Good-Bye Low Mortgage Rates; Good-Bye Housing Recovery

By Profit Confidential

Good-Bye Housing RecoveryThe already struggling U.S. housing market recovery took it on the chin this week…

While most investors were focused on the collapsing stock market, courtesy of the Fed’s announcement Wednesday that it would pull back on its $85.0-trillion-a-month paper money printing program some time later this year, bond yields rose sharply.

The yield on the bellwether 10-year U.S. Treasury bill has jumped almost 50% over the past 12 months—and that means mortgage rates are rising sharply. This should be of no surprise to my readers, as I have been warning about higher interest rates for some time now. (See “Gone Are the Days When the U.S. Bond Market Was the Place to Be.”)

If there is one factor that affects activity in the housing market the most, it is interest rates. That’s why the nail in the coffin for the housing market might now be in.

The National Association of Realtors reports first-time home buyers accounted for only 28% of all the existing-home purchases in the U.S. housing market in May. What’s even more troubling is that they have been declining in number. In April, first-time home buyers accounted for 29% of purchases; and in the same period a year ago, they bought 34% of all existing homes in the U.S. housing market. (Source: National Association of Realtors, June 20, 2013.)

Looking forward, I won’t be surprised to see the number of first-time home buyers decline even further, because the Federal Reserve has pulled the rug right out from under their feet by saying it may pull back on its quantitative easing later this year, thus pushing mortgage rates sharply higher.

The standard 30-year fixed mortgage rate jumped to 4.24% today, up from only 3.67% a month ago.

As I have been writing, the U.S. housing market has been propped up this year by institutional investors moving in and buying single-family homes for the sole purpose of renting them out—for investment purposes. Institutional investors became major buyers of single-family homes in key areas of the U.S. housing market and even bid up prices.

But now that yields across the board are rising, is the housing market that attractive to institutional investors? Money flows to the highest and safest returns. With rates rising, the big-money guys might finally have other investment alternatives to look at. Combine less focus on the housing market from institutional investors with declining demand from first-time buyers and rising interest rates, and quickly the housing recovery becomes a has-been.

Michael’s Personal Notes:

The so-called “powerhouse” of the global economy, China is witnessing an economic slowdown like never before—the repercussions of which will be felt here in North America.

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) continued its slide in June, registering 48.3—a nine-month low—compared to 49.2 in May. (Source: Markit, June 20, 2013.) Any number below 50 suggests contraction in the manufacturing sector.

China is a leading indicator of the global economy, because it exports a significant portion of its products worldwide. If manufacturing in China declines, it suggests the economic hubs of the global economy aren’t really buying much.

Similarly, Germany, the fourth-biggest economy in the global economy, is also facing dismal economic conditions. The country’s Flash Manufacturing PMI declined to a two-month low in June, standing at 48.7 compared to 49.4 in May. (Source Markit, June 20, 2013.)

And Russia seems to be headed towards an economic slowdown as well. The International Monetary Fund (IMF) has slashed its growth forecasts for the country. The IMF expects the Russian economy to grow only 2.5% in 2013, and 3.25% in 2014. I think the IMF is way off with both estimates—we see growth coming in much lower for Russia this year and next.

As an economic slowdown in the global economy emerges, we are seeing U.S.-based companies report weak demand. Caterpillar Inc. (NYSE/CAT), the big construction and mining company, reports that in the last three months ending in May, its total machine retail sales in the global economy fell seven percent from the same period a year ago. Caterpillar’s retail machine sales declined in every region of the global economy except for Latin America! (Source: Bloomberg, June 20, 2013.)

Caterpillar’s retail sales declining in the global economy may just be the beginning of what may become the norm for second-quarter earnings results for other large American multinational companies—weak revenue.

My opinion hasn’t changed; the global economy is treading in dangerous waters. Very few in the media are covering this story. It’s a global economy: if China, the eurozone, Japan and other big economies are all facing soft demand from their consumers and businesses, big American companies operating in these countries will eventually feel the pain as well. That pain will eventually make its way to the stock prices of those companies.

What He Said:

“Why Google stock will go higher: Most investors in Google, surprisingly, are retail investors. And that’s why the stock can go higher—because only 20% of the stock is owned by institutions. If the institutions jump in and buy Google, the stock will certainly move higher.” Michael Lombardi in Profit Confidential, June 2, 2005. Michael recommended Google Inc. (NASDAQ/GOOG) as a buy on June 2, 2005, when the stock was trading at $288.00. On November 5, 2007, when Google reached US$700.00 per share, Michael advised his readers to sell their Google stock and to put the proceeds into gold-related investments. Coincidently, gold bullion was also trading at about $700.00 per ounce in November 2007. Michael’s message was to trade each $700.00 share of Google into $700.00 of gold, because he saw gold as a much better investment.

Article by profitconfidential.com

Mediocre FedEx Earnings a Sign of What’s to Come?

By Profit Confidential

Mediocre FedEx Earnings a Sign of What’s to ComeThe business of freight is always a benchmark.

FedEx Corporation (FDX) reported its fiscal fourth-quarter numbers that can only be described as mediocre. The stock went up on the news.

The company reported that its fourth-quarter sales grew four percent to $11.4 million, while earnings dropped 45% to $303 million, compared to its $550 million a year ago. Earnings per share fell similarly from $1.73 to $0.95.

FedEx noted that international customers were opting for less premium freight services, which is what affected the company’s earnings. The company is retiring older planes and undertaking voluntary employee buyouts, which added to costs.

FedEx’s earnings results are emblematic of the softness in the eurozone marketplace. The company increased its adjusted earnings forecast for fiscal 2014, but it was a little bit short of existing consensus.

The company’s share price went up on its earnings release day, when the broader stock market finished a full one percent lower. United Parcel Service, Inc. (UPS) reports in another month.

FedEx’s four-percent revenue gain wasn’t bad for such a large, mature enterprise. Noticeable in the company’s numbers were a 10% reduction in fuel costs and a 25% jump in purchased transportation expenses.

Like many corporations, the company’s cash balance increased to $4.9 billion, up from $2.8 billion (partially due to $1.74 billion in new long-term debt).

International air freight was the real weak point in the most recent quarter. U.S. total freight revenues were slightly positive. The company’s long-term stock chart is featured below:

FedEx Corporation Chart

Chart courtesy of www.StockCharts.com

Given the company’s modest earnings report and the weakness apparent in international markets, I’d say the stock is expensively priced, with a price-to-earnings ratio of approximately 18.

