Tuesday, May 31, 2011

Caution Warranted on Investing in Bank Stocks for Dividends

Dividend is a powerful variable that confirms the profitability of a company. Unlike many other financial factors that can be used to evaluate a firm, dividend is a simple and quick way to determine a firm’s financial strength. However just dividend payment themselves do not give the full financial picture. This is especially true with banks. In recent months many banks have raised dividends on the back of rising earnings and lower loan losses. At current price levels, many bank stocks pay above-average dividend yields. But before jumping into these stocks investors may want to analyze if these yields are sustainable. The Wall Street Journal recently had an article about bank dividends and discussed in detail using New York Community Bancorp (NYB) as an example. From the article:

dividend-banks.jpg

A hefty dividend can be a source of strength, especially in these yield-deprived times. It can also become an Achilles heel.

That is the risk for investors in New York Community Bancorp. At 6.2%, it has the highest dividend yield of any significant U.S. bank.

Yet New York Community’s first-quarter payout of 25 cents a share is equal to nearly 90% of net income. In 2010, the bank’s dividend payout was 80% of net profit. That is high, and well above the 30% threshold the Federal Reserve favored when assessing capital-return plans for some big banks.

So far, it hasn’t been a problem. When asked on the bank’s recent earnings call if the 30% level might be applied to other banks, Chief Executive Joseph Ficalora said, “It’s been indicated, at least, in all conversations we’ve had in Washington that that would not be the case.”

Still, investors will have to be watchful for any changes in regulatory views. This also puts the company under additional pressure—any falloff in earnings that propels the payout ratio to over 100% could lead to heightened scrutiny. That has happened before—from 2005 to 2010, New York Community paid $1.98 billion in dividends, $160 million more than it earned over that period. But that was during a different regulatory time.

The immediate question for investors is whether the dividend is sustainable since it underpins the stock. Although down about 11% this year, the shares trade at about 2.3 times tangible book value, a roughly 70% premium to peers.

27 Foreign Stocks Paying Dividends Quarterly

Many investors have the view that foreign stocks pay dividends only annually. However this is not fully true. There are many foreign companies that pay dividends on a quarterly basis just like their U.S. peers. For example, European firms usually pay dividends twice a year - one in the form of interim dividend and the other as a final dividend. Most Latin American firms follow the U.S. model and pay quarterly dividends.A few Latin American firms such as Itau Unibanco (ITUB) pay a small monthly dividend.

Unlike most U.S. firms, dividend payments made by foreign firms can be volatile and vary based on earnings.However due to taxation laws and policies, foreign companies generally tend to have higher payout ratios than U.S. firms. So U.S. investors looking to add some overseas stocks that pay dividends quarterly and have high yields can choose from a wide universe.

The table below lists 27 foreign stocks(excluding Canada) paying quarterly dividends:

S.No. Name Ticker Sector Dividend Yield as of May 19, 2011
1 Banco Santander, S.A. STD Regional Banks 11.78%
2 Partner Communications Company Ltd PTNR Communications Services 11.93%
3 Banco Bilbao Vizcaya Argentaria SA BBVA Money Center Banks 7.53%
4 Telecom Corp of New Zealand NZT Communications Services 6.01%
5 Fly Leasing Ltd FLY Rental & Leasing 5.61%
6 VimpelCom Ltd VIP Communications Services 5.42%
7 Ecopetrol S.A. EC Oil & Gas Operations 5.08%
8 Telefonos de Mexico, S.A. TMX Communications Services 4.89%
9 Royal Dutch Shell plc RDS-A Oil & Gas - Integrated 4.80%
10 Royal Dutch Shell plc RDS-B Oil & Gas - Integrated 4.75%
11 GlaxoSmithKline plc GSK Major Drugs 4.88%
12 Vina Concha y Toro S.A. VCO Beverages (Alcoholic) 4.69%
13 Unilever plc UL Food Processing 4.08%
14 Unilever N.V. UN Food Processing 4.04%
15 Grupo Aeroportuario del Centro Nort OMAB Misc. Transportation 3.86%
16 BP plc BP Oil & Gas - Integrated 3.88%
17 STMicroelectronics N.V. STM Semiconductors 3.45%
18 HSBC Holdings plc HBC Regional Banks 3.48%
19 Ensco plc ESV Oil Well Services & Equipment 2.49%
20 Carnival plc CUK Recreational Activities 2.39%
21 ArcelorMittal MT Iron & Steel 2.23%
22 Bancolombia S.A. CIB Regional Banks 2.21%
23 Honda Motor Co Ltd HMC Auto & Truck Manufacturers 1.93%
24 Teva Pharmaceutical Industries Ltd TEVA Biotechnology & Drugs 1.86%
25 Embotelladora Andina SA AKO-A Beverages (Nonalcoholic) 1.83%
26 Embotelladora Andina SA AKO-B Beverages (Nonalcoholic) 1.67%
26 Barclays PLC BCS Money Center Banks 1.50%
27 Companhia Brasileira de Distribicao CBD Retail (Grocery) 0.45%

Disclosure: Long ITUB, STD, BBVA, EC

Don Quixote Effect: Most American Utilities Are Publically Owned: (Just Like a Co-Op)

For the price of one cup of coffe per week, every American can choose to have all of thier electric power to come from a renewable source. (Wind or Solar)That's about $12 a month. Contact your local utility to sign up.

