Month: January 2012

Jan. 3 (Bloomberg) — Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs. The amount needing to be refinanced increases to more than $8 trillion when interest payments are included. Linda Yueh reports on Bloomberg Television’s “First Look” with Caroline Hyde. (Source: Bloomberg)

The Bank of Uganda held its new monetary policy interest rate (the central bank rate [CBR]) unchanged at 23.00%.  The Bank also reduced by 100 basis points the rediscount rate to 27.00% and the Bank Rate to 28.00%.  Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, said: “I acknowledge the fact that the long-term solution to controlling inflation rests on addressing the structural constraints and improving productivity, but controlling inflation in the short to medium term is extremely crucial in stimulating this long-term economic growth.”

Previously the Ugandan central bank increased its interest rate by 300 basis points in November, and 400bps to 20% in October, after hiking 200bps in September, and 100bps at its August meeting, and previously setting the new central bank rate at 13.00% at its June meeting.  The Bank only recently began using the 7-day interbank rate to influence inflation, also commencing official targeting inflation; the Bank previously announced an inflation target of 7%, and noted it has a 5% core inflation target in its September press release.  

Uganda reported annual headline inflation of 27% in December, down from 29% in November, and 30.5% in October, compared to previous readings of 28.3% in September, 21.4% in August, 18.8% in July, 18.7% in June, 16% in May, and 14.1% in April, while core inflation was 29% in December.  Uganda reported annual GDP growth of 6.3% in the fiscal year to June, compared to 5.5% in the same period last year.  

The Ugandan shilling (UGX) has depreciated by about 8% against the US dollar so far this year; the USDUGX exchange rate last traded around 2,450, off from the highest (2,885) on record (against a low of 1570 in 2008).

Subsidies Aren’t the Real Problem for Alternative Energy

by David Fessler, Investment U Senior Analyst
Tuesday, January 03, 2011: Issue #1678

No doubt you’ve seen plenty on the news the last few months about a certain solar panel maker, Solyndra.

The California-based company received a $528-million federal loan, with White House support, only to declare bankruptcy in September.

Beacon Power, which built flywheel energy storage devices, declared bankruptcy in late October, but not before drawing down the majority of its $43-million federal loan guarantee.

Should those companies have received the funding?

That’s a matter for Congressional committees to determine. But one thing is clear to me – the government shouldn’t be in the business of trying to pick winners. It will more often than not get it wrong – and taxpayers will turn out to be the losers.

And yet, here’s a news flash for you: No new energy source has ever been developed in the United States without government subsidies.

That’s right: The government has subsidized all energy sources that ultimately became viable. That includes oil drilling, which still receives a type of federal subsidy, in the form of the percentage depletion allowance, first put into place as part of the Revenue Act of 1913.

I’ve been perusing a 2008 report from the EIA, which lists the subsidy levels for all the different types of energy.

As a group, renewables (such as solar and wind) get the lion’s share of incentives and tax breaks ($4.8 billion). Refined coal (a treatment process that reduces carbon emissions in low-grade coal) receives about $2.3 billion. After that comes natural gas ($2.1 billion), nuclear power ($1.2 billion) and coal ($932 million).

But let’s look at federal support in a different way.

How many “subsidy dollars” does it take to produce one megawatt-hour (MWh) of electricity for each of those forms of energy?

Again, we turn back to the EIA data:

Refined coal: $29.81/MWh
Solar: $24.34/MWh
Wind: $23.37/MWh
Nuclear: $1.59/MWh
Coal: $0.44/MWh
Natural gas: $0.25/MWh

Go back and look at that last entry… natural gas. At $0.25 per MWh, it clearly gives the federal government its biggest subsidy “bang for its buck.”

It’s All About “Scale”

In the words of the famous American venture capitalist Vinod Khosla, “If it doesn’t scale, it doesn’t matter. Most of what we talk about today – hybrid, biodiesel, ethanol, solar photovoltaic, geothermal – I believe are irrelevant to the scale of the problem.”

Khosla’s hit the nail on the head. Natural gas scales. With the advent of new fracking technologies, it’s plentiful and cheap to pull out of the ground. That’s right now – not some time in the future.

And once a well is tapped, it continues to produce. There are no interruptions from sunless or windless days. No years of delay and public anxiety that come with building and maintaining a nuclear power plant. No additional and costly steps, like refined coal, where it has to be dug out of the ground and processed further (which uses yet more energy) before being sent on to market.

Alternative Energy’s Biggest Problem

Don’t get me wrong. When it comes to alternative energy, wind and solar in particular, the technologies are certainly viable.