Weakness abroad is an ongoing theme, and the fact that international customers are moving their business away from higher-margin priority shipping is worrisome. It’s something I’m sure FedEx doesn’t want to see continue.

It’s very early days for this earnings season, but already, mediocrity stands out. The stock market’s action has been all about the Fed, but now it’s time for the bread and butter; if the numbers continue like this, stocks should pull back. (See “Action in Dow Jones Transports, Utilities Signaling Caution.”)

The marketplace knows that there’s been a reduction in second-quarter earnings expectations on the part of Wall Street analysts. There have also been a few earnings warnings from corporations.

Considering how far the stock market has come since the beginning of the year, it’s very difficult to get enthusiastic about second-quarter earnings season yet.

A prolonged break in the main market indices is overdue.

Article by profitconfidential.com

Think Global for the Best Investment Opportunities

By Profit Confidential

Think Global for the Best Investment OpportunitiesThe Japanese Nikkei 225 continues to hold above 13,000, but with the index still up 56% from its recent low in mid-October, I continue to advise you to look elsewhere. The index was down 23% after its recent correction, but it has rallied four percent since. Even so, I would avoid Japanese stocks. (Read “Why Nikkei Sell-Off May Foreshadow Things to Come.”)

My feeling is that the emerging markets will continue to offer the best risk-to-reward investment opportunities. This is where the new wealth is and where people want to spend. The end result will be a rise in consumer spending in the emerging markets and their respective economies.

Longer-term, China remains a top area among the emerging markets, but we have to get past the near-term growth issues and an underperforming stock market.

I would rather be looking at some of the smaller Asian emerging markets that have major trading with China and Japan. Here, we have the four “Little Tigers,” comprising Hong Kong, Singapore, South Korea, and Taiwan. While South Korea has been disappointing, Taiwan has delivered some excellent returns this year; Singapore has, too, but to a lesser degree.

In my view, South Korea is worth a closer look for those in search of a market that has underperformed. The country has numerous global multinationals, such as Samsung Electronics Co. Ltd., Kia Motors Corporation, Hyundai Motor Co. Ltd., and LG Corporation. The region is hurting a bit now due to the associated stalling in China and the recession in the eurozone, but longer-term, I’m bullish on South Korea.

Another country from the BRIC (Brazil, Russia, India, China) group that has been under duress is Brazil. The country is facing high inflation from years of expansion and spending. Inflation has become problematic in the country, with the inflation rate at an annualized 6.13% in January, which makes interest rate risk quite high. The country’s gross domestic product (GDP) growth slowed to an annualized 2.2% in the first quarter, which is well below the readings in the previous years. In my estimation, Brazil will face hurdles in the short term, but there are opportunities to buy on current weakness.

My reasoning is that the newfound wealth and growing middle class in these emerging markets will drive consumer spending and economic growth.

The chart below of the iShares MSCI Emerging Markets index shows the mixed trading since early 2011; but notice the possible formation of a bullish flag, as indicated by the blue lines on the chart.

MSCI Emerging Markets Chart

Chart courtesy of www.StockCharts.com

In Europe, while the eurozone is gripped in a recession, there will be buying opportunities in the emerging markets of Eastern Europe—namely Russia, the largest economy in Eastern Europe, and Poland, the second-largest economy in the region.

The bottom line is: to diversify and drive up higher returns, take a look at the emerging markets and the companies that operate there, especially those with a presence in the global economy.

Article by profitconfidential.com

Coast Isn’t Clear for America, Economic Growth Slowing

By

Over the past few months, it appears that the first-quarter economic growth spurt has begun to decelerate in America. This is troublesome, as stock market investors had anticipated that we would be seeing economic growth finally gain steam.

Unfortunately, we don’t have the global economy on which to rely. Much of the world remains quite weak, and this lack of demand in the global economy is creating a drag on our own nation.

While first-quarter economic growth was relatively strong at 2.4% real gross domestic product (GDP), it appears that in the second quarter, economic growth slowed to less than two percent. This was on the heels of tax increases, a slowdown in manufacturing, and budget cuts by the federal government.

Also Read: NYSE Holidays 2013

The real goal for economic growth is to have a rate of increase that is close to optimal, which is approximately 2.5%. An economic growth rate above this level would be extremely positive, as it would quickly eliminate any slack in the labor market; however, it would be best if it didn’t grow too high,because that would create strains in the economy
and could lead to inflation.

We have seen only anemic job creation, partly because the economy has averaged an economic growth rate of just 2.1% since hitting a bottom in 2009. While the growth is positive, it simply is not strong enough to generate the number of jobs needed to fill the void left by so many lay-offs during the recession.

This weakness in the global economy is also a factor in the lack of manufacturing jobs. Many of the jobs created over the past two years have been in the low-wage service sectors, not manufacturing. The level of the job creation for manufacturing will be an important part of the total economic growth rate for the remainder of the year.

Many parts of the global economy are slow, but not all nations are experiencing the same economic problems. Some parts of the global economy are still mired with deflation, such as Japan; other parts are lacking access to credit, such as certain countries in the European Union; and some areas of the global economy have extremely high levels of inflation, such as India.

While the global economy remains mixed, consumer sentiment within America is quite resilient in spite of relatively anemic levels of economic growth. This could be a result of rebounding home prices and the stock market at all-time highs.

However, economic growth needs to be able to accelerate for a continuation of not only consumer sentiment, but also job creation. No business will start hiring people until it’s a safe bet that their business can grow revenues and earnings in excess of the costs of labor.

With economic growth showing signs of slowing over the past month here in America, and the global economy not reaccelerating, there needs to be several months of data indicating that this trend is reversing before I would be comfortable in saying that the coast is clear.

This article Coast Isn’t Clear for America, Economic Growth Slowing was originally published at Investment Contrarians

 

Forex Trading – Befriending Trends

By Intellitraders

For a new trader or an amateur, a way of managing risk and not incurring colossal losses is to play safe and sure. This means basing your positions in the market on slow, but sure elements. This is precisely the reason, that trends are expressed in the markets, as “The trend is your friend.” Even experienced traders seek trends on which they can base their positions.

Why Use Trends

So what makes even experienced traders seek a strong trend, and why should the inexperienced ones also find one? The answer lies in the ease in trading it offers to the traders. The strategy is simple, find a strong trend and then trade in the trend’s direction. It becomes less important to time your trade entries. This is because, if the market shows a declining trend, all you need to do is go short. However, you should always watch out for reversals in trends. This, therefore, means that you have to be careful in timing your exits.

