Month: June 2011

The euro continues to rise as the vote on the next Greek austerity program nears with market participants expecting a positive outcome. This may set up an opportunity to “buy the rumor, sell the fact,” as the release of the next tranche from Greece’s first bailout simply kicks the can down the road. A solution to the underlying burden of Greek debt remains to be found.

EUR – Greek Austerity Vote
The debate rages in the Greek parliament while rioters run amok in the streets of Athens leading up to today’s austerity vote. The euro has been bid with a majority of expectations for a successful passage of the plan which would allow Greece to receive the final tranche from its first bailout. But the weight of the debt burden will not be lifted from Greece but only pushed further into the future. This may present a selling opportunity in the present euro rally. Last week’s high at 1.4440 is the first resistance followed by the early June high at 1.4700. Support is found at yesterday’s low at 1.4240 and the rising support line from the mid-May low at 1.4115.

USD – Pending Home Sales m/m – 14:00 GMT
Expectations: 2.4%. Previous: -11.6%.
Forecasts are for a rebound from the previous month’s sharp downturn in pending home sales though this data release will largely be put on the back burner to the events taking place in Greece.

Read more forex trading news on our forex blog.

By Dezan Shira

While both China and India are drawing global investors’ attention with their impressive economic performance, prevalent bureaucratic and political corruption has stood out as a negative factor that unfairly affects foreign enterprises and will potentially stifle economic development in the long term.

Corruption in public procurement creates unfairness in access to resources
According to an anti-corruption briefing series published by the risk analysis company Maplecroft, corruption is still prevalent in both China and India’s public procurement, since this is usually where the governments can easily maximize their gains. Corruption scandals in public procurement that usually involve high-level politicians have caused discrimination in tender selection, and made it more difficult for more qualified foreign companies to access major projects or attend non-discriminatory public bids.

The Maplecroft research identified construction, natural resources, banking and finance, and health care as four sectors that are most exposed to corruption in China. Interestingly, those are also sectors where foreign investors boast comparatively less presence. Despite the multiple possible factors that lead to the different scales of foreign presence across distinct industries, the research result still makes people wonder if certain correlations do exist between corruption and weaker foreign investors’ competitiveness in these particular sectors.

In addition to encountering the same problems as investors in China, foreign companies in India also need to deal with the regional differences in administrative systems and laws across the country. The lack of consistency in the system could greatly inconvenience a business that operates in different states. According to the World Bank’s World Enterprise Survey in 2006, 24 percent of companies in India expect to secure a government contract through bribing, and another report by Transparency International said the average bribe amount is estimated to stand as high as 15 percent of the contract’s value.

Corruption in administrative services adds to company costs and reduces efficiency
Complicated and cumbersome administrative procedures in both countries give governmental officials wider discretionary powers to interpret rules and thus lead to massive corruption in administrative services. Public utilities, such as water, phone and electricity can become more expensive because enterprises are expected to make “facilitation payments” to secure operating contracts and speed up accessing procedures. Bribes also take place in tax and customs administrations, in order to reduce payment and convenience customs clearance.

Corruption in legal system could hurt business essentials
China’s judicial independence is rated at “extreme risk” by the Maplecroft research, and the court can determine rulings in favor of bribers or influential local government bodies and officials. Biased judgments under corruption can impact the essentials of a business, such as contract enforcement and property rights protection.

In India, although the judicial independence is not low, the judicial accountability is still weak, since the political interference in judicial decisions is relatively high, from judge appointment to final judgment deliveries. While the upper court is considered to be comparatively clean, corruption in lower courts is rampant and systematic. Court officials can misuse their power with impunity at multiple points. Court procedures are very slow and complicated, making it harder and costlier for companies to protect their proper rights with legal measures.

Anti-corruption progress
As both governments have realized the potential threat corruption will bring to the economic advancement in the long term, they have been making various attempts to reduce corruption. China has been in pursuit to an anti-corruption drive that concerts the United Nations Convention against Corruption and targets both public and private sectors since 2006. Numerous anti-corruption investigations and prosecutions have taken place and many of them have affected top-level officials.

The Indian government has started drafting the Lokpal Bill, which plans to establish a new independent anti-corruption governmental body. The government plans to introduce the new Bill at the next parliamentary session, which begins in July 2011.

About the Author

Read the rest of this story about potentical corruption when you do business in China or India, was written for the Asia business news blog, 2point6billion.com.

You can also find out more about doing business in China from Asia Briefing’s China Business Guide.

