Fibonacci Retracements Analysis 30.04.2014 (EUR/USD, USD/CHF)

Article By RoboForex.com

Analysis for April 30th, 2014

EUR USD, “Euro vs US Dollar”

Eurodollar rebounded from local level of 78.6% (1.3879) and continued falling down. Most likely, price will break minimum during the day. Main target is the group of fibo levels at 61.8% (1.3760).

As we can see at H1 chart, lower target area is formed by four fibo levels. According to analysis of temporary fibo-zones, predicted targets may be reached during the next couple of days.

USD CHF, “US Dollar vs Swiss Franc”

After rebounding from local level of 78.6% (0.8768), Franc started moving upwards. Main target for the next several days is the group of upper fibo levels at 0.8885 – 0.8880. If price rebounds from them, market may start deeper correction.

As we can see at H1 chart, Franc is consolidating. Possibly, price may reach new maximum on Wednesday. According to analysis of temporary fibo-zones, upper target levels may be reached until the end of this week.

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.

 

 

 

 

 

USD Up Against Euro With Weak German Inflation Report

By HY Markets Forex Blog

Forex options traders should continuously follow economic indicators in the euro zone and U.S., as these reports can provide valuable information on the direction of market movement.

With weaker than expected German inflation data, speculation in the currency markets is that the European Central Bank may loosen monetary policy, according to Reuters. As a result, the dollar rose against the euro in late April. The dollar was also up against the Japanese yen.

“If inflation comes in too low, that raises expectations the ECB will lower rates or take other steps that will hurt the currency,” Eric Viloria, currency strategist at Wells Fargo Securities in New York, told Reuters. “Germany is Europe’s biggest economy, and we will be watching what happens.”

However, weak German inflation doesn’t mean the euro zone isn’t going to make progress in the near future. Therefore, forex options traders shouldn’t think it is a sure thing that the dollar is going to continue to climb against the euro.

In fact, ECB Vice President Vitor Constancio said the euro zone has made progress recently, as banks are repaying long-term loans and rebuilding investor confidence, according to the Wall Street Journal.

“Given where we stood barely two years ago – on the edge of redenomination risks – such progress is encouraging,” he said. “However, it does not mean we are entirely out of the danger zone.”

With the potential for future improvement, investors will want to keep a close eye on euro zone economic indicators. For example, future inflation reports could signal momentum that could push the euro in a positive direction against the dollar – important information for binary options traders.

The post USD Up Against Euro With Weak German Inflation Report appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

What America’s Energy Blunder Means for Oil

By MoneyMorning.com.au

Here’s a quiz for you.

Can you name the top three countries by proven oil reserves?

The top spot may surprise you. It’s Venezuela.

The number two spot is more obvious. It’s Saudi Arabia.

What about number three?

You won’t get this one. But don’t feel bad about it. The energy industry has gone through big changes in recent years, and even bigger changes are on the way…

It may surprise you to know that the country with the third largest proven oil reserves is Canada.

That’s an impressive feat for a country often disparaged as being the 51st US state, and for its people’s fondness for putting bacon on pancakes.

But it turns out there’s more to Canada than meets the eye. With 10.4% of the world’s proven oil reserves, Canada is ahead of Iran and Iraq, which have 9.4% and 9% respectively of the world’s proven reserves.

So just how did Canada quietly go about achieving this top three position?

Canada’s oil ‘miners’

Canada derives its strong oil position from the Alberta Oil Sands.

Put simply the Alberta Oil Sands (also known as the Athabasca Oil Sands) covers around 141,000 square kilometres in Canada’s Alberta province.

The oil sands themselves are a thick bitumen located near the Earth’s surface. In fact, due to the density of the oil sands, the most effective way of ‘mining’ the resource is to dig for it in the way a mining company would dig for coal, copper or iron ore.

Once they have dug up the oil sands, they transport it to a processing plant where they separate the oil content from the rest of the oil sands, and send it for refining.

The current and future development of Canada’s oil sands and the US’s shale gas resources creates an interesting prospect for the world’s energy supply.

It’s not so long ago that North America — the US especially — was facing an impending energy crisis.

The US was at the mercy of oil cartel OPEC. The cartel controlled the supply of oil and played a big part in setting the oil price. During the 1990s and most of the 2000s the market closely watched these meetings.

Today, does anyone pay attention to OPEC? Not really. Can you remember the last time you read a news story about an OPEC meeting? We can’t.

(By the way, the last OPEC meeting was on 4th December last year. The next meeting is on 11th June this year. You can expect today’s Money Morning to be the last time you read about the OPEC meeting in June, as nobody cares anymore.)

Thanks to the oil sands and shale gas, the North American energy market is starting to look a lot more stable. Or it would, except the US doesn’t appear to be in any hurry to secure its energy future.

If the US doesn’t want it, China will take it

The US has huge potential and proven reserves of natural gas due to its shale gas industry. The reserves of shale gas are so huge that the US could become energy independent within 20 years.

That’s providing the shale gas reserves prove to be as lucrative and economical as expected. However, while the US may become energy independent on paper, it still needs an oil supply. It can get oil domestically from onshore and offshore rigs.

But it will still need to rely on OPEC producers for the balance of supply. That’s what makes the US government’s decision not to prioritise the Keystone XL pipeline from the Alberta Oil Sands fields to refineries in Texas all the more surprising.

Legal challenges have held up the proposed pipeline due to its path through key farmland in Nebraska. In the old days, the Canadians may have just bided their time, not wanting to annoy their powerful neighbour to the south.

But things are different today. Today the US isn’t the only big energy buyer. That’s why the Canadian government is considering an alternative proposal. Rather than a north to south pipeline, the Northern Gateway Pipeline would stretch from Bruderheim in east-central Alberta to Kitimat on the coast of northern British Columbia, some 1,178 kilometres away.

The expected buyer of the crude oil will be growing Asian economies, in particular China.

Canada’s pain could be an oil investor’s gain

It’s not hard to see why the Canadians are so keen to monetise this huge proven resource. As we said at the top of this letter, the scale of the Alberta Oil Sands means that Canada has the world’s third biggest proven oil resource.

Estimates are that the Oil Sands contain 168 billion barrels of heavy crude oil. In dollar terms, according to Bloomberg News, failure to monetise this resource in one way or another could cost the Canadian economy CA$632 billion in foregone growth.

And seeing as the US currently accounts for 97% of Canada’s oil exports, any delays by the US will only make the Canadians more keen to sign a deal elsewhere…perhaps with China, which currently only takes 1% of Canada’s oil exports.

So, where are we going with this?

Well, it just goes to show how quickly markets can change. There’s a huge ‘stash’ of oil in Canada waiting to find someone willing to refine it and use it. But it needs the pipeline.

At first glance that may seem to be bad news. But it also creates opportunities elsewhere. For instance, in areas which don’t have infrastructure problems. That’s something resource analyst Jason Stevenson is closely looking at now. Already this year he has looked at several Aussie and overseas energy opportunities.

The bottom line is that regardless of what’s going on in the world of macro-economics and politics there will always be a demand for energy. That means there will always be the need for energy explorers and producers to find and finance new projects.

