Wednesday, July 25, 2012

Monitoring the Global Economy

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10 tough foreign-policy questions for Romney from Steve Walt: http://t.co/FwYnaxuB

EconoMonitor : EconoMonitor » What’s Driving China’s Real Estate Rally? Part 1

Finance Documentaries is the go-to website for watching finance documentaries on the net. Already we have over 100 finance documentaries listed on the website, and we are actively growing that number with plenty of new interesting and insightful documentaries. Whether you are interested in investment banking, trading, hedge funds, private equity, the financial crisis, banking reform, central banking, or even eco-investing or microfinance, there is a documentary here for you to watch.

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Tuesday, July 24, 2012

Dundee Precious Metals Reports on Progress of Acid Plant at Smelter in Namibia - MarketWatch

Reading this release, it should become clear that mining projects are long-term ventures requiring patience from investors, experienced managers, favorable commodity prices and low operating costs for just a few of the consideration and RISKs.

Penny stock promoters will promise many things and possibly deceive you into thinking riches can arrive overnight.

Remember: "A gold mine is a hole in the ground with a liar standing next to it."

MINERS

Now, here is a gold-miner's compliment, and this one is forty-two years old. I remember the circumstances perfectly well. It was the introduction of Mark Twain, lecturer, to an audience of gold-miners at Red Dog, California, in 1866, by one of themselves. It was in a log house, a large school-house, and the audience occupied benches without any back, and there were no ladies present, they didn't know me then; but all just miners with their breeches tucked into their boot-tops. And they wanted somebody to introduce me to them, and they pitched upon this miner, and he objected. He said he had never appeared in public, and had never done any work of this kind; but they said it didn't matter, and so he came on the stage with me and introduced me in this way. He said: "I don't know anything about this man, anyway. I only know two things about him. One is, he has never been in jail; and the other is, I don't know why."
- Speech, 1908

Mark Twain has described a mine as "a hole in the ground owned by a liar."

- This quote was attributed to Mark Twain in The Autobiography of John Hays Hammond (Farrar & Rinehart, 1935), p. 97. Although Hammond knew Twain personally, there is no other authentic record that Mark Twain made this statement.

Inscribed portrait of Mark Twain by Everett Shinn to John Hays Hammond
from Library of Congress Prints and Photographs Division

http://www.twainquotes.com/Miner.html

..............................................................................................................

TORONTO, ONTARIO, Jul 24, 2012 (MARKETWIRE via COMTEX) -- (All amounts in US Dollars)

Dundee Precious Metals Inc. CA:DPM +0.73% ("DPM" or the "Company") has announced the completion of a feasibility study by SNC-Lavalin, Johannesburg, SA on the installation of a sulphuric acid plant (the "Project") at its Tsumeb smelter in Namibia, owned and operated by Namibia Custom Smelters (Pty) Ltd. ("NCS"), a wholly-owned subsidiary of DPM.

The proposed construction of an acid plant is the currently preferred option to capture sulphur from emissions at the smelter.

DPM's board of directors has approved proceeding with the Project, subject to final costs estimates and commercial arrangements that provide for acceptable economics and the long-term marketing of the acid produced.

The first phase of the Project, comprising basic engineering, site preparation, final costing and detailed scheduling, has been awarded to Outotec, the global leader in sulphuric acid plant design and delivery. Once complete, NCS anticipates entering into a definitive EPCM contract, including a turnkey contract relating to the construction of the acid plant.

This is expected to occur during the fourth quarter of 2012.

The capital cost estimate for the Project, based on the Outotec tender, is $167 million, which includes a 30% contingency and excludes offsite infrastructure costs, which the Company is working to mitigate through various third parties.

Based on expected annual smelter production capacity of 240,000 - 310,000 tonnes of concentrate, the acid plant will produce in the range of 270,000 - 340,000 tonnes of sulphuric acid.

This Project is expected to be financed from DPM's current cash position and free cash flow generation which, even at significantly weaker commodity prices, is sufficient to satisfy its existing operating and capital requirements.

Commissioning is currently expected to take place during the third quarter of 2014.

This Project is consistent with the directives issued to NCS by the Namibian government in April 2012 aimed at improving off-gas capture and workplace conditions at the smelter.

The sulphuric acid plant will process off-gas from the smelter and the acid produced will be sold into the market through off-take agreements.

NCS has entered into a memorandum of understanding with Protea Chemicals Namibia (Pty) Limited, a subsidiary of Omnia Group (Pty) Limited and a leading industrial chemicals company with significant presence in Sub-Saharan Africa, to assist with the marketing and sale of the acid.

"The construction of an acid plant is the final step in converting our smelter in Namibia to a facility that will operate at international environmental standards", said Jonathan Goodman, President and CEO of DPM.

"We look forward to working with Outotec and utilizing their vast experience in acid plant design and construction."

Dundee Precious Metals Inc. is a well-financed, Canadian based, international gold mining company engaged in the acquisition, exploration, development, mining and processing of precious metals.

The Company's principal operating assets include:

1. the Chelopech operation, which produces a gold, copper and silver concentrate, located east of Sofia, Bulgaria;

2. the Kapan operation, which produces gold, copper, zinc and silver concentrate, located in southern Armenia; and

3. the Tsumeb smelter, a concentrate processing facility located in Namibia.

4. DPM also holds interests in a number of developing gold properties located in Bulgaria, Serbia, and northern Canada, including interests held through its 51.4% owned subsidiary, Avala Resources Ltd., its 47.3% interest in Dunav Resources Ltd. and its 10.7% interest in Sabina Gold & Silver Corp.

