Month: October 2011

Source: ForexYard

The publication of the durable goods orders reports from the United States earlier this afternoon revealed a mixed sentiment regarding the manufacturing sector of the world’s largest economy. The nominal figure came in with a reading slightly below forecasts with a 0.8% contraction. The core reading, however, beat forecasts with optimistic growth.

The core reading measures the same level of orders as the nominal reading, but excludes transportation items due to their heightened level of volatility. The core reading revealed a 1.7% increase in durable goods orders for October. This reading, which tends to have greater impact, gave several traders reason to be optimistic, but the downturn in transportation orders sends mixed signals about the direction of American manufacturing.

Read more forex trading news on our forex blog.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Oct. 26 (Bloomberg) — Patrick Perret-Green, Singapore-based head of foreign-exchange and rates at Citigroup Inc., discusses the European sovereign debt crisis and the outlook for the euro. He speaks from Singapore with Linzie Janis and Linda Yueh on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Source: ForexYard

Consumer inflation, as reported by the Reserve Bank of Australia (RBA) this morning, seems to have held steady at 0.6% in October. But the Trimmed Mean CPI, which is similar to the Core CPI reading of other countries since it excludes the most volatile items, revealed sluggishness with only 0.3% growth despite forecasts for a higher reading.

The consumer price index (CPI) measures the change in price paid by consumers and represents one measure of economic growth. If prices are increasing, it can be due to any one or a combination of several factors including higher demand, rising energy costs, rising manufacturing costs, lower supply, longer transportation times (i.e. higher transportation costs) due to increased traffic during the holidays, etc. The sluggish reading suggests that the core of Australia’s inflationary growth is being held lower which may affect the Aussie’s (AUD) value over time.

Read more forex trading news on our forex blog.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Nathan Slaughter, DividendOpportunities.com

Note: At Dividend Opportunities our focus is clearly on companies that pay high and lasting dividends. But we also realize that not every investing opportunity includes high-yields. So today we’re bringing you a compelling article by Nathan Slaughter — Chief Investment Strategist of StreetAuthority’s advisory Scarcity & Real Wealth. Sometimes it’s not a bad idea to see where the “smart money” accumulates. Hope you enjoy!

Here at StreetAuthority we like to keep tabs on where the richest people in the world are putting their money… (in fact, we even put together a recent presentation on the subject).

After all, billionaires like Warren Buffett and Bill Gates have proven themselves as some of the smartest investors on the planet.

In fact, Buffett has been beating the market for so long that it defies belief.

Anyone with the good judgment to invest $10,000 in Warren Buffett’s partnership at its inception in 1956 (and to transfer into Buffett’s Berkshire Hathaway (NYSE: BRK-B) at the partnership’s termination) would be sitting on an astonishing $432 million today — after all fees and expenses.

But these days, he is far from the only billionaire worth knowing about.

Booming economies from Brazil… to Russia… to India… to China have created a number of billionaires around the world… many of them are unfamiliar to U.S. investors.

Yet people all around the globe are familiar with where they made their money.

That’s because it’s no secret. People have been making money here for hundreds of years.

In fact, when you look at the 100 richest people on the planet, 29 of them made their fortunes in one single area… natural resources. (Meanwhile, even “classic” billionaires like Buffett and Gates have large investments in natural resources.)

This is by far the largest single group in the top 100 when you break them all down by the source of their wealth.

But that’s not really anything new.

When you look back in history, you find that natural resources have created most of the great family fortunes of lore.

And some of these historical fortunes make today’s billionaires look like pikers.

Oil tycoon John D. Rockefeller was not only the richest man in history… he had more money than Warren Buffett, Bill Gates, Sam Walton and Carlos Slim combined.

None of these poor guys can hold a candle to the $336 billion fortune (adjusted for inflation) amassed by Rockefeller.

Rockefeller started out as a wholesale grocer and went on to found Standard Oil, which grew to be a gargantuan monopoly.

Rockefeller made his fortune on the quintessential commodity of modern times: oil. But guess what? The second-richest man of all time also made his fortune in a commodity business.