With the fall of OPEC’s influence, and new technologies making oil exploration possible in previously inaccessible places, other markets are looking to take up the slack. You can rest assured that if Canada drops the ball on its attempt to become an oil exporting giant, there are plenty of other markets primed to take Canada’s place.

The oil sector looks set to be one of the key resource opportunities for investors this year.

Cheers,
Kris+

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By MoneyMorning.com.au

Everyone Has the Argentine Economy Wrong

By MoneyMorning.com.au

They lead the chants, manage the supporters, unfold the flags and sell the choripán sandwiches. But the Barras Bravas — tough gangs — aren’t your average football fan club. They’re the reason why violence, perpetrated by an army of barra soldiers pumped up on drugs and cheap beers, has become an integral part of Argentine football.

The first time I worked in Argentina, I had a football column for a local English-language paper. At the time football violence was getting out of hand, so I was asked to write a piece on the Barra Brava gangs that were causing the trouble. What I discovered was a powerful football mafia network. Why would they want to control football clubs? Because of the chance to launder money, or make more from selling star players — a market worth $228 million in the first half of 2013 alone.

Many people believe that the rest of the Argentine economy is just as corrupt and risky as its football business. Bill Bonner, the founder of Agora inc. (the company which publishes Money Morning), for one, is famously bearish on Argentina.

Disagreeing with your boss is never a particularly smart career move — but sometimes you have no choice. While I respect Bill for carving out a huge international media empire — and making very many prescient investment calls along the way — I think he’s got this one wrong. On average, my Argentine tips are up by around 20% since I first started writing about them, and I think that brave investors, who are prepared to go against the consensus, could stand to make more in the future.

Argentina’s ‘century of decline’

Bill’s not the only one beating up on Argentina at the moment. A recent cover story from The Economist asked what other countries could learn from a ‘century of decline’, while most other mainstream financial media have a similarly bearish view on the place. And to be fair, when you have lived and worked in Argentina like I have, you can understand why it has so many critics.

I’ve already mentioned corruption in football but in my various spells in Argentina, I came across plenty more examples of the corruption that plagues the country and stops it fulfilling its true potential. I always remember when a friend of mine, who’d just graduated from a top university in Buenos Aires, found that he’d landed his dream political job. The post was his but only if he agreed to give the guy who was fixing it for him 10% of his wage for the rest of his career. ‘Don’t worry’, said his fixer, ‘you can make it back in the future when you help someone get a job.’ When idealistic young graduates are forced to accept corruption at that stage of their working lives, it doesn’t bode well for the rest of the system.

But the corruption doesn’t just concern politics; it pervades almost everything else.

These are just anecdotal examples of course. But they’re backed up by more comprehensive evidence. Transparency International ranks the country 106th out of 177 in its Corruptions Perceptions Index, while the World Bank scores it 126 out of 188 when it comes to the ease of doing business. Corruption happens everywhere but the fact that it is so endemic in Argentina is one reason that the country hasn’t always made the most of its incredible natural resources.

Another problem has been erratic swings in policymaking that have discouraged investment. In just two decades, investors in the country went from the ‘privatise everything that moves’ era of Argentine President Carlos Menem, to the more recent wave of nationalisations, import taxes and price controls. Ultimately, the Argentines are free to choose whatever system they like — and both can deliver prosperity. Moreover, large institutional investors or multinationals aren’t afraid of risk. Many are invested in countries that are far less appealing than Argentina. But the one thing they really dislike is uncertainty. And in recent years, there has been way too much of that in Argentina.

In a later spell in the country, when I worked for an oil magazine out there, I used to speak to oilmen that were fuming with the government. They had gone out and made investments under one set of conditions but then the rules of the game had been changed completely. As they pointed out, it ended up being a lose-lose situation because when the investments dried up, neither the government nor the energy firms were making any money.

Oil, gas and debt markets: the road to recovery

If you’ve read this far you’ll be wondering why I still see an opportunity. Well, I’ll be honest. I don’t see the corruption issue being solved anytime soon. Yet, as I’ve been writing for a while now, there are signs of a shift in policy.

One of Argentina’s biggest problems is its energy deficit. It spends around $10 billion on importing energy each year, which is then provided at subsidised prices to domestic users. But in the last year, the government has been taking concrete steps to correct this. A recent ruling allows producers to sell 20% of their oil and gas abroad at international rates, as long as they have invested $1 billion in the country, while local gas prices have also been raised. Crucially the government is planning to cut subsidies, which currently stand at 5% of GDP, in half to 2.5%. The government has also settled with Repsol — the Spanish oil firm that lost out when the government expropriated its share of the huge YPF oil company — and is looking to attract other international investors. For example, Chevron has signed a big shale gas deal out there. Meanwhile the newly nationalised YPF has started to boost output. These are all signs that Argentina will increase oil and gas production.

Given that the country has the world’s second-biggest shale gas deposits and fourth-biggest shale oil reserves, a change in policy could create an energy boom. This would also benefit the rest of the economy, as the government would have less need to control capital flight; it would have more money for infrastructure investment; and consumer spending would receive a boost. Indeed economic consultant firm, Capital Economics, believes that it could lift Argentina’s growth to around 5%.

Argentina’s other problem is international — that is to say its terrible relationship with the global financial community. Ever since its default in 2001, the country has been locked out of international debt markets. While the commodity boom was in full flow that didn’t seem to matter but now Argentina’s export earnings are falling, the government realises that being able to borrow has its advantages. But again, we can see signs of some improvement here. Economy Minister, Axel Kicillof, recently presented a repayment plan to the Paris Club — a group of rich country creditors — and is due to begin formal negotiations in May. The government has also improved its inflation statistics, a major bone of contention with the IMF.

People will tell you that Argentina has underperformed for ages. Perhaps, but the current energy crisis and international pariah status are actually anomalies in the country’s recent history. And when they are resolved, they will give a massive boost to the economy.

Don’t get me wrong, these firms could get hit in the short term as Argentina faces any number of risks. The country’s lack of access to dollars is slowly pushing it towards a balance of payments crisis and a bad soy harvest, Chinese slowdown or government-spending spree ahead of the 2015 elections could easily tip it into recession. It’s also possible that we could see a wave of strikes that would disrupt the economy. But in the medium term, if Argentina can solve its energy crisis and re-enter the global financial system, it looks likely to enjoy a solid recovery.

Some people might want to wait for the short-term risks to play out and hold out for the chance to buy into these stocks at a lower price. It’s a nice idea but timing these things is never easy. That’s why I think it makes sense to buy in now, sit back and wait for Argentina’s fortunes to improve.

James McKeigue,
Contributing Editor, Money Morning

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

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By MoneyMorning.com.au

Ed Sterck: Russian Sanctions May Have Utilities Squeezing Less Juice from Uranium Supply

Source: Tom Armistead of The Mining Report (4/29/14)

http://www.theenergyreport.com/pub/na/ed-sterck-russian-sanctions-may-have-utilities-squeezing-less-juice-from-uranium-supply

Russia is a commodities giant, but supply isn’t the major issue—enrichment is. With a 44% global market share, Russia’s enrichment industry allows utilities around the world to squeeze more juice out of fewer lemons. In other words, Russian sanctions could mean utilities may have to use more natural uranium to make lemonade. That’s how Edward Sterck sees it, and the uranium mining analyst for BMO Capital Markets predicts a supply deficit by 2018. In this interview with The Mining Report, Sterck delivers a comprehensive uranium market overview and shares uranium names that can juice profits in lean times.