FORWARD LOOKING STATEMENTS

This news release may contain certain information that constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices and other factors described above and in the Company's most recent annual information form under the heading "Risk Factors" which has been filed electronically by means of the Canadian Securities Administrators' website located at www.sedar.com . The Company disclaims any obligation to update or revise any forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

Contacts:
        Dundee Precious Metals Inc.
        Jonathan Goodman
        President & Chief Executive Officer
        (416) 365-2408
        jgoodman@dundeeprecious.com
        
        Dundee Precious Metals Inc.
        Lori Beak
        Senior Vice President, Investor & Regulatory
        Affairs and Corporate Secretary
        (416) 365-5165
        lbeak@dundeeprecious.com

Source:
Dundee Precious Metals Reports on Progress of Acid Plant at Smelter in Namibia - MarketWatch

http://www.marketwatch.com/story/dundee-precious-metals-reports-on-progress-of-acid-plant-at-smelter-in-namibia-2012-07-24

Biogen 2nd-quarter profit up on MS drug sales | Reuters

(Reuters) - Biogen Idec Inc (BIIB.O) said on Tuesday its second-quarter earnings topped expectations on higher sales of its drugs to treat multiple sclerosis, and the company increased its profit forecast for the year.

The company's shares rose 3.5 percent in premarket trading.

Higher-than-expected sales of Avonex, its biggest-selling multiple sclerosis drug and Rituxan, its cancer drug, offset lower-than-expected sales of its newer multiple sclerosis drug Tysabri.
The Weston, Massachusetts-based biotechnology company raised its full-year profit forecast to above $6.20 a share from a previous forecast of above $6.15 a share. It left its revenue guidance unchanged for growth in the mid-single digits.

Mark Schoenebaum, an analyst at ISI Group, said the forecast could be conservative.
Net profit rose to $387 million, or $1.61 a share, from $288 million, or $1.18, a year earlier. Last year, the company's earnings were hurt by a charge of 15 cents per share due to arbitration involving its partner Roche Holding AG (ROG.VX).
ts were on average expecting earnings of $1.56 a share, according to Thomson Reuters I/B/E/S.

Biogen 2nd-quarter profit up on MS drug sales | Reuters

http://www.reuters.com/article/2012/07/24/us-biogen-earnings-idUSBRE86N0P420120724

Monday, July 23, 2012

FDA warns about seizures with MS drug Ampyra | Reuters

Having talked about this drug a number of posts back in hopeful terms, it is a important to follow-up with a caution delivered by the FDA. ....

By Toni Clarke

WASHINGTON | Mon Jul 23, 2012 1:09pm EDT

(Reuters) - The U.S. Food and Drug Administration has issued a warning to patients and physicians about the increased risk of seizures in multiple sclerosis patients taking the drug Ampyra.

The drug was developed by Acorda Therapeutics Inc to improve walking ability in patients with multiple sclerosis. Biogen Idec Inc has rights to the drug in Europe where it is sold under the brand name Fampyra.

The FDA said that based on reports, it recently evaluated seizure risk in MS patients taking Ampyra and noted that the majority of seizures happened within days to weeks after starting the recommended dose and occurred in patients with no history of seizures.

Seizures are a known risk with Ampyra, the agency said, and the risk increases with higher blood levels of the drug. Since Ampyra is eliminated from the kidneys, patients with kidney impairment may develop higher blood levels of the drug, thus increasing their seizure risk, the FDA said.

As a result, the agency is updating the prescribing information for physicians, making clear that a patient's kidney function should be checked before starting Ampyra. Patients should be monitored at least once a year while the treatment continues.

In addition, patients who miss a dose should not take extra doses as an extra dose can increase seizure risk, the agency said.

The drug was approved in the United States in January 2010. Biogen received conditional approval for drug in Europe last July. Conditional approval is granted to drugs in which the benefit is seen to outweigh the risk but where additional information is needed to confirm that view.

As part of the conditions of approval, regulators recommended Biogen carry out an additional study to discover more about the drug's benefits and safety over the long term.

Biogen's shares fell 2.7 percent to $138.38 in afternoon trading on Nasdaq. Acorda's shares fell 1.2 percent to $24.73.

(Additional reporting by Anna Yukhananov; Editing by Maureen Bavdek)

Acorda Therapeutics IncACOR.O

$24.78

-0.24-0.96%
Biogen Idec IncBIIB.O

$139.23

-2.98-2.10%

FDA warns about seizures with MS drug Ampyra | Reuters

http://www.reuters.com/article/2012/07/23/us-fda-ampyra-idUSBRE86M0W120120723

Sunday, July 22, 2012

Wealthy hiding $21 trillion in tax havens, report says - World - CBC News

CBC News

Posted: Jul 22, 2012 1:58 PM ET

The world's "super-rich" are hiding between $21 trillion US and $32 trillion in tax havens, according to a new report. (Lee Jin-man/Associated Press)

The "super-rich elite" are hiding more than $21 trillion US in tax havens around the world, an amount roughly equal to the combined GDP of the United States and Japan, according to a new report.

Commissioned by the Tax Justice Network, an independent British organization, the report is said to be the most comprehensive ever done concerning what it calls the “offshore economy.”

Researched and written by James Henry, an expert on tax havens, the report states the hidden money could be as large as $32 trillion, and represents a massive black hole in the world's economy.

The amount of tax income lost "is large enough to make a significant difference to the finances of many countries,” Henry noted.

Hidden money from elites living in developing countries is "enough to make a significant difference to the finances of many countries... that are now struggling to replace lost aid dollars and pay for climate change.

Indeed, once we take these hidden offshore assets and the earnings they produce, 'debtor countries' are in fact revealed to be wealthy," he said.