Think of it as a cheap investement that could pay off in spades. Every extra dollar spent on renewable energy is reinvested into the technology, just like in the stock market. You get the "peace of mind" in doing your part and not being a pansy.

The more viable the energy source, the less volatile it is on the stock market. You could get rich and save the world at the same time. Wouldn't your children and grandchildren love you for that? How about loving yourself? But it's gotta start somewhere, it's gotta start with a choice, and you have to make it.

best performing stocks under $5 2011 on the New York Stock Exchange, Nasdaq and NYSE Amex

The Russell 2000 index -- a benchmark for small-cap stock performance -- is up 6.8% so far in 2011, slightly below a gain of 7.7% the Dow Jones Industrial Average. However, the Russell 2000 is outpacing both the S&P 500 and Nasdaq Composite this year.

Analysts expect stocks under $5, like Sprint Nextel(S), to outperform this year, but those companies haven't been among the biggest winners. Penny stocks including Evergreen Energy(EEE) have tripled over the first five months of the year.

Investors in penny stocks must be prepared to lose it all. The risk of a sharp, quick selloff is elevated for investors in these companies. For example, trucking giant YRC Worldwide(YRCW) has tanked recently, falling more than 50% this month alone.

Still, many inexpensive stocks have generated huge returns for lucky stock pickers. The following pages detail the best-performing stocks under $5 this year on the New York Stock Exchange, Nasdaq and NYSE Amex, ranked by total return through the first five months of 2011.

10. Level 3 Communications(LVLT)


Company Profile: Level 3 Communications is an integrated Internet networking services provider. In April, the company said it would acquire fellow communications services company Global Crossing(GLBC) for $2 billion.

Shares of Level 3 have steadily increased this year, with a big rise last week on news the company was able to lower its borrowing costs through a $600 million bond sale. Earlier in the month, Level 3 reported an adjusted first-quarter loss that beat analysts' forecasts.

Current Share Price: $2.30 (May 27)

2011 Total Return: 126%

Analyst Ratings: Level 3 is one of the most widely followed stocks on this list, garnering 12 overall ratings from analysts. D.A. Davidson is one of only two firms with "buy" ratings on the stock. Another seven firms, including Oppenheimer, suggest investors hold on to shares, while three firms rate the stock a "sell."

TheStreet Ratings has a "sell" rating on the stock, which it has maintained for two years. The latest report says Level 3's "primary weakness has been its feeble growth in its earnings per share."

9. TeamStaff (TSTF)

Company Profile: TeamStaff provides staffing services to the U.S. Department of Veterans Affairs and other U.S. governmental entities.

Once on the Nasdaq's chopping block for falling out of compliance with listing requirements, TeamStaff has seen its stock rebound sharply this month after the company said its first-quarter net loss shrank substantially from a year earlier. The company also announced that it was awarded the Department of Veterans Affairs' Consolidated Mail Outpatient Pharmacy program. Work is expected to begin on July 1 and continue for up to five years, the company said.

Current Share Price: $1.18 (May 27)

2011 Total Return: 131%

Analyst Ratings: There are currently no research analysts covering TeamStaff.

TheStreet Ratings has a "sell" rating on the stock, which it has maintained for two years. The latest report highlights TeamStaff's multiple weaknesses, "such as its disappointing return on equity, poor profit margins and weak operating cash flow."

8. Interphase(INPH)

Company Profile: Interphase is a telecom-equipment maker. The company provides services for LTE and WiMAX, interworking gateways, packet processing, network connectivity, and security for key applications for the communications and enterprise markets.

Interphase shares more than doubled on Feb. 11, a day after the company reported fourth-quarter financial results. The company said revenue in the quarter jumped 24% to $5.8 million as it swung to a quarterly profit. The stock hit a high of $7.59 in March but has been steadily pulling back since.

Current Share Price: $4.22 (May 27)

2011 Total Return: 134%

Analyst Ratings: There are no research firms covering Interphase currently.

TheStreet Ratings has a "sell" rating on the stock, which it has maintained since downgrading the stock from "hold" in July 2009. The latest report calls attention to Interphase's "feeble growth in its earnings per share."

7. Star Scientific(CIGX)

Company Profile: Star Scientific develops dissolvable smokeless tobacco products, which are billed as delivering fewer carcinogenic toxins.

Shares of Star Scientific began surging in March on reports that compound RCP-006, which the company says is a "nutritional supplement," has potential in treating Alzheimer's. TheStreet's Adam Feuerstein notes that RCP-006, also known as anatabine, "might one day be a cure for Alzheimer's, but it's very premature to make such a claim since this nutritional supplement (not even a drug) has not yet been tested in humans, let alone humans with Alzheimer's."

