By MoneyMorning.com.au
TECHNOLOGY: A Leap to Nowhere
It was this weekend I’d planned to show you an incredible piece of technology. It’s the Leap motion controller for PC and Mac. It’s a little device you plug into your computer and use hand motions to control. I’d written about it 3 months ago and mentioned how excited I was about this great technology. I also had expected delivery in May…it’s now almost August.
The Leap is ground-breaking. No more computer mouse, no more grubby, fingerprint coated screens. The ability to simply use hand gestures to control my computer is, or was, very exciting for me.
I should now be flipping through webpages like a symphony conductor. But I’m not. I’m still using the track ball on my computer mouse. Wires still shackle me to my computer. And I still have to point and click to get stuff done.
You see here’s the thing when you’re an early adopter. When you get a new piece of consumer technology, the technology might be amazing but the company is usually crap.
And unfortunately the whole experience with Leap from pre-ordering through to ‘delivery’ has been bad.
I’ve written about this very dilemma before, The Difference Between Great Technology and Great Technology Businesses. Sometimes the company can’t match the hype of its technology.
You can make as many cool YouTube videos as you want. Tweet to your heart’s content and blog like it’s something new. But at the end of the day sometimes the company just plain outright fails the end user.
What this also does is highlight the weakest link between technology and growth…people.
What if computers, robots and algorithms had been in charge of the whole process? I’d probably be posting a video to you this weekend showing the Leap in action.
But I’m not. Leap has not just let me down, but you too.
The upside of all this is affirmation that automation is the way of the future. Sure you need people to invent, design and bring a technology like Leap to market. But when it comes to the part of getting the thing from the warehouse to the consumer I say, ‘Bring on the Robots.’
Imagine…I click ‘Buy’ on the Leap website. A robot in the Leap warehouse picks a unit off the shelf. The robot sends it along a production line, its parcelled up and stamped with my address. It finds its way to a distribution centre. There it’s get an allocation to Australia with other Leap controllers heading in the same direction.
A self-driving delivery van takes the Aussie orders to the airport. They’re loaded onto a freight drone which leaves on time and lands on time. It’s then loaded into another self-driving delivery van and driven out to the addresses.
Running complex algorithms, the delivery van customises a route to avoid traffic and road hazards, ensuring all deliveries are on time.
Oh I can dream…excitingly the technology is available now to do all that. But simply, the technology isn’t being utilised.
Until it does I will stay patient. I sit and hope the Leap will find its way to me eventually. I hope technology will help to forget the experience that the company has so far provided.
HEALTH: Why a Flatworm Holds The Key To Eternal Life
Nature demonstrates the most amazing miracles. Looking at the potential of what exists around us, scientists can unlock new discoveries in biotechnology and science.
What I mean is scientists often look to nature for the answers to their scientific problems. What nature can provide can also be used in modern medicine.
Take the Lotus flower as an example. Lotus flowers have superhydrophobicity. Meaning they are highly water resistant and self-cleaning. The reason why this occurs is due to the nano sized structure of the flower’s leaves.
If you take a microscope and look at a Lotus leaf you see tiny protrusions on the leaf. It’s a whole bunch of little spikes sticking out of it.
Therefore as a water droplet hits the leaf only about two to three percent of the water surface area actually touches the leaf. Since this discovery scientists have applied this principle to everything from NASA rockets to shoe coatings and paint.
And when it comes to the future of health and medicine, nature has a lot more to give.
Two of the most intriguing phenomena in nature are thanks to the Salamander and the Milk-white Flatworm. The Salamander can regrow its limbs and the Flatworm can regrow its head from its tail.
The key to both of these regenerative miracles is the structure of the creatures’ stem cells.
And it’s in the potential of stem cells that Regenerative Medicine holds the key for humans to live longer and healthier than ever before.
But don’t just take my word for it. Through extensive and lengthy research we’ve discovered a company involved in the science of stem cells that holds the key to eternal life.
You see scientists are on the verge of unlocking the full potential of stem cells. And when they crack it, it will turn the practice of medicine on its head.
I know it might sound a bit gross regrowing limbs and body parts, but that’s because it’s likely you still have yours intact.
Take a moment to think of someone that doesn’t have two arms and legs. They might have lost an arm or a leg while serving in the army. Maybe they were involved in a car crash.