Andrew Carnegie emigrated as a child from Scotland to Pittsburgh and began working as a bobbin boy in a textile mill. He changed spools of thread for 12 hours a day, for $2 a week.

By the time he was 30, he owned iron works, railroads and oil wells. But his real money came from steel. By the late 1880s, Carnegie’s steel empire was the world’s largest maker of steel rails and iron.

So why have natural resources done so well over time?

One word: scarcity.

Once you burn a barrel of oil or a ton of coal, it’s gone forever. Every day we lose more and more of our planet’s precious resources. And even if new supplies come online, it takes a lot more time and effort to get them out of the ground than it does to use them.

And today, demand continues to surge. Growing economies in the emerging markets are continually putting pressure on global supplies.

China alone has recently gone from being an exporter of oil, to the second largest importer. With that sort of demand, you have serious pressure building under prices.

In fact, many of the best-performing stocks in history have all benefited from the scarcity dynamic.

When demand is infinite and supply isn’t, you don’t need a visionary leader or a breakthrough gizmo. And you don’t need a one-in-a-million marketing genius like Steve Jobs at the helm.

So it’s no wonder that half of the top 20 best-performing stocks in the world over the past 10 years were natural resource stocks:

As you can see, the best-performing stock in the past decade was the natural resource stock Fortescue Metals — an Australian company that sells to China — which returned better than 50,000% according to Bloomberg.

FMG wasn’t mining gold, silver, or some other high-priced precious metal either. It made its fortune in iron ore… about as dull a business as you can get.

Obviously, not every natural resource stock is going to experience massive returns like the ones investors saw from Fortescue. And there will be ups and downs. But you can’t deny the opportunities that commodities have presented investors over the last 10 years. And going forward, the next decade looks just as opportunistic.

So when my team and I recently put together a report titled The 9 Best Stocks to Own for the Next Decade, it should be no surprise that we focused on natural resource stocks. After all, not only have natural resources spurred the fortunes of one-third of the world’s richest people, but even those who didn’t make their money in commodities, including Bill Gates, Carlos Slim, and investing legend Warren Buffett, have been buying these types of investments for years.

To find out more information about The 9 Best Stocks to Own for the Next Decade — including a few names and ticker symbols — you can watch this presentation here.

Good investing!

Nathan Slaughter
Chief Investment Strategist
StreetAuthority Market Advisor, Scarcity & Real Wealth

Disclosure: Nathan Slaughter does not own shares of the securities listed in this article. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio.

Oct. 26 (Bloomberg) — Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley, talks about the outlook for the euro amid efforts by European leaders to find a solution to the debt crisis. Stannard also comments on the yen with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 26 October, 08:50 EDT

U.S. DOLLAR gold bullion prices rose to $1720 an ounce in Wednesday’s Asian trade – the highest level for over a month – before easing back to around $1700 by lunchtime in London.

Silver bullion also gained, climbing to $33.95 – 13.3% above where it started the month.

Yesterday afternoon saw gold bullion leap 3.1% in less than three hours following news that European finance ministers had cancelled a meeting scheduled today – though the EU leaders summit is expected to go ahead as planned.

“The rally…marks the first time in several weeks that gold has traded inversely to equities,” says one gold bullion trader here in London, citing the 2% fall in the S&P 500 index.

Stock markets on Wednesday morning were fairly flat, as were commodities. Longer-dated US and German government bonds sold off, while UK Gilts gained.

Eurozone officials resumed discussions in Brussels on Wednesday – ahead of a summit scheduled for this evening at which leaders will hope to agree a deal to tackle the ongoing debt crisis. A meeting of Eurozone finance ministers had also been scheduled for today, but was cancelled on Tuesday afternoon.

Talks are expected to focus on three main areas: recapitalization of Europe’s banks, the amount by which Greek government debt should be written down, and how to use the European Financial Stability Facility to prevent contagion spreading further.

Leaders agree banks need around €110 billion of additional capital to withstand future shocks, according to press reports.

It is uncertain, however, how big a loss holders of Greek government bonds will be asked to take. Greece’s finance minister is reported to have told his country’s banks that the figure will be around 50%.

