Oct. 4 (Bloomberg) — Daphne Roth, head of Asian equity research at ABN Amro Private Banking, talks about the outlook for financial markets and investment strategy. Roth speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
The Natural Gas Company You Need to Watch After Today
The Natural Gas Company You Need to Watch After Today
by David Fessler, Investment U Senior Analyst
Tuesday, October 4, 2011: Issue #1614
The energy sector has taken a pounding over the last few trading sessions… If you’re overly focused on the short-term in the markets, you’re probably not feeling too well.
But if you’re investing in natural gas for the long term, you’ll definitely feel confident after reading the EIA’s Annual Energy Outlook for global demand… I know I do…
At 52-percent, the global growth rate in natural gas use over the next 25 years will be nothing short of spectacular. And even while the recession of 2009 resulted in a dip of about two trillion cubic feet, the decline in usage is now reversed. Levels now exceed those before the downturn.
Next year and over this decade, there’s a lot of money to be made in natural gas. You just have to know where to look in the supply chain for the best opportunity. And right now, I’m seeing a lot of opportunity in processing terminals as the United States is set to become a chief exporter of this new liquid gold… Let me explain.
Global Trends in Natural Gas Spot Prices
If you thought European prices for natural gas were high, then check out this chart from the EIA.
It shows the spot price for natural gas in the United States at the Henry Hub, the European price as measured at the National Balancing Point in the U.K. and Japan’s average LNG import price (measured monthly).
The chart clearly shows Japan is paying a fortune for natural gas. Why? Simple: It has no indigenous supplies of its own, and has to import all of the natural gas it uses. Much of that comes from the U.S. LNG export plant in Kenai, Alaska.
Exacerbating Japan’s problem was the earthquake, tsunami and disaster at the Fukushima nuclear plant, which took a significant amount of power production offline for the foreseeable future.
Most of that generating capacity was replaced with natural gas-fired units. This increased the demand for LNG in Japan, and subsequently, the price it pays. And remember, this is just one energy-starved nation in a world where demand is going to grow by 52 percent over the next 25 years.
The Growing Case for U.S. LNG Exports
The United States is the Saudi Arabia of natural gas, and the price has been relatively constant for the last two years.
Besides creating a cheap fuel that’s increasingly becoming the fuel of choice for power plant operators, a number of companies are putting plans in place to turn their LNG import terminals into bi-directional facilities.
With as much as a $12-per-million-Btu (MMBtu) difference in the price for gas here and abroad, exporting LNG makes a lot of economic sense. The cost to liquefy natural gas tacks on less than $1 per MMBtu. Intercontinental transportation via LNG tankers adds another $1 to $2 per MMBtu. That’s still well under even the price Europe is paying, and a far cry from what Japan pays.
Where to Consider Investing in LNG
As previously stated, the only liquefaction terminal in operation presently is in Kenai, Alaska. Numerous others are in the planning stages. Of the two that are furthest along, one is being built by Cheniere Energy Partners (AMEX: CQP).
It received approval to begin construction of a liquefaction plant at its Sabine Pass receiving terminal located in Cameron Parish, Louisiana. When fully operational in 2015, Cheniere expects to be able to process and liquefy 1.2 billion cubic feet of natural gas.
The problem is that 2015 is a long way away, and the stock is taking a pounding without a steady stream of revenue. It’s down more than seven percent so far today…
Which brings me to another play that I really like over the long term. A second company in the advanced stages of planning for an LNG export terminal is Dominion Resources, Inc. (NYSE: D).
It’s requested permission from the U.S. Department of Energy to modify its Cove Point LNG re-gasification terminal. It wants to be able to install LNG liquefaction trains, and ultimately be able to export natural gas from Cove Point.
Construction would start in 2014, and first LNG production is slated for 2016. While both companies are good bets on LNG, Dominion is well capitalized, and Cheniere will likely have to raise significant additional capital to finance its project. That would likely happen in the form of the issuance of additional common shares, further diluting existing stockholders.
There’s certainly a good case for both companies. But for now, take a look at Dominion. Though it’s down a little more than three percent today, the stock is still near its 52-week high, and it sports a nearly four-percent yield. When the LNG begins to flow, Dominion will be in the catbird’s seat. And so will its shareholders.
Good investing,
David Fessler
Article by Investment U
Jones Says Australian Bonds Becoming `Safe Haven’
Oct. 4 (Bloomberg) — Russell Jones, global head of fixed-income strategy at Westpac Banking Corp., talks about Europe’s sovereign debt crisis and investment strategy. He speaks with Linzie Janis on Bloomberg Television’s “First Look.” (Source: Bloomberg)
NFC Technology: What Investors Need to Know
NFC Technology: What Investors Need to Know
by Justin Dove, Investment U Research
Tuesday, October 4, 2011
Two recent events have likely ushered the dawn of NFC smartphone technology in the mainstream marketplace.
