Month: February 2014

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Catalysts Drive These Stocks: Mara Goldstein

Source: George S. Mack of The Life Sciences Report  (2/20/14)

http://www.thelifesciencesreport.com/pub/na/catalysts-drive-these-stocks-mara-goldstein

Whether biotech stocks keep up the scorching pace of 2013 remains to be seen, but we can count on one thing going forward, says Cantor Fitzgerald Senior Analyst Mara Goldstein. We are still in a catalyst-driven market. In this interview with The Life Sciences Report, Goldstein discusses four names with approaching milestones that she believes are important growth drivers. Her fifth pick is a binary event story, meaning it could skyrocket on good data or plummet on bad.

The Life Sciences Report: With stock prices up, I know companies want to raise money through secondary offerings. Do you feel this trend is strong right now, or is it showing fatigue?

Mary Goldstein: Let me take the second part of your question first. The question of fatigue is important because, with so much interest in financing in the past year, there has been a lot of discussion around whether the pent-up demand from previous years is gone and whether there is as much opportunity as there was in 2013 for financings to continue.

We have seen a fair number of companies raise capital thus far in Q1/14. In fact, this past January was the second strongest January on record since 1994 in terms of total money raised. The desire to secure financing is well know among biotech investors, and there does seem to be a strong dynamic to ride any potential wave of enthusiasm that gets generated at the beginning of the year because of conferences, such as the JPMorgan Healthcare Conference. That conference typically kicks off the year, and many companies try to extend cash runways by financing early in the year. Three and four years ago, companies had to finance because they were running out of cash, and funding was needed to get to that next data point. Now, companies are financing around data points, and that is a very different value proposition.

TLSR: Are you saying that companies are extending their cash runways even though they may not need the money today?

MG: I think that if you’re a biotech executive, cash and cash runway are always a concern given the long road from discovery to commercialization. My point was that financings are not happening solely to extend cash runways, although that is an important consideration. They’re also occurring around data releases, which have an impact on valuations.

TLSR: We’ve seen a lot of initial public offerings (IPOs) in the last year. Does the IPO market still look strong to you? If it does, does it look frothy?

MG: As an analyst, I watch financings as a surrogate for demand in the sector. Despite more than $20 billion ($20B) of equity capital coming into the biotech industry in 2013, the beginning of 2014 has shown some legs, with the appetite for biotech financings still in evidence. While one could argue that backlog and pent-up demand drove financings last year, one could also argue that investors have had a greater appetite for riskier and higher return stocks. I think the combination of those factors helped to fuel a robust IPO market. The question, in my mind, is whether conditions exist that facilitate demand for financings. Already in 2014, we’ve seen $5.5B in capital raised in the biotech sector, with more than $1B in IPOs and roughly $2B in follow-on offerings.

TLSR: Mara, what about the maturity of the IPO companies?

MG: If we are speaking to stage of development, I think it is mixed. Of the class of 2013, close to 50% of the IPOs were in phase 2, another 35% or so were in phase 3, and the remainder were earlier stage. I believe that breakdown is consistent with IPOs that have been priced thus far in 2014. But I think you’ve touched on an important point about the ability of companies to continue to advance drug candidates in capital raising-constrained environments. Of the 40 or so IPOs in 2013, a considerable number came to market having already advanced lead candidates into mid-phase testing.

TLSR: Are companies themselves mature enough when they go public, or are you seeing lower-quality companies that perhaps don’t have clear pathways to pharma partnerships or product commercialization?

MG: I wouldn’t confuse quality with development stage, because some very high quality companies are going public at earlier stages of development. Clearly the market has an appetite for stocks where investors believe that a high value return can be accelerated, such as for companies developing drugs for orphan disease.

TLSR: You mentioned the excitement and enthusiasm coming out of the JPMorgan Healthcare Conference. Were companies talking about any new regulatory or other trends that you can detect from their presentations?

MG: From company presentations in general, and from the dialogue that I broadly observed, it seems as if companies are engaging the U.S. Food and Drug Administration (FDA) earlier in the process than they have in the past. That is, of course, a good thing because the more that can be ironed out early on, the less regulatory risk later.

TLSR: Mara, do you have a current theme for growth-oriented investors?

MG: I continue to think that this is very much a catalyst/milestone-driven market for biotech stocks. We definitely saw that last year, and I think we’ll see a continuation of that. In the lead-up to 2013, when capital markets were constrained and the biotech sector was struggling with a host of different issues, clinical trials still advanced, with some companies making progress, albeit quietly. But even as clinical programs were advancing—let’s say, in 2009–2011—there was not necessarily commensurate interest in the stocks as investment vehicles. Now, a fair number of companies with midstage and later-stage pipeline products are hitting milestones that are, in essence, driving value creation. I don’t think that trend has played out yet.

TLSR: Could we talk about some companies, please? Which name would you like to start with?

MG: NewLink Genetics Corp. (NLNK:NASDAQ.GM) is working in the field of immunotherapy, and is a stock we like a lot. The company has a platform technology to develop therapeutic vaccines, taking advantage of the concept of innate immunity to stimulate an immune response to cancer without the need to personalize treatment for each patient. NewLink has a phase 3 trial underway, testing its HyperAcute platform in pancreatic cancer. This program is known to investors as HyperAcute Pancreas, or algenpantucel-L. The company has built interim checkpoints into the program, and the initial one is pending, but final data readout, if the trial doesn’t stop early, could be sometime in 2015. This is the company’s most advanced program, and is being tested in lung cancer and melanoma, as well as a few other indications.

What’s generating a fair amount of interest today is a second platform technology, which has been under the radar screen for quite some time, inhibition of indoleamine 2,3-dioxygenase (IDO) as a way to block tumor immune escape. The IDO pathway is a checkpoint pathway, and there is much interest in checkpoint inhibitors in oncology right now. Cancers suppress the immune system so that tumor cells are not recognized by a person’s innate immunity. The idea behind the IDO and other checkpoint inhibitors is that cancer cells may use the IDO pathway to facilitate survival, growth, invasion and tumor recurrence.

NewLink has two IDO pathway inhibitors—two distinctly different molecules. One is indoximod, which is in phase 2 for metastatic prostate cancer and metastatic breast cancer. Another, NLG919, is in phase 1 for recurrent advanced solid tumors. The interest in NewLink’s IDO inhibitors is driving a lot of the interest in this stock, in addition to the HyperAcute vaccine platform.

TLSR: Would you tell me what other checkpoints, aside from IDO, are interesting in oncology today?

MG: Checkpoint inhibition, broadly speaking, refers to immune checkpoints that facilitate tumor immune escape. The two most well known to the investment community are CTLA-4, or cytotoxic T-lymphocyte antigen-4, and programmed death protein 1 (PD-1).