As the industries scale to greater manufacturing volumes, cost comes out of the process.

Ultimately, I believe both will be successful without subsidies, but that day is three to five years away at best.

And even as they succeed in driving down manufacturing costs, alternative energy still won’t be able to produce electricity as cheaply as natural gas. At least not for a very long time.

Right now, we have more natural gas in this country than we’ve ever had. The cost of natural gas hasn’t budged in a year, and it’s not going to increase any time soon.

Storage levels are even higher than they were last year, and that was a record.

The bottom line is this: If it weren’t for the 36 states with Renewable Energy Portfolio Standards (RPS) that mandate utilities use renewable energy sources, solar and wind would still be science projects.

The Federal government, from the President on down, talk about getting us off foreign oil…

The reality is, they’re doing very little to foster the development of industries that’ll profitably achieve that goal. Instead, they’re trying to pick winners. Mr. Market will determine who the winners ultimately are. He always does.

Right now the winner is natural gas.

“The Tipping Point” For Natural Gas

And one of the biggest winners in that space is going to be Westport Innovations (Nasdaq: WPRT).

Westport is an “alternative energy” leader in its own right – it makes and sells vehicle engines and fuel-delivery systems that use natural gas for fuel.

Westport’s CEO said in early November that he sees 2011 as a “tipping point for the use of natural gas as a transportation fuel.”

And it looks like the company is seeing a corresponding leap in sales. Westport saw its revenue jump 80 percent in its most recent quarter, compared to year ago levels. And the company raised its forecast as well, expecting total revenue of $240 to $250 million this year.

Westport’s already linked some big marketing and supply ventures with the likes of Shell (the largest global LNG supplier) and General Motors, as well as three of the four largest makers of heavy-duty tractor-trailer engines.

The company now sells natural gas power systems for Ford F-250 and F-350 pickup trucks, as well.

So if you want to invest in the alternative energy “pioneers” (you know the kind… the ones with the stock market arrows in their backs), then gamble in the wind and solar sector…

Or buy a company like Westport that already has technology and timing on its side. And no government loan guarantees, either.

Good Investing,

David Fessler

Article by Investment U

Jan. 3 (Bloomberg) — British billionaire Richard Branson’s Virgin Money Holdings U.K. Ltd. has completd its acquisition of Northern Rock Plc from the U.K. government. Nicole Itano reports on his marketing strategy on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Jan. 3 (Bloomberg) — Pu Yonghao, Hong Kong-based chief investment strategist at UBS Wealth Management, talks about Asia financial markets and economies. Pu also discusses Europe’s sovereign debt crisis and the U.S. economy. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

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

Jan. 3 (Bloomberg) — Bill Blain, co-head of the Special Situations Group at Newedge Group Ltd., and Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co in London, discuss Europe’s growth prospects in 2012. They speak with Mark Barton on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

Bollinger bands do not need an introduction to any trader whether novice or professional and whether it is stocks or Forex or any commodities. Bollinger bands find a way to the trading charts of majority of traders even if they are not used as signal generating indicator for many, especially those who are not trading for short-term or scalping or in a market which is moving sideways.

Combining various indicators which can be complementary to each other is always good. It is like team work with complementary skill sets. Let’s try to see can Bollinger bands be used for some good entry signals with the combination of some other technical analysis indicators like Stochastic and ADX.

Bollinger bands tells about the changing volatility of the market and it is important to know about the change in volatility. The change always indicate the possibilities of some major move and we need to catch that up early.

Let’s see how can we use Bollinger bands in some of the following market situations:

1) Widening Bollinger bands: This indicates that the volatility in increasing. It also indicates the possibilities of further move in the ongoing direction. But before taking a trading position we should have a good idea of the current direction.

2) Tightening Bollinger bands: This indicates that the volatility getting less, the market is getting less volatile. d may indicate that a major breakout is on the way. But we need to analyze the direction of that possible breakout.

1A) Widening Bollinger Bands with possibilities of further upward move i.e. bullish:

– The bands are widening with the upper band moving sharply upwards and the lower and moving sharply downwards.
– The price-action is moving upwards above the middle band.
– The recent candle sticks are longer than the previous candlesticks

Checklist and action:
– RSI (Relative Strength Index) is in the range of 30 to 50 and rising.
– You may also check if ADX (Advance Directional Index) is rising towards 25 and/or beyond 25 and +DI line is crossing -DI line upwards.
– Also check if Slow Stochastic is crossing the stochastic signal line upwards.
– With all the above taking place, we can expect a further upward movement. It will better to wait for 2 or 3 more candles to confirm the trend and then take a long (buy) position. There is always a possibility that before a further upward move, a downward correction may take place. The wait of 2 or 3 candles may help in increasing our profits if we can take a position during that correction and market moves as we expected. In case the market does not behave the way we expected and moves opposite, this wait will help in reducing the loss.

