Class Act: "Emerging markets power Q1 profit surge at Siemens" (SI)

The stock closed yesterday at $129.28 up $3.97 on 11 times average NYSE volume (I didn't check the European bourses) and looks to open higher today.
We are fans.
It took a decade and some changes at the top but the turnaround at Siemens seems complete.
I'll get to the latest release shortly, first some history:

BusinessWeek June 5, 2000
Siemens' Turnaround Plan: A Report Card

In July, 1998, Siemens CEO Heinrich von Pierer set out a 10-point plan to 
rescue the company from plummeting profits. Here are some highlights:

GOAL                        PERFORMANCE

Turn around the             EXCELLENT Per-share earnings
semiconductor               rose sixfold in the last quarter.
division                    The April IPO of minority stake
                            in Infineon semiconductors unit
                            raised $5.4 billion.
...MORE

 
Harvard Business Review-Case Study

June 24, 2003 

Siemens Medical Solutions: Strategic Turnaround

Describes how Siemens Medical Solutions (MED) accomplished a remarkable 
turnaround from a money-losing operation to one of Siemens' most 
profitable divisions....MORE 

The Economist

September 9, 2010

A giant awakens  

Europe’s biggest engineering firm used to be known for two things: 

making everything but a profit; and scandal. Now things look very different

IN A 100-year-old workshop in the centre of Berlin stands a gleaming piece of forged metal, four storeys high. It is thicker than a person’s body and weighs almost as much as Boeing’s new Dreamliner aeroplane. This single, enormous hunk of steel—in essence, a huge bolt—will soon be at the centre of a gas turbine big enough to meet the electricity needs of a small city.

Though precisely engineered, the bolt is not especially complex, technically speaking. Perhaps a dozen companies around the world can make something similar. Yet the fact that it stands in Germany’s capital city, at a time when industrial jobs are supposed to be leaving rich countries for cheaper places, serves as a powerful symbol of the resilience of the country’s manufacturing—and of the huge component’s maker, Siemens.

The bustle in this factory, where giant robots cut and grind the huge disks that go into gas turbines, points to a remarkable recovery in demand for German goods, not least Siemens’s, from Europe’s deepest recession since the second world war. For much of this year German manufacturing orders have been about one-quarter higher than in 2009. Those from abroad have been 30% up. Orders for Siemens’s continuing businesses were 16% higher at the end of June than a year earlier. Operating profit for the quarter jumped by 40%.

Siemens’s growth spurt has even placed it ahead of its archrival, General Electric (GE), long the world’s dominant industrial company, on some measures. In comparable sales, calculates Martin Prozesky, an analyst at BernsteinResearch, Siemens is now bigger than the company that made a fetish of being one of the top two in a market or getting out. As chart 1 shows, GE’s total sales in the first half of this year were 50% bigger than Siemens’s. But take out GE Capital, the American conglomerate’s financial-services arm, and Siemens’s small finance business (used almost entirely for vendor finance), and the two firms are about the same size. Remove GE’s media holdings, and Siemens takes the lead. In areas of more or less direct overlap—which would exclude GE’s jet-engine business, too—Siemens’s sales are 50% greater than GE’s.

In market capitalisation, GE ($165 billion) is still almost twice the size of Siemens (€68 billion, or $87 billion): no surprise, given GE’s broader range. But in 2007 it was more than three times as big. The narrowing of the gap has something to do with GE’s battering in the financial crisis: investors have been worried chiefly about GE Capital, which diversified into everything from credit cards to subprime mortgages. It has more to do, however, with a revitalisation of the sleepy German giant.

For decades Siemens was the problem child of European heavy industry, lurching from profit to loss almost quarter by quarter as big infrastructure projects went wrong or spending spiralled out of control. Even when it made a profit, its margins were too thin to cover its cost of capital—in the early 2000s Siemens’s margins were routinely half those of its main competitors, according to analysts at HSBC. Until the past few years its share price has also lagged behind its rivals’....MUCH MORE

If you can catch a turnaround that works, well, hallelujah brothers and sisters.
From Reuters:

* Q1 new orders in India up 160 pct, China up 49 pct
* Net profit from continuing ops 1.79 bln euros, beats poll
* Sees year net income from continuing ops up 25-35 pct
* Shares closed down 0.5 pct, outperform Germany's DAX
(Adds closing share price, trader's comment)
By Jens Hack and Marilyn Gerlach
MUNICH/FRANKFURT, Jan 25 (Reuters) - Siemens (SIEGn.DE), Europe's biggest engineering conglomerate, beat profit forecasts due to robust demand in fast-growing emerging economies and said signs for future sales were strong.