Here’s another reason why you should trade in the trend’s direction. A small research will show you that there are more pips available to profit on when you move in a trend’s direction, than against it. This is simple, a trend shows where the price graph is inclining over a given period, up or down. So if price has moved in a given direction in more days than less, there are more pips to bank on in the same direction.

Identifying Trends

Identifying trends is not too hard, if you have a good broker at your service who allows you many charting tools to play with. But you don’t need a hefty tool for this, just extract a chart with 100 to 200 candle bars on it. Now you can see a trend going in one direction or the other. If you see higher highs and higher lows, that’s a rising trend. On the other hand, if you see lower highs and lower lows, well that’s a declining trend. The trend changes, when you notice highs and lows contrary to the existing or previous trend.

So is there a special way to pick trends? No, the basic idea is to pick those pairs to trade that have the most obvious trends forming up. There are at least 30 most popular pairs available which you can trade. You can further improve your trade by following only those signals that follow your pair’s trend, this way you will improve your probabilities.

James Fanklen

Intellitraders

Monetary Policy Week in Review – Jun 17-21, 2013: 5 of 13 central banks cut as Fed’s plan for QE exit roils markets

By www.CentralBankNews.info
    This week 13 central banks took policy decisions with the Federal Reserve’s narrowing of its timetable for normalizing monetary policy triggering higher U.S. interest rates and a plunge in global stock markets amidst concern over turmoil in China’s money markets.
     At the press conference following this week’s meeting of the Federal Open Market Committee, Chairman Ben Bernanke firmed up his congressional comments from May 22, saying asset purchases would be slowly reduced later this year and then wound up by mid-2014, assuming the economy continues to expand.
    It’s not immediately obvious why Bernanke’s statements caused such a ruckus in global financial markets as his reason for winding up years five years of ultra-easy monetary policy is basically good news: Falling unemployment and solid economic growth rather than a feared rise in inflation.
   But the Federal Reserve’s decision to wave goodbye to quantitative easing may have come earlier than expected, surprising highly leveraged investors who relied on low interest rates to hunt for yields around the world. Like crack addicts that lose their mind when the dealer runs dry, they panicked.
    U.S. long-term interest rates have shot up, global stock markets have plunged and capital has flowed out of emerging markets. Since early May benchmark U.S. 10 year yields have rocketed to over 2.5 percent from 1.66 percent, the highest in two years, tightening credit and mortgage conditions at the same time the Federal Reserve pumps in liquidity with monthly asset purchases of $85 billion and looks to keep shor-term rates close to zero until late 2014 or early 2015.
    The jump in U.S. interest was accompanied by a surge in Chinese money market rates, apparently because the Chinese central bank is attempting to let the air out of a credit bubble by reining in some forms of credit that have been used by the massive shadow banking sector.

    While the Federal Reserve’s decision to wind up asset purchases was based on growing confidence about the economic outlook, Norway’s central bank turned more pessimistic though it was still among the eight central banks (India, Turkey, Egypt, Morocco, Namibia, Switzerland, Norway and the United States) that held rates steady this week.
    Norges Bank signaled that it is likely to cut rates in the year ahead, dropping its tightening bias and completing a shift in policy that has been under way since October last year when it first started pushing back the timeframe for a rate rise.
    Not only is Norway’s economy feeling the effects of the euro area’s recession, which it expects to persist for longer than expected, the central bank may be starting to worry about the specter of deflation, saying it is concerned that inflation expectations could become entrenched at too low a level.
    Illustrating the growing role of central banks in financial stability, Norges Bank expects in September to issue rules on the size and timing of a countercyclical buffer that will be imposed on domestic banks to help dampen the continuing rise in household debt from a strong housing market.
    The buffer – a concept introduced in the Basel III rules in 2010 – is aimed at boosting banks’ capital cushions so they can better weather a downturn when credit growth begins to pose a systemic risk.
    The buffer adds to central banks’ growing arsenal of tools to fine-tune economic activity and will be useful to Norway’s central bank which fears that a rate cut will end up encouraging further debt and higher home prices.
    Like Norway, Switzerland is also faced with strong real estate markets and plans to impose its own countercyclical buffer in September.
    The Swiss National Bank (SNB) reiterated its determination to keep the franc from rising above 1.20 euros, saying the threat of upward pressure has not been averted as the franc remains sought after by investors seeking a safe haven.
     The Reserve Bank of India (RBI), whose rupee has been falling in recent weeks along with other emerging market currencies, also held rates steady but warned of the inflationary impact of the falling exchange rate.
     India is vulnerable to capital outflows due to its high current account deficit and the RBI was been reported to have intervened last week to support the rupee.

     While most emerging markets are feeling the pressure from the outflow of capital, which is hitting their currencies, stock and bond markets, Pakistan has chosen a different route.
    In contrast to Indonesia, which last week raised its rate to fend off inflationary pressure from a depreciating rupiah, Pakistan cut its policy rate this week in a calculated bet that a persistent outflow of capital would reverse due to improved sentiment among investors following the recent elections.
    The State Bank of Pakistan (SBP), which has been worried over the impact on foreign exchange reserves from the lack of capital inflow, is also relying on inflation remaining under control – in May it hit the lowest level since October 2009 – to help attract capital and boost the growth of credit and thus economic activity.
    Pakistan’s rupee has dropped by 1.7 percent against the U.S. dollar so far this year compared with Indonesia’s rupiah that has dropped almost 3.0 percent.

    The other four central banks that cut rates this week include Mauritius, Botswana, Georgia and Rwanda.
    Through the first 25 weeks of this year, central bank policy rates have been cut 62 times, or 25.5 percent of the 243 policy decisions taken by the 90 central banks followed by Central Bank News. This is up from 24.8 percent after 23 weeks.
    The number of rate increases this year was stable at 12, accounting for 5 percent of all policy decisions.

    LAST WEEK’S (WEEK 25) MONETARY POLICY DECISIONS:

COUNTRYMSCI             DATE              RATE       1 YEAR AGO
INDIAEM7.50%7.50%8.00%
NAMIBA5.50%5.50%6.00%
MOROCCOEM3.00%3.00%3.00%
MAURITIUSFM4.65%4.90%4.90%
BOTSWANA8.50%9.00%9.50%
TURKEY EM4.50%4.50%5.75%
GEORGIA4.00%4.25%5.75%
UNITED STATESDM 0.25%0.25%0.25%
SWITZERLAND DM 0.25%0.25%0.25%
NORWAYDM 1.50%1.50%1.50%
EGYPTEM9.75%9.75%9.25%
RWANDA7.00%7.50%7.50%
PAKISTANFM9.00%9.50%12.00%

   
    NEXT WEEK (week 26) features nine scheduled central bank policy meetings, including Israel, Armenia, Hungary, Taiwan, the Czech Republic, Fiji, Uruguay, Angola and Trinidad and Tobago.

