Best Auto Car Show: July 2014

Sunday, July 27, 2014

Will Nvidia Be Able to Overcome Qualcomm?

At the point when Google dispatched the second cycle of the Nexus 7, it continued with Qualcomm's (QCOM) processor instead of sticking with Nvidia's (NVDA) Tegra 4. Nvidia lost a couple of smartphone slots such as HTC as well. What's more, Microsoft's (MSFT) Windows RT, which was based on the Tegra stage, never truly took off and Microsoft needed to suffer a gigantic record of $900 million.

This prompted an immense drop in sales of the Tegra and revenue from that segment dropped by 71% to $52.6 million in the second quarter. This headed me to state that investors should sell Nvidia shares.

Notwithstanding, there were numerous steps that Nvidia took to push the Tegra stage. One such exertion was the Nvidia SHIELD, a gaming handheld which won't be sufficient to turn its fortunes around. Be that as it may certain late developments show that there may be trust truth be told.

What next

It seems that Nvidia is attempting its hand at making a tablet. Regardless, its tablet will simply be known as the Tegra Tab. This will be an in-house item based on the 1.8ghz Tegra 4 processor and combined with 2gb of RAM. It will also presumably have a 7-creep 1280x768 display alongside what looks like front-confronting speakers and double cameras.

What's interesting is that it also comes with a stylus. This is supposed to be a demonstration of the Directstylus, the stylus engineering that Nvidia has created.

While it is still not clear what heading this exertion will take, yet in the event that Nvidia is going for gaming tablets, then it could make a separate market for itself, similar to the specialty PC gaming market which is developing despite declining PC sales.

An alternate critical slot that Nvidia has won for its Tegra stage is the Xiaomi smartphone. At the point when Xiaomi propelled the low end gadget called "Red Rice," it sold 100,000 units in 90 seconds. Xiaomi's Mi2 smartphone is directly behind the Galaxy S4 and HTC One in terms of sales.

Xiaomi made news when it figured out how to get Hugo Barra, the VP of Android item administration for Google, to go along with them so as to stretch globally. Presently, Xiaomi is just pander to three or four markets all inclusive.

What's most critical is that Xiaomi is as of now selling more than Apple in China. Just two years after its commencement, the organization plans to sell 15 million devices this year in China to net $4.5 billion in revenue. Miphone 3 offers decision of Tegra or Snapdragon processors. The Qualcomm Snapdragon 800 version is set to introduction with China Unicom and China Telecom while the Nvidia Tegra 4 model will dispatch with China Mobile.

This augurs well for Nvidia's Tegra stage because China Mobile is the world's largest telecom operator.

Furthermore, Asus stepped out recently with a Tegra 4-controlled top of the line high resolution tablet - Asus Transformer Pad Tf701t. This is first slate with a 1.9 Ghz Tegra 4 processor. It is asserted to be the world's fastest quad-center Cortex-A15 processor with a 72-center GPU.

Microsoft's second emphasis of the Surface Pro will also be based on the Tegra stage. Notwithstanding, vast scale acknowledgement of Surface tablets is yet to see the light of the day yet Microsoft has no decision yet to continue attempting till it succeeds as the PC market is in a decline.

Microsoft has sent out invites to the media for an occasion on Sept. 23, where it would presumably be refreshing the Surface tablet. The approaching Surface 2 is supposed to incorporate a two-stage kickstand, a 1080p display, and Nvidia's Tegra 4 processor, while Microsoft has chosen Intel's Haswell processor for the Surface 2 Pro.

So Tegra 4 is seeing more than just the light of the day now and slowly seems to be picking up slots in devices which may sell in nice numbers.

Past mobile registering

PC sales are declining yet this doesn't imply that everybody associated with the PC industry is damned. It's just the players who handle their exchange the wide based PC market that are feeling the high temperature. This includes all companies which sell low-end desktops and laptops to end users and will keep on being affected by the switch to tablets.

Be that as it may, the PC gaming market is stronger and companies like Nvidia which fundamentally coddle that segment require not be concerned much. The PC gaming market is still developing. Nvidia is focusing all the more on the top of the line PC gaming market and in the last reported quarter, GPU revenue increased 8% year-over-year, with strong interest for top of the line cards driving development.

Nvidia wins this one

Qualcomm is Nvidia's biggest risk. As specified prior, Qualcomm's Snapdragon displaced Nvidia from the Nexus tablet. What's more, the way that it as of now has a head start in 4g coordinated basebands while Nvidia is yet to bring the Tegra 4i to the market will make it more troublesome for Nvidia to addition customers.

Qualcomm has also been attempting to enter the high-volume market for smartphone processors in China as well. Yet it would appear that this round goes to Nvidia after it went into Xiaomi's telephone.

Conclusion

On the off chance that the moves that Nvidia is making to market and push the Tegra stage are successful, then its mobile figuring division should start seeing development. A ton depends on the sales of the Xiaomi Miphone 3 as future design wins of Nvidia in the Chinese market and its battle against Qualcomm may rely on upon it.

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Friday, July 25, 2014

Natixis to Fund Study on Investor Behavior

It’s the perpetual balancing act for investors — achieving greater investment returns versus not wanting to take risks.

In an effort to help investor’s overcome this, Natixis Global Asset Management will fund a three-year, $1 million research project with the intentions of creating automated, customized processes to help investors make better investment decisions at the Massachusetts Institute of Technology, it announced Monday.

“The research we’re funding at MIT will lay the foundation necessary to revolutionize traditional investment strategies designed to help investors build better portfolios and increase their chances of long-term success,” said John Hailer, chief executive officer of Natixis Global Asset Management in the Americas and Asia, in a statement.

Hailer is hoping the research project will bring “added focus on helping investors develop a personal, outcome-based approach to achieve success. It’s time to introduce a new paradigm for investing,” he said in a statement.

According to a Natixis survey released in May, 70% of investors globally face an ongoing psychological battle between the hunt for investment returns and the preservation of capital [67% in 2013], and tied to this, 86% of investors seek to balance risk and return [84% in 2013].

The 2014 Global Survey of Individual Investors, which surveyed 1,050 investors across the U.S. as part of a survey of nearly 6,000 investors in 14 countries, also reported that only 56% were willing to take just minimal risk to achieve high yields.

The survey stated, “the modern day investor is conflicted, wanting to move forward in pursuit of asset growth, yet not at a velocity that creates exposure to additional risk and the potential polar opposite effect on portfolios – decreasing rather than increasing value.”

The research project, led by Andrew W. Lo, professor at the MIT Sloan School of Management and director of the Laboratory for Financial Engineering (LFE), will focus on investor behavior and personal benchmarks and will utilize data from Natixis global Investor Insights surveys of individuals, financial advisors and institutions.