The Mining Report: Edward, welcome. Russia is facing international sanctions. How will all this affect the uranium market?

Edward Sterck: It hasn’t yet had any impact. Sanctions haven’t been brought in that are affecting the Russian nuclear industry, but there is the potential for that to occur. Indeed Rosatom, which is the Russian state umbrella company that covers Russian nuclear activities, has made a statement to the effect that business is continuing as normal, including the delivery of nuclear fuel to Ukrainian reactors, but sanctions could affect its ability to make deliveries under current contracts to Western utilities and Western customers in general.

If that occurs, it isn’t likely to have an impact on the supply of natural uranium to the market, but Russia is the world’s biggest supplier of enrichment, and it has a number of western customers for that enrichment.

The potential for reduced availability of enrichment capacity to the West could have a knock-on effect on uranium prices. The way in which this could occur is a little complicated, but effectively if you’ve got reduced enrichment availability to make a required amount of nuclear fuel, you can compensate by using more natural uranium and then less enrichment. The analogy is that to make orange juice, you can either squeeze a given number of oranges to get a given amount of juice or you can use fewer oranges and squeeze them harder to get the same amount of juice. Effectively, if sanctions are brought in against Russia and they do encompass the nuclear industry there, we could eventually see a knock-on effect and an increased demand for natural uranium from western utilities.

TMR: And what about Japan’s restart?

ES: At the moment there are 17 reactors that have been put forward for the restart process. Two of them have been shortlisted for restart. Those two reactors are going through the final rounds of safety checks and public consultations, but unfortunately at this point we still don’t have a clear idea of what the timing would be. Prime Minister Shinzo Abe’s government is keen to see the first restarts before the summer, which is the period of peak electricity demand in Japan. If that occurs, we could see the first reactors restart around the middle of the year. Hopefully some further reactors restart after that.

In terms of what reactor restarts in Japan mean for the market, it’s more of a derisking event for the equities and probably won’t have an immediate effect on the uranium price. Since Fukushima, Japanese utilities have by and large continued to take deliveries of their contractual commitments, so they have accumulated quite significant levels of excess inventories. Their engagement in the market and their need for new material beyond what they’re already contracted to take will probably remain fairly suppressed for quite a few years to come, even after restarts have commenced.

TMR: Given the long-depressed uranium price, is that going to extend the doldrums for the price?

ES: Not necessarily. One of the impacts of the low price is that producers are beginning to shut down production. Some of the higher-cost operations, such as Paladin Energy Ltd.’s (PDN:TSX; PDN:ASX) Kayelekera project in Malawi, are being put onto care and maintenance. No new significant projects are being pushed forward at the moment for production. In this case, the knock-on effect of low prices is a reduced supply outlook.

Despite Japan, we do still have a nuclear industry that’s growing, driven mainly by China, but also by some of the Middle Eastern countries and a handful of other places. That does lead to future demand growth for natural uranium. On my estimates we end up in a situation where supply is insufficient to meet demand in 2018, and it enters a fairly deep and sustained deficit thereafter.

There are some positive price indicators. Last year the long-term contracting market was extremely quiet. Normally you’d see around 170 million pounds (170 Mlb) of uranium signed into long-term contracts, but the volume was only about 20 Mlb last year. Utilities appear to be pretty well covered for near-term requirements, and they were putting off signing contracts as a result. This year, the amount of contracting activity has picked up. A number of U.S. utilities in particular are coming to the market looking for long-term contracts, which suggests that they are beginning to feel that they are less well covered than they perhaps were at this time last year. It’s interesting to note that they are typically looking for new contracts on a fixed-price basis, which suggests that utilities think that prices probably have to rise at some point in the future as well.

TMR: Since you spoke with The Energy Report nearly two years ago, the uranium price has continued to trend lower. What has kept you interested in the uranium space?

ES: One of the reasons I’m interested in the uranium space, and also quite a number of investors are, is that when the uranium price moves, it tends to move quite dramatically. That also translates into movement in the share prices of the uranium mining equities. It’s a subsector of the mining space that’s worth keeping an eye on because there’s an opportunity there when it does begin to move.

TMR: What is the significance of Denison Mines Corp.’s (DML:TSX; DNN:NYSE.MKT) discovery at Wheeler River?

ES: It’s probably the best exploration project that Denison has. It’s a typical Athabasca-style deposit consisting of high-grade mineralization in quite a small area, which makes defining it quite tricky. It requires a lot of precision drilling. At the moment I’d say that the defined resource isn’t substantial enough for it to be a candidate for a development decision, but Denison has had some recent drilling results in a separate zone about 3 kilometers away from the existing resource that has returned some interesting hits that it plans to follow up on in the summer drilling program.

If Denison manages to expand the mineralization it has identified in that separate zone, it’s possible that it could get to the point where Wheeler River reaches a critical mass. I think it would probably also require higher uranium prices than what we see today, but to be completely honest, that’s probably the same as any uranium exploration project right now. I can’t see anyone pushing ahead with development decisions at $35/lb U3O8. Given mining costs, you’d have to have a very special project indeed to make that sort of decision.

TMR: What is Denison after in acquiring International Enexco Ltd. (IEC:TSX.V; IEXCF:OTCQX; I6E:FSE)?

ES: Denison has made a few acquisitions over the last 18 months or so. I think that International Enexco falls into its strategy of building a substantial land package in the Athabasca. It’s about controlling acreage and building up an interesting exploration portfolio. Denison has also acquired some companies with assets in Africa. The company has said that its plan is to become an Athabasca-focused exploration company and then potentially spin out its African assets as a Denison Africa stock play.

TMR: What’s the thinking behind your market perform recommendation on Paladin Energy Ltd. (PDN:TSX; PDN:ASX)?

ES: Paladin is in an interesting but slightly tricky place right now. It’s got two producing assets, one of which, as I mentioned earlier, is being put on care and maintenance, but operationally it has made some significant improvements at both its cornerstone projects, Langer Heinrich and Kayelekera. It has been driving down operating costs. Langer Heinrich, the operating mine, is still the focus. Paladin recently sold a minority stake in that to raise some cash.

Paladin’s balance sheet is somewhat stretched at the moment. It took on a lot of debt during the uranium boom to build these mines, and the cash flows in this uranium price environment have not allowed Paladin to meaningfully pay down that debt. That’s the rationale behind the market perform.

The projects look interesting, albeit that Kayelekera is on care and maintenance at the moment, and certainly have a long-term strategic value. If we see the uranium price go up, you’ve got a ready-built mine with a 3 Mlb capacity at Kayelekera, and Langer Henrich has several decades of resource life. The challenge is that leveraged balance sheet, so the market perform reflects the two conflicting attributes of Paladin: the positive attributes and then the negative attributes of the balance sheet.

TMR: What is the significance of Cameco Corp.’s (CCO:TSX; CCJ:NYSE) startup of its Cigar Lake mine?

