InvestMacro FX

JG Summit Holdings or JGS in the Philippine Stock Exchange for a while had moved past its previous high at PHP 27.50. However, sellers are quick to bring it back towards PHP 27.00. Nonetheless, things still look rosy for JGS at least from a technical perspective at this point in time.

2011 is a positive year so far for JGS as it has been able to push its price up from PHP 19.58 during the start of January to a high of PHP 28.30 couple of days ago. Still, it appears that it has some more leg to move higher given its present technical set-up. As you can see from its daily chart above, JGS has formed an inverted head and shoulders continuation pattern. A successful break above this pattern’s neckline could send it to its minimum target price of PHP 35.00 (gauged by projecting the height of the formation from the possible breakout point. Last week, though, it attempted to move past the PHP 27.50 high but it was not able to stay above it for so long. The question now is, will we see such another attempt? Possible.

More on LaidTrades.com …

Another John Gokongwei – led company, namely Universal Robina Corporation or URC in the Philippine Stock Exchange has been making some headway these past couple of days. Now, will it be able to regain its form and regain its previous high that it had back in 2010?

As you can see from its daily chart above, the shares of URC have been on snooze mode since the start of December 2010. However, it appears that this sleeping giant will once again crawl back in the trading scene. You see, URC has been consolidating within a cup and handle pattern for almost 5 months now. Just last Friday, though, it seems that it has already broken above the pattern’s neckline. Or did it really do so? Well, while it looks that it did move past the neckline, there was no significant volume to support the move. Given this and the apparent resistance at the nearby PHP 40.00 level, URC could still face some selling pressure at present levels. But if it manages to move past PHP 40.00 and its volume surges as well, then there’s a big chance that it could once again aim for PHP 45.00 or even higher. A failure to do so, on the one hand, could place URC back in hibernation.

More on LaidTrades.com …

The euro recovered in the US session to trade higher following a late day rally as the currency looks to close up on the day. However, today’s move in the US trading session may be a “Dead Cat Bounce” as the EUR/USD remained inside a defined range and event risk remains following the European finance minister’s meeting.

A mid-US session rally helped the EUR/USD trade as high as 1.4235 before falling back to 1.4220. Weaker than expected US housing data and industrial production numbers originally fed into USD buying but as the trading wore on the euro began to draw bids. The euro rally is surprising given the European finance minister’s meeting did approve an aid package for Portugal but the jury is still out on Ireland and Greece. This subsequent event risk hangs over the head of the euro.

Today’s price action shows this may be a short rally before further potential declines. The daily high coincides with yesterday’s high as well as a downward sloping channel line off of the May 11th peak. The lower channel line falls off of the May 9th low.

Cable went on a rollercoaster ride after the release of higher than expected UK inflation numbers. The GBP/USD rose to as high as 1.6302 before falling back to 1.6185 and looks to close near 1.6250.

Tomorrow UK unemployment data will be released along with the BOE MPC Meeting Minutes. No change is expected in the voting as the meeting took place prior to the upcoming departure of known hawk Andrew Sentance. His replacement is former Goldman Sachs economist Ben Broadbent who maintains the view of holding UK interest rates at ultra-low levels until the economy gains traction. Q1 UK GDP expanded by only 0.5% following a Q4 contraction of -0.5%. GBP/USD support comes in a 1.6140 with resistance at 1.6515.

Read more forex trading news on our forex blog.

Life affords each of us an opportunity for adventure every day. Often, it is simply a matter of embracing the opportunity to advance a goal.

Here’s an example of what I mean…

For years, I traveled through the entire state of Florida by car for business. As you can imagine, driving to appointments became less than fun. So when one of my clients asked me to attend a meeting that would require a three-hour drive (one way), I almost said no. After all, I am very selective in the way I choose to spend my time and energies.

However, I have an alternate mode of transportation – my single-engine airplane. “Wow!” I thought, “By flying there, maybe I can make attending this meeting both productive and fun!”

Think about it. There is nothing worse than going into a meeting tired and in a bad mood. I would rather not go at all. But instead of stressing myself out over having to drive for six hours or say no to the opportunity, I took a “mental step” back and reassessed my options.

Since that first time, I’ve flown my airplane to many business appointments. And I’ve been able to take on clients in Lake City, Gainesville, New Port Richey – each one a long drive from my home in Orlando.

I save hours of boring driving. I arrive at my destination rested and eager to become involved in the work. I know I will have plenty of time to visit with the client and go to lunch at a nice restaurant to further our relationship.

Flying to appointments also advances my personal goal of increasing the number of hours in my log book. Best of all, I enjoy it!