“Many companies and experts have been talking about the need for change for years now,” said Lo, in a statement.

“The Holy Grail of developing automated, customized processes for making better investment decisions is not unique to our times or the financial industry,” said Lo, who is also the founder, chairman and chief investment strategist of AlphaSimplex, in a statement. “But what is unique is the confluence of breakthroughs in financial technology, computer technology and institutional infrastructure that, for the first time in the history of modern civilization, makes automated personalized investment management a practical possibility.”

Lo and his research team will study the industry practice of using an index as a benchmark to develop a more modern approach to benchmarking based on an individual’s unique circumstances as well as current market dynamics. In order to examine the mistakes often made by investors, researchers will develop algorithms that mimic common, irrational investor behavior — like buying high, selling low and moving to cash for extended periods of time.

This will help them to then create new customizable benchmarks and indexes that adapt to changing market conditions and behavioral challenges.

---

Related on ThinkAdvisor:

Thursday, July 24, 2014

Why "Mr. Softy" Will Continue to Rebound

Just under a year ago, Capital Wave Forecast Editor Shah Gilani said it was time to buy Microsoft Corp. (NasdaqGS: MSFT).

It was a surprising call. The once-great software giant had become a moribund also-ran, and Wall Street clearly saw no future for the Redmond, Washington-based company.

As is so often the case, Wall Street was wrong.

Microsoft shares are up 40% in the last year, and still some of the pros seem reluctant to believe in the turnaround.

But it's a new day for Microsoft. Satya Nadella is firmly in charge from the corner office. He's setting the new tone and company direction, and he announced a massive layoff last week that sent shares surging.

And now comes the payoff, as MSFT's earnings take center stage on Tuesday. All of which makes it a great time to revisit this call on Mr. Softy.

The Upside for Microsoft Is Huge

Resident tech expert Michael Robinson also believes there's more to come for Microsoft...

Lots more...

Microsoft was a true stock-market "kingmaker" throughout the 1990s. After a long stretch in stock-market purgatory, it's emerged as a "special situation" turnaround play with a hefty upside.

"You know, Bill, most investors have written this company off - or have forgotten about it altogether," Michael told me during a late-night telephone call the other day. "It's become something of a 'wallflower' stock. But Shah made a great, great call ... and I think Microsoft is going to show us something very special. The stock is up nearly 20% this year; it has a $50 billion cash hoard, and a committed dividend policy. It has a new CEO. And it just spent $7 billion in a big buyout. It's the kind of corporate turnaround play that I just love."

To understand why the pros just don't seem ready to "believe" in this rebound - and to fully grasp the opportunity at hand - we need to take a look at Microsoft's past.

A Fond Remembrance of Those Halcyon "Wintel" Days

With its Windows operating system installed on virtually all of the world's PCs - its market share peaked at about 95% - Microsoft was the personal computer revolution.

Microsoft teamed with chip giant Intel Corp. (Nasdaq: INTC) to create the "Wintel" standard, and the duo's bare-knuckled business practices made the PC market uninhabitable for any other chip-and-software standard.

Microsoft's dominance didn't stop with operating systems, either. With its Microsoft Office suite of productivity software, the Redmond tech titan did nearly the same thing in the applications market.

The result: Microsoft's shares went on a 9,000% ride during the 1990s.

Today, Microsoft continues to dominate the PC market. But the PC market is not the dominant force it once was.

With the dot-bomb implosion of 2000, the PC market began to slow. From 2001 to 2011, while the tech-heavy Nasdaq Composite Index gained 34%, Microsoft shares plunged 25%.

"If you think back, Bill, so dominant was Microsoft that it drew the attention of government anti-trust watchdogs in both the United States and the European Union," Michael said. "All the lawsuits - designed to curb Microsoft's bullying of other, smaller companies - did virtually nothing to derail the Microsoft Express. But Microsoft's mastery of its markets and the slowing growth rate in the PC market that followed the dot-bomb implosion of 2000 ended the years of eye-popping increases. The decade that followed taught Microsoft investors a very hard lesson: The market doesn't reward companies that rake in profits but show only modest rates of growth. That's why the Street has written the company off."

But we haven't and here's why....

These Catalysts Power Microsoft's Gains

Setting aside quarterly earnings buzz, we've identified four specific catalysts that will continue to power the Microsoft stock rebound. They are:

The change at the top (new CEO Satya Nadella). Big Data and Cloud Computing. The mobile revolution. And the creation of a Microsoft tech "ecosystem - akin to the one that rival Apple Inc. (Nasdaq: AAPL) has created with its iPhone, iPad, iPod and iWatch product lines, and its vision of a unified future.

Let's take a look at the four catalysts...

A New Club Member

Microsoft insider Satya Nadella was appointed CEO back on Feb. 14. And that makes him a member of a very exclusive club.

"Even though Microsoft turns 40 next year, it's only had three CEOs," Michael said. "You've got Bill Gates, Steve Ballmer, and now Nadella. That is one very exclusive group."

A native of India who grew up and was educated in the United States, Nadella is a Microsoft veteran who's not imbued with some of the perceived personality flaws of his predecessors. For instance, Nadella is very much a "people person," which is already endearing him to his management team. He thrives on success and innovation, and he's excited about change.

"When I analyze a corporate turnaround - and I know you share the same view, Bill - I prefer to see new blood at the top," Michael said. "And by 'new blood,' I'm talking about an outsider - an exec without ties to current management. That wasn't what happened here... but that's okay. In fact, in this case, I believe the Microsoft board has made a very savvy move."

While Gates is still immensely popular among the company's hefty work force, the workers understand that the company, the workers - indeed the entire corporate culture - needs to continue its transition from a pure PC play to a company that's capitalizing on the mobile wave, cloud computing and a tech "ecosystem" akin do the "unified computing" model Apple is creating.

"Nadella occupies a rare position in the technology industry," Michael said. "He is both deeply rooted in Microsoft's history and is also seen as a visionary change agent. And he has broad support from the company's roughly 100,000 workers - as well as from Gates himself."

Folks already like Nadella's decisiveness and investor focus.

In late April, he won plaudits from Wall Street when he joined a call with analysts to discuss Microsoft's quarterly earnings. It was the first time in five years that a Microsoft CEO had been present on an earnings call.

He also understands the opportunities at hand...

Like the Cloud.

Send in the Clouds

One great thing about this appointment is that Nadella is a true expert in one of Microsoft's key growth areas: Prior to his appointment, he had served as the executive vice president of Microsoft's strongly performing Cloud and Enterprise group. Under Nadella, the unit outperformed its peer group, and the overall cloud market.