TLSR: NewLink’s IDO inhibitors are still in early and midstage development—NLG919 in phase 1 and indoximod in phase 2. Do we have any indication of efficacy at this point?

MG: We’ve seen some phase 1 data on the indoximod compound. The data essentially suggest that there is a response, that the drug’s profile looks reasonable in the field of oncology and that this candidate should be explored further.

TLSR: NewLink shares are up 27% in the past four weeks. Even though the IDO inhibitors are not the lead programs, do you think this platform may be what’s moving this stock so dramatically?

MG: I definitely think IDO is a piece of that. Two things have occurred. One, the visibility of the IDO platform is improving. The company recently held a key opinion leader meeting, to which it invited the investment community. The meeting was very well attended and generated a lot of interest. The second component has been the HyperAcute platform and the pancreatic cancer trial (IMPRESS), now in phase 3. We have been waiting for an interim look into the IMPRESS trial, which is event-based. As the trigger number of events has not been reached yet, the interim has not occurred. There had been expectation that the interim would occur in mid or late 2013, and it still hasn’t happened.

When a time trial takes longer than expected, investors will typically believe that either the active arm is working very well, and that’s why the trigger point has not been reached, or that perhaps the company has miscalculated, and both arms are doing better than expected. We won’t know until the final data are released, but I think the fact that it has taken a while to get to an interim point in this trial is creating a calming effect, at least so far.

TLSR: This IMPRESS trial is being conducted under a special protocol agreement (SPA). Does that carry any special meaning for you as an analyst?

MG: An SPA allows a company to work out trial details with the FDA ahead of time, so that there are fewer questions about how the trial was conducted after it is finished. An SPA also allows, theoretically, for a more rapid review. As an analyst, it says not so much that the trial is derisked, but that there is less regulatory risk because the company has worked out issues up front.

Then again, the risk in doing a trial under an SPA is that if the standard of care changes while you’re in your trial, and you’re committed to completing it one way, some nuance of data could make the trial less relevant. In general, however, I think the benefits certainly outweigh the detriments.

TLSR: What other companies are competing in the IDO inhibitor pathway space?

MG: The only company that I know has a molecule in a similar stage of development is Incyte Corp. (INCY:NASDAQ). I do not cover this company.

TLSR: Another company, please?

MG: I continue to like Celldex Therapeutics (CLDX:NASDAQ) a lot. Celldex was one of the best performers in the biotech market last year. I liked it because I thought there was huge opportunity stemming from the multiple data points the company would reach throughout the year, and in particular, in the second half of 2013. I think that continues to be the case for 2014.

Celldex has a phase 3 program for rindopepimut (a peptide-based vaccine) for a particular form of glioblastoma multiforme, or brain cancer. Another phase 3 program, METRIC, is evaluating CDX-011, also known as glembatumumab vedotin, in triple-negative breast cancer. The drug is a monoclonal antibody-drug conjugate targeting glycoprotein (transmembrane) nmb (GPNMB) over-expression in breast cancer. Screening for this trial is currently underway. The company should see data for CDX-1135, for a rare orphan drug indication called dense deposit disease, in 2014. And there will be more data on the CDX-1127 program, which is a monoclonal antibody targeting CD27, which is involved in the activation of lymphocytes.

I think there is still opportunity in the stock, based on visibility of the pipeline. I think that to some degree, as with last year, data points are skewed toward H2/14 rather than H1/14. Nonetheless, Celldex is a name that we continue to like, particularly because the stock really sold off in Q4/13, most likely profit taking after such a strong year. I think investors can pick up some lost ground in the coming year.

TLSR: You’re also following one company in the cancer stem cell space. Tell me about that, please.

MG: I like Verastem Inc. (VSTM:NASDAQ). The cancer stem cell space is very interesting, building on the work of Dr. Robert Shapiro, a founding member of the Whitehead Institute for Biomedical Research and a professor at Massachusetts Institute of Technology. Dr. Shapiro’s work led to the discovery of a phenomenon called the epithelial-mesenchymal transition, or EMT, which is central to the idea that certain cancer cells are able to travel in the body and seed new tumors, but are able to evade traditional chemotherapy. Verastem has licensed certain “know-how” from Dr. Shapiro’s lab, and uses this to develop drugs that target cancer stem cell pathways. The drug that is furthest in development is defactinib, an inhibitor of focal adhesion kinase, or FAK, which is a pathway that promotes growth and survival of cancer stem cells. The initial clinical program is in mesothelioma (malignant pleural mesothelioma, specifically), as well as KRAS-mutated non-small cell lung cancer. The company believes it has identified a biomarker allowing for an enriched patient population for the clinical trial. We could see some data emerge this year. The company is also conducting a small bridging study looking at defactinib in a Japanese population, and hopes to use this data as a segue into a broader registration study for the Japanese market by incorporating Japanese sites into the phase 2 COMMAND study. I believe there may be information on this in H1/14.

We think that Verastem’s shares will benefit from advancing clinical programs, and that forms the basis of our thesis on the shares.

TLSR: That bridging study in Japan has only 18 patients, right?

MG: It is a small study—a dose escalation study—looking at safety, pharmacokinetics and pharmacodynamics in a Japanese population. For drugs to be approved in Japan, it is typical for regulators to require data in Japanese patients, as variations among patient populations do exist and can have an effect on safety as well as efficacy. Because the study is a fairly classic dose escalation trial, it’s not a large population. If the data for this population is consistent with other data sets, Verastem will request that Japanese sites be allowed to roll into the COMMAND study, which could be considered a registration trial.

TLSR: The upcoming catalysts with Verastem are what?

MG: Number one is the bridging study, and, second, more data on defactinib. The company also has two other candidates, VS-5584 and VS-4718, both of which are in phase I. We expect data presentations throughout the year. But the greatest focus will be on defactinib, the outcome of the bridging study in Japan and the results of a phase 1b trial exploring a combination with paclitaxel in ovarian cancer.

TLSR: Another name?

MG: We haven’t talked that much about the large-cap names, but I continue to like Celgene Corp. (CELG:NASDAQ). It’s a name that we liked last year because we saw a lot of opportunity for share price expansion based on the accelerating sales and earnings numbers. I think we’ll continue to see that in 2014—the numbers will continue to go up and the company will continue to raise guidance through the year.

Celgene has a very large phase 2 pipeline that should gain visibility through this year, and this is in addition to its suite of drugs in the process of rollout and launch. Apremilast, a drug that will compete in the psoriasis and psoriatic arthritis space, will launch later this year. We think expectations for that drug might be low, and we see that as an opportunity.

TLSR: Another name?