- Google (Nasdaq: GOOG) finally released Google Wallet on September 19,
- Isis announced last week that a handful of major handset manufacturers are already showing support for its NFC platform. (Isis is a joint mobile payment venture between AT&T (NYSE: T), Verizon (NYSE: VZ) and T-Mobile.)
While Isis most likely won’t come online until 2012, it should offer some competition to Google, which is likely to use its recent acquisition of Motorola Mobility to help further push its NFC agenda.
While these companies duke it out over who controls the NFC payment market, the semiconductor companies producing the chips used in the devices will most likely be the ultimate winners.
NXP’s Weakness
For more than a year, NXP Semiconductors (Nasdaq: NXPI) was touted as the best way to play NFC-payment technology. Being chosen for Google Wallet was a large reason for that.
NXP is possibly still a decent investment at this stage, especially since its stock is battered and is currently at less than half its 52-week high of $35.32. But looking at the future of NFC, NXP has an inherent weakness…
It doesn’t manufacture baseband processors for smartphones. Although current NFC-capable models and those in the near future use NFC controllers, it probably won’t last very long.
These controllers cost roughly $5 per phone. If NFC is widely adopted, it’ll be much cheaper – according to some, about $0.50 per phone – to combine the NFC capability into the baseband processor, much like GPS, Bluetooth and WiFi are now.
Innovision’s Vision
In early June of 2010, Innovision announced that it created a way to greatly lower the cost of implementing NFC. Essentially, its Gem NFC IP allows baseband processor manufacturers to combine the NFC capabilities into their “combo chips” with the other features like GPS, Bluetooth and WiFi.
Former Innovision CEO David Wollen told the NFC Times that the company believed NFC models starting in 2012 or 2013 would no longer put standalone NFC chips inside devices, but instead would opt for “combo chips” supporting the various wireless technologies. It would eventually reduce the cost of embedding an NFC modem in a handset to well below U.S.$0.50, he said.
Just over a week after the announcement, baseband manufacturer Broadcom (Nasdaq: BRCM) purchased Innovision for 47.5 million.
Broadcom will certainly have competition from other baseband manufacturers, such as:
- STMicroelectronics (NYSE: STM)
- LM Ericsson (Nasdaq: ERIC)
- Qualcomm (Nasdaq: QCOM)
- Marvell Technology Group (Nasdaq: MRVL)
But the acquisition of Innovision is already reaping benefits as Broadcom officially entered the NFC chip market and already has a head start on the competition.
Broadcom’s New Line of NFC Chips
On Monday, Broadcom announced the release of the BCM2079x family of NFC chips. Broadcom claims that the chipset “slashes power consumption by more than 90 percent, uses 40 percent fewer components and has a 40 percent smaller board area, making it the smallest and most power efficient NFC solution on the market.”
“Broadcom is committed to making NFC as ubiquitous as Bluetooth and WiFi are today,” Broadcom Vice President and General Manager Craig Ochikubo said.
While this chip doesn’t quite reach the vision of the complete “combo chip,” it’s a large first step in that direction.
The Bottom Line
NXP may still have a solid future due to the possible royalties it’ll receive from patents and licenses. It may even look to acquire or launch a baseband business to keep up with companies such as Broadcom and Qualcomm. But for those bullish on NFC and looking for a leader, it’s more likely to be Broadcom, or one of the other baseband manufacturers.
In reaction to the Innovision acquisition last June, Ochikubo told the NFCTimes, “We really feel its perfect timing right now, given increased interest from handset makers and carriers and the maturity of the NFC market.”
And with the recent confluence of Google Wallet and the Isis news with Broadcom’s latest release, it looks like Broadcom may truly be right on time.
Good investing,
Justin Dove
Article by Investment U
Where to Find Stocks with Yields Double Those in the U.S.
Note: Starting today, Dividend Opportunities will now be published twice each week on Wednesday and Saturday. That means we’re bringing you twice the income investing ideas from our income experts Carla Pasternak, Amy Calistri, and Paul Tracy.
This extra benefit comes at no charge. Dividend Opportunities always has been and always will be a free publication for income investors. As always, thank you for being a subscriber.
Last week, I told you about the enormous number of high-yielding stocks abroad. I think the amount of international dividend-payers out there is one of the market’s biggest secrets.
