http://www.vibescaster.com Your Source for Social News and Networking Mon, 20 May 2013 20:00:15 CEST en http://www.vibescaster.com//etf-insider-asia-pacific-country-fund-looks-ripe-for-rebound-gold-offers-a-hedge/

Below we outline two new actionable idea that stands to benefit from a potential rebound in overseas markets:
Actionable ETF Ideas: 

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Disclosure: No positions at time of writing.
 
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Please follow Money Game on Twitter and Facebook.Join the conversation about this story » ]]> Mon, 20 May 2013 20:00:15 CEST Teddy 27 http://www.vibescaster.com//etf-insider-asia-pacific-country-fund-looks-ripe-for-rebound-gold-offers-a-hedge/ http://www.vibescaster.com//its-the-end-of-the-radio-as-we-know-it/
]]> Mon, 20 May 2013 20:00:13 CEST Teddy 15 http://www.vibescaster.com//its-the-end-of-the-radio-as-we-know-it/ http://www.vibescaster.com//video-fight-on-to-beat-ash-dieback-fungus/ Mon, 20 May 2013 20:00:08 CEST Ritchie_Coote 19 http://www.vibescaster.com//video-fight-on-to-beat-ash-dieback-fungus/ http://www.vibescaster.com//video-making-theatre-more-autism-friendly/ Mon, 20 May 2013 20:00:07 CEST malmsteen_83 19 http://www.vibescaster.com//video-making-theatre-more-autism-friendly/ http://www.vibescaster.com//conservatives-reject-feldman-probe/ Mon, 20 May 2013 20:00:06 CEST Bongo_Levi 28 http://www.vibescaster.com//conservatives-reject-feldman-probe/ http://www.vibescaster.com//expats-see-business-boom-in-mid-east/ Mon, 20 May 2013 20:00:04 CEST Neville_Longbottom 20 http://www.vibescaster.com//expats-see-business-boom-in-mid-east/ http://www.vibescaster.com//5-stocks-on-the-move-after-broker-upgrades/   
Who cares what brokers say?
A glance over the decades of research into the impact that broker research can have on stock prices reveals that investors need to tread carefully, particularly if you are thinking of trading on ‘buy’ and ‘sell’ recommendations. Despite the way you see broker recommendations bandied around by bulls on bulletin boards, the research shows that the price impact of new ‘buys’ and ‘sells’ is sudden and short-lived – and because of the bias inherent in much broker research, sometimes analyst buy recommendations are best used as a contrarian indicator!
However, a strategy based on trading on changes in broker estimates, rather than recommendations, is supported by much more promising research. This is likely to do with freshness. Barber et al found that nearly 50% of all recommendations are left unchanged when they are revisited, approximately 300 days after they were first made. Earnings forecasts, in contrast, are generally more responsive to short-term news events (being revised on a quarterly or even monthly basis). 
Among the most compelling research that found in favour of earning upgrades was a 1996 study by Phillip McKnight and Steven Todd. They assessed the revision anomaly across Europe and found that stocks with the greatest number of upward revisions in earnings, net of downward revisions, achieved significantly higher returns than otherwise similar stocks. They tracked a portfolio of shares in the highest 20% of net upward revisions and found that it outperformed the bottom 20% of upward revisions by more than 16% annually.
McKnight and Todd concluded that an EPS revisions strategy worked so effectively because ‘bad news travels quickly, but good news travels slowly’. In other words, investors are quick to respond to downgrades, which means the market is acting efficiently at pricing-in bad news. But with positive revisions, investors are more likely to take a wait-and-see approach. They blamed this on investors being all too aware that analysts can be susceptible to bias and being over-optimistic. As a result, the impact of earnings upgrades on share prices – and the underlying information that is driving those upgrades - takes time to be fully priced in.
Stocks on the move
As you can see from the Rules below, our Earnings Upgrade Momentum screen mainly focuses in on stocks that have seen over the past month the greatest percentage earnings-per-share upgrades for the year after next (remember you can fork any of our screens to add your own interpretation).