COUNTRYMSCI             DATE              RATE       1 YEAR AGO
ISRAELDM24-Jun1.25%2.25%
ARMENIA25-Jun8.00%8.00%
HUNGARY EM25-Jun4.50%7.00%
TAIWANEM27-Jun1.88%1.88%
CZECH REPUBLICEM27-Jun0.05%0.50%
FIJI 27-Jun0.50%0.50%
URUGUAY 27-Jun9.25%9.25%
ANGOLA28-Jun10.00%10.25%
TRINIDAD & TOBAGO28-Jun2.75%3.00%

 
     www.CentralBankNews.info

Money Weekend’s Technology FutureWatch 22 June 2013

By MoneyMorning.com.au

TECHNOLOGY: The Usain Bolt of Supercomputers

We all are more than likely to have a computer. If you’re reading this, if it’s not on a computer it’s on a tablet or mobile device of some sort.

As you’re familiar with a home PC it’s more than likely you’re familiar with the speed of your machine. If it’s older it will be a bit slower than new machines.

As an example, a new modern day PC will have something like 4 GB of Random Access Memory (RAM), and maybe a Computer Processing Unit (CPU) of about 2–3GHz. You might have heard of one as IBM’s Quad-Core processor.

Within that CPU will be maybe two to four ‘cores’ which are actually CPU’s themselves just bundled together into one. And then in addition to all this you have a graphics accelerator, a GPU which helps handles things like video and rendering.

Now you’ve got a grasp of what a typical PC has in terms of grunt, and you have a rough gauge as to the speed and performance of such machines.

If we mentioned Titan, Watson, Sequoia or Tianhe you certainly wouldn’t think of them as famous names. But in the world of computing, those names are the rockstars of hardware. By that we mean those are the names of some of the world’s fastest and most powerful supercomputers.

And twice a year, every year, these supercomputers race each other to see how fast they go. It’s like the 100m Olympic Final and IBM is like the Jamaican team. And it looks like Sequoia is Usain Bolt. According to Graph500.org the Sequoia smashes the competition…for now.

IBM Sequoia
Source: digitaltrends.com

But competition and bragging rights aside, just how fast are these computers really?

Well to get a scale for how powerful and fast these supercomputers are, your PC has at best probably four ‘cores’ as we mentioned earlier. The Sequoia (an IBM BlueGene/Q model) has 1,048,576 ‘cores’.

The purpose of supercomputers is to help scientists and researchers do mind-bogglingly hard calculations. Also, they push the boundaries of possibility when it comes to modern day computing. Moving forward, better and faster supercomputers will overtake these existing ones. But as history has shown us the supercomputers of today are your home PC in 5–10 years.

What this means is that the speed of computers is still moving at a breakneck pace. And it’s continuing to filter down into our lives. As this happens it means your day to day lives adapt to the ability of computers to assist in enhancing your life.

It’s all part of the Integrated Technology trend we’ve been writing about. As companies like IBM continue to push the boundaries of what’s possible in computing, we all benefit in the long run.

HEALTH: 7400 Slices of Brain, 1000 Super Computer Hours

While on the subject of supercomputers, they’ve been useful in the latest advancement in mapping the human brain. We’ve spoken previously about the US BRAIN Project. Recently a team from the Jülich Research Centre in Germany has completed research to compliment that study. They’ve sliced and diced a deceased woman’s brain to 3D model it on a supercomputer.

As reported by New Scientist, Dr. Katrin Amuntus and her team ‘embedded a 65-year old woman’s brain in wax, sliced it into more than 7400 sections each 20 micrometres thick – one-fifth of the width of a human hair – and made digital images of the slices, also at a resolution of 20 micrometres.

What they next did was use these digital images to recreate a 3D model of the woman’s brain on a supercomputer. This was a very challenging task that an ordinary computer wouldn’t be capable of.

Using a supercomputer it took the team over 1000 hours to recreate the brain model. In other words it took the supercomputer 41 days to do it…that’s a lot of processing!

This 3D model of the brain is the most detailed model ever created. It’s a great step forward in helping other brain-related projects like BRAIN reach their final end point. That end point being able to understand the workings of the human brain.

As we’ve said before, next to the Human Genome Project it’s possibly one of the most significant projects in the history of mankind.

It’s an ambitious goal, but with little steps forward like the work of Dr. Amuntus, it’s certainly an achievable goal in the not too distant future to understand the most complex and most powerful machine on earth, the human brain.

ENERGY: Dance your Phone Back to Full Charge

We don’t know about you, but one of the most frustrating problems we have is how to keep our mobile phone charged during the day. Current phones seem to do a very good job of depleting battery life in about half a day. It’s likely because of the always-running apps we have on them.

With that in mind, big phone companies like Vodafone don’t like phones dying of battery. It means fewer calls, messages, downloads…and fewer dollars for them. So it’s in the interest of a big Telco to keep phones powered and alive.

Thankfully Vodafone has been beavering away at a solution to this problem. And they’ve combined this with their strong marketing presence at the many festivals held across the UK during ‘festival season’.

Vodafone in conjunction with Professor Stephen Beeby from the Electronics and Computer Science Department of the University of Southampton have created ‘Power Pockets‘.

As Vodafone have outlined the tech through their company blog,

(Stephen’s) research has culminated in thermoelectric material that’s so small it can be stitched into a pair of shorts or, in the case of the Recharge, a sleeping bag. But how does it work?

Professor Beeby explains,

Basically, we’re printing down pairs of what are called ‘thermocouples’. You print lots of those down and connect them up to make a thermoelectric module. One side of that is cold and the other is hot, and when you get a flow of heat through it you can create a voltage and a current. Voltage and current together equals electrical power.

Now that’s all good and well, but what do Power Pockets and Festivals have to do with each other. Well Vodafone has put their Power Pockets in sleeping bags, and ‘short-shorts’. Or as Vodafone are calling them, Power Shorts and the Recharge Sleeping Bag.

power pocket
Source: blog.vodafone.co.uk

Using the thermoelectric modules, simply dance the day away in the power shorts, and you’ll have enough charge for about 4 hours of usage. Tuck in to the sleeping bag over night and you get about 11 hours of standby time.

That’s pretty impressive. And particularly handy when you’re short (excuse the pun) of power points at a festival.

