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Smokefree Innotec Inc. |
Today, stock of the Smokefree Innotec ( PINK: SFIO) keep marching higher and up 25 % as of now after friday's 58 % up move. We announced a break out alert in this penny stock after the recent news developments on friday see
here, Traders might look for intraday trading positions and use pump and dump strategy as it is not a good stock for investing due to lack of liquidity. Read our previous reports on smokefree innotec and other penny stock recommendations below. It is still moving higher now up 45 % see below links for how to trade it.
here, Traders might look for intraday trading positions and use pump and dump strategy as it is not a good stock for investing due to lack of liquidity. Read our previous reports on smokefree innotec and other penny stock recommendations below. It is still moving higher now up 45 % see below links for how to trade it.
Greece Flag |
Standard and Poor's cut Greece's rating to B from BB-, dragging it further into junk territory over concerns that a debt restructuring is increasingly likely.
"In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds," the agency said in a statement, warning that more downgrades could come.
It said its projections suggest that principal reductions of 50 percent or more could be needed to restore Greece's debt burden to a sustainable level.
Greece, whose fiscal slippages triggered Europe's debt crisis, is rated junk by all three major rating agencies.
Earlier on monday former Greek finance minister & president of the Centre for Progressive Policy Studies told CNBC speculation over the weekend that Greece could leave the euro was “utterly unrealistic and would be a “catastrophe” for the country and for the wider European.
Papantoniou said any such move would put Greek debt to beyond 200 percent of gross domestic product which would be absolutely astronomic while for Europe the move would herald the dissolution of the euro zone, which was “not in the interest of anybody.”
“I think we should forget this and cease talking about it in an official manner; of course we cannot prevent people like heads of research centers talking about it. But it is totally unrealistic and out of the agenda,” he said.
He added that finance ministers across Europe needed to focus on how to help Greece repay its debt and regain its credibility in the markets and called on the Greek government to accelerate its plans to deal with its debts and reshape its economy.
Carl Weinberg, the chief economist at High Frequency Economics also told CNBC that talk of Greece leaving the euro is “plainly ridiculous.” Read other stories here >>
( Source; Reuters, CNBC )
Michael Hasenstab, who manages the venerable Templeton Global Bond fund is a star manager with an exemplary track record having returned over 12% a year over the last decade (and 3.3% YTD). What distinguishes Hasenstab from other bond managers is his global focus and his use of currency overlays which have added significant alpha to his returns. In a previous newsletter,
I had discussed the views of Ray Dalio of Bridgewater Associates (the world's largest one of the most successful hedge funds) with regards to the impending revaluation of some emerging market currencies versus the developed world as being the seismic event over the next 18 months – I now bring to you the views of Hasenstab (via Wealth Track) on the same theme.
He is staying away from bond markets which are overvalued and have a degree of fiscal and monetary risk (i.e. the US, Europe and Japan) and focussing on markets (i.e. EM, Scandinavia, Australia) where they can earn yield without taking too much interest rate and credit risk by buying short dated bonds.
He views the US to be on a reasonable 2.5-3.5% growth trajectory and is therefore not an environment to own long dated bonds. In addition, he is concerned about the lack of political ability in the US to address the budget deficit
While the US tackled the crisis very aggressively (and appropriately) by printing money, fiscal spending and dealing with bank recapitalization thereby avoiding a Japanese style lost decade, they continue to employ aggressive measures in a much improved environment and are therefore creating market distortions.
With the three largest economies in the world having the loosest monetary policies on record, the excess liquidity is creating distortions in global asset prices - like commodities prices which are driven up by growth in EM countries as well as the flow of liquidity.
He likes currencies of countries which do not have excess leverage, have prudent fiscal management, and are ahead of the curve in terms of monetary policy – which include some developed countries like Australia, Sweden, Norway and EM countries like China and Malaysia.
Japan is likely to continue its very easy monetary policies, and have lower growth and interest rates than the US, resulting in a weakening in the Yen. In addition, G7 policymakers have drawn a line in the sand at 80 Yen which would prove to be a strong resistance for Yen appreciation.
He is negative on the Euro, particularly against some Scandinavian and Central European countries. Poland is a favourite as it has conservative accounting standards, one of the lowest debt to GDP ratios and a relatively fast growing economy –it was the only European country which did not have a recession during the crisis.
The big risk facing the world is that countries get behind the curve in terms of monetary policy – with the US exporting its loose monetary policy to the world it is critical that countries negate this with raising their interest rates and currencies - and the Asia-Pacific region is doing a tremendous job in this regard.