That skepticism hasn't kept shares from rising. The stock did take a hit in April before the Food and Drug Administration said it will regulate smokeless electronic cigarettes as it does with traditional tobacco products. Shares are now near their all-time high.

Current Share Price: $4.73 (May 27)

2011 Total Return: 142%

Analyst Ratings: No research analyst currently follows Star Scientific. TheStreet Ratings does not have a rating on the stock.

6. USA Technologies(USAT)


Company Profile: USA Technologies is a supplier of cashless, remote-management, reporting and energy-management services.

Shares of USA Technologies ramped higher in January after the company said revenue in its fiscal second quarter jumped 60% from a year earlier to $6 million, while its net loss narrowed to a penny a share from a loss of 19 cents. Shares pulled back slightly in March after USA Technologies announced it raised nearly $11 million in a private placement of common stock. In April, USA Technologies announced a collaboration with Verizon Wireless for connectivity that enables wireless point-of-sale payments at vending machines via credit and debit cards.

Current Share Price: $2.50 (May 27)

2011 Total Return: 142%

Analyst Ratings: Northland Securities has an "outperform" rating and $3 price target on USA Technologies. The only other research firm covering the company, Janney Montgomery Scott, rates the stock "neutral" with a price target of $1.25.

TheStreet Ratings has a "sell" recommendation on USA Technologies, citing "unimpressive growth in net income and poor profit margins."

5. Authentidate Holding(ADAT)

Company Profile: Authentidate provides software applications and Web-based services for businesses.

The surge in Authentidate's stock started in early April after the company completed the sale of its wholly owned subsidiary, Authentidate International AG, to Switzerland's Exceet Group AG. The transaction yielded net cash proceeds of $1.3 million. During the second half of April, the Department of Veteran Affairs, Ameri-Quipt and Superior Oxygen & Medical Equipment selected Authentidate's services.

Current Share Price: $1.12 (May 27)

2011 Total Return: 151%

Analyst Ratings: C.K. Cooper & Co. is the lone firm with research coverage on Authentidate, rating the stock "buy" with a $2 price target.

TheStreet Ratings has a "sell" rating on the stock, which it has maintained for two years. The latest report on Authentidate highlights the company's "deteriorating net income, disappointing return on equity and feeble growth in its earnings per share."

4. Dynatronics(DYNT)

Company Profile: Dynatronics makes medicine and aesthetic products used by physical therapists, chiropractors, sports-medicine practitioners, podiatrists and physicians.

In March, Dynatronics announced that it signed a contract with FirstChoice Cooperative, the third group-purchasing-organization contract the company signed in two months. In April, the company regained compliance with the Nasdaq's listing requirements, as the stock climbed above $1 a share to satisfy the minimum bid price requirement.

Current Share Price: $1.60 (May 27)

2011 Total Return: 154%

Analyst Ratings: No research firm currently follows Dynatronics.

TheStreet Ratings has a "hold" rating on the stock after upgrading from "sell" on Sept. 30, 2009. The latest report notes the company's "revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures." However, those strengths are countered by disappointing return on equity.

3. Evergreen Energy(EEE)

Company Profile: Evergreen Energy is a so-called cleaner-coal company.

On Jan. 5, Evergreen was granted an extension by the NYSE Arca to regain compliance with listing rules regarding minimum bid price and market value of publicly traded shares. By March 3, Evergreen regained compliance with the listing standards.

The stock hit a 52-week high shortly after the company completed a $16 million private placement of common stock. Shares pulled back, though, after Evergreen posted financial results for 2010. Revenue for the year fell to $403,000 from $423,000 in 2009.

Current Share Price: $1.88 (May 27)

2011 Total Return: 189%

Analyst Ratings: No research firm has coverage of Evergreen Energy. In addition, TheStreet Ratings doesn't follow the stock.

2. Capital Trust(CT)

Company Profile: Capital Trust is a finance- and investment-management company that specializes in credit-sensitive structured financial products. The company is focused on the commercial real estate industry.

The stock spiked in April after Capital Trust announced a debt restructuring deal, which was financed by a new $83 million mezzanine loan provided by an affiliate of Five Mile Capital Partners.

Current Share Price: $4.72 (May 27)

2011 Total Return: 204%

Analyst Ratings: There are no analysts following Capital Trust.

TheStreet Ratings has a "sell" rating on the stock, which it has maintained for two years. The latest report highlights Capital Trust's "feeble growth in its earnings per share, deteriorating net income and weak operating cash flow."

1. Majesco Entertainment(COOL)


Company Profile: Majesco Entertainment makes video games mainly for the family-oriented, mass-market consumer.

Majesco's incredible run this year started on Jan. 11 when the company announced it had shipped more than 500,000 copies of its Zumba Fitness video game title for the Wii, Xbox 360 and PlayStation 3. In late January, the company announced that it regained compliance with the Nasdaq's minimum bid price requirement for continued listing.

In early March, shares of Majesco climbed higher after the company posted better-than-expected fiscal first-quarter financial results, with revenue jumping to $48.5 million from $29.2 million in the same period a year earlier.

