Monday, June 30, 2014

US stocks mixed as strong Q2 ends



Traders Michael Zicchinolfi, left, and Jonathan Niles work on the floor of the New York Stock Exchange, Monday, June 30, 2014. Wall Street stocks Monday turned in a mixed performance to close a strong second quarter after US pending home sales jumped but automaker General Motors announced another massive auto recall. AP PHOTO/RICHARD DREW



NEW YORK–Wall Street stocks Monday turned in a mixed performance to close a strong second quarter after US pending home sales jumped but automaker General Motors announced another massive auto recall.


The Dow Jones Industrial Average lost 25.24 points (0.15 percent) at 16,826.60, while the broad-based S&P 500 dipped 0.73 (0.04 percent) to 1,960.23.


But the tech-rich Nasdaq Composite Index rose 10.25 (0.23 percent) to 4,408.18.


The Nasdaq also scored the biggest gains for the second quarter, rising 4.98 percent. The Dow increased 2.24 percent over the three-month period, while the S&P 500 advanced 4.69 percent.


“People want to show the stronger stocks in their portfolio at the end of the quarter,” Michael James of Wedbush Securities said of the Nasdaq’s Monday gain.


The National Association of Realtors reported that the pending home sales index jumped 6.1 percent in May to 103.9, the first time the index has topped 100 since last November.


But GM recalled another 8.4 million vehicles in North America following seven crashes and three fatalities. GM, under scrutiny following an ignition-switch recall scandal, also raised its second-quarter estimate of recall costs to $1.2 billion from $700 million.


GM shares dropped 0.9 percent.


Micron Technology jumped 4.6 percent after Credit Suisse added the chipmaker to its list of top investment ideas, citing a better pricing environment following industry consolidation.


Other tech companies to score gains include Apple (+1.0 percent), Yahoo (+2.6 percent) and video camera maker GoPro (+13.4 percent).


Biotech company MannKind jumped 9.6 percent on news that the Food and Drug Administration approved its Afrezza treatment for diabetes.


PPG, a supplier of paints, coatings and glass, announced a $2.3 billion acquisition of Mexico’s Consorcio Comex, which manufactures coatings in Mexico. PGG rose 3.0 percent.


Devon Energy announced the sale of non-core energy assets in Texas and other sites to Linn Energy for $2.3 billion. Devon dipped 0.1 percent, while Linn rose 1.4 percent.


Bond prices rose. The 10-year US Treasury dipped to 2.52 percent from 2.53 percent, while the 30-year declined to 3.34 percent from 3.36 percent. Bond prices and yields move inversely.





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Bank branching restrictions end today


Preparing for liberalized Asean financial services


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Photo from bsp.gov.ph and AP FILE PHOTO



The regulatory bank branching restrictions in Metro Manila expire July 1, allowing local lenders to compete more freely for business inside the nation’s capital.


In line with rules issued in the middle of 2012, restricted areas in Metro Manila have been opened to banks’ expansion starting Tuesday, in line with the central bank’s push to promote the industry’s growth.


This comes ahead of the opening up of banking services in the Southeast Asian region, which means the eventual entry of more foreign financial institutions that will compete head-to-head with local players.


Older rules prohibited banks from opening too many branches in certain areas of Metro Manila, particularly places where other banks were already present.


The restrictions were imposed to avoid the overcrowding of banks in the metropolis and, at the same time, encourage lenders to expand their networks in the provinces.


Having bigger networks would allow the local banking sector to at least maintain their dominance over the Philippine market even as foreign banks try to gain a foothold.


The expansion of branch networks will also improve the banking sector’s deposit-taking operations and the mobilization of these funds through new loans to businesses and households.


BSP Deputy Governor Nestor A. Espenilla Jr. earlier this year said the lifting of branching restrictions was part of the regulator’s policy of allowing banks to expand as they wish, which would benefit consumers.


“We recognize the need to include more people in the financial system. One way to get them is to make banks nearer to the public,” Espenilla said in a previous interview.


In the first quarter of 2014, the BSP approved applications for the establishment of 90 new bank branches across the country. In the same three-month period, data released this week showed 96 additional bank branches were put up by local lenders, while two more branches were reopened.


Data from the BSP showed that there were 10,020 banks and bank branches across the country at the end of March. More than half of these bank offices were owned by universal and commercial lenders.



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Is This Stock Ready To Pop?


I was looking over the charts this past weekend and noticed one stock that I wanted to bring to your attention. There are two reasons why I think this stock is worth a look.


1. There was a new monthly Trade Triangle signal on June 27th at $48.04.


2. I like the formation. This chart has a "W" formation, which normally occurs at the bottom of a move and signals a reversal. In this case, it would look as though once we close over $48 a share, we could see a quick pop up to $50.


The stock I am referring to is Coca-Cola Enterprises Inc. (NYSE:CCE), traded on the New York stock exchange. This is a large company and has been around for a long time. While not usually considered a hot stock, the formation is undeniable. As with any position, you should always be using money management stops.



Another part of this formation I like is the classic Fibonacci retracement of 60%, that was again tested on June 13th and it held. In addition to having the Trade Triangles in a positive mode, the RSI is also in a positive state. Both of these indicators are showing that this market should be moving higher in the very near term.


Key numbers on the chart:


1. Start of the Fibonacci measurement

2. End of the Fibonacci measurement

3. Classic Fibonacci retracement

4. Pivot point

5. Retest of Fibonacci retracement

6. RSI moves over the 50 line

7. Target zone for CCE at $50


Every success with Coca-Cola Enterprises Inc. (NYSE:CCE).


Every success with MarketClub,

Adam Hewison

President, INO.com

Co-Creator, MarketClub



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Money supply growth eased in May






Growth in the amount of cash circulating in the economy decelerated to its slowest in nearly a year as adjustments in monetary settings started to take hold, data released by the central bank on Monday showed.


The Bangko Sentral ng Pilipinas (BSP) said the slowdown would help mitigate risks to financial and price stability that excess liquidity might cause. Despite getting its desired effect, the BSP said it remained ready make further adjustments in policy settings to ensure that domestic liquidity or M3 growth stayed low.


“The BSP stands ready to undertake further measures as necessary to ensure that liquidity dynamics stay in line with the BSP’s price and financial stability objectives,” a statement read.


M3 growth eased to 28.4 percent in May, slower than April’s 32.1 percent, the BSP reported. This growth in May was the slowest since June last year. Growth in M3 reached a record high 37 percent earlier this year.


Elevated growth rates in M3 followed the restrictions on individual investments from the BSP’s special deposit accounts (SDA), which took effect last November.


The BSP expects that as a result of recent policy moves, M3 growth rates should continue to decline to “normal” levels toward the end of the year.


In April and May, the BSP asked local banks to set aside more of their clients cash as reserves. Last month, the BSP also raised yields on SDAs to encourage banks to park more funds in central bank vaults.


“The recent increase in the interest rate on the SDA facility as well as the earlier adjustment in the reserve requirement of banks are seen to help mitigate potential risks to price and financial stability that could emanate from strong liquidity growth,” the BSP said.


Meanwhile, in a separate statement, the BSP said bank lending rose by 21.1 percent in May, faster than the previous month’s 20.8 percent. Loans that financed productive activities such as real estate, wholesale and retail trade, manufacturing, and financial intermediation, made up about 80 percent of total disbursements, the BSP said. Paolo G. Montecillo



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Megawide goes into power


Megawide Construction Corp. aims to double its profits in three years as it continues to diversify its traditional construction business into more infrastructure projects like airports and power to achieve more sustainable returns, company officials announced during the firm’s annual stockholders’ meeting on Monday.