Leaders are expected to discuss two options for the EFSF. One involves insuring a portion of any losses on newly issued sovereign debt, while the other would see EFSF funds used to set up a triple-A rated special purpose vehicle – which would issue its own bonds and use the proceeds to buy the debt issued by at-risk sovereigns.

Europe’s leaders are “saying a lot of the right things,” reckons US Treasury secretary Timothy Geithner.

“They’re clearly working on it and they’re moving with a greater sense of urgency. That’s all welcome, but until we see what they come together with, it’s a little hard to evaluate.”

“The numbers are not yet finalized,” one European Union official told newswire Reuters on Tuesday.

“The leaders will agree on the options…but whether it will be an agreement with all details remains to be seen. I think it will be challenging…it will be very difficult to agree on everything.”

“Buck up,” says Barry Eichengreen, professor of economics at the University of California at Berkeley.

“This crisis is going to be with us still for a while…I fear they’re not going to take the kind of steps to resolve it.”

In Italy meantime the government was “at risk” last night, according Umberto Bossi, leader of junior coalition partners the Northern League.

Italy’s government was told by EU leaders to draw up fresh austerity measures ahead of today’s summit, but proposed pension changes have reportedly led to disagreement within the country’s ruling coalition.

“If we touch pensions the people will kill us,” said Bossi.

Prime minister Silvio Berlusconi was reported to have reached a compromise Wednesday morning – though it remains to be seen whether this will be deemed sufficient by his fellow Eurozone leaders at today’s summit.

Italy is the Eurozone’s third-largest economy, and its biggest borrower – with a debt-to-GDP ratio of 120%.

French banks meantime have the highest exposure to Italian debt in the European banking system – holding nearly $400 billion in Italian government and private debt instruments at the end of last year, more than twice that held by German banks, according to data from the Bank for International Settlements.

Elsewhere in Rome, Mario Draghi – who takes over as ECB president at the start of next month – says “the Eurosystem [of European central banks] is determined, with its non-conventional measures, to prevent malfunctio0ning in the money and financial markets creating an obstacle to monetary transmission.”

Draghi’s comments are a coded implication that the ECB will continue to buy government debt issued by Italy and other troubled sovereigns, according to Reuters.

Here in the UK meantime, plans have been approved for Scotland’s first gold mine. Scotgold Resources expects its gold mining operation in Loch Lomond National Park will eventually produce 0.6 tonnes of gold bullion per year – and around 2.4 tonnes of silver bullion.

Total world gold mining production last year was an estimated 2698 tonnes, according to data published by the World Gold Council.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Duqu: Another Reason to Invest in Cyber Security

by Justin Dove, Investment U Research
Wednesday, October 26, 2011

As the war in Iraq finally draws to an end, there may be another war looming in an unconventional battlefield.

A newly discovered piece of Trojan malware, simply called Duqu, brings the possibility of sophisticated cyber warfare one step closer…

And this new super-Trojan could lead to expanded enterprise and government spending on cyber security.

A Precursor to a Stuxnet-Like Bug

Duqu is said to bear striking similarities to Stuxnet, the infamous malware that sabotaged Iran’s nuclear enrichment centrifuges last June and may be a precursor to a similar program. According to a Forbes report, “Roughly 99% of the Duqu software rules are the same as Stuxnet’s. The source codes and keys for encryption are the same, only Duqu is more sophisticated.”

“This is definitely a troubling development on a number of levels,” Ronald Deibert, Director of Citizen Lab told Technology Review. “In the context of the militarization of cyberspace, policymakers around the world should be concerned.”

While Stuxnet was used to effectively control computer systems in Iran last year, Duqu is said to be more of a spying virus. According to a report published last Thursday by Symantec (Nasdaq: SYMC), “The attackers [which utilized Duqu] were searching for information assets that could be used in a future attack.”

The code is said to be able to monitor messages and processes. It can also unlock other information, including the design of supervisory control and data acquisition (SCADA) systems. SCADA systems are the types of systems used at industrial plants and power plants to centrally control functions.

