In focus this week; $1 natural gas, new EM plays called the next 11, Apple’s top and the sitfa
According to the Journal, natural gas in the Rockies and the Louisiana hub are below $2 per million BTU’s. The April delivery price is around $2.35.
Is $1 gas in our future?
In fact the cash handle, an industry term, is already showing some gas in the $1 range.
But many gas analysts, the CME group in particular, say we should see a rally to the $4.00 range by sometime in 2013. Some contracts for the fall heating season are already trading in the $3.00 range.
The key to any price appreciation lies in slowing gas production, the glut we have now is monstrous. But developers have to drill to hold on to their leases, so despite the conflict the journal reports gas production cuts will be the new normal, and that will be bad news for earnings.
With the exception of Chesapeake and Southwest Energy, most gas developers are showing a respectable gain in share prices over 2011. But as storage capacity shrinks and the gas glut continues to grow we could see a big reversal in what had been a booming industry for several years.
There has been talk recently about gas becoming more of a transportation fuel but until that demand shift happens we will have to wait for production cuts and the next winter season to kick the price up to a reasonable level.
For now look for higher prices in the fall, but I wouldn’t hold your breath.
The next 11
That’s what the new BRIC’s are being called, the next 11.
According to Karen Wood, Sr. Global Economist at HSBC lesser known emerging economies like Egypt, Bangladesh, the Philippines, and Iran have great demographic profiles that are essential for strong growth; an increasing working population.
The other factors that HSBC sees as driving really big GDP growth in these new emergers that will make countries like Malaysia, Indonesia, Viet Nam and Mexico the next big plays are; openness to technology, expanding educational opportunities, political reforms, a focus on patent rights and the rule of law.
Of course, as with the BRIC’s over the last 20 years, there are real risks here. HSBC’s Wood urges investors to find the countries that fit their risk profile rather than buying a cross section of them. The risk levels vary greatly.
Malaysia and Indonesia for example have shown more stability and are further along in the process than some of the others and should offer more stability and lower risk.
The really big growth of course will come from the still less developed areas like Egypt, which is undergoing structural changes and Iran which is sorting out its nuclear future and struggling with geo political issues.
In fact, HSBC sees political stability as the one key risk issue with all of the “next 11” countries. Patent rights, and their enforcement, and the rule of law will the big limiting factors in all of them.
There’s a lot of money to be made here, but you’d better be able to ride out the ups and downs for as long as the next couple of decades. These are definitely long term plays with lots of volatility.
To get a better idea of what kind of volatility you can expect, go back and look at the ups and downs of just about any long term India or China fund, use one that has at least 15 to 20 years under its belt.The ups and downs might surprise you.
Apple, Holy Cow!
A few months ago when AAPL was at $385 I called for $600, but never this fast. I thought it would take a year or so.
But Peter Misek, the Sr. Tech Analyst at Jefferies, says it can’t last much longer, unless Apple TV comes sooner than expected. That could be a game changer on the upside. He didn’t say how much.
Right now, according to Jefferies and Company, Apple alone is worth 20% of the total increase in the entire Nasdaq 100 this year and 4.3% of the total return of the S&P 500. One stock is driving a lot of this whole market move.
Misek says he sees $700 as the near term top and would start taking money off the table around $650, unless, again, Apple TV arrives earlier than expected. He’s looking for it this fall.
One of the interesting plays Misek mentioned is to short the Nasdaq 100 when Apple hits the $650 to $700 range, not if, when! Since it is 20% of the whole move this year on that index we should expect a sizable drop when Apple finally corrects.
But, with the recent announcement of the stock buy back, and a dividend, as small as it is on a percentage basis, the whole picture changed.
From my perspective, this recent move has obviously been huge but the combination of the dividend, the stock buy back and the eventual roll out of their TV concept, $750 to $1000 is very realistic and lots of analysts were calling for 800 to 1000 before the dividend was announced.
My take on this one, stick with the stock and tighten your trailing stops as we approach the $650 to $700 range, and wait for the TV announcement.
As I have said in the past, Steve Jobs did the best selling job with this company in the history of business and the momentum here is unparalleled. Ride your winners, dump the losers, and this might be one of the biggest winners of all time.
As far as anyone can see, there is no bad news in this stock. The only short term fluctuation we may see is from profit taking or a political event, neither of which will be permanent.
What a ride.
Finally, the sitfa
This is a really funny one, it goes to the guy who came up with this offer. It appeared in business opportunity homepage.
“How to get one million people to send you $2.00! Method plus proof it really works. Rush $2.00 and SASE to…”
This guy has some real gumption! I wonder how many responses he got?
Article by Investment U