Sam Volkering
Technology Analyst

Join me on Google+

From the Archives…

Don’t Make Investing a Chore… Invest in an Innovative Business
14-06-2013 – Kris Sayce

The Technology Revolution Begins in Four Days…
13-06-2013 – Kris Sayce

Zero G for the Australian Dollar is a Shot in the Arm for Miners
12-06-2013 – Dr Alex Cowie

There’s More to Technology Than Facebook and Spying
11-06-2013 – Sam Volkering

Four Great Australian Technological Achievements
10-06-2013 – Sam Volkering

Industry Veteran Vern Gowdie, Tells It Like It Is

By MoneyMorning.com.au

In today’s Money Weekend we put aside the events of the week and in the markets for a chat with Vern Gowdie, the latest editor to join Port Phillip Publishing.

Vern is working on an exciting ‘Family Office’ style project that will draw on his nearly thirty years’ experience in financial planning. You might have seen a couple of his articles appear in Money Morning over the last few weeks. 

One thing we can say right off the bat is that Vern’s position is the complete opposite of regular Money Morning editor Kris Sayce.

Kris is backing a rising market over the next few years. Vern is anticipating a falling one.

But the differing views don’t end there, so we thought you might like to hear his take on the market today and the message he’ll be bringing to investors across Australia with his new service…

CN: How is your view different from the other editors at Port Phillip Publishing?

VG: Without differing views there would not be a market. Everyone would either be a seller or a buyer. Differing views are healthy.

When I read the research of the other editors, we are not that dissimilar in our broad view of the global economy. They are highly critical of central bank intervention and the distortions this madness has created in markets. Our views differ on what this meddling will do to global share markets.

Some editors expect the Fed’s levitation act to support higher equity prices, whereas others have a more bearish outlook. For reasons I will explain shortly, I am in the extremely bearish camp. Also, the other key difference is in our approach to asset allocation — the other editors are very much Alpha investors (individual stock selection and trading strategies) while my investment philosophy is purely Beta (index investing). The passive investor approach.

CN: Can you expand on why you are so negative on the share market?

VG: To paraphrase Heath Ledger’s character The Joker, ‘Why sooo bearish?’

As the saying goes ‘If it walks like a duck, quacks like a duck and looks like a duck, it must be a duck’. This market looks like a Secular Bear,has performed like a Secular Bear and has P/E contraction like a Secular Bear —therefore my conclusion is it must be a Secular Bear.

Every Secular Bearmarket since 1900 has ended when the index P/E reached single figures. The S&P 500 index P/E currently sits around 20x. So unless ‘this time is different’ (the most infamous phrase in investing) a 50% reduction in P/E still awaits us from this Secular Bear market.

The P/E reduction can happen in three ways:

  1. The price remains static while earnings increase (this is what has happened since 2000). The S&P 500 is only slightly above its 2000 level while earnings have more than doubled over the past thirteen years. The S&P 500 index P/E in 2000 was 42x.
  2. The earnings remain static while the price falls.
  3. Earnings and price both fall — this is the dire (extremely bearish) outcome I think awaits us.

Think about this math:

  • Earnings $1 million x P/E 20 = $20 million
  • Earnings fall 40% (due to deflationary conditions created by The Great Credit Contraction and P/E falls to the level experienced during The Great Depression – the last global credit crisis)
  • Earnings $600,000 x P/E 5 = $3 million
  • Market correction of 85%. Ouch!

CN: So you’re betting against the central banks?

VG: The Feds are not ploughing trillions of dollars into the markets for nothing — they know what’s at stake. The world’s greatest period of Credit Expansion inflated assets well above their intrinsic value.

The Great Credit Contraction job is to deflate the asset bubble. This has not happened — yet! The Feds see it as their mission to stop the natural forces of the market. Good luck with that mission.

As the tide goes out on the market, no company (no matter how strong it is) will swim against the force of this current. It’s for this reason I prefer to invest in an asset class as opposed to individual stocks.

For the time being I do not want to be in the asset class of shares. There is far too much downside for my liking. In my opinion, the share market at current levels is high risk/low return.

When shares represent a low risk/high reward proposition, buying the ASX 200 index will be the easiest way for passive investors to participate in its inevitable recovery.

My investment approach will appeal to cautious investors looking to protect their capital in an uncertain world.

CN: What can readers expect from your new publication?

VG: As from 1 July 2013 the financial planning industry is being legislated into acting in a client’s best interest. You would think this would happen without Canberra’s intervention. However commissions, volume bonuses and institutional ownership of financial planning firms have created situations where conflicts of interest exist between the planner and the client.

What the readers can expect from the ‘Family Office’ newsletter is what Canberra is legislating for — absolutely 100% unbiased views on what I believe will assist investors protect and improve their capital.

The newsletter will be as much about education and guidance as it will be about where to invest. Any asset allocation I make will be the same one I am undertaking for my family portfolio.

Whether readers adopt the recommendations is entirely up to them. Transparent, independent advice without paying a fee that is based on a percentage of funds invested — this is the new face of financial advice.

CN: What’s a common mistake people make in regards to financial planning?

VG: Impatience. Markets will do what they have to do in their own sweet time. Trying to chase a certain return because you need it to achieve your goals is a recipe for disaster.

Patience and an understanding of the risk and reward offered by all asset classes is the best way to protect and promote your capital. Sometimes you have to stand still to go forward.

CN: Thanks for your time, Vern.

Callum Newman.
Editor, Money Morning

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PS. Don’t forget if you want to keep track of the latest things we’re reading and brief commentary on events that happen through the day, check out our Google+ page and Kris Sayce’s as well.

From the Port Phillip Publishing Library

Special Report: Panic of 2013

Daily Reckoning: QE is Dead, Long Live QE

Money Morning: We’re Buying This Crashing Stock Market

Pursuit of Happiness: The Single Biggest Mistake a Technology Investor Can Make

Deadly Bacteria Is a Global Crisis: Brad Spellberg

Source: George S. Mack of The Life Sciences Report (6/20/13)

http://www.thelifesciencesreport.com/pub/na/15386

Antibiotic-resistant bacteria, like the proverbial time bomb, are poised to wreak infectious havoc on a worldwide scale. Brad Spellberg, associate professor of medicine at the Los Angeles Biomedical Research Institute and the Harbor-UCLA Medical Center, is committed to defusing the bomb with the development of new antibiotics and creative platforms. He believes investigators must look at alternative ways to deal with bad bugs, perhaps by neutralizing their toxic effects rather than killing them. In this interview with The Life Sciences Report, Spellberg explores this critical issue and names four companies with novel technologies that address this looming global crisis.