Government Backing?

According to Technology Review, Stuxnet “went far beyond shutting down or disrupting operations.” After infecting the systems, it damaged the centrifuges so that uranium could not be separated into yellowcake. In what Technology Review dubbed “a Hollywood touch,” Stuxnet was able to display normal information on system’s interface so that the operators wouldn’t notice anything was up.

Even more troubling is the likelihood that these bugs have been developed and implemented by government agencies. Back in January, The New York Times postulated that Stuxnet “was designed as an American-Israeli project to sabotage the Iranian program.”

According to the Forbes report, “While no one government came forward to claim responsibility for Stuxnet, those on the front lines of IT security say that with 100 percent certainty it was a government agency that created it, like cryptologists at the National Security Agency of the U.S. or a similar organization in Israel and the U.K.”

No Connection Found Between Targets

It appears that Duqu is more of a testing program. While Stuxnet had a clear target and objective, Duqu seems to be spread all over the globe with no clearly defined targets.

Kaspersky Lab Malware Expert Sergey Golovanov told Forbes there were no commonalities between the victims, and that the victims were cast across the globe. At least one university and multiple companies were infected by Duqu.

According to the Symantec report, “The threat has been highly targeted toward a limited number of organizations for their specific assets.”

While there aren’t any clues that point to what assets were targeted, the important thing is that not only governments are being attacked, but enterprises. Duqu and subsequent threats are likely to spread a wave of paranoia that leads to increased spending on cyber security.

Companies to Benefit

The most obvious company standing to benefit is Symantec, which created the detailed report on Duqu. It’s an industry leader in IT security in the personal and enterprise arena.

Other possible plays include:

• The KEYW Corporation (Nasdaq: KEYW) is a small-cap company providing “mission-critical” cyber security for U.S. government defense and intelligence agencies. Its stock is still about half of its 52-week high after the recent sell-offs in the broad market.

• Iron Mountain Inc. (NYSE: IRM) is a diversified play that’s unaffected by recent market fluctuations. Among many services, Iron Mountain provides data storage and recovery services. If a large company is in fear of having its database or system infected or wiped out, they may want to find services, such as Iron Mountain’s, to keep information safe.

• SAIC, Inc. (NYSE: SAI) is another diversified play that offers cyber security services to government agencies and large enterprises, among many other services. It was battered by the market the last few months, however, it recently announced a big partnership with McAfee and has a very attractive P/E at 7.50.

• Speaking of McAfee, Intel (Nasdaq: INTC) bought the cyber-security leader last year. While it’s just a small part of Intel’s portfolio, it should help continue to drive some growth in Intel’s recent run of better-than-expected earnings reports.

As these threats become more sophisticated and more frequent, look for governments and large enterprise to continue to spend big on cyber security to secure systems and data. Investors should look at companies that offer these types of services, as growth should continue in the sector for some time.

Good investing,

Justin Dove

Article by Investment U

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

By The Sizemore Letter

In September, I challenged readers to come up with two tech stocks that are more unloved than Microsoft (NASDAQ: $MSFT) and Intel (NASDAQ: $INTC)—see “Wintel: The Ugly Sister and the Buy of the Decade.”

As I wrote in September, it’s not that investors hated the old Wintel duo.  “Hate” is reserved for more recent fallen stars like Netflix (Nasdaq: $NFLX), which we’ll return to later. No, investors were indifferent to Microsoft and Intel. In the era of smartphones and iPads, Microsoft and Intel seemed a little like buggy-whip makers in the age of automobiles.

There were two major problems with this line of thinking.  First, both stocks were incredibly cheap, trading at single-digit P/E ratios and yielding more than the 10-year Treasury note.  Secondly, both remain wildly profitable and continue to post record earnings.

Intel knocked the ball out of the park last week with its third-quarter earnings release, sending its share price up sharply.  Company profits were up 17 percent over last year, setting a new record of $3.47 billion, or 65 cents per share.