But if through science they had the chance to get all limbs back and intact do you think they’d take the chance?
It won’t happen overnight, it might not even happen in our lifetime. And it’s more than likely you won’t be able to regrow a head.
But the science that nature gives us will lead to great breakthroughs in medicine. And it’s really thanks in part to a Salamander and a Flatworm.
ENERGY: A Little Bit Of Wind Could Be Making People Sick
This last week has seen some controversial news reports about the potentially harmful effects of wind turbines. Yes that’s right, claims that wind turbines are harmful to people’s health.
Before you burst into laughter…apparently the ‘infrasound’ from the turbines can lead to insomnia, anxiety and nausea. This is what the findings from a report completed in 1987 (26 years ago) said anyway.
Maybe wind turbines do create unintended medical issues for people? Maybe it’s an exacerbated form of paranoia, I don’t know. It does feel as though anti-turbinists have some ulterior hidden agenda though.
Seriously, how can you bring up a report from 1987 to strengthen an argument that wind turbines are detrimental to people’s health today?
Anyway, regardless of the lunacy that supports that argument, let’s say hypothetically that wind turbines might have some detrimental impact to health.
There is a simple solution to the problem. Take the wind turbines offshore. Don’t have them near domestic residences.
Source: http://graysharboroceanenergy.com
A report from the European Wind Energy Association highlights offshore wind is one of ‘the fastest growing maritime sectors’. And that by 2020, ‘4% of Europe’s energy demand could be met by offshore wind turbines.’
The offshore wind farms would be a mix of floating turbines and fixed turbines.
Harnessing the wind makes sense. The lucky part of living on Earth is that we’re never short of wind.
It’s not something we’re going to run out of anytime soon. So why not make the most of one of the most abundant sources of energy we have?
Wind turbines and wind farms are will be a part of the answer to achieving energy independence for countries around the world.
Australia has only recently started to appreciate that point and hence started building some of the world’s largest wind farms. The biggest in the Southern Hemisphere is here in Victoria, the Macarthur wind farm. It opened in April this year and has a 420 Megawatt capacity.
Apparently no one has dropped dead from any infrasound from Macarthur. But just in case, maybe it’s worth sticking some turbine farms off the coastline. There’s certainly enough wind, and certainly enough coastline.
It all might contribute to the future of Aussie energy being entrenched in the wind. We’re off to a good start with Macarthur. Here’s hoping it doesn’t stop there.
Sam Volkering+
Technology Analyst, Revolutionary Tech Investor
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From the Archives…
Why Invest ‘Hard’ When You Can Invest ‘Easy’?
19-07-2013 – Kris Sayce
Read This Before You Buy Another Stock or Bond…
18-07-2013 – Murray Dawes
Could Uranium be the Best Investment in 2013?
17-07-2013 – Dr Alex Cowie
Asteroid Mining and the Commercialisation of Space
16-07-2013 – Sam Volkering
Why the Australian Share Market is Heading Even Higher
15-07-2013 – Kris Sayce
By MoneyMorning.com.au
Today’s Money Weekend will touch on a familiar theme before revealing a metal play that could remake one of the world’s biggest industries.
But first, there was no avoiding China this week. Jim Chanos will be smiling. If you happened to catch last week’s MW, you’ll know Jim Chanos is ‘short’ US blue chip Caterpillar, a company highly leveraged to mining and construction, especially in China.
Well, Chanos is on track for the moment. Caterpillar reported this week a 43.5% drop in quarterly profit and cut its outlook for the year, according to Reuters.
The news this week out of China of a contracting Purchasing Manager’s index won’t have eased any worries in the Caterpillar boardroom, either. Preliminary data has the PMI at 47.7, an 11-month low. A reading above 50 means expansion. Of course, you wonder how reliable and useful any of these readings are. But there’s no doubt they shift sentiment, and in the short term, that moves markets.
The Two Choices: Inflate or Shakeout?
The question that hangs, of course, is how the Chinese authorities will respond to the continuing slowdown. In the past, any slowdown has been veered off from a familiar playbook: more credit and ‘stimulus’.