Among the top qualifying stocks currently on the screen is Carphone Warehouse (LON:CPW), the mobile phone retailer. It recently moved to take control of its retail operations across Europe by buying-out US joint venture partner Best Buy in a deal it said would be earnings enhancing. Combined with a robust fourth quarter trading update, the company’s shares were propelled by more than 50p to over 240p.
On each of our stock reports, we show the recent change in consensus for the next year – as you can see from this chart, brokers have dramatically upgraded their 2013 EPS forecasts of late, up by 34.8% over the past month. It will be interesting to see whether this has now been priced in or whether Carphone Warehouse shares can keep up their price momentum in the coming months.

Shares in betting group Betfair (LON:BET) leapt in April on news that it had become a $1.5 billion target of private equity company CVC. While buy-out talks were terminated last week, Betfair’s new management team have been keen to stress that their efforts to turnaround the company’s fortunes are beginning to bear fruit. It recently said it was on course to beat full year earnings guidance and that it was enjoying ‘strong strategic momentum’. Brokers have upgraded their two-year EPS forecasts by 29.1% over the past month, signalling optimism that investors might be on to a winner.
Commercial vehicle hire company Northgate (LON:NTG) has seen its share price double to 334p since last June but hire rates in its UK and Spanish markets have dipped recently, causing a near-term reduction in forecasts. However, Northgate seems to be a bet on improving economic conditions in those markets, with two-year consensus forecasts upgraded by 17.7% over the past month. We’ll hear more from Northgate when it reports its full year results at the end of June, but recent statements indicate that it is confident of growing its business in the UK and squeezing better returns from investments in expansion.
Brokers have been gradually downgrading their EPS forecasts for hedge fund manager Man (LON:EMG) over the past 12 months but there are signs that sentiment might be changing. Since taking the reigns as CEO in February, Emmanuel Roman has been trying to stem redemptions from the group’s funds, albeit unsuccessfully. However, over the past month there has been an 11% upgrade in consensus EPS forecasts for the next two years, helped by news that Man intends to redeem much of its debt and may begin buying back its own shares. That has breathed life into the share price, which has risen from 105p to 129p over the past four weeks.
One final company that may be worth mentioning from the Earnings Upgrade Momentum screen right now is ARM Holdings (LON:ARM), which makes chips for iPhones among other things. ARM has been a remarkable story stock over the past three years, in which time it has added £10 to its share price (currently around 1093p). While recent headlines have begun to raise doubts about its ability to continue growing, it’s notable that 20 of its brokers upgraded their two-year earnings forecasts for the stock during the past month, representing a consensus increase of 5.26%. Over the same period, the share price increased in value by 221p, currently leaving it within a whisker of its 52 week high. Still, by many valuation metrics, it now looks super expensive so, again, it will be fascinating to see whether the stock can maintain its momentum. 
Weight of momentum
Last week, I wrote about how companies surprising versus consensus expectations were enjoying some strong share price performances. Joining the dots between these kinds of earnings ‘surprises’ and positive price momentum is grounded in a whole host of research. It turns out that surprises sometimes cause a price lag that can take months for the market to correct and as momentum takes hold, investors can ride the wave. In many ways, earnings surprises and earnings upgrades are in the same investing league. Both events have been linked to several months of positive price momentum (or negative momentum in the case of downgrades and earnings disappointments) as the market slowly digests their implications. 
Given the performance of the Earnings Upgrade Momentum screen over the past year, it seems that taking note of broker upgrades and the price momentum they can cause, could be a profitable strategy. As always, there is a need for caution, not least because any strategy based on following analysts brings with it questions about the credibility of the underlying analysis. Just like ‘buy’ and ‘sell’ recommendations, earnings revisions are susceptible to bias and the behavioural instincts that cause analysts to herd together. Still, the evidence of this screen so far suggest that there may be an interesting mispricing effect here for investors.
To use our screening tools amp; stock analysis, why not take a free two week trial. StockopediaRead more posts on Stockopedia »
Please follow Money Game on Twitter and Facebook.Join the conversation about this story » ]]> Mon, 20 May 2013 18:00:21 CEST charles_dexter_ward 16 http://www.vibescaster.com//5-stocks-on-the-move-after-broker-upgrades/ http://www.vibescaster.com//ratio-spread-etf-option-strategy-explained/
What Is a Ratio Spread Strategy?