MG: I have one more name I’ll talk about today. Sunesis Pharmaceuticals Inc. (SNSS:NASDAQ) is conducting a study that has the potential to be transformative. The company is set to deliver the most pivotal of all pivotal data points, the readout of the phase 3 VALOR study looking at vosaroxin in acute myeloid leukemia (AML). This is a binary endpoint, looking at overall survival in the setting of first relapse/refractory AML. Either the trial will demonstrate efficacy, and the shares will increase in valuation, or the results will show the opposite and the shares will contract. That has been a big overhang on the shares, particularly because other development programs have yet to enter human trials.

 

What we really like about Sunesis is the trial design of the VALOR study. We think the trial is very derisked because of the use of an adaptive design that allowed additional patients to be added into the study to ensure appropriate statistical powering over a range of possible outcomes. AML, however, is a very risky category to develop a drug in, since the success rate of trials in this indication is about as close to zero as one can get. The company has set a very high bar in terms of seeking success in this indication.

 

At the same time, we like the unique attributes of the vosaroxin molecule and how it fits into the current treatment frame. We think Sunesis shares represent a value creation opportunity, though we understand the risk/reward axis.

 

TLSR: Thank you so much. Always a pleasure.

 

MG: Thank you.

 

Mara Goldstein joined Cantor Fitzgerald & Co. from Thomson Reuters, where she served as director of research for Reuters Insight. Goldstein was initially responsible for the firm’s healthcare research practice, and later assumed responsibility for all research activities and sectors. Prior to that, Goldstein was an executive director and senior pharmaceutical analyst at CIBC World Markets. At Cantor, Goldstein covers the biotechnology sector. Goldstein also worked at Alex Brown & Sons and CS First Boston. She holds a bachelor’s degree in economics from Purdue University.

 

Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

 

DISCLOSURE:
1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Life Sciences Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Mara Goldstein: I own or my family owns shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: For important disclosures on companies mentioned, please go to cantor2.bluematrix.com/sellside/Disclosures.action. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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EURGBP – Loses Corrective Recovery Steam.

EURGBP- Unless EURGBP resumes its corrective recovery triggered off the 0.8157 level, the risk is for it to return to the 0.8190 level. Below here if seen will open the door for a return to the 0.8157 level, its Feb 17 2014 low. Further down, support is seen at the 0.8100 level with a turn below here will aim at the 0.8050 level and possibly lower towards the 0.8000 level. Immediate resistance comes in at the 0.8265 level where a break if it occurs will target the 0.8300 level. Further out, resistance stands at the 0.8349 level. Followed by the 0.8385 level, its Jan 15 2014 high where a violation will trigger further upside towards the 0.8400 level, its psycho level and next the 0.8450 level, its psycho level. All in all, the cross remains biased to the downside on further weakness.

Article by www.fxtechstrategy.com

 

 

 

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Forex Technical Analysis 21.02.2014 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, GOLD)

Article By RoboForex.com

Analysis for February 21st, 2014

EUR USD, “Euro vs US Dollar”

Euro is still being corrected. We think, today price may form another ascending structure and then fall down towards level of 1.3676. Later, in our opinion, instrument may continue moving upwards to reach level of 1.3900.

GBP USD, “Great Britain Pound vs US Dollar”

Pound is under pressure and still moving downwards to reach level of 1.6580. Later, in our opinion, instrument may form reversal structure and continue growing up towards level of 1.7000.

USD CHF, “US Dollar vs Swiss Franc”

Franc is returning towards level of 0.8920. Later, in our opinion, instrument may form descending structure towards target at level of 0.8730.

USD JPY, “US Dollar vs Japanese Yen”

Yen is still moving according to main scenario and forming ascending structure of current correction with target at level of 104.00. Target of the third wave is at 103.40. Later, in our opinion, instrument may form the fourth wave at level of 102.40 and then complete this correction by forming the fifth wave at level of 104.00.

AUD USD, “Australian Dollar vs US Dollar”

Australian Dollar returned to level of 0.9015. We think, today price may form another ascending structure towards level of 0.9025 and then continue moving inside descending trend to reach level of 0.8700.

XAU USD, “Gold vs US Dollar”

Gold is still forming consolidation channel near level of 1316. We think, today price may grow up and reach level of 1330. Later, in our opinion, instrument may form new correction towards level of 1285 and then form the fifth ascending wave to reach level of 1360.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

 

 

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Fibonacci Retracements Analysis 21.02.2014 (EUR/USD, USD/CHF)

Article By RoboForex.com

Analysis for February 21st, 2014

EUR USD, “Euro vs US Dollar”

Euro is trying to finish current correction; pair rebounded from level of 78.6% and may start new ascending movement. Main target is still at 1.3800, where there are several important fibo-levels.

As we can see at H1 chart, current correction reached local level of 38.2%, which is right inside temporary fibo-zone. Main target is less than 100 pips away, so it may be reached by the end of the day.

USD CHF, “US Dollar vs Swiss Franc”

Franc is still controlled by bears; local correction was supported by one of intermediate fibo-levels. In the future, instrument is expected to start new descending movement towards 0.8800, where there are several fibo-levels.

As we can see at H1 chart, current correction reached local level of 78.6% and rebounded from it. In the nearest future, bears may reach new minimum and then continue pushing price downwards to reach targets in lower part of H1 chart. Later these levels may become starting point of new correction.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

 

 

 

 

 

 

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Clerical Error Awards Every Employee $345 Million

By WallStreetDaily.com Clerical Error Awards Every Employee $345 Million

“Markets can remain irrational a lot longer than you and I can remain solvent.”

So said John Maynard Keynes, the famous British economist. And right now, irrationality certainly reigns in Silicon Valley.

So much so, in fact, that I’m officially renaming it “Silly Valley.” Because that’s the only way to characterize the valuations being paid.

In this week’s Friday Charts edition, I’m going to prove just how downright silly it’s gotten.

Prepare to be stupefied…

Nineteen. Billion. Dollars.

That’s an amount equal to the entire economy of Nicaragua, seven and a half Mark Cubans, roughly one-third of the market cap of leading automaker, Ford Motor (F)… and now, what Facebook (FB) is paying for text messaging service, WhatsApp.

Yes, a text messaging company, with only 55 employees, just fetched a $19-billion takeover offer. That works out to $345 million per employee.

It has to be a mistake, right? The biggest clerical error in history? An accidental extra digit in the offer sheet?

Nope! Fact is, the deal represents the largest venture-backed takeover in Silicon Valley. Ever.

 

Utter absurdity! So what is Facebook’s hoodie-wearing head honcho, Mark Zuckerberg, thinking?

Well, he knows long-term success in the social media world is all about engagement. Lose it and the next stop is the plot beside MySpace in the internet graveyard.

