others are saying about the eventual collapse of the “Great Wall” economy.

I have been to Asia, and I have seen the dynamic economies there. Yes, there are many manufacturing plants in China’s economic zones that sit idle as the global economy struggles on. And yes, we are seeing some manufacturing move to Mexico, where the close proximity to the U.S. is making Mexico a hotspot for manufacturing outside of the Chinese economy. But I would still be looking at some of the bigger Chinese companies—the ones that actually make money. Of course, we need to also trust the reports. The U.S. Securities and Exchange Commission (SEC) is working on this.

For some of you, a good alternative to buying stocks would be to consider buying exchange-traded funds (ETFs) with a focus on the Chinese economy. This includes the PowerShares Golden Dragon Halter USX China Portfolio (NASDAQ/PGJ) ETF, which is at a 52-week high. This ETF has a focus on strong small-cap stocks that are familiar to most investors, including Baidu, Inc. (NASDAQ/BIDU) and Qihoo 360 Technology Co. Ltd. (NASDA/QIHU), which has been sizzling on the chart. This is a good fund that allows you access to numerous Chinese growth stocks in the technology, healthcare, and industrial sectors.

On the large-cap side, if you are more conservative and want to invest in Chinese blue chips, then the iShares China Large-Cap (NYSEArca/FXI) ETF may be for you. This ETF owns the top major companies in China, many of which are not available to buy on U.S. exchanges.

This iShares ETF is based on the Xinhua 25 Index, which consists of 25 of the largest and most liquid Chinese stocks. This ETF is a relatively conservative play on Chinese stocks.

Unlike the small-cap PowerShares ETF, iShares China Large-Cap is just north of its 52-week low, so there’s potential.

With $5.22 billion in assets as of June 27, 2013, this ETF has been lackluster, with a three-year return of -3.58%. If the country can renew its growth, the iShares ETF could rally.

Again, this ETF has a large-cap focus and is suited to conservative investors; albeit, even more speculative investors should have some large-cap holdings in their portfolios for diversification purposes. The fund is heavily invested in the financial services sector (53.93%), which has been a drag on the Chinese economy. Other top sectors in this fund include telecommunications (17.26%), energy (12.29%), and technology (7.24%).

The fund’s top-10 holdings are China Mobile Limited, China Construction Bank Corporation, Industrial and Commercial Bank of China Limited, Tencent Holdings Limited, Bank of China Limited, CNOOC Limited, PetroChina Company Limited, China Petroleum & Chemical Corporation, China Overseas Land & Investment Ltd., and China Life Insurance Company Limited.

If the iShares ETF can turn its fortunes, it may be worth some consideration for more conservative investors looking to buy into blue chip Chinese stocks. (Read “How to Make Radical Changes in China Work for You.”)

Article by profitconfidential.com

By Profit Confidential

Troubles in the Chinese economy are mounting as the economic slowdown in the world’s second-biggest economy takes its toll—troubles that could wash ashore here in North America sooner than most expect.

The Flash China Manufacturing Purchasing Managers’ Index (PMI) registered at 47.7 for July—a new eleven-month low. (Source: Markit, July 24, 2013.) Any reading below 50 on the PMI represents contraction in the manufacturing sector.

The Chinese economy is heavily focused on manufacturing, so a contraction of this magnitude indicates a severe economic slowdown for the country.

And that’s not all…

Gross domestic product (GDP) for China’s economy is quickly slowing. After growing for years at 10% per annum, in the first quarter of this year, China’s economy grew at only 7.7%; in the second quarter, the rate slowed further to 7.5%. (Source: MarketWatch, July 23, 2013.) Growth of 7.5% per year for the Chinese economy is embarrassing when compared to its historical average.

So why would an economic slowdown in China’s economy be a problem for us here at home?

China’s economy is the third-biggest destination for U.S. exporters.

As the economic slowdown in the Chinese economy strengthens, demand for goods and services within the country will decline. American exporters will face more downward pressures on profits as they export less to China. And U.S. GDP will get hit as exports are considered one of the major factors in its calculation.

But the damage the economic slowdown in the Chinese economy could have on American and Canadian exporters is just one small piece of the puzzle. Corporate earnings of U.S.-based companies operating in the Chinese economy will also become an issue.

Giants like Wal-Mart Stores, Inc. (NYSE/WMT) and Caterpillar Inc. (NYSE/CAT) have a major presence in the Chinese economy. Wal-Mart operates 380 stores in China, employs 100,000–120,000 people in that country, and has been opening 50–60 stores a year in China.