Suppose an investor believes that the SPDR S&P 500 ETF (SPY, A) will remain roughly even over the next month, but could drop significantly if politicians fail to resolve a budget deficit and spending cuts go into effect. Purchasing SPY obviously isn’t a good idea given these dynamics, but shorting SPY could tie up a lot of capital if the market trades sideways [see also ETF Protective Put Options Strategy Explained].
By purchasing one in-the-money call option and selling two out-of-the-money call options, the investor can set up a ratio spread to capitalize on these dynamics. The strategy generates a profit from sideways price movement, with limited downside if those spending cuts do in fact send the S&P 500 into a dire tailspin; in fact, the only major risk is with the upside.
Here’s a diagram showing the strategy’s dynamics:

Who Is the Ratio Spread Strategy Right For?
The ratio spread strategy is ideal in cases where the investor expects the stock to remain at the same price with a bearish bias. In the example above, the investor was neutral on the market over the next month, but thought there could be a downturn. Rather than simply waiting on the sidelines, the ratio spread strategy lets investors remain active in the market [Download 101 ETF Lessons Every Financial Advisor Should Learn].
In general, the strategy is considered to be neutral-bearish in nature, since the investor profits the most when the stock remains unchanged and experiences only small losses when it declines. On the flip side, the investor faces the greatest potential losses when the stock price rises in value, since the uncovered short call options could suffer from unlimited upside potential.
What Are the Risks/Rewards?
As previously mentioned, the ratio spread strategy has limited upside with potentially unlimited downside, since the two short calls generate an upfront income (upside) but could suffer from unlimited upside in the underlying ETF. Investors are, therefore, best off only using the ratio spread when they are certain that upside potential is unlikely [see 13 ETFs Every Options Trader Must Know].
The maximum risk/reward profiles are:

Maximum Profit occurs when the price of the underlying stock is equal to the strike price of the short calls. It’s equal to the strike price of the short call minus the strike price of the long call plus premiums received minus commissions paid.
Maximum Loss occurs when the price of the underlying stock is greater than the strike price of the short calls. It’s equal to the price of the underlying minus the strike price of the short calls minus max profit plus commissions paid.

How to Use a Ratio Spread Strategy
Using the above example, let’s assume that the investor entered into a ratio spread strategy when SPY was trading at 162.00 by writing two 165.00 call options for $1.15 a piece and purchasing one 160 call option for $3.30. The net debit to enter the position would be $100, since the $330 to purchase the 160 call would be offset by $230 in written call income.
There are a few different scenarios that could then play out:

Bearish – If the underlying stock falls below 160.00 per share, then all of the call options expire worthless and the loss is limited to the $100 debit to enter the trade.
Neutral – If the underlying stock remains between 160.00 and 165.00, then the 160.00 call option is profitable and the two 165.00 call options expire, netting whatever the gain might be on the 160.00 call option minus the debit to enter the trade.
Bullish – If the underlying stock rallies beyond 165.00, then the 160.00 call option is profitable, but the two short 165.00 call options will be increasingly underwater.