Current Share Price: $2.95 (May 27)

2011 Total Return: 283%

Analyst Ratings: Majesco garners a lone "buy" rating from Needham & Co. and a "neutral" rating from Wedbush. Needham analysts have a $4 price target on the stock while Wedbush has a $3.50 target.

Golar LNG net income first quarter of 2011

Golar LNG reports consolidated net income of $16.3 million and consolidated operating income of $20.4 million for the first quarter of 2011, Golar LNG announces a cash dividend of $0.25 cents per share, Significant improvement in charter rates during the quarter

Golar secures charters for its 4 modern vessels of between 12 and 18 months. The contracts are expected to generate approximately $80 million of EBITDA on an annualized basis


Successful completion of the initial public offering of Golar LNG Partners raising gross proceeds of $310 million

Golar LNG orders 6 new LNG carriers from Samsung Heavy Industries and has options on a further 2 vessels

In April 2011, Golar LNG acquired shares in subsidiary company Golar LNG Energy Limited via private placement share swaps and cash purchases that increased its ownership to 95.1%. A voluntary offer has subsequently been made for the balance of the outstanding shares of Golar LNG Energy Limited and Golar LNG currently owns 99.4 % of the shares.

Tuesday, May 24, 2011

Widely Held Australian Stocks & Shares May 25, 2011

Bhp Blt Fpo 43.12 chart -0.28%
Cwlth Bank Fpo 50.05 chart -1.71%
Telstra Fpo 3.01 chart -0.33%
Woolworths Fpo 27.18 chart -0.73%
Westpac Fpo 21.49 chart -1.60%
Macq Group Fpo 32.57 chart -3.41%
Rio Tinto Fpo 78.89 chart -0.15%
Wesfarmer Fpo 32.41 chart -0.92%
Crown Fpo 8.57 chart -0.92%
Qbe Insur. Fpo 17.37 chart -1.59%
Fosters Fpo 4.26 chart +0.00%
Asx Fpo 31.50 chart -0.47%
Australand Staple 2.81 chart -1.75%
Westfieldg Staple 9.00 chart -0.33%
Leighton Fpo 23.11 chart -1.99%
Spdr S&p/asx 200 43.78 chart -0.88%
Etfs Physical Gol 141.00 chart +0.87%
2011-05-25

Australian and World Stock Market Quotes May 25, 2011

Hover over the stock price change to see the stock price graph or click on the name of the stock or index to see more detailed information on the Yahoo Finance website.

Further stock price information & charts can be found on the ASX Resources page.

The latest stock prices for the Shareswatch Random Portfolio are at the bottom of this page.


All Ordinaries 4669.30 chart -0.83%
S&p/asx 200 4589.50 chart -0.85%
DJIA 12356.21 chart -0.20%
Nikkei 225 9439.39 chart -0.40%
Ftse 100 5858.41 chart +0.38%
Nzx 50 Index Gros 3569.11 chart +0.27%
Hang Seng Index 22562.59 chart -0.74%
Macq Group Fpo 32.57 chart -3.41%
Crown Fpo 8.57 chart -0.92%
Etfs Physical Gol 141.00 chart +0.87%
Woolworths Fpo 27.18 chart -0.73%
Telstra Fpo 3.02 chart +0.00%
2011-05-25

Analytical Charts for Gold, Silver, Platinum and Palladium may 25 2011

Analytical Charts for Gold, Silver, Platinum and Palladium may 25 2011 : Due to popular demand, we have added Palladium to the list of Analytical Charts that Metals Analyst Jim Wyckoff features.
( soource Kitco )

GDP: America's New Misery Index? May 24, 2011

Truthout published an article today that is well worth a read in its entirety. Mark Provost in "Why the Rich Love High Unemployment" argues that the "jobless recovery" is not a fluke, rather high unemployment has been a boon to the super rich. Political focus on the GDP and corporate profits as the sole measure of economic health have made jobs a low priority. While the U.S. has the second largest GDP growth from 2008-2010 (after Canada) of the G-7 countries, it has the highest unemployment. Provost writes:

A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion. At some level, corporate executives are aware that they are lowering workers' living standards... Call it the "paradox of profitability." Executives are acting in their own and their shareholders' best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company's income statement has been a disaster for working families and their communities...

In the first Great Depression, President Roosevelt created an alphabet soup of institutions - the Works Progress Administration (WPA), the Tennessee Valley Authority (TVA) and the Civilian Conservation Corps (CCC) - to directly relieve the unemployment problem, a crisis the private sector was unable and unwilling to solve. In the current crisis, banks were handed bottomless bowls of alphabet soup - the Troubled Asset Relief Program (TARP), the Public-Private Investment Program (PPIP) and the Term Asset-Backed Securities Loan Facility (TALF) - while politicians dithered over extending inadequate unemployment benefits...

Proponents of labor-market flexibility argue that it's easier for the private sector to create jobs when the transactional costs associated with hiring and firing are reduced. Perhaps fortunately, legal protections for American workers cannot get any lower: US labor laws make it the easiest place in the word to fire or replace employees...