It's a massive opportunity.

Market researcher Forrester says the Cloud market - where customers pay vendors to host data and applications at remote computer centers - will hit $55 billion by the end of this year. By the end of this decade, that number will climb to more than $241 billion.

Microsoft has already staked a claim.

In its recent ranking of top Cloud players, researcher Gartner gave Microsoft's Azure cloud platform a No. 2 rating. It trailed only Amazon.com Inc. (Nasdaq: AMZN). That means it finished ahead of Google Inc. (Nasdaq: GOOG), Computer Sciences Corp. (NYSE: CSC), and International Business Machines Corp. (NYSE: IBM).

And just weeks ago, Microsoft struck a key partnership with Salesforce.com Inc. (NYSE: CRM). The terms were not disclosed, but the alliance blends Salesforce's popular customer relationship management cloud app platform with Office and Windows.

"As I see it, this should give the Cloud business a further boost from its impressive fiscal 2014 third-quarter results," Michael said. "Office 365, a Cloud offering, now has an annual run-rate revenue of $2.5 billion and grew sales 100% compared with the year-ago results."

This Is a (Really) Big Deal

Much of Microsoft's current trouble stems from the fact that it missed the mobile revolution.

But it's making a heck of a comeback attempt - and the recently completed $7.2 billion acquisition of the Nokia Corp. (NYSE ADR: NOK) device business is a linchpin piece of the strategy.

The reason: It makes Microsoft a legitimate player in mobile.

It was Ballmer who made the deal, but it's Nadella who will have to make it work.

Nokia makes 90% of the mobile devices running the Windows Mobile operating system. And in the first quarter, market researcher IDC said Windows smartphones were in third place, with a 3.5% market share.

But IDC says Windows phones will see their market share grow at triple the rate of iPhones and double the growth of Google's Android operating system. Windows phones could capture as much as 6.4% of the market by 2018.

"Nadella is taking no chances here, Bill," Michael said. "He's making Windows Mobile free for smaller mobile devices. This is a savvy move, because it makes Microsoft competitive in emerging markets that are still in the early stages of smartphone adoption. Researcher IDC says that Android is now the operating system in 78% of all mobile devices worldwide. So, by copying Google's playbook and making its operating system free, Nadella hopes to see even greater growth in India, East Asia, Latin America and the Middle East. I get a really good vibe here from all this."

Copying Apple

Folks often misunderstand Apple. It's not just a device company. It's a "tech-ecosystem" player. It created all those great iDevices - and found a way to make them work together... seamlessly.

And the new unified computing strategy that we told you about earlier this month figures to take this new "ecosystem" into entirely new areas of opportunity. Shah understood this last fall, which is why he recommended Apple at the same time that he recommended Microsoft. Apple is up more than 54% right now, and we expect more to come there, too.

But we're intrigued by the Apple model because it's clear to us that Microsoft hopes to do something very similar.

That's why the hardware Microsoft makes - the Surface line of tablets, its Xbox gaming system, and now its Nokia lineup of mobile devices - figures to become ever more important to the company's ongoing turnaround. The devices can help drive "brand awareness" up and down the product family, and drive growth in the Cloud, in mobile, in software, and in products yet-to-be unveiled.

It works the other way, too: Microsoft's Cloud business can be used to drive growth in mobile, in software, or in services.

And that brings us to our forecast for "Mr. Softy."

Muscle-Soft?

Microsoft brings some strong financials to these growth markets.

The stock closed at $44.71 a share Friday - 28.8% above our $34.70 recommendation price.

But Michael believes there's plenty more to come.

"You're talking about a company with sterling financials, $50 billion in cash, a dividend yield of nearly 3%, and some very nice catalysts," Michael said. "The shares are trading at a forward price/earnings (P/E) ratio of 16.8 - a bit of a discount from the overall market. It has operating margins of 34% and a return on equity (ROE) of 27%. Throw in that nice dividend and you have a stock that offers us an excellent yield and the prospect of continuing price appreciation."

The stock traded at about $60 a share back in the late 1990s. That's a reasonable target.

"Bill, if Microsoft's shares just got back to their late-1990s highs in the neighborhood of about $60, we'd be looking at a profit of 44% from current levels and a gain of 73% from where Shah recommended it," Michael said. "I think these are the minimum gains we can expect to see. Given Nadella's aggressive plans for mobile and cloud computing, all that cash, and the other catalysts we've talked about today, I believe that Microsoft will continue to earn double the market returns over the next few years. This leader-turned-laggard has become a leader again."

In short, Microsoft has added some real muscle.

Mr. Softy is getting even stronger.

Wednesday, July 23, 2014

Best Ways to Get Online Coupon Codes

If you're not in the habit of looking for a coupon code before you make any purchase online, you're missing an opportunity to save. These codes – typically a combination of letters and numbers – can be entered at checkout to score discounts. There are a multitude of Web sites that offer discount codes, and retailers themselves provide them through a variety of channels.

Here's a rundown of the best ways -- as well as the best times -- to find online coupons. You'll find that all of these strategies are relatively easy and can save you big bucks.

SEE ALSO: 8 Great Coupon Apps Where to get codes

Retailers' sites. Retailers tend to promote discount codes at the top of their homepages. Take note of the code because you might not see it again once you get to the checkout page where the box to enter the code is located. Bath and Body Works, Kohl's, JCPenney, Macy's, Saks Fifth Avenue, Sears and Victoria's Secret are among retailers that most frequently offer codes that apply to items sitewide or to broad categories, according to DealNews.com. Several of these retailers also allow customers to use more than one code at a time. Jones says a 10% to 20% off coupon code for electronics is a good discount; whereas 15% to 20% off for clothing is common, so hold out for 40% or more. However, sometimes the coupon codes offered on retailers' sites aren't the best available discounts, says DealNews.com coupon editor Sarah Jones. That's why you should check other sources, too.

Coupon sites. Sites dedicated to providing coupon codes occasionally list exclusive coupon codes in addition to those that retailers are promoting on their sites. So you can find codes at these sites that you won't find anywhere else because they have partnered with retailers to offer these special discounts. Some of our favorites are Coupon Sherpa, DealNews.com, PromotionalCodes.com, RetailMeNot.com and Savings.com. As the name suggests, FreeShipping.org is a good source of free shipping codes.

Facebook and Twitter. Following a retailer on Facebook or Twitter is a good way to find out about coupon codes – as well as one-day sales and giveaways, says Ashley Recio Nuzzo, founder of FrugalCouponLiving.com and a Savings.com contribute. Sometimes the only way to get a retailer's discount code is to "like" its Facebook page.

