Month: November 2011

Nov. 22 (Bloomberg) — Rajeev De Mello, head of Asian fixed income in Singapore at Schroder Investment, talks about the implications of Europe’s sovereign debt crisis on Asia’s economies and financial markets. De Mello also discusses the failure of a special debt-reduction committee in the U.S. Congress to reach an agreement. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

Geothermal Power: A Dark Horse in Renewable Energy

by David Fessler, Investment U Senior Analyst
Tuesday, November 22, 2011

When you mention the words “renewable energy,” most people immediately think of wind and solar. Over the last decade, renewables in the United States (excluding hydropower) have more than tripled.

In 2009, renewables reached 53 gigawatts of installed capacity. Renewables have grown at a compound annual growth rate of 14 percent since 2000.

It’s no big secret that wind and solar are the fastest-growing renewable sectors. In 2009 alone, wind installations here grew by 39 percent and solar PW grew by nearly 52 percent.

Even with these heady growth figures, renewables represent a very small percentage of our overall installed electrical generation capacity: about 4.7 percent as of the end of 2009.

The renewable that’s garnered the least amount of attention in America’s three-year push to renewables is geothermal energy. In stark contrast to the growth figures for solar and wind, geothermal has grown a mere 1.2 percent annually from 2000 to 2009.

In spite of those dismal growth figures, the United States leads the world in geothermal installed capacity at about 15.2 GW as of the end of 2009. Most of that is installed in California.

Advantage Over Wind, Solar

Geothermal energy has one advantage over wind and solar. It doesn’t care whether the wind is blowing, or if it’s a sunny day. The energy available from geothermal is available 24 hours a day, every day of the year.

That makes it available as a baseload source of renewable energy, something most other renewables aren’t capable of.

So why isn’t the United States deploying more of this eco-friendly renewable resource? It’s certainly not because we don’t have the potential resources. Take a look at the map below from the National Renewable Energy Laboratory.

As you can see, it depicts all of the available geothermal “hot spots” in the country. The greatest growth potential for geothermal is located in the western part of the country, with Nevada having the most identified hydrothermal sites with temperatures greater than 90 degrees Celsius.

As you can see from the map below, most of the present geothermal electrical generation is located in California, with over 2.5 GW of geothermal electrical generation. This satisfies about five percent of California’s total energy demand.

However, it’s interesting to note that Nevada has more projects in the planning stages, and it certainly has the potential sites to supply them.

How Geothermal Power Works

Geothermal power production is a relatively simple process. At least two wells are drilled into a known geothermal site. The down-hole water or steam temperature is evaluated to determine what type of system will be constructed, but most of them ultimately involve the use of steam turbines connected to electrical generators.

The water, which can be as hot as 700 degrees Fahrenheit, is brought to the surface, flashed into steam, and used to spin a turbine connected to an electrical generator. It’s then re-condensed and re-injected into the earth through a second well.

The Hold Up

While geothermal power plants are relatively inexpensive to build compared to coal, natural gas, or nuclear plants, they have to be located where the resources are. These are, particularly in the case of Nevada, often in the middle of nowhere.

Lack of nearby transmission lines, especially in sparsely populated western states, has hampered the growth of geothermal.

While the plants are relatively inexpensive, development and construction can take anywhere from four to eight years. This is far longer than solar and wind, and it means potential investors have to wait much longer to recoup their capital investment.

There’s risk involved, as well. Even after extensive testing, not all geothermal resources produce as much energy as originally anticipated. This has led more recent projects to be developed incrementally in order to mitigate this risk and the costs associated with it.

Taking a Back Seat

Ormat Technologies, Inc. (NYSE: ORA) is the developer and operator of the most geothermal resources in the United States. Ormat is vertically integrated, designing the plants and equipment, and developing and operating the final site.

Due to a lack of investment in geothermal, the company has had a somewhat lack-luster year, with its stock down over 35 percent in the last 12 months.

Last quarter, it announced that revenue was up by about 9.2 percent over the same quarter a year ago, but earnings came in at $0.02 per share, well below analysts’ estimates of $0.14 per share. Not exactly outstanding results.