America's labor market depression propels asset price appreciation. In the last two years, US corporate profits and share prices rose at the fastest pace in history - and the fastest in the G-7. Considering the source of profits, the soaring stock market appears less a beacon of prosperity than a reliable proxy for America's new misery index.

U.S. millionaire to provide 1.5 million pounds and 15 stocks skills training May 25, 2011

Looked at, including A shares, including the recent global stock market has been “chatter”, many people are itching, copy the big end of hope to earn in life first bucket of gold, but they have been delayed, not hands-on: Any is in the hands of the “versus” small; either the red and green variety of the K line, average no understanding. But now, when someone gave you 10 million pounds (about 1.04 million yuan), and even teach you a variety of trading techniques, you would be willing to “sea” tried his hand? According to Xinhua News Agency

24, according to British media reports that claimed that American millionaire Mike Di Baghdad, anyone can become a successful investor. To prove this assertion, he recruited 15 investment layman, to provide £ 100,000 per person for the time in 3 years trading stocks, commodities and so on.

Professor at the London stock

According to reports, Baghdadi offered in the British capital London, a financial trading training institutions. Baghdadi said that he wants to prove that, when a successful financial products, traders do not require special skills, just willing to “follow some specific rules.” Whether changes in the financial markets there is a pattern different opinions, but Baghdadi’s spokesman told the British “Daily Mail” reporter: “We stand by the rules of the test of time, the most suitable for the 21st century transaction.”

The spokesman described the large amount of money to teach ordinary people learn the transaction item, did not avoid promoting their business. “Our method of training for each trainee to train with us in all the world the same way as financial institutions, personnel.”

July 4 start “real”

In addition to providing each student an initial £ 100,000 trading capital, Baghdadi training institutions bear all expenses and related costs and initial losses of students. Participants will receive a certain percentage of salary, and can profit from the transaction in the commission.

Baghdadi singled out at the end of the project will leave for their outstanding work performance. Limited number of winners. Baghdadi said: “This project is my dream, I am responsible for 15 students.”

After training, these trainees, July 4 start real time trading. The Baghdadi’s body will record the 3-year students experience this, I hope the final can be shared with more people.

8 of 15 places for thousands of candidates to compete

About 8,000 people apply for the Baghdadi projects selected include taxi drivers, housewives and retired military officers.

They must give up the original work, full-time to participate in this 3-year project, first undergo rigorous training to learn Baghdadi called “trading strategies secret.”

谢尔盖古赛伊诺夫 aged 30, previously a receptionist at a London hotel.

About the reasons for the Project, this study English in London in 2005 Russian law graduates, said: “a receptionist is not my ideal job,” he said, “I believe that I can engage in this work.”

Who’s Who

Investment experience in gold trading lay family

Information Times roundup Baghdadi was born in Egypt, and later became a U.S. citizen, 36 years of cumulative investment career, and now, in addition to teaching than some Wall Street investment banks, he is well-known stock analysts, market analyst and television people.

The reason why the investment in the memories of their own interest when it is due Baghdadi own childhood by the “monasteries.” At that time, his family specialized in the manufacture of porcelain decorative items, while his father was a famous sculptor in Egypt, often made with plenty of gold ornaments. Little Baghdadi every month to see the price of gold rises and falls in interest on investment thus began. Later, while going to school to take care of his side of the family business, purchasing gold a month still to go to Europe to make their trading experience more comprehensive. When he graduated from Cairo University, he officially entered the investment industry.

The reason that the launch of the training, Baghdadi said he was inspired by legendary trader Richard Dennis, the United States. Bet with a friend in 1983, Dennis said, anyone can master a set of rules to profit in the transaction. Later, Dennis recruiting students for training, one of the participants 100 million “pot of gold” earned $ 31,000,000.

Bank Nifty Technical View on 25th May 2011

Bank Nifty Futures shut stop at 10428.85 up by 70.55 points or 0.68 %. It is looking bearish in the coming trading session if it manages to trade support level of 10330 else above resistance level of 10525 it would be in an upward trend.

Resistance: It has first resistance close to the level of 10525 above this level the next resistance is seen near to the level of 10545.

Support: It has first support close to the level of 10330 & below this level the next support is seen near 10210 marks.

Penny Stock Mid Day Update for Tuesday May 25, 2011

%3D Mid Day Update for Tuesday 5-24-2011 I will be sending you something special later today, watch for my emails.

Hurry and put SUFF on your watch list, they just announced a few minutes ago that they have signed a LOI with a China based manufacturer and distributor with anticipated values in the millions. SUFF is starting to move a bit already today. Could this news be the catalyst for a bigger breakout! Make sure it`s on your watch list as the news spreads.

SUFF – Possible Breakout http://finance.yahoo.com/qsSUFF Suffer engages in the manufacture, sale, and retail of mixed martial arts (MMA) apparel products, fight gear, and training videos. It primarily offers T-shirts, fight shorts, hoodies, and thermals for men and women.