And it’s changed my entire attitude toward work.

I’m productive by nature. And I used to be relentless in the pursuit of my goals. I would go in earlier and stay later – whatever it took to get the mission accomplished. If it meant driving 10 hours to meet a new client, I would do it.

Not anymore!

It’s great to be an achiever. And I still believe in a “whatever it takes” approach. However, ONLY on rare occasions and ONLY in a limited timeframe.

If, for example, your annual business conference starts next week, then, sure, you’ve got to focus solely on gathering the troops and making it happen. An all-hands-on-deck mentality is necessary. But if opening day is three months away, there is no need to be in hyper-mode. With proper planning (and a dash of faith), all should come together on time and on target.

Under ordinary circumstances, I find that it’s much better to enjoy the ride as I go along my goal journey.

When I complete one of my weekly Power Surge messages for ETR’s Total Success Achievement/Epiphany Alliance Program, I often reward myself with a glass of wine on the porch. My wife Karin, who assists me with the messages, joins me.

You can do something similar. Next time you sit down to write an article for your online business website, why not take your laptop outside? It will clear your head and allow you to enjoy your surroundings while you work. Or when your team at work is staying late to complete a project, why not take a half-hour break to play a quick game of touch football in the parking lot? Exercise is a great stress reliever.

What I’m getting at is this: Play more and you can bring renewed vitality and enthusiasm to the achievement of your goals.

In other words, take yourself lightly – even while taking your work seriously. Don’t be so completely focused on your work that you eliminate other activities that can add value to your life.

Here’s how to do it…

• Make a list of your scheduled activities for next week.
• For each one, ask yourself, “How can I make this fun?”
• Write down your answer. And write the word FUN next to it to imprint your new perspective on your brain.

Start TODAY to incorporate this success practice into your weekly routine.

Make your new motto “Let the adventure begin!”

[Ed. Note: Improving your life starts from the inside out. Yes, you need to take action in order to move yourself forward to success. But sometimes you need a little push to get yourself going… and some simple techniques to help you accomplish your dreams. Discover what success mentor Bob Cox can do for you here.]

“Inspiring and stimulating.”

As always, I found Michael Masterson’s writing very inspiring and stimulating.

When I start reading his “Plan B” article, my first reaction was that this is an interesting approach. Then I realized that Dale Carnegie said the same in one of his books – to imagine the worst possible outcome and accept it as possible. Then plan around it.

Francois

This article appears courtesy of Early To Rise, a free newsletter dedicated to creating wealth and success through inspiration and practical, proven advice. For a complimentary subscription, visit http://www.earlytorise.com.

It may be too much for most people to fully comprehend the size of the government’s $14.3 trillion debt, so let’s put this in terms each of us can understand – yesterday the United States maxed out all its credit cards.

By law, the government is restricted to a debt ceiling of $14.294 trillion. This limit came into play on Monday and means the government is effectively prevented from selling bonds and taking on any further debt. The Treasury Department released a somber statement noting that by raiding the nation’s pension funds it could manage to meet the nation’s debt obligations until mid-summer, but unless new funds are available by then, the Treasury would have no choice but to default on some of the country’s debt obligations.

Mandatory Spending vrs. Discretionary

The U.S. debt has become a ferocious beast with an insatiable appetite. In 2010, mandatory spending grew nearly 15 percent over the previous year and totaled $2.17 trillion. At the top of the list was Social Security at a shade under $700 billion with Medicare / Medicaid following at $453 billion and $290 billion respectively. It is also noteworthy that interest on the national debt – also a mandatory expenditure – cost American taxpayers $164 billion for the year.

Discretionary spending for 2010 was also up significantly gaining almost 14 percent over the previous year to $1.38 trillion. Defense spending as you might imagine, was the number one expenditure on the discretionary side accounting for $663.7 billion. By comparison, the remaining discretionary totals are miniscule with the number two category – the Department of Energy – accounting for “only” $26.3 billion.

Here is the problem facing lawmakers. Mandatory spending is just that – mandatory. In other words, the government has few options to find savings in these areas. With respect to discretionary spending, other than the big-ticket defense spending, the remaining expenditures are – relatively speaking – insignificant. Locating a spare trillion or so in this category will require significant cutbacks across many different departments and would take months to complete; the government has at best, a few weeks.

So why not simply raise the lending limit? Well, this would be the obvious solution but the typical back-room shenanigans are in full-bloom in Washington right now and it is unclear when this approval may come. Both sides are using the debate to positions themselves as the better steward of the nation’s finances and should this partisan back-and-forth continue past the Treasury’s warning date, some form of default is unavoidable. Treasury officials are already quietly considering the worst case scenario and are identifying areas where a default would create the least damage.

