Saturday, August 31, 2013

China manufacturing activity strengthens in August






In this Nov. 27, 2008 file photo, a worker is seen at a Sinopec oil refinery in Wuhan, in central China’s Hubei province. AP



BEIJING – China’s manufacturing activity strengthened in August, official figures showed Sunday, the latest data to suggest that the world’s second-largest economy is stabilizing.


The official purchasing managers’ index (PMI) rose to 51.0 last month from 50.3 in July, according to figures released by the National Bureau of Statistics.


The index tracks manufacturing activity in China’s factories and workshops and is a closely watched gauge of the health of the economy. A reading below 50 indicates contraction, while anything above signals expansion.


The PMI strengthened for the second straight month and comes as other recent data have spurred optimism a slowdown in the economy may have been stemmed.


The first half of this year saw a spike in analyst concerns after an expected rebound from the worst growth performance in 13 years failed to materialize.


China’s economy grew 7.8 percent in 2012, the weakest result since 1999.


Growth in the first three months of the year dipped to 7.7 percent from 7.9 percent in the final quarter of last year and slowed further to 7.5 percent in the three months through June.


British banking giant HSBC said last month that the initial reading of its PMI survey for August came in at 50.1, rebounding from an 11-month low and marking the first time since April the indicator had expanded.


HSBC was due to release its closely watched final PMI index for August on Monday.


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Short URL: http://business.inquirer.net/?p=141123


Tags: Business , China , manufacturing , world



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France drops PH from tax blacklist

By



MANILA, Philippines—The Philippines has been removed from the French government’s blacklist of noncooperative countries for their tax policies.



Finance Secretary Cesar Purisima. FILE PHOTO



This according to the Department of Finance (DOF) which announced on Saturday that the Philippine government’s move to improve its information sharing on tax-related matters with the French government paved the way for the removal of the country from the list.


The Bureau of Internal Revenue now has a solid information-sharing agreement with its counterpart in France, according to the DOF.


In fighting tax evasion and money laundering, the French government has encouraged other countries to share tax-related information, especially on French firms doing business in their territories.


Investors from countries on the blacklist are saddled with stricter tax rules in France.


According to Finance Secretary Cesar Purisima, the Philippines’ removal from the blacklist was a welcome development as it signaled the country’s commitment to fiscal integrity.


“This move is a recognition of the Aquino administration’s commitment and tangible progress in combating tax avoidance and promoting fiscal honesty,” Purisima said in a statement.


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Tags: Bureau of Internal Revenue , Department of Finance , France , tax blacklist



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Tourist accommodations turn to online ads





Peter Pahrice, an Australian businessman living in the Philippines, has a problem that most business owners would aspire for—his transient house in Baguio City is almost always fully booked. All this because he has been applying his marketing savvy online, where he credits 71 percent of his business growth for the past three years.


In fact, it’s not just Peter who is enjoying this trend. A local online direct hotel bookings company, DirectWithHotels, also cites that when combined, their hotel accommodation clients get 8,000 conversions or number of bookings per month when they used online advertising.


Filipinos are indeed becoming more tech savvy when it comes to travel. In fact, 10 percent of the 35 million online Filipinos bought their plane tickets and booked their hotels online, according to the 2012 Asia Pacific Digital Marketing Yearbook. From this trend, companies are realizing the benefits of marketing online.


Even small tourist accommodations can compete with huge hotel chains by marketing online. “We provide online marketing services for independent and hotel groups—businesses that can’t afford to host their own booking engine,” says Jose Edzel del Rosario V, DirectWithHotels Senior Manager for Data and Search Advertising. “Although these are small to medium-sized hotels, we have experienced success in marketing them, seeing the high rate of conversions.”


DirectWithHotels uses several marketing platforms, including online advertising tools like Google AdWords. Initially, they only received 10 percent of their revenues from Google AdWords but eventually it grew to contributing to 50 percent of the company’s total revenue.


Online advertising does not require small and medium-sized hotels to spend a huge budget to compete with large hotel chains. Peter, who owns Baguio Transient, an eight-apartment accommodation in Baguio City, only spends P3,000 per month on Google AdWords, which helped increase their website visits and convert these into actual bookings.


Peter has noted an approximate 20 percent annual growth in website visitors since they began using Google AdWords. Each month, he receives up to 6,000 website visitors. Filipinos have been receptive in planning their travel using the Internet that Peter considers his decision in closing his beach resort in Australia and building a transient house in Baguio City for tourists a good business move.


“Our business has definitely grown a lot. We began with keeping four apartments and now we’re keeping eight apartments, which are almost full during the peak season, from November to May. We’ve also purchased a lot of vans to service our customers from Manila to Baguio City,” says Peter. There was even a time when he had to refer customers to other transient houses as they were already full. “We have experienced significant growth and Google has contributed to it.”


Google AdWords is also instrumental in DirectWithHotels’ growth as a company. In 2007, the company only had 130 employees. But because of the ROI brought in by AdWords, it has grown so much that they are now housed in three floors of the Makati building they occupy today. The company has also several sales offices around the world like Thailand, Latin America, and Argentina.


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Tags: Business , DirectWithHotels , Online Ads , Peter Pahrice , Tourism



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A Strategy for Every Trader: Wave Trading


By: Toni Hansen of Trade Station


When you picture a trading strategy that can be applied to literally any asset class what does it look like? In more than 15 years of trading, there is one particular pattern that I've fallen in love with. I use it to scalp the index futures and to invest in my IRA. It's served me well through bull markets, bear markets, and those times in between as the trends reverse. In this video, I'm sharing it with you. It's a pattern that will look familiar to many of you, but unless you've been following my work over the years, you've probably never been shown what it is that makes it so successful. And without those details, you probably struggled to find that level of success. Watch it. Study it. Trade it. And then let me know what you think!


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Friday, August 30, 2013

Mexico ships 1st load of best tequila to China






A container with bottles of tequila being exported from Mexico to China, parked outside the building of the Tequila Regulatory Council, in Guadalajara, Jalisco state, Mexico, on 30 August, 2013. Mexico is exporting to China, for the first time, 100 percent traditional and pure tequila, thanks to a modification on the Chinese regulations and to a new trade agreement between both countries. AFP PHOTO/Hector Guerrero



MEXICO CITY — Mexico has shipped its first load of blue agave tequila to China in hopes of turning the Asian nation into the biggest market for the alcoholic beverage after the U.S.