ES: It’s a pretty significant project, almost on par with its biggest operation, McArthur River. It should be a relatively low-cost operation, coming into the first quartile of the cost curve once it’s at full steam. Cigar Lake is an important project for Cameco for future cash flows. It replaces the material that Cameco benefitted from through the Megatons to Megawatts deal between the U.S. and Russia, where Russian warheads were being downblended and sold to western utilities. Cameco was one of the conduits for that uranium to reach the market. The company is now working through the last of the inventory from that. Cigar Lake is a pretty key project for Cameco, and for nuclear utilities of the world.

TMR: AREVA SA (AREVA:EPA) has the McClean Lake mill near the Cigar Lake startup. Is CIgar Lake going to significantly increase the value of that mill?

ES: I think the value of McClean Lake is one that will benefit from Cigar Lake material going through it, but it also benefits more from a strategic value, which is quite hard to put a dollar figure on. It’s one of only two mills up in that part of Athabasca; the Rabbit Lake mill is not too far away from there. I think permitting a new mill today in that area with a new tailing facility would probably be challenging. If we look at the other projects that might be developed in that region, the likelihood is that you’d probably have to toll treat material through one of the existing mills. That’s really where the strategic value of McClean Lake comes in.

TMR: Are there any other companies in your uranium coverage universe that you see as attractive takeover prospects?

ES: At the moment, not really. I think most companies have their heads a bit below the parapet. We are seeing a bit of consolidation in the mid- to small-cap space, but it’s mainly Denison taking over smaller companies. Within the larger caps, I would expect the status quo to continue. If we saw uranium prices fall further and Paladin was looking more and more distressed due to the balance sheet, then someone could make a low bid for them. I’m not sure we’re there just yet. I think that would require a lower share price than where we stand today.

TMR: Do you see any really exciting companies in your coverage universe that we haven’t discussed?

ES: I think if the uranium price goes up, most of the uranium equities should benefit. It just comes down to everything being somewhat hinged on the uranium price at the moment. I’m waiting for that turnaround to occur.

TMR: I’m impressed with what we’ve covered today. Thanks for your time.

ES: You’re welcome. Thank you.

Edward Sterck covers uranium, diamond, platinum group metal and European copper mining companies for BMO Capital Markets. He joined BMO in 2007, prior to which he was a mining analyst at Hargreave Hale. Before working in mining research, he spent more than four years trading government bond futures on a proprietary basis. Edward holds a Bachelor of Science in geology with honors from the Royal School of Mines, Imperial College London.

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DISCLOSURE:

1) Tom Armistead conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.

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New Melanoma Therapies Are Ready for Primetime: Sanjiv Agarwala

Source: George S. Mack of The Life Sciences Report (4/29/14)

http://www.thelifesciencesreport.com/pub/na/new-melanoma-therapies-are-ready-for-primetime-sanjiv-agarwala

Melanoma confronts patients and their physicians with unique barriers to treatment and successful outcomes. In this interview with The Life Sciences Report, Dr. Sanjiv Agarwala, chief of medical oncology and hematology at St. Luke’s University Hospital, illuminates some of the new paradigms being developed in the treatment of this deadly skin cancer. Along the way, he spotlights interesting work in the field.

The Life Sciences Report: You have been a principal investigator in several different clinical trials exploring skin cancers and their metastatic manifestations. Because of your position at a major teaching institution, do you see mostly advanced-stage or late-stage patients? Are you ever able to see early-stage or treatment-naďve patients?

Sanjiv Agarwala: Being in an academic/teaching institution, it can go either way. Because of my specific interest and expertise in melanoma, and having maintained good working relationships with community oncologists and other physicians in the area, I tend to have patients referred at all stages. Of course, many of them are advanced stage because those patients need me more. But I do get patients with early-stage melanoma, at least for an opinion.

Here at St. Luke’s Cancer Center, when a patient is referred to us, we keep him or her in our database and on our clinic schedule so that we are able to pick up any kind of recurrence or metastases early and intervene in a timely manner, either with treatment or with enrollment in a clinical trial.

TLSR: Were you trained as a hematologist/oncologist?

SA: Yes. Some melanoma specialists come from a dermatology or surgery background, but I was trained in hematology/oncology and, before that, in internal medicine. I’m technically triple-boarded. But as I have developed my career, I have focused on melanoma and the immune system, and that’s pretty much all I do now.

TLSR: Would you briefly compare melanoma versus squamous cell carcinoma versus basal cell carcinoma? What sets melanoma apart? Is it a propensity to metastasize to very tragic areas, such as the brain and liver?

SA: Absolutely. Skin cancer as a whole is extremely common. More than several million patients per year develop skin cancer in the U.S. But melanoma is the least common of all the skin cancers, and is diagnosed in approximately 90,000 (90K) Americans per year. What sets it apart, aside from being the least common, is that it is also, unfortunately, the most dangerous. However, the good news is that if melanomas are picked up early, most of them can be cured—and thank goodness most of them are picked up early.

There are a couple of issues that make melanoma so dangerous. One is that many melanomas don’t look like what you might expect a melanoma to look like, and so they’re hard to identify. The second issue is that melanoma does have a propensity to metastasize. But it’s a tricky cancer that metastasizes even when it’s small, which is somewhat unique. When you think you’ve picked it up early, and you dig deeper, clear the margins, do the sentinel lymph node mapping and so on, you might find that even a small tumor has already metastasized. These factors make melanoma unique.

Another thing is that when melanoma metastasizes to different parts of the body, it tends to metastasize to more dangerous areas—the more tragic areas, as you put it—like the brain and liver. Any organ can be involved, however, and in fact, the most common site of melanoma metastasis is the lung, as well as other subcutaneous tissues, where patients tend to have a better prognosis and survival rate than those with metastases to the liver or the brain.

TLSR: Squamous cell carcinoma occurs much more frequently, and it also metastasizes, doesn’t it?

SA: Yes. But squamous cell metastasizes much less frequently than melanoma. Basal cell carcinomas very rarely metastasize. Still, both these cancers can metastasize and become a clinical problem, and should therefore not be ignored.

TLSR: All tumors, solid as well as those of hematologic origin, learn to circumvent chemotherapeutic agents and even antibodies. Tumor cells evade and even learn how to pump out therapeutic drugs. At a later stage of disease, do you see melanoma as more resistant to chemotherapy than, let’s say, squamous cell carcinoma?

SA: Yes, indeed. Melanoma is actually one of the most resistant tumors to any kind of chemotherapy—not only compared to squamous cell of the skin, but to any cancer, including lung cancer, head-and-neck cancer and breast cancer. This extreme resistance to chemotherapy is why classic chemotherapy drugs are rarely used in melanoma, and almost never as a frontline option. Melanoma has the ability to evade the immune system, but it also arouses the interest of the immune system more than some other cancers. That is why we have used immunotherapy as a treatment modality for melanoma with some success.

TLSR: Is this the reason that interferon, an immunotherapy, has been such a popular therapeutic agent in melanoma?