If it comes to that extreme, it seems unlikely that the government would risk sacrificing its credit rating by defaulting on its interest payments. The resulting collapse in investor confidence would force yields much higher on subsequent bond offerings and this would have grave consequences on America’s ability to raise funds in the future. After all, the U.S. will be forced to rely on deficit financing for the foreseeable future so this option is a non-starter.

It is also hard to imagine that the government will take the route of slashing healthcare or dismantling other social programs. This would be a tough sell with the 2012 election campaign about to kick-off in earnest but the political posturing does serve to set up the debate between the two camps – the Democrats who favor minimal spending cuts with increased taxes, and the Republicans who demand dramatic spending cuts as the cost for garnering their support for raising the credit limit.

So far, it appears that both sides are more concerned with scoring political points at each other’s expense rather than tackling what could quickly become a crisis issue. Despite the looming election, both sides would be well-advised to ease up on the politics until the financing question is settled for the short term at least.

A good start would be to remove the specter of a default by approving an increase in the borrowing limits ASAP. Once markets are reassured that a default is not going to happen, then lawmakers can address the larger question of spending and taxes.

Oh, and here is something else to keep in mind – just because the limit has been increased on your credit card, it doesn’t mean to have to spend it.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

Panama City, Panama: Living in Panama City could cost you less, maybe a lot less, than wherever you’re living today, depending where you’re living today and how you decide you want to live in Panama City. But perhaps the real point is that your budget, whatever you decide it to be, can buy you a dramatically elevated standard of living in this part of the world.

Dear Live and Invest Overseas Reader,

A few months after we moved from Paris to Panama City, I reflected on the relative costs of living in these two places, noting that, in fact, our cost of living in Panama City was not proving to be noticeably lower than it had been in the City of Light.

In July, we’ll have been living in Panama for three years. Now fully settled into our new lives in the tropics, how is our cost of living faring? Lief and I reconsidered our budget comparison, Panama City versus Paris, last night.

It’s costing us about half as much to rent our house in Panama City as it would to rent a suitable apartment for our family of four in Paris. That’s a big difference, of course, and an expense item where Panama City comes out the big winner. However, cost of housing should be considered separately from your overall cost of living (because it’s so variable and so hard to compare apples to apples).

Housing aside, our cost comparisons between Panama City and Paris get more interesting.

In Panama we have a full-time maid, a part-time gardener, and two full-time assistants, one for the business and one for our personal stuff and travel. In Paris, I had to negotiate with Lief to get him to go along with the idea of once-a-week, two-hours-at-a-time help around the house, and we paid half as much for that weekly help as we’re paying for my full-time helper (five days a week, cooking, cleaning, and ironing) here in Panama (and we’re paying beyond the very high end of the current going rate).

In Paris, we never entertained the idea of a full-time personal assistant. You don’t employ people lightly in France. As even French friends joke, employees in that country are lifetime liabilities. That may be a small exaggeration, but the point is that, once hired, a French employee is not easily parted company with. Plus, the cost of even a part-time assistant in Paris would have been beyond our budget.

The kind of day-to-day support, with household chores, with weed-pulling, and with travel planning, that we’re enjoying here in Panama has been liberating. If and when we move to a place where we can no longer afford it, we’ll feel the loss.

In Panama City, we dine out at four- and five-star restaurants on average twice a week. In Paris, it was maybe twice a month. Panama’s capital boasts dozens of international-standard restaurants that, while not super cheap, are a bargain compared with the cost of fine dining in Paris.

We dropped off 35 items at the dry cleaner’s yesterday. As Lief remarked, in Paris, where the average per-item cost of dry cleaning is about 4 euro, that would have been a significant cost item for this month’s budget. Here in Panama City, the cleaners we go to charges an average of 90 cents per item.

Jack has weekly piano lessons and four-times-a-week Hapkido lessons here in Panama City for a total cost that is less than the cost of his weekly guitar lesson in Paris. And our Spanish tutor in Panama costs one-third as much as the French tutor I worked with in France.

Lief’s haircut in Paris cost 40 euro. In Panama City, he has his hair coiffed for US$5. So he gets his hair cut twice as often.

On the other hand, in Paris, we didn’t own (need or want) a car. Here in Panama we’ve invested in a Prado. You need a car to get around this city. As small as it is, it’s not a city for walking. And, if you intend to travel in the country beyond the capital, you need a four-wheel-drive SUV.

Our utility costs are a little higher in Panama, thanks to the cost of air conditioning those 320 square meters we live in.