The Chinese Yuan is likely to become one of the three major global currencies , in addition to the dollar and the euro. This process would require opening up of their capital accounts resulting in an appreciation of the Yuan, which will bring up the value of many Asian currencies as well.
They get exposure to the Chinese Yuan via linked economies and currencies which benefit from Chinese growth – i.e. most Asian countries as well as countries like Australia and Chile.
He does not see a dollar crisis, but more of a gradual realignment where the dollar will actually do well against the Euro and Yen but very poorly against a lot of the EM currencies.
The key theme for them is to purchase short term bonds in countries where they expect rising interest rates and currencies.
A great interview as it presents Hasenstab's views in a clear, simple and precise manner. The key theme espoused by him - to focus on buying short-dated high quality bonds in countries which are pursuing conservative fiscal and monetary policies with rising interest rates makes eminent sense and is likely to provide a 10% plus return over the next few years. In addition to the countries he has mentioned like Australia, Sweden, Norway, Poland, China, Malaysia, Indonesia, Chile – I would add (by perusing the last page of the Economist which lists a table with the budget deficits, current account balances and interest rates for all countries) – South Korea, Mexico, Brazil, Hungary, Russia (India does not quite make the cut due to its high budget deficit despite having a conservative monetary policy and other countries like Singapore have sound fiscal and monetary policies but very low interest rates making them relatively less attractive as a yield investment- but an attractive cash holding).
In terms of the all-important portfolio allocation – an appropriate allocation target could be: a 30% allocation to a bond & currency portfolio as above, 10% to US credit and private mortgage funds (US treasuries are now a range trading play, and with the recent sharp rally, are for now more of a sell than a buy!), a 30-35% allocation to equity funds/ETFs comprising primarily Greater China(8-10%) , India(7-9%), US & global natural resource (7%), US high quality (5%) and balance exposure to Russia, Brazil, South Korea, Singapore and Canada, 20% cash (diversified) , 5% in gold and 5% in real estate (investment – not including abode). Some may find the exposure to real estate exceptionally low, and to counter that view I present below a graph which clearly illustrates the bubble like price movements in Asian home prices – and this is not a "paradigm shift" resulting from increasing demand for finite natural resources as argued by Grantham last week (and supported by the likes of Paul Krugman-I would vote with the two of them than a multitude of others!).
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He is staying away from bond markets which are overvalued and have a degree of fiscal and monetary risk (i.e. the US, Europe and Japan) and focussing on markets (i.e. EM, Scandinavia, Australia) where they can earn yield without taking too much interest rate and credit risk by buying short dated bonds.
He views the US to be on a reasonable 2.5-3.5% growth trajectory and is therefore not an environment to own long dated bonds. In addition, he is concerned about the lack of political ability in the US to address the budget deficit
While the US tackled the crisis very aggressively (and appropriately) by printing money, fiscal spending and dealing with bank recapitalization thereby avoiding a Japanese style lost decade, they continue to employ aggressive measures in a much improved environment and are therefore creating market distortions.
With the three largest economies in the world having the loosest monetary policies on record, the excess liquidity is creating distortions in global asset prices - like commodities prices which are driven up by growth in EM countries as well as the flow of liquidity.
He likes currencies of countries which do not have excess leverage, have prudent fiscal management, and are ahead of the curve in terms of monetary policy – which include some developed countries like Australia, Sweden, Norway and EM countries like China and Malaysia.
Japan is likely to continue its very easy monetary policies, and have lower growth and interest rates than the US, resulting in a weakening in the Yen. In addition, G7 policymakers have drawn a line in the sand at 80 Yen which would prove to be a strong resistance for Yen appreciation.
He is negative on the Euro, particularly against some Scandinavian and Central European countries. Poland is a favourite as it has conservative accounting standards, one of the lowest debt to GDP ratios and a relatively fast growing economy –it was the only European country which did not have a recession during the crisis.
The big risk facing the world is that countries get behind the curve in terms of monetary policy – with the US exporting its loose monetary policy to the world it is critical that countries negate this with raising their interest rates and currencies - and the Asia-Pacific region is doing a tremendous job in this regard.
The Chinese Yuan is likely to become one of the three major global currencies , in addition to the dollar and the euro. This process would require opening up of their capital accounts resulting in an appreciation of the Yuan, which will bring up the value of many Asian currencies as well.