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GNTA – Possible Bounce http://finance.yahoo.com/qsGNTA.OB Genta Incorporated is a biopharmaceutical company with a diversified product portfolio that is focused on delivering innovative products for the treatment of patients with cancer ****************************

TITXF – Momentum http://finance.yahoo.com/qsTITXF.PK Titan Medical Inc. is a Canadian public company focused on the development and commercialization of robotic surgical technologies.

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US: New Home Sales Rose Again in April, but Recovery Still Slow 25 MAY 2011

New home sales rose 7.3 percent in April to a 323,000-unit annual pace. Due to competition with foreclosure sales, the inventory of unsold homes slid to its lowest level on record. Median prices rose to $217,900.

Gains Encouraging, but Level of Sales Still Depressed

New home sales rose 7.3 percent in April, the second consecutive monthly increase. Sales in all regions improved with the largest monthly gains in the West and Northeast. While sales are picking up, the overall level remains extremely depressed. Nearly three-quarters of new homes sold were under $300,000, with the largest concentration of homes in the $200,000 – $299,999 price range.

New Home Inventories Fall to Record Low

The overall inventory of new homes fell to 174,000 units, the lowest level on record. Builders remain reluctant to increase inventories as they continue to face tough competition from foreclosures. The steady decline in existing home prices due to foreclosures and short sales has significantly widened the gap between the median price of a new home vs. an existing home.

The months’ supply fell to 6.5 months in April.



World Oil Analysis update 25 may 2011

Expect Brent oil price at USD96/bbl and WTI oil price at 85/bbl by 4QCY11
Supply side issues not too big at present; OPEC spare capacity enough to meet crude oil demand: With the ongoing MENA crisis and the resultant protest in Tunisia, Egypt and Libya, the market is keenly focused on the crude oil supply worries in the near to medium term. Libyan sweet crude supply of 1.1 million barrels per day (mbpd) is already out of the market and serious concerns about the supply disruptions from major oil producing nation – Saudi Arabia (produces 8.9mbpd or 10% of world oil demand) is gaining heat. In our view, the market has overreacted to the current MENA crisis given the fact that the Libyan crude supply is merely 1.8% of the global oil demand and the current OPEC spare capacity ex Libya at 4.58mbpd (5.1% of the world oil demand) is sufficient to meet the CY11 crude oil demand.

Current OEPC spare capacity – not as low as seen in gulf war and US mortgage crisis: The OPEC spare capacity issue in the ongoing MENA crisis is not as severe as it has been witnessed in 1990-91 gulf war (OPEC spare capacity of merely 1.8mbpd) and 2008 US mortgage crisis (OPEC spare capacity at only 3.2mbpd and reached to 2.3mbpd in July-08).

Downward pressure on CY11 crude oil demand growth – due to high crude price and Japan tragedy: International Energy Agency (IEA) expects world crude oil demand to grow by 1.5mbpd in CY11 mainly on the back of expectation of strong GDP growth (IMF estimates of 4.5% in CY11). However, with the crude price above USD100/bbl mark in CY11, we see serious threat to crude oil demand as higher prices would take the US crude expenses as percentage of US GDP to 5.1% (almost near to 5.3% mark witnessed in CY2008) and subsequent crude oil demand destruction as seen in CY08 and CY09. Moreover, since Mar-11 Japan earthquake, the country’s crude oil demand has fallen by 0.2mbpd in Mar-11 vs Feb-11 crude oil demand. We believe this would create pressure on the world oil demand as the pace and timing of reconstruction activities in Japan is still not certain. IEA has already lowered its world crude oil demand growth forecast by 0.2mbpd to 1.3mbpd in its May-11 Oil Market Report Highlights; detailed report awaited.

Expect Brent crude price at USD96/bbl and WTI crude price to US85/bbl by 4QCY11: With pressure building on crude oil demand due to high oil prices and Japan tragedy and lost Libyan supplies likely to come back to the market, we expect the Brent crude price to come down to USD96/bbl by 4QCY11 and WTI crude price to USD85/bbl. We expect Brent-WTI price differential to remain at USD11/bbl due to storage and infrastructure bottlenecks at Cushing, Oklahoma. In our view, a significant rebalancing of WTI crude price may only be after 2013 when new pipeline capacity from Cushing to the Gulf Coast (if approved) comes online. We expect yearly average Brent crude price of USD104/bbl and WTI crude oil price of USD93/bbl in CY11.

MENA crisis and crude oil supply concerns
Ongoing MENA unrest……
The ongoing political unrest in the Middle East and North Africa (MENA) region, which started on December 18, 2010 with protest in Tunisia have spread to Algeria, Libya, Egypt, Yemen, Kuwait, Saudi Arabia, Iraq and other MENA countries. Although all the major MENA countries has been witnessing protest but the severity of the unrest is different among the countries. Currently, the worst political unrest is seen in Libya, which begun with peaceful protest against Gaddafi’ government on January 13, 2011 but have now reached to the situation of civil war.

…..raised concerns of supply disruptions; however no major disruption so far except Libyan crude
The MENA unrest has raised concerns of crude oil supply disruption. Due to this 1.1mbpd of crude oil contribution from Libya in the world crude oil supply is discontinued. Currently only Libyan crude supply has gone out of the market and no supply disruptions has been seen from the other oil producing nations in the MENA region. Libyan crude supply is only 1.8% of the world oil demand.

