Forex Analysis: Oil price rise raises specter of global recession

Forex Analysis: Oil price rise raises specter of global recession LONDON (Reuters) - A jump in energy prices is jamming the slow-turning cogs of an economic recovery in the West, but that may be nothing compared to the economic shock an Israeli attack on Iran would cause. Oil rose to a 10-month high above $125 a barrel Friday, prompting responses from policymakers around the world including U.S. President Barack Obama, watching U.S. gasoline prices follow crude to push toward $4 a gallon in an election year. Europe may have more to fear as its fragile economic growth falters and Greece, Italy and Spain look for alternative sources to the crude they currently import from Iran, where an EU oil embargo, intended to make Iran abandon what the West fears are efforts to develop nuclear weapons, comes into force in June. In euro terms, Brent crude rose to an all-time high of 93.60 euros this week, topping its 2008 record. 'The West's determination to prevent Iran acquiring nuclear weapons is coming at a price - a price that might include a second global recession triggered by an oil shock,' said David Hufton from the oil brokerage PVM. In dollar terms, oil prices are still some $20 a barrel short of their 2008 record of $147. But the latest Reuters monthly survey will Monday show oil analysts revising up their predictions for Brent crude by $3 since the previous month. Such a change is big in a poll of over 30 analysts, and last happened at the peak of the Libyan war in May. Ian Taylor, head of the world's biggest oil trading house Vitol, told Reuters this week prices could spike as high as $150 a barrel if Iran's arch-enemy Israel launched a strike at its nuclear facilities - an option Israel has declined to rule out. 'I used to think this would never happen,' Taylor said, 'but everyone you speak to says the Israelis will have a go at striking at Iranian nuclear sites. 'The day that happens, you have to believe the Iranians throw a few mines in the Strait of Hormuz and, for a few hours at least or maybe more, I cannot see a scenario where prices would not be at that sort of level ($150).' The U.N. nuclear watchdog said Friday Iran had sharply stepped up its uranium enrichment, which Iran insists is solely for civilian purposes. Israel has warned that, by putting much of its nuclear program underground, Iran is approaching a 'zone of immunity,' but it has also said any decision to attack is 'very far off.' Wall Street bank Merrill Lynch said this week that oil prices could climb to $200 over the next five years. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> So far this year, dollar prices for Brent crude have risen by more than 15 percent, pushed up mainly by fears about Iran. The loss of supply from three small and mid-sized producers suffering internal turmoil - Syria, Yemen and South Sudan - has added to the supply worries. WEAK GROWTH, HIGH PRICES A stabilization of the U.S. economy may explain some of the rise in oil prices, but the global economy is growing far more slowly now than at this time last year, yet crude prices are just as high. World equities and oil have typically been closely correlated since 2008 because both were driven by global demand. However, as oil prices start to respond to supply problems, the correlation is evaporating, and the global economy is already paying a high price. Data published this week showed unexpectedly weak activity in Europe's most powerful economy, Germany, and in France, sparking fresh worries that the region could tip into recession. Few have forgotten that in 2008, within six months of hitting its all-time high, oil plunged as low as $35 a barrel with the onset of the global credit crisis. In the United States, demand for refined oil products is close to its lowest level in nearly 15 years, indicating that motorists are cutting back their mileage. 'The price spike is going to be a challenge for politicians in the West running for re-election,' said Olivier Jakob from the Petromatrix consultancy. He said developed countries would find it hard to justify a release of strategic oil stocks similar to what they did in 2011. Unlike a year ago, when Libyan oil exports were disrupted by a war, this year 'there is ... instead a voluntary restriction on buying from a specific country,' said Jakob. Other than a release of oil stocks, developed countries could resort to yet another round of monetary easing, to which emerging markets will respond with quantitative tightening, price controls and subsidies, said analysts from HSBC. 'In terms of fiscal health, it would seem that Asia is better placed than other regions to deal with an oil price shock,' HSBC said in a note last week.

