EURUSD’s downward movement extends to 1.3539

EURUSD’s downward movement from 1.3832 extends to as low as 1.3539. Deeper decline to test 1.3462 support is possible, as long as this level holds, the fall could be treated as consolidation of the longer term uptrend from 1.2756 (Jul 9 low), one more rise towards 1.4000 is still possible after consolidation. On the downside, a breakdown below 1.3462 support will indicate that the uptrend from 1.2756 had completed at 1.3832 already, then the following downward movement could bring price to 1.2500 zone.


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When to Sell Stocks


Today is the final day of ‘Retirement Week’.

We hope you’ve got something out of it.

During this week we’ve shown you how to put together the pieces to develop your own retirement plan.

We’ve show you the importance of understanding risk, how to allocate your assets, a simple savings plan to get you started, and an overview of the strategies you can use to help build and preserve your retirement savings.

Today we’ll touch on a subject most pro investment advisors prefer to ignore – how do you know when to sell stocks?

If you don’t think about how to identify selling opportunities then you’re at the complete mercy of the market. And even worse, all the good work you’ve done building your portfolio will count for nothing.

Let’s look at some of the key issues surrounding the undervalued skill of knowing when to sell stocks

The latest issue of Vern Gowdie’s Gowdie Family Wealth investment advisory outlines the importance of knowing when to sell.

He also explains the bizarre attitude many in the mainstream have towards those who warn about the risks in the market.

Vern doesn’t make this comparison, but we will. To many in the mainstream, a rising stock market is akin to a football team. So when someone dares to say stocks could fall, the mainstream sees it as an insult to their ‘team’.

And so they fight back with all sorts of vitriol. But that’s fine. Contrarian investors tend to have thicker skin than most other investors anyway.

That brings us back to Vern’s comments in his latest report.

The Market and Ridicule in Tandem

In his report, Vern details how the mainstream dislikes any talk of over-priced markets and despises even the notion that stock prices could fall. As Vern explains:

Years of being exposed to institutional research and economic opinion left me disillusioned with mainstream thinking; ‘cash for comment’ is my view on institutional commentary. Everything is always an opportunity for the institutions. Major threats (credit bubbles, unbridled money printing, overheated share markets etc.) are not dissected with any real gravitas. If any credence is given to an obvious risk, the institutional worst case scenario is always a ‘soft’ landing followed by a resumption of growth.

If you can find one mainstream Australian economist or investment commentator who warned against the US credit bubble prior to its bursting, please let me know. They are as rare as the dodo…

Bill [Bonner] and a number of independent commentators (many of whom I subscribe to) had been sounding the warning bell on the US debt crisis for a number of years. And therein lies the problem with big picture thinking – you can identify trends early, but it can take years before your analysis is proven correct. In the interim you are easily dismissed as a ‘chicken little’.

In my experience, [the] market and ridicule operate in tandem; as the market goes higher, so too does the volume of ridicule.

We don’t usually like to reprint such long quotes, but everything Vern says in this quote is true and important to understand.

This mainstream attitude all feeds into the mind of investors. It’s the combination of peer pressure, the fear of missing out on further gains, and the potential of people calling you a kook or misfit if you dare say or do anything that’s contrary to mainstream thought.

And yet after the major crash in 2008 the mainstream acted in one of two ways: they said it was obvious the market would crash so don’t give the ‘chicken littles’ too much credit. Or they claim that no one saw it coming because it was so unexpected.

They can’t have it both ways…but they try to.

When to Sell Stocks

Look, we’re not saying it’s easy to know when to sell. It can be one of the hardest things to do.

What if you sell today and the stock price doubles tomorrow?

That’s the thing that worries investors the most, that they’ll miss out on further gains. But as any investor knows, gains can quickly turn into losses. So, when do you sell?

Well, there are several variations on a theme that we follow with our personal share portfolio.

The first and most important part of selling is in the buying – don’t over-expose your portfolio to the stock market. That’s something you should follow regardless of market conditions.

Stocks can fall quickly. As you saw in May and June this year, one week things looked great, the next they didn’t look great as the market fell 10% in just a few days.

But assuming you haven’t piled too much of your cash into stocks, the best technique we’ve found over the years is to ‘bank’ profits when a stock hits a particular level.

As to what level you choose, that’s up to you. One of the most popular techniques (especially with growth stocks) is to sell half your position when the stock price doubles.

That way you’ve effectively taken out your initial stake and you’re leaving the profits to run. It’s a good strategy. It means that even if the stock price goes to zero you haven’t lost any of your initial stake.

Another strategy is similar, but involves taking out your initial stake plus the amount you would normally expect to make from a growth stock during that time.

For instance, if the stock doubles in a year and your investment has gone from $1,000-worth of shares to $2,000-worth of shares, you could sell $1,300-worth which would equal your initial stake plus an extra 30% based on what you would normally expect from a higher-risk growth stock.

That way, even if the stock price goes to zero after you’ve sold, you’ve still banked a 30% gain on your initial investment. Of course, these examples don’t include transaction costs and tax consequences, so bear that in mind too.

Selling Stocks is as Important as Buying

In short, selling should be just as much a part of your investment strategy as buying. And yet it’s the part of investing that most people ignore.

Right now, we believe we’re in the middle of a bull market that could last another two years. But we’re not ignorant. We hear the warnings about the chances of a market crash – we hear them because they’re mostly coming from our colleagues.

That’s why we only recommend a 30-50% exposure to stocks, with at least half of that in dividend stocks. We know the market could turn on a sixpence at any time.

So if we’re wrong and stocks fall, we need to make sure we bank some profits on the way up, and that we can easily sell stocks if the market heads down.

Bottom line: don’t ignore those calling for a market crash; you’ll be grateful for the warning when the crash finally comes.


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AUD vs USD – Which Currency Should You Bank On?


The letter below came from a Gowdie Family Wealth reader recently. Since the answer has a lot to do with my current strategy for Aussie investors, I thought I’d answer it here.