By Cedric Welsch

Recently, there has been a lot of publicity surrounding the foreign exchange market, also known as the Forex or FX market. With the instability of the stock market in these volatile times, investors are looking for new opportunities to make money. Before one jumps in with both feet, it is important to learn how this market works and what the pitfalls can be.

Many people have never heard of this form of trading that is being touted as the latest, greatest thing in investments. However, banks, multinational corporations and institutions have recognized this as a superior opportunity for many years. It has only been in the past few years that an individual has been able to do what previously was restricted to large companies.

This is primarily due to the increasingly widespread use of computers and the availability of the internet to nearly everyone. The ready access to technology, charting tools and other resources which was once limited to professionals has now become available to the general public.

One of the simplest ways to define this market is to say that it is the practice of trading world currencies. A set of two currencies is called a pair. A trade consists of selling one country’s currency to buy that of another one. The common terminology is “trading pairs”.

In contrast to the stock market, the Forex averages a volume of over one and a half trillion dollars per day. The New York Stock Exchange only averages about twenty-five billion. Also different from stocks, there is no one exchange or location at which one can trade. Investors only need a telephone or a computer with online access.

Because trades in this market are made by investors in all parts of the civilized world, it does not operate on the same limited schedule as the stock exchanges. It is open 24 hours a day, five days a week. For someone living in the eastern time zone of the United States, a week for this type of trading typically starts on Sunday afternoon and continues without pause until Friday afternoon.

Many companies offer free classes in how to trade currencies. Some even offer practice trading accounts to allow a person to become familiar with how this market works before spending any real money. Anyone wishing to trade in the foreign exchange market would be well advised to investigate this form of investment and learn its intricacies.

About the Author

Do not be incompetent when it comes to trading updates, get your daily dose of forex news online. There may be irreconcilable differences between forex trading reviews that you read at times.

AUDUSD had formed a cycle bottom at 1.0390 on 4-hour chart. Further rise towards the upper border of the price channel is expected later today. As long as the channel resistance holds, the bounce from 1.0390 is treated as consolidation of downtrend from 1.0773, and one more fall towards 1.0250 is still possible. Only a clear break above the channel could indicate that the fall from 1.0773 had completed at 1.0390 already, then another rise towards 1.1011 previous high could be seen.

Daily Forex Forecast

By Ulli G. Niemann

Do you think you need an Investment Advisor? Hold on before you answer because this is sort of a trick question. Also, I am definitely biased because I am an Investment Advisor. Nonetheless, I think I can assist you in looking at this issue in a way that will serve you.

Working with a fair number of investors over the last nearly 20 years, I have observed that while most are intelligent people, and many are fairly knowledgeable about the market, they are, as a group, not terribly successful with their investing.

Why should they be? More likely than not they have made their living doing something other than investing, so why would they think they can do what a professional does better than a professional? (After all, they go to professionals for health care or for car repairs when needed!)

Most investors-even some professionals-tend to be “off” in their timing: they buy things when they are hot, not when they are cold. But for the greatest benefit, it should be the opposite. The media doesn’t help much when it comes to this buying approach, and let’s face it; greed and fear play a large part in most peoples’ investment decisions.

I truly believe the majority of people would be better of (that is, they would end up with more money at the end of the day) if they used professional money managers to advise them on their investing. Specifically I am referring to Registered Investment Advisors with proven track records of performance in investing in stocks, bonds, mutual funds

Let me burst one myth right off the bat: You don’t have to be a millionaire to engage the services of a topnotch advisor. Some people think you need to start an account with $50,000 or more to get a really good advisor. Well, you may have more choices if you’re at that level, however you can find very successful Investment Advisors who will accept opening accounts for as little as $5000.

There are literally thousands of Registered Investment Advisors in the US. Just what do they do-what service do they provide you? They do the legwork; the research and analysis. Maybe more importantly, they keep their primary focus on the markets, and specifically on their specialty area like individual stocks, mutual funds, or bonds.

Because they spend the bulk of their time and energy researching, considering, and analyzing, they naturally have a greater sense of the market and its movements than those of us who don’t put this kind of attention into it. So, with the right advisor, you can keep your focus on what you want-like your business or your retirement or whatever-and still get the information you want and need to invest wisely.

How Do You Find The Advisor for You?

Since there are good Investment Advisors and bad ones, how do you find the former and avoid the latter? Good question, and there are some keys. Most large brokerage firms list the Investment Advisors they work with and maintain information about their past performance. This is not a foolproof resource, though, since they tend to recommend the Investment Advisors who invest in their products or clear their business with the firm. So if you pursue this avenue, you need to watch for conflict of interest issues.