Supply side concerns not too big at present – spare capacity ex Libya comfortable at 4.6mbpd
Crude fundamental data indicates that the there is no major threat to world crude oil supply even if Libya’s supply of 1.1mbpd is out of the market for next 12 months. The current OPEC spare capacity excluding Libya at 4.58mbpd is sufficient to meet the oil demand in CY2011 even if Libyan crude oil is out of the market for next several months.

Crisis spreading to other MENA countries – cannot be ruled as MENA countries as not independent of each other
The recent revolution in the MENA countries, have resulted in the ouster of powerful Mubarak (Egyptian president for last 30 years) and Ben Ali (president of Tunisia) by the people of the country. The unrest in Libya with strong demand to remove President Gaddafi from power (ruling Libya for last 42 years) seems to have created a situation of a civil war. The impact of these revolutions has been felt in the other MENA countries in the form of strong protest against the existing government. Hence, in our view, all the MENA countries is not independent of each other and therefore possibility of current crisis spreading to other MENA countries cannot be ruled out.

Can the current crisis spread to Saudi Arabia?
The most important question from the oil supply point of view is that whether Saudi Arabia would be able to protect itself from the current MENA unrest. Saudi Arabia is a monarchy headed by King Abdullah Bin Abdul Aziz and there limited political freedom, hence we do not rule out the possibility of unrest in the country. We have tried to analyse the Saudi Arabian government‘s initiatives for betterment of the social and economic conditions in the country.

Supply disruptions in Saudi Arabia and Iran – could destabilize the crude oil market fundamentals
Presently, Saudi Arabia is the largest oil producer in the MENA region with 8.9mbpd (10% of world crude oil demand) followed by Iran (produces 3.68mbpd or 4.1% of world crude oil demand) and Iraq (produces 2.68mbpd or 3% of world crude oil demand). A prolonged Libyan crisis, concerns over Shiite unrest in Bahrain spreading to Saudi Arabia and situation of instability in Iran, Iraq, Yemen and other regional producers could worsen the situation in the region. Under such situation, any kind of supply disruptions in Saudi Arabia could destabilize the crude oil supply fundamentals for long term.

Crude oil demand outlook
Robust crude oil demand outlook – demand to rise by 1.5mbpd to 89.4mbpd in CY11
World crude oil demand grew by around 2.8 million barrels per day (mbpd) to 87.8 mbpp in CY2010 from a decline of 1.1 mbpd in CY2009. This growth in the second highest in last 10 years (earlier in CY2004 world oil demand grew by 3.3 mbpd to 82.5 mbpd). The growth was fueled by strong oil demand across the globe (North America – 0.6mbpd, China – 1 mbpd and other Asia – 0.3 mbpd) except for Europe. World oil demand is expected to grow by 1.5 mbpd or 1.7% in CY2011 to 89.4mbpd supported by strong demand from China (0.6 mbpd or 6.4% yoy growth) and other Asia (0.2 mbpd or 1.9% yoy growth).

What can damage the crude oil demand outlook?
Japan Mar-11 earthquake
No impact on world oil demand; however timing and pace of reconstruction activities is uncertain
As a consequence of the recent earthquake, Japan’s crude oil demand has fallen by 0.2mbpd in March 2011 versus February 2011 crude oil demand. We believe that negative impact of this devastating natural disaster would last at least till the end of 2QCY11. However, we expect the crude oil demand in Japan to pick-up in 2HCY11 due to following reasons:
*Damaged nuclear power plants would result into increased utilization of power plants burning crude and fuel oil to meet the country electricity needs. This is expected to add another 0.2mbpd to the country crude oil demand.
*Reconstruction activities likely to boost gasoil demand
*Naphtha demand would recover in soon as majority petrochemical plants were not affected, being largely located in the south.
We believe that the fall in crude oil demand in 1HCY11 in Japan is due to slowdown in economic activity would largely be offset by incremental demand for crude oil from power plants and reconstruction activities in 2HCY11. Hence, we expect that Japan’s crude oil demand for CY11 to be around 4.4mbpd (similar to CY10 level). As such we do not believe that world oil demand outlook (89.4mbpd) would change due to March 2011 Japan earthquake. We highlight here that the Japan tragedy could create pressure on the world oil demand as the timing and pace of reconstruction activities in Japan is still not certain.

Crude oil price above USD100/bbl
Higher crude price leads to oil demand destruction
During CY02 to CY07, US crude oil consumption have witnessed increase (expect for small decline in CY06) despite crude oil prices rising strongly during the period. This clearly shows that US crude oil consumption was largely inelastic to the movement in the crude oil price during the period. In our view, the primary reason behind this pattern in the US crude oil consumption was that US crude oil expenses as a percentage of US GDP remained in the manageable range of 1.6%-4.1%.