Hi Vern,

I’ve been wondering about the parlous state of the US economy – if/when it goes kaput will the Aussie $ strengthen against the greenback?


Hello Ray!

Good question.

With the debt ceiling issued now settled (at least until Feb 2014) things will continue as before – more excessive spending financed by the Fed’s $85 billion per month asset purchases.

Yes the US is in a parlous state, however my theory is GFC Mk II will not come from the US. There are countries in a far worse position than the US that I think will crumble well before they do. Japan, Italy, Spain, Greece and more importantly France are so far down the ‘debt hole’ that there is no coming back.

The ageing demographic in Japan is a real worry; lower tax revenues + higher entitlement spending is a no win equation for a country with public debt nudging 250% of GDP. 

The southern European states and France have an embedded socialist culture. Again, retiring boomers are going to test the elasticity in these countries’ welfare and healthcare budgets.

Based on nothing other than history my forecast is that the spark which sets fire to the global debt tinder is going to come from a source no one is really looking for. The surprise factor is what throws markets into a death spiral.

Expect the Unexpected

Look at the US share markets over the past few weeks leading up to the debt ceiling ‘crisis’. Yes, they were down a few hundred points. But nowhere near the 6,000+ point fall that accompanied GFC Mk 1.

This tells us the market was a little concerned but not overly worried. Everyone was looking in the direction of the debt ceiling ‘crisis’. It was not an unexpected ‘crisis’.

Ironically, the one we have to worry about is the one we don’t know about – as illustrated by former US Defence Secretary Donald Rumsfeld’s famous line about the ‘unknown unknowns,‘ which leads me to answer your question regarding the USD versus the AUD.

Here’s the important part:

IF (and that’s all I can go by is IF) the next financial crisis is sparked beyond the shores of the US, there will be a scramble to buy USD as investors rush to the perceived safety of US Treasuries. Yes these are the same Treasuries that up until last Wednesday may have been defaulted on – the markets are so fickle!

This is what happened in GFC Mk 1. Nearly every currency fell against the USD as money poured into the US Treasury market. At one stage, investors were buying negative yields just to have the security of a US Treasury Bond.

So while the US economy is rickety, there are others on a far less stable footing that I think will topple well before the US. The domino effect should see the USD strengthen significantly.

My assessment could be wrong. However, the odds of the US being the first to teeter are, in my opinion, low. The Fed can print money till the cows come home, whereas most other sovereigns (especially those with a history of default) are more likely to shirk their bond holders and in turn spark a rout in the bond market.

Time will tell but I am still comfortable with holding US dollars at this stage. The Reserve Bank of Australia will also want our dollar sub-90c to restore some competitiveness to our manufacturing industry. In fact, don’t be surprised if the RBA starts participating (via dollar selling) in the global currency war (the one no G20 official speaks about.)

The skittishness we have witnessed is all part of the theatre that accompanies the growing instability in the global post-GFC economy. Anyone with a passing interest in markets and the economy either consciously or subconsciously knows the system is being propped up rather than genuinely recovering.

Eventually something gives and I suspect it is going to be a left-field event. Waiting and watching for this debt drama to play out is never easy. Each day feels like a week. This is why patience (together with cash) is the greatest asset for prudent long-term investors.

Vern Gowdie+
Contributing Editor, Money Morning

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Why Chen Lin Is Buying Fracking Stocks and Selling Gold Holdings

Source: Tom Armistead of The Energy Report (10/31/13)

Chen Lin, author of What is Chen Buying? What Is Chen Selling?, goes wherever he sees returns. In the summer, he bought mining stocks when the yellow metal hit $1,200 per ounce. Now, he’s trading in his gold names and moving into the fracking space after a three-year hiatus. In this interview with The Energy Report, Lin names the companies he’s buying to play a likely energy sector bottom and tells investors to actively manage their portfolios in the coming stock-picker’s market.

The Energy Report: Chen, welcome. What is your take on the international prospects for drilling in 2014?

Chen Lin: Actually, the most exciting development for me is closer to home. I think the major action is in the U.S. and Canada. The whole fracking revolution is picking up steam. We could see as much as a 1 million barrel per day (1 MMbbl/d) increase in North American oil production! The United States is finally inching closer to energy independence, which could have a profound impact on the world.

TER: What are the catalysts that are going to move oil and gas in the coming year?

CL: Right now the key to watch is the Fed—if it’s going to taper, when it’s going to taper. This year I was betting the Fed would delay tapering. I think it probably will taper, at the latest, early next year. Fed action could have a very strong impact on the commodity space, for commodity prices as well as commodity stocks.

TER: How will these conditions affect the oil and gas companies in your portfolio?

CL: My portfolio in oil and gas is quite broad. I try to pick the stocks that can move on their own. They can move on their news, trading results, their success in certain areas. They won’t be affected too much by the Fed or by the commodity price. The tapering will actually have a negative impact on energy and stocks in general.

TER: How has your oil and gas portfolio been doing this year?

CL: The first half was very difficult for commodity stocks in general, not just energy. Mining of any kind was hit hard. Stocks just continued to go down without any reason. Then oil stocks started to scream back in the past month. I was very lucky this year because in the summer I was buying gold stocks. Then when gold hit $1,400 per ounce ($1,400/oz), I told my subscribers that I was planning to sell. I sold most of my gold stocks in late August/early September. I was just buying energy, and energy bottomed around that time, so many have already moved a lot in the past month.

TER: Are you expecting to add to your oil and gas portfolio or drop any companies?

CL: I’ve been adding energy plays lately. I also sold some of the energy plays, like Coastal Energy Co. (CEN:TSX.V), in which I had quite a large position. I reduced my position because it depreciated a lot. The next 6–12 months will probably be quite a tricky timeframe, so you have to actively manage your portfolio. I try to add and drop, get in and out of companies actively.

TER: In one of your letters you said you were buying fracking plays this year. Why weren’t you doing it earlier?