You can always subscribe to one of the numerous database services that include information, and sometimes rankings, on Investment Advisors. These services tend to be fairly pricey, though, so they may not be your best choice. Another option is to find articles (yes, like this one) or free newsletters written by Investment Advisors. If you find one or several that make sense to you, check out the IA and see if there’s chemistry between you.

When checking out advisors, here are some things to keep in mind:

1. Verify their record — look over their past performance;

2. Consider their system. Will it work in different market environments?;

3. As best you can, check out their operation and

4. See if they’ve had regulatory problems.

5. Equally important as doing your due diligence is making sure there is good communication between you and your advisor and that you trust this person with your money choices.

Another quick free way to scan through a select database and find a wide variety of candidates is with www.wiseradvisor.com. I’m registered there myself as an advisor and know that the company did a background check regarding registrations and regulatory issues.

An important question to ask is the how the advisor gets compensated. You want to stay away from commission junkies or salesmen disguised as advisors. I believe that you will get the best unbiased advice from someone who is paid a management fee based on the value of the assets that you entrust them with.

To take it one step further, ask if the advisor invests his own money in the same methodology that he recommends for his clients. If he doesn’t, ask why. If you don’t like the answer, close your check book and run as fast as you can.

Choosing an Investment Advisor can yield long-term high profit benefits. I encourage you to consider it if you haven’t before. However, as with any relationship, make sure there’s a fit before you jump into it.

© Ulli G. Niemann

INO.com’s Susan Jackson analyzes the latest movements and trends in the major financial markets.

The European Banking Authority (EBA) continues to court controversy with the way it is administering the recent round of bank “stress” tests. The testing process has been in progress since March and is designed to restore confidence in the European banking system awash in questionable sovereign debt.

As part of the evaluation, the banks have been provided with a formula that will “address inconsistencies and excessive optimism” when it comes to assessing risk of these sovereign exposures. Based on the risk assumption, the banks can then determine the extent of the “haircut” to which they could face and then determine how much they need in reserves to cover the potential losses.

What the EBA is not doing, however, is to force the banks to simulate the impact of an actual default or debt restructuring. If the EBA is hoping to restore confidence with this approach, it leave much to be desired. Especially given the track record of the previous round of stress testing.

Last year’s stress test results were called into question from the very beginning simply because so few banks were deemed at risk. Indeed, the Irish banks were given a clean bill of health just months before the Irish government was forced to provide emergency funding to keep them afloat.

Nevertheless, the EBA claims that owing to the improvements introduced this year, the results will provide a truer picture of the state of the financial system. Still, they are not addressing the greatest fear of all investors – an out-and-out default by a sovereign nation.

Testing Results Leaked

A story carried by several news agencies Tuesday morning quoted an anonymous Eurozone insider as saying that potentially one in six of the ninety-one banks tested will fail the testing process. This means up to fifteen banks are deemed at risk based on the criteria imposed by the EBA.

On the surface this appears to be a dreadful result but according to the EBA source, this is exactly what the banking authority wants as it feels this will prove that the EBA is serious in its assessment.

“In order to demonstrate that it is credible, the EBA would need to show that the number of bank failures is significant, without being substantial,” the source was quoted as saying. “A number in the teens is about right.”

The process still has the appearance of being manipulated given the nature of the comments, but in light of last year’s fiasco, there could be a degree of method in the madness. Besides, no one is buying the old “the banks are all right line” line any how, so by finding a significant number as being at risk – but not too many – this may actually show investors that authorities are indeed serious this time.

Final results are due in a couple of weeks at which point we’ll see once and for all how the EBA intends to deal with the bank solvency question.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

By EarlyToRise

In the investing world, we talk about bubbles. A bubble happens when stocks in a particular sector are over-hyped, and greed starts driving the market.

In a stock market bubble, investors stop thinking about what they’re buying and start looking around them to see who else is buying it.

Joe Investor sees a sizable group of other investors piling into a stock or sector, driving the price higher. He figures they’ve thought things through, so he’ll go along for the ride.

Jill takes Joe’s lead, figuring he knows what he’s doing. Jerry follows Jill. Julie follows Jerry. The blind are leading the blind.

Well guess what?

There are marketing bubbles too…

Some marketing tactic or strategy is hyped beyond all reasonable expectation… newbies who don’t know any better jump in… and a bubble is born. As the hype grows, it creates a kind of vortex that sucks in more and more people. The number of dupes and the number of promoters both skyrocket.