They get exposure to the Chinese Yuan via linked economies and currencies which benefit from Chinese growth – i.e. most Asian countries as well as countries like Australia and Chile.
He does not see a dollar crisis, but more of a gradual realignment where the dollar will actually do well against the Euro and Yen but very poorly against a lot of the EM currencies.
The key theme for them is to purchase short term bonds in countries where they expect rising interest rates and currencies.
A great interview as it presents Hasenstab's views in a clear, simple and precise manner. The key theme espoused by him - to focus on buying short-dated high quality bonds in countries which are pursuing conservative fiscal and monetary policies with rising interest rates makes eminent sense and is likely to provide a 10% plus return over the next few years. In addition to the countries he has mentioned like Australia, Sweden, Norway, Poland, China, Malaysia, Indonesia, Chile – I would add (by perusing the last page of the Economist which lists a table with the budget deficits, current account balances and interest rates for all countries) – South Korea, Mexico, Brazil, Hungary, Russia (India does not quite make the cut due to its high budget deficit despite having a conservative monetary policy and other countries like Singapore have sound fiscal and monetary policies but very low interest rates making them relatively less attractive as a yield investment- but an attractive cash holding).
In terms of the all-important portfolio allocation – an appropriate allocation target could be: a 30% allocation to a bond & currency portfolio as above, 10% to US credit and private mortgage funds (US treasuries are now a range trading play, and with the recent sharp rally, are for now more of a sell than a buy!), a 30-35% allocation to equity funds/ETFs comprising primarily Greater China(8-10%) , India(7-9%), US & global natural resource (7%), US high quality (5%) and balance exposure to Russia, Brazil, South Korea, Singapore and Canada, 20% cash (diversified) , 5% in gold and 5% in real estate (investment – not including abode). Some may find the exposure to real estate exceptionally low, and to counter that view I present below a graph which clearly illustrates the bubble like price movements in Asian home prices – and this is not a "paradigm shift" resulting from increasing demand for finite natural resources as argued by Grantham last week (and supported by the likes of Paul Krugman-I would vote with the two of them than a multitude of others!).
1 of 1 File(s)
Imagine going to college to improve your life and walking away with $500,000 in student debt.
Consider it a cautionary tale. Over the past decade, college students have had every reason to borrow for college and little reason not to. College costs exceeded inflation by as much as six percentage points a year, bringing the average annual price of a private-school education to $37,000. Congress raised the maximum on federal student loans and introduced the Grad PLUS loan, allowing graduate students to borrow up to the cost of attendance. And until 2008, when credit began tightening up, lenders handed out private student loans as if they were party favors.
Result? More students borrowed, and in larger amounts. The average debt at graduation was $24,000 in 2009, up 6% from the year before, according to the Project on Student Debt. But that understates the dramatically higher debt that some students racked up. And many of them got swamped by their bills almost immediately. Of the 3.4 million federal-loan borrowers who entered repayment in 2008 (as the economy slid into recession), 7% defaulted within the year, the highest percentage in more than a decade (see the explanation of late-payment penalties below). That statistic doesn't include the thousands of borrowers who fell behind on their payments without defaulting, or those who couldn't keep up with their private student loans.
Missing a few payments invites dunning calls and letters, but defaulting has the potential to destroy your future. Being on the dark side of federal student debt means the feds can demand payment in full, assign your case to a collection agency, garnish your wages, pocket any state or federal refunds, and even come after your benefits in your old age. "We see people who defaulted on loans in the 1970s and 1980s whose Social Security benefits are being garnished," says Paul Combe, of American Student Assistance, an agency that guarantees federal loans. Worse yet, old, neglected loans carry decades' worth of fees, interest and collection costs. "A $2,000 loan that defaulted 20 years ago is now $30,000," says Combe.
The federal loan program offers several plans that can get you back on track. With private loans, you have to negotiate with the lender. Either way, start by knowing what types of loans you have, where they originated and who services each one. For federal loans, go to the National Student Loan Data System . For private loans, review your loan agreements, which should include the terms of the loan and repayment options see here
.
Help with federal loans. With the federal loans known as Staffords (now part of the Federal Direct Loan program), as well as Grad PLUS loans, the loan goes into delinquency when your payment is 21 to 30 days late. If you fall 60 days behind, the loan agency will report the lapse to the national credit bureaus. Meanwhile, late fees and interest will add up.