CL: Because they were very bad performers in the past three years. I sold fracking plays three years ago with a very good profit. At that time, fracking had just started and people were rushing into the space. I got out because I realized the capital costs are very high for a lot of companies. Issuing debt for a small company costs a lot of money.

Three years later, fast-forward, the fracking play companies have done so badly since then. Many are down as much as 90%. They are down so low that if the management chooses to sell all its land and the shale position, you can get a lot of backers at this current stock price, which means that the stock price was pressured very, very hard.

Meanwhile, Exxon Mobil Corp. (XOM:NYSE) is actively buying, and all the other major companies are moving into the fracking plays. There are a lot of deals going on. Also deals from China, from Korea, from Japan. Then the deals traded at a much higher premium to stock prices. Part of the reason I got into the fracking play is that it’s a good value proposition. There are not a lot of management teams that are not willing to sell in case of a takeover, for example, so that also could benefit shareholders. That’s why I got back into the fracking plays about one to two months ago.

TER: You say the fracking companies were doing poorly before. Were the oil companies doing any better than the average, or were oil and gas doing about equally poorly?

CL: The oil and gas companies were not doing well in the past two years in general, but the fracking plays were doing even worse. There were multiple reasons. West Texas Intermediate (WTI) was low, and the spread of WTI to Brent was very high, $20–25 sometimes. Companies were forced to sell at a price well below Brent. In order to continue drilling, they had to borrow money or issue shares. Even my recent best performer, Penn Virginia Corp. (PVA:NYSE), performed very poorly. It was a $30 stock in 2010. It went down all the way to $4/share this year. I bought it at $4.70, and it went over $7 in one month, which is good for me and my subscribers, but imagine a shareholder who bought at $30 in 2010. Same thing for my other best performers lately: Rock Energy Inc. (RE:TSX) was trading at $6 in early 2011; it dropped all the way to $1. I was fortunate to get in at ~$2 a couple of weeks ago; now it’s over $3. BNK Petroleum Inc. (BKX:TSX) was more extreme, trading at around $6 in early 2011, it dropped below $0.40 and is now close to $2. If BNK has any successes in Poland in a few months, I believe the stock can revisit the old high. You can see how volatile these stocks can be, and I was very fortunate to have sold my fracking stocks in late 2010 and early 2011.

TER: What has changed in the fracking plays to make them more attractive now?

CL: There a couple of reasons. The WTI/Brent spread has narrowed dramatically in the past six months. At one point, WTI/Brent was trading at par this year. That’s the first reason. Second, the fracking technology has improved. Most companies know how to drill a well cost-effectively and to get the most production out. As technological development is ongoing, a lot of questions have been answered. Infrastructure started building up. We see there are some pipelines at least in the lower part of United States already built up. Finally, large companies and Asian countries are starting to buy into the fracking play, paying as much as $60,000 per acre. That was a record.

TER: Are you still expecting a major decline in the price of oil?

CL: I’m concerned about the oil price. One of the reasons is that the production going on in the United States and Canada has tremendously increased. The annual production rate increased by nearly 1MMbbl/d between 2011 and 2012. The Middle East situation is starting to quiet down as well. Recently I heard Saudi Arabia has been cutting back to maintain the high oil price. It’s hard for me to imagine the country continuing to do that at its own expense.

TER: What draws your attention to a particular energy company, like Pan Orient Energy Corp. (POE:TSX.V) or Mart Resources Inc. (MMT:TSX.V), that motivates a buy decision?

CL: Companies I favor have their own unique stories; the companies can move on their own. They’re not dependent, for example, on the financial market. They don’t need to raise money. They’re going to have a very significant company-changing event potentially happening in the next 3–6 months. Those I believe can significantly move the stock price.

TER: Which companies on your scorecard have been doing their best work this year?

CL: If you look at the long-term performance, probably Mart was still my best performer. I got it at $0.15. I think I told my subscribers it would become one of my largest positions. It’s over a dollar now. Consider how much dividend that’s paid. You get all the money back if not more.

Mart is going to build its own pipeline for its Nigerian oil field because the current pipeline is poorly maintained, and the stock suffered because the pipeline loss recently was as high as 20–25%. People were concerned so much oil was stolen. However, when Mart builds its own pipeline, which the company expects to do in H1/14, then it can improve oil production and move to a much better maintained pipeline with much less loss. That will be a major catalyst.

Again, it’s a Nigerian company. A lot of people have doubts about a Nigerian company. Sometimes people need to see the pipelines built before investing in the stock. You need some patience. They’re paying about $0.20/ year dividend. I just received my recent quarterly dividend. You keep getting paid while waiting.

TER: Mart Resources’ production losses at the Umusadege oil field in Nigeria were much greater this year than last. It looks like it was because of longer and more frequent export pipeline shutdowns and oil theft. How would Mart make its new pipeline better protected?

CL: It will go through a completely different system. This is the other export route where losses are a small fraction of the AGIP pipeline.

It’s an old Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE) pipeline. At last report, Mart was only a few kilometers away from connecting.

If you look at the pipeline from this year and last year you will understand why the stock went down this year. Last year, the pipeline was running fine and Mart was doing fantastically. In the past two or three years Mart was the best performer among all energy stocks. This year the pipeline has had a lot of issues—flooding, theft. Mart shares were hit hard, though it was completely out of the company’s control. Hopefully when the new pipeline starts, the new route from the Shell exit facility, we will see a very different company. Then Mart will triple production, so you will see much larger production, more cash flow and potential increase of dividend, which is already very high. I think that dividend is 13–14% right now.

TER: Do you have a target expectation for Mart’s performance or stock price after the completion of that line?

CL: Right now I do not, but I expect the stock will be substantially higher than the current price because the company can triple production and the cash flow. The year 2014 could be a banner year for the company with huge cash flow coming in. The stock should be a multiple of the current price, but time will tell.

TER: Is religiously motivated violence in the northeast of Nigeria likely to affect Mart’s profitability?