In CY2008, international crude prices breached USD140/bbl mark and averaged nearly US100/bbl for the year. We mention here that the US crude oil expenses as a percentage of US GDP reached its all time high of 5.3% leading to demand destruction by 1.2mbpd in CY08 and 0.8mbpd in CY09. At current crude price of USD115bbl, we estimate US crude oil expenses as a percentage of US GDP to be around 5.9%, which is way ahead of historical threshold limits of 4.5% (based on the 2008 data points). Hence, in our view if the crude oil price remains at the current level throughout CY11, then this would definitely lead to crude oil demand destruction.

Current MENA crisis versus previous oil crisis

1990-91 gulf war
The ongoing MENA crisis is not as severe as 1990-91 gulf war mainly from OPEC spare capacity perspective. During gulf war period (which lasted for 7 months), OPEC spare capacity came down to 1.8mbpd levels from 5.9mbpd before the crisis. This resulted into sharp rise in the crude oil prices by USD24/bbl to USD41/bbl.

OPEC spare capacity during Gulf war (Aug-90 – Feb-91)
OPEC spare capacity 1.8
World oil demand (CY90) 66.5
OPEC spare capacity as % of world oil demand 2.7%

Demand destruction of 0.8mbpd
Consequently, world crude oil demand growth declined to 0.4mbpd in CY90 as compared to 1.2mbpd in CY89. This crude demand destruction of 0.8mbpd during the gulf war was mainly due to steep rise in the crude oil prices by 140%. With decline in the world crude oil demand growth, the crude prices also corrected by USD22/bbl and reached to USD19.4/bbl by end of gulf war in Feb-91.

2008 US Mortgage crisis
In 2008, the WTI crude oil prices reached all time high of USD145/bbl mainly on the back of strong demand environment, low OPEC spare capacity and weak US dollar. The OPEC spare capacity stood at only 3.2mbpd and reached to 2.3mbpd in July-08 during the crisis.

OPEC spare capacity during 2008 US mortgage crisis
OPEC spare capacity 3.2
World oil demand (CY08) 86.1
OPEC spare capacity as % of world oil demand 3.7%

Demand destruction of 1.7mbpd
The higher crude oil price resulted into total demand destruction of 1.7mbpd in CY08 and CY09 from world oil demand of 86.7mbpd in CY07. With decline in the world crude oil demand growth, the crude prices also corrected by USD101/bbl and reached to USD44.6/bbl by end of Dec-08.

Current MENA crisis – not as severe as gulf war and US mortgage crisis
The crude oil supply issues in the ongoing MENA crisis is not as severe as it has been witnessed in 1990-91 gulf war (OPEC spare capacity of merely 1.8mbpd) and 2008 US mortgage crisis (OPEC spare capacity at only 3.2mbpd in CY08 and reached to 2.3mbpd in July-08). The fact is that except for Libya, crude oil supplies from other OPEC countries are as per the OPEC oil production quotas. The current OPEC spare capacity ex Libya at 4.58mbpd (5.1% of the world oil demand) is sufficient to meet the CT11 crude oil demand estimates by IEA.

OPEC spare capacity during ongoing MENA crsis
OPEC spare capacity 4.58
World oil demand (CY08) 89.0
OPEC spare capacity as % of world oil demand 5.1%

Geopolitical crisis drove the crude price higher

Crude oil price outlook – correction imminent
We have tried to analyze crude prices outlook in two phases:
Phase I (1QCY11 – 2QCY11) – high crude price on supply side worries
*Supply side pressure as the 1.1mbpd of Libyan sweet crude oil being out of the market
*Demand destruction of 0.2mbpd from Japan’s March-2011 earthquake

We expect supply side pressure to govern the crude oil price movement during Phase I. We believe that though crude demand destruction in Japan would be a concern but not too big to dictate crude oil price. During Phase I, we expect crude prices to remain above USD100/bbl mark.
Phase II (3QCY11-4QCY11) – crude prices to correct on demand destruction worries
* High crude price to negatively play on world crude demand
* Supply side worries to ease as we expect ongoing MENA crisis to lose momentum
* Lost crude oil supply from Libya to enter the market by 4QCY11

We expect demand destruction worries to gain stream as crude prices above USD100/bbl will definitely take its toll on world crude oil demand. With MENA crisis expected to lose momentum and Libyan crude likely to enter the market by 4QCY11, supply side issues would reduce substantially or almost negligible. With demand worries dominating supply issues during Phase II, we expect crude prices to correct and come below substantially below USD100/bbl mark.
Expect Brent crude price at USD96/bbl and WTI crude price to US85/bbl by 4QCY11

With pressure building on crude oil demand due to high oil prices and Japan tragedy and lost Libyan supplies likely to come back to the market, we expect the Brent crude price to come down to USD96/bbl by 4QCY11 and WTI crude price to USD85/bbl. We expect Brent-WTI price differential to remain at USD11/bbl due to storage and infrastructure bottlenecks at Cushing, Oklahoma. In our view, a significant rebalancing of WTI crude price may only be after 2013 when new pipeline capacity from Cushing to the Gulf Coast (if approved) comes online. We expect yearly average Brent crude price of USD104/bbl and WTI crude oil price of USD93/bbl in CY11.