It probably boils down to the usual two choices from Washington to Canberra to Beijing. If China stays tight, credit and liquidity could dry up and a lot of industry will get the shakes. That means unemployment and protests, which threatens political stability. The second is to turn the credit tap on again, keeping the growth engine happening to keep millions employed rather than rioting in the streets.
The IMF showed last week that China’s total credit has grown from $9 trillion to $23 trillion since 2008. That’s now 200% of GDP.
Source: IMF
In other words, as yet there doesn’t seem to be any sign of the famous ‘rebalancing’ that’s supposed to be occurring away from investment toward consumption. Chinese Premier Li has made it known previously he isn’t a fan of another major credit expansion. But what about this little snippet in the Australian Financial Review on Friday?
‘Chinese Premier Li Keqiang said the nation will speed railway construction, especially in central and western regions, adding support for an economy that’s set to expand at the slowest pace in 23 years…
‘Additional spending would help the world’s second-largest economy, after the government signalled this week it will protect its 7.5 per cent growth target for this year following a second straight quarterly slowdown.’
You know what they say about old habits…
Is there a limit to this? Greg Canavan over at Sound Money Sound Investments says yes, and that China’s economy is more unbalanced than ever. This is the endgame he’s been hunting, and the reason he expects a panic. But it’s mostly government and politics, not markets, that put the figures you see there that high, so can those same things send them higher again? We don’t think you can rule it out.
The Vampire Squid Strikes
Of course, you can’t rule out anything these days. The New York Times revealed this week that Goldman Sachs might be manipulating the base metal market in quite a bizarre way. This is, of course, the investment bank that has the reputation that brought out Matt Taibbi’s memorable line to describe them as a ‘great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.’
The apparent scheme is to keep aluminium traded on the major US commodity exchange in storage for longer via bogus bottlenecks to clip more rent while it sits there. That’s a cost that shows up for the end user, like any time a bloke in the US cracks open a tinny. It’s not strictly illegal, more like a lucrative loophole. And when has a bank ever passed up an opportunity like that?
Check it out!
‘The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.’
But the main reason this caught our eye is the metal itself. Aluminium is not a headline metal like gold or silver, but in the latest edition of Australian Small Cap Investigator, Kris Sayce showed how the aluminium market is locked in a high stakes battle with steelmakers for market share in one of the world’s biggest industries: car manufacturing. Any false cost embedded in the metal will be showing up there too.
We’re reliably informed that Goldman’s game is up because ownership of the London Metal Exchange (that regulates the warehousing) has changed hands. The new chiefs in Hong Kong want to put a stop to it. This could bring more supply of aluminium out and bring the price down.
If so, the takeaway for investors is aluminium could became even more attractive to manufacturers. Kris Sayce says it already is something like a ‘magic metal’ because it can reduce car weights and increase fuel efficiency. Had you heard that? No, neither had we. It’s a technological innovation that could be good for your pocket and the environment if the car industry makes a major switch in how they produce their cars.
Kris says the mainstream missed the story completely. Intrigued? You can see what he says here.
Callum Newman+
Editor, Money Weekend
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From the Port Phillip Publishing Library
Special Report: The Sixth Revolution
Daily Reckoning: Productive Investments
Money Morning: Is This the Spark to Send Australian Property Crashing?
Pursuit of Happiness: Foreign Family in Taxpayer Rort…Or Royal Celebration?
By www.CentralBankNews.info Trinidad and Tobago’s central bank held its benchmark repo rate steady at 2.75 percent as inflationary pressures are well contained and private sector investment remains subdued.
The Central Bank of Trinidad and Tobago, which trimmed rates by 25 basis points in 2012, said the economic recovery was still dependent on the slow but steady performance of the non-energy sector as significant downside risks stem from the energy sector.
“Business lending, however, contracted for the sixth consecutive month in May 2013, suggesting that the low interest rate environment is yet to encourage a strong revival in private sector investment,” the central bank said.
The domestic economy expanded by an annual 1.6 percent in the first quarter, the third consecutive quarter of growth, driven by a 2.5 percent rise in the non-energy sector while the energy sector only rose by 0.5 percent due to supply constraints from maintenance and security upgrades at energy companies. Works planned for September continue to weigh on economic recovery for this year.
In May, the central bank said it was forecasting growth this year of 2.5 percent, up from 0.2 percent in 2012, based on a rebound in natural gas production.