The company, which is partly owned by billionaire Henry Sy, is lining up renewable power projects like solar plants and wind farms and plans to roll out an attributable power portfolio of 100 megawatts in two years at an estimated investment of $100 million, Megawide chief financial office Oliver Tan told reporters after the meeting.


The power projects were first announced Monday and will be in partnership with PhilCarbon Inc., but the company has been taking steps toward this direction as it participated and won various projects under the Aquino administration’s public private partnership program.


In April, it won the P17.5-billion Mactan Cebu International Airport PPP with partner GMR Infrastructure of India and earlier, the modernization of the Philippine Orthopedic Center PPP in Quezon City. Both the modernized hospital and new Cebu airport terminal would be done by 2017, Tan said, and would dramatically shift the company’s revenue base.


By 2017, profit would hit about P2.8 billion with these new projects from P1.4 billion in 2013. Revenues would also double, Tan said.


He said this was a route also taken by another conglomerate that Megawide “idolizes,” the Consunji family’s DMCI Holdings Inc., whose interests range from construction, property development, power, mining and water distribution.


DMCI is also a much larger company, with roughly 10 times Megawide’s market value of more than P20 billion.


“Our model is very much like DMCI. We will still retain our current market share in the construction business but we all know the cyclical nature of the industry, which is why we are pursuing assets that will provide us that stability,” Tan said.


Tan said that Megawide’s initial foray into power generation would be a 3.5-MW biomass power plant in Northern Luzon. He said the project would be completed in two years with an estimated costs of $2 million to $2.5 million per megawatt.


He said other power projects were being lined up while noting that Megawide was open to taking in partners, depending on the requirements of a particular project. Apart from airports and hospitals, the company, which made its name building residential condominium projects for the SM Group’s SM Development Corp., had won PPP deals for the construction of classrooms.





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Conergy hikes solar portfolio in PH

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Conergy, one of the world’s leading solar power solution and service providers, is working on its second solar power plant contract in the Philippines.


The Hamburg-based company said it had entered into a contract to design and build a new 8-megawatt solar power plant for Raslag Corp., the renewable energy arm of generation company Angeles Power, Inc.


Once connected to the Luzon grid in the fourth quarter of this year, the 8-MW plant’s 30,000 panels will produce enough electricity to supply 4,800 homes.


The size of the contract was not disclosed, however.


The completion of the new 8-MW facility will bring Conergy’s portfolio in the Philippines to 30 MW.


Conergy said it wanted to establish “a strong early position” in the Philippines amid a wave of investment in energy infrastructure.


Alexander Lenz, president for Conergy Asia & Middle East, said in a statement that he believed there were “huge opportunities” for solar power to expand access to electricity and reduce energy imports in the Philippines.


“With high and predictable levels of sunlight, solar is already competitive with traditional power generation in many parts of the country. It’s early days and there are logistical challenges, but Conergy has excellent relationships with partners across the archipelago, which allow us to select and successfully develop the right projects,” Lenz said.



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US to slap record $8.9-B fine on BNP Paribas



A man walks past the French bank BNP Paribas headquarters in Paris. AP FILE PHOTO



NEW YORK – French bank BNP Paribas has agreed to pay US authorities a $8.9 billion fine to avoid being tried in court for dealing with US-blacklisted countries, sources close to the matter told AFP.


The deal ends months of haggling which saw French President Francois Hollande pressing his US counterpart Barack Obama to intervene and lighten the punishment.


Agreement on the record fine, approved by the bank’s board of directors at a special weekend meeting in Paris, is due to be announced Monday after markets close at the New York Stock Exchange around 4:00 pm (2000 GMT).


The US Justice Department and New York banking regulator Benjamin Lawsky will make separate announcements, another source said, also speaking on condition of anonymity.


BNP declined requests for a public comment.


At least $2 billion of the fine will go to Lawsky, who is temporarily suspending parts of BNP’s dollar-handling business in the United States — key to any major bank’s US operations — for all of 2015.


Sources said the suspension would take place progressively since BNP has operations underway.


BNP, France’s largest bank, has until December 31 to find a bank that agrees to make dollar payments on its behalf.


The deal forces BNP to plead guilty to the bank’s deals from 2002 to 2009 with countries that Washington has blacklisted like Cuba, Iran and Sudan.


The investigation probed more than $100 billion of transactions, finding that $30 billion of that amount were concealed in order to skirt the sanctions.


Too tough on BNP?


BNP has a strong enough capital base to handle the penalty, but the size of the fine and the temporary suspension of parts of its dollar-handling business — key to any major bank’s US operations — will mean a significant hit on its earnings.


BNP chief executive Jean-Laurent Bonnafe reportedly wrote to employees on Friday conceding the bank will be “punished severely,” but stressing that “this difficulty … will not impact our roadmap.”


US authorities have already forced BNP to dismiss three senior officials allegedly linked to the sanctions violations, including its chief operating officer.


Lower bank officials could also be fired as part of the settlement.


Sources say the settlement could include a year-long suspension of the bank’s dollar clearing for oil and gas trading activities in Switzerland, Singapore and France, and suspension of dollar clearing on behalf of other banks and some clients.


That would likely be a blow to the bank’s bottom line. In 2013 BNP reported total profits of 4.83 billion euros ($6.59 billion) on revenues of 38.8 billion euros. It has already set aside $1.1 billion to cover losses from the case.


BNP has been largely quiet about the allegations and potential penalties during months of negotiations.


Critics have accused Washington of being especially tough with foreign banks, and BNP in particular, while treating US banking transgressions more lightly.


In punishing US banks for financial crisis-related violations, negotiated fines have run into the billions but none has had to plead guilty, an act which could lead to the loss of a banking license.


In 2012 Dutch bank ING paid a relatively paltry $619 million financial crisis, and Britain’s Standard Chartered $670 million. HSBC, which was also accused of complicity in money laundering, paid $1.9 billion.


None were forced to plead guilty or halt certain banking operations.


But US authorities have become much tougher on banks that are less cooperative in investigations.


‘Negative consequences’


In May, Credit Suisse pleaded guilty to helping Americans evade taxes and was fined $2.6 billion, over three times the $780 million fine US authorities imposed on fellow Swiss bank UBS for the same charges in 2009.


Analysts say the size of the BNP fine relates to the size of the business it did with Sudan and Iran, several times larger than that handled by ING and Standard Chartered.


The BNP controversy has been a thorn in US-France relations. French officials warned in early June that it could cause problems for the huge transatlantic trade treaty under negotiation between the European Union and the United States.


“Evidently… this risks having negative consequences,” Foreign Minister Laurent Fabius ominously warned.


Hollande also raised the issue with Obama during a dinner in Paris.


Fabius said that Hollande had told Obama the case is “very important for Europe and for France,” saying if BNP is weakened it would “create a very negative interference in Europe and its economy.”


But even before the dinner, Obama had signaled he would stay out of a legal issue.


“The rule of law is not determined by political expediency,” he said.