The Report says:

UBS, Credit Suisse and Goldman Sachs are the three private banks handling the most assets offshore
92,000 people, or 0.001 per cent of the world’s population, hold $21 trillion in hidden assets

Henry, who collected data from the International Monetary Fund (IMF), the World Bank and the Bank of International Settlements, said the figure he came up with is conservative because it doesn’t take into account property like yachts or other physical assets.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network.

Source:
Wealthy hiding $21 trillion in tax havens, report says - World - CBC News

http://www.cbc.ca/news/world/story/2012/07/22/tax-havens.html

Wednesday, July 18, 2012

Infographic: The Worlds Richest Hedge Fund Managers Exposed | The FloorGem Blog

Image Source: Floor Gem Maryland

Source:
Infographic: The Worlds Richest Hedge Fund Managers Exposed | The FloorGem Blog
Link:
http://floorgem.com/blog/infographic-worlds-richest-hedge-fund-managers/

4 reasons the hedge fund industry is dead - Outside the Box - MarketWatch

July 18, 2012, 12:02 a.m. EDT

4 reasons the hedge fund industry is dead

Portfolio Relevance

LEARN MORE

By Conor Sen

ATLANTA (MarketWatch) — The era of multi-billion dollar hedge funds, with their “2 and 20” fee structures, high portfolio, and employee turnover, looking no farther ahead than this year’s bonus, is over.

The Economist came out with a piece last week talking about the struggles of the hedge fund industry in the first half of 2012, which fared no better in 2011.

Read Economist’s “Mastered by the universe.”

There are four structural reasons why the industry as we know it is dead.

No. 1: The incentive structure

Due to a variety of forces — increased competition for assets and talent, the volatility of the past decade, and especially the past four years, and the lack of liquidity and transparency hedge fund investors experienced during the latter half of 2008 — the industry is unable to look out past the current calendar year, and in many cases, even the next two to three months.

Analysts are worried about making one bad call and getting fired. Or dreaming about getting one call right and leaving for greener pastures. Managers are worried about getting redeemed. Impatient hedge fund investors are worried about missing out on the next hot fund, or being stuck with a bad one, and in many cases have lost faith in managers who violated their trust over the past several years.

As a result, the industry judges all financial assets on the basis of their short-term merits. Over the next five to 10 years, it’s likely that U.S. Treasurys will underperform U.S. equities, and high-dividend stocks in the consumer and utility sectors that have recently outperformed and are relatively expensive will underperform many growth and cyclical names. Over the near term? It’s anyone’s guess. Hedge funds can’t afford to take a shot on a company with a great five-year story that could have a hairy next quarter or two.

No. 2: The overhead

In addition to the new due diligence forms required of hedge funds by their investors, the government has piled on forms. For instance, large hedge funds registered with the Secutiries and Exchange Commission are required to fill out Form PF, a 42-page document, on a quarterly basis. Dotting the i’s and crossing the t’s has become much more critical in a post-Lehman, post-Madoff, post-MF Global world. It’s a major headache for firms; it detracts from their core competency, and serves as a tax on the business model of the industry.

No. 3: The business model

Imagine you could invest in one of the following two groups. One has 20 analysts, Bloomberg terminals throughout the office, offices in New York/London/Hong Kong, a fully loaded back office and compliance divisions, major restrictions on communication including absolutely no social media, a “2 and 20” fee structure, and several billion dollars.

The other has three analysts, all of whom are highly versed in tools like FRED with some programming and data expertise, fully plugged into Twitter and other forms of financial social media, and is grubstaked with $5 million of friends and family money that isn’t sweating quarterly returns, with a different fee structure/partnership that gets past the year-to-year performance chasing.

Is there any reason in 2012 why the former group will outperform the latter?

Read Minyanville’s “Why Investors Confidence Has Tumbled.”

Technology has leveled the playing field, maybe not in terms of asset-raising, but in terms of performance, absolutely.

No. 4: No opportunity for unproven managers to get funded

David Einhorn started his hedge fund at age 28 with $900,000. Paul Tudor Jones started his fund in his 20s. So did Stan Druckenmiller. There used to be a way for unproven managers from non-traditional backgrounds to get “a chip and a chair,” as they say in poker.

Today, with the risk aversion and overhead required by big money, there isn’t. And the well of talent from big banks that used to be the hedge fund minor leagues has dried up as they’ve cut prop trading and junior employees. Finance, like tech, is incredibly dynamic, with new players looking to eat incumbents’ lunches all the time.

If the next Facebook FB -0.55% of the investment management world can’t get funded, all that means is we’re left with a bunch of Yahoos YHOO -0.29% and AOLs AOL +0.29% flailing away, chewing through management fees.

The problem the investment management industry faces is that the big assets want to invest in firms that already have lots of assets, a long track record, and all the compliance and internal control whistles expected of large institutions. Read Minyanville’s “Investing Like an Insider: What Three Legendary Stock Pickers Are Buying Now.”

But that’s not where the alpha’s going to come from in the current hedge fund model. The superstars of the next 10 years, in addition to excelling at investment management, will have to come up with an entirely new firm structure that can get past the short-term-ism of the present.

Conor Sen is a Minyanville contributor.

Source:
4 reasons the hedge fund industry is dead - Outside the Box - MarketWatch

http://www.marketwatch.com/story/4-reasons-the-hedge-fund-industry-is-dead-2012-07-18?siteid=rss&rss=1

Roubini sticks to 2013 'perfect storm' prediction

Roubini sticks to 2013 'perfect storm' prediction

Top News
Roubini sticks to 2013 'perfect storm' prediction
Tue, Jul 17 18:16 PM EDT

By Edward Krudy

NEW YORK, July 17 (Reuters) - Economist Nouriel Roubini is standing by his prediction for a global "perfect storm" next year as economies the world over slow down or shudder to a complete halt, geopolitical risk grows and the euro zone's debt crisis accelerates.