SA: Yes. In fact, until recently, there were basically three drugs that were U.S. Food and Drug Administration (FDA)-approved for melanoma. One is interferon, an immunotherapy that is used in adjuvant therapy, which is prevention of relapse or recurrence. Another drug used in the metastatic setting is interleukin-2 (IL-2), which is given in high doses that can produce significant toxicity. It’s a bit hard to use in most patients. There is also a chemotherapy drug called dacarbazine, which was approved in an era when treatment regimes were different. It’s been around for 30 years and has never actually shown a survival advantage in melanoma; I honestly don’t think it would be approved by the FDA today.

A lot of progress is being made in melanoma therapies right now, mostly in immune and targeted therapies. As I said, the immune system is very important in melanoma, which is exactly why interferon has been used quite extensively in the adjuvant setting for a while, and will continue to be used for some time to come.

TLSR: When the pathologist sees a melanoma lesion under the microscope and looks at its histopathology, the diagnosis of melanoma is not hard to make. Are we getting to the point where our diagnoses are becoming even more differentiated? Are we starting to see melanomas diagnosed by their genotype—by their epigenotype or mutations—as we see in breast cancer and some other areas?

SA: Those kinds of mutations are not so much used for diagnostic purposes. The melanoma is still diagnosed by its histopathology and the use of special stains performed by the pathologist. But the next step, which is now routine, is to test the melanoma genotype, specifically looking for certain mutations that have value both in prognosis and therapy. You used the breast cancer paradigm; certainly that is what’s happening.

I think that, ultimately, what we call melanoma will prove to be not one disease, but that we will diagnose different types of melanoma in a molecular sense. We know that melanomas that arise from the skin are different from those that arise from the mucosa. These melanomas, in fact, have different mutations, and the affected patients have different prognoses, as well as different responsiveness to drugs. We’re just beginning to scratch that surface. But in the future we will be diagnosing all cancers mostly on genotype.

TLSR: What targets look interesting to you today on the molecular level?

SA: The BRAF mutation is certainly the most important, and the most widely used. More than one drug has been approved for treatment of patients who have the BRAF mutation, and those drugs can be quite effective. The BRAF mutation is present in approximately 40–50% of patients with melanoma, and that makes it very interesting. We saw the approval of a first-in-class BRAF inhibitor, vemurafenib back in August 2011.

Genentech is also developing a MEK/BRAF combination inhibitor, which is not yet approved but is in clinical trial. We’re waiting for the results. Genentech, to my knowledge, is the frontrunner in the targeted therapy area, and is now studying its antibody, MPDL3280A, targeting PD-L1 (programmed cell death-ligand 1), which is upregulated on tumor surfaces. The idea behind the anti-PD-L1 and anti-PD-1 (programmed cell death-1) antibodies is to unmask the tumor cells, thereby taking the brakes off the immune system, in part by rejuvenating T cells. These drugs make the immune system much more powerful, and are changing immunotherapy for us. We’ve always thought of immunotherapeutic agents as having very low response rates and being very slow-acting. Now we think immunotherapy can actually have high response rates and can work quicker.

TLSR: Are there other targets you think could be interesting?

SA: There is a c-KIT mutation, which is more common in mucosal melanomas. Another mutation, called NRAS, is common in cutaneous or skin melanomas. NRAS, interestingly, does not occur if you have a BRAF mutation, so if you don’t have a BRAF, you should look for the NRAS. Clinical trials are in progress now targeting NRAS mutation-positive melanomas.

We’re just beginning to explore this arena. There are going to be other mutations out there, and we are just beginning to learn which drugs might target those mutations. The BRAF mutation is ready for primetime. The others are being developed.

TLSR: I note that you’ve been doing a study testing interferon alfa versus peginterferon alfa-2b. Could you comment on that?

SA: Most of my research has been done in high-dose interferon, and I have been involved with these trials through the Eastern Cooperative Oncology Group (ECOG), where I’ve been a coinvestigator and a coauthor of many papers. The pegylated interferon, or peginterferon, regimen work was done in Europe. Based upon a large European trial, peginterferon is now available in the U.S., and I’m using it with some of my patients right now.

The only study on pegylated interferon that I’m involved with currently is a quality-of-life study. It’s our theory and our observation that patients who receive pegylated interferon have a better quality of life, but no one’s actually proven that, so we are comparing pegylated interferon to high-dose interferon. It’s not a randomized trial.

TLSR: When you talk about quality of life, is this about terminal-stage disease?

SA: No—in fact, quite the opposite. Just to clarify, interferons are used in early-stage disease, such as stage IIB, IIC or III disease. We are talking about patients who are potentially cured from the surgical standpoint, but because of a high recurrence rate could be affected again in the future. Interferon is used in an effort to lower the risk of recurrence.

However, these drugs are not perfect, and we can’t guarantee they will work. Frankly, a patient may not need the drug, but we just don’t know. Therefore, when you have someone who’s potentially cured, quality of life becomes a very important issue. While the drugs do reduce the risk of recurrence and, in some cases, improve survival, the patient has to deal with the toxicity. The study focus is on maintaining a high quality of life during this treatment, and not on end-stage patients.

TLSR: This is an investigator-sponsored, observational study?

SA: It’s a 100-patient trial pilot study. It was a concept I put forth from our cancer center; we have funding, which makes interferon and is very interested in these data. We have an unrestricted grant to do this research.

TLSR: I note that the final data collection for this trial is supposed to be complete in December 2014.

SA: The trial will be open longer than that, I’m sure. We hope to get 100 patients in the study by December, but we may not. The trial will remain open until we get 100 patients. We’ll analyze the data and then, hopefully, we’ll learn something interesting, publish it, and potentially move into a larger trial.

TLSR: Three years ago there was a tremendous amount of excitement surrounding the approval of ipilimumab for melanoma. Are you using this antibody?

SA: I am. Ipilimumab is approved and indicated for advanced melanomas that are metastatic but not surgically curable—for stage IV patients, and unresectable stage IIIs.

There was tremendous excitement about the approval of this agent because it was the first-ever drug to be approved in advanced melanoma based upon a survival advantage in a randomized clinical trial. There have been others since then, but this was a breakthrough. Ipilimumab has a role, but not as an adjuvant therapy—not just yet. Trials with ipilimumab are ongoing in the adjuvant setting.

TLSR: Is the theory here that if ipilimumab works, and shows a survival advantage in stage IV, it could be helpful in earlier-stage disease?

SA: Exactly right.

TLSR: What’s the future of melanoma therapies, Sanjiv? Is it going to come down to training a patient’s system to deal with the disease?

SA: I think the future of melanoma therapies is going to be twofold. First, as we learn more about these various molecular pathways and targets, we’re going to find drugs that will specifically hit those targets and will potentially be very effective. We already see this with the BRAF mutation. The other path is with immunotherapies. We are developing and learning much more about the immune system and how we might stimulate it to be more powerful.

The great advantage of immunotherapy is that it doesn’t require or depend on a specific mutation, at least that we know of. We can give the therapy to all patients with advanced melanoma who qualify. For the mutational drugs, the patient has to be mutation-positive for the therapy to work. Immunotherapies also tend to be more durable in their outcome and response, though that could change as we develop new agents on the targeted side.

I think the future will feature both these therapies, and then we’ll work on how to put them together. Do we use them at the same time or in sequence? Which goes first, which goes second? We are going to spend many years doing the science and the research.