Some investment analysts are calling the recent LinkedIn IPO a warning sign that a new tech bubble might be upon us. The stock debuted at $45 and immediately started gyrating between $80 and $120, hundreds of times 2010 earnings. In plain English, there was no justification for these prices.

Groupon and Facebook are planning IPOs as well, and they will most certainly garner the same kind of senseless, nosebleed valuations. The bubble will balloon and burst. And overnight, billions of dollars will change hands, just as they did during the dot-bomb bust of the late nineties. Foolish investors holding these stocks will get the shirts ripped from their backs.

With marketing bubbles, the damage is subtler…

Each day, a new crush of wild-eyed marketing neophytes rush in, lured by the promise of easy money, like ants to a Twinkie. Hungry for knowledge, they buy up info-products right and left. And do they learn?

Bubble stuff. All about Facebook and Twitter and mobile marketing and Groupon and other so called “game changers.” Now I’m not saying there is no value in these things. It’s just that they are hyped into the ozone… out of all proportion… beyond anything even remotely real.

And that hype drowns out the importance of learning the basic, bread and butter stuff, without which these neophytes are going to get their heads handed to them.

In the world of investing, the basics are things like earnings growth, return on equity, and profit margins. The boring, common sense stuff that allows you to rationally compare one stock to another. In the marketing world, it’s return on resources invested (RORI). Is marketing this way worth my investment? Is it the best use of my resources?

The fact that there are umpteen million users with a Facebook account makes for great hype. Heck, if it were a country it would be the third-biggest. But what does that mean in terms of the RORI for your particular business?

Most people who market with social media haven’t a clue. Their behavior is driven purely by peer pressure.

They’re going gaga for likes and friends and fans and followers and the rest of it. But they have no idea how many new subscribers or customers or dollars all that exertion is netting them.

Worse, many of them are paying zero attention to the fundamentals of online marketing – like copy and conversion. They don’t even know these things exist. Bubbleheads.

I read somewhere that for many people Facebook IS the Internet…

Pretty strong hype, isn’t it?

I suppose there are people quaking in their cyber-boots at the thought of venturing into the savage outer reaches of the Web… that bastion of evil lurking beyond the safe, mediated womb-world of Facebook. But do you really want those people as YOUR customers? Maybe you do. Depends on what you’re selling.

For the kind of fierce individualists who make good customers for me, Facebook-addicted prospects are about as attractive as a bag of chicken giblets.

And then there’s the whole Groupon thing…

We’re seeing Groupon copycats popping up everywhere, like Whac-a-Mole. They’re hyping the slashing and burning of prices to blue blazes. There are even Groupon wannabes for information products. I’m willing to bet that if it hasn’t happened already, you’re about to get pitched by one of them.

“Let us expose your company to the multitudes,” they say. “You’ll gain hundreds, perhaps thousands, of brand-new customers. All you have to do is let us sell your $1,000 info-product digitally for $17 bucks and pay us a commission.” Come again?

What should you do when they come knocking? If you’ve got a stale old info-product that few are buying and you can still sell it with a conscience, think of it as lead generation.

But to sell a genuine $1,000 product that offers real commensurate value for $17… get serious. Do you really want to pimp your brand and the perceived value of your products in exchange for a bunch of bottom feeding bargain hunters who will probably never even open your files on their computer?

Let your decision on all things bubbly be based on good old-fashioned RORI, not peer pressure.

[Ed. Note: Daniel Levis is a top marketing consultant, direct-response copywriter, and publisher of the highly acclaimed marketing periodical Persuasion Mastery Club. Get a full month of Persuasion Mastery Club (a $78 value) FREE! No credit card required. Just sign up here.

Listen in while Daniel grills one of the masterminds behind what is arguably the biggest info-product success story in the history of direct marketing – The Doctor’s Book of Home Remedies for Rodale Press. Michael Fishman spills his most cherished secrets on everything from envisioning an info-product idea… to developing it through systematic research… to validating it with small-scale tests… and, ultimately, to rolling it out for juicy profits!

Click here for free access to the mp3 and transcript of this priceless interview and a bonus edition of Daniel’s Persuasion Mastery Club premium e-letter.]

About the Author

This article appears courtesy of Early To Rise, a free newsletter dedicated to creating wealth and success through inspiration and practical, proven advice. For a complimentary subscription, visit http://www.earlytorise.com.