The shipment of more than 70,000 bottles contains nearly 14,000 gallons of 100 percent blue agave tequila, considered the best quality.


A Friday ceremony in Guadalajara marked the departure of the $412,000 shipment for the Pacific port of Manzanillo. Mexico says the shipment will arrive in China in 25 to 35 days.


Chinese President Xi Jinping in June lifted the previous import ban on Mexico’s 100 percent blue agave tequila. The methanol content was considered too high until Chinese authorities had a change of opinion after visiting with President Enrique Pena Nieto in Mexico.


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Tags: Agave , Agave Tequila , China , Mexico , Tequila , Trade



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Weekly Futures Recap w/Mike Seery


We’ve asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.


Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.


Grain Futures--- The grain market continues its extreme volatility especially in soybeans up another $.40 this Friday right near contract highs at 13.26 a bushel all due to the fact that the crop is not very good despite heavy rains across much of the Midwest yesterday especially in Illinois but production in Iowa is dismal with a worse crop than the 2011 floods and the 2012 drought which is absolutely astonishing in my opinion, and it looks to me that these prices are headed higher. As I’ve stated in previous blogs the trade that is been working is to be long soybeans & short corn and wheat and its working again as the real strength is and soybeans as corn is still going to have a terrific crop and if wheat could talk it would bark that’s how big of a dog this market is only up $.04 today at 6.44 only $.05 away from making new contract lows as the fundamentals in wheat are much different than in soybeans. Corn futures are up $.06 at 4.71 basically going nowhere in recent weeks after Thursday’s debacle down $.19 due to the heavy rains and it looks to me that corn and wheat will remain weak for quite some time as the possibility of soybeans continuing towards the $14 mark looks pretty good and if you look at soybean meal prices they have hit contract highs once again as massive demand for that product continues to prop up prices towards historical highs. I’ve been recommending buying the oat market which I don’t talk about a whole lot but I believe it has excellent chart structure and I do believe prices are headed higher finishing right around 3.31 a bushel in a pretty lack luster trade this week but if you have a smaller account or even a large account you are only risking around $600 per contract on this trade & whenever the risk reward is in your favor I always take that trade regardless of what I think. One lesson to remember is the fact that I was short soybeans for such a long period of time and I was stopped out at the 10 day high which was 12.21 which was almost 2 weeks ago and that is why you use stop losses because now were at 13.26 and what a debacle that would’ve been if I stayed in this trade and many people probably did & that is why you have to use the 2% rule on your account balance as a risk tool and you have to have an exit strategy & my exit strategy if I’m short to put a stop at the 10 day high regardless of what you think of the market because you must exit and move on and I did and I didn’t turn this trade into a loser or a tremendous loser which it would have become. Another lesson to learn here is you never add to a loser if people have been adding short positions to this market on the way up they are getting absolutely crushed so remember when trades go against you make sure you just put a stop and you never add any more contracts because of the fact that you are wrong because you only add contracts when you are right. TREND: HIGHER IN SOYBEANS –CHART STRUCTURE: AWFUL


Crude Oil Futures----Crude oil futures in the October contract sold off a $1.50 for the 2nd straight trading session as worries about Syria are fading to fade finishing at 107.50 a barrel down around $1.50 right near session lows as investors lately have been taking advantage of the hysteria going on in the Middle East pushing prices higher recently but profit taking set in on the close today. It will be interesting to see how prices react over the Long Labor Day weekend ahead making traders nervous today. The trend is your friend in the commodity markets and I have been recommending buying crude oil when it broke above 108 which was contract highs and I still believe prices are headed higher and I would place my stop below the 10 day low which is at 103.53 risking at this point around $2,500 per contract if you believe prices are headed higher. Crude oil is a very large contract meaning if you are correct on the direction in this market it will pay you off very well, however if you are wrong it can do serious damage to your trading account if you risk too much money or overtrade the market so make sure you use stop losses or invest in the option market where your losses are limited to what the premium costs. TREND: HIGHER –CHART STRUCTURE: EXCELLENT


Coffee Futures-- Coffee futures were extremely quiet this Friday afternoon still hovering right near 4 year lows with prices not seen at these levels since June 2009. Coffee futures are still trading below their 20 and 100 day moving average basically trading unchanged for the week as pressure has been put on prices due to the fact of a weak Real versus the U.S dollar which is actually hitting new lows & pressuring all the Brazilian products at this time. In all my years of trading I can’t remember such a nonvolatile coffee market and I’m just wondering when this will end because volatility certainly has come back in all the other markets and I still believe if you’re a long-term investor this is a sleeping giant waiting to be woken and when it does you will see extreme volatility come back especially at 4 year lows. TREND: LOWER –CHART STRUCTURE: EXCELLENT


Orange Juice Futures-- Orange juice futures were slightly lower this Friday afternoon still trading above their 20 and 100 day moving average but really there is no trend at this point in time and I’m still recommending sitting on the sidelines and waiting for something to develop as we enter hurricane season possibly pushing prices higher. The chart structure in orange juice at this time is OK as in the last 3 months prices traded as high as 152 and as low as 126 and I’m still recommending watching this market at this time as volatility will increase during hurricane season. TREND: MIXED –CHART STRUCTURE: SOLID


Cotton Futures-- Cotton futures were lower for the 4th consecutive trading session hitting a 12 week low before rallying on the closing bell to finish up 25 points at 83.49 & as I was recommending in yesterday’s blog to be short this market with a futures contract or some type of put option because prices are starting to look weak with the next major support at 81.72 which is the contract low and what a difference a week makes when prices were trading at 93.54 on August 19th now down about 1000 points quickly. The reason for such a dramatic drop is U.S production is going to be very solid as well as Indian production which is ahead of expectations with China releasing or possibly releasing some of their cotton to the market which is putting more pressure on prices at this time with very little bullish fundamental news out there. The chart structure in cotton is starting to improve as it’s starting to look like a classic bear market that grinds lower like what sugar and coffee have been doing for several years and I do think prices are headed lower. TREND: LOWER –CHART STRUCTURE: IMPROVING