Oil Bloomberg exec in talks to run New Corp's Dow Jones

Oil Bloomberg exec in talks to run New Corp's Dow Jones RELATED QUOTES Symbol Price Change NWSA 18.88 +0.06 TRI.TO 27.80 -0.14 APKN.PK 0.012 0.00 TRI 27.82 -0.10 (Reuters) - Rupert Murdoch's News Corp is in 'serious talks' to poach veteran Bloomberg LP executive Lex Fenwick to run its Dow Jones publishing business, which houses the Wall Street Journal, according to two people familiar with the discussions. Fenwick, who founded Bloomberg Ventures in 2008, was previously chief executive of Bloomberg LP, taking over from the company founder Michael Bloomberg in December 2001. Wall Street Journal reported news of the talks earlier on Friday. The top job at Dow Jones has been vacant since last July when then-Publisher and Chief Executive Les Hinton resigned in the wake of the phone-hacking scandal at News Corp's UK newspaper unit, which had previously run. Hinton told a UK parliamentary inquiry in 2009 that any problem with phone hacking at the company's papers was limited to one case. It was later revealed that thousands of ordinary people and celebrities had been the victims of the voice mail hacking. Hinton, who worked with News Corp for 52 years, was perhaps Murdoch's closest associate. Bloomberg and Dow Jones compete with Thomson Reuters. (Reporting By Yinka Adegoke; Editing by Steve Orlofsky)

Forex >SIEMENS LIMITED: Projects in mobility KAHRAAMA, Essar Construction, solar thermal & Torrent Power (Earnings Review Q4FY12)

Forex
New orders fall, Adj PAT 46% below BofAMLe; Maintain UPF


2Q12 only optically in line, Revenue disconnect
Siemens (SIEM) 2Q12 Adj PAT of Rs1.63bn is 46% lower than BofAMLe. Revenues of Rs38bn beat BofAMLe by 11%, up 22% YoY. However, results include a net write back of Rs2.1bn (PBT), which we believe led to higher revenues and in-line Rep PAT Rs3bn. 1H12 order inflows declined 36% YoY (adj -27%) due to high base, lower project orders, but short cycle & SMART products drove base orders. We maintain our Underperform rating on: 1) reduced revenue visibility as orders decline from power gen, T&D and process sectors; 2) lower FY12-14E margins due to new product launches; and 3) modest 8% earnings CAGR in FY12-14E, and declining RoEs.


Mobility and new products drive revenues
We believe a) projects in mobility (Gurgaon Rs7-8bn, Chennai Rs6bn, & Kolkata Rs1.6bn), b) power (KAHRAAMA Rs25bn, Essar Const, 200MW solar thermal &  Torrent Power Rs15bn), and c) launch of new low cost products in 1Q12, were major revenue drivers in our view in absence of mgmt commentary on the impact of the write back on revenue and EBITDA.


Margins lower on comp, cost push, entry pricing & losses
Despite the write back EBITDA margins contracted 130bp YoY (13%) on price competition in T&D, cost push in industry projects and entry pricing on SMART products. Segmentally, Industry (-600bp), Healthcare (loss) and Infra &cities (-100bp) were margin drags. Energy was positively impacted due to the write back.


We are 6% & 14% lower than consensus, expect downgrades
We maintain our FY12/13/14 earnings ests despite lower than anticipated results in 1H, as SIEM aggressively provides for contingencies (3-3.5% of rev) while executing large orders. We estimate KAHRAAMA & Gurgaon metro to be mostly complete in FY12, so expect further write backs. We do not change order inflow & revenue ests as we build in for contribution from VAI and also Rs10bn order from Qatar. However, our FY12/13 ests are 6% and 14% lower than Street. Consensus has lowered ests by 13/10% in past qtr; we expect further earnings downgrades.