By Cedric Welsch

The currency exchange business is a global financial market where financial centers located in different parts of the globe function as trading places between sellers and buyers. Forex also known as foreign exchange aids in trade and investment by making it possible for businesses or individuals to convert one currency to another. This helps facilitate companies from different parts of the globe to import goods from other countries by paying in the currency of the country they are buying from. It makes it possible for a European company for example to import goods from the United Kingdom by paying in sterling even if the income of the European company is in Euros.

For those thinking about giving the currency exchange market a try, subscribing to trading news or what’s better called as forex news is a must. This will help an investor or an importer to keep himself or herself updated with the goings on in the financial industry. Although the latest news about the currency exchange industry is vital in this line of business, it is still important for traders to study the market extensively to make sure that they make money instead of losing capital.

Foreign exchange began in the 70s and has been deemed as the perfect venue for businesses around the world to interact with each other without being hampered by currency intervention.

It is important to note however that dealing with foreign exchange is not easy. One has to learn about the political climate in a country along with other factors before making a transaction.

A lot of businessmen and start-up investors have tried dealing with currencies by practicing with play money in different websites. When they started making profit in these websites, they figured they should try the real deal. The real transaction is more complicated than a game though because this is not a game of chance.

It is important to keep in mind that one is not relying on pure luck in this type of market but on intelligent decisions that involves a lot of factors. This involves studying the market, the trends, and the different currencies one is contemplating to trade in. A vital part of this industry are companies who seek currency exchange to buy goods or services. Banks and central banks also play crucial roles in this business. Central banks are there to control inflation, interest rates and money supply. More often than not, the central banks have target rates for their own currencies.

About the Author

Some incomprehensible numbers and stats may arise as you hear forex news trading from different sources. The more heavy the gravity of a certain forex scam, the more you need to be aware of it too.

U.S. Coal Production: What Investors Need to Know

by David Fessler, Investment U Senior Analyst
Tuesday, June 28, 2011: Issue #1544

Last week, I wrote about Indonesia’s booming thermal coal export business. It’s the largest exporter of thermal coal in the world, and business is booming, primarily due to demand from India and China.

It turns out the coal export business is just as good for another country, half a world away from Indonesia. I’m talking about the good ol’ U.S.A.

That’s right, coal exports are booming here, too. As you can see from the graph below, published by the EIA, coal export shipments are now at levels not seen in nearly two decades.

This past year, they’ve been on an absolute tear, up 49 percent for the first quarter of 2011 compared to a year ago…

The two-year statistics are just as good: The 26.6 million short tons exported in the first quarter were double the amount shipped in the same quarter of 2009.

Coking or metallurgical coal makes up 64 percent of U.S. exports. But that’s rapidly changing. Like Indonesia, the United States has experienced a tremendous increase in thermal or steam coal.

As you can see from the EIA graph below, in the first quarter of 2011 steam coal exports were up a whopping 160 percent compared to 2010. Coking coal was up a respectable 21 percent for the same period.

What’s going on here? As I’ve said countless times, with commodities, it’s all about supply and demand. In the case of coal, this year’s gains in the United States and elsewhere have come largely at the expense of Australia.

Flooding and typhoons that occurred between last November and this February shut down most of the coal mines in Queensland. The multiple disasters also disrupted rail service and damaged seaport coal-handling facilities.

That translated into an estimated 30-million-ton export shortfall from down under, and that was just from the first quarter. Dewatering the mines, and repairing the railroads and port facilities is ongoing.

Golden Opportunity for Two Big U.S. Coal Producers

Full mine production isn’t expected to resume until sometime in the third quarter of 2011. That means U.S. coal producers are stepping in to fill the gap. This is happening in the face of increasing coal demand from China and India. They’ll be burning coal for the next 100 years, and they can’t get enough of it.

As a result, U.S. producers can ship all they can mine. That’s been a boon to U.S. steam coal producer Arch Coal, Inc. (NYSE: ACI).

Here’s why I like Arch: The location of its mines and its easy access to port loading facilities give it a big advantage over some of its domestic competitors. It ships coal domestically and to customers on four continents globally.

Alpha Natural Resources, Inc. (NYSE: ANR) is another big U.S. coal producer that’s substantially ramped up its production and exports in response to Australia’s woes. Why do I like it? Simple: It has more export terminal capacity than any other U.S. producer.

It also happens to be the nation’s leading exporter of metallurgical coal, and the number three supplier in the world.

If you want to be invested in commodities, and you can get past the environmental guilt, you should definitely consider both of the above suppliers, particularly for the balance of 2011.

Good investing,

David Fessler