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Sunday, June 29, 2014

3 mining firms not Filipino-owned, SC rules



The Supreme Court (SC) has upheld the disqualification of three mining firms from exploration and extraction activities in the country because they were not Filipino corporations. INQUIRER FILE PHOTO



MANILA, Philippines–The Supreme Court (SC) has upheld the disqualification of three mining firms from exploration and extraction activities in the country because they were not Filipino corporations.


The tribunal’s Third Division dismissed the petition of Narra Nickel Mining and Development Corp., Tesoro Mining and Development Inc. and McArthur Mining Inc. which had sought a reversal of the Court of Appeal’s decisions dated Oct. 1, 2010, and Feb. 5, 2011.


In its April 21 ruling, the high court determined that the mining firms were not Filipino corporations because a 100-percent Canadian corporation, MBMI Resources Inc., owned 60 percent or more of their equity interests.


The magistrates used two tests to determine the nationality of a corporation—the control test and the grandfather rule which is embodied in a Department of Justice opinion in 2005.


“Shares belonging to corporations or partnerships at least 60 percent of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality (control test), but if the percentage of Filipino ownership in the corporation or partnership is less than 60 percent, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality (grandfather rule),” according to paragraph 7 of the DOJ opinion.


The Supreme Court considered the “grandfather rule” because “doubt prevails and persists in the corporate ownership of the petitioners.”


Company layering


It also looked into the corporate structure of all three mining firms and found that “company layering” was utilized by MBMI to gain control of McArthur. MBMI also controlled Tesoro and Narra.


“…(W)hether looking at the capital structure or the underlying relationships between and among the corporations, petitioners are not Filipino nationals and must be considered foreign since 60 percent or more of their capital stocks or equity interests are owned by MBMI,” said the 31-page division ruling penned by Associate Justice Presbitero Velasco Jr.


The high court, meanwhile, said it could not tackle the issue raised by the mining firms on the recent sale of MBMI shareholdings to DMCI, a corporation duly organized and existing under Philippine laws and which is at least 60 percent Filipino-owned.


The mining firms had told the high court that they could now be considered to be Filipino-owned because the transfer of their shares cured the defect of their previous nationality.


The Supreme Court said that it could not tackle this new manifestation by the mining firms because it was pending in another division of the court.





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Gov’t readies auction of biggest PPP



Transport Secretary Joseph Abaya INQUIRER FILE PHOTO



The Transportation department’s biggest public private partnership (PPP) project yet, the P271-billion North-South Commuter Railway in Luzon, is expected to be offered to investors in the latter part of the year through early 2015 as it pursues big-ticket deals deemed crucial in driving future economic growth.


Transportation Secretary Joseph Abaya told reporters last week that they were studying a hybrid PPP structure for the railway deal, meaning part of the project that aims to link Malolos in Bulacan to Calamba in Laguna, will be funded by the government and the rest by the private sector.


That decision, which Abaya said has yet to be made pending key approvals, comes as the Department of Transportation and Communications drew just one offer out of a potential seven for its P65-billion Light Rail Transit Line 1 PPP, whose second bidding round was recently concluded.


The DOTC, which is also preparing a P135-billion “subway” PPP project linking key business districts in Metro Manila, needs private sector support for even bigger railway deals in the pipeline.


Abaya noted that while talks with investors suggested that there was still appetite for railways, he said the government was willing to step in to ensure that the projects get off the ground.


“The important thing is you can bring in government. And the government has funds,” Abaya said.


The North-South Commuter Railway, which the DOTC plans to present to the board of the National Economic and Development Authority (Neda) next month, is being used as an example partly because of its massive size.


Abaya said the Japan International Cooperation Agency (Jica) had expressed its interest to finance part of the commuter railway, or the elevated segment from Malolos, Bulacan, to Tutuban in Manila. The remaining Tutuban-to-Calamba segment would then be auctioned as a PPP project, he noted.


Once the project receives Neda board approval, Abaya said they would be able to start the procurement process. He said they were targeting a bid submission date in the first quarter of 2015 although he did not discount the possibility that this would be pushed back.


Other projects due to be presented to the Neda Board, which is chaired by President Aquino, are provincial airport projects also to be auctioned under the PPP program. These are in Laguindingan (Cagayan de Oro), Panglao (Bohol), Puerto Princesa, Iloilo, Davao and Bacolod, Abaya said. These would be a combination of operations and maintenance contracts as well as expansion requirements.


PPP Center executive director Cosette Canilao said the contracts of the six airport projects would likely be bundled together to create more scale and draw large airport operators. She did not elaborate on which airports would be bundled together.





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PH advances in e-gov’t rankings

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The Philippines ranked 95th out of 193 member states assessed in the e-government development index (EGDI) survey by the United Nations, signifying that the country has made significant advancements in its “e-government.”


Based on the UN E-Government Survey 2014, the Philippines was categorized to be in the “Middle EGDI” together with 73 other countries. There are, meanwhile, 25 countries ranked to have very high EGDI, led by Republic of Korea and Australia; 62 countries with high EGDI; and 32 countries with low EGDI.


Countries in the high EGDI and middle EGDI categories, which include the Philippines, are seen to have “considerable opportunity” to advance their e-government development by, among others, investing in primary, secondary and tertiary education.


Produced every two years, the UN E-Government Survey 2014 was completed in January 2014 and launched in June 2014.


It is the only report in the world that assesses the e-government development status of the 193 UN member states and serves as a tool for decision-makers to identify their areas of strength and challenges in e-government and to guide e-government policies and strategies.


The UN defines e-government as the “use and application of information technologies in public administration to streamline and integrate workflows and processes, to effectively manage data and information, enhance public service delivery, as well as expand communication channels for engagement and empowerment of people.”


The government, for its part, has set up an online portal on public-private partner-ship to attract private partners to invest not only in traditional infrastructure projects but also in non-traditional infrastructure and development sectors.



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Asean’s Jan.-May vehicle sales decline


Motor vehicle sales in seven Asean countries fell by 13 percent to 1.33 million units in the first five months of the year from 1.5 million a year ago, according to data from the Asean Automotive Federation.


Of the total sales generated for the period, however, the Philippines accounted for a mere 6.7 percent at 89,335 units, placing fourth among the seven countries. This was despite posting a 23.6 percent year-on-year growth in domestic sales during the January to May period.


According to the Asean AutoFed, Indonesia continued to chalk up the biggest vehicle sales in the region at 531,812 units, followed by Thailand, which sold 367,112 units in the first five months. Motor vehicle sales in Malaysia meanwhile stood at 274,581 units during the same period, while Vietnam, Singapore, and Brunei sold 44,086 units, 15,694 units, and 7,511 units respectively.


In terms of motor vehicle production, the Philippines continued to be at the bottom of the heap compared to its counterparts in the Asean. Domestic production stood at 34,561 units in the first five months of the year, accounting for only 2 percent of the 1.69 million motor vehicles produced in five Asean countries.


Thailand remained the biggest manufacturer in the region, having produced 792,233 units from January to May, followed by Indonesia with a production of 556,346 units. Ranking third would be Malaysia which manufactured 264,299 motor vehicles, while Vietnam placed fourth with a production of 43,690 units.


At present, automotive players in the Philippines are highly bullish of prospects in the country, prompting a number of them to expand their operations, raise their production capacities, and increase sales targets in anticipation of the third wave of motorization. This was despite the delay in the issuance of the much awaited automotive roadmap, which was supposed to set the direction and lay down some crucial policies that will make the business more conducive for automotive manufacturing.