Despite low interest rates, the central bank said growth in private sector credit grew by an annual 3 percent in May from 2 percent in December though consumer lending had picked up in recent months.
But business lending contracted by over 5 percent in May, the sixth consecutive monthly drop.
Liquidity in the financial system is still elevated but a $1 billion central government bond from May, along with tax payments in late June and July, had helped remove some excess liquidity.
To further contain liquidity, the central bank said it had opened for auction another central government bond, to be issued on August 6, whose proceeds would be sterilized and thus withdraw some $1 billion from the banking system.
Headline inflation accelerated in June to 6.8 percent from 5.6 percent in May while core inflation, which excludes food, slowed to 2.2 percent in June from 24 percent.
The recent rise in global yields following news that the U.S. Federal Reserve may reduce monetary stimulus, is “expected to influence the trajectory of rates in Trinidad and Tobago given the country’s open capital account,” the bank said, adding that it would keep an eye on monetary conditions, “including those related to the tapering off of quantitative easing in the United States.”
www.CentralBankNews.info
By www.CentralBankNews.info Colombia’s central bank held its benchmark interest rate steady at 3.25 percent and while it trimmed its growth forecast for this year the Central Bank of Colombia struck a slightly more confident tone about the country’s economic prospects.
Economic growth in the second quarter is forecast to be between 2.5 and 4.0 percent, with 3.4 percent the most likely outcome, above the first quarter’s annual growth rate of 2.8 percent, the bank said, noting that exports were stronger, consumer confidence was up along with retail sales, indicating an acceleration in private consumption.
On the supply side, mining, agriculture and trade accelerated and the decline in industry was less pronounced, the central bank said.
Colombia’s central bank has held rates steady since April after cutting them by 200 basis points since July 2012, but it repeated that economic growth should strengthen during the year in response to past rate cuts and the government’s $2.7 billion stimulus program from April.
The central bank’s staff trimmed its 2013 growth forecast to between 3.0 and 4.5 percent, with the most likely outcome between 4.0 and 4.3 percent due to slower global growth and weaker-than-expected private spending.
The central bank previously forecast growth in a range of 3.0-5.0 percent, with 4.3 percent the most likely outcome, compared with 2012 growth of 4.0 percent, down from 2011’s 6.6 percent.
As other emerging market currencies, Colombia’s peso dropped in May and June and bond yields rose, but the central bank said this was partially reversed in July along with lower risk premiums and rates on government debt.
Last year the central bank embarked on a program to intervene in foreign exchange markets to keep the peso from rising – it rose by 10 percent against the U.S. dollar – but a 6.3 percent depreciation this year so far has brought the peso back to the around the level of January 2012 when it was trading at 1,938 to the U.S. dollar compared with 1,887 today, a depreciation of only 2.6 percent.
This year the central bank renewed its intervention program and in May it said it would continue to buy foreign exchange worth at least $30 million a day through September to keep the peso from rising and thus help its exporters.
Colombia’s inflation rate rose to 2.16 percent in June, the highest in six months, and up from 2.0 percent in May, but the bank said inflation expectations were anchored around its 3.0 percent target.
www.CentralBankNews.info
By Profit Confidential
Carlo and I went to high school together about 30 years ago. We remained friends after we left school even though we went our separate ways. Our common thread is that we are both entrepreneurs running our own businesses. After years of not seeing each other, last night we spent a couple of hours together discussing the economy and investing.
Carlo’s complaint last night, which is characteristic of many investors today, was that he worked hard all his life, watching what he spent and saved. “But I’m being punished for it,” he lamented. Why? Carlo looks at other investors who had less than him, but who borrowed heavily after the credit crisis of 2008 to either buy stocks or buy real estate. And they’ve done remarkably well.
“I worked hard, saved, and bought bonds. Meanwhile, I lost money because the return I’ve gotten over the years hasn’t kept up with real inflation. What the government tells me is the inflation rate is a lie. I’m upside down!”
Carlo went on and on: “I know people with no education, people who have never ran a business, people who never saved, but they made millions since 2008 because they bought properties, interest rates went down, and real estate prices went up.”
The government, by lowering interest rates so aggressively since the credit crisis and keeping them low, “punished savers but boosted speculators,” he noted.