Pfizer Inc. (NYSE/PFE) has a significant stake in the Chinese economy, with business operations in 250 cities and eight plants in three major cities. (Source: Pfizer China web site, last accessed July 24, 2013.)

As I have outlined in these pages before, the U.S. is not an isolated island. We are connected to events in the global economy. The economic slowdown in the Chinese economy will impact U.S. growth and the corporate earnings of companies on key stock indices.

Michael’s Personal Notes:

In the first quarter’s revised U.S. gross domestic product (GDP) numbers, we found consumer spending in the U.S. economy was slow, dragging U.S. economic growth lower. Going forward, I can’t help but to expect more of the same.

We are already getting warnings from major financial institutions that U.S. GDP growth in the second quarter will be dismal. The Goldman Sachs Group, Inc. (NYSE/GS) expects the U.S. economy to grow at only 0.8% in the second quarter. The Royal Bank of Scotland Group plc (NYSE/RBS) and Barclays PLC (NYSE/BCS) both expect U.S. GDP growth to come in at 0.5%. (Source: Wall Street Journal, July 15, 2013.)

It shouldn’t go unnoticed: consumer spending makes up about two-thirds of the GDP in the U.S. economy. If consumer spending declines, or remains stagnant, then it would be foolish to expect the U.S. economy to experience any growth.

Let’s look at retail and food services sales, a key indicator of consumer spending in the U.S. economy. Since the third quarter of 2009, the average rate of growth quarter-over-quarter in real retail and food services sales in the U.S. economy has been 0.9%. In the second quarter (April though June) of 2013, these sales only increased 0.81% from the previous quarter. (Source: Federal Reserve Bank of St. Louis web site, last accessed July 24, 2013.)

Unemployment—another indicator of pressure on consumer spending—remained a problem throughout the second quarter. While the mainstream media and politicians told us everything is great on the employment front, the reality was quiet the opposite.

In the U.S. economy, the underemployment rate, which provides a better look at the U.S. labor market situation, actually increased from 13.9% in April to 14.3% in June of 2013. (Source: Bureau of Labor Statistics, July 5, 2013.) It’s common sense that when people don’t have jobs, they pull back on their spending.

Aside from a slowdown in retail and food services sales and rising real unemployment, the U.S. housing market remains depressed, as real homes buyers stay away from the market. Right now, we have institutions fueling home purchases. First-time home buyers fuel the economy as they buy lawnmowers, appliances, and furniture to fill their homes. Recently, I’ve heard stories of big institutions buying homes in bulk (to rent out) and filling them with appliances they are buying directly from overseas in bulk.

All this happened during the second quarter of 2013, as the key stock market indices continued to rally.

In the first half of this year, key stock indices like the S&P 500 rose roughly 13%. Is this sustainable when the U.S. economy is struggling? I seriously doubt it.

Sure, markets can stay irrational for longer than most expect, but eventually, regression to the mean occurs. And when it does, it won’t be a pretty sight.

Article by profitconfidential.com

By Profit Confidential

In the first quarter’s revised U.S. gross domestic product (GDP) numbers, we found consumer spending in the U.S. economy was slow, dragging U.S. economic growth lower. Going forward, I can’t help but to expect more of the same.

We are already getting warnings from major financial institutions that U.S. GDP growth in the second quarter will be dismal. The Goldman Sachs Group, Inc. (NYSE/GS) expects the U.S. economy to grow at only 0.8% in the second quarter. The Royal Bank of Scotland Group plc (NYSE/RBS) and Barclays PLC (NYSE/BCS) both expect U.S. GDP growth to come in at 0.5%. (Source: Wall Street Journal, July 15, 2013.)

It shouldn’t go unnoticed: consumer spending makes up about two-thirds of the GDP in the U.S. economy. If consumer spending declines, or remains stagnant, then it would be foolish to expect the U.S. economy to experience any growth.

Let’s look at retail and food services sales, a key indicator of consumer spending in the U.S. economy. Since the third quarter of 2009, the average rate of growth quarter-over-quarter in real retail and food services sales in the U.S. economy has been 0.9%. In the second quarter (April though June) of 2013, these sales only increased 0.81% from the previous quarter. (Source: Federal Reserve Bank of St. Louis web site, last accessed July 24, 2013.)

Unemployment—another indicator of pressure on consumer spending—remained a problem throughout the second quarter. While the mainstream media and politicians told us everything is great on the employment front, the reality was quiet the opposite.

In the U.S. economy, the underemployment rate, which provides a better look at the U.S. labor market situation, actually increased from 13.9% in April to 14.3% in June of 2013. (Source: Bureau of Labor Statistics, July 5, 2013.) It’s common sense that when people don’t have jobs, they pull back on their spending.