CL: It’s possible. Nigeria is a risky place. As you said, the northeast part of the country, which is dominated by Muslims, has a lot of problems with violence against Christians. Fortunately, Mart is operating in the southwest part. It’s closer to the shore, in a relatively stable area, so they don’t have too much religious violence.

TER: In an interview with The Energy Report in January, you said that Pan Orient has the potential to be a tenbagger this year. How has it performed?

CL: It has not performed very well, certainly below my expectations. Part of it was that the big wells it’s trying to drill have not been very successful. Five big wells all turned out to be dry holes, which is very disappointing, but that’s the risk we take by investing in exploration companies. However, right now it’s entering a very interesting phase because Pan Orient’s neighbor just found a large oil pool just on the border of Batu Gajah (77% owner and operator). The crest part of the discovery—the best part—is on Pan Orient’s land. The discovery is rather large. It may be over 150 million barrels of oil equivalent (150 MMboe). It has oil, it has gas condensate and it has gas.

The discovery well was drilled only 175 meters from Pan Orient’s border. You can go to Pan Orient’s website and see the location of the well. You can see the crest of the discovery is right on the Pan Orient concession. That makes a very interesting play because you can drill right there and it becomes very low-risk drilling, because the other company drilled three wells. The first two wells averaged more than 6,000 boe. The third well they’re still testing. It’s right on the border. Pan Orient has the best part of that. This could be a very nice discovery.

My understanding is Pan Orient is going to partner out all three of the major Indonesian concessions. It expects to receive a large down payment and to have the partner carry out the next few wells on each concession. Since Pan Orient spent close to $100 million in all the drilling, the seismic, the groundwork, I expect it to get a lot of the money back from partnering. Potentially, it could be tens of millions. It’s very hard to give an exact number because it is negotiating with its partners right now.

Its cash position should substantially increase. I would guess it would be around $1.50 after everything’s over. Right now the stock is a little over $2/share. So the company will have around $1.50 in cash, then it has its partner(s) drilling the well—potentially I would say 8–10 wells in Indonesia at the partner’s cost. It has a big oil target coming up in Thailand that it’s going to drill. You can see the 3D seismic on the website. It’s a very large target. Over there in Thailand, it only costs $1–2 million to drill. Then it also is fully funded to do the heavy oil in Canada. The company has three possibilities, and all three have a very good chance to succeed. Success in each of them can dramatically change the stock price.

TER: Andora Energy has a steam-assisted gravity drainage project at Sawn Lake. When is that one going to produce its first oil?

CL: It’s going to start drilling in early October. First oil should be in Q1/14. Sometime in Q1/14, we will know the results of the well. Remember, the second largest French company, Maurel & Prom (MAU:EPA), is already Pan Orient’s partner there. The company subscribed a private placement at 1,200% premium to the stock price, which tells you how undervalued the whole area is.

TER: Can you talk about some other companies in your portfolio?

CL: I’m buying different energy plays. About the end of August/early September, my major additions were BNK Petroleum, Penn Virginia Corp., Ithaca Energy Inc. (IAE:TSX) and Harvest Natural Resources (HNR:NYSE). We had a very tough H1/13 on commodities. I was very lucky to buy gold miners during the summer, when gold was testing $1,200/oz. When it hit $1,400/oz, I was extra lucky to sell these gold miners to use the money to buy those energy stocks. That actually turned out to be a very good trade.

BNK is an interesting company. Its recent well results in the U.S. have been fantastic. It is surrounded by Exxon, and will likely sell the assets to Exxon, which it has done before. Then the company cash level should be around its market cap. It has about one million acres in Poland and will drill the first well in early 2014. If it is successful in Poland, the sky is the limit. Remember, BNK had a billion-dollar market cap just based on Poland in early 2011!

I already sold Penn Virginia; it jumped 70-80% for me in one month. Though I still believe there is value in the stock, I would wait for a pullback to buy it again. Ithaca Energy also moved up a lot, but it still has a lot of upside room. It’s a North Sea-based oil exploration company trading at 1–2 times cash flow. If the company can continue to execute, I think it still has substantial upside.

Harvest Natural Resources is a special play here. If you calculate the recently announced transaction, you will see the company can pay off all its debt and have $10/share cash left on its balance sheet, from which it intends to distribute around $6 to shareholders. The stock’s still trading around $5. Potentially you can get your money back plus you have another valuable spin off with very interesting asset in Indonesia and in Colombia plus $4 on the balance sheet for free. Most important, the company’s worth is independent of market fluctuations. That’s why I like it.

Rock Energy has been another great performer for me lately. It should have more upside left since the recent wells derisked the whole area. One interesting play is RMP Energy (RMP:TSX). Its recent well flows 2,000 barrels per day (2,000 b/d) oil. The payback of the well is less than one month, something unheard of in the fracking space. The company just consolidated the area and has around 100 drilling locations just on that property. They are planning to upgrade the oil processing facility to 20,000 b/d in Q1/14, when we will see a huge jump in production.

Recently I found a very interesting stock I’ve been accumulating. The company name is NXT Energy Solutions (SFD:TSX.V; NSFDF:OTCBB). It can fly airplanes over a field and detect if oil is present or not. It recently did a very large survey with PEMEX (Petróleos Mexicanos), the Mexican oil company. PEMEX already has seismic data on a certain field, they knew where it has oil deposits and where it doesn’t. PEMEX asked NXT to fly over, and the results were shockingly good. NXT found every large field for PEMEX! The report is on the website. PEMEX is the co-author.

If NXT can continue like this, it can change the oil industry as we know it. You probably need seismic later on to pinpoint where the oil is, but you can fly a plane over a very broad space and then detect where the oil is. That will be a revolution in the oil industry. It’s a very interesting company. It has a strong balance sheet. Recently it has started to go to the oil exploration companies and negotiate payment through royalties in exchange for its services. That can be a very interesting move. It’s an interesting company. I think if everything’s successful it has a very bright future.