If ADX does not move above 25 then the upward move may be limited and hence the profit taking will be limited

1B) Widening Bollinger Bands with the possibilities of further downward move i.e. Bearish:

– The bands are widening with the upper band moving sharply upwards and the lower and moving sharply downwards.
– The price-action is moving downwards below the middle band.
– The recent candle sticks are longer than the previous candlesticks.

Checklist and action:
– RSI (Relative Strength Index) is in the range of 55 to 75 and is falling.
– We may also check if ADX is rising towards 25/beyond 25 and -DI line crossing +DI line upwards.
– Check if Slow Stochastic is crossing the signal line downwards.
– With all the above taking place, we can expect a further downward move. It will be safer and hence better to wait for 2 or 3 more candles for confirmation of the trend before taking a short position. It also happens that before a further downward move there may be some upward correction and the wait of 2 or 3 candles may help in increasing the profits or reducing the losses if we can enter during the correction, as mentioned in point 1-a.

If ADX does not move above 25 (market not trending) then the downward move may be short-lived and hence the profit taking will be also be limited.

2A) Tightening Bollinger bands (Bullish):

The pattern happens with a prolonged sideways move with less volatility (short candlesticks)

Checklist and action:
– Check if there are minimum 2 continuous bullish candlesticks (green) which are longer than previous 2 to 3 candlesticks.
– Relative Strength Index (RSI) is in the range of 30 to 50 and rising.
– You may also check if ADX (Advance Directional Index) is rising towards 25/beyond 25 and +DI crossing -DI upwards.
– Check if Slow Stochastic is crossing the signal line upwards.
– If all above are taking place then we can expect an upward breakout. It will be safer and hence better to wait for 2 or 3 more candles for confirmation before taking a buy position with a red candle.

If ADX does not move above 25 (market not trending) then the upward move may be short-lived and hence the profit taking will also be limited

2B) Tightening Bollinger bands (Bearish):

The pattern happens with an extended sideways move and also with volatility being less (short candlesticks).

Checklist and action:

– Check if there are minimum 2 continuous bearish candlesticks (red) which are longer than previous 2 to 3 candlesticks.
– Relative Strength Index (RSI) is in the range of 40 to 60 and falling.
– You may also check if ADX (Advance Directional Index) is rising towards 25/beyond 25 and -DI crossing +DI upwards.
– Check if Slow Stochastic is crossing the signal line downwards.
– If all above are taking place then we can expect a downward breakout. It will be safer and hence better to wait for 2 or 3 more candles for confirmation before taking a sell position with a red candle.

If ADX does not move above 25 then the upward move may be limited and hence the profit taking will be limited.

3A) Continuation of uptrend after correction during the ongoing trend

Correction always takes place even during strong trends. During an uptrend the price may reverse to the middle band or even towards the lower band.

Checklist and action:
– RSI (Relative Strength Index) is in the range of 30 to 50 and rising.
– We can also check ADX (Advance Directional Index) to see if the ADX is above 25 and +DI line is over -DI line (bullish configuration).
– Whether the Slow Stochastic is over the signal which indicates a bullish configuration.
– With all the above we can expect the continuation of the ongoing uptrend. It is safer and better to wait for 2 or 3 more candles to have a confirmation that the recent opposite move was just a correction and then take a buy position

3B) Continuation of downtrend after correction during the ongoing trend

Correction always takes place even during strong trends. During a downtrend the price may reverse to the middle band or even towards the upper band.

Checklist and action:

– RSI (Relative Strength Index) is in the range of 55 to 75 and falling.
– We can check ADX (Advance Directional Index) to see if the ADX is above 25 and -DI line is above +DI line (bearish configuration).
– Whether the Slow Stochastic is below the signal line which indicates a bearish configuration.
– With all the above we can expect the continuation of the ongoing downtrend. It is safer and better to wait for 2 or 3 more candles to have a confirmation that the recent move in opposite direction was just a correction before taking a short position.

Note: We have mentioned Slow Stochastic. Some traders use normal stochastic, some “slow stochastic” and some “full stochastic”. Normal stochastic oscillator may tend to give too many false signals and full stochastic need a decision as to how slow we want to make it. I generally use either the normal stochastic with default settings or the slow one. Depending on the strength of the trend and market situations we can decide to use full stochastic and the factor as to how much slow we wish to make it.

