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The Winner Of The Natural Gas Boom Isn't Who You Think...

By: Jim Nelson of Street Authority

The energy market is officially broken.

That's according to the International Energy Agency (IEA).

On November 10, the group announced that oil prices will remain low for a long time.

Next year, the agency is forecasting a barrel of crude will go for just $60... and only $80 by 2020.

For hundreds of U.S. companies caught up in the shale oil boom over the last decade, that's disastrous news. At $60 a barrel, many oil companies will not generate enough revenue to break even. [Read more...]

Article source: http://www.streetauthority.com/node/30621371

A Clear Winner Is Emerging From The 'Megabrew' Merger

By: Jim Nelson of Street Authority

The "King of Beers," AB InBev (NYSE:BUD) has had some problems of late. To solve them, the $178 billion maker of Budweiser and Corona is doing what any large company does in that situation. It's trying to buy a better company and steal their growth.

You may recall the enormous $52 billion merger between Anheuser-Busch and InBev back in 2008. Some investors -- and beer drinkers -- never truly forgave the maker of Bud for relocating overseas. Yet, I don't think that's what's causing the company's operating mess today.

AB InBev suffers from the simple problem of too few drinkers. For the first time in 30 years, beer volume is set to decrease globally this year.

To make matters worse, the major beer makers like InBev have been forced to compete with an explosion of craft beer and smaller breweries like Dogfish Head and New Belgium.

The volume of craft beer sold in the United States has more than tripled over the last decade: [Read more...]

Article source: http://www.streetauthority.com/node/30609949

In A Stormy Earnings Season, These Two Sectors Should Be Safe Havens

By: Joseph Hogue of Street Authority 

In June, as the third quarter got underway, consensus profits for companies in the SP 500 were expected to show a modest 1% year-over-year dip. Three months later, analysts now think profits will slide nearly 5%, from year-earlier levels.

Of the companies that have announced guidance, 76 expect negative EPS growth for the third quarter according to FactSet Research. That compares to only 32 companies that have issued positive guidance for the three-month period so far.

The pain continues to build in the energy and materials sectors, but many other sectors are seeing downward earnings revisions as well. Fear of higher interest rates and declining earnings growth led an 8.6% drop in the SP 500 index, and a sharp spike in the VIX volatility index since mid-August.

The trend is so bad that analysts are expecting earnings growth of just 0.6% in the fourth quarter. The revenue picture is equally challenging.

Analysts think that third-quarter sales fell 3.3% against the same quarter last year. On a full-year basis, they are modeling for a 2.4% drop in sales. Unless revenue growth returns soon, investors may start questioning whether corporate management teams can squeeze further earnings growth from continued cutbacks. [Read more...]

Article source: http://www.streetauthority.com/node/30607462

These Six Gold Companies Could Create Exceptional Wealth Sooner Than You Think

For smart investors watching the gold-Dow ratio rather than mainstream media headlines, this is an exciting time to be a precious metals investor. The world seems to be conspiring to push the price of gold higher, with continued zero interest rates, Chinese stock market volatility and more unrest in the Middle East. In this interview with The Gold Report, Gold Stock Trades Editor Jeb Handwerger lays out his short list of junior mining companies that have been actively adding value, and that will be in demand when all eyes are on the sector.


The Gold Report: In your last interview with The Gold Report, you said that a Federal Reserve interest rate hike would be the best thing for gold. As we now know, the board decided to keep rates at almost zero. How does that impact your projections for precious metals? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/Ve0yyyBBGr0/16780

Are These The Greatest Success Stories In Europe?

By: David Sterman of Street Authority

It's been five years since the Financial Times first made use of one of the less flattering economic acronyms: PIIGS. Back then, Portugal, Ireland, Italy, Greece and Spain were seen as economic basket cases, and it was widely assumed that one or several of them would eventually default on their massive debt burdens.

While such an event has yet to pass, Greece remains quite sickly, and Portugal and Italy continue to wrestle with profound economic dislocation. To varying degrees, these countries have failed to embrace the badly-needed economic reforms that are essential to sow the seeds of a lasting economic recovery.