In spite of the zero-carbon footprint of geothermal, there’s a glut of natural gas in this country. There’s also a much bigger focus on wind and solar. At least for now, geothermal seems to be relegated to the back of the renewables bus.

Perhaps this will change at some point in the future, but for the present, investors would be prudent to invest their dollars elsewhere in the energy sector.

Good investing,

David Fessler

Article by Investment U

As yield rates for France’s sovereign debt climbs to levels most analysts feel to be unsustainable, the country’s triple A credit rating is firmly in the sights of the major ratings agencies. 10-year French government bonds rose to 3.5 percent as investors demanded an extra premium for the greater risk now associated with French debt.

The yield spread between 10-year French bonds and the benchmark German rate rose to 158 basis points.

In mid-day trading today, the extra yield demanded by investors for 10-year bonds rose to 158 basis points over the benchmark German rate. With yield spreads also widening in other triple-A economies including Austria and the Netherlands, it is evident that the debt crisis is penetrating the very core of the Eurozone.

Of the top-tier countries, France has the greatest debt burden with a debt-to-GDP ratio of 85 percent. It is also estimated that French banks have the greatest overall exposure to the Eurozone’s most indebted nations with just over $900 billion according to the Bank for International Settlements.

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

By Johnny Smiths

Searching online for a forex robot can bring you quite an array to choose from. The one thing that they all have in common is they do not work. There I said it, someone had too! You can twist it as much as you like the fact is that all forex robots out on the market will fail you at one point or another.

I recently came across a forex robot called Leo Trader Pro that had been shown at the forex convention in Las Vegas. As I researched it more I became more and more interested in its trading ability and what makes it different from the other robots that are out there.

Leo Trader Pro is a completely hands free forex robot that completely automates forex trading, once the software is installed it trades everyday with no human intervention. That statement alone makes this automated forex software stand out above the rest straight away.

The next thing that really got me salivating is the fact that it is not being back tested to give you the results and claims of a high percent success rate. The company give you a username and password to log into their live account on investor privileges to watch their Leo Trader Pro robot in action.

I logged in straight away being prepared for disappointment; I have to say I was quite amazed. Since August 2010 up until this present day the Leo Trader Pro has not made a single loss, granted the account is only trading in lots of $0.10-$0.20 but still the results are the same, NO LOSS.

I noticed that the stop losses on the trades are 330 pips, which I personally felt is out of my comfort zone but then looking at all the trades since the initial $500 dollar deposit it makes sense. The account has had no losses, no additional deposits or withdrawals and stands at $3080 after five months. Imagine if you had the deposit to cover trading at $1-$2 per pip you would have a profit of $30,000 for 5 months.

The Leo Trader Pro is traded on the Metatrader 4 platform which is well recognised, so I couldn’t see any possible scam there. It clearly shows it is a live account being traded real time in front of you I even opened up another platform to see if the prices where the same, they were to the second.

My experience of trading forex over the past 5 years has taught me one thing; investigate any forex program you are thinking about taking on fully, do your due diligence to avoid disappointment. So far I have not found a reason to reject the claims or the proof made by Leo Trader Pro.

About the Author

I don’t expect you to believe me so check out this forex robot for yourself. See if you can find fault with Leo Trader Pro, I know I can’t.

Nov. 22 (Bloomberg) — Bert Hofman, the World Bank’s chief economist for the East Asia and Pacific region, talks about the prospects for China’s economic growth and its implications for the region. The World Bank said China is heading for a soft landing of growth in excess of 8 percent next year, and with most Asian nations has fiscal scope to cushion its economy from an escalation in Europe’s debt crisis. Hofman spoke yesterday in Singapore with Bloomberg’s Haslinda Amin. (Source: Bloomberg)

By Nathan Slaughter, globaldividends.com

When it comes to income-paying energy stocks, most investors think about oil giants like ExxonMobil or Chevron that pay just 2%-3%. But why would you buy those low-yielding stocks, when these securities pay up to 13%?

A little over a week ago, I told you about a striking discovery that caught my team and me a little off guard.

Of the 21 best-performing income stocks of the past decade, 12 of them — 57% — come from the energy sector. (You can visit this link to see the full list of all 21 stocks.)

Here’s a sample of the high yields and strong returns we found in the energy sector…

You can view the rest of the list here. If you haven’t heard of these energy companies, you’re not alone. And if you have heard of them, you’re ahead of the curve.