Toyota Motor Philippines Corp., for one, has raised its planned capital spending in the Philippines this year to P700 million to boost the capacity of its manufacturing plant in Sta. Rosa, Laguna. It also raised its sales target to about 100,000 units.


Mitsubishi Motors Corp. meanwhile is eyeing to invest an initial P10 billion in its Philippine operations to make the country its third manufacturing hub in the Asean. This proposed capital infusion is expected to increase the current production of its local unit, Mitsubishi Motors Philippines Corp. (MMPC), to as much as 100,000 units annually from the current 15,000 units.





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Batangas port perks seen to continue






The Philippine Economic Zone Authority (Peza) hopes to further extend until next year the grant of an incentive that cuts by half the port fees for exporting companies that use the Batangas International Port for their shipping requirements.


In an interview, Peza Director General Lilia de Lima said this was meant to encourage more companies to use the Batangas port, which is currently underutilized.


At the same time, the move to continue a 50-percent discount on the processing fees would help ease the “temporary losses” being incurred by the locators in various Peza-managed ecozones, particularly in the Calabarzon region, due to the ongoing truck ban policy being implemented by the city government of Manila.


The incentive, which gives a 50-percent reduction in the processing fees for full container load shipments to be discharged or loaded at the Batangas International Port, has already been extended until December 2014 by virtue of a memorandum circular issued earlier this year.


“We were the first to reduce our fees and then the others, like the Philippine Ports Authority, followed suit. But if needed, we will renew this again for another year so we can assist companies reeling from the truck ban,” she told the Inquirer. “These companies are facing temporary losses, and that’s why we are pushing for increased utilization of the Batangas port. Before, there was only one shipping line calling in, but now there are three. In the next two or three months, we expect another two to three shipping lines calling port in Batangas.” Amy R. Remo



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Chew process of law


The gloves are off, and bare knuckles now show, in the ongoing discord in the JBC—yes, the venerable constitutional body Judicial Bar Council—over the nomination for the one vacated position in the Supreme Court.


The brawl is actually an offshoot of the retirement of Associate Justice Roberto Abad. The JBC thus must submit a list of candidates for his replacement to our leader Benigno Simeon (aka BS), who in turn takes a pick from the short-list.


It so happens that Chief Justice Mario Lourdes Sereno sits as “ex officio” head of the JBC and, under the JBC rules, the associate justices of the Supreme Court may also vote on the final candidates on the JBC short-list.


Sereno, who turns 54 on Wednesday, appointed by our leader BS as chief justice in 2010 when she was only 50 years old, all of a sudden wanted to do away with the “voting” among the associate justices.


Well, she wrote them that she was only trying to “accommodate” the justices who requested her to stop conducting the “voting.” She even said in the letter: “Please be informed that I have decided to favorably consider such request.”


Now, in an en banc session of the Supreme Court, the associate justices naturally confronted Sereno about her decision to scrap the “voting.” Associate Justice Teresita Leonardo-de Castro reportedly asked Sereno, pointblank, to identify the justices who made the request. The reports noted that Sereno could not name even one.


It seemed therefore that Sereno was trying to railroad the JBC selection process, perhaps to shoot down certain nomination. From what I gathered, Sereno was particularly, well, “unhappy” about the inclusion of Solicitor General Francis Jardeleza on the short-list.


At the same time, word started going around that Sereno’s candidate was the current Commission on Audit (COA) chair Grace Pulido-Tan. It seemed that, by shooting down Jardeleza’s nomination, the chances of Tan to get the nod of our leader BS would zoom up immediately.


You see, both Jardeleza and Tan were closely associated with the Aquino (Part II) administration. They are both said to be personally close to our dear leader BS himself. In legal circles, the talk was already about an “either-or” scenario between the two to take the single vacant position in the Supreme Court.


Who was this Jardeleza to Sereno, anyway, because from what I gathered, he seemed to be highly qualified, having finished law at the University of the Philippines, graduating cum laude and salutatorian of his class, placed third in the bar exams, and earned his MA of Laws at the Harvard Law School.


By the way, Jardeleza was SVP and general counsel of the conglomerate San Miguel Corp. until 2010, and only last last week, the UP Alumni Association gave him an award for his work as head of the Philippine legal team in the West Philippine Sea arbitration against China.


I mean, really now, how do you remove a candidate like Jardeleza from the JBC short-list if not by chewing his integrity as a government official?


And so it seemed that Sereno tried to waylay Jardeleza in the JBC process precisely by chewing on his integrity, as she “objected” to his nomination personally, meaning, she did it on her own, without official complaints against Jardeleza from any third party.


In fact, our very own Chief Justice invoked the “blackball” rule against Jardeleza to force his disqualification from the short-list. Sereno herself raised questions about Jardeleza’s integrity.


Under the JBC rules, when somebody challenges the integrity of an applicant, all the members of JBC, i.e., each and everyone, must vote “yes” for the JBC even just to consider the nomination.


Sereno did precisely just that: She questioned the integrity of one application. In other words, the blackball dropped by Sereno against the nomination of Jardeleza should immediately disqualify him.


Noting that a member of the JBC, the Chief Justice of the Supreme Court at that, was directly his accuser, Jardeleza ran to the Supreme Court to direct the JBC to stop Sereno from voting on the applicants to the JBC short-list.


From what I gathered, the four “regular members” of the JBC, i.e., not the “ex officio” members who sat in the council by virtue of their positions in the Aquino (Part II) administration, met with Sereno last week on Jardeleza’s move to ask the Supreme Court to prohibit her from voting.


Among the JBC members in the meeting were retired Court of Appeals Justice Aurora Santiago-Lagman, representing the private sector; lawyer Jose Mejia, representing the academe, and lawyer Milagros Fernan-Cayosa, representing the Integrated Bar of the Philippines.


Even then, from what I gathered, Sereno told the regular members of the JBC that they themselves should proceed with the voting, which was scheduled for today, June 30, and they should do so whether or not Jardeleza would appear.


Now, Jardeleza’s appearance before the JBC, precisely to defend himself against the accusation of Sereno regarding his “integrity,” could be a crucial part of the plot in this JBC soap. It was Sereno herself that directed Jardeleza to appear before the JBC today.


From what I gathered, his appearance before the JBC would only be a private executive session, sans record of the proceedings. To top it all, the JBC would not even inform the poor Jardeleza of the accusations against him.


Basta, somebody questioned his integrity, period! In such a scenario, how could anybody even be expected to put up any kind of defense, not to mention any “meaningful” defense?


It seemed that the JBC members saw something in the strategy of Sereno, and so they objected to her idea that the JBC should proceed with the voting. For one, Jardeleza already elevated his case against Sereno before the Supreme Court en banc, which would hold a session tomorrow, July 1.


That would be the next day of the supposed “voting” that Sereno was pushing to the JBC members, who were nevertheless leaning more toward prudence. They wanted to wait for the Supreme Court en banc decision on Jardeleza’s petition.


What if the Supreme Court were to grant his petition for the TRO issuance against Sereno? I mean, what kind of humiliation would the JBC have to face?


And all that maneuvering, ladies and gentlemen, was happening only at the JBC level. Just imagine how messy things could yet become at the level of our dear leader BS, who actually would have the last say. Supposedly, anyway!





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Optimizing the ABC Charting Formation


As a special treat to Trader’s Blog readers, Ron Ianieri is offering you an in-depth look at how to optimize the ABC charting formation.