TER: What is your outlook on energy in general for the next year?

CL: Like I said, I’m cautious about the oil price in 2014. The production from the U.S. and Canada is just amazing. If you read the Eagleford reports and Bakken reports you can see how many new wells are drilled. The completion techniques are getting better and deliver more oil production during the life of a well. I’m a little bit afraid the oil will fall much below $100/bbl. It’s possible.

On one hand, you have very high oil prices now. Most of my energy companies are making money. They’re doing fantastically. Though I’m not very confident the high oil price is here to stay. I want to remind everyone that if oil drops to below $80/bbl, the party of fracking stocks may be over. I would be careful and take profits as they go up. I’m going to watch the market month by month and see if the situation changes. I also believe that 2014 will be a stock pickers’ market. If you pick the right stock with the right catalyst, a stock can go up a lot just on its own. That’s what I’m looking at for 2014.

TER: Chen, thank you very much. This has been a fascinating conversation.

CL: Thank you. I appreciate it.

Chen Lin writes the popular stock newsletter What Is Chen Buying? What Is Chen Selling?, published and distributed by Taylor Hard Money Advisors Inc. While a doctoral candidate in aeronautical engineering at Princeton, Chen found his investment strategies were so profitable that he put his Ph.D. on the back burner. He employs a value-oriented approach and often demonstrates excellent market timing due to his exceptional technical analysis.

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


1) Tom Armistead conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family owns shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Energy Report: Pan Orient Energy Corp., Royal Dutch Shell Plc and Mart Energy Resource Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Chen Lin: I or my family own shares of the following companies mentioned in this interview: Mart Resources Inc., Pan Orient Energy Corp., Ithaca Energy Inc., Penn Virginia Corp., Harvest Natural Resources, BNK Petroleum, Rock Energy, RMP Energy and NXT Energy Inc. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

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Top 5 Reasons You Should Trade Binary Options

If you are one of the people who look at various ways to make money online, you have probably read or heard about binary options trading. In case you haven’t heard, binary options trading has had many people flocking to reap the rewards. There are several reasons why binary trading is the method that is becoming more popular. Here are the top five reasons.

Binary trading is easy. It’s a very simple system to learn. This trading options is not near as complicated as some other markets. Even a beginner can figure it out and make it work for them. Ease of use is probably the most common reason people cannot wait to get started trading with binary options. More information can be obtained from a binary options broker.

This type of trading also includes time limits (or expirations). It goes quick. The outcome of your trade is determined within just a few moments. This is why many investors choose this because they don’t have to wait for days to find out the results. Either way it goes, the simplicity and quickness are appealing to traders from all walks of life.

Binary options also offer the ability to trade multiple expiriations as well as multiple products simultaneously. This is possible because it is for such a short period of time. This enables traders to participate in these multiple trades and possibly increase their chances of profitability. This is another very popular reason people choose to trade options.

Trading with binary options is also one of the least expensive ways to trade. You can generally get in for as low as five dollars.A trader can select various investment amounts as he determines his risk level. That’s another benefit that keeps people coming back for more. If they can invest a small amount and possibly win a larger amount, you can bet there are thousands of people who will take advantage of this.

Binary Options in MetaTrader 4 will allow traders to trade both binary options as well as forex simultaneously. Anyone who trades can also  trade CFDs and other products their broker offers.

Before anyone gets involved in binary trading options, it’s always best to use a demo account first. This will give you a chance to participate in real time trading activities without risk. You can test your ability and do so without losing money. Always choose the best options trading platform for the activities you will be doing. The internet is loaded with information about the various types of trading. Make sure you do your own research. Make sure you understand the risk and possible gain of trading before participating. A broker can also help you. Avoid the scams and always verify any information that you come across when advice is given regarding trading.

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Podcast: Are We in a Stock Market Bubble?

By The Sizemore Letter

Listen to Charles discuss the outlook for inflation–using Japan as an example–and whether or not we’re in a stock market bubble with Mike Robertson on Straight Talk Money.

Charles and Mike consider arguments from InvestorPlace’s Jeff Reeves and Pension Partners’ Michael Gayed.

Related reading:

Reeves: “Why This Market High is Different

Gayed: “The Mother of All Fed Surprises

In a nutshell, Reeves argues that the metrics used to gauge the market’s valuation are dated and that too much emphasis is given to returns data that is too old to be useful.  Jeff also pokes holes in the belief that we are “due” for a correction of 10% or more.  Gayed counters that defensive sectors are leading–which is typical of the late stages of a bull market–and that more cyclical asset classes, such as small-cap equities, have struggled to make new highs.

This article first appeared on Sizemore Insights as Podcast: Are We in a Stock Market Bubble?

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Egypt maintains rates, downside risks to limit inflation

By     Egypt’s central bank held its benchmark overnight deposit rate steady at 8.75 percent, as expected, saying the current rates were appropriate as the downside risks to economic growth combined with the persistently negative output gap since 2011 would limit the upside risks to inflation.
    The Central Bank of Egypt (CBE), which cut rates in August and September, said the downside risk to global recovery stem from the challenges facing the euro area and softening growth in emerging markets and it would “not hesitate to adjust the key CBE rates to ensure price stability over the medium term.”
    The central bank raised its rates by 50 basis points in March, but then cut by a combined 100 points in the previous two months, resulting in a net reduction this year of 50 points.
    Egypt’s headline inflation rate rose to 10.15 percent in September from 9.74 percent in August, but some of the rise was due to the Haj season and the beginning of the school year.
    Inflation is projected to continue to be affected by seasonal events, such as the Eid festivities and the school year, but “upside risks to the inflation outlook continue to moderate as the possibility of a rebound in international food prices is unlikely in light of recent global developments,” CBE said.

    Egypt’s economy, hit by political unrest since the overthrow of former  President Hosni Mubarak in 2011, expanded by an annual rate of 1.5 percent in the second quarter, down from 2.2 percent in the first quarter.
    The CBE said investment levels remain low given the heightened uncertainty since early 2011 and the weak credit growth to the private sector.