Yet despite heavy odds, Ireland and Spain are clearly on the comeback trail. Thanks to broad-based reform packages, their economies have begun to turn the corner. And with the aid of a very competitive currency, their futures are looking far brighter than most would have suspected just a few years ago. For investors, exposure to these dynamic turnaround stories can be had through a pair of country-specific exchange-traded funds (ETFs).

Ireland Is Back In Business

Ireland and its citizens are remarkably resilient. They have been through myriad crises over the past two centuries, and always manage to bounce back. Most recently, they saw the country's economy crash and burn in the economic crisis of 2008-2009. Irish banks eventually grew so weak that a wave of bankruptcies were a real possibility. By 2012, unemployment in the country had risen to nearly 15%. [Read more...]

Article source: http://www.streetauthority.com/node/30602195

No Fed Rate Hike Good For Gold, Bad Sign For Economy

The much-anticipated decision by the Federal Reserve Board at the Sept. 17 meeting to hold interest rates near zero was met in the resource community with a mixture of relief and disappointment. The 9-to-1 vote citing global economic pressure on inflation left open the possibility of a hike at the December meeting. The Gold Report asked the experts in the resource sector what this means for precious metals and oil prices, and what signs they are looking for that a different outcome will be announced in December.

Fed announcement

Joe McAlinden, founder of McAlinden Research Partners and former chief global strategist with Morgan Stanley Investment Management, was disappointed that the Fed "blinked." He called the decision irresponsible and attributed it to worries about China's growth. The veteran investor saw the status quo as bullish for precious metals and oil, but warned, "As the Fed continues to postpone moving towards normalization of interest rates, the potential for future inflation from years of excessive stimulation increases with every delay of the end of the zero interest rate policy."

He continued, "Based on today's decision, we now need to watch economic data from China and the performance of the markets themselves. I do not believe that the Fed's focus on those points is appropriate. Nonetheless, it is now clear that these will influence the timing of the next Fed move. Also, and more appropriately, we should be watching average hourly earnings, overall signs of strength or weakness in the U.S. economy, and the trend of the core PCE deflator." [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/I5CKvl2wC3A/16777

Joe McAlinden Reverses View, Predicts Recovery for Gold, Oil and Housing

With the markets in whiplash mode, Joe McAlinden, founder of McAlinden Research Partners and former chief global strategist with Morgan Stanley Investment Management, believes volatility is going to stick around for a while, and we might see a correction double of what we've had so far. In this interview with The Gold Report, McAlinden bucks conventional wisdom to argue that an interest rate hike is good for gold and oil, and lays out his investing strategy for this period of market uncertainty.

The Gold Report: For more than a decade, you led Morgan Stanley Investment Management's global investment strategy; now you own your own research firm based on your observations of the industry for more than 50 years. How do you explain the volatility in the markets right now and how should investors position themselves to prepare for what is coming?

Joe McAlinden: It has been a wonderful bull market, a wild ride going all the way back to 2007 when the market made its top. That was followed by a horrendous plunge. We've not only made that back, but the market has reached highs that were 36% above the 2007 highs. I had been concerned recently, however, that price-earnings ratios have become elevated and we are seeing other spooky similarities to the conditions that prevailed prior to the 1987 crash, including the absence of a more than a 10% correction for three years and a breakdown of small-cap stocks. The market could be vulnerable to some kind of major shock. I believe that the big shock is only beginning to unfold and that as it does, this correction will get considerably worse, perhaps double what we've had so far and maybe even worse than that.

TGR: What do you think the market expects the Federal Reserve Board to do? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/morCECMRT5A/16769

What Tesla Needs to Know About the Graphite Sector

The Gold Report: What is the state of the current global graphite market and what impact might Tesla's construction of a battery Gigafactory in the desert in Nevada have on future demand for the mineral?