Email alerts. If you sign up to receive emails from retailers, you will get coupon codes and sale notifications. Many of the codes sent by email are universal, but sometimes retailers send exclusive codes for use only one time, Nuzzo says. Create a separate account to receive these emails so that your primary account doesn't fill up with notifications and offers from retailers, she says.

Customer service. Both Jones and Nuzzo say it never hurts to call a retailer's customer service to ask if any unpublished coupon codes are available. I once called customer service when the discount from a coupon code I was trying to use for an online purchase wasn't being applied. The customer service representative applied the discount to my purchase then gave me an additional 10% off to compensate for the trouble I had trying to place my order online.

When to get codes

First of the month. DealNews.com recently studied coupon release patterns and found that retailers offer a higher volume of discount codes on the first day of the month. Most of those codes tend to be valid for the entire month, Jones says. So if you can wait until later in the month to make a purchase, your patience might be rewarded with a better deal as retailers release codes for higher discounts to spur sales before the end of the month. If a deeper discount doesn't appear, the code released at the beginning of the month likely will still be valid.

Early in the week. Check for new coupon codes on Sunday, which is when many stores release offers. If the retailer of your choice doesn't release any then – or you're not impressed with the discount – check back later in the week to see if new codes have been released in advance of the weekend, Jones says.

Around holidays. DealNews.com found an increase in coupon codes released around major holidays – usually about two weeks in advance. Many retailers have sales around holidays, too, so you can increase your savings by applying coupon codes to already discounted items. According to DealNews.com, the best coupon discounts tend to appear on Cyber Monday – the Monday after Thanksgiving when online retailers have sales.

August and October. These two months see a higher than average volume of coupon code releases, according to DealNews.com. Back-to-school shoppers can take advantage of discount codes to cut the cost of school supplies and clothing (see 10 Ways to Save on Back-to-School Shopping). And savvy shoppers can take advantage of the abundance of coupon codes in October to get a head start on their holiday shopping.

Thursday, July 17, 2014

Why Does Fox Want Time Warner?

Albert Fried’s Rich Tullo says 21st Century Fox’s (FOXA) interest in purchasing Time Warner (TWX) is all “about streaming:”

Associated Press

Based on our due diligence, a merger of Fox and HBO would create a group that controls 20 of the top 50 shows binged today on all Streaming Services. In a year, perhaps 30 or more of the top 50 binged shows once the new HBO’s deal with Amazon finds its legs. Once HBO is reflected in the statistics because we think The Sopranos, Band of Brothers, The Wire and the Game of Thrones are likely to be among the top ten binged TV shows based on VOD and Pirating data.

So what does the opportunity look like? Well since Netflix (NFLX) inked its deal with AMC Networks (AMCX), Netflix’s top line and subs expanded by 30% to +$4 billion and 36 million respectively. More than Netflix’s own Originals (3 of 50), AMC Networks also controls 16% (8 of 50) of the top 50 shows watched on Netflix and we think better than 20% of the hours spent on Netflix is the viewing of Netflix content. Thus the streaming opportunity for an AMC Networks consolidation is about $1 billion in our view and we think the opportunity for Time Warner and Fox is in excess of $3 billion.

Shares of Time Warner have gained 18% to $83.65 at 10:28 a.m., while 21st Century Fox has dropped 2.4% to $34.35, Netflix has ticked up 0.1% to $449.74 and AMC Networks has advanced 3.2% to $62.85.

Full disclosure: 21st Century Fox was once part of News Corp, Barron’s ultimate parent.

Tuesday, July 15, 2014

Goldman Sachs: No Disappointment This Time

Just when you think Goldman Sachs (GS) is down for the count, it wows the Street with its results, just like compatriots Citigroup (C) and JPMorgan Chase (JPM).

Bloomberg News

Goldman Sachs reported a profit of $4.10 a share, beating forecasts for $3.05, on revenue of $9.1 billion, topping the Street consensus for $8 billion. Return-on-equity came in at 10.9% during the second quarter.

SunTrust Robinson Humphrey’s Eric Wasserstrom and Jeff Cantwell explain Goldman’s beat:

The upside reflected stronger revenues across all business lines, partially offset by higher expenses. In particular, Investment Banking results were up 15% YoY; trading results were -9%; and Investing and Lending revenue was up 46%, reflecting strong gains in private equity positions, and to a lesser extent, on debt holdings. The comp ratio was 43%, in line with our forecast, while the higher absolute level reflected the stronger revenue performance. Significantly, Goldman Sachs’ GAAP balance sheet declined by $56B to $860B, reflected a reduction in risk exposure, but RWAs were down only slightly to $590B; the CET1 ratio improved modestly to 11.4%. These results suggest upside to the consensus 2014 EPS of $15.23 (STRH $15.70).

Shares of Goldman Sachs have gained 1.1% to $168.92, while Citigroup has advanced 1.7% to $49.23 and JPMorgan Chase has jumped 3.9% to $58.49.

Monday, July 14, 2014

IRS Email Hunt Shows Lerner Switched To Texts, Which Aren't Kept....'Perfect'

U.S. District Judge Emmet G. Sullivan has ordered the IRS to explain what happened to Lois Lerner's emails. Judicial Watch sued when the IRS refused to provide them. DOJ tried hard to block it but lost. The legal wrangling is just one more seedy chapter in a scandal that casts further doubt on the tax system.

Still, it may bring a smile to the face of more than a few American taxpayers who have ever had to hunt for a receipt to hand over to the IRS. Will the IRS comply? It is harder to end-run a Judge than Congressional investigators. Yet the IRS seems pretty savvy at stalling. Besides, there's a new wrinkle: Texts aren't emails.

Remember the old saying, "if you don't ask (for exactly the right thing), you don't get?" Oh, you mean there are texts too? Yes, some of the real juice may be in text or instant messages. Indeed, in 2013 when the IRS targeting scandal was already brewing, Ms. Lerner asked an IRS IT specialist if the IRS saved texts? No, they are not automatically saved, came back the response.

text message (Photo credit: Wikipedia)

The IT person went on to say that saving them was possible, though, so be careful. "Perfect," was Ms. Lerner's response. Congressional investigators, Judicial Watch and others doubtless want those texts, especially since it now appears that there was a little more off-the-grid mentality when it came to texts.

Meanwhile, IRS Commissioner John Koskinen is beginning to look a little like Sergeant Schulz on Hogan's Heroes. The latter was beloved for his outbursts of, "I know nothing!" Many Republicans think former IRS official Lois Lerner knows a lot. But Mr. Koskinen seems not to.