Yes, Carlo would have been better off to close his business in 2008 or 2009, take all his money, borrow as much as he could and either have bought stocks or real estate. He would be further ahead by millions of dollars today.
Investing is about risk and reward. The higher the risk you are willing to take, the greater the return. But it can go against you, too. If you borrow heavily to get into an investment and it turns against you, you can easily get wiped out.
By this point in this story, my readers are probably asking, “What should Carlo do now?” That’s because I assume many of my readers are in Carlo’s situation, too.
If I were Carlo, the first thing I would recognize is that the greatest investor fortunes of our lifetime have been made by getting into investments when they are the most depressed and holding on until they come back.
Today, investors can go out and buy a share of Amazon.com, Inc. (AMZN/NASDAQ) at $300.00 a share. The company lost money in the most recent quarter. It trades at 100-times expected earnings for 2014 and doesn’t pay a dividend. There is huge demand for Amazon.com shares, which explains why the price has hit a new record high.
Also, today, investors can go out and buy the shares of Goldcorp Inc. (NYSE/GG) at $28.00 a share. Goldcorp is down 50% from its 2011 high, the stock trades at 14-times earnings, and it pays a dividend equal to a yield of 2.13%. The company produces about 600,000 ounces of gold a quarter at a cost of between $1,000 and $1,200 an ounce. Demand is falling for Goldcorp shares as gold prices have fallen and the company has taken some write-offs to recognize the lower price of gold. By the way, the shares of gold companies relative to earnings are selling at the lowest level in decades.
Sure, there is risk if gold prices fall below $1,000 an ounce. But there is also a huge reward if gold prices go to $2,000 an ounce.
Hence, the risk/reward play is always there for an investor like Carlo to act upon. He just needs to eventually take action on one of those plays when the opportunity is presented.
Michael’s Personal Notes:
The second-quarter earnings reporting season is underway, and mainstream stock advisors have high hopes. But what we are seeing is “more of the same” of what we saw in last quarter’s S&P 500 company corporate earnings: revenues are lower; corporate earnings are mediocre, and share buyback programs are boosting per-share income.
Take E. I. du Pont de Nemours and Company (NYSE/DD), a constituent of both the S&P 500 and the Dow Jones Industrial Average, as an example. The chemical giant reported corporate earnings of $1.03 billion, or $1.11 per share, for the second quarter. These earnings were 12% lower than the same period one year ago.
Caterpillar Inc. (NYSE/CAT), the mining and construction company that is also a component of both the Dow Jones Industrial Average and the S&P 500, reported a decline of 43.5% in its second-quarter corporate earnings compared to the same period one year earlier; Caterpillar slashed its outlook for the entire 2013 year. The company’s profit fell to $960 million in the second quarter from $1.7 billion a year earlier. On a per-share basis, the company’s corporate earnings declined from $2.54 to $1.45. (Source: Reuters, July 24, 2013.)
This April, Caterpillar announced its first share buyback in more than four years. The company has or will purchase $1.0 billion worth of its own shares at market prices. (Source: Associated Press, April 25, 2013.) And, of course, this will boost per-share earnings.
Halliburton Company (NYSE/HAL) is one company that reported corporate earnings slightly above estimates at $0.73 per share compared to $0.72 expected. But the company’s profit actually went down for the second quarter to $679 million compared to $737 million from a year ago—a decline of almost eight percent.
So how did Halliburton beat the Street with its per-share profit? In the second quarter, Halliburton purchased $1.0 billion worth of its own shares; hence it reduced the number of shares in circulation, pushing up per-share earnings even though actual profits were lower. Halliburton recently announced it raised its share buyback authorization to $5.0 billion.
Pfizer Inc. (NYSE/PFE), the major drug maker included in the S&P 500, has announced another share repurchase program valued at $10.0 billion—the fourth increase in its share buyback program in two and a half years, bringing its total share buybacks to $39.0 billion.
This is not what you call real corporate earnings growth, dear reader. S&P 500 companies are barely meeting already-lowered analyst corporate earnings expectations in the second quarter. Hence, these companies are resorting to stock buybacks to prop up per-share profits.