What does all this mean for you? Mostly it’s an effort to show you the kind of thinking you should be doing as you prepare for your own move to wherever you’re thinking of moving. Even if you’re planning to launch your new life in Panama City, your budget probably won’t look anything like ours.

We’re at a phase of our lives, thanks to our children and our business, where we need full-time help around the house. We have two children, each of whom needs a bedroom, plus we wanted room for guests. We like to eat out. We have a school-aged son who wants to learn to play the piano and to practice the martial arts. Etc.

Your life might look almost nothing like ours, meaning your costs of living could be dramatically less…or maybe they’d be more. I don’t know.

You could move to Panama City as a retired single or couple and get by on, say, US$1,200 a month. But that’s not the point.

Here’s the point that Lief and I recognized last night as a result of our three-year-on comparative musings:

Moving to a place like Panama City, from the States or, as in our case, from another developed-world spot like Paris, the big budget benefit isn’t necessarily a dramatic reduction in your overall cost of living. Living in Panama City could cost you less, maybe a lot less, than wherever you’re living today, depending where you’re living today and how you decide you want to live in Panama City.

All tallied, and cost of housing aside, we’re spending about the same to live here in Panama City as we did to live in Paris. But that budget is buying us a considerably improved standard of living.

And that’s the real point: Your budget, whatever you decide it to be, can buy you a dramatically elevated standard of living in this part of the world. Your new life can be more comfortable and better appointed. You truly can live better than you ever have until this point.

Kathleen Peddicord

P.S. This is the kind of thinking that I’m walking the students of my new “52 Days To Your New Life Overseas” program through, day by day, step by step. I’m delighted that the response to this has been so great. You can find out more here.

P.P.S. One more important thing about Panama: Living and running our business here we’re operating tax-free. You could, too. Again, I walk through this kind of thinking and planning as part of my new 52-day program.

Article courtesy of:

Kathleen Peddicord

Founder and Publisher Live and Invest Overseas

http://www.liveandinvestoverseas.com

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See More of Kathleen’s Special Reports:

• Live & Invest in Panama
  
• Around Asia
  
• The Argentine Vineyard Buyer’s Guide
  
• Panama Without The Sugar Coating
  
• Belize Report & The Belize Starter Kit
  
• Top Health Insurance Options For The Retiree Abroad

Housing in the U.S. is still in a fragile state. Prices for the average home continue to fall, although they have leveled off in some areas. Investors are wary, though. Buying a house in certain areas is like trying to catch a falling knife.

I want to show you a simple method that can help prevent any major wounds. At the very least, it can help ensure that you can cover your investment expenses.

Where Are Home Prices Now?

Measuring home values with any accuracy is next to impossible, but there are indexes that try. Eleven years ago, Case-Shiller created a home-price index that measures percentage changes in the average home prices of 20 cities across the country.

In January 2000, the index was set at 100. It peaked at 206.52 in July of 2006. Now that index is back down to 139, meaning that the average home value in America is only 39% greater than it was in January of 2000.

In much of the country, housing values have plummeted below April 2003 levels, which was the last time the index was at 139.

There are arguments from both sides. Some say that we are seeing signs of stabilization, and even growth, in the real-estate market. Others think that home prices still have room to fall.

While pundits and indexes like Case-Shiller can offer us general insight into the health of the housing sector, they can’t tell us what is going on in our own backyards.

Get Specific

Don’t get caught up in the hype, but take a look around your neighborhood for opportunities.

If you have lived in your area for at least five years, you probably have a good idea about what is going on with your local market. You most likely know the streets that are popular, what areas are selling and what sort of rents people are paying for houses and condos.

If you are not familiar, take some time to check out Realtor.com and take a look at local home values and, even more importantly, rent rates. You can also find this information on other sites like Zillow and Craigslist.

The reason I bring up rent rates is that rent rates can help you figure out if buying real estate makes sense or not (even if you aren’t going to rent it out).

Rent rates are a major part of my litmus test.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)

Find Value Using Logic

Real-estate value is EXTREMELY subjective and completely reliant on area demand. How else could a 600-square-foot studio rent for $3,000 in New York City and $400 in Dallas? In more densely populated urban areas, you can use rent rates as a comparison for value. This method won’t work so well in rural communities.

I have bought and sold about a dozen properties in Dallas over the past eight years and have used this method to help me ensure a good value. There are obviously no guarantees, but I will tell you from experience that rent rates can be more stable than home values in the long term. They can really help you justify (or pass on) a deal.

This method has helped me to profit in every real-estate investment I’ve been in.