Investors have numerous options when it comes to managing a ratio spread position. For example, if the underlying ETF appreciates in value, investors can consider rolling out the ratio spread position to longer-term expiration dates at a modest loss. Or, the investor could sell the options at a loss before the expiration date in order to limit their losses [see How To Hedge With ETFs].
The Bottom Line
The ratio spread strategy is a useful way for ETF investors to remain in the market during a neutral-bearish outlook. While equities may be undesirable to own, the option strategy provides a way to generate a profit from sideways movement and limit downside risk. However, investors should be aware that there’s potentially unlimited downside risk to the position.
[For more ETF analysis, make sure to sign up for our free ETF newsletter.]
Disclosure: No positions at time of writing.
Click here to read the original article on ETFdb.com.
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Please follow Money Game on Twitter and Facebook.Join the conversation about this story » ]]> Mon, 20 May 2013 18:00:21 CEST charles_dexter_ward 23 http://www.vibescaster.com//ratio-spread-etf-option-strategy-explained/ http://www.vibescaster.com//let-them-eat%E2%80%A6-insects/ Hong Kong
In what may go down as one of the most obtusely out-of-touch policy memos ever written, the United Nations Food and Agriculture Organization recently released a paper entitled “Edible Insects: Future Prospects for Food and Feed Security.”
http://www.fao.org/docrep/018/i3253e/i3253e.pdf
For 171 pages, the paper argues for insect-based diets, explaining why governments should “[d]evelop a clear and comprehensive legal framework” to ensure that we all start eating insects.
So what’s the UN’s reasoning behind this? How could the organization possibly justify such an idea?
Simple. Because it’s better for the environment.
As the paper states, “[i]nsects… emit considerably fewer greenhouse gases (GHGs) than most livestock,” and, “eating insects is not only good for [our] health, it is good for the planet.”
Sounds disgusting, no? But it’s all good, according to the report, because the Tukanoan jungle village (population 100) in Colombia eats invertebrate insects. Therefore, so should we.
They recognize that people might be put-off by such an idea. So their solution to resolve the ‘disgust factor’ is for governments to sponsor ‘bug banquets’ in order to reduce prejudice against insects.
It seems the fanaticism of these bureaucratic do-gooders has now reached epically farcical, and even dangerous levels; they view the government as an instrument to jam poorly-conceived solutions down people’s throats… in this case, almost literally.
This agenda ties in nicely with other government initiatives that tell people what they can / cannot put in their bodies: aspartame and high fructose corn syrup– good; raw milk– bad.
The paper also cites the cost factor. Without a full-frontal acknowledgement that food prices have been rising, the authors make a strong case for the economic benefits of insect-based nutrition.
Of course, anyone who has been to a grocery store in the last five years knows that food prices have been rising. A recent poll of Globe and Mail readers found that 53% of those surveyed have cut back on purchases because of rising food prices.
And when you look at the big picture for agriculture, it’s not pretty.
World population growth and the rising wealth demographics across Asia are driving unprecedented increases in demand.
Meanwhile, peak yields, soil erosion, weather challenges, water shortages, and declines in arable land worldwide are causing decreases in supply.
Then there are a number of destructive policy initiatives– price controls, export restrictions, etc. which lead to further supply reductions.
Plus the mother of bad policy, monetary policy, is creating trillions of new dollars in the financial system. Much of this finds its way into the agricultural commodity markets, driving food prices even higher.
Bottom line: rising demand, decreasing supply, and bad policy mean the best we can hope for is rising food prices. The worst case is potential shortages.
It’s a real problem. But with due respect to cultures that do eat insects, something tells me that global consumption Palm weevil larvae ain’t the solution.
I remember a few years ago when Bill Dudley, Goldman Sachs alumnus and current President of the New York Federal Reserve Bank, spoke at an event claiming that there was no inflation because the price of the iPad 2 was lower than the iPad 1.
At the time, this sounded like the modern day equivalent of “Let them eat cake,” the quip most commonly attributed to the wife of France’s Louis XVI months before their beheading in the 1790s.
The United Nations has clearly taken this to a whole new level. “Let them eat insects.”
It’s just another reminder of how truly out of touch these people are… and that placing any level of confidence in government to solve the world’s problems is dangerous course of action.
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Please follow Money Game on Twitter and Facebook.Join the conversation about this story » ]]> Mon, 20 May 2013 18:00:20 CEST vibcast 7 http://www.vibescaster.com//let-them-eat%E2%80%A6-insects/ http://www.vibescaster.com//spanish-banks-new-look-at-restructured-loans/
Germany, the tightfisted task master, is encouraging Spain to draw down more than the 40 bln euros it already has of the 100 bln euro line secured from the ESM to recapitalize its banks. Spain's budget minister denies there is a need. Germany does not typically encourage countries to take on more debt needlessly. We suspect by late Q3 or early Q4, Spain will, however reluctantly, take Germany's advice as it will likely need more funds for its banks.