I believe that Intel will eventually come up with a worthwhile chip product for tablets and smartphones.  Or if not, they’ll buy someone else’s design.  But even if Intel never successfully breaks out of its core markets—and even if the company’s growth rate ground to a halt tomorrow—the stock would be cheap at current prices.  In fact, Intel could rise by 50-100 percent and still be cheap given the safety and quality of the company.

Ignore the drone of self-proclaimed tech experts that tell you the PC is dead.  iPads are great, and the market for tablets is expanding faster than the market for desktop and laptop computers.  But Intel’s results should be proof enough that the PC market still has quite a bit of life left in it.  Intel trades for 9 times forward earnings and yields 3.6 percent.  Intel is a buy.

Microsoft, the other half of the Wintel duo, also released earnings last week.  Earnings were up a respectable 6 percent, matching analyst estimates.  Diluted earnings per share were up 10 percent.  Interestingly, the Windows franchise broke a three-quarter slump, showing modest gains in sales of the operating system in the last quarter.

I might add that Microsoft was able to post these gains in a sluggish economy with the highest unemployment in 30 years.  Cash-strapped businesses and consumers aren’t exactly queuing up to buy new computers, choosing instead to get a little more wear out of their existing equipment. That Microsoft is able to grow its sales and profits in this environment is testament to how essential its products are in the modern world.

Microsoft, like Intel, finds itself in the position of having to convince investors that it is still relevant in the age of the iPad.  PCs just aren’t cool anymore.

The company has collaborated with Facebook and has begun to incorporate Skype into its products (and into Facebook too, for that matter). But thus far, Microsoft has come across looking like high school mathlete geek desperately trying—and failing—to fit in with the popular kids.

I’m ok with that.  As a contrarian investor, I prefer to buy companies that are distinctly uncool.    It is the unloved and discarded stocks that offer the best returns to investors patient enough to wait for the whims of the investing masses to change.  In the case of Microsoft, we’re getting paid handsomely to wait.  The company recently raised its dividend by 25 percent and currently yields just shy of 3 percent.  Given that this is more than you can earn in the bond market, I’m content to wait indefinitely.  We’re still making a decent return is a very rough market.

Chasing trendy stocks is a risky business.  Consider the case of Netflix  Earlier this year, the former growth stock darling could do no wrong.   The company that put Blockbuster into bankruptcy with its DVD-by-mail business was aggressively expanding its internet streaming offering.  But why anyone would pay a premium multiple for the stock was a mystery to me.  The company had no competitive advantage, or what Warren Buffett likes to call “moats.”   There was absolutely nothing to stop a well-funded rival from offering the exact same product, and there was already a small degree of overlap with the streaming site Hulu.  And Netflix was also completely at the mercy of its content providers, the movie and TV studios.  Given the slow growth plaguing all media businesses these days, it was only a matter of time before the studios demanded a bigger slice of Netflix’s profits.

Let me be clear on something:  I like Netflix.  I am a customer myself, and I believe that the company’s streaming service is the future of TV.  But there was so much optimism baked into the share price, I couldn’t even consider buying it or recommending it in this newsletter.  Even today, after falling by more than 60 percent from its high, the stock is still expensive.  It trades at nearly 30 times trailing 12-month earnings and 18 times estimated 2012 earnings.  And given the number of customers the company is losing in the aftermath of their botched divesture of the DVD-by-mail business, those earnings estimates may prove to be overly optimistic.

I bring all of this up not to bash Netflix and its management but rather to make a point.  When it comes to investing, you don’t want to be trendy.  Yes, you can make a boatload of money in a hurry.  Plenty of instant millionaires were minted during the go-go days of the 1990s dot com boom.  But when you invest in what is currently trendy, you are playing a risky game of musical chairs.  It can be a lot of fun…until the music stops and you find yourself without a chair.

When you buy a stock that is unloved and cheap, there is always the risk that it becomes more unloved and cheaper.   But if I’m paying a reasonable price and getting paid handsomely in cash dividends to wait, that is a risk I’m willing to take.  At current prices, Microsoft and Intel remain the buys of the decade.

If you liked this article by Sizemore Insights, you’d probably enjoy The Sizemore Investment Letter, our premium members-only newsletter. Click here for more information.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.