Roubini, the New York University professor dubbed "Dr Doom" for predicting the 2008 financial crisis, highlighted five factors that could derail the global economy.

Those factors are a worsening of the debt crisis in Europe; tax increases and spending cuts in United Sates that may push the world's biggest economy into recession; a hard landing for China's economy; further slowing in emerging markets; and a military confrontation with Iran.

"Next year is the time when the can becomes too big to kick it down (the road)...then we have a global perfect storm," Roubini said in a television interview with Reuters.

Roubini's gloomy 2013 outlook isn't new, but it's getting more purchase as slowing economies and Europe's debt crisis drive turbulence in financial markets.

After what he expects will be a flat year for U.S. stocks in 2012, Roubini said the equity market could face a sharp correction next year, with little the Federal Reserve can do to stop it.

"There might be a weak rally because people are being cheered by more quantitative easing by (Chairman Ben) Bernanke and the Fed, but if the economy is weakening, that is going to put downward pressure on earnings growth," said Roubini.

Roubini said the Federal Reserve may be pushed toward unconventional policy options as the stimulative effect of successive waves of quantitative easing - effectively printing money to buy government bonds - diminishes over time.

Unconventional policy could include "targeting the 10-year Treasury at 1 percent, doing credit easing rather than quantitative easing, targeting nominal GDP, price-level targeting and lots of stuff that is more esoteric," said Roubini. "Eventually if everything goes wrong, they can even buy equities."

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Tuesday, July 17, 2012

U.S. Nearing Recession

Unemployment on the rise, retail sales falling, lower investment and corporate profits all suggest that weak growth may become a recession, if the Federal Reserve is unable to provide sufficient stimulus through monetary easing. ... "Fed easing either in the form of another round of quantitative easing or other non-conventional measures..."

Bill Gross Says U.S. Nearing Recession

By Shamim Adam and Masaki Kondo - Jul 17, 2012

Bill Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co., said the U.S. is approaching a recession. BlackRock Inc. (BLK) expects the Federal Reserve to take more steps to support growth.

Yesterday an unexpected drop in U.S. retail sales rekindled speculation Fed Chairman Ben S. Bernanke will use testimony today to hint at further monetary easing. That followed data earlier this month showing American employers added fewer-than-estimated workers to payrolls.

Goldman Sachs Group Inc. (GS) and Deutsche Bank AG cut forecasts for U.S. growth.

Approaching recession when measured by employment, retail sales, investment, and corporate profits,” Gross, who manages the $263 billion Pimco’s Total Return Fund (PTTRX), wrote on Twitter yesterday.

Bernanke will present his semi-annual monetary policy report to lawmakers in the Senate and House of Representatives today and tomorrow. He said on June 20 that the central bank will be prepared to take more steps, including additional asset purchases, if the labor market doesn’t improve continuously.

Everything ‘Weaker’

Retail sales fell 0.5 percent in June, figures from the Commerce Department showed yesterday, exceeding the most pessimistic forecast in a Bloomberg News survey.

U.S. employment increased 80,000 last month, according to a Labor Department report, trailing the 100,000 increase projected by economists.

“Pretty much everything is way weaker,” Ewen Cameron Watt, chief investment strategist at the Black Rock Investment Institute, told reporters today in a teleconference from London. “There will be some more action from the Federal Reserve, but not probably dramatic action in a sense of massive stimulus.”

The Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing from 2008 to 2011, seeking to cap borrowing costs and bolster the economy.

Last month, it expanded the program known as Operation Twist that replaces short-term Treasuries in its portfolio with longer-term debt.

With U.S. debt yielding nears record lows, Treasuries are “already expensive,” Cameron-Watt said.

The securities have returned 5.2 percent this year on an annualized basis, which would be the smallest yearly gain since 2009, according to a Bank of America Merrill Lynch index.

Goldman Forecast

A cooling job market is sapping household spending that makes up 70 percent of the economy, curbing sales at retailers such as Target Corp. (TGT) and Macy’s Inc.

Fed Bank of Kansas City President Esther George said yesterday the U.S. economy probably won’t grow much faster than 2 percent in 2012.

Forecasts Being Cut by several Economists:

Goldman Sachs analysts led by Jan Hatzius cut their estimate for second-quarter economic growth to 1.1 percent from 1.3 percent, while Deutsche Bank chief U.S economist, Joseph LaVorgna, reduced his forecast to 1 percent from 1.4 percent.

“The sharp downward momentum in the economy” increases the probability of further Fed easing either in the form of another round of quantitative easing or other non-conventional measures, LaVorgna wrote in a note yesterday.

“We need a couple of more weak employment reports, with figures near zero and with the unemployment rate increasing, for the Fed to undertake easing action.”

Gross Says U.S. Nearing Recession as BlackRock Sees Fed Step - Bloomberg

http://www.bloomberg.com/news/2012-07-17/gross-says-u-s-nearing-recession-as-goldman-sachs-cuts-forecast.html

Monday, July 16, 2012

INDIA and the Bottom of the Pyramid

Marketing to the "bottom of the pyramid" is a fascinating, potentially hugely profitable idea that involves the challenge of carving off the "fat" on technologies and creating affordable products like the automobile called the Tata Nano, low priced shampoo sachets, a much-needed, cheap water filter or medical equipment to save millions of lives. You direct your innovation and marketing efforts to the overlooked billions of people living on under $2.5o per day who have vast unmet needs ....

ECONOMY

India’s frugal revolution

Shashi Tharoor

New Delhi — The Globe and Mail

Published Monday, Jul. 16 2012, 2:00 AM EDT

India’s sliding economy has inspired gloom and doom far and wide, but increasingly bearish sentiment is misplaced.