And WhatsApp definitely boasts engaged users. Way more than all the other fledging, social media startups. Take a look:


Even with 450 million active monthly users, though, the purchase price doesn’t jive with reality.

Consider: When Facebook acquired photo-sharing startup, Instagram, for $1 billion, it paid roughly $30 per user. Now, less than two years later, the company is paying $42 per user, or 40% more, for WhatsApp. That’s a hefty increase in such a short period of time.

The price tag becomes all the more absurd when you realize WhatsApp’s monetization strategy involves charging users a measly $1 per year after a year of free use.

Mind you, these are users who rely on WhatsApp to bypass charges from mobile phone companies to send text messages for free over the internet.

Now, paying $42 for the right to earn $1 doesn’t make any sense in a rational world. But paying that much for a bunch of freeloaders doesn’t make any sense – period.

Even Facebook executives can’t justify it.

When Jefferies’ analyst, Youssef Squali, asked how they came up with the purchase price, CFO David Ebersman said the primary thing was “how healthy this network is and how it’s growing.”

Funny. But I don’t see a formula in Excel that lets me take into account those variables to arrive at a valuation. Must be some newfangled math, practiced only in Silicon Valley, that’s going to be included in the next update.

The silly valuations in the valley don’t stop with Facebook, though. Tesla Motors (TSLA) is getting in on the action, too.

Too Far, Too Fast

I know it appears that I was completely wrong for taking a bearish stance toward Tesla on CNBC’s Closing Bell on December 16, 2013. (The stock is up 30% since then.)

But I stand by my conviction – a day of reckoning is inevitable. And the numbers prove it.

On the heels of its quarterly report this week, Tesla traded to a new all-time high of $215.12 per share, equal to a market cap of more than $26 billion.

Mind you, the company only sold 22,477 cars last year. If we do the math, that works out to $1.17 million in market cap per car sold.

I get that Tesla boasts gross margins that are 10% higher than Ford, for example. But that’s still way too much of a premium valuation.

Truth be told, at current levels, the stock’s not even trading in the same galaxy as every other major automaker. And remember, Tesla is still just a car manufacturer.

 

Naysayers will quip that it’s all about future growth. Oh yeah? If we take into account management’s estimates for up to 40,000 vehicle sales in 2014, the company is still valued at an absurd $654,000 per car.

Even if we assume that the company keeps increasing production at the same breakneck pace, it would take more than five years to grow into its current valuation and trade at a level on par with other premium automakers like BMW and Mercedes Daimler AG.

Like I said, absurdity reigns in Silicon Valley. In situations like this, I’ve found it’s best to keep my hard-earned capital out of harm’s way.

Care to disagree? Then let me know why by dropping us a line here. While you’re at it, feel free to let us know what you think about any of our recent work at Wall Street Daily, too.

Ahead of the tape,

Louis Basenese

The post Clerical Error Awards Every Employee $345 Million appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Clerical Error Awards Every Employee $345 Million

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EUR/USD News Trading – US Labor Market

Article by Investazor.com

Do you know why the Non-Farm Payrolls is one of the most important macro indicators, if not THE most important? Well, it has always been considered of a major importance, but in the last six years it has become the most expected publication of the month among investors. So, how did this happen?

Shortly after Ben Bernanke became the chairman of the Federal Reserve, the financial crisis broke out and the Central Bank of the biggest economy of the world had to come up with some measures which should fix the “broken circuits”. The FED established two objectives, to improve the labor market by creating jobs (and also reducing the unemployment rate close to 6.5%) and stabilize inflation around 2%. The first one had a bigger consideration. Hence, which was the indicator that shows how many new jobs had been created in every month? Exactly, the Nonfarm Payrolls.

Now, let’s talk about this indicator in more detail. The Nonfarm Payrolls or NFP, how it is usually abbreviated, is the change in the number of the employed people during the previous month, excluding the farming industry and it is released monthly, usually on the first Friday after the month ends. So, this combination of importance and earliness of release contribute to the major impact it has on the markets. Why is this indicator so important and markets really care about it? Because job creation is a crucial leading indicator of consumer spending, which represents the majority of the overall economic activity.

Another aspect you should bear in mind is that with two days before the publication of NFP, a governmental report called ADP is issued, which is kind of a preface of NFP, but they are not always correlated. For an example, last month the ADP came above expectations and two days later the NFP heavily disappointed with a way below expectations figure.  Your trading strategies should follow the following fundamental logic and I will take as an example EURUSD as it is the most tradable instrument in the world with a 24.1% of the global trading volume in 2013.

First of all, as in the case of every macro indicator, we have to focus on the forecasted value and the actual value. If the actual value will be reported above the expectations, then the American labor market is improving which means a stronger economy. The effect will be that the US dollar appreciates because investors will buy USD and sell EUR, causing EURUSD to drop. On the other hand, if the actual value is below the expectations, the major objective of the FED is more far away, so the economy isn’t that healthy the markets were expecting and the disappointed investors will sell USD and buy EUR, which means that overall EURUSD will appreciate.

Also, it makes for a big difference in the trading game to not overrate the effect of the NFP report because its publication has to be judged in the economical context of every month. As an example, in both January and February the NFP disappointed investors with a way below expectations figure, but the February one had less impact than the January because the markets kind of expected it. Why? The answer is that these weak numbers were caused by a seasonal external factor, which is the extremely cold weather the United States experienced this winter.

It is important to master this kind of subtleties and apply them in your trading strategies as you will become more profitable in time. I am ending this article telling you to be careful with your trading strategies when the NFP is released next month and beware of the markets mood.

The post EUR/USD News Trading – US Labor Market appeared first on investazor.com.

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A 19 Billion Dollar Small-Cap Winner

By MoneyMorning.com.au

As an investor, analyst and market-watcher there’s nothing we find more exciting in the world of finance than small-cap stocks.

We know, small-cap investing doesn’t sound very sophisticated.

It doesn’t have the same mystique as FX or bond trading. And you won’t find many small-cap analysts occupying the guest seat on Bloomberg or CNBC.

But give us small-cap stocks any day. Whatever the industry, we don’t care. All we want to know is that whatever company we analyse has the potential for investors to use small stakes to make big returns.

That’s exactly what we’re seeing in the small-cap sector today, and a US$19 billion ‘small-cap’ takeover proves it…

You probably think we’ve gone bonkers. How on earth can a US$19 billion takeover be a ‘small-cap’ opportunity?

After all, applied to the Aussie market, there are only 12 stocks on the ASX with a market cap greater than US$19 billion. Those stocks are the likes of BHP Billiton [ASX:BHP], Commonwealth Bank of Australia [ASX:CBA], and Woodside Petroleum [ASX:WPL].