Blair Way: Because graphite is used in many energy-related applications (including electric vehicles, Pebble Bed Nuclear Reactors, fuel cells, solar panels and electronics ranging from smartphones to laptops), it has been categorized as a critical, strategic mineral by several governments including the United States and Europe.

What does this really mean? At this point in time it means nothing—graphite is in oversupply and prices are low. However, if China decided to stop supplying graphite to the world, then the West would be in trouble. This is highly unlikely to ever happen. As far as the impact of the Tesla plant on the greater market, that's yet to be defined in detail, but it will create more demand for graphite, both natural and synthetic.

TGR: How big is the graphite market? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/d1NnkmR06Oc/16766

Could A President Trump Put People Back To Work And Help The Dollar?

The Gold Report: In honor of Labor Day, let's discuss unemployment. You estimated that when all workers are counted, the unemployment rate in July was 23% compared to the government's reported rate of 5.4%. What is different about the job market today than before the recession?

John Williams: In a normal economic recovery, people who have lost their jobs start working again as the economy improves. That hasn't happened this time, at least not to the extent suggested by a 5.4% unemployment rate (U3), where the government's headline definition of "unemployed" is quite narrow. To be counted among the headline unemployed, you have to be out of work and actively to have looked for work in the last four weeks. If you want a job, but have given up looking, the government counts you as a "discouraged worker" or "marginally attached worker" and you don't show up in the headline number.

If you haven't looked for work in more than a year, even if you would like to work, then the government just doesn't count you in even its broadest measure of unemployment (U6); you just disappear from any of the unemployment measures. As a result, when the government says that 200,000 fewer people are unemployed in a month, and the headline unemployment rate drops, often there isn't an increase of 200,000 people who are re-employed. They just have been defined out of existence. My broad unemployment estimate includes those no longer tracked by the government, those who cannot find a job, who have given up looking for work for more than a year because nothing is available, yet they still would like to find a job, even though they may be doing other thingslike taking care of grandkids. That broader unemployment number is around 23%.

TGR: Have the types of jobs changed? Are we seeing fewer jobs in manufacturing and finance now than there were before? Are there other areas that are growing, like technology and service jobs? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/-qXNvDPekVI/16765

Look for Value Opportunities and Put Your Capital to Work Selectively in this Market

The Gold Report: When we talked in November, you warned that there would be downward pressure on gold this year. What are you anticipating for the balance of 2015 and into next year?

Florian Siegfried: We were being cautious in November when we published guidance that indicated gold could trade as low as $1,070 per ounce ($1,070/oz) as a support zone. And that is pretty close to where it is trading right now. But I think that we have to distinguish between the paper price of gold and the physical price, which trades at a premium. For example, the U.S. Mint currently sells gold at around $1,400/oz.

"Pretium Resources Inc.'s Brucejack is one of those mines that brings a long mine life and high grade in a safe jurisdiction."

This suggests that there is some tendency toward increasing premiums in the market for physical metal. Where we go by the end of the year is a difficult question because it's always hard to catch the bottom of the market. But a look at the last three or four years gives us some clues. Hedge funds were maximum net long in gold at the peak of 2011, and now they're maximum net short, which could be a good contrarian indicator (see chart above).

It looks as if $1,080/oz could be the bottom. It's not defined yet, but the sentiment is definitely at extremes.

The turn in gold will come from short covering, and the short covering will come when the bearishness really reaches a climax event. Probably we are there, but we will have to wait and see. It is difficult to make a call for year-end because there are so many factors influencing the gold price, and sentiment is extremely negative. The trigger for moving up could come from the bond market, which is in a difficult spot right now. Liquidity is down. Yields and credit spreads are rising. When something goes wrong there, where will the conservative money go to? I don't think it is going to go back into government funds. As investors lose confidence, that could be the trigger for gold. We are probably going to see this in the fall, by September or October. I think the bond market is about to turn around.

TGR: What are some of the other triggers you're watching? Are you monitoring the U.S. Federal Reserve and whether that rate hike happens in the fall? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/Yj6Wo8VGpQ0/16738

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