He was unaware of the instant-messaging system, he testified. With a kind of thousand yard stare, the top U.S. tax official still professed to a House committee that he didn't think this interchange of IT question and answer meant Ms. Lerner was happy that the instant messages weren't saved. It may be that 'perfect' means different things to different people.

In any case, the IRS wants to let the Inspector General finish his investigation of the computer failures. Then, the IRS can decide what further steps it should take. Hopefully that will be a bit more than an effort to "Round Up The Usual Suspects!"

Ms. Lerner's lawyer continues to state that his client did nothing wrong. The IRS probably would like to forget her, and her emails too. Oh, and her texts too. She is retired now on a government pension, but conceivably could still face prosecution.

She refused to testify on multiple occasions, and she was eventually held in contempt of Congress for it. After making a statement in which she said she had done nothing wrong, Ms. Lerner invoked her constitutional right against self-incrimination. But some Republicans say her statement amounted to a waiver. Her case was turned over to the U.S. Attorney for the District of Columbia. IRS Official Lerner Could Face 11 Years In Prison For Tea Party Scandal.

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

Saturday, July 12, 2014

The Biggest Apple Inc. iPhone 6 Photo Leak Yet? This Phone May Be a Game-Changer

As the rumored fall launch date for Apple's (NASDAQ: AAPL ) iPhone 6 line approaches, leaks and rumors continue to ramp up. While this week brought us a handful of news about the iPhone 6 to chew on, one report in particular may finally give consumers a good idea of what the phone may look like.

If you haven't been following the rumors and leaks surrounding Apple's iPhone 6, here's a brief summary. The next-generation lineup will supposedly come in two versions: one with a 4.7-inch display and a one sporting a phablet-like 5.5-inch screen. The display will likely be made from sapphire crystal, a display that is said to be more resistant to scratches (though some reports suggest only the phablet iPhone 6 will use this new glass). Other potential improvements include a faster processor, improved camera, and possibly new haptic feedback technology.

While all of these leaks and rumors are nice, investors know that design -- especially when Apple launches a phone with an entirely new form-factor -- will be likely be key consumers' decision to upgrade to the latest iPhone or not.

So, does the design live up to the Apple standard? Fortunately, we might finally be able to judge the design for ourselves.

Check it out:

Alleged leaked 4.7-inch iPhone 6 rear casing. The part was first shared by Feld & Volk. Image source: MacRumors

With rounded corners and an increasingly sleek form-factor, the design resembles the approach to the iPad Air and iPad mini. The leak comes from Feld & Volk, a Moscow-based company that says, for six years now, it has been working with the same factories that supply parts for Apple products. Notably, the leaked part appears to be incomplete, "with some features such as the full set of camera/mic/flash holes yet to be punched out of the shell," MacRumors notes.

Alleged leaked 4.7-inch iPhone 6 rear casing. Image source: MacRumors

But could the part be the real deal? I reached out to MacRumors Editor in Chief Eric Slivka for comment.

Understanding that these are unfinished pieces, I suspect that they are in fact the real deal. The complexity of the interior of the shell means it would be quite an undertaking to fake it.

Thanks to designers Tomas Moyano and Nicolas Aichino, we can examine a rendering of what the finished version of an iPhone 6 with casing like this might look like.

iPhone 6 concept renderings. Image source: Tomas Moyano and Nicolas Aichino

Best of all for Apple investors, this leak is more confirmation that Apple is, indeed, readying iPhones with larger displays. Further, it's good to see that Apple's iPhone 6 is likely to offer a significant departure form the form-factor used in the iPhone 5 and the 5s, giving consumers more reason to upgrade. Historically, Apple has seen a large percentage of users upgrade when the form-factor for the iPhone lineup is improved.

ISI analyst Brian Marshal is among the growing number of analysts expecting a "massive upgrade cycle" for the device thanks to a larger display. Further, he predicts "many 'Android switchers' returning back to the iPhone" due to the pent-up demand for displays measuring around five inches.

I'm increasingly convinced that the iPhone 6 will be a game-changer.

This small company may win big on Apple's next big product launch
Apple's so-called iWatch will almost undoubtedly shake up an entire industry. But one small company may benefit from the likely enormous adoption of these smart wearable devices more than Apple. Even better, its small stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, just click here!

Friday, July 11, 2014

Inventor Pushes Solar Panels for Roads, Highways

Solar Roadways/APInventors Scott and Julie Brusaw stand for a photo on a prototype solar-panel parking area at their company's business in Sandpoint, Idaho. SPOKANE, Wash. -- The solar panels that Idaho inventor Scott Brusaw has built aren't meant for rooftops. They are meant for roads, driveways, parking lots, bike trails and, eventually, highways. Brusaw, an electrical engineer, says the hexagon-shaped panels can withstand the wear and tear that comes from inclement weather and vehicles, big and small, to generate electricity. "We need to rebuild our infrastructure," said Brusaw, the head of Solar Roadways, based in Sandpoint, Idaho, about 90 miles northeast of Spokane, Washington. His idea contains "something for everyone to like." "Environmentalists like it," he said. "Climate change deniers like it because it creates jobs." While the idea may sound outlandish to some, it has already got $850,000 in seed money from the federal government, raised more than $2 million on a crowd-funding website and received celebrity praise. Solar Roadways is part of a larger movement that seeks to integrate renewable energy technology -- including wind, geothermal and hydro power -- seamlessly into society. The Solar Energy Industries Association, a trade group based in Washington, D.C., described companies like Solar Roadways as "niche markets" in the booming alternative energy industry. "They represent the type of creative innovation that addresses design and energy, while showcasing the diversity of solar applications," said Tom Kimbis, a vice president of the association. Brusaw said that in addition to producing energy, the solar panels can melt away snow and ice, and display warning messages or traffic lines with LED lights. There are skeptics, who wonder about the durability of the panels, which are covered by knobby, tempered glass, and how they would perform in severe weather or were covered with dirt. "It seems like something reasonable and something that is going to be very expensive," said Lamar Evans of the National Renewable Energy Association in Hattiesburg, Mississippi. Another problem would be how to store the electricity that could be generated, Evans said. The Brusaws have produced no estimates of how much the solar panels would cost, so the financial realities of their vision remain an unknown. To demonstrate the concept, the company has created a small parking lot at its headquarters, using 108 solar panels. Vehicles have been driven onto the space, without damaging the panels, he said. "We'll start off small with driveways and walkways," he said. His wife Julie came up with the idea after watching "An Inconvenient Truth," the global warming movie featuring former Vice President Al Gore, Brusaw said. She remembered that Scott had long talked about the concept of electric roads. The U.S. Federal Highway Administration gave the Brusaws $850,000 to develop Solar Roadways over the past few years, and build the prototype parking lot. This year, they turned to the Indiegogo crowd-funding site to raise additional money and move to the next phase. Launched on Earth Day, the campaign got off to a discouraging start, Brusaw said. Donations trickled in slowly, but two factors helped spread the company's vision: a viral YouTube video and celebrity mentions in social media. The video has more than 14 million views. The floodgates opened when actor George Takei of "Star Trek" fame and the TV show "MythBusters" mentioned the company. They received donations from more than 45,000 people in 50 countries. The money will enable the company to hire staff and begin production of more panels, Brusaw said. "Once we've perfected everything, our ultimate goal will be highways," he said.