Sugar Futures-- Sugar futures are trading below their 20 and 100 day moving average with extremely low volatility settling last Friday at 16.47 basically unchanged for the week settling around 16.40 as volatility continues to stay away from this market at the present time. There is major support in sugar prices at 16 which the contract low and we haven’t seen those prices since July 2010 despite the fact that crude oil prices are right near contract highs & that usually helps support the sugar market to the upside since sugar is used as a bio diesel, but at this point with the Real sinking against the U.S dollar to new lows pressuring agricultural products in Brazil and the fact that we have ample supply so at this time I would still be sitting on the sidelines waiting for some type of trend and volatility to develop. TREND: LOWER –CHART STRUCTURE: EXCELLENT


U.S. Dollar Index Futures-- The U.S dollar index in the December contract is up for the 2nd consecutive trading session trading at 82.45 higher by 15 points hitting a 4 week high against the major foreign currencies as investors are seeking a safe haven with higher interest rates and problems in the Mideast the dollar is starting to look appealing in my opinion. I’m recommending traders to take a long position buying a futures contract and place a stop below the 10 day low which was just hit on August 20th at 81.03 risking around $1300 per contract as I do think the momentum will continue to the upside here in the short term as investors are fleeing out of European banks and putting the money back in the U.S dollar & in my opinion I believe that is a wise decision which could prop up prices which have come down dramatically in recent weeks. The strength of the U.S dollar today had a negative influence on the precious metals & energies; however I do think this is more of a flight to quality because I do believe you could still have a higher dollar and higher oil and precious metal prices at the same time. TREND: HIGHER –CHART STRUCTURE: IMPROVING


What do I mean when I talk about chart structure and why do I think it is so important when deciding to enter or exit a trade?-- I define chart structure as a slow and grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market and allowing you to place a stop loss with will be relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure but markets that continue to trend like the current soybean complex allowing for you to place close stops as it continues to fall dramatically. I always like to place my stops at 10 day highs or 10 day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loses.


If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com


There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor.


Michael Seery, President

Seery Futures


Facebook.com/seeryfutures


Twitter–@seeryfutures


Phone # (800) 615-7649


mseery@seeryfutures.com



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Today's Video Update: Syria, The End of Summer and What's Ahead


Hello traders everywhere! Adam Hewison here, President of INO.com and Co-creator of MarketClub, with your mid-day market update for Friday, the 30th of August.


The U.K. Nixes Their Involvement In Syria, Should The U.S. Go It Alone?

When the vote was tallied last night in the British Parliament, the U.K. effectively dropped out of supplying any military support in Syria. This vote put the Obama administration in a very difficult spot, should the U.S. go it alone or backdown and lose face? Well, according to our poll, almost 77% of our readers voted that the U.S. should not get involved in Syria. So does the administration go against the will of the people? Only time will tell.


At the moment the world has backed Pres. Obama into a corner, if he doesn't do anything the U.S. is going to look weak and if he lob's in a few cruise missiles he is going to look pathetic at best. There is no win-win solution in either scenario.


Let's take a look at the markets and see how they are ingesting all of this information and what MarketClub's Trade Triangle technology is indicating. I'll also be looking at the monthly charts to get a bigger picture of what's going on and see how the various markets are closing out the month. Look for thin trading conditions today as many traders have taken off to enjoy the last days of summer.


I had the good fortune last night to appear on FOXBusiness with Charles Payne, unfortunately my train was delayed and I missed part of the show, but I was able to participate in the second part at 6:40 pm EST. It was a great experience to be on the show with Charles and be back in New York for a 2 hour visit.


Vote In Our Poll On Syria

This is perhaps one of the most important polls we have conducted on our blog. Vote or leave a comment, pro or con on this impending conflict.


Have a great Labor Day holiday everyone,

Adam Hewison

President, INO.com

Co-Creator, MarketClub


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Micro-Cap Oil Stocks that Hit the Jackpot


The Energy Report: With oil prices firming up over the past couple of months and the spread between West Texas Intermediate (WTI) and Brent Crude narrowing, what are your price expectations for the remainder of 2013 and into next year?


Phil Juskowicz: While I don't spend a lot of time predicting commodity prices, I personally see relatively stable short-term oil prices. Intermediate or long-term prices may weaken, assuming no supply disruptions arise from political upheavals, while gas prices may strengthen based on supply/demand fundamentals. We've seen continued oil supply growth and the short term market seems to be pretty range bound, having developed a good base around the $100 per barrel ($100/bbl) level.


TER: Where do you see some of the best investment opportunities in the oil and gas business?


PJ: Micro-cap exploration and production (EP) stocks have severely underperformed the SP Small Cap EP Index since the second half of 2011 (H2/11). However, the definition of "small cap" depends on who you're talking to. The Small Cap EP Index consists of companies around the billion-dollar range like Approach Resources Inc. (AREX:NASDAQ) and Northern Oil Gas Inc. (NOG:NYSE). Casimir has a micro-cap EP index, which is comprised of companies with market caps up to $500 million ($500M) with some names under $100M. That index level started to diverge in H2/11. Both of these groups consist of relatively equal gas/oil weightings, so the performance should not, in our opinion, be attributed to the relative strength of oil prices over gas that commenced around that time. As a result, we believe that there are attractive investment opportunities in the micro-cap EP universe.


Casimir Micro-Cap EP Index (White) vs. SP Small-Cap EP Index (Yellow)


idex


Casimir Micro-Cap EP Index composed of: AMZG, ANFC, CAK, CPE, CXPO, EGY, EEG, ENRJ, ENSV, FEEC, FXEN, GMET, GNE, HDY, HNR, IFNY, IVAN, LEI, MCEP, MILL, MPET, MPO, OEDV, PHX, PNRG, PSTR, RDMP, SARA, SSN, STTX, TAT, TENG, TGC, TPLM, USEG, WRES, ZAZA


Source: Bloomberg; Casimir Capital


TER: How do you choose the companies in your coverage list?


PJ: We look for small companies that have largely flown "under the radar screen" and are underfollowed. The companies we cover have strong management teams and operate in premier areas with good assets that have substantial cash flow potential.


TER: Do you cover any service companies?