The Life Sciences Report: The first thing I want to ask is if you believe it’s a hopeful sign that young physicians are less likely to prescribe antibiotics, especially at the patient’s request? Isn’t that a sign that residents and fellows are being trained with increasing awareness of bacterial resistance, an issue that is so important to you?

Brad J. Spellberg: I have not seen data to suggest that there is a generational effect. I think we are doing a better of job of talking about it than 20 or 30 years ago, when a large segment of the medical community thought that the problem was solved and we could just move on. There is still a huge amount of room for improvement. I see young physicians, old physicians, all physiciansóand, frankly, even I have done it out of fearóprescribing antibiotics for infections that are highly unlikely to be bacterial all the time. Prescribing antibiotics for viral infections is certainly inappropriate. The other thing physicians do all the timeóand there is absolutely no generational effect in my experienceóis treat patients very broadly when narrow spectrum therapy is needed. They also treat for far longer than is needed. Both of these practices are inappropriate.

TLSR: Brad, your book, Rising Plague: The Global Threat from Deadly Bacteria and Our Dwindling Arsenal to Fight Them, was published in September 2009. We know there is a threat of pandemic, but what do you mean by dwindling arsenal? Are you talking about a lack of will or desire to tackle this problem? Why is the arsenal dwindling?

BJS: The dwindling arsenal specifically refers to the collapse of the antibiotic research and development (R&D) pipeline. We have what has been accurately termed on Capitol Hill a market failure of antibiotics. The traditional capitalistic market has not supported antibiotic trials. It has collapsed. There are a couple of companies left, but most pharmas have gotten out of the business. The root causes of the collapse include a lack of awareness. We need to take action in other areas, such as pulling antibiotics out of animal feed, but raising awareness about what’s going on is also necessary.

We also have a regulatory problem, in which the U.S. Food and Drug Administration (FDA) has been overtly hostile to new antibiotic development. There are economic problems too. Antibiotics don’t make enough money to justify economic investment by companies that need to make a profit. Pharmaceutical companies are in business to make money, and it is not realistic to expect them to take a loss for the public goodówhich suggests that we need a new economic model. We either need incentives to change the economic realities so that antibiotics become a better investment for companies pursuing profits, or we need a defense contractor-like modelóa public-private partnership modelówhereby we defray some of the costs and risks of developing antibiotic molecules. The public needs these drugs, even if companies aren’t going to make a lot of money off of them.

TLSR: What about the Generating Antibiotic Incentives Now (GAIN) Act of 2011, designed to hasten development and approval of new antibiotics? The idea was to prod the FDA into getting antibiotics through the regulatory cycle. Is it working?

BJS: GAIN was signed into law last year (2012). It is an economic incentive, and provides a five-year data-exclusivity extension to new antibiotics so that companies have more time to make money off the drugs before they go generic.

Frankly, the bipartisan passage of GAIN was a huge triumph and a signal that Congress understands there is a problem. But GAIN was not strong enough to make pharmaceutical companies come back to the field. A five-year data-exclusivity extension, which is not the same as a patent extension, does not provide economic incentives to large companies. The only companies that will benefit are those with products that have gone off patent or are about to go off patent. It gives these companies an alternative form of exclusivity to prevent generic competition that is not dependent on a patent. If a company has a lot of patent time left on a molecule, GAIN is not going to give it any additional revenue.

There were other incentives in the bill, such as priority review for important molecules, but that is of minimal value in my opinion. GAIN did not do very much to make the FDA change. The only FDA change was to require the agency to develop guidance to get critically needed antibiotics developed. That did prod the FDA a little bit. It was already working on guidelines, albeit at a slow pace. But GAIN has not changed the philosophy of the FDA. GAIN was primarily an economic incentive and not a regulatory reform bill.

Let me add one thing. We need to thank Phil Gingrey (R-GA), the congressperson who spearheaded the charge to get GAIN passed. Gingrey is a physician, and he understands at a core level the critical problem posed by not developing new antibiotics and by not having them when they are needed. My understanding is that he intends to bring up follow-on legislation that will be more focused on the FDA.

TLSR: Antibiotic developers worry that if the FDA approves a drug, there’s a chance the agency may hold itóput it on the shelfófor second- or third-line therapy, to prevent premature formation of resistant strains of bacteria. The former CEO of Optimer Pharmaceuticals Inc. (OPTR:NASDAQ) told me in 2008, while his Clostridium difficile (C. difficile, C. diff) drug Dificid (fidaxomicin) was in development, that this scenario was his nightmare. Do developers still worry that their antibiotics are going to be relegated to a second- or third-line therapy?

BJS: Well, the short answer to the last part of your question is yes. They should worry, and we should too. I’ll come back to that specifically, but you said a couple of things that make my blood boil a little bit.

First of all, the FDA has no authority to determine what standard antibiotic use should be. It cannot say, “We’re going to approve this drug, but it can only be used as a second-line or third-line therapy.” Decisions about how drugs are to be used and where are made by market forces, unmet medical needs and physician leadership.

It’s hard for me to hear Optimer complain. The reason Optimer’s drug is not first-line is because the company priced it astronomically high. If Optimer wanted its drug to be used first-line, it should have come out with a different price. A lot of physiciansókey opinion leadersóhave told the company this. It’s difficult for me to imagine a circumstance that would make fidaxomicin first-line, given its pricing structure.

TLSR: Doesn’t this antibiotic crisis cry out for a Manhattan Project, where we don’t worry so much about the return on investment or the cost of developing new platforms?

BJS: Yes, it does. There are three primary ways to think about changing the traditional return-on-investment proposition for antibiotics.

The first thing we needóand this would be in the best interest of the public, not specifically in the best interest of companiesóis to move toward the public-private partnership model. The era of public-private partnerships is already upon us. We have government agencies that are funded and empowered to invest in the development of critically needed molecules. Just a couple of weeks ago GlaxoSmithKline (GSK:NYSE), in partnership with a federal agency called Biomedical Advanced Research and Development Authority (BARDA), announced a $200 million ($200M) investment in developing a platform of antibioticsónot just one antibioticóto address antibiotic resistance and bioterrorism. BARDA has decided to move away from putting money into a single molecule program that could fail at any time. The idea is to put that money into a series of compounds, so that if one or two of them fail, there are still others that can be developed. I think this platform concept is the future.

A second way to address the issue is with pricing. Fidaxomicin, which we have spoken about, is not a good example of how pricing should be addressed. In a for-profit, capitalistic society, if a company wants to charge a high fee for a drug to justify its development, then the drug needs to hit an unmet need. It can’t be yet another skin- and soft-tissue infection drug, when we already have 20 of those. You need to go after lethal infections, where there is virtually nothing available as treatment.