Aside from a slowdown in retail and food services sales and rising real unemployment, the U.S. housing market remains depressed, as real homes buyers stay away from the market. Right now, we have institutions fueling home purchases. First-time home buyers fuel the economy as they buy lawnmowers, appliances, and furniture to fill their homes. Recently, I’ve heard stories of big institutions buying homes in bulk (to rent out) and filling them with appliances they are buying directly from overseas in bulk.

All this happened during the second quarter of 2013, as the key stock market indices continued to rally.

In the first half of this year, key stock indices like the S&P 500 rose roughly 13%. Is this sustainable when the U.S. economy is struggling? I seriously doubt it.

Sure, markets can stay irrational for longer than most expect, but eventually, regression to the mean occurs. And when it does, it won’t be a pretty sight.

Article by profitconfidential.com

By Profit Confidential

Today, a very good business reports its numbers. It’s an old economy play that we looked at back in February, and it’s the kind of company that, according to history, you can just tuck away and keep in your portfolio.

The company is Airgas, Inc. (ARG) out of Radnor, PA. It’s not the most exciting enterprise in the world; it’s unlikely you’ll find it featured on CNBC or other media outlets. But it’s exactly the kind of old economy, reliable business that’s very necessary to the economy.

Airgas is a seven-billion-dollar company that pays dividends (currently yielding 1.9%). It sells propane, oxygen, nitrogen, and a lot of other gases used for industrial and medical purposes.

It’s the kind of business that you never think of but is absolutely necessary for basic infrastructure to be created (welding) and for healthcare to be delivered (oxygen, carbon dioxide, helium).

On the stock market, Airgas has mostly been a powerhouse. The position has been trading range-bound for the last six months, but the company’s long-term track record is very solid.

This kind of business is absolutely worthy of consideration for retirement accounts or long-term savings plans. Yes, there will be quarters when a company like this doesn’t meet expectations, but it’s difficult to imagine the demand for welding and medical gases going down systemically.

Just take a look at the company’s long-term stock chart below:

Chart courtesy of www.StockCharts.com

Every business experiences tough times. You can see in the above stock chart that shares for Airgas turned downward in 1997 and took almost nine years to recover. But that’s why businesses like this are for long-term investors who like to collect dividends. The company’s normalized stock market trend is consistent.

Investors might not be interested in an old economy stock at its high, but it’s the kind of business that’s worth following in case of a quarterly miss and/or a major share price retrenchment.

Reporting today, Wall Street doesn’t expect much in the way of growth from this company. Revenues are forecast to grow 1.1% comparatively to $1.27 billion. The average earnings-per-share estimate is $1.15, compared to $1.13 in the same quarter last year.

Clearly, this isn’t a growth story. But I still follow a number of businesses like this, because they are real. They aren’t going away anytime soon and even as mature, old economy stories, many companies like this have actually produced very good long-term returns on the stock market. (See “Why These Old Economy Stocks Are Absolutely Crucial.”)

I like big brand-name companies that pay increasing dividends to shareholders. But I also like esoteric, non-media-hyped businesses that just grind it out every day.

As part of an overall portfolio, I think there’s definitely room for a position like Airgas—an industrial, basic-infrastructure type of company with a proven track record of wealth creation.

It isn’t fancy and it sure isn’t glitzy, but who cares? At the end of the day, it’s the return that counts.

Article by profitconfidential.com

By Profit Confidential

CEO Thorsten Heins of BlackBerry (NASDAQ/BBRY) may be smart to start thinking about looking for a new job. No, there’s no evidence he will be fired anytime soon. Hired in early 2012, Heins has been at the job just over a year. But while he may be the company’s biggest cheerleader, his enthusiasm has not spread to the stock market.

Having launched to rave reviews, the new “Z10” and “Q10” are excellent products—unfortunately, you need more to attract customers. Like I said back in March, the two new BlackBerry devices were really make-or-break for the company, and so far, it doesn’t look good. (Read “RIM Replacing Apple as the Stock Market’s Tech Darling?”)

Having looked at the Z10, I must say it’s a nicer-looking device than my current “iPhone 4.” The Q10, with its physical keyboard, reminds me of my old BlackBerry.

The problem I have—and that I suspect many potential buyers have—is that there’s just not enough to make me want to switch over to the new BlackBerry at this time. I’m pretty sure Heins now realizes this, especially with Apple Inc.’s (NASDAQ/AAPL) dominance of the U.S. market.