RISH TRADER

Earn Etisalat eyes mobile remittances in Gulf

Earn Etisalat eyes mobile remittances in Gulf Companies: AFN RELATED QUOTES Symbol Price Change AFN 0.00 0.00 Related Content A man walks past a sign at the headquarters of telecommunications company Etisalat in Dubai October 25, 2011. REUTERS/Jumana El HelouehView Photo A man walks past a sign at the headquarters of telecommunications company Etisalat in Dubai October 25, 2011. REUTERS/Jumana El Heloueh By Matt Smith DUBAI (Reuters) - UAE telecoms operator Etisalat (ABD:ETISALAT), which saw $1.8 billion moved over its network last year via money transfers, has sought regulatory approval to expand its financial services offerings in the Gulf region, home to millions of expatriates. Mobile money services allow customers to pay bills or make remittances using SMS text messages, often at a cheaper cost than through banks or money transfer firms. 'Remittances are a huge business opportunity,' George Held, director of products and services at Etisalat, told Reuters. 'The cost base for telecoms operators is much different than for banks and exchange houses. We do not need bricks and mortar branches, so our costs are lower and we can pass on this saving and offer better exchange rates and transaction fees.' The former monopoly was expected to focus on its home market and Saudi Arabia. Both countries have large expat populations and inbound annual remittances were worth about $36 billion combined in 2010, Held said. About 89 percent of the UAE's 8.3 million population are expatriates, while in Saudi Arabia just over a fifth of the 27 million population are foreigners. Etisalat's Egypt unit could also profit from an estimated $8 billion of inbound remittances from Egyptians working abroad. Etisalat has tied up with Western Union and MoneyGram International to allow money sent by mobile customers in the Middle East to be collected anywhere in the world. Aside from remittances, the operator hopes to offer salary payments, peer-to-peer domestic funds transfers and utility and shop payments. 'Remittances will be an extremely important part of our mobile money services. But it is not enough alone to drive service adoption, so we will offer a mix of services to make it very hard for customers not to get involved,' said Held. Etisalat already offers some of these services in six countries, including Afghanistan, Pakistan, Sri Lanka and Tanzania and plans to expand this to the 17 countries in which it operates in Asia, Africa and the Middle East. 'We want to introduce mobile money in the rest of our markets as soon as possible. It is not a technical issue, but ticking all the boxes from a regulatory, compliance and customer education point of view,' Held said. LESS MONEY, MORE LOYALTY Mobile money has taken off in parts of Africa, where a minority of people hold bank accounts and the banking infrastructure in rural areas remains limited. About 8 percent of Tanzania's gross domestic product is thought to go through mobile banking. Text-based financial services will not help stem a decline in global SMS revenues - seen dropping up to 40 percent over the next three years as users opt for alternative text services such as BlackBerry Messenger or WhatsApp - but it can improve customer loyalty. 'When people have a mobile wallet ... we believe they will stay with us for a long time,' Held said. 'When was the last time you changed your bank account?' Etisalat will face challenges in convincing customers in the Gulf region, who have easy access to banking and exchange houses, to switch. 'In this region, people are used to going to the bank for transactions - they like to get a receipt. It is not a game-changer for telecom operators' revenues,' said a regional telecoms analyst. Pedro Oliveira, partner at consultant Oliver Wyman, said telecoms operators face a tough task competing with conventional exchange houses. 'Low income workers in the Gulf count every penny. So, it is not convenience that matters, but cost,' he said. 'For expats with prepaid contracts wanting to send money home, they would have to buy prepaid cards to top up their phone balance and then send a text.'

Signals >Why Countries Succeed and Fail Economically

Signals This study looks at how different countries' shares of the world economy have changed and why these changes have occurred, with a particular emphasis on the period since 1820. As explained in this study, the rises and declines in countries' shares of the world economy occur as a result of very long-term cycles that are not apparent to observers who look at economic conditions from a close-up perspective.


To begin, let's look at how the world economic pie has been divided up over time and why it has changed. The table below shows the shares of world GDP by major countries and/or regions at various points in time going back to 1500. Scan that table to see how these shares have evolved over time.


To read report in detail: WORLD ECONOMY
RISH TRADER

Oil >PERSISTENT SYSTEMS: Earnings Review Q4FY2012

Oil Persistent Systems' operating results for Q4FY12 were inline with expectations with a topline growth of 1.1% at ` 2.7bn as against our estimate of ` 2.7bn. Revenue growth was largely driven by IP led efforts - contributing 12% to revenues (up 38% QoQ) also includes Openwave numbers. Non IP revenues were up by just 1.5% QoQ all on better pricing of 1.7% as volumes remained flat for the quarter.


The company has indicated better than industry growth (NASSCOM projects 11-14%) for FY13 along with margin maintenance at FY12 levels of 19.6% at PBT levels. The company has not given quantitative guidance and has earmarked a soft fresh hiring plan of 350 employees in FY13. It will review salary hikes post Q2FY13 and have indicated better reward than peers.


We believe that the company going forward would rely less on fresh hiring as it used to be till FY10. We expect 15% volume growth for the company in view of challenging demand in the discretionary (new development) budgets. It would also focus on non linear opportunities and improved efficiency; incrementally. It continues to remain focused on its next generation technologies and expect its sales strategy along with opportunities in 'Bigdata' to drive the revenue growth in the coming period.