And yet when we refer to a US$19 billion small-cap takeover we mean it. Let us explain.

A Great Deal if Revenue and Profits Don’t Worry You

You’ve probably seen the news. Social networking giant Facebook Inc [NASDAQ:FB] is paying US$19 billion for mobile messaging firm WhatsApp Inc.

Founders Jan Koum and Brian Acton set up WhatsApp in 2009. Since then they have built up a customer base of 450 million people around the world.

A measure of the company’s success and growth is that they’re adding one million new users per day to their messaging service.

It’s a great business. Well, OK, it’s only a great business if things like revenue and profits don’t concern you. WhatsApp has negligible revenue so far as it provides its messaging service for free in the first year and only charges a nominal $1 for each subsequent year.

For that, Facebook is paying – we’ll say it again – US$19 billion in cash and shares. That values WhatsApp at about one-tenth the size of Facebook, and even if we assumed all of WhatsApp’s users paid one dollar per year (which they don’t), it would still be barely one-twentieth of Facebook’s revenue last year of US$7.9 billion.

So, what’s going on and what’s the takeaway from this?

Most analysts and investors will look at those numbers and scoff.

They’ll laugh at the expensive valuation. They’ll scratch their heads and wonder just how WhatsApp and Facebook can possibly make any money from providing a free messaging service.

And they’ll raise their noses in the air and tell their clients not to invest in such crazy ideas.

Well, that’s up to them. But as a speculator, as someone who enjoys the thrill of finding tiny opportunities that could one day turn into multi-billion dollar takeover targets, we love it.

Because despite the current price tag, WhatsApp is a small-cap story from start to finish.

There’s Only One Way to Get These Returns

You may not remember this far back, but when Facebook floated on the NASDAQ exchange back in 2012, we were one of the few analysts who suggested investors should go ahead and have a punt. We said the same thing about the Twitter [NASDAQ:TWTR] float last year.

That flew right in the face of the mainstream, who said they’d never touch Facebook or Twitter shares with a bargepole.

For a while they were probably right. Facebook shares sank for the better part of a year after listing. But around the middle of last year things started to turn as the company’s mobile advertising strategy began to pay off.

Over the past year Facebook shares have gained 140%. That’s a poke in the eye to those who say there’s no money investing in tech and social networking stocks. And after a poor start, Twitter is up 26.1% since it listed, beating the S&P 500 by 21 percentage points.

But if you think that’s a pretty good return, consider the return for the private equity firms that invested in WhatsApp.

As we mentioned, WhatsApp has only been around since 2009. Two years later in 2011, venture capital firm Sequoia Capital poured $8 million into the company in return for a 15% stake in the company. If you do that maths, that investment effectively valued WhatsApp at US$53.3 million.

That’s a small-cap valuation.

Now Sequoia Capital’s investment is worth US$2.85 billion. So when it cashes in its chips following the Facebook takeover, it will have made a 35,525% return on the initial stake.

That’s a small-cap style return.

Big Returns are There for the Taking

Of course, everyone would like to make a 35,525% return. But not everyone has the bottle to take the risk in advance.

Think about it. If founders Jan Koum and Brian Acton had approached you in 2009 saying they were after investors for a product they would provide for free, that wouldn’t contain any advertising, and that if customers stuck around for a second year of using this service they would pay just one dollar, would you have invested in their business idea?

Most people wouldn’t. And yet that’s the kind of risk small-cap investors take on a daily basis.

Many small-cap stocks have little more to their name than the promise of future riches. Sometimes the companies break that promise as they don’t reach their potential.

But sometimes the companies keep their promise and the stock takes off. Maybe you don’t get the 35,525% returns. Those gains are hard to come by. But if you have the attitude to risk that you need to be a small-cap investor, then big triple- or quadruple digit percentage gains aren’t just possible, they’re there for the taking.

That’s what small-cap investors search for…constantly. They’re after the opportunity to make big gains. And as the Facebook and WhatsApp deal show, these kinds of big transactions can happen.

As a risk versus reward proposition that’s pretty good in our book. So, pin-stripers on Martin Place can deal with what they consider to be the ‘sexy’ stuff such as derivatives. Good luck to them. But we’ll stick with what we know best, and with what we know works best in terms of speculation…and that’s small-cap stocks.

You don’t get US$19 billion small-cap takeovers every day, but when you see them, and you see where the target company has come from, it’s a great vindication for those looking to <a
rel=”nofollow” href=”http://ift.tt/1dU9JQv” target=”_blank”>build speculative wealth in the tiny end of the market.

Cheers,
Kris+

Special Report: 2014 Predicted

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How the US Fed Conquered the Markets

By MoneyMorning.com.au

There’s something strangely appealing to me about a symmetrical chart. As an investor, I’m always looking to see what trends can tell me about the future. Is there method in the madness? …And how can I profit?

What follows is probably the most important chart for any investor today – the 10-year US treasury interest rate. It’s what investors demand in return for lending the US government their hard-earned cash for a period of 10 years.

Why is it so important? Well essentially, it’s this asset that determines the price of all other assets. If this chart takes off then – all other things being equal – just about every other asset will tumble.

So, what information can we glean from this wonderfully symmetrical chart? And should we be concerned about that little inflection you can see right at the end?

Up and Down: 60 years of Faith in the System


Source: St Louis Fed, MoneyWeek edits
Click to enlarge

The chart above pretty much plots our confidence in the system – that is, how much we investors trust the government. How much do we ask in compensation for lending to these guys?

Well as you can see, following the Second World War – the far left of the chart – belief in the US government was strong. The rate on the 10-year treasury was as low as it is today. The system was working…and working well.

From this point, it took some 27 years for successive governments to lose all faith.

The 70s were particularly unkind to the US. Both investors and the public lost confidence in the system and inflation spiralled. As you can see, rates on government bonds went through the roof as a result.

The situation was much the same in the UK. Higher rates led to recession (represented by the grey bars in the chart) and the outlook was grim.

First Came The Years of Plenty

Then in 1979, Paul Volcker took the reins at the US Fed. Together with Reagan’s government, he set about rebuilding faith in the system. Pursuing monetarist policies (a strong currency…the opposite of what we have today!) they began to restore confidence in money itself. No matter what your political opinion, the chart is pretty unequivocal…in the years that followed, investors were increasingly happy to lend to the government…and to do so at an ever-reducing rate.

Again, this downward slope on government yields was similar for much of the West. Triumph in the Cold War, the fall of socialism and growing faith in the capitalist system all helped to win over investors.

Academics even came out with hypotheses suggesting that lending to government was risk-free. As such, pension funds and insurers filled their boots. Rates on government bonds went down, governments borrowed with impunity…everyone was happy.