TLSR: Speaking of intralesional therapies, you have been a principal investigator in clinical trials studying drug PV-10 (10% rose bengal disodium). Tell me about that.

SA: PV-10 is an interesting agent. I have done work with it in a Phase 2 trial. We’ve presented and published abstracts on the data.

PV-10 is also an intralesional therapy. What is so interesting is that PV-10 produced not only a local shrinkage of tumor, but we also saw a significant number of patients with significant responses in noninjected lesions. We call that a bystander effect. The agent must have a distant effect, which we believe is working through the immune system. Our colleagues at the H. Lee Moffitt Cancer Center & Research Institute are coming up with nice data that explains how the immune system might be affected and improved with PV-10. Once again, though, PV-10 is an intralesional therapy, so it needs to be researched in patients with locoregional (restricted to a local area) disease. When you get a distant bystander effect, it’s a bonus—it’s great to see.

TLSR: With regard to the bystander effect, I’m wondering about how longer-term studies with PV-10 could turn out with respect to preventing recurrence of disease and metastasis. The problem with that, as I see it, is that you must have a tumor present in which you will inject the drug to achieve that immunological, or bystander, effect. The clinician must administer the drug before the tumor mass is excised. Is that indeed the case?

SA: Yes—a tumor needs to be in place. These patients have generally had multiple surgical treatments but the disease has recurred, and a tumor is present because of that. You need to inject a tumor to stimulate and set up the necrosis—the desired chemoablative effect—in the tumor, and potentially trigger the immune response as well. Currently, we are using PV-10 in clinical trials in disease that is not surgically resectable.

“Melanoma has the ability to evade the immune system, but it also arouses the interest of the immune system more than some other cancers.”

But, you do bring up an interesting concept. If you have a patient with a lesion that you can resect surgically—one that you can actually remove—perhaps you could give a single injection—or more than one—of PV-10 prior to resection in an effort to stimulate the immune system. You would remove the tumor after that. This is, however, a research question. I would love to see that trial happen, but it has not yet been done.

TLSR: I know we’re talking relatively small numbers, but have the responses to PV-10 therapy looked durable so far?

SA: What we’re seeing is that both the injected lesions and the bystander effect tend to be durable. Obviously, we are looking at a Phase 2 database, so we would need to confirm that in a larger trial, potentially in a Phase 3 trial. But with the 80-patient data we have in Phase 2, the responses look durable.

TLSR: I’m noting that expanded access (compassionate use) protocol going on with PV-10. A lot of companies, especially small companies, might not want to dirty up their new drug application or final label by including late- or end-stage patients. I think this shows a lot of confidence in the program.

SA: I agree. We have an expanded access program available for patients who might benefit from this therapy. Obviously, I would only use that protocol for patients who have tried and exhausted most other options, because this is still an investigational drug.

TLSR: Have there been any interesting responses that you’ve seen in these expanded access patients?

SA: There have been. What we’ve seen in the expanded access program pretty much reproduces what we’ve seen in the Phase 2 trial. It’s a smaller number of patients—I think we’ve had nine patients at my center so far. I don’t know the data from the other centers as yet. But what we’ve seen with our expanded-access patients gives us confidence that our data from the Phase 2 study are robust.

TLSR: Sanjiv, it’s natural, in most cases, for the first physician seeing a melanoma patient to want to treat that patient, whether that’s the dermatologist or the oncologist. Because they may specialize in this area, it’s not obligatory for the first clinician to refer the patient to a center like St. Luke’s, is it?

SA: That’s true to some extent. I think dermatologists are often the ones who diagnose the melanoma based on a skin lesion, and they sometimes refer and sometimes don’t. I find that as oncologists build relationships, dermatologists tend to refer more patients. Often, these patients need fairly good management. Also, by having access to a center with expertise in melanoma, dermatologists may feel quite comfortable in getting a blessing, if you will—or an opinion—because they never know when the patient might need us. The patient might as well get to know us early.

TLSR: It seems to me that as long as community physicians know you’re not their enemy or that you’re not going to make them look bad, they may be more willing to refer at an earlier stage.

SA: That’s exactly what we try to foster. I make it very clear that if a physician sends someone to me for a second opinion, and if whatever I’m going to offer that patient is exactly the same as what the referring physician can offer, I encourage the patient to go back. There’s no point in having a patient travel a long distance to see me.

Because melanoma is relatively rare, many oncologists would prefer to have the patient treated by me here at St. Luke’s because of some of the intricacies of the new therapies, especially in more advanced disease cases. But I always give patients that option. Also, you’re right that we never want to make referring physicians look bad. We also don’t want them to feel like if they send patients to us, they will never hear about the cases again. We provide good feedback and keep referring clinicians in the loop. We don’t steal their patients, so to speak.

TLSR: It has been a pleasure talking to you about melanoma. Thank you.

SA: It’s my pleasure. We can look forward to very interesting data from all the agents we have talked about at the upcoming ASCO meeting.

Dr. Sanjiv Agarwala is chief of medical oncology and hematology at St. Luke’s Cancer Center in Bethlehem, PA, and professor of medicine at Temple University School of Medicine in Philadelphia. He is nationally and internationally recognized as an expert in the research and treatment of melanoma and cutaneous malignancies. He graduated from the University of Bombay, and did residencies and fellowships at the University of Bombay in India, Dunedin University in New Zealand and University of Pittsburgh. Dr. Agarwala has special interest and expertise in immunotherapy for cancer. He has been principal investigator for several clinical trials involving immunotherapy and targeted therapy for melanoma and other malignancies. He has written more than 100 publications and book chapters on melanoma and other research areas. He is board-certified in oncology, hematology and internal medicine, and is an active member of several professional and scientific societies, including the American Association for Cancer Research, the American Society of Clinical Oncology, the European Society of Medical Oncology and the Society for Melanoma Research.

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Kitchen-Table Economics

By Dennis Miller, millersmoney.com

What is it about retirement that causes confident, successful businessmen and -women to lose that edge when they invest their own life savings? Many otherwise dynamic people become virtually impotent in the face of retirement investing. I have many friends who were very effective in business—folks who made sound decisions affecting how millions upon millions of dollars were spent. They would gather the facts, make a plan, and make the right call with confidence. Whywas it so taxing for these same friends to manage their personal retirement accounts?

I’m a staunch advocate for gathering around the kitchen table to hash out problems and pass on life lessons. It’s where we gathered as a family to open our mail, pay the bills, and teach (and worry about) our children. I might even say that everything we needed to teach our family about economics, we taught at that kitchen table.

The secret is there is no secret. Investment gurus, stockbrokers, and talking heads like to use fancy words to dazzle. Many would have you believe their university or Wall Street pedigrees give them investing powers outside of your reach. Though many do have a little more knowledge or a little more experience, there is no need to be intimidated by the mystique.

Why? Because you already know most of what you need to know. The underlying principles for protecting and growing wealth during retirement are the same principles that allowed you to make and save that money in the first place.

When former Federal Reserve chairman Alan Greenspan would talk to Congress, many bright people would look at each other and think, “What the hell did he say?” If folks like Greenspan are so darn smart, why couldn’t they predict or prevent the Internet or real estate boom and bust? Why can’t they speak plainly? Don’t let anyone’s “elite” status overshadow your own common sense.