The chart below shows the downward move of BlackBerry (indicated by the red candlesticks) versus the upward move by Apple (shown by the green line).

Chart courtesy of www.StockCharts.com

BlackBerry is probably better off focusing on improving its devices and looking to the billions of users in the emerging markets like China, Asia, Latin America, and Eastern Europe.

These are the markets where the demand is for cheap yet still powerful phones. Apple, which has yet to produce a cheap version of its iPhone (there is speculation this may come), is well behind rivals Samsung Electronics Co. Ltd. and Nokia Corporation (NYSE/NOK) in the emerging markets. Nokia continues to be the king of the inexpensive phone. And until Apple comes out with a much cheaper version of the iPhone, I doubt it will gain any traction here. Users in these markets simply cannot afford expensive phones and plans.

Apple will need to somehow get into the emerging markets, as the company is stalling in its growth. The company will need to look outside of its dominant market in the United States to boost growth; until this happens, I doubt Apple can rally back to its record $705.00 high in September 2012.

The same goes for BlackBerry, but the situation is much worse. With minimal success in the U.S., unless it vaults over Apple, Heins will need a “Plan B” for BlackBerry’s survival, which should be to look at expanding into the emerging markets. Of course, even this won’t be easy, as the emerging markets are highly competitive.

So the battle continues. I don’t like BlackBerry, Apple is marginally better, but Samsung looks the most interesting; albeit, only time will tell. Movement into the emerging markets may just be what decides the fates of smartphone makers in today’s market.

Article by profitconfidential.com

London Gold Market Report
from Adrian Ash
BullionVault
Friday, 26 July 08:25 EST

The PRICE of gold bullion retreated from an overnight rise to $1340 per ounce in London on Friday morning, trading back down to $1322 – the low hit by the mid-April crash – as the US Dollar ticked higher.

Silver prices slipped back below $20 per ounce – a 33-month low when first breached in June.

Japanese stocks meantime fell hard as the Yen rose on the currency markets, and European equities slipped with commodities.

Government bond prices held steady, with 10-year US Treasury yields at 2.57%.

The US Federal Reserve next announces interest-rate and quantitative easing policy on Wednesday.

“I don’t really see how gold can go much higher,” says Matthew Turner, precious metals analyst at Australian bank Macquarie.

“After all the shenanigans of the last few weeks, we know that [QE] tapering at some point is clearly still the policy.”

China’s households will meantime overtake India as the world’s No.1 buyer of goldin 2013, said Marcus Grubb, managing director for investment at market-development organization the World Gold Council, on Thursday.

Buying perhaps 1,000 tonnes of gold – around 1 ounce in every 4 sold worldwide in 2013 – China is growing its jewellery demand, Grubb says, but not as fast as it’s growing demand for investment gold bars and coin.

Analysts have been forecasting China to overtake India since late 2009.

Investment bank and bullion market-maker Societe Generale yesterday warned thatgold-price volatility looks certain if there’s a “hard landing” in China‘s economy.

“Gold purchases by central banks have noticeably slowed of late,” says a note from Germany’s Commerzbank, pointing to the 400 tonnes forecast for 2013 against last year’s 532 tonnes.

New data from the International Monetary Fund showed only light gold buying amongst central banks in June, with Turkey’s reserves falling for the first time in a year, down 0.8% to 441.5 tonnes.

“The flows in the central banks are pretty small now, the big shifts are gone,” Bloomberg quotes economist Justin Smirk at Westpac Banking in Sydney.

“Central bank buying might give us a little bit of a floor, but they’re just soaking up some of what the ETFs are selling. You’re not going to see central banks coming in to push the price up.”

The world’s largest exchange-traded gold trust fund, the SPDR (ticker: GLD) yesterday shed another 2 tonnes on Thursday, taking its bullion – held to back shares in the trust – down  to 927 tonnes, the lowest level since Feb. 2009.

Lower prices mean supplies of scrap gold from existing jewelry and investment owners may slump by three-quarters to 400 tonnes or below, according to 2013 forecasts earlier this week.

“The pawn-broking industry is facing a collapse in the price of gold,” reports NPR’s Planet Money, reducing margins on gold items pledged by borrowers.

On the mining supply side, meantime, world No.3 Goldcorp joined No.2 Newmont in announcing sharp write-downs on the value of its assets, thanks to the 20% drop in world gold prices so far in 2013.

Adding $2 billion and $1.8bn respectively to the gold mining majors’ recent $9bn in writedowns, Goldcorp and Newmont Mining have both dropped more than 40% already on the stock market since gold began falling from $1800 per ounce last fall

Adrian Ash

BullionVault

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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

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