Like most of its German peers, Siemens relies heavily on exports of manufactured goods to China, Brazil, India and Russia to power growth, profiting from aggressive infrastructure investment in those countries.
Siemens and steelmaker ThyssenKrupp (TKAG.DE) have also benefited from emerging economies' appetite for German luxury cars, high-end engineering machinery and industrial equipment.

Latest data showed German manufacturing orders grew at their fastest rate in 10 months in November, quicker than economists expected, mainly due to strong demand from outside the euro zone for durable goods.

Siemens said growth was driven by its bread-and-butter Industry Sector, which makes equipment that large companies use to run factories, automation gear to help industrial plants run smoothly and LED lightbulbs to cut luxury cars' energy bills.

Businesses whose products take longer than four months to make, or long-cycle ones such as railway locomotives and power plants, also played catch-up in matching the short-cycle recovery in lightbulbs and automation drives.

"Orders and revenue grew in all regions, particularly in emerging markets," Siemens Chief Executive Peter Loescher said on Tuesday, referring to the first quarter to end-December....MORE

The General Electric, NRG, Conoco Phillips Venture Capital Hookup (GE; NRG; COP)

From the Wall Street Journal:

General Electric Co. is teaming up with major oil company ConocoPhilips and power plant operator NRG Energy Inc. to invest in early-stage energy technology companies.

The companies will announce a joint venture, Energy Technology Ventures, to deploy $300 million over the next four years, they said. The partners declined to say how much each of them is contributing.
This marks ConocoPhilips' and NRG Energy's first formal forays into venture-capital investing, while GE, which is already a major investor in this field, will use the joint venture as its main vehicle for backing these types of companies. The involvement of such large corporations comes at a time when many energy technology companies have been struggling to find capital to grow their businesses much beyond the start-up stage.

"Strategic [investors] are necessary for clean-tech," said David Yeh, an independent venture investor, speaking at the MIT Enterprise Forum in New York on Tuesday.

Richard E. Germain, manager of alternative energy at ConocoPhilips, said the company has been working with companies developing energy storage equipment, advanced biofuels and biomass, while ConocoPhilips itself is producing electrodes for advanced lithium-ion batteries. "We think a lot of the most successful technologies may still be coming out of the labs," said Mr. Germain.

However, the company hasn't gone as far as some of its competitors. Chevron Corp., for example, has managed strategic venture funds since the late 1990s. The monetary commitment is also relatively small compared with what the company spends on oil and gas exploration and production. "It's a fairly moderate and modest investment," said Mr. Germain.

GE is already one of the most active corporate venture investors in energy, having invested about $200 million since January 2006 in energy technology deals. The company will now conduct all due diligence for such deals through the joint venture.

"In our view, the value of our three companies working together is much greater than working independently," said Kevin Skillern, who heads up GE's group that invests in emerging technologies. Both NRG and ConocoPhilips, for example, are willing to invest additional capital in portfolio companies for demonstration projects. NRG has project development and operations expertise that's beyond the realm of GE's. ConocoPhilips, meanwhile, may also help with projects such as biofuel refineries.

The joint venture will take minority equity positions in about 30 companies, primarily in North America, Europe and Israel. Three of GE's existing investments are the first companies to receive capital: Alta Devices, which is developing solar technology, Ciris Energy, which aims to convert coal into natural gas, and CoolPlanetBioFuels—a biofuels company. The joint-venture partners declined to disclose how much they invested in these companies....MORE

CBO's Revised Budget Sees 2011 Deficit Rising By $500 Billion To $1.5 Trillion; $4 Trillion In Deficit Through 2013 Guarantees QE3+

From ZeroHedge:

No surprise: the projected deficit just went up by another half a trillion: "For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP." This is up from $1.07 trillion: a very small margin of error there. But don't worry - like true Keynesians the CBO expects that future deficits will have no choice but to go down: "The deficits in CBO's baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021.

Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law."