PJ: Enservco Corp. (OTCBB:ENSV) is on our "watch list". The company is the only nationwide provider of hot oiling, well acidizing and frack heating services generally used to coax oil out of the ground, for example to counter paraffin buildups. Enservco experienced healthy margins in Q2/13 despite it typically being a seasonally weak time for heating services. The company continues having to turn customers away in some areas while it builds out its fleet. Management, in our opinion, has a track record of building successful companies and its regional staff has strong relationships with EPs. The company is also expanding into other basins and successfully tapping into new revenue sources.


TER: Why aren't competitors seeing the opportunity here and moving in to get a piece of the action?


PJ: There are regional pockets of mom and pop shops that will do some of these services, but, a nationwide company like a Noble Energy Inc. (NBL:NYSE) might turn to Enservco because it already has a reliable relationship with Enservco's staff in different areas. Enservco's services account for a very low percentage of total well drilling and completion costs (it might cost around $100,000 to service a $7M well) so customers are not as likely to conduct competitive bidding processes. Instead, they choose to use a company with which the frontline managers already have existing relationships.


TER: So it has developed a national reputation, which is its competitive strength.


PJ: And it's building out the capacity as we speak. Enservco is expanding its already large presence in the Marcellus Formation. In its Q2/13 conference call, management said they were starting to see the Utica play out a little bit. The Utica underlies the Marcellus in a lot of areas and Enservco gets some economics of scale there. [See map] Furthermore, management has been getting the word out more and also may be contemplating a reverse stock split and listing on another exchange.


Marcellus


Source: Marcellus Coalition


TER: What EP names on your coverage list look interesting?


PJ: We like Miller Energy Resources (MILL:NYSE; MILL:NASDAQ), which, in late 2009, captured former Pacific Energy Resources Ltd. assets out of bankruptcy that were valued at $500M for an outstanding $4.5M. Miller's entire enterprise value, meanwhile, is just $240M. Moreover, its infrastructure assets were valued by third parties on behalf of its lender at $190M. What makes these assets most attractive is the fact that recent well results indicate that original estimates by Forest Oil (which sold the properties to Pacific in 2007) may in fact be correct, which would mean that these Alaskan assets could contain 100200 million barrels (MMbbl) of recoverable oil reserves. Proved oil reserves presently stand at 8.61 MMbbl.


TER: How was Miller able to buy $500M worth of assets for less than 1% of their value? Even in bankruptcy, you'd think that there'd be buyers willing to pay more than that.


PJ: David Hall, a Miller Energy executive who had worked on the assets even before Pacific bought them from Forest Oil in 2007, was following the Alaskan bankruptcy proceedings. He got in touch with the CEO of Miller, Scott Boruff, and told him about these assets that were becoming available.


TER: Why does Miller believe that the original estimates of recoverable oil reserves may, in fact, be correct?


PJ: The thesis is that Forest Oil used the wrong completion techniques, which is why well performances had dropped off. The completion techniques Forest Oil used were in fact different from techniques used for other assets on the McArthur Trend. David Hall believed that workovers on existing wells, for example, replacing some electric submersible pumps and making changes to completion techniques on new wells, could improve production. Low and behold, that's exactly what's happened.


In addition, Miller just started doing sidetracks of some of these old wells. It posted a 21-day production test of its RU-2A well several weeks ago at 1,314 barrels per day, which would indicate that that the oil's there and it's recoverable. Management has been doing a good job of utilizing preferred equity to have substantial capital expenditure programs without diluting the common shareholders. To top it off, it has about 600,000 undeveloped acres that it's just starting exploration on as well.


TER: What other names look interesting?


PJ: I like Trans Energy Inc. (TENG:OTCBB), which is a pure play in the Marcellus Shale. The company holds about 20,000 net acres in the Marcellus, a substantial portion of which are in the core, liquids-rich part of the play. Operators, including Range Resources Corp. (RRC:NYSE), EQT Corp. (EQT:NYSE) and Gastar Exploration Ltd. (GST:NYSE), continue to increase their return assumptions for acreage adjacent to Trans Energy's. The company's production is set to ramp up as soon as Williams Companies Inc. completes the construction of certain infrastructure. Trans Energy's acreage is in northeast West Virginia, on the southwest Pennsylvania border. There's been a lot of success coming out of that area.


TER: What sort of strategy would you suggest our readers consider?


PJ: I think the micro-cap space, in general, is less correlated to the market's vagaries. Perceived changes in foreign interest rates, for example, have a larger effect on large-cap names. Micro-cap pricing is determined more by company-specific dynamics, such as anticipated future cash flows. Plus, a lot of micro-cap names and EPs in general seem to be more active on hedging, and therefore should be less susceptible to changes in commodity prices. As a result, investors that exercise due diligence should be rewarded for accurate cash flow predictions. If you want to find companies where your hard work can actually pay off, then the micro-cap space is a good place to look.


Micro caps seem to be getting more active in reaching new investors, and some of the management teams have regrouped from previous lives and are starting up very successful new companies. I think Bonanza Creek Energy Inc. (BCEI:NYSE) is a great example of management hailing from one company and getting back together and starting all over again.


TER: Thanks for talking with us today and giving us some interesting input, Phil.


PJ: I appreciate the opportunity.


Philip Juskowicz, CFA is a managing director in the research department at Casimir Capital, a boutique investment bank specializing in the Natural Resource industry. Juskowicz began his career at Standard Poor's in 1998, where he was one of the first analysts to recommend Mitchell Energy, credited with discovering the Barnett Shale. From 2001-2005, He worked with a former geologist in equity research at both First Albany Corp. and Buckingham Research. At Buckingham, Juskowicz was promoted to a senior oilfield service analyst position, leveraging his extensive knowledge of the EP space. From 2006-2010, he was an insider to the oil and gas industry, serving as a credit analyst at WestLB, a German investment bank. In this capacity, Juskowicz was responsible for $500M of loans to energy companies and projects. He earned a Master of Science in finance from the University of Baltimore.


Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.


DISCLOSURE:

1) Zig Lambo conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family owns shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None.

3) Philip Juskowicz: I own or my family owns shares of the following companies mentioned in this interview: Bonanza Creek Energy Inc. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Empire Energy Group Ltd. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.


5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.


Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/LTUh9mSdjKo/15553



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Businesses less optimistic about Q3 prospects


Market volatility dampens local trade sentiment, says BSP


By



Local businesses were slightly less optimistic about prospects in the third quarter amid fears that volatility in financial markets could dampen the real economy.


Results of the Bangko Sentral ng Pilipinas’ (BSP) quarterly Business Expectations Survey (BES) showed that companies with rosy outlooks still outnumbered the pessimists, although the gap between the two was slightly narrower than the previous three-month period.


“The sentiment of businesses in the Philippines mirrored the weaker outlook in Hong Kong, South Korea, and India, but was in contrast to the more favorable sentiment of businesses in the United States, the United Kingdom, Canada, Germany, and New Zealand,” the BSP said in reporting the survey results.


The overall confidence index for the third quarter—which marks the height of the country’s rainy season—slumped to 42.8 percent, lower than the record high of 54.9 percent in the second quarter.


The confidence index is the difference between companies that said they were optimistic and those that believed otherwise.


Companies covered by the survey cited lower seasonal demand, possible operational interruptions due to bad weather, stiffer competition from China, and volatile movement of the peso as the main reasons for the deterioration in their confidence, the BSP said.


However, the same survey showed that businesses saw conditions improving in the fourth quarter of the year when demand is usually strongest.


The confidence index for the October to December period of the year reached 60 percent—a record high.


“This suggests that the growth momentum could accelerate in the last quarter of 2013,” the BSP report said.


Historically, the BES has a close correlation with the country’s GDP, BSP Deputy Governor Diwa C. Guinigundo said during a press conference.


“You could say [the BES is] a leading indicator,” Guinigundo added.


The BSP said the rosier outlook for the last quarter of the year was brought on by the usual pickup of business during the holiday season, continued increase in orders and projects leading to higher volume of production, and the introduction of new product lines.


Guinigundo said that the better forecast for the fourth quarter could be an indication that businessmen expect the volatility in financial markets to subside soon.


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Tags: Bangko Sentral ng Pilipinas , BSP , Business , economy , Markets and Exchanges



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PH BPOs urged to tap emerging markets

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The Philippine business process outsourcing industry has been urged to do all it can to tap emerging market economies, which are expected to account for 50 percent of the world’s gross domestic product by 2020.


This will enable the Philippines to further strengthen and cement its foothold as the world’s top destination for global outsourcing and related investments.


Asheesh Mehra, Japan and Middle East head of Infosys BPO, said that the Philippines must also gear up for the surge in demand for offshore outsourcing services from emerging market economies.


These emerging markets, which are seen to account for 38 percent of global spending and 55 percent of fixed capital by 2020, included China, Russia, Turkey, Brazil, and other countries.


“Six hundred billion dollars in foreign direct investments are going to these emerging market economies. Imagine how many industries are being created. And yet, we are focusing only on the United States. We need to spread our wings,” Mehra said during the International Contact Center Conference and Expo.


While countries belonging to the Group of 7 (G-7) managed to grow by only 1.4 percent in 2012, emerging market economies, made up of 81 out of 192 countries in the world, posted an average growth of 4.9 percent, Mehra told the delegates who attended a forum hosted by the Contact Center Association of the Philippines.


Mehra pointed out that, although the Philippines may have established a niche in offering voice services, it has not, however, “maximized its full potential” as a destination for offshore outsourcing of data services like India.


Thus, local BPOs need to educate workers to make them more than just a friendly voice on the line and enable them to acquire higher value skills, he said.


“Philippine companies must be strong in strategic improvisation, flexible and experimental… The cookie-cutter approach (that companies used in penetrating the US market) may no longer apply in emerging markets,” Mehra explained.


“The key to unlocking the emerging market economies’ door is to think differently. There may be significant opportunities, but there are also huge complexities such as the diversity in culture, language and scale,” he added.


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Tags: bpos , Business , emerging markets



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Construction projects in PH on the rise

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The value of construction projects with approved building permits rose in the second quarter from a year ago on the back of substantial demand for residential and office spaces.


This was according to the National Statistics Office, which reported that construction projects with building permits were valued at P66.4 billion in the second quarter, up by nearly 18 percent from P60.9 billion reported in the same period last year.


The total value was spread over 29,424 projects, lower by about 4 percent than the 30,614 approved building projects reported for the same period last year.


Nearly half, or P32.6 billion, of the total value of construction projects was accounted for by the residential sector. Non-residential accounted for P28.5 billion and the balance covered repairs.


The total floor area for residential projects stood at 3.3 million square meters, while that for non-residential settled at 2.1 million square meters.


The total floor area for residential projects was up from 3.1 million square meters a year ago, while the total floor area for office and other non-residential projects was lower than last year’s 2.8 million square meters.


The double-digit growth in the value of construction projects was attributed to still significant demand for residential and office spaces.


Economists said the demand for residential spaces in the Philippines was partly boosted by remittances from overseas Filipino workers, while demand for office spaces was driven in part by demand from business process outsourcing (BPO) firms.


Remittances continue to drive household expenditures in the Philippines, with global demand for overseas Filipino workers remaining strong.


The Philippines has also become a key destination for BPO investments due to its English-speaking workforce and availability of information-technology infrastructure.


Meantime, the 4-percent drop in the number of projects was attributed to the rising cost of construction materials.


The NSO reported that retail prices of selected construction materials rose year on year by 3.9 percent in April, 4 percent in May, and 2.1 percent in June, for an average increase of 3.3 percent for the second quarter.


The average increase in prices of construction materials was faster than the average inflation rate for the period of 2.7 percent.


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Tags: Business , Construction , construction projects



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NFA beefs up depleted food stock

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Palay harvest in the Visayas and Mindanao has started earlier than usual, providing an opportunity for the government to beef up its rice inventory in the aftermath of successive storms that resulted in extensive crop damage.


Regional managers of the National Food Authority (NFA) have already been ordered to step up their procurement of vital crops, said Orlan A. Calayag, NFA administrator.


“(We want) to capture a sizeable portion … for the country’s food security stocks,” Calayag explained.


He added that farmers in Western and Eastern Visayas as well as Western and Southern Mindanao and Cagayan have started harvesting palay as early as mid-August.


Calayag said in a statement that the early harvest would serve to boost the country’s rice stock. The bulk of the harvest from Central Luzon, Southern Tagalog, Ilocandia and Cagayan Valley are expected during the usual harvest months of September to November.