If none of the federal repayment programs offers a solution, apply to your lender for deferment or forbearance . Deferment lets you forgo monthly payments, usually for a year at a time, for up to three years. The feds pay the interest on subsidized Staffords but not on unsubsidized loans.
Accrued interest gets tacked on to the principal. You have a legal right to deferment if you meet certain criteria, including economic hardship or status as a half-time student or you are on active duty in the military.
Forbearance gets you off the hook on payments for up to five years, in yearlong increments. Generally, the lender decides whether you qualify. Interest accrues on all the loans, including subsidized Staffords. Forbearance makes most sense for borrowers who are experiencing a short-term financial crunch, not those whose situation is unlikely to improve. Such borrowers are better off in an income-based plan, which can reduce the payments to as low as zero and offers forgiveness after 25 years.
Defusing default. If you fail to make a payment for more than 270 days, your loan is technically in default, but most lenders wait 360 days to make the default official, giving you a window in which to redeem yourself. (If you're in that phase, call your lender immediately to discuss your options.) After the loan defaults, you lose access to forbearance and deferment, as well as to future federal student aid, and the default goes on your credit record.
Uncle Sam gives you several ways to get back in his good graces. One is to rehabilitate the loan, in which you contact your lender and arrange to make nine timely, "reasonable and affordable" payments over a ten-month period. The Department of Education sets guidelines as to what constitutes reasonable and affordable and stipulates that the lender can't require a minimum payment. In practice, however, negotiating the amount with the lender can be "a huge problem," says Deanne Loonin, of the National Consumer Law Center. If you and the lender can't come to terms, contact the Federal Student Aid Ombudsman, at 877-557-2575, and ask for help. If you rehabilitate your loan, the default disappears from your record.
The other strategy is to consolidate your loans with the Federal Direct Loan program, which lets you immediately enter one of the income-based repayment programs. (If you have already consolidated your loans in the Direct Loan program, you generally are not eligible to do so again.) "The advantage of consolidation is that it's faster. You don't have to make nine payments first," says Loonin. But the default remains on your credit record for up to seven years.
You may conclude that your debt is simply insurmountable and decide to try for bankruptcy. To succeed, you must demonstrate to the court that your payments impose "undue hardship," with no prospect of remedy, and that you made a good-faith effort to repay.
In a few circumstances, such as death or permanent disability, or if the school closed while you were enrolled, your federal loans are eligible for cancellation.
Help with private loans. Lenders of private student loans typically consider you to be in default as soon as you blow past the payment period, and you can count on receiving collection calls shortly thereafter.
To avoid that scenario, some lenders allow you to make lower payments for a few years and catch up later. They may also grant you forbearance, for three months at a time, during which interest continues to accrue. But don't expect them to go out of their way to extend these deals, says Loonin. Check your promissory note. If you don't see an alternative plan, call the lender and try to arrange one.
Unlike the federal government, which can garnish your wages and pursue the debt indefinitely, lenders of private loans must sue to collect on a default, and they are subject to your state's statute of limitations, usually six years. Lenders can and do take borrowers to court, says Loonin. "We've seen more-aggressive collection efforts, including more lawsuits, on the private-loan side."
If they succeed, they can garnish your wages, put a lien on your house and tap into your bank account. As with federal loans, private loans are extremely difficult to discharge in bankruptcy and require that you meet the same stringent standards. But a lender might consider settling the debt when the prospects for full payment are dim, says Henry. That was the case for her Seattle clients. With no chance of repaying the entire amount, the couple settled some of their private loans, arranged an income-based repayment plan on the federal loans and hope to discharge the remaining debt in bankruptcy.
Consider it a cautionary tale. Over the past decade, college students have had every reason to borrow for college and little reason not to. College costs exceeded inflation by as much as six percentage points a year, bringing the average annual price of a private-school education to $37,000. Congress raised the maximum on federal student loans and introduced the Grad PLUS loan, allowing graduate students to borrow up to the cost of attendance. And until 2008, when credit began tightening up, lenders handed out private student loans as if they were party favors.
Result? More students borrowed, and in larger amounts. The average debt at graduation was $24,000 in 2009, up 6% from the year before, according to the Project on Student Debt. But that understates the dramatically higher debt that some students racked up. And many of them got swamped by their bills almost immediately. Of the 3.4 million federal-loan borrowers who entered repayment in 2008 (as the economy slid into recession), 7% defaulted within the year, the highest percentage in more than a decade (see the explanation of late-payment penalties below). That statistic doesn't include the thousands of borrowers who fell behind on their payments without defaulting, or those who couldn't keep up with their private student loans.