I call this method my modified cap rate calculation. Let’s start with what the basic formula looks like:

A capitalization rate is how quickly you can make money on an investment. But I add a twist.

My calculation is slightly different.

I assume that an investor needs to borrow money to buy the property. I use typical investor rates with a 20% down payment to find out how much my costs are going to be each year.

Then I divide the average yearly rent in the area by my annual costs to find the modified cap rate. Here is what it looks like:

Say a condo costs $100,000. A 20% down payment means an $80,000 mortgage. A 30-year mortgage with a 6.75% rate will cost $6,226.56 a year. Then you have to factor in taxes ($1,500), condo fees ($1,200), and insurance ($300). When all is said and done, rent is $12,000 a year.

Now say your total annual costs are $9,226.56. That means you’re left with $2,773.44 in profits.

This is good. You want to make a profit. In your math, you should use the lower average of the rents in the area. This gives you a conservative estimate for your profits.

Then I take it a step further. I want the profit to be at least a 25% return on my total annual fixed costs.

In the above case $2,773.44 divided by $9,226.56 is 30%.

A 25% profit means the property could carry itself if I had to rent it out, and it also will help to account for repairs.

Don’t forget that there are tax advantages to owning real estate, and write-offs on mortgage interest. Make sure you speak to an accountant first.

Selling the Property

You don’t have to rent the property. Investors sometimes just want to try and make a profit from reselling the house. But they can use this simple calculation, too. It helps to be able to rationalize cost on the house. In times of high demand, buyers will generally pay more for homes and don’t care what it can rent for. They are betting that the value of the home will rise.

But using this formula tells you if you’re able to profitably rent the home while you wait for prices to appreciate. You can at least feel good knowing that if worse comes to worst and you had to sell, a buyer would be more attracted to a house that is returning at least 25% on its annual costs!

Editor’s Note: Velocity Trader’s Zach Scheidt has another way to make money in the housing when the market goes bust.

U.S. homebuilders have staged a remarkable recovery — propped up by government stimulus and a rising stock market. But these companies are about to take a major hit!

In this special report — yours absolutely free – Zach’ll show you how you could protect and grow your money when it happens! Get all the details from Taipan’s Velocity Trader.

Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.

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By Zac, CountingPips.com

There’s a new website out there at forexreviewsearch.blogspot.com where you can find forex information and search exclusively from a bunch of popular forex blogs and websites.

Check it out: forexreviewsearch.blogspot.com

I think forexreviewsearch will be a useful site for traders and others to quickly find quality information on the day to day goings on in forex trading. I’d also like to thank them for including us on their list of websites.

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.

At lunchtime during the European trading session the US dollar was sliding versus the euro and the pound while rising versus the yen. Stronger than expected inflationary data supported the pound versus the dollar but sterling’s gains versus the euro have been rolled back.

The GBP/USD was higher at 1.6230 from 1.6193 after this morning’s UK CPI report showed higher than expected inflationary pressures in the UK with y/y inflation rising 4.5%. Economists expected the data to show rising price pressures to the tune of 4.2%. Forecasts are for the Bank of England to increase rates between 2 and 4 bps. However, BOE Governor Mervyn King has been adamant in his opinion that the inflationary pressures in the UK economy are temporary increases due to the higher VAT and rising commodity prices. Thus may explain sterling’s inability to hold gains versus the euro.

The EUR/GBP fell as low as 0.8681 from 0.8745 before recovering to 0.8730. Markets appear unconvinced the BOE will be increasing rates in the near terms and this may explain sterling’s weakness. EUR/GBP support comes in at 0.8670 with a break here possibly triggering declines to 0.8620 where the 200-day moving average resides. Cable has resistance at 1.6515 with support coming in at 1.6300.

The dollar is mixed versus the remaining majors with the EUR/USD higher at 1.4180. Event risk remains for the euro as European finance ministers continue their second day of meetings surrounding the European debt crisis. The euro could receive support if a new aid package for Greece is announced. Initial resistance for the EUR/USD is found at yesterday’s high of 1.4240 followed by 1.4340.

The Japanese yen is on its back foot as the USD/JPY has reached its highest level since the beginning of the month. Supporting the rise in the pair were comments from Bank of Japan Governor Shirakawa who suggested further monetary easing measures could be enacted. The USD/JPY is up at 81.60 from 81.13. Resistance is found at 82.05 where the 55-day moving average lies, followed by 82.80. Support comes in at 80.60 at the bottom of the consolidation pattern from the May 4th low.

Traders are now anticipating US building permits this afternoon as well as increased utilization rates.

Read more forex trading news on our forex blog.