The truth is, when you mention income-paying energy stocks, the first thing that comes to most investors’ minds are the oil giants like ExxonMobil (NYSE: XOM) or Chevron (NYSE: CVX). But Exxon pays just a 2.5% dividend yield. Chevron pays 3.3%.

However, the yields you can find in the energy sector can be much more rewarding, if you know where to look.

Let me explain…

Last week, I told Dividend Opportunities readers about the #1 performing asset class over the past 10 years — it’s up 288%. But MLPs, or master limited partnerships, are some of the easily overlooked links in the energy chain.

Many income investors have heard of these partnerships, but I know most haven’t. MLPs run critical “midstream” energy infrastructure — the pipelines, storage tanks, terminals and ships that move energy from producer to user. It’s not a glamorous business. But the fact that most MLPs pay steady yields in the 5%-7% range, and some as high as 13%, sure make them stars for income investors.

And if you really start digging for income, you can come across even more opportunities that blow away the dividend yields most people associate with energy investments.

There’s the little-known class of just two dozen companies that T. Boone Pickens pioneered in 1979. They’re called royalty trusts, and they allow anyone to collect royalties from some of the world’s most prolific oil and gas fields. Simply put, royalty trusts allow you to buy a stake in the production of an oil field, just as simply as you would any stock.

I already mentioned two royalty trusts above, but you almost can’t talk about this asset class without mentioning BP Prudhoe Bay (NYSE: BPT). One of the largest and most well-known trusts, BPT gives you an interest in the legendary Prudhoe Bay oil field in Alaska. Thanks to its 8%-plus yield, BPT has returned 2,440% since 2001. It also distributed payments of almost $10 per share in 2010 and is on track to pay out a similar amount in 2011. That’s nearly $10,000 in income each year for every 1,000 shares you own.

Then there are the tanker companies. Every day the U.S. imports 12 million barrels of oil, up 50% from a decade ago. Europe imports about the same amount. That’s great news for the tanker business because the majority of the world’s oil is transported by ship — usually across thousands of miles of ocean. When business is good, profit margins are embarrassingly large. An oil tanker that holds 2 million barrels of oil costs about $18,000 per day to run — and can fetch $180,000 per day on the charter market. These stocks can be volatile, but double-digit yields aren’t uncommon.

And the truth is, these types of securities are just the tip of the iceberg when it comes to energy-focused investments that pay strong dividends. Yet, many investors don’t know they exist… much less that they are offering such appealing dividend opportunities.

As editor of StreetAuthority’s newest advisory — Energy & Income — I’m focused on the energy sector and its dividends. And In the weeks and months ahead, I’ll be bringing you more about the opportunities for income in the energy sector.

Stay tuned…

Good investing!

Nathan Slaughter
Chief Investment Strategist
Energy & Income

P.S. — If you’d like to know more about the income opportunities available in the energy sector right now, you can visit this link to watch a presentation I recently put together. Included are the names and ticker symbols of every one of the 21 best-performing income stocks that I mentioned earlier. I also go into more detail about the high-yield opportunities like MLPs and royalty trusts that I featured above. Visit this link to watch now.

Disclosure: Nathan Slaughter does not own shares of the securities mentioned in this article.

Nov. 22 (Bloomberg) — Mike Franklin, head of investment strategy at Beaufort International, talks about the outlook for equities and his preference for companies with exposure in emerging markets. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

Brace Yourself for Next Week’s Debt Downgrade

by Louis Basenese, Investment U Contributing Editor
Tuesday, November 22, 2011: Issue #1468

Congress desperately needs to be saved from, well, itself!

In a moment, I’m going to ask you to visit our brand-new “emergency measures” website, www.SaveCongressFromItself.org, where we just uploaded a new report.

The report details a secret strategy our Forefathers left behind for Americans to use as a last resort. It may represent our last lifeline!

But first, let me explain why our personal livelihoods could radically change – for the worse – as early as next week.

As you’re probably aware, Congress failed again to pass a budget for the Fiscal Year, choosing instead to operate under a series of stop-gap funding measures. Its Ethics Committees sure keeps busy, though, routinely investigating members for a plethora of improprieties.