So between 2010's $1.3 trillion, 2011 $1.5 trillion, and 2012's revised $1.1 trillion, we have $3.9 trillion just in deficit costs to plug. And as Zero Hedge has repeatedly demonstrated the actual debt to be issued is usually about 33% higher than the deficit funding need, meaning that over the next 3 years the US will need to issue about $5 trillion in debt. Which means further debt monetization is guaranteed as foreign investors have now fully withdrawn and the Fed is all alone in gobbling up every dollar in gross issuance. QE3 is guaranteed and we are stunned that the market continues not to realize this....MUCH MORE

I'm Thinking of a Career Change

Scott Adams' Dilbert.com blog

EPA /Treasury/SEC Report Says: "Oversight sufficient for US carbon derivatives market"

Swell.
Welcome to the exciting world of horse>barn-door regulation.
From Platts:

The US Commodity Futures Trading Commission can rely on its enhanced authority contained in the Wall Street Reform and Consumer Protection Act to oversee the country's derivatives market for carbon dioxide allowances and offsets in an effective manner, an interagency report concluded.

"The current legal framework for oversight of derivative markets, as enhanced by the Dodd-Frank Act when it becomes effective in July 2011, will provide for robust and effective oversight of carbon derivatives markets and closely linked derivative markets, such as those based on energy commodities," the study said.

The Dodd-Frank Act, which Congress passed in 2010, instructed the CFTC to lead an interagency group tasked with studying and issuing a report on oversight of existing and prospective carbon markets. That report was due to Congress by Tuesday.

The only mandatory emission allowance program for greenhouse gases in the US is the Regional Greenhouse Gas Initiative, a 10-state cap-and-trade program stretching from Maine to Maryland.

California is establishing what would be the second mandatory cap-and-trade program beginning in 2012.

Congress' efforts to set up a federal GHG cap-and-trade program have failed to date.

The existing CO2 market includes the trading of derivative products, such as swaps, tied to underlying allowances and offsets. These derivatives already receive various levels of oversight, the report said.

The Dodd-Frank bill will add another layer of oversight by regulating over-the-counter swaps, and requiring swaps to be subject to trading, reporting and clearing requirements, the study said....MORE

"Commodities' Warnings for Stocks"

We have a contrary view coming up, wherein QE's 3,4,5 are forecast.
From Barron's Up and Down Wall Street column:

Steep drop in metals, other markets suggests liquidity tide is turning.

Is the global tide of liquidity beginning to recede? The commodities markets, the first sector to be lifted by the tide, suggest it may be beginning to turn.

Just as financial news television programs this week have been filled with segments about spreading food inflation and how to play the commodity boom, prices of metals, energy and agricultural goods tumbled sharply as if on cue Tuesday.

As usual, ex post explanations were trotted out -- from news of a surprise contraction in the U.K. economy in the fourth quarter to a speculation of some hedge fund or other speculator scrambling to meet a margin call -- for the steep retreat Tuesday. That the decline followed a strong advance reaching back to last summer makes the decline understandable, even expected.

The key factor spurring that advance has been the expansionary monetary policy of the Federal Reserve, which effectively has been exported to other central banks.

But those central banks have begun to counter the liquidity that has flooded into their financial systems and pushed prices higher. The interest-rate increases and other tightening moves taken by India, China and other emerging economies now may be showing up in the commodities markets.

Overheating in those fast-growing economies and the resulting inflation could result in a "serious blow" to the global economy, the International Monetary Fund warned Tuesday. But the ink wasn't dry on the IMF's report before the commodities markets gave signs that tighter monetary policies abroad are beginning to bite.

No commodity is a better indicator than the one dubbed "Dr. Copper," so named because it's said to be the metal with a PhD in economics. The metal, which is used in a broad array of industrial and housing uses, soared more than 50% from last summer's lows. The big push got under way in earnest at the end of August, when Fed Chairman Ben Bernanke began laying the rhetorical groundwork for QE2, the second phase of quantitative easing.

The $600 billion Treasury-securities purchase program, now about half done, is all but certain to be completed as planned by mid-year. The Federal Open Market Committee will release its policy directive Wednesday and will confirm that. The panel also may provide some hints on its thinking about what will happen once QE2 is completed at the end of June....MORE

"Was Genghis Khan history's greenest conqueror?"