The ABC Charting Formation is one of the most basic and frequently occurring charting patterns that exist. Watch how this basic chart can be turned into a big payday with the use of options. Follow along as we use options to safely and easily follow the ABC's charting patterns twists and bends. We start out with the most basic and most easily understood strategy, roll it, morph it and finally close it. Suddenly, this simple charting pattern, traded with the simplest option strategy, becomes a sophisticated looking trading strategy that is incredibly simple to use, fully hedged at all times, and very profitable!


The concept of synthetics has always been fundamentally important to understanding options. Synthetics show us the mathematical relationship that exists between the stock, a call, and its corresponding put. This mathematical relationship not only relates the price of these instruments in relation to each other, but also shows how a call can be changed into a put, or a put can be changed into a call by simply adding the stock into the equation. Understanding synthetics allows investors the ability to morph positions from the wrong position to the right position quickly and efficiently. Understanding synthetics also allow investors to take advantage of the put/call skew we frequently see in the options market today.


Watch it now: Optimizing the ABC Charting Formation


Best,

The INOTV Team



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Saturday, June 28, 2014

Inside Look: Check out this Unprecedented Bear Market Formation Since 2000


Think the current conditions in the stock market are normal? Think again. Here are 3 characteristics you should expect to see in wave b.


By Elliott Wave International


Editor's Note: Below you will find a sneak peek from the just-published issue of Robert Prechter's Theorist. It provides you an opportunity to see some of the research, analysis and forecasts that Elliott Wave International's subscribers are enjoying inside their latest issue.


Figure 4 (below) is a diagram from Chapter 2 of Elliott Wave Principle. It displays a typical progression of prices and psychology in a bear market. We can apply this picture to the stock market since 2000. The real-life pattern is a bit more complex than this picture, because wave a itself was a flat correction, which ended in 2009. The dashed line in Figure 4 represents what the market has been doing since then: rallying to a new high in a b-wave. The entire formation has been tracing out an "expanded flat" correction (see text, p.47) of Supercycle degree.



Per Figure 4, among the characteristics we should expect to see in wave b are: "Technically weak," "Aggressive euphoria and denial" and "Fundamentals weaken subtly." The volume contraction in the stock market has now lasted over five years, which is extreme technical weakness, albeit only in that indicator. The 30+ charts we have shown of market sentiment reveal historically high levels of optimism regarding stocks. No doubt bulls would dismiss the idea that investors today exhibit "aggressive euphoria and denial." But look at Figure 5.



It shows that the yield on junk bonds has just reached its lowest level ever. Junk bonds did not even exist prior to 1989. In 2009, investors were deathly afraid of them. Now they cannot get enough of them. They are thinking only about yield; they are ignoring risk to principal. That's denial. Finally, fundamentals have not just weakened a bit but rather are awful. The economy is flat, the amount of debt is at a record high, and as shown in the June issue of The Elliott Wave Financial Forecast the quality of debt is at a record low.


There has never been an expanded flat pattern as large as Supercycle degree in recorded stock market history, going back 300 years. It's a first. So, we are getting commensurate expressions of stupendous optimism, which will prove worthy of the record books. People think today's market conditions are normal, because a benign present is always considered normal. But it's not normal. It's unprecedented.


Would you like to see the rest of the issue for free? For more details, the complete wave count, and EWI's forecast for how they believe it will all play out, continue reading Prechter's 10-page June Theorist now, completely risk-free. Learn more here.





This article was syndicated by Elliott Wave International and was originally published under the headline Inside Look: Check out this Unprecedented Bear Market Formation Since 2000 . EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.




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Friday, June 27, 2014

Weekly Futures Recap With 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.


Gold Futures


Gold futures in the August contract basically finished unchanged for the trading week with very little volatility trading at 1,319 still right near a 3 month high and if your currently bullish this market I would buy a futures contract at today’s price while placing my stop below the 2 week low which currently stands at 1,260 risking around $6,000 per contract, however that chart structure will improve dramatically in the next couple of days as volatility has really slowed down as we enter the Fourth of July holiday weekend. I am currently sitting on the sidelines in this market as I’m waiting for better chart structure to develop which is already currently happening and if you’re looking to get short this market I would sell at today’s price while placing your stop above today’s high of 1,325 an ounce risking around $600 per contract as if prices break that level to the upside I would have to think the trend has definitely turned bullish. Gold futures are trading above their 20 and 100 day moving average as the chaos in Iraq is certainly propelling prices in recent weeks as gold had a bearish trend for quite some time actually hitting 1,240 earlier in the month so I’m not totally convinced where prices are going to and that’s why I’m sitting on the sidelines.

TREND: HIGHER

CHART STRUCTURE: IMPROVING


Silver Futures


Silver futures had a very quiet trading week finishing up about $.10 closing at 21.14 an ounce still near a 3 month high and I’ve been recommending a long the silver position for a long time and volatility has really slowed down after a large break out occurring last week so at this point I would play the 10 day rule which currently stands at 19.50 which is still $1.63 away or around $8000 as the chart structure will tighten up considerably in a couple of days. The problem with silver in my opinion is that it’s too cheap and now with the Iraqi situation completely collapsing I think silver is a bargain at today’s price especially with crude oil hitting $107 and many of the other commodity markets much higher in 2014 so if you’re not currently in this market wait for a dip but continue to play this to the upside as prices are still trading above their 20 and 100 day moving average telling you that the trend is higher and this sleeping giant will wake up one day and if this craziness continues in the Mideast silver is going to be difficult to selloff.

TREND: HIGHER

CHART STRUCTURE: IMPROVING


Crude Oil Futures


Crude oil futures in the August contract finished down about $.75 for the trading week currently at 105.75 consolidating with very little volatility in the last 2 weeks and if your long this market as I’ve been recommending a long position when prices broke above 104 I would place my stop below the 10 day low which was hit yesterday at 105.03 risking around $.75 or $750 per contract. Crude oil futures are trading above their 20 and 100 day moving average telling you that the trend is higher however prices have stalled recently but I’m certainly not bearish this market as I think the Iraqi problem is here to stay for years to come and I believe this could possibly spread to other countries, however as a trader I must have an exit strategy and I will continue to place my stop at the 2 week low and if I your executed on that sit on the sidelines and wait for another trend to develop.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT


Soybean Futures


Soybean futures in the November contract considered the new crop finished down about $.17 this Friday afternoon closing around 12.27 also finishing lower by only $.05 for the trading week as prices basically are consolidating in recent weeks as flooding concerns especially in the state of Iowa have sent prices to 3 week highs before profit taking sent prices right back into the channel today. I’ve been recommending a short position for many weeks now and this trade has been going sideways and I still continue to believe that the rain will stop and the soybean plants will kick into high year as they are a very resilient crop as the 7 day forecast is hot and humid with rain and if you look at the corn crop here in Illinois it looks absolutely outstanding and I think eventually that’s going to happen to the soybean crop as the key level is $12 and if that level is broken you will start to see the funds get short and that’s when I believe the bear market starts and that could happen over the critical Fourth of July weekend. Soybean futures are trading just a hair above their 20 day and slightly above their 100 day moving average as the trend currently is mixed but if you’re looking to get short this market and you think the excellent weather will continue then sell at today’s price while placing your stop above the contract high at 12.80 risking around $.55 or $2,200 per contract as traders await Monday’s USDA supply demand and planting report figures.