“The NFA stock alone is recorded at 604,762 metric tons, or 12,095,234 bags, as of Aug. 13,” the NFA chief said.


Last week, the NFA said prices and supplies of rice in areas affected by floods remained stable as the NFA distributed some 7,900 bags of rice to victims of tropical storm “Maring.”


The bulk of the NFA’s emergency rice stock went to Metro Manila and Central Luzon, parts of which had been submerged for several days.


The agency said 3,605 bags were allocated to the National Capital Region while 2,578 bags went to Region 3.


The rest of the rice went to Laguna in Southern Tagalog, the Cordillera Administrative Region and Ilocandia.


“The NFA also continues to hold sufficient buffer stock of rice for market stabilization and to effectively address any emergency rice requirements,” the agency added.


Latest data from the Bureau of Agricultural Statistics showed that the country’s rice stock as of July 1 stood at 2.19 million metric tons (MT)—good for 65 days.


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Tags: Business , Food stock , NFA , NFA beef



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Chart to Watch - FFIV


We've asked our friend Jim Robinson of profittrading.com to provide his expert analysis of charts to our readers. Each week he'll be be analyzing a different chart using the Trade Triangles and his experience.


Today he is going to take a look at the technical picture of F5 Networks, Inc. (NASDAQ_FFIV ).


This week we'll look at the stock chart of FFIV.


When trading stocks we use the monthly MarketClub Trade Triangle to tell the trend of the stock, and the weekly MarketClub Trade Triangle to time the trades.


Right now FFIV is on a green monthly Trade Triangle which means the stock is in an up trend.


FFIV is on a red weekly Trade Triangle reflecting the current down move, which is more than likely, a counter trend correction within the larger up trend.


If FFIV trades higher from here and puts in a green weekly MarketClub Trade Triangle, that would be a buy signal with the MarketClub system, since the monthly and weekly Trade Triangles would both be green.


FFIV put in a high of 145.76 in January of 2011, so there is a lot of upside potential for this stock.


I would not be surprised to see FFIV eventually trade above the old high if every thing goes well for the companies earnings, and the general market stays bullish.


FFIV is an excellent Chart to Watch right now, because it looks like higher prices might be on the way.



Thanks,

Jim Robinson

Profit Trading.com



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Local share prices make strong rally

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MANILA, Philippines – Most local stock prices rallied sharply for a second straight session on Friday on upbeat economic prospects for the Philippines and a mix of month-end window-dressing and bargain-hunting.


The main-share Philippine Stock Exchange index racked up 130.96 points or 2.2 percent to close at 6,075.17.


For the week, the main index was still down by 1.4 percent from last Friday’s closing of 6,161.21 due to the bloodbath seen earlier in the week.


On Friday, all counters were up but the industrial, holding firm and property counters led the rally, all of them having risen by over 2 percent.


Turnover was heavy at P14.43 billion.


There were 100 advancers or nearly double the number of decliners, 53.


“Positive news for the Philippines is driving stock prices today. Selective buying is okay but manage cash and gains to avoid anxiety,” said fund manager Gus Cosio, president of First Metro Asset Management Inc.


The biggest PSEi gainers were EDC, URC, AGI, AEV and MPI which all surged by over 5 percent while RLC and Petron went up by over 4 percent. AP, DMCI and ALI rose by 3 percent. The most actively traded stocks were SMIC (+1.36 percent), ALI (+3.31 percent) and PLDT (+2.79 percent).


On the other hand, there was profit-taking on Jollibee (-3.59 percent) while SMC, JG Summit, Philex and Bloomberry also ended lower.


There was follow-through buying after Thursday’s report that the Philippine domestic economy had expanded by 7.5 percent in the second quarter year-on-year, the fastest growth seen in Southeast Asia, putting the country at par with China’s pace of growth.


The second quarter growth rate likewise exceeded market consensus forecast of 7.3 percent, resulting in upgrades of growth outlook for the full year.


Most Asian stock markets except those in Japan and China also gained ground on Friday as jitters over Syria eased.


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Tags: Business , local share prices , Markets and Exchanges , Philippine stocks , PSE



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Thursday, August 29, 2013

Japan prices rise at fastest pace since late 2008





TOKYO – Japan’s consumer prices rose in July at their fastest pace for almost five years, data showed Friday, giving cheer to the government’s easy-money policy but putting a strain workers owing to slow wage growth.


The reading, which excludes volatile prices of fresh food, was up 0.7 percent from a year earlier, the biggest rise since a 1.0 percent increase in November 2008 when expensive energy imports temporarily offset domestic deflationary pressure.


It also follows June’s 0.4 percent increase, which marked the first rise in 14 months, according to the internal affairs ministry.


The ministry added that unemployment edged down to 3.8 percent in July – its lowest since October 2008 – from 3.9 percent in June.


Separately the economy and industry ministry said factory output rose 3.2 percent on month in July, reversing a revised fall of 3.1 percent in the previous month.


The latest numbers will provide a lift for Prime Minister Shinzo Abe, who has pledged to reverse 15 years of deflation with active spending, which he says will stoke growth.


The latest factory output numbers are “good if we consider exports, which weren’t that favourable during the month”, said Norinchukin Research Institute chief economist Takeshi Minami.


“It shows the economic recovery remains intact,” he told Dow Jones Newswires.


Mizuho Securities Research and Consulting senior economist Norio Miyagawa said higher prices are “further proof that the Japanese economy is solidly recovering. The next challenge is how soon it will start pushing up wages”.


Household spending in July rose a marginal 0.1 percent on year, with disposable income at wage-earning households up 0.4 percent.


Although there are early positive signs of the effect of Abe’s policies, the higher consumer prices were fuelled by increases in the cost of electricity and gasoline, which could put a strain on workers amid stagnant wage growth.


The price increases in the past two months have largely represented “cost-push” inflation, driven by high global energy prices as well as a weaker yen that has made imports more expensive, Norinchukin’s Minami said.


“It’s a key for Japan whether we can smoothly shift from cost-push to demand-pull type of inflation,” Minami said.


The rises also come as Abe considers introducing a sales tax plan next year, which Minami, among other analysts, warns could smother any economic recovery.