Clearly our elected mis-representatives have their priorities backwards. It’s no wonder a late-October poll shows their approval rating hit an all-time low of nine percent.

But Congress’ ineptitude may soon have much greater consequences for Americans than most people realize. As in another debt downgrade, which would spell doom for the economy and the stock market.

At the crux of the situation is Congress’ mutually hopeless “Super Committee” – you remember, that new “bipartisan” House-Senate panel charged with finding $1.2 trillion in deficit cuts over a decade.

The Super Committee has until tomorrow to report its proposal. Or suffer the consequences.

Doomed By Design

Before I get to the solutions, let me back up a bit and show you in the simplest terms possible what’s going on… why I’m so concerned… and what could happen within days…

You see, when Standard & Poor’s downgraded the United States’ AAA credit rating this past summer, it also sent an ominous warning…

…that the joint committee better make progress toward achieving its goal of stabilizing the debt, or else.

There’s a big problem, though. With the deficit panel equally divided between Republican and Democratic members, gridlock is (once again) in the offing.

The Super Committee is operating under a veil of intense secrecy, but a senior Democratic aide has already spilled the beans, saying, “The likely outcome is no agreement will be reached.”

Surprised? Hardly! But here’s where it gets scary…

Failure to reach an agreement would not only erode what little confidence remains in our federal government, but would also trigger a budget sequester. Or in layman’s terms, automatic, across-the-board spending cuts… to defense and domestic programs, specifically.

And such a turn of events would be crippling.

For instance, it would shrink our Navy to the smallest number of ships since 1915. It would reduce our Air Force to its smallest size ever. And it would cut Medicare benefits by $123 billion.

Sequestration would also likely trigger a second debt downgrade – this time, from either Moody’s or Fitch – dealing another blow to America’s already fragile economy.

Worse yet, it could send the stock market into a death spiral.

Such a reality has the potential to erase billions in personal wealth, indiscriminately crushing stocks, ETFs, 401(k)s, mutual funds and pension funds (i.e. – our hard-earned nest eggs).

But it gets even worse…

Even if the Super Committee agrees to a workable solution (highly unlikely), if the structure of the spending cuts and new taxes aren’t just right, it could result in economic contraction, which itself could trigger another debt downgrade and further thwart GDP growth.

So you see? We’re hosed either way!

Our Forefathers Saw This Coming

Having just fought the Revolutionary War to gain independence from Britain, the Framers of the U.S. Constitution knew, firsthand, that over time, the government itself can become the plague.

Or as Lawrence Lessig says in his book, Republic Lost…

“Sometimes an institution becomes too sick to fix itself. Not that the institution is necessarily blind to its own sickness. But that it doesn’t have the capacity, or will, to do anything about it.”

Understanding this, the Framers added to our Constitution an ingenious escape hatch.

Although it’s never been used in the history of this proud country, it’s the only plausible strategy for forcing fundamental reform to our Congress.

We’re calling it “The Framers’ Secret Resolution.”

Again, our Forefathers bequeathed this gift upon us in case of an emergency. We now have a fundamental responsibility to use it, right?

Please navigate to www.SaveCongressFromItself.org and download the full report, titled…

Save Congress From Itself: The Framers’ Secret Resolution.

In it, you’ll find every detail regarding our Forefathers’ brilliant strategy.

As you’ll learn in the report, the Framers intended this to be a very grass roots effort. So raising public awareness may be our only way to save the country.

Good investing,

Louis Basenese

Article by Investment U

By, David Frank, Chief Market Analyst, AvaFX

The British Pound had an interesting week. The Sterling fell against the Japanese Yen and the Dollar while it gained against the rest of the majors. The 1.68 percent loss against the Greenback was relatively modest compared to the Swiss Franc. Along with the British 10 year Gilt (equivalent to the U.S. 10-year Treasury Note) hitting a record low yield, it appears that the Sterling is becoming an alternative safe haven, a notion inferred since the Swiss National Bank implemented a floor on the EUR/CHF on September 6.