Companies cannot continue the practice of buying their own shares to increase per-share corporate earnings for the simple reason that sooner or late, they will run out of cash to make the stock buybacks. You really have to look at this from the outside in, as they say. If big public companies can’t achieve real profit growth, and they resort to share buyback programs to boost per-share profits as a result, how far away can the end really be for the stock market rally?
Article by profitconfidential.com
By Profit Confidential
The second-quarter earnings reporting season is underway, and mainstream stock advisors have high hopes. But what we are seeing is “more of the same” of what we saw in last quarter’s S&P 500 company corporate earnings: revenues are lower; corporate earnings are mediocre, and share buyback programs are boosting per-share income.
Take E. I. du Pont de Nemours and Company (NYSE/DD), a constituent of both the S&P 500 and the Dow Jones Industrial Average, as an example. The chemical giant reported corporate earnings of $1.03 billion, or $1.11 per share, for the second quarter. These earnings were 12% lower than the same period one year ago.
Caterpillar Inc. (NYSE/CAT), the mining and construction company that is also a component of both the Dow Jones Industrial Average and the S&P 500, reported a decline of 43.5% in its second-quarter corporate earnings compared to the same period one year earlier; Caterpillar slashed its outlook for the entire 2013 year. The company’s profit fell to $960 million in the second quarter from $1.7 billion a year earlier. On a per-share basis, the company’s corporate earnings declined from $2.54 to $1.45. (Source: Reuters, July 24, 2013.)
This April, Caterpillar announced its first share buyback in more than four years. The company has or will purchase $1.0 billion worth of its own shares at market prices. (Source: Associated Press, April 25, 2013.) And, of course, this will boost per-share earnings.
Halliburton Company (NYSE/HAL) is one company that reported corporate earnings slightly above estimates at $0.73 per share compared to $0.72 expected. But the company’s profit actually went down for the second quarter to $679 million compared to $737 million from a year ago—a decline of almost eight percent.
So how did Halliburton beat the Street with its per-share profit? In the second quarter, Halliburton purchased $1.0 billion worth of its own shares; hence it reduced the number of shares in circulation, pushing up per-share earnings even though actual profits were lower. Halliburton recently announced it raised its share buyback authorization to $5.0 billion.
Pfizer Inc. (NYSE/PFE), the major drug maker included in the S&P 500, has announced another share repurchase program valued at $10.0 billion—the fourth increase in its share buyback program in two and a half years, bringing its total share buybacks to $39.0 billion.
This is not what you call real corporate earnings growth, dear reader. S&P 500 companies are barely meeting already-lowered analyst corporate earnings expectations in the second quarter. Hence, these companies are resorting to stock buybacks to prop up per-share profits.
Companies cannot continue the practice of buying their own shares to increase per-share corporate earnings for the simple reason that sooner or late, they will run out of cash to make the stock buybacks. You really have to look at this from the outside in, as they say. If big public companies can’t achieve real profit growth, and they resort to share buyback programs to boost per-share profits as a result, how far away can the end really be for the stock market rally?
Article by profitconfidential.com
By Profit Confidential
We’re now into the full-blown earnings blitz. On balance, the numbers are coming in pretty much as expected, often with one financial metric (revenues or earnings) not meeting Wall Street consensus.
It is well known that corporate earnings are managed, but what this market really wants to see is top-line revenue growth. That’s the great indicator.
The pizza business is typically a good one; that’s why there are so many chains. Domino’s Pizza, Inc. (DPZ) has been on fire over the last three years. The company’s domestic same-store sales increased a solid 6.7% in the second quarter. International same-store sales growth was 5.8%, representing the company’s 78th consecutive quarter of same-store sales growth in foreign markets.
Revenues grew 10.1% to $414 million, while earnings grew an impressive 18.4% to $33.3 million in spite of higher costs for cheese.
Restaurant stocks are always a good indicator. (See “How Peter Lynch Got It Right 20 Years Ago.”) Domino’s produced another solid quarter.
Moving to technology, Texas Instruments Incorporated (TXN) used to be a stock market darling, soaring eight-fold in the late-90s technology bubble.
The semiconductor company announced second-quarter numbers that surprised Wall Street, and the company’s management team was upbeat about the third quarter.
Second-quarter revenues actually fell nine percent to $3.05 billion as the company winds down its wireless chip business to focus on core analog chips used in cars and televisions.