The planned rise “will weigh on prices as the move is likely to kill the current positive momentum in prices by damping consumer sentiment”, he said.


Japan plans to raise its five-percent sales tax to eight percent in April 2014 and to 10 percent in October 2015 to help tackle mounting public debt as the population ages.


The government is expected to make a final decision in September on whether to go ahead with the hike.


Finance Minister Taro Aso said Friday the latest economic data showed a continued recovery in the world’s third largest economy and would positively influence a tax hike decision.


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Tags: Commodities , economy , Employment , Japan



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Asian stocks mixed despite easing concerns on Syria





HONG KONG – Asian markets were mixed on Friday as upbeat US economic growth data and easing concerns about an imminent strike on Syria were offset by mild profit-taking following the previous day’s gains.


The quiet trade brought an end to a torrid month for global shares and currencies dominated by fears over the end of the US Federal Reserve’s stimulus program as well as the possibility of military action in the Middle East.


Tokyo eased 0.67 percent by the break, Hong Kong was 0.14 percent lower, Sydney added 0.27 percent and Seoul was 0.48 percent higher while Shanghai edged up 0.10 percent.


Wall Street provided a positive lead after the Commerce Department said the US economy grew at an annual rate of 2.5 percent in the April-June quarter, much better than the original estimate of 1.7 percent.


It said stronger consumer spending and exports underpinned the pickup from the first quarter’s sluggish 1.1 percent pace, while exports were stronger and imports slower than originally estimated.


The Dow rose 0.11 percent, the S&P 500 added 0.20 percent and the Nasdaq increased 0.75 percent.


Investors were a little more buoyant as the likelihood of a US-led attack on Syria looked less imminent, as lawmakers in London voted against such a move.


And while the White House signalled it was ready to go it alone in punishing Syria for a deadly chemical attack on its civilians, analysts said they did not expect a strike this weekend, as was initially thought.


“There just seems to be less urgency about an attack any time soon,” said Alec Young, global equity strategist for S&P Capital IQ. “The stress level has come down a little.”


Expectations of a military strike against Syria sent shares diving this week as it fuelled concerns that a wider conflict was looming in the oil-rich region.


On forex markets Friday the dollar – which sank below 97 yen this week- was at 98.21 yen, compared with 98.32 yen late in New York.


Currency traders seemed unmoved by data out of Tokyo showing July consumer prices rose at their fastest pace in almost five years, giving cheer to the government’s easy-money policy. The rises were mostly attributed to the weaker yen making energy imports more expensive.

The euro traded at $1.3244, from $1.3241, while it also fetched 130.07 yen from 130.18 yen.

Emerging markets currencies were also slightly up. The Indian rupee was at 65.60 to the dollar, well down from the record low of 68.80 on Wednesday, partly thanks to central bank moves to support the unit.


The Indonesian rupiah was at 10,920 to the dollar, compared with levels above 11,000 this week, while the greenback bought 32.06 Thai baht down from 32.29.


Emerging markets have been hammered this month as dealers bet on the Fed winding down its bond-buying stimulus, which has helped fuel an investment splurge in developing economies over the past year.


Among the worst hit markets has been Manila, which has lost 10.5 percent this year, while Jakarta has fallen 11 percent and Bangkok 9.2 percent.


Oil prices declined further after peaking on Wednesday at multi-month highs because of supply fears linked to the Syria crisis.


New York’s main contract, West Texas Intermediate for delivery in October, was down $1.50 at $107.30 a barrel, while Brent North Sea crude for October eased $1.27 to $113.89.


WTI touched a two-year-high of $112.24 Wednesday while Brent rose to $117.34 at one point, its highest for six months.


Gold cost $1,407.25 an ounce at 0230 GMT, up from $1,409.96 late Thursday.


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Tags: Asia , economy , markets , stocks , syria , Trade , Violence



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Sugar industry urged to brace for tariff cuts

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Labor Secretary Rosalinda Baldoz. INQUIRER FILE PHOTO



MANILA, Philippines—Labor Secretary Rosalinda Baldoz urged sugar industry stakeholders to work together in finding solutions to mitigate the possible negative impact on the industry when tariff barriers on agricultural commodities come down in 2015 under the Asean Free Trade Agreement (Afta).


The Afta is a trade agreement among the 10 members of the Association of Southeast Asian Nations (Asean) to gradually eliminate tariffs and nontariff barriers within the group in order to increase Asean’s competitive edge as a production base and attract more foreign direct investment.


In the case of sugar, tariff on imported sugar will be reduced to five percent by 2015, from 18 percent in 2013.


At a recent meeting with industry stakeholders, Baldoz stressed that there is already a roadmap for the sugar industry that was prepared by the Sugar Regulatory Administration. The goals under this plan are to achieve self-sufficiency in the commodity; the use of sugarcane, sugar and its by-products for bio-fuel (ethanol) production; and power cogeneration.


However, she noted sadly that there was no roadmap for sugar industry workers.


She said the improvement of sugar workers should have been included in the goals of the road map so they will remain working in the industry as essential partners in production.


“For those who cannot remain in the industry, we have to prepare them for alternative employment or livelihood,” Baldoz told the stakeholders.


“The workers should not be left behind. There is a need for us to move as one and fast to replicate or adopt existing successful models,” she said.


Baldoz directed the Bureau of Workers with Special Concerns, the lead DOLE lead agency in the implementation of the Sugar Amelioration Program, to organize a two-day workshop with the sugar industry stakeholders to gather inputs for the formulation of a roadmap for the workers which will be submitted to the President as part of the “sugar industry roadmap.”


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Tags: Afta , ASEAN , Asean Free Trade Agreement , Association of Southeast Asian Nations , Rosalinda Baldoz , sugar industry



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Dollar advances on better US economic growth






AFP FILE PHOTO



NEW YORK CITY – The dollar Thursday advanced against other major currencies after a surprisingly upward revision of second-quarter US economic growth that revived expectations that the Federal Reserve will scale back its stimulus.


Near 2100 GMT, the euro traded at $1.3241, down from $1.3338 Wednesday.


The dollar bought 98.32 yen compared with 97.63 yen.


The euro fell to 130.18 yen from 130.23 yen.


Thursday’s US Commerce Department report estimated that the US economy grew by 2.5 percent in the second quarter, well above the 1.7 percent originally estimated and better than the 2.1 percent revision seen by many analysts.