How will the Pound perform? Will it be the leader, in the middle of the pack or lose? Maybe, just maybe, the Sterling will perform in the middle. This outlook is predicated on two bases: first, there might be increased capital flows from the Euro into the Sterling (leading to Sterling strength); and second, the Bank of England has indicated it will increase its quantitative easing program as the British economy continues to stagger (leading to Sterling weakness). This week, this tug of war will be in the spotlight.

Although the Sterling finished the week unchanged against the Euro, as Euro zone tensions flare, additional strength appears on the horizon for one of the world’s oldest currency. Liquidity is starting to thin out quickly. In fact, interbank borrowing costs in the United Kingdom are at their highest cost since the 2008-2009 market crash. This might be a cause for concern.

Given these developments, the most important event of the week might be the Bank of England minutes. On November 10, the Bank of England’s Monetary Policy Committee (BoE MPC) decided to keep its monetary policy the same, with the key interest rate at 0.50 percent and the asset purchase program unchanged at £275 billion. However, the notes of the meeting might provide detailed look at the musings of the central bank’s policymakers. Given recent dovish commentary, the Sterling might face some headwinds before and maybe even following the release.

for more information on fx trading, stock trading or cfd trading please visit us at Ava.

DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER.  FOR MORE INFORMATION AS WELL AS UP TO DATE FOREX ANALYSIS VISIT Fx-Insights, daily forex news.

The Real Estate Market Isn’t Dead

by Jason Jenkins, Investment U Research
Tuesday, November 22, 2011

News flash: The residential housing market is a mess. As I wrote in the past, declining values, weak sales, high inventories and legal problems with foreclosures have turned many people off to buying a home. It’s one of the major problems the Executive Office and the Federal Reserve are presently attempting to tackle as the housing market is seen as a direct stimulus to economic recovery.

But here’s something you probably wouldn’t expect: As a group, U.S. REITs have gained about 170 percent from the lows of two years ago. Up north, Canadian REITs have risen more than 120 percent – and both of these totals are excluding dividend payments.

REITs are still well off their 2007 highs, despite their strong gains since 2009. Canadian REITs, as represented by the S&P/TSX REIT Index, are down 18 percent from that high. U.S. REITS, as represented by the MSCI REIT Index, are off 36 percent.

What can be implied is that prices haven’t factored in a full recovery, allowing room for economic missteps. REITs can be seen as the perfect vehicle for waiting out a bear market because they look especially attractive with their dividends.

What’s Driving REIT Activity

Multifamily REITs – and let’s not forget ETFs – are at the forefront. The demand for rentals is growing so strongly that Realtor.com, the largest real estate website, is planning on listing apartments on its site for the very first time.

The Census Bureau tells us that demand for rentals remained high in the second quarter of this year, while homeownership rates declined slightly 65 percent. The national apartment vacancy rate dropped to 9.2 percent. That’s a one-year decline of 1.4 percent.

And there are two reasons to expect demand for rentals to continue to increase:

1. The ongoing trend of families losing their homes to foreclosure will continue to drive up the demand for rentals.

2. A new generation of households that lack down payments, sufficient credit scores, or the courage to buy a home in the face of declining prices will continue to create demand for rentals.

Maybe investors have their heads in the sand but homebuilders haven’t. In June of this year, the number of multifamily home starts with at least two units surged over 30 percent from the previous month.

Similar results were reported in October by the National Multi Housing Council’s (NMHC) latest Quarterly Survey of Apartment Market Conditions. The NMCH reported that 67 percent of the developers it surveyed said they either broke new ground or engaged in ongoing construction of multifamily units.

Better Than U.S. Treasuries

Dividend yields for REITs are trading well above U.S. Treasury yields right now.

Presently, U.S. REITs yield about 3.7 percent, which is decidedly more than the two percent you hope to get on the 10-year. And also, Canadian REITs are yielding around the neighborhood of about 5.6 percent, which is well above the yield on the 10-year Government of Canada bond.

One way to gain exposure to a quality REITs is the Vanguard REIT Index Fund (VGSIX).

Among REIT funds, Morningstar says this fund is “one of the cheapest, no-fuss ways to add sector exposure to your portfolio.” The fund has returned 11 percent over the past decade, and holds each of its stocks in approximately the same proportion as the weighting in the MSCI U.S. REIT Index.

Good investing,

Jason Jenkins

Article by Investment U