TREND: MIXED

CHART STRUCTURE: EXCELLENT


Wheat Futures


Wheat futures in the December contract Chicago finished up $.08 this Friday afternoon after hitting 5 month lows earlier in the trading week as excellent growing conditions with a possible record crop sending prices down about $1.80 in the last 2 months as this has been one of the best bear markets out of all of the commodities and if you are still short this market I would place my stop above the 10 day high which currently stands at 6.26 a bushel and with currently trading at 6.12 which is risking about $.14 or $700 per contract. The southern part of the United States received much needed rain right at a critical time I would still play this market to the downside but the major move has already been made in my opinion and if you’re not in wheat currently I would sit on the sidelines and wait for a consolidation to develop because the chart pattern is straight down and it would not surprise me if prices consolidated especially in the month of July which has high volatility due to weather concerns. Many of the agricultural markets have been going down including corn, wheat, and cotton which hit 2 year low as well as we are experiencing excellent growing conditions as we’ve had several poor growing years consecutive and we are due for a solid crop and currently everything looks very solid good for some isolated flooding.

TREND: LOWER

CHART STRUCTURE: EXCELLENT


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


Corn Futures


Corn futures in the December contract are still trading below their 20 and 100 day moving average finishing the week slightly lower as prices have been consolidating in recent weeks and I have been recommending a short position when prices broke out at 4.87 a bushel in early May and if you took that recommendation I would still place my stop above the 10 day high which is around 4.56 a bushel which is only about $.09 away from today’s price or $400 per contract as the chart structure is outstanding at the current time. There are concerns of flooding especially in the state of Iowa and I talk to many farmers throughout the day and that is a real concern especially in soybeans as that was planted later so that crop looks poor currently but the corn still is behaving relatively well and if this weather continues in the next couple of weeks I would have to think that it’s going to be very difficult to have a bull market in corn. Traders await Monday’s USDA crop report which will show supply demand tables plus planted acreage which was estimated at 91.7 million acres as the whisper number is around 89 million so that will keep traders on edge and if that report is bearish I would have to think corn prices could break $4 here in the next couple of weeks.

TREND: LOWER

CHART STRUCTURE: EXCELLENT


Coffee Futures


Coffee futures reversed earlier gains hitting a 4 week high right near the 185 level only to fall out of bed finishing down nearly 900 points at 172 a pound and a very surprising move in my opinion as I’ve been recommending a long position in coffee futures placing your stop below the 10 day low which currently stands at 166.55 about 600 points away at $2,400 per risk per contract. The volatility is starting to come back into this market as crop estimates are starting to surface as one day showing less production and the next day showing more produce as prices are still in a sideways channel and I still believe that prices are bottoming as coffee prices are down about 22% from the contract high which was just hit a couple of months ago. One interesting thing about coffee prices currently is the spread between the 20 and 100 day moving average which is very tight as the 20 days currently trading at 174 a pound while the 100 day moving averages is at 185 and that tells me there’s going to be a breakout soon because generally the distance between coffees 20 and 100 day moving average is much wider.

TREND: MIXED

CHART STRUCTURE: EXCELLENT


S&P 500 Futures


The S&P 500 finished down around 3 points for the trading week despite the fact that the 1st quarter GDP was revised to a negative -2.9% that is the 1st time in a non-recessionary year that has happened since 1952 and that just shows you how sluggish the economy is and you would think that would selloff the stock market, however you would be wrong as stocks are right near session highs once again due to the fact that investors realize low interest rates are here to stay. The great thing about the stock market currently is bad news equals good news and good news equals even better news as the bullish trend continues as there’s no other game in town so continue to buy on dips in this market as 2000 is coming in my opinion very soon as this market is extremely resilient. If you think about it we have complete chaos in Iraq and one of the worst GDP numbers in over a generation and what happened the stock market does not sell off so what it’s going to take to get a selloff in the S&P 500 and my answer is you need poor earnings and I don’t think that’s on the horizon so continue to play this market to the upside as 2014 will be another solid percentage gain in my opinion.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT


Feeder Cattle Futures


Feeder cattle futures hit all-time highs once again finishing up nearly 800 points for the trading week to close at 214.52 a pound and if you been reading any of my previous blogs I was telling people to take profits if you had multiple contracts on while maintaining the 10 day low stop on the other contracts as prices just look to go higher in my opinion as the 10 day low currently stands at 205 a pound. Corn prices were finished up 4 cents today but it’s clear that the trend in corn is to the downside so my next target in feeder cattle is 220 a pound as this is a remarkable run as were going into heavy demand season with the lowest herds in 60 years as the fundamentals in this market are as strong as I’ve ever seen in any market I’ve covered over the last 20 years.


Live cattle futures also hit all-time highs in the August contract finishing up 500 points for the trading week despite selling off 140 points this Friday afternoon trading at 151.35 as this market continues to move higher so continue to place your stop at 10 day low which is at 144 a pound and that will tighten up considerably in the next couple of days as I look for the possibility that live cattle futures trade as high as 160 in coming weeks as the bull market seems to be getting stronger at the current time. The only thing I think that could stall cattle prices would be if corn rallied sharply due to some weather event but currently the weather in the Midwest is outstanding while the retail consumer is still willing to pay ridiculous prices at the store and until that stops happening look for higher prices ahead but continue to place your stop at the 10 day low because one of these days the trend will change.

TREND: HIGHER

CHART STRUCTURE: IMPROVING


Sugar Futures


Sugar futures settled last Friday at 18.75 while going out today around 18.30 losing around 40 points this week as prices are still trading above their 20 &100 day moving average but they have petered out up here at the 18.80 – 19.00 level as that price has been hit many times in the last 4 months and has failed every single occasion. I have been recommending to sit on the sidelines in this market as the chart structure is very poor and I don’t believe prices will break 19 a pound but if they do then the bull market is underway but until that happens stay on the sidelines and wait for a better trend to develop as choppiness is a traders worst friend.

TREND: LOWER

CHART STRUCTURE: POOR


Cotton Futures


Cotton futures in the December contract which is considered the new crop settled last Friday at 77.08 while going out this Friday afternoon in New York at 74.75 selling off 250 points this week hitting a 2 year low as the trend remains bearish. As I’ve talked about in previous blogs if you were short this market last week the 10 day high was 78 when prices were trading at 77 with the risk of about $500 as this trade has paid off and continue to keep your stop at the 2 week high which remains at 78 risking around 325 points or $1,700 as the trend continues to move lower due to the fact of outstanding weather in southern part of the United States which could produce another record crop. Also with carryover levels right near all-time highs as well as there are very few bullish fundamentals in this market so continue to play it to the downside in my opinion and if you look at many of the agricultural commodities like corn, wheat, and cotton which all continue to move lower.

TREND: LOWER

CHART STRUCTURE: AWFUL


Orange Juice Futures


Orange juice futures in the September contract settled last Friday at 161.65 and are going out today at 140.50 falling out of bed and if you took my recommendation which I talked about earlier in the week selling at 161 while placing your stop at 168 which was the contract high risking around $1,000 dollars this trade has paid off relatively well and at this time due to the fact that it has absolutely terrible chart structure I would take profits and move on and look for another market. I’m very surprised that prices dropped that dramatically as I do believe eventually orange juice prices will rally once again so keep an eye on this market and wait for better chart structure to develop allowing you place your stop loss much tighter allowing a 2% risk on any given trade of your account balance. Orange juice futures are trading below their 20 and 100 day moving average but I don’t like markets that go straight down because then the possibility of coming straight back up happens quite a bit just look at the rough rice chart and just keep an eye on this market at the current time.