From Mother Nature Network:

The Mongol invasion scrubbed nearly 700 million tons of carbon from the atmosphere, 

according to surprising new research.

 

GENGHIS GREEN: The founder of history's largest contiguous empire cooled the planet while taking 

a body count. (Photo: Wiki Commons/public domain)

Genghis Khan's Mongol invasion in the 13th and 14th centuries was so vast that it may have been the first instance in history of a single culture causing man-made climate change, according to new research out of the Carnegie Institution's Department of Global Ecology, reports Mongabay.com.

Unlike modern day climate change, however, the Mongol invasion cooled the planet, effectively scrubbing around 700 million tons of carbon from the atmosphere.

So how did Genghis Khan, one of history's cruelest conquerors, earn such a glowing environmental report card? The reality may be a bit difficult for today's environmentalists to stomach, but Khan did it the same way he built his empire — with a high body count....MORE

State Of The Union: What the pundits are saying

From the Columbia Journalism Review's Campaign Desk blog:

So the State of the Union played out something like a slowly deflating balloon—robust and shiny in the beginning, a shriveled afterthought by the end, all leaky air in the middle. After just minutes, the metaphors felt forced, the proposals felt old, and with Republicans sitting collegially alongside Democrats, there wasn’t even the usual drama of the divided standing O to keep my interest piqued (oh ludicrous theater, how I never thought I’d miss you!). As Melinda Henneberger wrote at Politics Daily, “it neither soared nor stumbled, while reminding us that everyone needs an editor.”

That seems to be the universal view today, at least, of the performance, with headlines like “Stirred, but not shaken,” and “That old familiar SOTU.” The rhetorical flourishes just don’t seem to be doing it for anyone anymore. But where the content is concerned—the stuff in between those big thudding “we do big things” and sputniks and whatnot—the president gave the pundits much to muse over.

The question most are grappling with this morning is how the president is repositioning himself: what his calls for a spending freeze and a ban on earmarks, his defense of health care, his sharp line on tax cuts, and his promises of “investment” say about where the president is directing himself politically. Is he continuing the posture of veiled liberal? Or is he genuinely moving to the center? Will he enrage or delight the left? Will he welcome or shun the right?

One common suggestion is that the president last night returned to the themes and style of his 2008 election campaign. That’s Matt Bai’s take in The New York Times today, arguing that after a two-year period in which the former senator dug deep into the policy machinations that propelled his agenda along, he is digging out, and returning to the vague themes of unity and togetherness on which he rode into the White House. Bai writes that “the most profound shift in the speech turned out not to be a move from left to center, as some had predicted, but rather a move away from legislative priorities in favor of telling a broader American story.”...MUCH MORE

Wheat Up Again as Cold Drought Grip China, La Nina Resumes Downtrend

Chicago futures are up 10 1/2 cents at $8.4875.
After faking a bit of warming sea surface temperature anomalies in the Nino 3.4 area are heading down again, that is, La Niña is not letting go and will continue to influence weather around the world, witness the flooding in Australia and the cold and drought in China's #2 wheat growing province. Here's the most recent anomaly chart from Climate Observations:

http://i53.tinypic.com/zxp5l0.jpg

The most recent downturn puts the anomaly at -1.8 deg. C, close to the low for this episode.
On top of that the Pacific Decadal Oscillation is firmly in the cool phase registering at -1.21 for December, this after some modestly positive numbers for the first five months of 2010.

In the U.S. drought is intensifying in Texas and into the Southeast:

NOTE: To view regional drought conditions, click on map below. State maps can be accessed from regional maps.

This is typical of cold PDO and warm Atlantic Multidecadal Oscillation combinations, as we saw in our April 2008 post "Um, folks, um, maybe we should start thinking about rebuilding our grain reserves.":

...North American Drought

Drought over north America has been correlated to the Atlantic Multidecadal Oscillation and the Pacific Decadal Oscillation.

The relationship between drought in the continental US and the phases of the Pacific Decadal Oscillation (PDO) and the Atlantic Multidecadal Oscillation (AMO). The most severe droughts occur when the PDO is in a negative phase, and the AMO is in a positive phase.
From McCabe (2004).