Thursday, July 10, 2014

S&P 500 Rallies Continue To Face Headwinds

Earlier in the month, I made the case for a stalling scenario in the S&P 500, despite the close proximity to the Fed's September tapering deadline, which is widely expected to jar markets and increase price volatility in all of the major stock indices. So far, this expectation of sideways trading (with a modest downward bias) has been realized, and the SPDR S&P 500 Trust ETF (SPY) is showing losses of roughly 3% for the month of August. Perhaps what has been most accurate about the projection has been the fact that even in the face of positive economic data, any attempts at rallies have been lackluster.

The latest example of this could be seen in the much stronger than expected GDP data out of the U.S., which showed that the world's largest economy grew at a rate of 2.5% for the second quarter. This is more than twice the rate of expansion seen during the first quarter and much higher than the 1.7% rate that was expected in early estimates. To be sure, markets did ease off pressuring prices to the downside, but at this stage it is clear that investors will need much more to shift bias into the bullish camp.

Reasons for Weakness

Reasons for weakness in SPY have come from both internal and external forces. Most recently, positives have been seen in collaborative discussions between Verizon (VZ) and Vodafone (VOD), helping support market sentiment and in Guess? Inc (GES), which posted strong rallies on improved quarterly profits. On balance, however, the negatives have carried more weight. Market uncertainty has seen significant increases based on potential military conflicts in Syria. This is being viewed alongside the increased possibility that the Federal Reserve is prepared to start removing monetary stimulus -- a driving factor that has helped SPY rally nearly 155% from the lows seen in the beginning of 2009.

Policy changes that could be enacted in the next few weeks will completely change the market climate and signal an end to an historic period for the U.S. economy. Encouraging economic data (such as the latest GDP figures) can actually be viewed as negatives because of this, as stronger data supports the Fed's longer-term outlook for the rate of recovery into 2014. So even while potential military activities in Syria might represent nothing more than a short-term risk, it is clear that investors remain reluctant to commit to overly bullish positions and volume activity in equity markets as a whole suggest that a good section of the market is more than content staying on the sidelines until key event risks pass.

Going forward, volatility in the month of September could become erratic as the recurring issue of U.S. debt is revisited and the Federal Reserve is set on a path to commit to a more substantive policy bias in coming weeks. Investors should take note of September's stock performance, as this will be the best indication of the valuations we are likely to encounter into the end of this year. At this stage, markets are at an important crossroads as investors wait for the next driving impulse that takes the S&P out of its slower range trading environment.

SPY Chart Perspective

2218401-13778734765356414-Richard-Cox.pn

Using a longer-term chart perspective (weekly charts) support levels in the SPY are clearly defined. A confluence of historical and Fibonacci support can be found in the 155.90 region, and any approach here should be viewed as a strong buying opportunity. This level marks the 23.6% fib retracement of the rally from below 108, and should contain prices into the end of the year. Resistance above is now seen at 167.

About the author:RichardCoxRichard Cox is a university teacher in international trade and finance. Lecture halls of 80 to 120 students. Lessons in macroeconomics and price behavior in equity markets. Investing strategies in these articles are based on technical and fundamental analysis of all the major asset classes (stocks, commodities, currencies). Trade ideas are generally based on time horizons of one to six months. Follow me on Twitter: @Richard_A_Cox

Visit RichardCox's Website

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Wednesday, July 9, 2014

So Much For Dow 17,000 as Blue Chips Shed 100 Points

If to forgive is divine, to blame is as human as a human can be–which makes today’s stock market drop all the more entertaining as there’s no obvious catalyst for a selloff.

Associated Press

The Dow Jones Industrial Average has dropped 1117.59 points, or 0.7%, to 16,906.62 today, while the S&P 500 fell 0.7% to 1,96371. The Nasdaq Composite tumbled 1.3% to 4,391.46 and the small-company Russell 2000 slipped 1.2% to 1,172.15.

Rhino Trading’s Michael Block blames fear of a Fed rate hike for the stock-market weakness, a fear, it should be added, that he finds misplace:

…the bears and hawks are salivating. They are strange bedfellows. I am holding firm to my conviction that the Street is once again misinterpreting the FOMC's intentions and focus. The economic data doesn't matter anymore – except for how it drives asset prices. Yesterday we watched the hawkish playbook manifest itself on the yield curve. The long end rallied while the short end saw yields move higher. At some point there will be a great opportunity to own the short end for a trade but I am giving that plenty of room, just like I wait until SPUs are closer to 1900 before I buy misguided fear of a hawkish Fed.

Today’s move bears a striking resemblance to yesterday’s, notes ISI Group’s Dennis DeBusschere and Brian Herlihy:

Global risk assets moved lower yesterday with many attributing the reversal to Goldman Sachs (GS) moving up their estimate of the timing of the first Fed rate hike. An earlier or faster policy path from the Fed would put downward pressure on certain factors and sectors, but we would not expect it to cause a broad decline in equity prices. That being said, the pace of market returns needs to moderate or earnings growth needs to significantly accelerate in order to keep S&P multiples from reaching levels that are both unusually high and abnormal given the level of major macro factors.

The folks at MRB Partners see a Fed rate hike knocking 10% off the market but not derailing the bull market:

After more than five years at the lower bound, investors are finally facing the prospect of a U.S. interest rate hike sometime next year. While the timing of the first rate hike is still up for debate, Fed funds futures imply a 90% chance of it occurring in 2015, in line with the guidance of the FOMC.

This upcoming regime shift in monetary policy is worrying for many equity investors. The unprecedented nature of the Fed's monetary policy experiment suggests that there is a greater chance of a policy mistake and, at a minimum, many investors cite rising interest rates as a reason to expect lower equity market multiples in the future.

We conclude that while the chance of a Fed-driven correction in the equity market over the next 6-12 months is high, we expect it to be of limited magnitude, on the order of 10% or less. For now, it is not appropriate to position for an equity market correction, but a further run-up in prices in the near-term could alter the risk-reward assessment.