2013 Biotech Watchlist Update: Companies Climb and Crumble on Catalysts

Source: George S. Mack of The Life Sciences Report (10/31/13)

The Life Sciences Report‘s Biotech Watchlist, introduced in January 2013, is composed of 17 companies that industry analysts felt showed promise for the coming year—companies with productive pipelines, good management and stock-moving catalysts on the horizon. The new year presented legitimate prospects for portfolio growth and, indeed, that has been the case. In this update, we summarize the current status of Watchlist companies and introduce our Portfolio Tracker, showing the status of each company in real time.

A Quick Recap

Back in January our friends and collaborators at San Diego-based Sagient Research, publishers of theBiomedTracker, delineated important concepts about the market-moving data and events that can make or break smaller biotech companies. All stocks are affected by catalysts, but nowhere do they provide more leverage (positive or negative) than in the life of a biotech. And many of biotech’s key catalysts are tied to the regulatory process.

The Prescription Drug User Fee Act (PDUFA) is the most significant piece of legislation affecting the development path of a new drug. PDUFA was designed to speed up the drug approval process by having product sponsors pay the freight for U.S. Food and Drug Administration (FDA) staff that could rid the process of staggering bureaucratic delays. Review of new drug application (NDA) submissions is now promised in 12 months for standard submissions and eight months for priority reviews. There is also an emphasis on pre-submission meetings for NDAs and biologic license applications (BLAs), with the goal of making sure the applications are filed with minimal errors and can be expedited.

The FDA also allows drug developers to request that a product be designated as “breakthrough therapy,” with action on the breakthrough request promised no later than 60 days after submission. The first breakthrough designations came through in Q1/13 and included Vertex Pharmaceuticals Inc. (VRTX:NASDAQ) cystic fibrosis drug Kalydeco (ivacaftor) (approved in January) and Pharmacyclics Inc.’s (PCYC:NASDAQ) ibrutinib, which is being developed in a lead indication for chronic lymphocytic leukemia (CLL) and has breakthrough therapy status for treatment of Waldenstrom’s macroglobulinemia and mantle cell lymphoma. Pharmacyclics is a Watchlist company.

Although therapies may still encounter jarring potholes on the road to FDA approval, 39 new molecular entities (NMEs) were approved in 2012, a 15-year high. Through Oct. 8, 2013, there have been 18 NMEs.

Choosing the Watchlist

Back in January, The Life Sciences Report asked a group of key biotech analysts to weigh in on their best ideas. The companies they identified included a number focused on the oncology space, with the rest targeting orphan diseases, immunotherapies, cardiovascular disease and diagnostic agents. The analysts were Mara Goldstein, senior biotechnology analyst at Cantor Fitzgerald; Raghuram “Ram” Selvaraju, managing director and head of healthcare equity research at Aegis Capital; John McCamant, editor of the Medical Technology Stock Letter; Mike King, senior analyst and managing director at JMP Securities; George Zavoico, senior biotechnology analyst at MLV & Co; and senior analyst Lisa Bayko of JMP Securities.

Of the 17 stocks on the Watchlist, 11 have posted gains ranging from 4% to 235%. The remainder has seen declines in stock value ranging from 3% to 85%. Though the doldrums of the last month—notably the government shutdown—have slowed biotech’s nearly two-year-long bull, the space is still bolstered by a stiff wind that originated in 2012. As of Oct. 21, the NASDAQ Biotechnology (NBI) index is up 44%.

Links to Previous Watchlist Updates and Stories

Biotech Watchlist Portfolio Tracker

How Are They Doing? Update on the Progress of Expert Picks

The Approval Process in Action (infographic)

January 2013 Biotech Watchlist

January 2013 Biotech Watchlist (story)

April 2013 Biotech Watchlist Update

April 2013 Biotech Watchlist Update (story)

PDUFA? What’s a PDUFA? Understanding the Drug Development Process Is Key to Biotech Investing

Company Updates

[Editor’s Note: All percentage increases or decreases in company stock prices are as of Oct. 21, 2013. All markets caps are as of Oct. 21, 2013.]

Amarin Corp. (AMRN:NASDAQ)

Back on Feb. 26, Amarin filed a supplemental new drug application (sNDA) for Vascepa (icosapent ethyl), its fish oil drug approved in July 2012 to lower triglycerides in patients with high triglycerides and mixed lipidemia, the drug’s ANCHOR indication. The FDA is scheduled to act on this application on Dec. 20; however, on Oct. 16, the agency’s Endocrinologic and Metabolic Drugs Advisory Committee met and voted 9–2 against approval. The FDA does not have to follow the panel’s advice, but investors hammered Amarin shares for a quite significant 60+% loss when trading resumed on Oct. 17. The company is down 72% year to date, and the stock is now back down in small-cap territory, with a $397M market value.

Ariad Pharmaceuticals Inc. (ARIA:NASDAQ)

It has been a tough year for Ariad. In mid-December 2012, the company got a surprise holiday gift when the FDA approved Iclusig (ponatinib) for two rare blood and bone marrow diseases, chronic myelogenous leukemia and Philadelphia chromosome positive acute lymphoblastic leukemia. It was a surprise because it came three months ahead of its scheduled PDUFA date, but investors sold on the news. . .and it has been all downhill from there. In early October of this year, news emerged that the FDA was scrutinizing Iclusig following increased reports of life-threatening blood clots and severe narrowing of arteries and veins. Although Iclusig is intended for patients who are no longer doing well with first-line therapies, the drug’s original label did warn about blood-clotting risks. On Oct. 18, Ariad announced that it was stopping its phase 3 EPIC trial of Iclusig in patients with newly diagnosed chronic myeloid leukemia. Ariad shares are down 85% YTD, and the market cap is down to $563M.