But our Time was up – and Markets Crashed

Well, following decades of falling yields on government bonds, the time finally came. A meltdown in the capital markets wiped trillions off the value of everything.

And as we all know – rather than risk shaking the faith – the central planners went about falsifying the yield curve. They printed more and more money to buy government bonds and force rates to stay low. That was, and is still, their plan.

Many players in the markets fear that the yield curve is about to break out and head north. Tapering talk has already started the process…you see, at the far right of the chart? Yields are rising!

The Central Planners Can’t Stop Now

But it is my contention that the yield curve cannot be allowed to be set loose. That would surely bring about a meltdown in the system. This is why I maintain my position that tapering is a con. 

Of course there will be ramifications to all of this money printing. In fact I suspect that’s what’s spurring on the gold market right now.

Now, let’s look at the chart again. Our central planners are hardly likely to let the last 27 years of hard work go to waste, are they? The last five years have proved that. Then again, if you think these guys really are about to let go – and many investors do – you should place your bets accordingly. What does that mean? Sell up…and sit on cash.

As for me, however, I’m staying put. I’m aboard the planners’ rollercoaster. It’s going to be quite a ride, as these boys fight the markets at every turn trying to keep that damned yield curve from rising! But I just don’t believe that after decades of keeping rates low, central planners are going to throw in the towel that easily…so I’m staying in the stocks game.

Bengt Saelensminde,
Contributing Editor, Money Morning

Ed note: The above article was originally published in MoneyWeek.

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Uranium Supply Disruptions Spell Opportunity for Investors: David Talbot

Source: Tom Armistead of The Energy Report  (2/20/14)

http://www.theenergyreport.com/pub/na/uranium-supply-disruptions-spell-opportunity-for-investors-david-talbot

A supply crisis is looming in the uranium industry, and today’s uranium price, stagnant at an eight-year low, will shoot up quickly when restarts of Japanese nuclear power plants bring back demand with a vengeance, David Talbot tells The Energy Report. Talbot, a geologist and senior mining analyst at Dundee Capital Markets, is excited about the potential of Canada’s Athabasca Basin, the world’s most prolific uranium source. But beyond the pounds in the ground, he sees money to be made in undervalued companies.

The Energy Report: David, welcome. Let’s start with the big picture: What is the general outlook for uranium in 2014?

David Talbot: Thank you, Tom. The long-term outlook on the uranium market remains the same at US$65/pound ($65/lb) U3O8. I think a new reality in the near term has set in. The uranium price has dropped significantly and now appears stable at levels not seen for almost eight years. We believe much of this has to do with the lagging Japanese restarts, cash-strapped sellers impacting the market and probably most important, near-term demand is lacking. We do expect uranium prices to rise, and relatively quickly when they do, but for right now, uranium prices will remain leveraged to the news of the Japanese reactor restarts and a return to term contracting by utilities.

“Energy Fuels Inc. is one of our favorite stocks in a low uranium price environment.“

This thesis underpins our $42/lb price estimate for the year, with prices to about $48/lb by Q4/14. When restarts might occur remains the million-dollar question, perhaps starting mid-2014, but the indicators out of Japan are that the government is committed to bringing its nuclear fleet back online now as the 17th and 18th reactors have applied for their restarts. We’ve had ongoing reviews. They were expected to take about three to six months, and now we’re in month eight. So when they start isn’t quite certain, but they are moving in the right direction. Their return should actually coincide with the return in contracting, almost completely absent last year as massive uranium requirements loom. We’re seeing about 180 million pounds (180 Mlb) due, expected by the 2016–2018 period.

TER: What are the major influences in the uranium market today?

DT: Supply remains a wild card and probably the most important factor, hence the focus of our recent comprehensive sector report. Mines are currently being taken offline, deferred or cancelled altogether. But long-term fundamentals underpin our belief that a uranium supply deficit starting in 2016 will likely increase by 2020, at which time we think we’ll see a deficit of about 16 Mlb. So we remain adamant that uranium supply is threatened by current uranium prices, regardless of the difficulties of the mining industry and challenges in permitting. This continues to set the stage for the supply crisis, particularly in light of dwindling secondary supplies as the Highly-Enriched Uranium (HEU) Purchase Agreement has come to a close, taking 24 Mlb/year with it.

The other part of the story is timing. We anticipate Japanese restarts to be the catalyst to kick-start uranium buying and contracting, but the lack of deals in 2013 resulted in the elevated uranium requirements that utilities have mentioned. This means that once the pendulum shifts back, it will shift quickly, and prices will probably rise at quite a torrid pace.

TER: Do you expect that 16-Mlb deficit in 2020 to draw more explorers and producers to the industry, or just to create more opportunity for the current players?

DT: Once the 16-Mlb deficit comes closer, we would expect development for some projects to perhaps expedite on the back of stronger uranium prices. But most of the new supply we see over the next few years is from existing producers, mainly expansion of existing projects, Ranger 3 Deeps, for example, or Cigar Lake. We do model some marginal players coming on-line, like Toro Resources Corp.’s (TRK:TSX.V) Wiluna project, or perhaps with some of Energy Fuels Inc.’s (EFR:TSX; EFRFF:OTCQX; UUUU:NYSE.MKT) conventional assets in the U.S. But that’s a relatively small amount of production and certainly not enough to close the gap. We do think that uranium prices are going to be what’s required to incentivize investors. Certainly, there will be a new set of explorers set up as exploration funding comes in. Just look at the explosion of junior exploration companies around the Patterson Lake South discovery. So should uranium prices rise, we would expect investment in the sector and exploration spending to increase.

TER: What was the mood at the NEI Nuclear Fuel Supply Forum in Washington, D.C., in January?

DT: Remember that the Nuclear Energy Institute is an American association that promotes nuclear power to Congress, the White House, state policy forums and the general public. So its message is typically well scripted and relatively even-keeled, and delivered nonpromotionally. I think that feelings were mixed. There were a few uranium-sector participants. In late January, the sector was flying high, so sentiment was generally positive. This was also after the Uranium Participation Corp. (U:TSX)financing, which more than suggests that investors will be coming into the sector shortly as Uranium Participation is mandated to spend about 85% of its raise on purchasing uranium. So at that time, the stocks were doing quite well, and the fundamentals of supply and demand are generally unquestioned by that group of people.

Richard Myers discussed the U.S. nuclear program. He’s vice president of policy development at NEI. His message was similar to the one he provided last year at the World Nuclear Association Symposium in London. He started by saying U.S. nuclear power plants are operating well at about 90% of their capacity factor.