TREND: LOWER

CHART STRUCTURE: AWFUL


Cocoa Futures


Cocoa futures in the September contract finished up 82 points this afternoon while trading above their 20 and 100 day moving average hitting a 3 year high with excellent chart structure currently trading at 3135 breaking out of a 3 week consolidation. I currently am recommending a long position in cocoa at today’s price of 3135 while placing your stop below the 10 day low which currently stands at 3049 risking around 85 points or $850 per contract as the consolidation recently was very tight allowing you to place tight stops so continue to play this market to the upside as the trend has been choppy in recent months but one of these breakouts will be real and if you’re only risking $850 I think the risk reward situation is highly in your favor.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT


Where Should You Place Your Stops?


Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out. Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong. The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.


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


SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS


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. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.


Michael Seery, President

Seery Futures

http://ift.tt/1fGCqDc

Twitter–@seeryfutures

Phone #: (800) 615-7649

mseery@seeryfutures.com



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Are You Prepared For Q3?


It's hard to believe, but here we are coming to the end of the trading week and also the end of the second quarter. We only have a few more trading days before Q2 is done and dusted.


Earlier this week I wrote about Tesla Motors (NASDAQ:TSLA) and First Solar (NASDAQ:FSLR).


I still believe that both of these stocks will move higher, as the Trade Triangles are all in place. If you missed these posts, you can read about Tesla here and First Solar here. Both of these stocks are higher for the week while the general stock market is flat. I view this as a psychologically positive sign for these stocks.


Last week I also posted a special report on gold. I still believe gold is going to remain in a positive upward trend until about the middle of August. That is when this market next cycle should top out. As always, money management stops should be in place on all positions.


Generally speaking the summer months tend to be less active, as many traders take off for some well-deserved downtime. However, I believe that this year is going to be a little bit different, as many traders still think there is further to go on the upside. This market action could entice more investors from the sidelines.


One technical indicator to pay close attention to is the MACD, which is close to turning to the downside. This is very similar to what happened in March of this year when we had a pullback in the NASDAQ to the 3,950 level. I am going to trust the Trade Triangles, particularly the weekly Trade Triangle, to alert me of any weakness in the NASDAQ.


I also have a concern with the S&P 500. I am seeing a negative divergence on the daily RSI indicator. This means we have seen new highs on the actual index, but the momentum did not follow through and make new highs. Sometimes this can be an early warning signal, so that is also an area that I am paying particular attention to.


Looking at MarketClub's Internet portfolio, there are only two stocks that are in a bullish mode based on the Trade Triangle Technology, Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL).


Every success with MarketClub,

Adam Hewison

President, INO.com

Co-Creator, MarketClub



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Regulator hopes for inflation reprieve



Bangko Sentral ng Pilipinas building INQUIRER FILE PHOTO



Although prices likely rose by a faster pace this month, the price pressures were largely driven by demand shocks that would not warrant a response from monetary officials, according to the Bangko Sentral ng Pilipinas (BSP).


In a statement to reporters, BSP Governor Amando M. Tetangco Jr. said local supply disruptions and higher oil prices resulted in higher prices of commodities such as garlic and rice.


“The relevant government agencies are addressing these supply bottlenecks,” Tetangco said, explaining that the steps taken by concerned officials should help moderate the upward pull on prices.


Inflation, or the average year-on-year rise in the prices of major commodities, accelerated to 4.5 percent last month—the fastest in two and a half years. It almost reached the top end of the central bank’s target of 3 to 5 percent for 2014.


The BSP expects inflation to average at 4.4 percent in 2014—faster than last year’s average of 3 percent.


Global oil prices have been increasing of late partly because of the spreading conflict in Iraq, Tetangco noted.


“This is as a key source of risk to inflation as oil represents a major input cost in the production of most commodities,” he said.


The central bank is now keeping a close watch on evolving price and output dynamics, he added.


“The BSP stands ready to undertake policy actions … to prevent inflation expectations from unraveling. At the same time, the BSP continues to support supply-side administrative responses that directly address … bottlenecks,” Tetangco explained.


BDO chief market strategist Jonathan Ravelas said Tetangco’s statement this week could be a signal to market players that interest rates would be kept at their record lows.


Speculation is rife in the private sector on when the BSP will make adjustments to its benchmark overnight borrowing and lending rates, which currently stand at 3.5 and 5.5 percent, respectively.


In its last three policy meetings, the BSP tightened monetary settings by initiating measures aimed at mopping up liquidity from the economy. In April and May, banks were told to set aside more of their clients deposits as idle reserves. This month, rates on special deposit accounts were hiked from record lows.


The central bank is “just preparing the market,” Ravelas said in an interview yesterday. Policy rates “may not be raised yet because these are supply-side pressures. What we should fear is demand-driven inflation … because that’s caused by excesses. What happens in the supply-side is not our fault.”





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9 firms keen on Mount Apo geo plant


Nine companies may join the state auction for the deal to manage the power output of the so-called Mount Apo geothermal power plants in North Cotabato province, state firm Power Sector Assets and Liabilities Management Corp. (PSALM) said.


The government is seeking a suitable independent power producer administrator (IPPA) for the Mindanao I and II (Mt. Apo 1 and 2) Geothermal Power Plants via bidding on September 24, 2014.


Ten investor groups initially submitted letters of interest but only nine firms complied with initial requirements early this month and attended the pre-bid conference on June 26.


The nine were EDC Mindanao Geothermal Inc., FDC Misamis Power Corp., GDF Suez Energy Philippines, Inc., Good Friends Hydro Resources Corp., SMC Global Power Holdings Corp.; SPC Power Corp., Therma Southern Mindanao, Inc., Trans-Asia Oil and Energy Development Corp., and Vivant Geo Power Corp.


Elmer Nonnatus A. Cadano, officer-in-charge of PSALM’s privatization, bids and awards committee, said the pre-bid conference was held to acquaint attendees with bidding procedures.


“We want them to be fully prepared before they tender their bids on or before the bid submission deadline,” he said.


As IPPA, the winning bidder will manage government’s contracted energies in the Mt. Apo 1 and 2 plants, which are 390 gigawatt-hours (GWh) and 398 GWh per year, respectively.


The bidding exercise in September, if succesful, will be PSALM’s first completed IPPA auction in the Mindanao region.


The Mt. Apo 1 and Mt. Apo 2 geothermal power plants have a rated capacity of 54.24 megawatts (MW) each, and are located in Kidapawan City, North Cotabato.


Owned and operated by the Energy Development Corp., the power plants were commissioned on 15 February 1997 (Mt. Apo 1) and 17 June 1999 (Mt. Apo 2) under a build, operate and own contract scheme.


The cooperation period for both plants is 25 years, and the same will expire on 15 February 2022 and 17 June 2024 for Mt. Apo 1 and 2, respectively.


Besides generating cash for the settlement of the National Power Corp.’s debts, PSALM said it sees the sale of the energy contracts to encourage diversification in the energy market.


PSALM, formed under the Electric Power Industry Reform Act of 2001 (Republic Act 9136), is mandated to privatize assets of debt-ridden Napocor and pay off its debts.