Celgene Corp. (CELG:NASDAQ)

Celgene is up 96%, with a $66B market cap. Analyst Mara Goldstein thoroughly explained why she recommended Celgene as a growth name, even though it was a large-cap stock at the time. For Goldstein this story was about the continuing development of a basket of products, including the multiple myeloma essential, Revlimid (lenalidomide), as well as Pomalyst (pomalidomide) also for myeloma, which was approved early February of this year.

There was also an sNDA being filed for an old chemotherapeutic agent formulated as Abraxane (paclitaxel protein-bound particles) for treatment of pancreatic cancer. Based on the company’s IMPACT study showing a clinically relevant increase in overall survival, Abraxane was approved by the FDA on Sept. 6 for use in combination with standard-of-care cytotoxic agent gemcitabine as the first new therapy sanctioned for metastatic adenocarcinoma of the pancreas in almost eight years. Celgene has also been developing apremilast for autoimmune disease indications, in particular rheumatoid arthritis and psoriatic arthritis. Investors have been anticipating phase 3 data that could come in H2/13. Celgene hasn’t disappointed; it has given investors a near double YTD.

Celldex Therapeutics (CLDX:NASDAQ)

Celldex is up 235%, with a market cap of $2.9B. Analyst Mara Goldstein got a near quadruple on Celldex, which grew up from small-cap to mid-cap company with its recent valuation. Celldex develops products that modulate the immune system; drugs in its pipeline target various cancers as well as other diseases.

Celsion Corp. (CLSN:NASDAQ)

In Q1/13, Celsion’s ThermoDox (liposome-encapsulated doxorubicin) suffered a letdown in its phase 3 HEAT trial for hepatocellular carcinoma (HCC), which resulted in a single-day drop in the company’s stock of 81%—a textbook case of a binary event affecting a one-product pipeline and causing shares to tumble dramatically. Year to date (YTD) the stock is down 85%. The company’s market cap is about $73 million ($73M).

Galena Biopharma Inc. (GALE:NASDAQ)

Galena is testing its immunotherapeutic product NeuVax (nelipepimut-S) in a phase 3 trial called PRESENT. The vaccine is intended to prevent recurrence of breast cancer in women with low to intermediate HER2 expression. Over the course of three years patients will receive a total of 11 immunizations; the primary endpoint will be disease-free survival.

There is also a phase 2b trial in progress with NeuVax in combination with Herceptin (trastuzumab), and a phase 1/2 study with Galena’s second targeted cancer immunization agent, folate binding protein (FBP) in ovarian and endometrial cancers. Results from the phase 1 study with FBP were announced in June at the American Society of Clinical Oncology (ASCO) annual meeting. Galena is up about 39% year to date, with a market cap of about $186M.

Hyperion Therapeutics Inc. (HPTX:NASDAQ)

Hyperion received approval for Ravicti (glycerol phenylbutyrate), for urea cycle disorders, on Feb. 1. Shares are up about 103% year to date, as product rollout continues. Hyperion’s market cap is about $463M.

Medivation Inc. (MDVN:NASDAQ)

On April 1 Medivation and partner Astellas Pharma Inc. (ALPMF:OTCPK) announced an updated interim analysis plan for the phase 3 PREVAIL trial of Xtandi (enzalutamide) in chemotherapy-naďve patients with metastatic castration-resistant prostate cancer. Still expected in 2013, these data could herald Xtandi as a best-in-class agent compared to Johnson & Johnson’s Zytiga (abiraterone acetate). The company’s stock price shot up on the catalyst, but has lost most of those gains since then. Medivation is down 3% YTD, and its market cap is about $3.9B.

Navidea Biopharmaceuticals Inc. (NAVB:NYSE)

Navidea received approval of its radiopharmaceutical diagnostic medium, Lymphoseek (technetium Tc 99m tilmanocept) on March 13. Lymphoseek is an isotope that is sensed intraoperatively by the surgical oncologist with a gamma detector and is approved to map the location of lymph nodes draining and disseminating metastatic disease from primary breast cancers and melanomas.

Hoping to expand into new disease indications, the company has been conducting a phase 3 study of Lymphoseek in head-and-neck cancers. The company hopes to file an sNDA for this indication before the end of 2013. While this story continues to hold together, the stock is down about 25% year to date. In the future, stock catalysts will include approval for new disease indications, uptake by surgeons and hospitals, and actual product revenues. Lymphoseek is marketed through Cardinal Health Inc. (CAH:NYSE), the largest sales channel for diagnostic isotopes in the U.S. Navidea’s market cap is about $259M.

NewLink Genetics Corp. (NLNK:NASDAQ.GM)

NewLink Genetics is developing algenpantucel-L for pancreatic cancer and tergenpumatucel-L for non-small cell lung cancer. Both are in phase 3 trials. Shares are up 45% YTD, and the company is now valued at about $442M.

Onyx Pharmaceuticals Inc. (ONXX:NASDAQ)

Onyx, an oncology franchise, experienced the drug developer’s dream-come-true when two of its drugs, Kyprolis (carfilzomib) for multiple myeloma and Stivarga (regorafenib) for metastatic colorectal cancer and gastrointestinal stromal tumor, moved to the market in 2012. The share price doubled last year, and was up about 61%, with a market cap of about $7 billion ($7B) by the time the company was acquired by Amgen Inc. on Oct. 1 for $658M.

Peregrine Pharmaceuticals Inc. (PPHM:NASDAQ)

Peregrine’s monoclonal antibody bavituximab, in development as a second-line therapy in non-small cell lung cancer (NSCLC), has rebounded following a labeling snafu that compromised its phase 2b study. A subsequent analysis of the study results showed a “meaningful but not statistically significant 4.4-month increase” in median overall survival (mOS), explained George Zavoico of MLV & Co. back in our April Watchlist update. After the company explained the situation to investors, shares popped 73%. Shares are up about 4% YTD.

In May, Peregrine announced that it had mapped out its pivotal phase 3 trial design for bavituximab in second-line NSCLC with the FDA. The study will be known as the SUNRISE trial and is expected to begin by year-end. Shares are up 4.48% YTD; the company’s market cap is about $217M.