India still offers hope, but, to understand why, you have to leave macroeconomic indicators aside and go microeconomic.

Indian companies have long recognized the opportunities in meeting previously overlooked demand at the “bottom of the pyramid.”

Shampoo sachets originated in India more than two decades ago, creating a market for a product that the poor had never before been able to afford.

Indians without the space or money to buy a whole bottle of shampoo for 100 rupees could spend five for a sachet that they’d use once or twice.

But India’s leadership in “frugal innovation” goes beyond downsizing:

it involves starting with the needs of poor consumers – itself a novel term (who knew the poor could be consumers?)

– and working backward.

Instead  of complicating or refining their products, Indian innovators strip  them down to their bare essentials, making them 

affordable, accessible,  durable and effective.

Indians are natural leaders in frugal innovation, imbued as they are with the jugaad system of developing makeshift but workable solutions from limited resources. Jugaad essentially conveys a way of life, a worldview that embodies the quality of making do with what you have to meet your needs.

But jugaad is not about pirating products or making cheap imitations of global brands.

It is about innovation; finding inexpensive solutions, often improvised on the fly, within the constraints of a resource-starved developing country full of poor people.

An Indian villager constructs a makeshift vehicle to transport his livestock and goods by rigging a wooden cart with an irrigation hand pump that serves as an engine. That’s jugaad.

Common machines and household objects are reincarnated in ways that their original manufacturers never intended.

Everything is reusable or reimaginable. If you cannot afford your cellphone bills, you invent the concept of the “missed call” – a brief ring that is not answered but that signals your need to speak to the recipient.

Indian ingenuity has produced a startling number of world-beating innovations, none more impressive than the car - Tata Nano, which, at $2,000, costs roughly the same as a high-end DVD player in a Western luxury car.

Of course, there’s no DVD player in the Nano (and no radio, either, in the basic model) but its innovations (which have garnered 34 patents) are not merely the result of doing away with frills (including power brakes, air conditioning, and side-view mirrors).

Reducing the use of steel by inventing an aluminum engine, increasing space by moving the wheels to the edge of the chassis and relying on a modular design that enables the car to be assembled from kits proved conclusively that you could do more with less.

Then there’s the GE MAC 400, a hand-held electrocardiogram (ECG) device that costs $800 (the cheapest alternative costs more than $2,000), and the Tata Swachh, a $24 water purifier (10 times cheaper than its nearest competitor).

The GE MAC 400 uses just four buttons, rather than the usual dozen, and a tiny portable printer, making it small enough to fit into a satchel and even run on batteries; it has reduced the cost of an ECG to just $1 per patient.

The Swachh uses rice husks (one of India’s most common waste products) to purify water.

Given that some five million Indians die of cardiovascular diseases every year, more than a quarter of them under 65, and that about two million die every year from drinking contaminated water, these innovations’ value is apparent.

Many other examples of frugal innovation are already in the market, including:

- a low-cost fuel-efficient mini-truck,

- an inexpensive mini-tractor being sold profitably in the U.S.,

- a battery-powered refrigerator,

- a $100 electricity inverter, and

- a $12 solar lamp.

Moreover, medical innovations are widespread.

An Indian company has invented a cheaper Hepatitis B vaccine, bringing down the price from $15 per injection to about 10 cents.

Insulin’s price has fallen by 40 per cent, thanks to India’s leading biotech firm.

A Bangalore company’s diagnostic tool to test for tuberculosis and infectious diseases -costs $200, compared to $10,000 for comparable equipment in the West.

Even the financial  sector has seen innovation: 

Just three years ago, there were only 15 million bank accounts in a country of 1.2 billion people.

Indians concluded that if people won’t come to the banks, the banks should go to the people.

The result has been the creation of brigades of travelling tellers with hand-held devices, who have converted the living rooms of village homes into makeshift branches, taking deposits as low as a dollar.

More than 50 million new bank accounts have been established, bringing India’s rural poor into the modern financial system.

Frugal innovation pervades the Indian economy.

It is one of the reasons why there is more dynamism in the Indian economy than those who look only at the macroeconomic data believe.

Sometimes it is important to stop looking at the forest and focus on the trees.

Shashi Tharoor is an an author and member of India’s Parliament.

SOURCE:

http://www.theglobeandmail.com/report-on-business/small-business/starting-out/lessons-i-learned-from-three-startup-failures/article4377100/

India’s frugal revolution - The Globe and Mail

C.K. Prahalad Describes the Growth of Microfinance, UCLA

by UCLA
on Sep 26, 2008

Best-selling author shares his vision of world-class products for the world's poorest customers.

Visit UCLA Anderson School of Management

http://www.anderson.ucla.edu/

Click here for more Distinguished Speaker Videos from UCLA Anderson School
of Management

http://www.anderson.ucla.edu/x17389.xml

Category: Education

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Sunday, July 15, 2012

BACK TO 1965

BANKS BUYING GOLD!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!THIS IS HARD TO BELIEVE????????

Central Banks Buying Gold Again -sell at the bottom, Buy at the Top!!!???

WHY WERE THEY SUCH BIG SELLERS WHEN GOLD WAS AT BARGAIN BASEMENT PRICES???

Mean Street
Just Like 1965, These Are Golden Years

David Weidner talks with Simon Constable about a seminal moment in global economics as central banks hoard gold. Also, did the judges in the Pacquiao-Bradley boxing match get the decision right? Photo: Bloomberg.

6/11/2012 2:00:00 PM17:46

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Video - Just Like 1965, These Are Golden Years; Did Pacquiao-Bradley Judges Get It Right? - WSJ.com

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Friday, July 13, 2012

5 trading losses that cost billions before rthe recent $5.8 billion loss by JPMorgan

Lest we forget that JP Morgan CEO Jamie Diamond is just one of the big losers in the derivative game.....