And don’t forget that Alcoa (AA) will get earnings season started after the close today. Newedge’s Robbert Van Batenburg thinks US companies will do a good job beating forecasts:

Alcoa will kick-off Q2 earnings season today after the close. Wells Fargo (WFC) will be the first US bank to announce earnings on Friday morning. The S&P 500 EPS is expected to grow 8.9% y/y. Of the 133 preannouncements in Q2, 97 were negative vs. 24 positive, a 4:1 ratio, the lowest since Q4 of 2012.

Our analysis highlights the consistent drop in Q2 S&P EPS consensus estimates since the start of the quarter, increasing the probability that EPS beats estimates.

Let the games begin.

Tuesday, July 8, 2014

How are Nadex Binaries Settled? Part 1: Binary Expirations

There are defining points in your life that can help determine the person you become.

Some of these are winning moments, some are losing moments. In trading options, however, the defining point is the settlement.

The settlement in a trade is the value or the price, at expiration, of whatever market you are trading.

The Nadex Glossary defines it this way: “Settlement value is the level at which a contract is settled, based on the expiration value and any relevant parameters of the contract (e.g. Floor/Ceiling levels for Bull Spreads). Binary Options must have a settlement value of either 0 or 100.”

Related: What Is A Nadex Spread?

When you are in an option trade, you are answering the yes or no question regarding whether or not the instrument will settle at a given price. Your settlement is either going to be 0 or 100, depending on whether your answer to the yes or no question was wrong or right. When trading with Nadex, you can always exit the trade at any time prior to expiration.

In order to determine the settlement value, Nadex bases it on the expiration value. This is not just a randomly selected number. There are math calculations involved in reaching this defining value. Again, the Nadex glossary gives us the best definition. It says: “Expiration value is the calculated level of the underlying market at expiration, as determined by Nadex (except for economic events where it is determined by the relevant source agency)."

Nadex uses the following process to calculate expiration value:

1. Take the last 25 trade or midpoint prices in the underlying market. (Midpoints apply to forex; last trades apply to other contracts.)

2. Remove the highest five prices and the lowest five prices.

3. Take the arithmetic average of the remaining 15 prices and round to one decimal point past the point of precision of the underlying market (with the exception of Wall Street 30, which is rounded to the same point as the underlying market).

On forex, Nadex takes t

Sunday, July 6, 2014

Japanese "Militarization"? Why I Declined An Interview With RT TV

Last Tuesday, July 1, I opened my email and saw the following message:

Dear Mr. Harner,

Good day, Sir! I hope this email finds you well!

My name is Katia, I am a producer representing RT TV international, a 24/7 English global news network. We are broadcasting from our headquarters in Moscow as well as from our own bureaus placed around the world, in such major cities like London, New York, Berlin, Washington DC, etc. You might find our news stories on www.rt.com or on our YouTube channel (which was the first media to reach and exceed 1 billion views).

We would be honored to offer you an invitation to an interview with us

Tomorrow Japan's government is reportedly set to make a historic decision on expanding the state's military capabilities and changing the post-WWI Constitution rules.

However, the recent polls shows that 71% of Japanese citizens oppose PM Abe's initiate and believe it will drag Japan into a military conflict. A man has set himself on fire yesterday to bring attention to the situation.

We have learned about your opinion on the topic through article published on the Forbes web site: http://www.forbes.com/sites/stephenharner/2014/02/12/a-dangerous-wsj-column-on-collective-u-s-japan-defense/

We would like to offer you an invitation to an interview with us to learn more of your opinion as Japan is gearing up to make a historical decision.

Would you be interested and available for us today or tomorrow? Interview will take about 10 minutes and we will be providing a video link when it gets on air.

Please, let us know if you could consider our invitation!

Sincerely,

Katia Bylkina, Producer, RT TV US Desk

Saturday, July 5, 2014

15 Oil and Gas Stocks to Sell Now

Popular Posts: Hottest Technology Stocks Now – IGTE GTAT PRLB BBRYHottest Healthcare Stocks Now – MNKD INO ACAD INCY8 Biotechnology Stocks to Buy Now Recent Posts: 9 Oil and Gas Stocks to Buy Now 7 Internet and Web Service Stocks to Buy Now 15 Oil and Gas Stocks to Sell Now View All Posts 15 Oil and Gas Stocks to Sell Now

The ratings of 15 oil and gas stocks are down this week, according to the Portfolio Grader database. Each of these rates a “D” (“sell”) or “F” overall (“strong sell”).

Crescent Point Energy Corp. () ratings are on the decline this week as the company earns an F (“strong sell”). Last week, it received a D (“sell”). The stock also earns F’s in Portfolio Grader’s specific subcategories of Earnings Revisions, Earnings Surprise, Cash Flow and Margin Growth. The stock has a trailing PE Ratio of 118.50. .

This week, Golar LNG Partners () falls to a D (“sell”), worse than last week’s grade of C (“hold”). Golar LNG Partners owns floating storage and regasification units and liquefied natural gas carriers. .

This is a rough week for Cosan Limited Class A (). The company’s rating falls to F from the previous week’s D. Cosan is a fully integrated company in the renewable energy and infrastructure segments in Brazil. The stock gets F’s in Cash Flow and Margin Growth. The stock’s trailing PE Ratio is 41.30. .

The rating of Goodrich Petroleum Corporation () declines this week from a C to a D. Goodrich Petroleum explores, develops, produces and acquires oil and natural gas properties. The stock gets F’s in Earnings Growth, Earnings Revisions, Equity and Cash Flow. As of July 3, 2014, 31.5% of outstanding Goodrich Petroleum Corporation shares were held short. .

EXCO Resources, Inc. () is having a tough week. The company’s rating falls from a D to an F. EXCO Resources is an oil and natural gas company involved in the exploration, exploitation, development and production of onshore North American oil and natural gas properties. The stock gets F’s in Earnings Surprise, Equity and Cash Flow. As of July 3, 2014, 11.1% of outstanding EXCO Resources, Inc. shares were held short. .

This week, Calumet Specialty Products Partners, L.P.’s () rating worsens to an F from the company’s D rating a week ago. Calumet Specialty Products produces hydrocarbon products in North America. The stock receives F’s in Earnings Growth, Earnings Momentum and Earnings Revisions. Cash Flow and Margin Growth also get F’s. .

The rating of Plains All American Pipeline, L.P. () slips from a C to a D. Plains All American Pipeline is involved in interstate and intrastate crude oil pipeline transportation and crude oil terminalling storage activities. The trailing PE Ratio for the stock is 26.50. .