The continued decline in house prices, the contracting economy and high unemployment point to the likely increase in bad loans. While this may be generally appreciated, another problem is emanating from loans to households and businesses that have already been restructured.



The issue is that the loans have been restructured mostly because the borrower cannot service their debt. Banks seem to be hiding the full extent of the damage by classifying the restructured loans as if they are performing normally, in an example of "extend and pretend" or "delay and pray".




According to official statistics, Spanish banks have restructured loans of about 208 bln euros. Over a month ago, the Bank of Spain told the banks to review the classification of the restructured loans immediately. Apparently, either the banks were moving to slowly or were finding serious problems, or a combination of both.



Last week, the central bank gave banks until September to reclassify the restructured loans according to tougher guidelines.  In particular, it shifted the onus of proof:  restructured loans will be assumed to be substandard unless proven otherwise.  The substandard classification requires greater loan loss reserves.  



Overall Spanish banks have restructured about a seventh of their loan book (~208 bln euros)  About a quarter are mortgage-related and another third or so are loans to non-real estate companies.  Household and government loans account for about 40%.  



Of these restructured loans, about 37% are considered "doubtful" and 21% are "substandard".  The problem is with the 40% that are classified as performing normally, by which banks can avoid provisioning.  



Spain's three largest banks account for a little less than 40% of the restructured loans.  At the end of last year, Santander had almost 30 bln euros of restructured loans in its portfolio, BBVA had about 23 bln euros and Caixabank had almost 20.5 bln. 



Some estimates suggest as much as 50-60% of the restructured loans should be classified as substandard or less.   This will require greater provisioning.  Some banks will be able to do so through retained earnings, but others, especially some of the smaller and weaker banks may find it more difficult.  



Spanish banks have already transferred 50 bln euros of bad (toxic) assets to Sareb, the bad bank that has been established.  Difficulties into valuing these assets continues and finding buyers is also proving challenging.  In March, the government said Sareb was planning on selling 1.5 bln euros by the end of this year.  Wilbur Ross, the US billionaire, has become more impressed with Spain's efforts and, seems to reversed his stance in October last year by telling Bloomberg TV today that he is considering investing in a Spanish bank or acquiring a Spanish loan portfolio.    



The outlook is far from certain.  House prices have fallen by 40% from their peak six years ago.  S&P recently warned that prices can slide another 20% over the next four years.  Moody's warned today that Spain's residential mortgage backed securities were continuing to deteriorate.  On the other hand, Santander said last month that the real estate market was nearing a bottom. 



In terms of non-performing loans, the government estimates that the ratio edged slightly higher in March to 10.3%.  However, if one were to include the loans transferred to Sareb, part of the restructured loans discussed above, and the roughly 60 bln euros of foreclosed real estate assets, the non-performing loan ratio could rise toward 20% and nearly 30% of GDP.  




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Please follow Money Game on Twitter and Facebook.Join the conversation about this story » ]]> Mon, 20 May 2013 18:00:18 CEST Teddy 5 http://www.vibescaster.com//spanish-banks-new-look-at-restructured-loans/ http://www.vibescaster.com//the-new-abnormal/
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]]> Mon, 20 May 2013 16:00:19 CEST Manny 7 http://www.vibescaster.com//tesla-stock-subaru-recall-2014-bmw-5-series-refreshed-car-news-headlines/ http://www.vibescaster.com//breast-gene-test-extended-in-scotland/ Mon, 20 May 2013 16:00:12 CEST ian_twain 30 http://www.vibescaster.com//breast-gene-test-extended-in-scotland/ http://www.vibescaster.com//cancer-risk-gene-testing-announced/ Mon, 20 May 2013 16:00:12 CEST ian_twain 13 http://www.vibescaster.com//cancer-risk-gene-testing-announced/ http://www.vibescaster.com//video-eu-benefits-dwarfed-by-%C2%A3150bn-costs/ Mon, 20 May 2013 16:00:12 CEST Gandhi_Mangler 11 http://www.vibescaster.com//video-eu-benefits-dwarfed-by-%C2%A3150bn-costs/