5 trading losses that cost billions

CBC News
Posted: Jul 13, 2012 12:13 PM ET

Ex-trader Jerome Kerviel is appealing his sentence in connection with his 2010 conviction for forgery, breach of trust and unauthorized computer use for covering up bets on the futures market worth nearly $70 billion at French bank Société Générale.
(Jacques Brinon/Associated Press)

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JPMorgan trading loss more than doubles to $5.8B US

JPMorgan Chase announced Friday that a bad trade executed in May and originally estimated to have cost $2 billion US has actually cost the bank nearly three times that since the beginning of the year.

The $5.8-billion loss by the biggest bank in the United States is only the latest example of a financial institution or hedge fund taking a huge hit after a trading blunder.

In other instances of trades gone wrong, those blamed for the losses have faced court action and been convicted on charges such as fraud or forgery.

Arguably the most famous example is the case of Nick Leeson, a derivatives trader for Britain's Barings Bank in the early 1990s, who concealed a series of bad trades on Asian stock markets in a so-called "error account."

The losses, which eventually reached more than $1 billion, brought down the United Kingdom's oldest investment bank. Leeson spent several years in a Singapore prison and his story inspired the 1999 Hollywood film Rogue Trader.

While Leeson is legendary, his losses are eclipsed by the following five examples, which cost billions.

Morgan Stanley
In the United States, according to Time, one trader "came to embody the financial misdeeds that led to the massive economic crisis of 2008."

His name is Howard (Howie) Hubler, and his mortgage-market actions were blamed for a $9-billion loss at Morgan Stanley in 2007. He left the company that year.

"On his way out the door," the Wall Street Journal reported in 2010, "Mr. Hubler checked to make sure he would be allowed to keep all the shares previously awarded to him, a person familiar with the matter says. The company felt it had no choice because Mr. Hubler hadn't broken any rules or deceived higher-ups about his strategy."

Société Générale
In the biggest trading scandal to hit France, ex-trader Jerome Kerviel was found guilty in 2010 of forgery, breach of trust and unauthorized computer use for covering up bets on the futures market worth nearly $70 billion at bank Société Générale.

Kerviel was sentenced to three years in prison and told to pay €4.9 billion in damages, the loss — about $7 billion at the time — the bank said it took to unwind the deals. Société Générale is still seeking the damages, but admits Kerviel could never reimburse that sum.

In June 2012, Kerviel launched an appeal of his conviction. He says the bank was aware of his exorbitant bets and that he was the victim of a financial system that runs on greed and profits. The prosecution says he is lying.

Amaranth Advisors LLC

U.S. hedge fund Amaranth Advisors LLC managed to lose $6 billion US of its $9.5-billion portfolio in just a couple of weeks in September 2006 by betting the wrong way on the direction of volatile natural gas prices.

The managers thought they'd go up. Instead, they slid to multi-year lows. Amaranth, which was based in Greenwich, Conn., folded in 2006.

Long-Term Capital Management LP

In 1998, hedge fund Long-Term Capital Management LP lost $4.6 billion by taking leverage to unheard-of dimensions — at one point, it controlled $125 billion US of assets with only $4.8 billion US in equity capital.

When Russia devalued the ruble in August 1998 and a worldwide "flight to quality" ensued, LTCM's portfolio took a hit it could not recover from. It barely escaped having to default.

Sumitomo Corp.

In 1996, Sumitomo Corp., a Japanese trading house, said it lost at least $1.8 billion, and blamed the situation on actions by its former chief copper trader, Yasuo Hamanaka. In the end, the losses totalled $2.6 billion.

According to Time, "Hamanaka, known as 'Mr. Five Per Cent' for his control over a vast portion of the world's copper, had been hiding his losses and forging his bosses’ signatures on unauthorized trades for a whole decade of secret swindling."

Two years after the loss was reported, Hamanaka was sentenced to eight years in prison on forgery and fraud charges.

With files from The Associated Press and CBC News

Link: http://www.cbc.ca/news/business/story/2012/07/13/f-banking-blunders-trading-losses.html

5 trading losses that cost billions - Business - CBC News

Mining company cries foul over postponement of N.W.T. hearings - Business - CBC News

MORE TRIALS AND TRIBULATIONS IS THE RISKY JUNIOR MINING AREA of the market..... Beginning with following Aura Minerals, everyday shows another downside risk in mining and junior mining companies... time is money... What happens to Net Present Value calculations and future borrowing or equity financing?.

Fortune Minerals says delay could add another year to the project

CBC News

Posted: Jul 13, 2012 2:08 PM ET

A mining company is concerned the postponement of public hearings on its NICO project could delay construction plans and add another year to a project that's already taken three-and-a-half years to review.

Fortune Minerals Ltd. wants to build a cobalt-gold and bismuth mine at its Nico property, located about 90 kilometres north of Behchoko, N.W.T.

The site of the proposed NICO mine by Fortune Minerals, near Whati, N.W.T. (CBC)

A hearing was scheduled to be held in Behchoko at the Elizabeth Mackenzie but the hearings are now tentatively postponed until mid-October.

Fortune said the delay threatens plans to start hauling equipment and material to the mine site this winter.

Tom Hoefer, president of the N.W.T. and Nunavut Chamber of Mines, says the postponement sends a bad message to investors.

"We need to be signalling that this is a better place to do business than it's been in the last couple of years. These kinds of decisions don't add that confidence," said Tom Hoefer, the chamber’s president.

The review board will finalize a new date for the hearings at a meeting next week.