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Gov’t to bid out LRT-1 maintenance contract

By





The government will bid out the contract for the maintenance of the Light Rail Transit Line 1, a published notice on Friday showed.


The one-year contract, valued at P423.24 million, is for the existing LRT-1—a 20.7-kilometer elevated railway that serves about half a million people daily.


The bid submission deadline has been set on Aug. 13, the Light Rail Transit Authority announced.


Maintenance work on the railway, one of the oldest in the country, was part of the recent LRT-1 public-private partnership deal, which would soon be awarded to the consortium of Metro Pacific Investments Corp. and Ayala Corp.


But the contract to be auctioned off is only for a year, and its expiration may coincide with the formal turnover of operations to the private sector next year, a government spokesman said.


Based on the notice, the auction will be conducted through open and competitive bidding process using so-called non-discretionary “pass/fail” criterion. These are specified in the revised implementing rules and regulations of Republic Act No. 9184.


Filipino citizens, sole proprietorships, partnerships, or organizations with at least 60 percent of its outstanding capital stock owned by Filipinos are the only ones allowed to bid for the contract.


The LRTA has also set a pre-bid conference for interested groups on July 16.


LRT-1 served a total of 171.8 million passengers last year, generating P2.52 billion in revenues.


The P65-billion LRT-1 PPP deal will extend the existing rail line to Bacoor, Cavite. The expansion project, to be completed by 2020, is expected to boost daily ridership to over 800,000, the Transportation department earlier said.


LRT-1 is considered to be the first light rail transit system in Southeast Asia, information on its website showed.



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Jollibee on top of Asia food chain


Homegrown fast-food giant Jollibee Foods Corp. (JFC) has hit its goal of becoming Asia’s most valuable restaurant chain and is further expanding its global footprint.


JFC chief executive officer Tony Tan Caktiong on Friday reported during the annual stockholders meeting that JFC recently became the leading restaurant company in terms of market capitalization in Asia, and the second highest among quick service restaurants in the world.


Citing independent consumer research data, Tan Caktiong also noted that, as of end-2013, JFC had the second highest system-wide sales (next to Japanese chain Zenshio Corp.) among all Asian restaurant companies.


“According to our estimate, JFC would generate the largest sales by 2014 or 2015. For all intents and purposes, your company has achieved its vision of becoming the No. 1 Asian restaurant company,” he told stockholders.


In 2013, JFC breached the P100-billion sales mark for the first time.


Further expansion is in the pipeline locally, as well as overseas.


“We’d like to have more play in the US market. We’re looking at a certain acquisition in the US,” Tan Caktiong said in a briefing after the stockholders meeting.


He said JFC would like to acquire a US-based fast-food chain, which has room for further growth.


Tan Caktiong will retire as the company’s CEO on July 1.


About 20 percent of the company’s turnover now comes from its overseas operations, the biggest market of which is China—it now accounts for 12 percent of the total business.


The goal is to have a 50-50 percent mix, but this has been pushed back because the Philippine market is likewise growing fast, Tan Caktiong explained.


Aside from the potential acquisition of a new brand, JFC plans to bring its brands to new markets. For instance, flagship Jollibee will likely be introduced to Canada by next year and opportunities in Indonesia are under study, Tan Caktiong said.


Jollibee is now present in eight overseas markets: Vietnam, Brunei, Hong Kong, Singapore, the United States, Saudi Arabia, Qatar and Kuwait.


Chinese fastfood chain Chowking was recently introduced in Saudi Arabia and would soon be brought to Kuwait, said JFC chief operating officer Ernesto Tanmantiong.


Chowking has existing operations in the United States and the Middle East.


According to Tanmantiong, who will succeed his brother Tan Caktiong as CEO, Jollibee has received “a lot of offers” to franchise its brand in new markets like Malaysia, Burma (Myanmar), Europe and Japan, and is looking at franchising in more overseas markets “in the near future.”


Outside of the Philippines, Jollibee’s stores are mostly company-owned except those in the Middle East.


The group now has about 411 stores in China.


As of end-March, the group had a total of 2,805 stores globally, of which 2,217 restaurants were in the Philippines.


About half of its global store network is company-owned.





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PSE index slips on US interest rate jitters

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MANILA, Philippines – The local stock index ended a five-day run-up on Friday as talk of a potential US interest rate increase by March weighed down regional markets.


The Philippine Stock Exchange index gave up 50.03 points or 0.73 percent to close at 6,842.15, led by the decline in the interest rate-sensitive property counter (-1.56 percent).


Across the region, markets tumbled on reports that a US Federal Reserve official had talked about a likely increase in US interest rates by March.


The financial, industrial, holding firm and mining/oil counters likewise slipped.


Turnover amounted to P6.91 billion.


There were 75 advancers against 100 decliners while 54 stocks were unchanged.


Among the steepest decliners among PSEi stocks were SMPH and SMIC, both down by over 2 percent, while ALI, Megaworld and EDC all slipped by over 1 percent.


BDO, Metrobank, URC, DMCI and BPI likewise declined.


On the other hand, Petron (+1.58 percent) gained due a favorable outlook by a foreign broker. PLDT and AC also firmed up.


Outside of the main index, those that bucked the downturn were MARC (+3.48 percent), LPZ (+1.89 percent) and Puregold (+1.3 percent).


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Macay Holdings infusing P2 B into beverage unit

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MANILA, Philippines—Macay Holdings Inc., an investment holding firm led by businessman Alfredo Yao, is infusing P2.09 billion in fresh equity into ARC Refreshments to finance the acquisition of machinery, equipment and other assets to be used in its bottling operations.


In a disclosure to the Philippine Stock Exchange on Friday, Macay said its board had approved the payment of unpaid subscribed shares in ARC Refreshments amounting to P187.5 million as well as additional subscription to the latter’s shares worth a total of P1.9 billion.


The unpaid subscription consists of about 187.5 million shares to be paid for at P1 per share while the additional subscription comprises 190 million shares to be paid at P10 per share.


Macay earlier announced it was beefing up ARC Refreshments’ bottling operations by taking over two non-core bottling plants of Zest-O Corp., which is also owned by the Yao-led group. The deal includes bottling plants in Kaybiga, Novaliches, and Canlubang, Laguna.


Macay Holdings was formerly the shell company for Maybank ATR Kim Eng Financial Corp. (MAKE). In late 2013, MAKE incorporated ARC Refreshments Corp. to engage in the business of trading goods such as beverages on wholesale basis.


ARC in turn acquired substantially all the operating units of Asiawide Refreshment Corp. and Mega Asia Bottling Corp. Asiawide holds an exclusive license from RC Cola USA to manufacture and distribute RC Cola in the Philippines while Mega Asia operates the RC Cola bottling and manufacturing operations in the Philippines. It is based in Caloocan but it also has operations in other areas like Pampanga and Davao.


This group also holds the license to manufacture and distribute RC Cola across Southeast Asia. Yao’s group earlier indicated plans to put up new RC Cola plants in Myanmar, Thailand and Vietnam.


Yao has been expecting his RC Cola business to become a public company ahead of flagship beverage business Zest-O. After its backdoor-listing through Macay, the group has yet to announce plans for a follow-on offering.


The businessman also has interests in aviation through a partnership with Air Asia and in banking, Philippine Business Bank, which went public in February of last year.



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