That gets to these two proposals, one from the Infectious Diseases Society of America (IDSA), called the Limited Population Antibacterial Drug (LPAD) approval mechanism, and one from the trade organization Pharmaceutical Research and Manufacturers of America (PhRMA). The proposals are essentially identical and suggest a new approval pathway for high priority antibacterial drugs. They say the FDA should be empowered to approve drugs that treat lethal infections where limited alternative therapies are available based on very small clinical development programsóperhaps with as few as 30ñ50 patients exposed to the drug in phase 3óbut with a post-marketing requirement for ongoing safety assessments. A drug approved through that process would, of course, get a very restrictive label because it’s been approved after only a very small number of patients have been exposed, and would be used against only highly resistant pathogens. If you get into a population with an infection that is 50% fatal or higher and you’ve got the new drugówell, you’re in the realm of oncology-type drugs, where you can start justifying pricing like that of fidaxomicin, or even more. You have to hit a true unmeet need. You need to go after an indication that’s lethal and for which there is limited alternative therapy.

The third option would be to create other kinds of incentives, the way GAIN has attempted to, using tax write-offs and patent or data extensions. Frankly, the third option is probably the least effective. The first twoóthe public-private partnerships and changing the pricing structure so that companies stop focusing on large indications and start focusing on smaller indications, addressing unmeet needsóare more effective ways to change the net present value calculation of antibiotics.

TLSR: You said you thought the platform idea is the future. We used to think in terms of a new platform taking 25 years to develop from inception to therapies that are approved and on the market. Certainly, we need to develop new technologies to circumvent resistance to bacteria, which only has to produce a single, small gene mutationóone altered protein synthesisóto render ineffective an antibiotic that cost a billion dollars to develop. With high-throughput screening and in silico development capabilities, will we be able to develop products from new platforms in a shorter periodó15ñ20 years? Is this something that’s going to happen?

BJS: I think our experiences in high-throughput screening and the genetic revolution have had no impact. In fact, if you read the literature from the head of GSK’s antibacterial discovery performance unit, David Payne, as well as others, companies have learned that heavy investment in genomics technology to develop targeted drug discoveries for antibiotics in the 1990s failed. They’ve had to go back to traditional methods.

There is a scientific challenge because the low-hanging fruit has been plucked. The therapies that were easier to discover through high-throughput screenings have already been discovered. When researchers do the screens, they keep discovering the same stuff over and over. Companies have dealt with this reality by increasingly outsourcing the discovery component. Even companies that are still in the game, like GSK and AstraZeneca Plc (AZN:NYSE), which do have internal R&D components, are increasingly in-licensing products. They figure, “If we’re not paying for the internal discovery, we can sift through a lot more chaff to find the wheat. We can sift through hundreds of small companies and labs to cherry-pick the therapies we like.” The smaller companies and labs will have paid for and taken the risks in the discovery phase. The unfortunate reality is that, as a result of this trend, highly sophisticated, well-developed, multidisciplinary scientific teams at big companies have been dismantled in favor of the in-licensing approach.

TLSR: Let me pick your brain for a minute with regard to new antibiotic technologies. What are they? Who’s developing them?

BJS: Well, there are a few new technologies in the pipeline, and more at the preclinical and phase 1 stages. There are a variety of types. I’m not going to talk about molecules targeted to gram-positive bacteriaóthere’s no point to that, since there’s not much unmet need there. We have lots of antibiotics for gram-positive bacteria. The real resistance problem right now is among gram-negative bacteria. There are four gram-negative-targeted compounds in phase 2 and in phase 3 that I could speak to.

Cubist Pharmaceuticals Inc. (CBST:NASDAQ) has an advanced-generation cephalosporin, a ceftolozane-tazobactam (CXA-201) combination, in phase 3 trials now. The drug has good activity against multidrug-resistant Pseudomonas aeruginosa and is being developed as a first-line intravenous treatment for serious gram-negative infections.

AstraZeneca and Forest Laboratories Inc. (FRX:NYSE) are collaborating on a novel beta-lactamase inhibitor, avibactam (NXL 104), which is being combined with the broad-spectrum antibiotic ceftazidime to overcome resistant bugs. The product is in phase 3 and is intended for serious gram-negative infections including complicated intra-abdominal infections (cIAI) and complicated urinary tract infections (cUTI).

Achaogen Inc. (private) has a next-generation aminoglycoside, plazomicin (ACHN-490), which has completed phase 2 and has demonstrated efficacy against systemic infections caused by multidrug-resistant gram-negative bacteria such as Klebsiella pneumoniae and Escherichia coli (E.coli), as well as gram-positive Staphylococcus aureus (methicillin-resistant S. aureus [MRSA]).

Tetraphase Pharmaceuticals Inc. (TTPH:NASDAQ) has a novel, next-generation, fully synthetic tetracycline called eravacycline, which has completed phase 2 trials. It is being tested in cIAIs and cUTIs.

That’s a brief summary of the advanced gram-negative pipeline right now.

TLSR: Brad, you are on the scientific advisory board of Synthetic Biologics Inc. (SYN:NYSE.MKT). This company is attacking the bacterial toxins rather than the bacteria themselves. I’m thinking of the company’s oral enzyme for C. difficile and the antibody for Bordetella pertussis (whooping cough). How important are these going to be? Are they solutions?

BJS: These are some really cool ideas. The reason I like them so much is that while we certainly need to develop new antibiotics, we also need to take the pressure off antibiotics by finding alternative ways to deal with infections.

The C. diff molecule, SYN-004, is not an antitoxin. The reason people get C. diff infection is that we give them antibiotics, which kill off the friendly bacteria in the gut. That makes room for opportunistic C. diff bacteria to take hold and start causing problems. The cool idea here is that Synthetic Biologics’ enzyme destroys antibiotics in the gut. It does not get into systemic circulation, so the antibiotic can do its thing, treating the infection systemically. The enzyme prevents the antibiotic from causing the friendly fire injury in the gut.

TLSR: How far is this program from becoming a marketed product?

BJS: It has been through phase 1. A close relative was previously developed in phase 2. So the company needs to do more clinical development. The enzyme will not be available next yearóit’s going to take some years, depending on how long it takes to complete phase 2 and phase 3.

TLSR: Is SYN-004 proposed to be given with antibiotics, after antibiotics or before antibiotics?