Missing a few payments invites dunning calls and letters, but defaulting has the potential to destroy your future. Being on the dark side of federal student debt means the feds can demand payment in full, assign your case to a collection agency, garnish your wages, pocket any state or federal refunds, and even come after your benefits in your old age. "We see people who defaulted on loans in the 1970s and 1980s whose Social Security benefits are being garnished," says Paul Combe, of American Student Assistance, an agency that guarantees federal loans. Worse yet, old, neglected loans carry decades' worth of fees, interest and collection costs. "A $2,000 loan that defaulted 20 years ago is now $30,000," says Combe.
The federal loan program offers several plans that can get you back on track. With private loans, you have to negotiate with the lender. Either way, start by knowing what types of loans you have, where they originated and who services each one. For federal loans, go to the National Student Loan Data System . For private loans, review your loan agreements, which should include the terms of the loan and repayment options see here
.
Help with federal loans. With the federal loans known as Staffords (now part of the Federal Direct Loan program), as well as Grad PLUS loans, the loan goes into delinquency when your payment is 21 to 30 days late. If you fall 60 days behind, the loan agency will report the lapse to the national credit bureaus. Meanwhile, late fees and interest will add up.
If none of the federal repayment programs offers a solution, apply to your lender for deferment or forbearance . Deferment lets you forgo monthly payments, usually for a year at a time, for up to three years. The feds pay the interest on subsidized Staffords but not on unsubsidized loans.
Accrued interest gets tacked on to the principal. You have a legal right to deferment if you meet certain criteria, including economic hardship or status as a half-time student or you are on active duty in the military.
Forbearance gets you off the hook on payments for up to five years, in yearlong increments. Generally, the lender decides whether you qualify. Interest accrues on all the loans, including subsidized Staffords. Forbearance makes most sense for borrowers who are experiencing a short-term financial crunch, not those whose situation is unlikely to improve. Such borrowers are better off in an income-based plan, which can reduce the payments to as low as zero and offers forgiveness after 25 years.
Defusing default. If you fail to make a payment for more than 270 days, your loan is technically in default, but most lenders wait 360 days to make the default official, giving you a window in which to redeem yourself. (If you're in that phase, call your lender immediately to discuss your options.) After the loan defaults, you lose access to forbearance and deferment, as well as to future federal student aid, and the default goes on your credit record.
Uncle Sam gives you several ways to get back in his good graces. One is to rehabilitate the loan, in which you contact your lender and arrange to make nine timely, "reasonable and affordable" payments over a ten-month period. The Department of Education sets guidelines as to what constitutes reasonable and affordable and stipulates that the lender can't require a minimum payment. In practice, however, negotiating the amount with the lender can be "a huge problem," says Deanne Loonin, of the National Consumer Law Center. If you and the lender can't come to terms, contact the Federal Student Aid Ombudsman, at 877-557-2575, and ask for help. If you rehabilitate your loan, the default disappears from your record.
The other strategy is to consolidate your loans with the Federal Direct Loan program, which lets you immediately enter one of the income-based repayment programs. (If you have already consolidated your loans in the Direct Loan program, you generally are not eligible to do so again.) "The advantage of consolidation is that it's faster. You don't have to make nine payments first," says Loonin. But the default remains on your credit record for up to seven years.
You may conclude that your debt is simply insurmountable and decide to try for bankruptcy. To succeed, you must demonstrate to the court that your payments impose "undue hardship," with no prospect of remedy, and that you made a good-faith effort to repay.
In a few circumstances, such as death or permanent disability, or if the school closed while you were enrolled, your federal loans are eligible for cancellation.
Help with private loans. Lenders of private student loans typically consider you to be in default as soon as you blow past the payment period, and you can count on receiving collection calls shortly thereafter.
To avoid that scenario, some lenders allow you to make lower payments for a few years and catch up later. They may also grant you forbearance, for three months at a time, during which interest continues to accrue. But don't expect them to go out of their way to extend these deals, says Loonin. Check your promissory note. If you don't see an alternative plan, call the lender and try to arrange one.
Unlike the federal government, which can garnish your wages and pursue the debt indefinitely, lenders of private loans must sue to collect on a default, and they are subject to your state's statute of limitations, usually six years. Lenders can and do take borrowers to court, says Loonin. "We've seen more-aggressive collection efforts, including more lawsuits, on the private-loan side."