Right now in the U.S., they are currently shutting five reactors. These are typically older, smaller, single units that are mostly at risk but, also, larger, multi-unit sites are struggling under current regulations. Essentially, electricity prices are being suppressed by state mandates and federal subsidies. So price signals right now are inadequate to support existing power plants and investment in new capacity. He suggested that all electricity should not be treated the same. Nuclear has some very important attributes that are not being monetized. It’s baseload; it provides grid stability, price stability, clean-air compliance, technical and fuel diversity and a huge tax base. So failure to address the importance of nuclear as baseload electricity will compromise reliability, introduce price volatility and frustrate efforts to decrease carbon emissions. This, of course, could have a negative impact on the U.S. uranium requirements, currently in the 45–50-Mlb range.

TER: Dundee Capital Markets was expecting 87 Mlb new production from 22 uranium operations between 2007 and 2013, but only 17.8 Mlb materialized. What happened there?

DT: I think this is the trend in the industry. You’ll see these plans to develop uranium projects and, ultimately, a fraction of that effort ever materializes. Many of those mines that we expected to come on-line in 2007 never started. In one or two instances, there were technical issues. The timing of that report also coincided with the global financial crisis in 2008, so that was certainly one of the main factors. Capital dried up. But in general, development is becoming much more expensive, with timelines for projects ranging up to 15 years or more between discovery and production. That’s because of several challenges that face the uranium space. You have increasing environmental and regulatory constraints. Public perception has darkened post-Fukushima. Significant community consultation is now required, and stringent radiological and groundwater controls are being put in place. Detailed tailings management plans are required, and comprehensive decommissioning strategies with upfront financial commitments are now commonplace.

TER: You mentioned the high costs of development. What role does the Canadian Non-Resident Ownership Policy play in that?

DT: That policy states that a foreign company cannot own 50% of a uranium project. This hasn’t concerned me too much in the past. It is just a policy. We have seen some companies get around that policy, not necessarily grandfathered but just moving toward the expectation that that policy will not be there when they need to go and get their licenses. For example, you have AREVA (AREVA:EPA) moving forward its Kiggavik development project in Nunavut Territory. You have Paladin Energy Ltd. (PDN:TSX; PDN:ASX) moving forward its big project in Labrador called Michelin, formerly an asset of Aurora Energy Resources Inc. More recently, we’ve seen Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) come in and take out Hathor Exploration Ltd. for its Roughrider deposit. So there are foreign companies that are acting in Canada. They’re acting as if this policy will be overturned and, certainly, the Saskatchewan government would like to have it overturned.

TER: Is the uranium market heading for a wave of mergers and acquisitions (M&A) to achieve efficiencies of scale and maybe increase production capability in a low-price market?

DT: We do expect further consolidation. Financing is more difficult than ever. Project timelines are lengthy and costly. With some companies unable to secure supplies to advance projects, we expect further delays and/or corporate insolvencies. What often happens is the predator comes in and takes out its prey at pennies on the dollar relative to its underlying net asset value (NAV).

Many certainly look at Cameco (CCO:TSX; CCJ:NYSE) as the top predator. With about 1 billion pounds (1 Blb) in resources and reserves, it says it doesn’t need more pounds in the ground, but bolting on production makes a lot of sense to us. Cameco has long said it seeks more production growth in the U.S., and while some of that’s happening through organic growth, newer companies like Uranerz Energy Corp. (URZ:TSX; URZ:NYSE.MKT) and Ur-Energy Inc. (URE:TSX; URG:NYSE.MKT) look exciting to us. You also can’t count out Denison Mines Corp.’s (DML:TSX; DNN:NYSE.MKT) Phoenix project in the Athabasca Basin. Cameco is a partner there, but that’s the world’s third highest-grade project at 16% U3O8. There are about 60 Mlb there right now. Plus, Denison has interest in the McClean Lake mill, and I know Cameco would probably be interested in having a feed at the mill that is processing its own Cigar Lake ore.

TER: Energy Fuels is trading around CA$9.50 now, but your target is CA$17. Why is this company so undervalued?

DT: I think part of it has to do with the general downdraft in equities, but Energy Fuels, in particular, did have a few events leading into 2014 that put some pressure on the stock. That included a selloff after a four-month hold on its June 2013 private placement. Strathmore shareholders were selling post-deal, post-acquisition of Strathmore. There was also pressure after its 50:1 rollback, as expected. Another part of this could be just the general unfamiliarity with this name. This is a company that has a number of small-scale operations with different incentive price levels, all feeding into the White Mesa mill. So production is often not year-round, but happens in runs or batches. This combines with alternate feed material runs.

TER: What are Energy Fuels’ strengths and its weaknesses?

DT: I think Energy Fuels has several strengths that make it one of our top picks. It is one of our favorite stocks in a low uranium price environment, as the company is effectively 100% hedged at around $60/lb uranium. But we also like it for its significant leverage to rising uranium prices, given its ability to easily turn on its brownfield projects at minimal cost. Primary standby mines—Pandora, Beaver, Daneros—all have potential to produce between 200–500 thousand pounds (200–500 Klb)/year. Canyon could add another 500 Klb/year once it’s developed. So its White Mesa mill has a license capacity of 2,000 tons per day and can produce about 8 Mlb/year. Costs have also come down about 18% quarter over quarter to $32/lb.

But there are some risks, of course, with small, higher-cost conventional mines. The production profile hinges on milling and trucking costs. So with about 50% of our valuation dedicated to these projects and then 50% delegated to greenfield projects, development risks must also be taken into account. Those include permitting, financing, economics, timelines and so on.

TER: What is the significance of the Patterson Lake South discovery for Fission Uranium Corp. (FCU:TSX.V)?

DT: We believe the Patterson Lake South discovery is very significant, probably the largest since Hathor’s Roughrider discovery, and we all know what happened with that one. It sold for $680 million ($680 M) to Rio Tinto. At that time, it wasn’t much bigger than where we think Patterson Lake South is now. So we do have a Buy on Fission as a result of its Patterson Lake South project. It’s shallow, high grade, thick; it has all the hallmarks of a great project. Not only that, but it’s also located in the Athabasca Basin, which hosts a supportive government, excellent infrastructure, capacity at existing mills and a solid permitting framework.

At Patterson Lake South right now, all six zones lie at or near the surface, and they are only drill limited at this point; they’re not cut off. We anticipate that several of these zones will probably tie together, creating a much larger, single deposit. It’s still in the early stages of delineation. Aggressive drilling is underway in preparation for an initial resource. We speculate we might see that early next year. Right now, we estimate about 43 Mlb grading 2% uranium. The grade goes up significantly if we use a higher cutoff grade, but the pounds in the ground aren’t impacted that much. So right now, it’s looking like a great, high-grade uranium deposit.

TER: Does that make Fission Uranium a likely takeout target?