BJS: Most likely the enzyme will be given with the antibiotic. This will come out at the clinical trials. The company will also need to find a patient population that is at high risk for C. diff infection to show a reduction of infection in the experimental arm versus the control arm, with enough events to determine statistical significance. The population of patients selected will have to have a combination of age, background, medical problems and existing antibiotic therapy that is optimal. The idea is that if a physician starts a patient on a cephalosporin, that patient is going to be at risk for C. diff infection. If the patient is given the Synthetic Biologics’ enzyme with the cephalosporin, it will protect the gut against the cephalosporin.

TLSR: What about the antibody, SYN-005, for pertussis?

BJS: The general idea is that the damage from pertussis is, as you said, from the toxin. The problem is that a physician can give antibiotics and can kill the bacteria, but the toxin has already been elaborated and caused damage to epithelial cells. The idea would be to focus on neutralizing the toxin that causes this illness, rather than on killing the bacteria.

TLSR: This sounds like forward thinkingóreally outside the box.

BJS: Yes. The reason I like the idea is it gets to this broader concept: Maybe we don’t always need to kill the bug to treat the infection. AstraZeneca’s head of infection, John Rex, says something that I love. Resistance, he says, happens because we’re trying to kill the bugs, but the bugs don’t want to die. If you don’t want to cause resistance, don’t kill the bug. Maybe you use small molecules or biologics to change the way the bug interacts with the host.

That makes so much sense when you think about it. The antitoxin idea is one example, but future ideas could involve stopping bacteria from triggering inflammation, since that’s what causes the signs and symptoms of infection. Then physicians could allow the host immune system to gradually clear the bacteria over time. If we’re not trying to kill the bacteria, there’s no selective pressure that would drive resistance and therefore change the way bacteria interacts with the host. I think these kinds of ideas are going to come to the fore over the coming one to two decades.

TLSR: This has been fascinating, Brad. It was so nice meeting you.

BJS: Thanks. Nice to meet you, too.

Brad J. Spellberg, M.D., is associate professor of medicine at the David Geffen School of Medicine at the University of California, Los Angeles, and the Harbor-UCLA Medical Center, and the Los Angeles Biomedical Research Institute. He is also the associate medical director for inpatient services, and an associate program director for the Internal Medicine Residency Training Program at Harbor-UCLA Medical Center. He received his bachelor’s degree in molecular cell biology-immunology in 1994 from the University of California, Berkeley. He then attended medical school at the Geffen School of Medicine at UCLA, where he received numerous academic honors, including serving as the UCLA AOA Chapter co-president and winning the prestigious Stafford Warren award for top academic performance in his graduating class. Spellberg completed his residency in internal medicine and subspecialty fellowship in infectious diseases at Harbor-UCLA Medical Center, where he received the department of medicine Subspecialty Fellow of the Year award. Spellberg serves on the scientific advisory board of Synthetic Biologics Inc.

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.

DISCLOSURE:

1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Life Sciences Report:Synthetic Biologics Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Brad Spellberg: I or my family own shares of the following companies mentioned in this interview: Synthetic Biologics Inc. My research institute has received within the past year payments from companies mentioned in this story, including research grants or contracts from Cubist Pharmaceuticals Inc. and consulting fees from GlaxoSmithKline. 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.

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Mid-Year Check-Up: How is the Investing All Star Team Doing?

By The Sizemore Letter

I genuinely enjoy following Barron’s Roundtable every year (see “Shifting Winds”).  The venerable old rag puts together a team of 10 outspoken money managers and allows them to do the journalistic equivalent of a cage fight.  The participants are free to grill each other over their recommendations, and it can get pretty intense.  Some years, I like the recommendations on offer, and other years I don’t.  But it always leaves me with something to think about.

Well, we’re about halfway through 2013; let’s see how Barron’s some of the investing all-star team are doing so far.

I’ll start with the Bond King himself, Bill Gross.  Gross is having a rough ride in 2013; none of his recommendations are positive on the year.  The SPDR Gold Trust (GLD) is down 15%, and the Pimco Total Return ETF ($BOND), BlackRock Build America Bond Trust ($BBN) and Pimco Corporate & Income Opportunity Fund ($PTY) are down 0.2%, 5.4% and 2.6%, respectively.

He may very well be the most talented bond investor in history, but even Gross took a hit by the sudden spike in Treasury yields in May.  I consider it impressive that his flagship fund, BOND, held up as well as it did.  It is a testament to Gross’ skill as a manager.  Gross reiterated his recommendation on PTY, expecting 12-month total returns in the 15% range.

Felix Zulauf has one notable success—his correct call on the short yen / long Japanese equities trade—and two notable failures—his bet on gold and on emerging markets.  His recommendation of the WisdomTree Japan hedged equity ETF ($DXJ) was up 12.7% before he exited it, and his recommendations of the iShares MSCI Brazil ETF ($EWZ), iShares FTSE China 25 ETF ($FXI) and iShares MSCI Emerging Markets ETF ($EEM) were down 10.6%, 12.6% and 8.0%, respectively, before he closed them out.

Zulauf was not the only manager to be on the wrong side of emerging markets this year; yours truly held shares of FXI in my Covestor Tactical ETF Portfolio before selling in the first quarter.

Zulauf is now “long volatility” via VIX futures and recommends shorting Hong Kong stocks via the iShares MSCI Hong Kong ETF ($EWH) and shorting the Turkish, Mexican and Polish currencies.

Brian Rogers has had a nice run in 2013, and all of his recommendations are showing gains: PNC Financial Group ($PNC)—17.8%, Kohl’s ($KSS)—23.0%, Apache ($APA)—7.0%, Avon Products ($AVP)—51.3%, Legg Mason ($LM)—28.7% and General Electric ($GE)—11.6%.

Not a bad run.   Rogers reiterates his buy recommendations on all but Avon Products and adds a recommendation to the cruise line company Carnival ($CCL), which has had a run of terrible publicity of late.  Rogers considers it an attractive contrarian pick with a sweet 3.1% dividend.

Meryl Witmer also has a spotless record thus far.  Her three recommendations from January—Spectrum Brands Holdings ($SPB), Chicago Bridge & Iron ($CBI) and Tribune Company ($TRBAA)—are up 29.7%, 28.2% and 12.7%, respectively.  Chicago Bridge & Iron was a recent purchase by Warren Buffett’s Berkshire Hathaway ($BRK-A), putting Witmer in good company.

Witmer added German chemicals company Lanxess (Germany:LXS) to her recommendations.  Lanxess is largely a play on a rebound in the European tire market.

Disclosures: Sizemore Capital is long BOND. This article first appeared on MarketWatch.

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