We remain positive on the stock for its attractive valuations of 6.6 (x) for FY14E
EPS of ` 49.4 with a BUY rating on the stock with a target of ` 444 valued at 9x
of its FY14E earnings.

Financial Highlights:
Persistent Systems' operating results for Q4FY12 were inline with expectations with a topline growth of 1.1% at ` 2.7bn as against our estimate of ` 2.7bn (Revenues up 4.9% in USD terms). Revenue growth was largely driven by IP led efforts - contributing 12% to revenues (up 38% QoQ). Non IP revenues were up by just 1.5% QoQ all on better pricing of 1.7% as volumes remained flat for the quarter. EBITDA grew 11% QoQ at ` 773mn on lower travel cost and flat non IP expenses (employee count down by 78 QoQ) thus resulting in better operating margins of 28.5% (up 260bps) for the quarter – DE at ` 677mn.


PAT grew by 1.6% qoq to ` 412mn ahead of our estimate of ` 398mn as gains on operating margin got negated to certain extent on higher depreciation and weak other income (loss of ` 34mn as against gain of ` 27mn).


The company managed to achieve its PBT margin maintenance but fell short of its USD revenue guidance of 29% (actual achieved 22%) for FY12.


The company has named Mr. Rohit Kamat as the Chief Financial Officer with effect from April 23, 2012, in place of Mr. Rajesh Ghonasgi who has resigned citing personal reasons. Brief profile of Mr Kamat is annexed below for your reference.


Valuation & Outlook:
We believe the series of efforts such as acquisition of S&M team of Agilent & Openwave location services, sales with strategy (pre-emptive effort to deploy codeveloped products), and investment in next generation technologies would lead into higher than industry growth rate. We remain positive on the stock for its attractive valuations of 6.6 (x) for FY14E EPS of ` 49.4 with a BUY rating on the stock with a target of ` 444 valued at 9x of its FY14E earnings.


RISH TRADER

Forex Natural Gas Stocks are a Gas Gas Gas

Forex Natural gas has tanked 39% this year, the worst performer of all the commodities. Natural gas should increase to $4 per million BTU pretty soon, according to Goldman Sachs (GS). This is primarily due to production cutbacks from major producers and increased demand from utilities this year. It is significant since gas dropped 39% this year, the worst performing of all utilities.

There are many publicly traded companies involved in the distribution of natural gas, to both homes and businesses, and over 15 over them have yields in excess of 3%. For example, TransCanada Corp. (TRP), based in Calgery, Alberta, Canada, owns and operates natural gas pipelines and regulated gas storage facilities throughout Northern California. The company, which trades at 20 times earnings, pays a generous yield of 4.0%. (Talk to your accountant about foreign withholding tax, especially when foreign stocks are put in a retirement plan.) Earnings for the latest quarter were up 37.5% on a 14.7% rise in revenues.

Enterprise Products Partners LP (EPD) is another high yielder gas company, which yields 4.9%. The stock trades at 21.6 times earnings, and earnings for the latest reported quarter ending December 31, were up an amazing 351.3% year over year, on a revenue increase of 20.9%. The company reports earning on May 2.

More options are available and worth further research including Northwest Natural Gas (NWN) at a 3.9% yield, WGL Holdings Inc (WGL) paying 4.0%, and Sempra Energy (SRE) at 3.7%. You can access a free list of over 25 natural gas companies, along with their price to earnings data, at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.

By Stockerblog.com

Forex >Why Countries Succeed and Fail Economically

Forex This study looks at how different countries' shares of the world economy have changed and why these changes have occurred, with a particular emphasis on the period since 1820. As explained in this study, the rises and declines in countries' shares of the world economy occur as a result of very long-term cycles that are not apparent to observers who look at economic conditions from a close-up perspective.


To begin, let's look at how the world economic pie has been divided up over time and why it has changed. The table below shows the shares of world GDP by major countries and/or regions at various points in time going back to 1500. Scan that table to see how these shares have evolved over time.


To read report in detail: WORLD ECONOMY
RISH TRADER

Signals Socially Irresponsible High Yield Stocks

Signals Many investors and a few mutual funds will purposely avoid investing in certain companies that are in industries that are not considered socially responsible, such as Alcohol, Animal Testing, Weapons, Gambling, Tobacco, Oil, Coal, and Nuclear Energy. However, stocks in one of these industries, cigarettes and tobacco, the yields re quite high.