If they succeed, they can garnish your wages, put a lien on your house and tap into your bank account. As with federal loans, private loans are extremely difficult to discharge in bankruptcy and require that you meet the same stringent standards. But a lender might consider settling the debt when the prospects for full payment are dim, says Henry. That was the case for her Seattle clients. With no chance of repaying the entire amount, the couple settled some of their private loans, arranged an income-based repayment plan on the federal loans and hope to discharge the remaining debt in bankruptcy.
Read more and compare student loans services from below
( Source : Kiplinger, NASDAQ)
( Source : Kiplinger, NASDAQ)
Index | Country | Local Market Time | Indian Time | ||
Open | Lunch Break | Close | |||
Nikkei | Japan | 9.00 am - 11.00 am | 5.30 am | 7.30 am - 9.00 am | 11.30 am |
12.30 pm - 3.00 pm | |||||
Hang Seng | Hong Kong | 9.30 am - 12.00 pm | 7.30 am | 10.00 am - 11.30 am | 2.00 pm |
1.30 pm - 4.00 pm | |||||
Strait Times | Singapore | 9.00 am - 5.00 pm | 6.30 am | NO | 2.30 pm |
Sanghai Composite | China | 9.30 am - 11.30 am | 7.00 am | 9.00 am - 10.30 am | 12.30 pm |
1.00 pm - 3.00 pm | |||||
Taiwan Weighted | Taiwan | 9.30 am - 12.30 pm | 7.00 am | 10.00 am - 11.10 am | 12.00 pm |
1.40 pm - 2.30 pm | |||||
KOSPI | South Korea | 9.00 am - 3.00 pm | 5.30 am | NO | 11.30 am |
Jakarta Composite | Indonesia | 9.30 am - 4.00 pm | 8.00 am | NO | 2.30 pm |
9.00 am - 4.00 pm* | 7.30 am* | NO | 2.30 pm | ||
FTSE | UK | 8.00 am - 4.30 pm | 12.30 pm | NO | 9.00 pm |
DAX | Germany | 9.00 am - 5.30 pm | 12.30 pm | NO | 9.00 pm |
CAC | France | 9.00 am - 5.30 pm | 12.30 pm | NO | 9.00 pm |
Nasdaq | US | 9.00 am - 4.00 pm | 6.30 pm | NO | 1.30 am |
Dow Jones | US | 9.00 am - 4.00 pm | 6.30 pm | NO | 1.30 am |
Strategy: The cold logic behind our 16,000 target for the Sensex
Over the past few months we have highlighted that the Sensex is likely to head towards 16,000 by the end of June. Given the events of the last few days, clients have sought clarity on the numbers behind our 16,000 estimate for the Sensex. The table below sets out the logic for the same. A glance at the table will show that there are TWO key assumptions behind our 16,000 target:
Assumption 1: The Sensex's forward P/E, which currently stands at, 14,7x should derate to 13.8x. Why are we saying this? The Sensex currently trades at a 36% premium to MSCI EM (on a forward P/E basis). Over the past 10 years this premium has averaged around 28%. Given the outlook for the Indian economy (rising finance, fuel, labour and input costs in a environment where economic reform is stalled by policy gridlock), we believe that it makes sense for the Sensex's forward P/E premium to derate by around 10% (14.7 going to 13.8) so that our premium to MSCI EM becomes 28% (in-line with India's CY01-10 premium).
Assumption 2 : The Sensex's FY12 EPS estimate, which currently stands at 1,257, should fall by 7% over the next couple of months as consensus factors in higher input costs. Whilst consensus expects a 13% yoy growth in FY12 Sensex EPS, we believe EPS growth will be pulled down to 6% yoy growth on account of the following
1) a 2% impact on account of higher interest costs (interest cost account for ~27% of PAT and interest costs are likely to be higher by 75 bps )
2) a 2% impact on account of higher fuel costs ( fuel costs account for ~44% of PAT and 50% of fuel price increases are likely to be unhedged)
3) a 3% impact on account of higher raw material costs (raw material costs account of ~276% of PAT and assuming average WPI inflation of 7.9% in FY12)
We see this ongoing pullback as a return to sanity for valuations in the Indian market and we continue to believe that investors should use this opportunity to build positions in our 48 stock "good & clean" portfolio (see attached). Over the past two months this equal weighted portfolio has outperformed the BSE200 by 585bps (on a market cap weighted basis the outperformance is still a very respectable 302bps). This portfolio was created 2 months ago keeping in mind the dislocated environment we find ourselves in. We would be happy to sit down with clients and discuss the three step process (outlined below) we used to build this portfolio:
Step 1: Screening sectors for inflation immunity
The rationale: High inflation withholds the translation of high sales growth by imposing cost pressures (see exhibit 2 for details). This dynamic explains the historic phenomenon whereby equity returns are lower in a high inflation environment – both across the market as well as across sectors (see exhibit 3 for details).