For the last few years, the Federal Reserve has been printing a 100-year supply of money annually. No one needs a PhD in economics to grasp the potential for high inflation. A little knowledge of history and a bit of common sense will tell you where we’re headed.

The key to using kitchen-table economics in retirement is to apply the same fact-finding and research skills that made you successful in business. If you are uncomfortable making an investment decision, continue to educate yourself until you are. Of course, it’s sensible to take in input and ideas from experts. Just don’t get caught thinking they have any magic bullets.

If you ask four people to define “rich,” you would likely get four different answers. As we move into retirement, the definition tends to be more practical and realistic. “Rich” is enough money to live comfortably without countless hours of financial worry. It’s also a feeling of pride in the lifetime of work that built your nest egg and an appreciation for each and every trip you get around the sun.

How much do you have; how much do you need to earn to supplement your retirement income; and, how can you invest safely to reach that goal? Retirement investing is no more complicated than that. Simply put, it’s living within your means and protecting what you have.

If I could shout one piece of encouragement to retirees, it would be: Don’t let the fear of losing money immobilize you! Doing nothing can be just as dangerous as risking too much on a speculative or even downright foolish investment.

You may recall the old adage about the banker who never made a loan because he was afraid he might lose money. When the bank went out of business, he claimed it wasn’t his fault. After all, he never made a bad loan during his tenure.

To make your retirement money last, you have to take on some risk. There are, however, proven ways to limit that risk to manageable doses: sector, geographical, and political diversification, trailing stop losses—the list goes on. Good investors will lose money from time to time and learn from their mistakes. You just need to learn and make the right judgment call more often than not.

Don’t fret when others brag about how well they’re doing. Each year financial newsletters, mutual funds, and investment managers like to boast about how much money they’ve made their clients. Accountability is a good thing; we’re certainly proud of our own track record.

Though, when I see the list of top-performing funds ranked by the amount of annual return, my first questions are: How much did they risk to get there? Have they performed that well consistently? How much of those profits were eaten in fees?

Some mutual funds occasionally produce nice gains for their shareholders. I, however, would put my money on the well-educated grandfather investing from his kitchen table in Iowa any day of the week. Why? A recent report indicated that 78% of all US domestic equity funds were outperformed by their benchmarks during the past three years. Large-caps were worse, with 86% of falling short of their benchmarks. Benchmarks are the indices in the sectors funds specialize in, respectively. In short, there are countless statistics indicating that you can invest just as well as a fund manager.

Those numbers should embolden you, not frighten you. I shared them to keep things in perspective. There is no magic wizardry, secret code, or special knowledge. All investors gather facts, make an evaluation, and then allocate some money based on what they think the future will bring. Those are skills that can be honed through education and experience by smart folks sitting at their kitchen tables or in their home offices.

I’m happy to report that the most frequent comment we receive is that our newsletter explains investments in plain English. There’s a reason for that: the investments well suited for a conservative investor’s retirement portfolio are not that complicated.

You can overcome retirement impotence. The best way to build your confidence is to learn ways to invest safely. We think teaching our premium subscribers about protective mechanisms like asset allocation, diversification, position limits, trailing stop losses, and internationalization is just as important as the individual picks in the Money Forever portfolio. If you’d like to learn more too, sign up for a no-risk trial subscription today by clicking here.

 

 

The article Kitchen-Table Economics was originally published at millersmoney.com.

Things That Make You Go Hmmm: Gyver & Guffin

By Grant Williams

This week’s TTMYGH revolves around “Macs.” The first is a man-turned-verb who was capable of extricating himself from seemingly hopeless situations, armed with an array of tools seemingly singularly unsuited to the purpose; and the second is an ingenious, though ultimately futile, plot device which has been used by everyone from Welles to Hitchcock to Tarantino.

I%20Heart%20Japan.psd

Though at first blush it’s hard to see a link between the two, in today’s world there are Angus MacGyvers everywhere, beetling away with duct tape and Swiss army knives, trying to extricate themselves from completely hopeless situations; and if they are to succeed before the credits roll, they must rely upon one very important thing: the suspension of disbelief by their audience.

That’s where the other “Mac” comes in.

Man first.

Angus MacGyver was a troubleshooter. He worked for the fictional Phoenix Foundation as a secret agent and also for the US government in the (also fictional) Department of External Services.

Macguyver.psd

Educated as a scientist and possessing an encyclopedic knowledge of the physical sciences, MacGyver had been a bomb disposal technician during the Vietnam War and possessed a distinctly pacifist outlook on life — he hated guns.

Also, his luck could scarcely be described as merely “good.”

Somehow, over the course of seven seasons, MacGyver managed to get himself into some 139 impossible-to-get-out-of situations — each of which he managed to navigate successfully by using conventional items in a distinctly unconventional way.

By way of illustration, in the pilot episode alone, MacGyver managed to do the following:

Rig a machine gun with a cord, string, stick, and matches so that when the string burned through, the machine gun fell and was triggered by the stick and began firing (while still being held by the cord).

Plug a sulfuric acid leak with chocolate. MacGyver stated that chocolate contains sucrose and glucose. The acid reacted with the sugars to form elemental carbon and a thick gummy residue. (NB this was subsequently proven to work, as demonstrated on the show Mythbusters.)

Make a “rocket thruster” by hitting a flare gun with a rock, launching MacGyver and a man he rescued off of a mountain, whereupon he opened a parachute and made a clean getaway.

Create a bomb to open a door using a gelatin cold capsule containing sodium metal, which he placed in a glass jar filled with water. When the gelatin dissolved, the sodium reacted violently with the water and caused an explosion which blew a hole in the wall.

Impressive stuff. It’s no wonder he ended up becoming a verb. But to witness perhaps his greatest-ever escape, afford yourself two minutes to watch THIS little stunt to see how MacGyver escaped from his own coffin.

Coffin.psd

I couldn’t help but think of MacGyver this past week as I sat chatting with a colleague about the situation Japan now finds itself in.

I won’t recap the details of the straitjacket into which the Japanese have been strapped for the past two decades — enough ink has been spilled on that subject already, including in a recent Things That Make You Go Hmmm… entitled Avenomics — but my conversation this week stemmed from the following statement, made by me to myself, as I leaned back in my chair after reading an article about proposed changes to the GPIF (Government Pension Investment Fund), Japan’s public pension fund:

“Japan really is totally f*****.”

What led me to that well-thought-out and eruditely expressed conclusion? Read on.

In case you are not familiar with the GPIF, it is the largest pool of government-controlled investment capital on the planet — outstripping even the infamous Arab sovereign wealth funds.

The GPIF controls ¥128.6 trillion, or $1.25 trillion, and to say the organization is somewhat risk-averse is akin to calling the Kardashian family somewhat shameless.

The GPIF holds almost 70% of its assets in bonds — and the vast majority of them are of the local variety. The reason for this? Well that would be because the GPIF is (and has always been) run by bureaucrats from the Ministry of Health, Labour & Welfare, as opposed to, say, investment professionals.

But that’s probably no bad thing, because no investment professional worth his salt would have bought so many JGBs; so if GPIF didn’t buy them, THAT would be a big problem for the Japanese government AND the BoJ.