TransCanada Corporation’s () rating weakens this week, dropping to an F versus last week’s D. TransCanada develops and operates energy infrastructures, including natural gas pipelines. .

Enbridge () earns an F this week, falling from last week’s grade of D. Enbridge is in the business of transportation and distribution of crude oil and natural gas primarily in Canada and the United States. The stock gets F’s in Earnings Growth, Earnings Momentum and Cash Flow. The stock currently has a trailing PE Ratio of 70.30. .

StealthGas () gets weaker ratings this week as last week’s C drops to a D. StealthGas offers marine transport services for liquefied petroleum gas producers and users. In Earnings Growth, Earnings Revisions, Earnings Surprise and Cash Flow the stock gets F’s. .

Ultrapar Participacoes S.A. Sponsored ADR () experiences a ratings drop this week, going from last week’s D to an F. Ultrapar Participacoes is engaged in the fuel distribution and chemical businesses in Brazil. Shares of the stock have been changing hands at an unusually rapid pace, twice the rate of the week prior. .

This is a rough week for Gevo (). The company’s rating falls to F from the previous week’s D. Gevo operates as a technology development company for biobutanol. The stock gets F’s in Equity, Cash Flow and Sales Growth. As of July 3, 2014, 11.6% of outstanding Gevo shares were held short. .

PDC Energy () experiences a ratings drop this week, going from last week’s C to a D. PDC Energy is an oil and gas company with drilling and production operations in the Rocky Mountains, the Appalachian Basin and Michigan. The stock gets F’s in Earnings Revisions and Cash Flow. As of July 3, 2014, 11.3% of outstanding PDC Energy shares were held short. .

Slipping from a D to an F rating, Chevron Corporation () takes a hit this week. Chevron is an integrated energy company with operations in countries located around the world. .

This week, Kinder Morgan, Inc. Class P’s () rating worsens to an F from the company’s D rating a week ago. Kinder Morgan is a pipeline transportation and energy storage company. The stock has a trailing PE Ratio of 31.60. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Friday, July 4, 2014

Earnings Scheduled For July 3, 2014

Related ISCA Stocks To Watch For July 3, 2014 Top 4 Stocks In The Sporting Activities Industry With The Highest EPS

International Speedway (NASDAQ: ISCA) is expected to report its Q2 earnings at $0.49 per share on revenue of $186.34 million.

Posted-In: Earnings scheduleEarnings News Pre-Market Outlook Markets

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Thursday, July 3, 2014

Target to customers: No guns please

Target: No guns in our stores, please NEW YORK (CNNMoney) If you're heading to Target, leave your guns at home.

That's the message the retailer "respectfully" sent to shoppers Wednesday.

In a note posted online, interim CEO John Mulligan said that guns in stores create "an environment that is at odds with the family-friendly shopping and work experience we strive to create."

Target (TGT), which has nearly 2,000 stores, does not sell firearms or ammunition. A representative for the company said it can't enforce the request, and will abide by all local gun laws.

The request applies to stores located in communities where people can legally carry firearms openly, Mulligan said.

There are 43 states that have so-called "open carry" laws, meaning you can visibly carry a licensed firearm in public. Many businesses, including Wal-Mart (WMT) and Home Depot (HD) say if guns are allowed in the state, they're allowed in their stores.

But open carry laws don't require businesses to allow guns on their properties.

Starbucks (SBUX), Chipotle (CMG), Sonic (SONC), Disney (DIS) theme parks and Chili's, which is owned by Brinker International (EAT), have recently asked their customers to come unarmed.

Gun-control group Moms Demand Action for Gun Sense in America said it "applauds Target's decision today to ask customers not to bring guns into its stores," in a statement released after the decision.

Related story: Starbucks to customers: Please don't bring your guns!

The group started an online petition in June to demand that Target "protect customers in its stores," which has garnered nearly 400,000 signatures, according to the group. Moms Demand Action also pushed Starbucks and the fast-food chains to take a stand.

Gun-rights advocates ha! ve recently been showing up at restaurants and stores, including some Target locations, openly carrying small arms and large assault rifles to protest their right to bear arms.

Open Carry Texas, which organized many of the demonstrations, wrote on its blog on Wednesday that it "regrets" Target's decision but will honor its "policy of not taking long arms into Target stores or any other business."

Wednesday, July 2, 2014

Why Investors Have High Hopes For India's First Modi Budget

Next Next week should see the first federal budget from new Indian Prime Minister Narendra Modi and his finance minister, Arun Jaitley. It will be the first clear indicator of whether the almost 20% rise in India's stock market this year has been justified or just election-fuelled hype.

Why has the market risen so heavily, first on the expectation of a Modi victory, then on its confirmation? The markets believe India has voted in a more business-friendly government that will boost the national economy. They believe this is a reform-minded administration that will take tough decisions, get infrastructure development underway and support growth.

Are the markets right? The presence or absence of the following initiatives will give us a clue.

Firstly, investors want to see tax reform. Many foreign investors in India have been deterred by tax disputes, with Vodafone Vodafone a prominent example (the glo

bal telco has sought international arbitration out of frustration with India's government). This is a complicated field, but a central part of it is the issue of retroactive tax measures; foreign investors would welcome an assurance that the government will respect tax laws that are already in place. On top of that, there is the expected goods and services tax: the budget is expected to include a clear plan for its implementation and collection.

modi

Secondly, there is the perpetual frustration around Indian infrastructure. It is said that the last government lost power partly because of its inability to get stalled projects moving again, and this one will be judged on its efforts to improve the situation in power, roads and ports. This point is not necessarily central to the budget, but it would be a surprise if the budget announcement were not accompanied by a pledge to improve project completion.

Third, like any budget, this one will announce the direction of new spending. Will it go on subsidies or on infrastructure, healthcare and education? Reducing subsidies is politically difficult anywhere, but particularly in a country with deep and entrenched poverty. Yet investors seem to expect it. "LPG and kerosene are the primary sources of energy for a large portion of households in India and are therefore politically sensitive," says Sonal Varma, analyst at Nomura. There are suggestions there will be a staggered hike in the prices of both kerosene and LPG cylinders. "It would take several years to completely eliminate the subsidy," Varma says. "At the moment these are just proposals, but if the government does decide to announce such a move we believe it would send a positive signal to the markets, make the government's fiscal condition much more credible, and increase fiscal space for capital expenditure."

Finally, and vitally, the budget will be expected to lay out measures for job creation. This might include tax breaks for factories, or measures to create a more skilled workforce.

The thing is, market expectations have been built up so much that even the slightest hint of slow progress may lead to a sell-off, whether justified or not. The long-term future may be bright for both India and its stock markets, but it is going to take something special to sustain the ardour of recent months.