The model: Based on consolidated financial data for BSE500 sectors we estimate each sector's exposure to each of the three types of input costs i.e. raw material cost and fuel cost, employee cost and interest cost. Please refer to the attached note titled '5 forces driving India Inc's P&L' for details.
Step 2: Weeding out stocks with poor quality earnings
The rationale: Whilst at the level of the overall market between share price performance and accounting quality is not visible, the fact that accounting quality matters for equity returns leaps out at the sectoral level (particularly if we slice the sectors into different market cap buckets).
The model: Use our forensic accounting model of BSE 500 companies to identify the best one third of stocks within each of these sectors Please refer to our attached note tiled 'Accounting quality matters' to understand how our forensic accounting framework works.
Step 3: Applying the valuations screen
We then apply three valuation screens - forward P/E, forward EV/EBITDA and forward P/B - to whittle down the long list of 90 stocks emerging from steps 1 & 2 to shorter list of 48 stocks. Each of the three valuation screens compared a stock's current mutliple with its historic 5 year average multiple with the intent being to buy stocks which are trading below their historic P/E, EV/EBITDA and P/E.
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Exact From my Buy level(5492-5511), NIFTY Bounced 5584...!
Yes, We are waiting for 5597-5632 Target
Ultimate Analysis on NIFTY Future
(9th May, 2011)
NIFTY Performed on Friday:
The NSE benchmark S&P CNX Nifty snapped its nine-session losing streak by gaining 91.60 points in early trade on Friday on renewed buying on easing of macroeconomic worries in view of a sharp fall in crude oil prices.
The Nifty futures closed and settled finally at 5555, down by 96.60 or (-1.77 %). It is looking bullish in the coming trading session if it manages to trade above the resistance level of 5595 else below support level of 5415 it would be in a downward trend.
Positional Trend with Levels See below links for more
Sustenance above the 5500 levels will see the NIFTY gradually head higher towards the 5650-5687 levels. (Expected time zone 72hrs)
Above 5594, NIFTY may see 5669, 5706…Easily…? (Yes)
Yes, Everybody knows of Thursday of last week given to BUY Nifty fut. 5450 in small quantities…! (Your Stop loss is your bought price)
Note: This pull is not believable for ending of Bearish Trend but also not confirmation of Bullish fully
Therefore, Just Non-Stop 5688-5722 will be sign of Bulls for 5800-5840
Keep Patience of Accurate single and our levels
(New update will be below 5440 only)
Technical Data-Sheet on NIFTY:
Last (06/05/2011) close@5551 (+92 points)
Last high@5564 low@5472
Weekly high@5909 low@5443
5DMA@5563
20DMA@5764
50DMA@5631
200DMA@5752
Prediction of MoneyMunch.com Intraday
Buyers expected on two levels: 5449 to 5461(last hope) and 5492 to 5511
Today's Intraday Targets 5597 to 5632
(After closing above 5585, Nifty future will be strong pull back for targets 5677-5743 in 72hrs)
Just watch opening 5550 above
(For the 11 o' clock trading above this level…then intraday heavy buyers might come to test 5641-5663)
Note: In this case, you must be keeping Stop point as 5536-5531
Angry Birds Logo |
An IPhone app developers coming with IPO wow !!
Rovio, the developer of the "Angry Birds" mobile game eyes an initial public offering in three to four years, its chief marketing officer was quoting as saying in a Finish business daily on Monday.
"It is very possible that we will be listed in bourse in three to four years, but we are not in a hurry," Chief Marketing Officer Peter Vesterbacka told Kauppalehti, but did not say where the IPO could take place.
"We can carry out all of our current plans without bourse listing, but bourse is still a more meaninful direction than, for instance, selling the company." He said Rovio aimed within three years to become the world's leading entertainment brand.
Currently the firm is opening a new office in China and mulls new offices in Japan and the United States.
Vesterbacka estimated Rovio's 2011 sales would be around 50-100 million euros ($69.85-$139.7 million) versus 6.5 million in 2010. See links below for more Iphone apps, IPOs, Stocks, news and developments.