If you remember, I told you that only 18 profitable U.S. companies were paying yields of more than 12%… compared to 412 abroad. The numbers fluctuate day to day, but the trend is pretty clear.
I’ve researched this topic for years. And the fact is, foreign companies are simply paying higher yields across the board.
Take a look at the table to the right.
You can see the difference between what we get from U.S. companies and what’s available from international companies. Keep in mind that I only looked at the common stocks of companies that were profitable over the past year.
Truth is, the stocks in the S&P 500 pay an average yield of just 2.0%. That makes us one of the lowest-yielding markets in the world.
But go abroad, and you find something completely different. No, not every country is a dividend stalwart… but there are a surprising number of markets that more than double the yields found here in the United States.
Compare our 2.0% average yield to what I’m seeing in international markets.
According to Bloomberg, Germany’s average yield is 3.6%… Brazil’s average yield is 4.1%… the United Kingdom yields 3.4%… Australia yields 4.5%… New Zealand pays 4.4%.
Take a look:
As Judy Sarayan, a fund manager at mega-investment firm Eaton Vance explained in simple terms, “There’s a much stronger dividend culture abroad… individual investors play a larger role in those markets, and they have always demanded more dividends.”
But there are more reasons to look abroad than just the dividend yields.
In the one-year period between August 2010 and August 2011, the S&P 500 returned 15.9%. That’s certainly nothing to sneeze at, but when you look at total performance worldwide, the U.S. market ranked just 36th in the world over that period.
And over the past five years, the S&P 500 has returned 12.6%. But 34 other countries delivered better stock market returns.
So not only can you find higher yields abroad, but you can also see stronger capital gains.
You see, there’s a correlation between economic growth and rising stock prices. The faster the growth, typically the higher the stock market moves. And international markets are where the majority of the world’s economic growth is happening.
Look, the United States is unlike any other nation on the planet. It’s the largest economy and home to the world’s most innovative entrepreneurs. But the simple fact is that the headiest days of our economic growth are behind us.
Why?
It’s simply the law of large numbers. With an economy in excess of $14 trillion, growing more than a few percent each year is a major undertaking.
In fact, think back about what we’ve seen over the past few years. The U.S. government has spent trillions in an effort to stimulate the economy. The Federal Reserve has spent trillions more. Interest rates have been slashed to zero.
And yet, the U.S. economy grew just 2.8% in 2010. Not bad, but only good enough to rank us 117th in the world — between South Africa and Cameroon — when it comes to annual GDP growth.
Qatar topped this list with 16.3% growth. Singapore saw a 14.4% rise in GDP. Panama, 7.5%… South Korea, 6.1%… Poland, 3.8%… even Germany boosted its GDP at a 3.5% annual rate.
Fact is, more and more income investors are realizing that if they want to give themselves the best chance at the “Holy Grail” of investing — high yields AND rising stock prices — they need to look at international companies.
Don’t get me wrong — investing in international dividend-payers isn’t a guaranteed winning investment. Nothing ever is. But as I like to say, limiting yourself to only U.S. stocks is like going to a restaurant and limiting your options to just one side of the menu. Sure you can find something you like… but wouldn’t you rather see all the options?
For more on international dividend-payers, I invite you to watch my latest presentation, where I’ve also included names and ticker symbols of many high-yield international plays. I’ve even included the full list of the 18 U.S. companies yielding above 12%. Visit this link to watch now.
All the best,
Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist — High-Yield International
Technical Analysts Say Gold is At a Bargain
Technical Analysts Say Gold is At a Bargain
by Steve McDonald, Contributing Editor, Investment U
Tuesday, October 4, 2011
Gold is at a bargain – at least that’s what technical analysts are saying.
The techies described the recent 20-percent dip in gold prices as a bump in an otherwise long bull road for gold… and the charts support this claim.
The chart below is for the SPDR Gold Trust (NYSE: GLD). It shows a very strong upward trend for gold, and the recent sell-off just touched its upward trend line and bounced right off it.
(Courtesy: Barron's)
According to Michael Kahn of Barron’s, the sell-off is exactly what you would expect from the “parabolic” rise gold has had since last July. This isn’t the end of the run, but a short rest.
Kahn described the recent dip in gold as allowing the metal to get back to a more sustainable rate of change.
He also thinks gold is in better shape than silver, and both are in better shape than the respective miners.
Two factors don’t seem to be going away:
- Investors lack of confidence in the U.S. government and the Fed’s ability to do what’s necessary to get the economy going again.
- A worldwide lack of confidence in paper money as political promises in the EU and at home don’t turn into actions.