2269.png

Source: GPIF

How did that allocation to domestic bonds do last year? Well, as it turns out, not so great:

 

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Total 2013

Domestic Bonds

-1.48

1.18

0.18

-0.14

Domestic Stocks

9.70

6.07

9.19

27.05

Int’l Bonds

4.01

1.64

8.16

14.34

Int’l Stocks

6.14

7.13

16.23

32.17

Source: GPIF

Fortunately, over the last twelve years the GPIF has managed to meet its targets — by growing at an annualized rate of 1.54%.

Thankfully for the GPIF, despite their largest allocation throwing off negative returns, the BoJ’s actions in weakening the yen boosted the Nikkei, and the central-bank-inspired strength in equities and bonds elsewhere in the world helped GPIF’s performance to pass the smell test for 2013.

Now, when it comes to bureaucracy, Japan is in a league all of its own. My first up-close experience of this came in 1989 when I went to get a driver’s license after moving to Tokyo. Anybody who has attempted to complete that fairly straightforward objective in Japan knows that it requires the best part of a day traipsing upstairs and down between several counters, getting the same piece of paper stamped by numerous people in a very specific order. Several visits are required to the same person — but only in the correct order.

Jap%20Drivers%20License%20small.jpg

Maybe this process has changed 25 years on, maybe it hasn’t. I’m willing to bet on the latter.

Anyway, amongst themselves, foreigners in Japan have a saying which strikes at the very heart of this little bureaucratic problem:

“Everything makes sense once you realize Japan is a communist country.”

Aki Wakabayashi’s book Komuin no Ijona Sekai (The Bizarre World Of The Public Servant) sprang from her 10 years working at a Labour Ministry research institute and lifted the lid on some of the peccadilloes of Japan’s civil service.

The facts unearthed by Wakabayashi are remarkable:

(Japan Times): The national average annual income of a local government employee was ¥7 million in 2006, compared to the ¥4.35 million national average for all company employees and the ¥6.16 million averaged by workers at large companies. Their generosity to even their lowest-level employees may explain why so many local governments are effectively insolvent: Drivers for the Kobe municipal bus system are paid an average of almost ¥9 million (taxi drivers, by comparison, earn about ¥3.9 million).

Click here to continue reading this article from Things That Make You Go Hmmm… – a free weekly newsletter by Grant Williams, a highly respected financial expert and current portfolio and strategy advisor at Vulpes Investment Management in Singapore.

Obama’s Secret Pipeline

By Marin Katusa, Chief Energy Investment Strategist, Casey Research

Isn’t it odd that an 800-mile pipeline that runs across environmentally sensitive land has been permitted without any mention in the media? Not a word about it from President Obama either.

Obama’s Secret Pipeline will be built over land that’s much more sensitive than that of the Keystone XL pipeline, which gets nothing but front-page coverage. It will actually be 17% (six inches) larger in diameter than Keystone XL (36 inches) and it will transport natural gas, not oil.

Bill 138

The Senate of Alaska, the state in which the pipeline will be built, has just passed Bill 138, which makes the state a partner of three of the world’s largest oil companies, including one that has a horrible environmental track record on US soil. In a nutshell, Alaska’s government is now partners with BP, ExxonMobil, and ConocoPhillips.

Only one more signature is required—Governor Sean Parnell’s—and it’s expected that he will sign the deal.

Not Even the US Government Wants US Dollars

For more than 100 years, the US government has been receiving a royalty and tax revenue paid on the amount of oil or natural gas produced on American soil—a fee that is paid in US dollars. Bill 138 has changed this forever.

Instead of Alaska receiving its dues in US dollars, the state legislature has decreed through Bill 138 that the state will be paid “in kind.” In other words, the state will be getting its share of royalty and tax revenue in natural gas instead of US dollars.

For the record, this is the first time ever that a US state has entered into a partnership like this. Essentially, Alaska is now a 25% equity partner with BP, ExxonMobil, and ConocoPhillips—which also requires the state to cough up cold, hard cash to build the entire project, including the 800-mile-long, 42-inch-wide pipeline.

Overall, the project is currently estimated to cost north of US$50 billion, and we expect that when all the capital expense overruns and government inefficiencies are accounted for, the whole project will come in at more than US$75 billion, using the total costs of similar projects for comparison.

But it will be 2015 before the final negotiations and the specific details of the partnership are agreed on, and remember, the devil is in the details. Who do you think will get the better end of the deal—a bunch of government bureaucrats with zero oil and gas experience, or the world’s top oil- and gas-producing companies? I know whom I’m betting on.

Which leads us to the point of this weekly missive.

And the Winner of Obama’s Secret Pipeline Is…

We already know which company will be building and operating Obama’s Secret Pipeline. The company I’m talking about has a lower price-to-earnings (P/E) ratio and a better yield than all of its peers. That’s good, because shareholders get paid a monthly yield for owning the stock while sitting back and watching the share price rise as well.

The Ultimate Oil Toll Booth

Think of it this way: this company charges the world’s most powerful oil and gas producers for every barrel of oil that passes through its “road network,” and now it can also charge the state of Alaska. Regardless of the price of oil or natural gas, this company gets its fee.

It’s a low-risk way to benefit from a high-risk enterprise. This company is a current Buy in our Casey Energy Dividends portfolio. The Energy team is currently working hard on the upcoming issue, which will in detail cover the company that’s bound to gain big from Obama’s Secret Pipeline.

I know you haven’t heard about this pipeline yet, but you will soon enough.

That’s what we do here at the Energy Division of Casey Research: We’re the first to uncover breakthrough stories, and the first to uncover the best energy investment opportunities in the world. Doug Casey and I just got back from a whirlwind European tour, where we visited many of Europe’s most promising energy projects.

Here’s a picture of Doug Casey and me at Europe’s largest onshore drill site. This drill rig is 15 stories high and uses about 16,000 liters of diesel a day to turn the drills—which Doug and I are holding in this picture. As a side note, just the crank shaft that we’re holding costs US$2 million—this rig is expensive and gigantic.

For you to get a better perspective on the true size of Europe’s largest onshore drill rig, here is a picture of Doug Casey and me with our friends Frank Holmes, Frank Giustra, and Matt Smith.

(From far left to right: Frank Holmes, Doug Casey, Marin Katusa, Frank Giustra, Matt Smith)

Do Your Portfolio a Favor and Try Out the Casey Energy Report

Doug Casey and I have done all the hard work for you. The current issue of the Casey Energy Report is a compilation of our Europe trip, including in-depth descriptions of our site visits and a new recommendation with a hugely promising project in an out-of-the-way European country that we personally checked out. The company is backed by mining giant Frank Giustra, and you bet he knows what he’s doing.

The Casey Energy Report comes with a free one-year subscription to Casey Energy Dividends (a $79 value), including, of course, the upcoming May issue with our “Obama’s Secret Pipeline” pick.

There’s no risk in trying it: You have 90 days to find out if it’s right for you—love it or cancel for a full refund. You don’t have to travel 300+ days a year (as we do) to discover the best energy investments in the world—we do it for you.

If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund. Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. Click here to get started.

 

 

The article Obama’s Secret Pipeline was originally published at caseyresearch.com.