You may check more details about Bollinger Bands at Forex Trading site ForexAbode.com

What to Expect From Sony (NYSE: SNE) in 2012

by Jeannette Di Louie, Investment U Research
Tuesday, January 3, 2011

To say that Sony (NYSE: SNE) had a rough 2011 is akin to saying that the Titanic got delayed…

Either way, it’s a major understatement.

Early in November, the Japanese electronics and entertainment conglomerate not only had to report a $346-million loss for the previous quarter, but it also revised its annual earnings forecast downwards to an overwhelmingly depressing $1.2-billion loss for the fiscal year.

Meaning that Sony will have recorded four straight years of negative growth.

That probably seems surprising considering Sony’s impressive corporate history and equally notable product line. Founded in 1946, the company sells laptops – including the swanky VAIO line – televisions, cameras, desktops and gaming consoles.

Yet it can’t seem to catch a break.

Based in Japan, Sony blamed the strong yen along for lower sales – especially in their TV department – and heavy flooding in Thailand on top of the 2011 tsunami, both of which disrupted production.

Those excuses are all well and good, and even valid, but four years in a row isn’t a fluke. It’s a trend… and not a flattering one…

Sony Flops and Failures

In Sony’s defense, TV sales really have been dropping across the board for several years now. Much like the housing market, television sets are currently in a buyers’ market.

Well-established businesses like Panasonic (NYSE: PC) and Toshiba (TYO: 6502) have suffered right alongside Sony as prices just keep falling. As Yahoo! Finance’s Andrew Martin explains, “Even newer and more nimble competitors like Samsung and LG have struggled to make much money on TVs, if any.”

But all the same, Sony’s revenue fell in just about every area of its diversified business, from its Consumer Products and Services division, to its Music, Financial Services and Professional, Device and Solutions departments. In fact, the only thing that did well was Sony Pictures, where revenue increased by an admittedly impressive 17 percent.

Even revenue from Sony Ericsson, which it shares equal ownership with Swedish telecommunications company, Ericsson, fell 1.1 percent. And they sell phones, a market that seems to be all but recession proof these days.

Sure, the larger company didn’t make it onto Yahoo’s highly unflattering “Worst Product Flops of 2011″ list… unlike Netflix (Nasdaq: NFLX) for its harebrained and short-lived Qwikster, General Motors (NYSE: GM) for its all but un-sellable Volt and Research In Motion (Nasdaq: RIMM) for its disappointing attempt at a tablet with PlayBook.

But that’s hardly very comforting to Sony shareholders, whether loyal or prospective.

Not a Bet Worth Making

With all of that said, Sony does have a few factors in its favor, one of them being the nearly certain fact (or at least as certain as you can get in this crazy business climate) that it isn’t going anywhere anytime soon.

It’s here to stay and, even now, its teams are working hard at putting the finishing touches on what could be an exciting, new product lineup due out this year or shortly after.

That includes the PlayStation 4, which it’s currently keeping hush-hush. Investors and gamers alike might get some significant sneak peaks at it at the E3 gamers’ conference in Los Angeles in June, however.

Then there’s the PlayStation Vita, Sony’s latest portable gaming system, which consumers will be able to buy with Wi-Fi or 3G. And that’s not the only portable entertainment system it plans on debuting soon, since it also has high hopes for its upcoming Personal 3D Viewer.

As Business Insider describes it, the Viewer is “a full 3D home theater system… on your head,” all for just $800. Though, of course, that isn’t likely to sell like the electronic version of hotcakes in this poor global economy.

For that matter, there’s no guarantee that the other two products will, either. Not with products priced in the $100s and consumers still so jittery.

Whether that’s Sony’s fault or not doesn’t really matter in the end. Blame it on tough luck, bad management decisions, or some combination of the two.

But no matter who or what deserves the blame, investors should wait to see some signs of life from Sony before investing in them any time soon.

Good Investing,

Jeannette Di Louie

Article by Investment U

Jan. 3 (Bloomberg) — Christopher Gothard, head of foreign exchange at Brown Brothers Harriman (Hong Kong) Ltd., talks about his forecast for the euro.¶ European leaders return to work this week seeking to buy time for the Spanish and Italian governments to wrest control over their debt and rescue the single currency from fragmentation in its 10th anniversary year. Gothard also discusses the yen, pound, Australian dollar and yuan. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)