( Source Reuters )
And another huge hit to future oil supply. After Goldman released a report on Friday, backtracking on its April recommendation that clients sell crude, instead warning that "critically tight supply-demand fundamentals" will likely cause oil prices to "return to or surpass the recent highs by next year", "should Libyan oil supplies remain off the market", which it now appears they will considering Gadaffi is winning the Libyan civil war against the West-backed rebellion, here comes a stunner out of Iraq which has just slashed its 2017 oil production estimate from 12 million barrels to just 6.5-7 million bbpd. Oddly enough, Iraq is being rational: "Baghdad believes it would not be in its interests to try to achieve the 12 million target by 2017 because boosting global supply would depress prices." Who would have though a cartel would think of itself first… Surely, this is great news for Saudi Arabia which will promise to hike oil production and replace the missing output only for it to be discovered a few months later that not only did it not to do that
(as we just discovered now following the whole Libya fiasco), but that it just does not have the excess capacity. And, of course, "speculators" will be blamed once they take WTI from $97 to $140 daring to discount the future price of oil in a (inflationary) world in which demand increases by 50% over a decade, even as supply continues to trickle down with each passing year. In other words, the CME margin hike crew is actively studying how many margin hikes it will take to break the back of the recently record number of non-commercial net specs… for at least a week or two, especially once the Chairman goes to town with the printer Turbo button. And elsewhere, the upcoming scarcity of lubricating petroleum byproducts is about to be felt through the entire supply (and demand) chain.
(as we just discovered now following the whole Libya fiasco), but that it just does not have the excess capacity. And, of course, "speculators" will be blamed once they take WTI from $97 to $140 daring to discount the future price of oil in a (inflationary) world in which demand increases by 50% over a decade, even as supply continues to trickle down with each passing year. In other words, the CME margin hike crew is actively studying how many margin hikes it will take to break the back of the recently record number of non-commercial net specs… for at least a week or two, especially once the Chairman goes to town with the printer Turbo button. And elsewhere, the upcoming scarcity of lubricating petroleum byproducts is about to be felt through the entire supply (and demand) chain.
From The Australian:
The country's Oil Ministry, with backing from the Prime Minister Nouri al-Maliki, will set a new target to produce between 6.5 million and 7 million barrels per day by 2017, down from original plans to pump 12 million barrels, according to industry insiders.
Iraq, which is a member of the OPEC cartel that pumps 40 per cent of the world's oil, produces about 2.68 million barrels a day, barely higher than under Saddam Hussein.
It had been hoped that with a huge injection of foreign investment, it would be able to challenge Saudi Arabia as the world's biggest oil exporter this decade.
Confirmation it has scrapped the old target will add to fears that global supply will be unable to keep pace with demand in coming years.
As usual, the 'conspiracy of optimism' got the better fo everyone. And we can't wait to see if the Libyan, Siryan and Yemeni problems spread to Iraq… and/or Iran.
It is understood that government negotiations to change the long-term service agreements signed by companies in the past two years based on the old production target will begin soon.
Analysts said companies would seek improved terms to compensate them for losing out on revenue, which at present is earned for each barrel of oil produced above a base target.
Baghdad believes it would not be in its interests to try to achieve the 12 million target by 2017 because boosting global supply would depress prices.
No demand?
Ministers also argue that there is not sufficient demand for the extra oil, despite soaring prices. Last month, Saudi Arabia cut its output by 800,000 barrels a day after pumping more in response to the political crisis in North Africa, complaining that the extra crude was sitting in tankers with no customers.
High oil prices, which have doubled since the 12 million target was set two years ago, will compensate Iraq for the lower production. Ministers also recognise that creaky pipelines and storage facilities could not cope with such an increase.
The International Energy Agency estimates that investment of more than $US160 billion ($149bn) would be needed to meet the target.
So perhaps the Chairman was not lying that the end price of commodities is determined by supply and demand. The only qualifier is that while crude will surely have a $2 handle and three digits in it in several years (forcing inflation to spike far higher than where it is now in order to offset the pricing impact on the broader population), in the interim volatility in commodities will surge to unprecedented levels (as we expected back in the fall of 2010) as it takes our speculators on both bullish and bearish extremes, invites in the HFT crew to make price swings even more ridiculous, and forcing the Fed to step in and take over this vertical that it still does not control, after already having taken charge of the fixed income and equity markets. And with that, the last pseudo-unmanipulated product will succumb to central planning.