Pharmacyclics Inc. (PCYC:NASDAQ)

Pharmacyclics’ ibrutinib (PCI-32765), a Bruton’s tyrosine kinase (BTK) inhibitor, has enjoyed tremendous success in clinical trials for patients with B-cell blood cancers, particularly chronic lymphocytic leukemia (CLL) and mantle cell lymphomas (MCL). In late August the company was told by the FDA that its NDA for ibrutinib had been accepted, which triggered a $75M milestone payment from development partner Janssen Biotech (a unit of Johnson & Johnson [JNJ:NYSE]). Investors are awaiting approval, which could come by the end of this year. The stock is up 107% YTD, and the market cap is about $9.5B.

Prana Biotechnology Ltd. (PBT:ASX)

Prana was another of Zavoico’s Watchlist picks. He called it one of the biggest risk/reward opportunities of this year, citing its investigational drug PBT2, which has restored cognition in mouse models of Alzheimer’s disease (AD). PBT2 is currently in a phase 2b trial for AD and in phase 2a for Huntington’s disease. Zavoico called Prana’s focus on the role played by biological metals in the development of degenerative diseases such as Alzheimer’s and Huntington’s “a potential game-changer,” and cited the therapy’s novel approach as fitting with an FDA emphasis on finding “innovative approaches” that could benefit cognitive function for patients. The stock is up about 69% YTD, but has been volatile, due in part to its micro-cap status with a $152M market valuation.

Sangamo BioSciences Inc. (SGMO:NASDAQ)

Sangamo is developing DNA-binding proteins to regulate genes. The stock is up 74%; the company is conducting a phase 2 study of SB-728-T, which it believes may be a “functional cure” for HIV/AIDS.

In early March Sangamo presented data from its phase 1 study showing that a single treatment with SB-728-T produces a “durable reconstitution of the immune system” by expanding memory CD4+ T-cells, which have the capacity to recall and then rapidly respond against HIV and other foreign antigens. With personalized medicine and associated biomarkers gaining credibility with regulators, data from this study also demonstrated that specific cell surface markers, as well as gene expression characteristics, might predict which patients would be most responsive to the therapy. More than 33M people globally have HIV and AIDS, with an estimated 1.2M in the U.S. Sangamo’s market cap is about $575M.

Sarepta Therapeutics Inc. (SRPT:NASDAQ)

Sarepta is up about 58% YTD, but that pales next to last year’s 481% rise. Sarepta is an antisense drug development company working on a true disease-modifying therapy for Duchenne muscular dystrophy (DMD). Normally a patient with DMD, considered an orphan indication, becomes incapable of walking between the ages of seven and 13, and may not live beyond the second or third decade of life.

At the beginning of April, the company put out top-line data on its exon-skipping drug eteplirsen (AVI-4658) in a phase 2b study that showed a “sustained benefit” in patients. Eteplirsen modifies protein synthesis from DNA to skip exon 51 of the dystrophin gene, making the resulting dystrophin protein shorter but still serviceable. It’s a structural and functional repair that can slow, or perhaps prevent, muscle breakdown. In September, the company announced that study results at 96 weeks “showed a continued stabilization of walking ability in eteplirsen-treated patients.” Sarepta’s current market value is in the $1.4B range. If eteplirsen gains acceptance and ultimate approval, the stage is set for a leap in Sarepta’s share price.

Trius Therapeutics Inc. (TSRX:NASDAQ)

Trius delivered good news on March 25 when it released data from its phase 3 ESTABLISH 2 trial with tedizolid phosphate for acute bacterial skin and skin structure infections. The study met its primary endpoints, determined by both the FDA and the European Medicines Agency, as well as all secondary efficacy endpoints. Trius was acquired by Cubist Pharmaceuticals Inc. in September for $658M, giving investors a 185% return from the start of 2013.

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


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The Fed’s Gameplan on Straight Talk Money

By The Sizemore Letter

I joined Mike Robertson this morning to discuss the Fed’s announcement and what it means for tapering, inflation, and the stock market on Straight Talk Money.  You can listen to the audio in the embedded player above.

So, what should we expect?  What is the Fed’s gameplan?

Bernanke wanted to close the door on quantitative easing before leaving office in January.  That’s not going to happen.  Weaker than hoped-for growth and the fallout from the government shutdown make tapering on Bernanke’s original timeline a nonstarter.  Expect the current policy regime to last well into the first quarter of 2014…and possibly longer.

This article first appeared on Sizemore Insights as The Fed’s Gameplan on Straight Talk Money

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Fiji holds rate steady, revises up growth forecasts

By     Fiji’s central bank maintained its overnight policy rate (OPR) at 0.5 percent, unchanged since December 2011, and revised upward its forecast for economic growth this year and next year.
    The Reserve Bank of Fiji forecast growth of 3.6 percent this year, up from August’s forecast of 3.2 percent, and 2014 growth of 3.0 percent, up from an earlier 2.5 percent forecast. Fiji’s economy expanded by 2.2 percent in 2012 and the International Monetary Fund forecasts 3.0 percent this year.
    Despite this upward revisions, Reserve Bank Governor Barry Whiteside said the economy still needed support in light of the IMF’s downward revision of its global growth forecasts and the bank’s policy stance was maintained “given the comfortable outlook for the Reserve Bank’s twin objectives (low inflation and comfortable foreign reserves).”
    Fiji’s inflation rate rose to 3.1 percent in September from 2.5 percent the previous month, but the central bank still projects year-end inflation of 3.0 percent due “subdued global demand conditions and contained food and energy prices.”
    Fiji’s trade deficit widened due to higher imports and a slow recovery in exports, but the Reserve Bank said higher tourism earnings, remittances and inward investments supported the balance of payments’ position with foreign reserves “comfortable” at $1.783 billion, sufficient for 4.9 months of imports, slightly down from around $1.834 billion at the end of August.