Cigarettes are still selling well, in spite of the cigarette pack warnings, in spite of the anti-smoking cigarette commercials, and in spite of the upcoming gross anti-smoking warnings that are expected to appear on cigarette packages.

I don't smoke and I don't ever remember investing in a tobacco company. But there are investors who are just primarily concerned about the financials of a company, as opposed to the company's products. There are actually ten publicly traded cigarette and tobacco companies, most of which pay decent dividends, that have been turned up by WallStreetNewsNetwork.com. Yields range from 3.5% to 9.3%.

One example is Lorillard, Inc. (LO) has a dividend payout rate of 4.5%. The stock, which markets the Newport, Kent, True, Maverick, Old Gold, and Max brands, trades at 14 times forward earnings.

Altria Group Inc. (MO), which is a Virginia based company that makes and markets cigarettes, cigars, and beer. It is the largest cigarette company by market cap in the US. The stock has a forward price to earning ratio of 13.5, and pays a very generous yield of 5.5%. The company's brands include Marlboro, Virginia Slims, Parliament, Benson & Hedges, Basic, L&M, Copenhagen, Skoal, Red Seal, and Husky.

Reynolds American Inc. (RAI) makes and markets cigarettes and other tobacco products including the Camel, Kool, Pall Mall, Doral, Winston, Salem, Misty, Capri, Dunhill, and Natural American Spirit brands. The stock has a forward PE ratio of 13.1, and pays a nice yield of 5.4%.

For a free list of all the high yield tobacco stocks, which can be downloaded, sorted, and updated, go to WallStreetNewsNetwork.com. Also, if you haven't seen the Graphic Color Anti Smoking Pictures to Appear on Cigarette Packs, you should check them out.

Disclosure: Author did not own any of the above at the time the article was written.


By Stockerblog.com

Earn Why Brand Value Still Matters

Earn Why Brand Value Still Matters RELATED QUOTES Symbol Price Change PVH 74.26 +0.36 RL 143.11 -1.43 PVH's (NYSE: PVH - News) 2010 acquisition of Tommy Hilfiger turned out to be a good long-term prospect. PVH posted a handsome growth in profits in its third quarter, spurred mainly by Tommy's international sales. The growth speaks volumes for PVH, known to be a high-end clothier trying to sail through a struggling, cash-strapped economy. Let us take a closer look at what makes PVH tick. Good third-quarter showing PVH's net income came in at $112.2 million, a 12% rise from $99.8 million in the year-ago period. Continued healthy sales for both its Calvin Klein and Tommy Hilfiger brands of clothes spurred this growth. Strong sales, both domestic and international, also boosted revenue by 9% from last year to $1.65 billion. This even exceeded management expectations. Tommy Hilfiger, in particular, went a notch ahead of Calvin Klein, as the former's strong international sales base led it to post an earnings increase of 27% over Calvin Klein's 13%. Naturally, PVH felt confident enough to raise its full-year outlook. What spurred the growth Tommy Hilfiger's strong international sales were a major boost to PVH's third-quarter figures, as the brand registered a 17% growth in revenue over last year, spurred by key markets such as the United Kingdom, Italy, and France. Of course, one of the main reasons behind Tommy Hilfiger's acquisition was because the former is known to generate a large chunk of its revenue from international markets. But then, its other flagship brand Calvin Klein was not far behind either as its revenues went up by a healthy 11%. However, PVH needs to check back on its competitors' progress as well. For instance, rival Ralph Lauren (NYSE: RL - News) also cashed in on robust sales figures to post a 14% increase in second-quarter profits. PVH needs to be particularly wary of Ralph Lauren, which is a highly aspirational brand, and whose overseas revenue is around 38% of the consolidated total. Ralph Lauren also caters to a similarly wealthy segment and is in the process of launching new brands such as Lauren footwear. The Foolish conclusion PVH is certainly not getting complacent as it aims to spend around $5 million more than what it did last year on international marketing, with the stress being on holiday campaigning through television and cinema. This is one company that has brand recall, caters to the high-end segment that is not really 'discount-dependant,' and has structured future plans. It may be a good idea to stock up on PVH. Fool contributor Subhadeep Ghose does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.