Earnings increased to $660 million, or $0.58 a share, up from $446 million, or $0.38 a share, including a $0.16 earnings-per-share gain.
The stock moved solidly higher after the company posted its results.
Lockheed Martin Corporation (LMT) beat Wall Street consensus by a wide margin and raised its guidance even in the face of continuing budget cuts.
Ryder System, Inc. (R) met expectations, guiding third-quarter earnings in line, while narrowing its full-year expectations.
And TD Ameritrade Holding Corporation (AMTD), a really good indicator of business conditions in the brokerage business, reported fiscal third-quarter earnings of $183 million, or $0.33 per diluted share, representing a solid gain over earnings of $144 million, or $0.26 per diluted share generated in the same quarter last year.
The company’s revenues grew to a record $725 million during the latest quarter, up solidly from $679 million on what management said was strength in commissions and asset management.
For equity investors, corporations are generally coming through so far and it’s why the S&P 500 is at a record-high with nowhere left for cash to go.
The key to the current stock market rally is earnings results from smaller U.S. companies (who don’t report as soon). This will be the tell-all for genuine economic growth.
My read is that the numbers will continue to be mildly positive and that the stock market’s near-term uptrend is intact.
Article by profitconfidential.com
By Profit Confidential
We all know how Chinese stocks have underperformed this year and last, but that doesn’t mean there’s no reason to invest in them—just remember that careful and selective picking is the name of the game here.
While I’m neutral in the near-term, my longer-term assessment continues to be bullish in spite of what others are saying about the eventual collapse of the “Great Wall” economy.
I have been to Asia, and I have seen the dynamic economies there. Yes, there are many manufacturing plants in China’s economic zones that sit idle as the global economy struggles on. And yes, we are seeing some manufacturing move to Mexico, where the close proximity to the U.S. is making Mexico a hotspot for manufacturing outside of the Chinese economy. But I would still be looking at some of the bigger Chinese companies—the ones that actually make money. Of course, we need to also trust the reports. The U.S. Securities and Exchange Commission (SEC) is working on this.
For some of you, a good alternative to buying stocks would be to consider buying exchange-traded funds (ETFs) with a focus on the Chinese economy. This includes the PowerShares Golden Dragon Halter USX China Portfolio (NASDAQ/PGJ) ETF, which is at a 52-week high. This ETF has a focus on strong small-cap stocks that are familiar to most investors, including Baidu, Inc. (NASDAQ/BIDU) and Qihoo 360 Technology Co. Ltd. (NASDA/QIHU), which has been sizzling on the chart. This is a good fund that allows you access to numerous Chinese growth stocks in the technology, healthcare, and industrial sectors.
On the large-cap side, if you are more conservative and want to invest in Chinese blue chips, then the iShares China Large-Cap (NYSEArca/FXI) ETF may be for you. This ETF owns the top major companies in China, many of which are not available to buy on U.S. exchanges.
This iShares ETF is based on the Xinhua 25 Index, which consists of 25 of the largest and most liquid Chinese stocks. This ETF is a relatively conservative play on Chinese stocks.
Unlike the small-cap PowerShares ETF, iShares China Large-Cap is just north of its 52-week low, so there’s potential.
With $5.22 billion in assets as of June 27, 2013, this ETF has been lackluster, with a three-year return of -3.58%. If the country can renew its growth, the iShares ETF could rally.
Again, this ETF has a large-cap focus and is suited to conservative investors; albeit, even more speculative investors should have some large-cap holdings in their portfolios for diversification purposes. The fund is heavily invested in the financial services sector (53.93%), which has been a drag on the Chinese economy. Other top sectors in this fund include telecommunications (17.26%), energy (12.29%), and technology (7.24%).
The fund’s top-10 holdings are China Mobile Limited, China Construction Bank Corporation, Industrial and Commercial Bank of China Limited, Tencent Holdings Limited, Bank of China Limited, CNOOC Limited, PetroChina Company Limited, China Petroleum & Chemical Corporation, China Overseas Land & Investment Ltd., and China Life Insurance Company Limited.
If the iShares ETF can turn its fortunes, it may be worth some consideration for more conservative investors looking to buy into blue chip Chinese stocks. (Read “How to Make Radical Changes in China Work for You.”)
Article by profitconfidential.com