For gold, this is a buying opportunity.
Good investing,
Steve McDonald
Article by Investment U
Greetham Says Gilt Yields Point to `Death, Destruction’
Oct. 4 (Bloomberg) — Trevor Greetham, director of asset allocation at Fidelity International, talks about his investment strategy. He speaks with Owen Thomas on Bloomberg Television’s “On the Move.”
Gold Down, Stocks Continue Falling as Greek Fears “Destroy Bank Credibility” and Threatens Market Shock “Bigger than Lehmans”
London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 4 October, 08:30 EDT
THE U.S. DOLLAR gold price dropped to $1643 an ounce Tuesday lunchtime in London – still a 1.1% gain on the week so far – while stocks and commodities were battered again as Greek debt fears weighed on markets.
Copper fell 1.9%%, while WTI crude oil lost over 2%, dropping to $76 a barrel.
The silver price dropped to $30.21 – 0.8% up on last Friday’s close.
“Gold continues to benefit from the current pessimism regarding the global economy [and] the realisation that the Eurozone debt issue is far from being resolved,” says today’s note from Standard Bank’s commodity analysts.
“We expect physical [gold] demand to be quite decent in the coming days,” adds Edel Tully, precious metals strategist at UBS.
“After the recent washout, gold positioning is far from extended, and this is quite a bullish signal for price strength ahead.”
Stock markets meantime fell Tuesday for the fifth session running, with the FTSE100 here in London dropping through 5000 – a level it first crossed on the way up in August 1997.
The finance ministers of France and Belgium today pledged to “step in” if necessary and bail out the part-nationalized Dexia banking group.
Dexia received a bailout worth around €6 billion in 2008. Its share price fell to a low of €0.81 Tuesday morning – 44% below where it closed last week – after ratings agency Moody’s placed Dexia on review for downgrade, citing “concerns about the group’s sizeable reliance on short-term funding and the consequent liquidity gaps”.
Last week Fitch, another ratings agency, referred to Dexia’s “structural weakness” and warned that the bank faces growing difficulties in getting access to funding.
Several European banks have now “marked to market” the Greek government bonds they own, making writedowns of 50% or more. But others – including French banks BNP Paribas and Societe Generale and the Franco-Belgian Dexia Group – have so far only recorded the 21% loss agreed at a Eurozone summit in July.
“It’s no coincidence that the banks with some of the biggest holdings of Greek debt took the smallest writedowns,” says Peter Hahn, professor of finance at Cass Business School in London and a former managing director at Citigroup.
“You’ve got banks, which are supposedly comparable, putting different values on their assets. That destroys the credibility of the banking system, and is one of the reasons why the shares are being hit so badly.”
“The market is increasingly worried about the potential of the Greek crisis and the calamity that could be created if there was a messy default,” says Jane Foley, senior currency strategist at Rabobank in London.
“We could be in for a shakeout even larger than the Lehman shock,” adds Hideki Amikura, Tokyo-based foreign exchange manager at Nomura Trust Bank.
“While last week saw precious metals largely following equities on a downward slope, gold and silver’s moderate gains this week are a positive sign that they are returning to favor on haven demand,” reckons one bullion dealer here in London.
“Investors will be reassured that last week’s rout [of gold] was driven more by a flight to cash to meet margin calls and mitigate losses on equities than by a fundamental shift in perceptions of gold’s value.”
Luxembourg prime minister Jean-Claude Juncker, who chairs the Eurogroup of single currency finance ministers, confirmed Tuesday morning that he has cancelled a meeting of Eurozone ministers scheduled for October 13 to discuss whether or not Greece should receive the next installment of its bailout funding, worth over €8 billion.
The cancellation follows Greece’s announcement on Sunday that it expects to miss its deficit-cutting targets for 2011.
Greek finance minister Evangelos Venizelos said today that the government has enough money to last until mid-November if the next installment is delayed. He has previously said it would run out of money by the middle of October.
Dollar and Sterling gold prices remain broadly where they closed on Friday 23 September, while the Euro gold price is up 1.7% over the same period.
In the so-called commodity currencies, the gold price has risen 2% against the Canadian Dollar in that time and 3.4% against the Australian Dollar – recovering most of the losses in that currency incurred towards the end of last month.
Gold value calculator | Buy gold online at live prices
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
Harr Expects Euro to Fall to $1.30 `Pretty Soon’
Oct. 4 (Bloomberg) — Thomas Harr, head of Asian currency strategy at Standard Chartered Plc in Singapore, talks about his forecast for global currencies. Harr speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
Forex CT 4-10-11 Video News Update
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.