LINK: http://www.cbc.ca/news/business/story/2012/07/13/north-fortune-minerals-delays.html

Mining company cries foul over postponement of N.W.T. hearings - Business - CBC News

JPMorgan trading loss nearly triples to $5.8B US

JPMorgan Chase, the largest bank in the United States, said today that a trading blunder had cost the bank $5.8 billion since the beginning of the year — nearly triple its original estimate.
The company also raised the prospect that traders had attempted to conceal the trading loss.
"This has shaken our company to the core," CEO Jamie Dimon told analysts.
The bank said all managers in the London office responsible for the trade had been dismissed without severance pay and that it planned to revoke two years' worth of pay from each of those executives.
JP Morgan said the trade had cost $4.4 billion from April to June, and cost an additional $1.4 billion in the first three months of the year.
On Friday, Dimon said he believed the loss was mostly contained. In the worst case, if financial markets deteriorate severely, the bank could lose an additional $1.7 billion, he said. That would bring the total loss to $7.5 billion.
JPMorgan's original estimate of the trading loss, disclosed in May, was $2 billion.
Investors appeared relieved that the mess was mostly behind the bank, sending JPMorgan stock up $2.03, or six per cent, to close at $36.07.

Internal investigation raises questions

The bank said an internal investigation, including emails and voice messages, had called into question the values that traders placed on certain bets, and that the traders may have been seeking to mask losses.
Dimon told Congress last month that the trade was meant to hedge risk at the company and protect it in case "things got really bad" in the global economy. Instead, the trade has backfired and damaged the bank's reputation.
The bank said that it was reducing its net income for the first quarter by $459 million because it had discovered information that "raises questions about the integrity" of values placed on certain trades.
"We don't take it lightly," Dimon told Wall Street analysts on a conference call. He added: "We're not making light of this error, but we do think it's an isolated event."
Dimon said the bank had closed the division of the bank responsible for the bad trade and moved the remainder of the trading position under its investment banking division.
Overall, JPMorgan said it earned $5 billion, or $1.21 per share, for the second quarter.
The bank also suggested a $15 billion stock buyback program, which was suspended when the trading scandal broke, could be restarted.

Reputation eroded

Just three months ago, JPMorgan was viewed as the top American bank, guided by Dimon's steady hand. Since the disclosure of the trading loss, however, that reputation has been eroded.
Dimon, who originally dismissed concerns about the bank's trading as a "tempest in a teapot," appeared before Congress twice to apologize and explain himself, and several government agencies have launched investigations.
JPMorgan has lost about 13 per cent of its in market value since the loss came to light.
The bank could take back pay from executives in charge of the division where the losses occurred.
That procedure is known as a "clawback." It would be the first time JPMorgan exercised such a procedure.
The most likely candidate would be Ina Drew, JPMorgan's chief investment officer, who oversaw the division responsible for the loss and left the bank days after the disclosure. In 2011, her pay package totalled $15 million US.
The Wall Street Journal reported Friday that three other employees of the bank tied to the trade, including one who was known as the "London whale," had left the bank.
Under close questioning from lawmakers in June about his own role in setting up the investment division responsible for the mess, Dimon declared: "We made a mistake. I'm absolutely responsible. The buck stops with me."
The trading loss has raised concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis erupted in the fall of 2008.
With files from CBC News

Sorce:
http://www.cbc.ca/news/business/story/2012/07/13/jpmorgan-trading-loss.html

JPMorgan trading loss nearly triples to $5.8B US - Business - CBC News

Free cash flow: It's better than profit

My familiarity with 'free cash flow goes back a little further to a book by David Drenan...

Number Cruncher

Free cash flow: It's better than profit

ROBERT McWHIRTER

Special to The Globe & Mail

Published Wednesday, Jul. 11 2012, 6:06 PM EDT
Last updated Thursday, Jul. 12 2012, 6:47 AM EDT

What are we looking for?

Rising free cash flow, low enterprise value to free cash flow and good incremental operating cash flow for each dollar of increased sales.

Free cash flow (or FCF) is cash available for investors after the company has funded its cash costs, its receivables and inventory and its capital expenditures.

In his book, Free Cash Flow: Seeing Through the Accounting Fog Machine, author George C. Christy, CFA, makes a compelling case for the importance and impact of free cash flow on a company’s true value.
Mr. Christy quotes

Alex Pollock of the American Enterprise Institute (AEI):

“Every calculation of net profit reflects choices from among competing theories of accounting. … They are matters of opinion … not matters of fact. … Profit is an opinion, cash is a fact.”

In addition to his work at AEI, Mr. Pollock is a seasoned banker with more than over 35 years in the industry, and is the a former president and CEO of the Federal Home Loan Bank of Chicago.

Growth investors should pay attention as Mr. Christy notes that:

“All too often companies produce terrific revenue and EPS growth rates while sacrificing margins and/or using excessive amounts of capital.”

He adds:

“A company that chronically provides revenue increases and negative cash flow does not include investor return among its priorities.”

More about today’s screen

In creating today’s offering, I filtered the Morningstar CPMS database of Canadian companies for large firms using Mr. Christy’s criteria.

In addition to companies with strong free cash flow growth and good incremental operating cash flow for each dollar of increased sales, I looked for firms with:

A market cap greater than $295-million;

No negative earnings surprises and positive estimate revisions.

This screen follows Mr. Christy’s insight.

“Some of the best return candidates can be found in the bottom of free cash flow yields … companies that may have recently transitioned from negative to positive FCF and may have good prospects for continued growth.”

What did we find?

Back testing – based on up to 25 stocks from September, 2004 to June, 2012, using the Morningstar CPMS database, showed Mr. Christy’s criteria significantly outperformed the S&P/TSX composite index (14.1 per cent for the portfolio versus 7.5 per cent for the S&P/TSX).

The median trailing P/E and EV/FCF for the portfolio is similar to the typical Canadian stock.