DT: We’ve always felt that Fission is a potential takeover target. Given its grades and shallow depth, Patterson Lake South has potential to become an economic deposit, capable of supporting not only construction of a mill. But, also, perhaps even more attractive is that this near-surface deposit may require relatively smaller upfront capital and could provide feed to an existing mill and be run at irregular intervals, essentially delivering high-value material over great distances when it’s necessary. So we believe that Patterson Lake South and Fission, for that matter, make sense as a target for anybody that wants to set up shop in what is the underexplored western side of the Athabasca Basin.

TER: You changed your rating on UEX Corp. (UEX:TSX) very quickly. Why?

DT: We did an about-face on UEX not long after reducing our target and recommending it as a Neutral due to unexpected news of a slowdown and competition from fresh discoveries, like Patterson Lake South. But we now rate UEX as a Buy with an $8 target price. While we didn’t change our discounted cash flow model, the new CEO, Roger Lemaitre, brings depth to this company that it hasn’t seen before. With his vast industry experience as Cameco’s exploration director and the fact that UEX has almost $9M in cash, I think he’s going to turn the company’s attention to new discoveries and potential M&A activity. His familiarity with Cameco is certainly an asset. But I think we still need to see some execution here by UEX to leverage its attributable 85 Mlb in resource plus its past exploration success into something new and accretive for shareholders. Meanwhile, Shea Creek is open in multiple directions. It does have a current resource of about 96 Mlb. As UEX decides to take its direction, I think it will remain focused on the Athabasca Basin. I think it will likely seek synergistic projects.

TER: Are you excited about any other uranium companies?

DT: There are two others. Ur-Energy—we have a Buy on this one. It has a $2.20 target price. Ur-Energy is our top pick in the sector right now. This is a U.S.-based, Wyoming-based, in-situ recovery producer. It officially entered production last year. Early indications are the well fields are performing exceptionally well. It produced 135 Klb last year. We expect about 1 Mlb this year, 1.2 Mlb next. Flow rates and front end are operating above expectations. The back end elution and precipitation circuits are performing as designed. Notably, head grades have been significantly above expectation, leading to less header houses and volumes that are required, pointing to lower costs. Right now, the company sells about 40% of its production forward at about $60/lb between 2014 and 2016, so it makes Ur-Energy less sensitive to spot price fluctuations than some of its peers. It’s actually getting prices much, much higher than spot. It was in the $63/lb range for last quarter. Shirley Basin is another project it just purchased. That could be up next. It could come online by 2017, ramping up to 1 Mlb/year within a couple years there. Ur-Energy trades at a discount to its producer peers.

Another company here: We recently initiated full coverage on NexGen Energy Ltd. (NXE:TSX.V). We’re recommending it as a Buy, no target price. The company has two high-quality assets in the right locations. Rook I is adjacent to Fission Uranium’s Patterson Lake South discovery. NexGen could potentially have the best claims in the area aside from Fission itself. The second project is the Radio property. That’s located on the Roughrider Midwest trend on the eastern side of the Athabasca Basin. That project is within 10 kilometers of 150 Mlb of uranium resources. First drilling at Rook I tested three conductors that lie directly east of Fission’s Patterson Lake South discovery in the Athabasca. With 12 holes, it hit the right graphitic basement rocks, shallow structures and modest alteration, and elevated uranium mineralization was confirmed in three holes and somewhat significant in one of those. Follow-up drilling has made a potential uranium discovery (pending assays) that is not only a game-changer for NexGen, but for the western side of the Athabasca Basin. What’s more impressive is that it was the first hole drilled into Target C, now called Arrow, that hit.

Further drilling is required and NexGen has suggested that it will commit more resources to follow up. The Radio project is essentially on hold with earn-in commitments delayed, allowing the company to focus on the Rook project. NexGen has experienced management and quite a deep technical team, including ex-Hathor and Rio Tinto geologists who really know the region.

TER: Do you have any parting thoughts to share on the uranium market generally?

DT: I think it all hinges on supply. Demand is relatively consistent. It’s predictable, Japan restarts notwithstanding. But I believe it’s the strengthening fundamentals based on supply that really drive this. Mines are closing. We’ve seen Zarechnoye close, La Sal, Beaver, Pandora, Daneros. Projects are being deferred, big projects including Olympic Dam, Trekkopje, Imouraren, Cameco’s Double U, plus no more Kazakhstan production. The HEU agreement is gone, and we’re getting unexpected disruptions, such as Ranger, Rossing, Cigar Lake and assets in Niger. So I think investors should focus on that. When uranium prices come back, I think they’re going to come back quite quickly, not because Japan is going to come back seeking supply but because the other 90% of the world hasn’t been buying like it should.

TER: Thanks for sharing your thoughts.

Dundee Capital Markets, V.P. and Senior Mining Analyst David Talbot worked for nine years as a geologist in the gold exploration industry in Northern Ontario. David joined Dundee’s research department in May 2003, and in the summer of 2007 he took over the role of analyzing the fast-growing uranium sector. David is a member of the Prospectors & Developers Association of Canada, the Society of Economic Geologists and graduated with distinction from the University of Western Ontario, with an Honors Bachelor of Science degree in geology.

Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

DISCLOSURE:
1) Tom Armistead conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family owns shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: Energy Fuels Inc., Fission Uranium Corp., UEX Corp., Uranerz Energy Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) David Talbot beneficially owns, has a financial interest in, or exercises investment discretion or control over, companies mentioned in this interview: Fission Uranium Corp. Dundee Capital Markets and its affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by, mentioned in this interview: Energy Fuels Inc. Dundee Capital Markets has provided investment banking services to companies mentioned in this interview in the past 12 months: Energy Fuels Inc., Uranerz Energy Corp., Denison Mines Corp. and Fission Uranium Corp. All disclosures and disclaimers are available on the Internet at www.dundeecapitalmarkets.com. Please refer to formal published research reports for all disclosures and disclaimers pertaining to companies under coverage and Dundee Capital Markets. The policy of Dundee Capital Markets with respect to Research reports is available on the Internet at www.dundeecapitalmarkets.com. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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GBPJPY: Vulnerable But Retains Its Broader Long Term Uptrend Bias

GBPJPY – The cross remains biased to the upside in the medium and long terms but now faces corrective downside. In order for it to resume its uptrend, it will have to break above the 171.15/87 levels. A breach could force further upside towards the 172.50 level. Further out, resistance resides at the 173.64 level. Its daily RSI is bullish and pointing higher supporting this view. Conversely, support comes in at the 169.11 level where a break will aim at the 168.00 level and then the 167.19 level. Further down, support resides at the 166.14 level, its Feb 07 2014 low with a break targeting further downside towards the 166.00 level. All in all, the cross remains biased to the upside in the long term.

Article by www.fxtechstrategy.com