The report showed better consumer spending and more favorable export and import data compared with the initial GDP report.


The strong GDP numbers improve the chances the Fed will taper its $85 billion a month bond-buying program, said Christopher Vecchio, currency analyst at DailyFX.


“With the US economy growing in line with the Federal Reserve’s forecasts from June, there is reason to believe that the Fed will move ahead with its plan to reduce the pace of QE3 next month,” Vecchio said.


Kathy Lien, managing director at BK Asset Management, said Thursday’s data put the Fed “on track” to taper the bond-buying program in September.


“Most policymakers have probably made their decision on when they want to taper and the only question is how much bond purchases should be reduced on a monthly basis,” Lien said.


The British pound slipped to $1.5503 from $1.5525 Wednesday.


The dollar rose to 0.9308 Swiss franc from 0.9220.


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Tags: currency , dollar , economy , Foreign Exchange , US



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Is the national love affair with the automobile over?


Driving in America has stalled, leading researchers to ask: Is the national love affair with the automobile over?


After rising for decades, total vehicle use in the U.S. the collective miles people drive peaked in August 2007. It then dropped sharply during the Great Recession and has largely plateaued since, even though the economy is recovering and the population growing. Just this week, the Federal Highway Administration reported vehicle miles traveled during the first half of 2013 were down slightly, continuing the trend.


Even more telling, the average number of miles drivers individually rack up peaked in July 2004 at just over 900 per month, according to a study by Transportation Department economists Don Pickrell and David Pace. By July of last year, that had fallen to 820 miles per month, down about 9 percent. Per capita automobile use is now back at the same levels as in the late 1990s.


Until the mid-1990s, driving levels largely tracked economic growth, according to Pickrell and Pace, who said their conclusions are their own and not the government's. Since then, the economy has grown more rapidly than auto use. Gross domestic product declined for a while during the recession but reversed course in 2009. Auto use has yet to recover.


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Meanwhile, the share of people in their teens, 20s and 30s with driver's licenses has been dropping significantly, suggesting that getting a driver's license is no longer the teenage rite of passage it once was.


Researchers are divided on the reasons behind the trends. One camp says the changes are almost entirely linked to the economy. In a few years, as the economy continues to recover, driving will probably bounce back, they reason. At the same time, they acknowledge there could be long-term structural changes in the economy that would prevent a return to the levels of driving growth seen in the past; it's just too soon to know.


The other camp acknowledges that economic factors are important but says the decline in driving also reflects fundamental changes in the way Americans view the automobile. For commuters stuck in traffic, getting into a car no longer correlates with fun. It's also becoming more of a headache to own a car in central cities and downright difficult to park.


"The idea that the car means freedom, I think, is over," said travel behavior analyst Nancy McGuckin.


Gone are the days of the car culture as immortalized in songs like "Hot Rod Lincoln," "Little Deuce Coupe" and "Pink Cadillac."


"The car as a fetish of masculinity is probably over for certain age groups," McGuckin said. "I don't think young men care as much about the car they drive as they use to."


That's partly because cars have morphed into computers on wheels that few people dare tinker with, she said. "You can't open the hood and get to know it the way you used to," she said.


Lifestyles are also changing. People are doing more of their shopping online. More people are taking public transit than ever before. And biking and walking to work and for recreation are on the rise.


Social networking online may also be substituting for some trips. A study by University of Michigan transportation researcher Michael Sivak found that the decline in teens and young adults with driver's licenses in the U.S. was mirrored in other wealthy countries with a high proportion of Internet users.


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Demographic changes are also a factor. The peak driving years for most people are between ages 45 and 55 when they are the height of their careers and have more money to spend, said transportation analyst Alan Pisarski, author of "Commuting in America." Now, the last of the baby boomers the giant cohort born between 1946 and 1964 are moving out of their peak driving years.


"They are still the dominant players, and they are moving toward a quieter transportation lifestyle," he said.


There's also a driving gender gap. In a role reversal, there are now more women than men in the U.S. with driver's licenses. And the declines in miles driven over the past decade were more widespread among men than women, according to Pickrell and Pace. Driving by men has declined in every age group except those 65 or older, where it increased slightly. Among women, driving declined only among young adults and teenagers.


There are several economic factors that help explain the trends. Driving declines exactly mirror job losses among men during the recession, when male-dominated industries like manufacturing and construction were especially hard hit, researchers said. But average automobile use has declined recently even among those who have remained employed.


Economists say many Americans, especially teens and young adults, are finding that buying and owning a car stretches their financial resources. The average price of a new car is $31,000, according to the industry-aligned Center for Automotive Research in Ann Arbor, Mich.


"We're not selling to everyone. We're selling to upper-middle class to upper class," said Sean McAlinden, the center's chief economist. The rest of the public, he said, buys used cars or takes the bus.


Then there's the cost of insurance, maintenance and parking. The price of gas has gone up dramatically over the past decade.


The share of younger workers who can find jobs is at an especially low ebb, while the cost of a college education and with it student loans is soaring. Many schools have stopped offering free driver's education to students. Owning a car is increasingly beyond the reach of many young drivers, researchers said.


Research by the AAA Foundation for Traffic Safety found that 18- to 20-year-olds were three times more likely to have a driver's license if they lived in a household with an annual income above $100,000 than if they lived in a household with an income below $20,000.


"I don't think it's a change in people's preferences. I think it's all economics," McAlinden said. "It might last if the economics stay the same. But if they improve, I think people will come back to driving more. ... Give a person a good job 25 miles away and they'll be at the dealership the next morning."


The decline in driving has important public policy implications. Among the potential benefits are less pollution, less dependence on foreign oil, reduced greenhouse gas emissions and fewer fatalities and injuries. But less driving also means less federal and state gas tax revenues, further reducing funds already in short supply for both highway and transit improvements. On the other hand, less driving may also mean less traffic congestion, although the impact on congestion may vary regionally.


Phineas Baxandall, senior analyst for the liberal U.S. Public Interest Research Group, says driving declines mean transportation dollars could be put to other uses.


"You just don't want to spend money you don't have for highways you don't need," he said.


By JOAN LOWY

Associated Press

(AP:WASHINGTON)



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