The median increase in year-over-year free cash flow is 90 per cent versus negative 4 per cent for the S&P/TSX. The median trailing free cash flow yield is 5 per cent versus negative 2 per cent.

The median year-over-year sales growth of 17 per cent versus 6 per cent is almost three times greater than the S&P/TSX.

The median increase in incremental cash flow for each dollar of additional sales is also three times greater.

This combination appears to be a significant contributor to the out performance of the portfolio.

Robert McWhirter is president of Selective Asset Management Inc.

More Discussion on DR-T

Companies with strong free cash flow

Company	Symbol	Recent price $	Market cap. ($ mil.)
Medical Facilities	DR-T	13.40	379
Cdn Helicopters Grp.	CHL.A-T	29.82	392
Pason Systems Inc.	PSI-T	15.07	1,235
Methanex Corp.	MX-T	29.11	2,731
Agnico-Eagle Mines Ltd	AEM-T	41.26	7,063
Liquor Stores N.A. Ltd.	LIQ-T	18.58	424
Manitoba Telecom Srvcs.	MBT-T	33.34	2,216
Stella-Jones Inc.	SJ-T	55.00	879
Corby Distilleries	CDL.A-T	16.31	464
Dollarama Inc.	DOL-T	61.65	4,550

Download table as a CSV file

Morningstar Canada

View full table

Security	Price	Change
DR-T Medical Facilities Corp.	13.74	0.01 0.073%	Add to watchlist
CHL.A-T Canadian Helicopters Group	29.84	0.09 0.303%	Add to watchlist
PSI-T Pason Systems	14.99	0.09 0.604%	Add to watchlist
MX-T Methanex Corp.	28.64	0.62 2.213%	Add to watchlist
AEM-T Agnico-Eagle Mines	38.21	0.39 1.031%	Add to watchlist

Companies with strong free cash flow

Company	Symbol	Recent price $	Market cap. ($ mil.)


Intertape Polymer Grp.	ITP-T	7.99	471
Mullen Group Ltd.	MTL-T	21.74	1,763
Agrium Inc.	AGU-T	92.88	14,677
Atrium Innovations	ATB-T	11.20	361
Cdn. National Railway	CNR-T	85.86	37,467

Morningstar Canada

Company	Symbol	Recent price $	Market cap. ($ mil.)	EV to trailing FCF	EV to trailing FCF (grade)	Trailing P/E	Trailing FCF yield %	Yr/yr sales growth %	Each $ rise in op. CF per $ rise in sales	Yr./yr. FCF growth %
Medical Facilities	DR-T	13.40	379	10	B+	28	13	18	3.87	490
Cdn Helicopters Grp.	CHL.A-T	29.82	392	9	B+	7	12	33	0.69	1,246
Pason Systems Inc.	PSI-T	15.07	1,235	24	C-	12	4	32	0.64	213
Methanex Corp.	MX-T	29.11	2,731	12	B-	15	10	10	0.43	144
Agnico-Eagle Mines Ltd	AEM-T	41.26	7,063	43	D+	19	3	16	0.50	56
Liquor Stores N.A. Ltd.	LIQ-T	18.58	424	68	E+	19	2	9	n/c	71
Manitoba Telecom Srvcs.	MBT-T	33.34	2,216	89	E+	13	2	-2	n/c	152
Stella-Jones Inc.	SJ-T	55.00	879	17	C+	14	7	22	0.23	55
Corby Distilleries	CDL.A-T	16.31	464	23	C-	16	3	-10	n/c	-20
Dollarama Inc.	DOL-T	61.65	4,550	30	C-	25	3	18	0.36	76
Intertape Polymer Grp.	ITP-T	7.99	471	14	C+	21	10	5	1.51	41
Mullen Group Ltd.	MTL-T	21.74	1,763	23	C-	12	5	23	0.20	104
Agrium Inc.	AGU-T	92.88	14,677	12	B-	10	9	25	0.14	57
Atrium Innovations	ATB-T	11.20	361	9	B+	7	20	6	0.56	10
Cdn. National Railway	CNR-T	85.86	37,467	30	C-	17	4	16	-0.19	47

LINK: http://www.theglobeandmail.com/globe-investor/investment-ideas/number-cruncher/free-cash-flow-its-better-than-profit/article4408732/

Free cash flow: It's better than profit - The Globe and Mail

Greed and Capitalism

Wednesday, July 25, 2012

Monitoring the Global Economy

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Tuesday, July 24, 2012

MINERS

Monday, July 23, 2012

Sunday, July 22, 2012

Posted: Jul 22, 2012 1:58 PM ET

Wednesday, July 18, 2012

4 reasons the hedge fund industry is dead

No. 1: The incentive structure

No. 2: The overhead

No. 3: The business model

No. 4: No opportunity for unproven managers to get funded

Tuesday, July 17, 2012

Everything ‘Weaker’

Goldman Forecast

Monday, July 16, 2012

India’s frugal revolution

Category: Education

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Sunday, July 15, 2012

Central Banks Buying Gold Again -sell at the bottom, Buy at the Top!!!???

Friday, July 13, 2012

Fortune Minerals says delay could add another year to the project

CBC News Posted: Jul 13, 2012 2:08 PM ET A mining company is concerned the postponement of public hearings on its NICO project could delay construction plans and add another year to a project that's already taken three-and-a-half years to review.

Internal investigation raises questions

Reputation eroded

Companies with strong free cash flow

Companies with strong free cash flow

Companies with strong free cash flow

CBC News

Posted: Jul 13, 2012 2:08 PM ET

A mining company is concerned the postponement of public hearings on its NICO project could delay construction plans and add another year to a project that's already taken three-and-a-half years to review.