Also from spring 2008 (the last time we had this PDO-ENSO combination): 

A Black Swan in Food

As a follow-up to the PDO/food thoughts that ended the post below and the crop progress report yesterday, we have this snip from Minyanville:

...Donald Coxe, chief strategist of Harris Investment Management and one of my favorite analysts, spoke at my recent Strategic Investment Conference. He shared a statistic that has given me pause for concern as I watch food prices shoot up all over the world.

North America has experienced great weather for the last 18 consecutive years, which, combined with other improvements in agriculture, has resulted in abundant crops. According to Don, you have to go back 800 years to find a period of such favorable weather for so long a time....

Folks, it is not getting better.

"Top Ten Acts of Civility Planned for the State of the Union"

From WhiteHouseDossier:

White House Dossier has learned that for tonight’s State of the Union, President Obama and Congress have planned a series of surprise events to showcase the new Era of Civility they all hope will overtake Washington.

Spoiler alert! If you wish to be surprised, please read no further. Also be warned that some of these moments are so touching that just reading about them may bring you to tears.
Below is a list of the top ten acts of civility that are planned for this evening.

1. When Speaker John Boehner begins weeping, Nancy Pelosi will ceremonially hand him a Kleenex.

2. Rahm Emanuel will follow President Obama into the Chamber throwing rose petals at members of Congress along the aisle.

3. Seats will be removed from the House chamber so that lawmakers are forced not only to sit next to each other, but to sit on each other’s laps.

4. At the mention of Roe v. Wade, Justices Antonin Scalia and Ruth Bader Ginsburg will rise, embrace, and begin briefly tongue kissing.

5. Yoko Ono will suddenly appear in the gallery and play an acoustic rendition of John Lennon’s “Give Peace a Chance.”...MORE

Also at WHD:
The Twelve Most Surprising Obamacare Provisions

"Why You Aren’t Buying Venezuelan Chocolate"

No it's not because Hugo Chavez has expropriated the means of production.
Here's the Harvard Business Review:

Chocolates El Rey is a proud, old company that processes some of the best cacao beans in the world. El Rey commands a 30% price premium for its cacao—the key raw ingredient in chocolate—which is bought by the great chocolate houses in Switzerland and Belgium for use in products that are sometimes more expensive than caviar.

El Rey also makes its own brand of excellent chocolate, which it’s trying to sell globally. But so far, El Rey chocolate is relatively hard to find outside its home market, and people aren’t willing to pay a price comparable with that of, say, Godiva or Lindt. That’s because El Rey is from Venezuela, not Belgium or Switzerland, and consumers have been conditioned to believe that great chocolate comes from Europe, not South America.

This is the provenance paradox. A product’s country of origin establishes its authenticity. Consumers associate certain geographies with the best products: French wine, Italian sports cars, Swiss watches. Competing products from other countries—especially developing markets—are perceived as less authentic. Even when their quality is on par with that of established players, the developing-market firms can’t command a fair price. The lower price, in turn, reinforces the idea that the offering isn’t as good and that the region doesn’t make premium products....MUCH MORE

Rare Earths: Pssst, You Want a Hot Tip in the Market? (FRO.TO; FRO.WT)

On page 254 of Edwin Lefevre's Reminiscences of a Stock Operator (online version) we read:

...At the same time I realise that the best of all tipsters, the most persuasive of all salesmen, is the tape....

Read the book, it's the best tip I've got.
Livermore understood markets.
Mr. Lefevre also wrote a short story called The Tipster, published in 1901.

If, on the other hand, monsieur et madame should be in the market for say, a wild-ass mining speculation, I would like to draw your attention toward:

A Luxembourg based company with
An undeveloped South African rare earth deposit whose stock
Trades on the Toronto stock exchange.

I'm thinking the warrants.

Here are the specifics via CanadianWarrants.com:

Warrant Symbol - FRO.WT
Number  Trading - 11,472,715
Expiration Date - November 17, 2012
Cusip - G36830 11 8
Exercise Price - $4.60

Here are the charts, again from CanadianWarrants.com:

Frontier Rare Earths Warrants

Frontier Rare Earths Limited

Here is the only reason I would even look at such a potentially fine bit of scripophily:

Our September 9 post, "Rare Earth Metals: "Chinese Institutional Investors Look At Rare Metals Overseas" (AVL.TO: LYC.AX; MCP; UCU.V)" ended:

...America’s needs for light rare earths will be oversupplied by Molycorp as will Australia’s by Lynas in a massive way. For the heavy rare earths, America’s needs can be meet and exceeded  by Ucore Rare Metals and Rare Element Resources. The needs of China, Japan, Korea and India for heavy rare earths can be met by the Canadian and African operations of Great Western Minerals Group, the Canadian operations of Avalon Rare Metals or Quest Rare Minerals, and the southern African operations of Frontier Rare Earths and Tantalus Rare Earths....MORE

The stock is up 7 cents this morning at $3.05.
Frontier is weighted at 5.9% in the Bloomberg Rare Earth Mineral Resources Index.
As with anything you see on the internet, if you are making investment decisions based on some blog, you deserve what you get.
Should there be profits, they're yours.
Losses? You own 'em.

The New BRICS on the Block: Which Emerging Markets Are Up and Coming?

Yeah, yeah emerging markets are overbought, all the action's going to be in the developed economies, blah, blah, blah.
Here's Knowledge@Wharton:

Building on the foundation of the well-known BRIC countries -- Brazil, Russia, India and China -- a new set of up-and-coming emerging markets is gaining attention. The so-called "CIVETS" countries -- Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa -- are now touted as hot markets because they have diverse economies, fast-growing populations, relatively stable political environments and the potential to produce outsized returns in the future.

Far-flung geographically and shaped by vastly different cultural, religious and political structures, the CIVETS show the potential to develop rapidly and reward those willing to take on emerging market risk beyond the more-established BRIC countries, experts say.

The BRICs were christened a decade ago by Goldman Sachs then-chief economist Jim O'Neill. Goldman Sachs now predicts that the BRIC's combined GDP will surpass U.S. GDP by 2018 and that they will account for half the global economy by 2020. The CIVETS owe their acronym to the Economist Intelligence Unit (EIU), which forecasts the countries will grow at an annual rate of 4.5% during the next 20 years. That's only slightly below the 4.9% average predicted by the EIUfor the BRIC nations, and far above the rate of 1.8% forecast for the world's richest -- or "G7" -- nations. (For what it is worth, a civet is a nocturnal, cat-like mammal found in at least two of the CIVETS countries -- Indonesia and Vietnam.)

In a recent survey conducted by Knowledge@Wharton and the global communications firm Fleishman-Hillard, a majority of corporate executives, investors and business leaders indicated that they would be interested in doing business with multinationals in the CIVETS countries. Respondents said they were most attracted to CIVETS because of low labor and production costs and the countries' growing domestic markets. When asked to identify weaknesses, the survey participants cited political instability, corruption, a lack of transparency and infrastructure, and homegrown companies without much of a reputation or brand identification.

According to Wharton management professor Witold Henisz, while there are a total of 150 emerging markets worldwide, a catchy name and new focus may give multinationals and investors more incentive to look toward these lesser-known countries. "An acronym is a simplification, but it calls attention to growth opportunities in rapidly growing markets abroad that managers need to come to understand," he says.

The Knowledge@Wharton/Fleishman-Hillard survey of 153 corporate and business leaders found a range of enthusiasm for different CIVETS. When asked to say which of the six countries offered a "great deal of opportunity" or "some opportunity," 86% cited Indonesia, followed by South Africa (84%), Turkey (82%), Vietnam (77%), Egypt (61%) and Colombia (56%). A significant set of respondents (42%) predicted that by 2020, the CIVETS countries would be on a level playing field with the BRICs in the global economy.

When compared to the BRICs, the CIVETS are much smaller. Indonesia is, by far, the largest with 242.9 million people, followed by Vietnam with 89.5 million, Egypt (80 million), Turkey (77 million) and Colombia (44 million). By contrast, Russia has a population of 139 million, Brazil has 201 million, India 1.2 billion and China 1.3 billion.

'Frontier Markets'

Henisz says size is one reason the decision to invest in the CIVETS countries is not as clear-cut as it is with the BRICs. A Western company might be willing to accept some missteps in China because the rewards would be so great given China's size. Entering a CIVETS country, however, is a more complicated strategic decision, he notes, and will probably come with added pressure for short-term results, compared to larger countries where companies might be willing to stay the course. "China is so critical that if you mess up the first year, you can stay around. That's not so clear about, say, Colombia -- it's not seen as mission critical."...MORE

See also last July's "Beyond BRICS: the CIVETS"

Goldman Sachs vs. the First Solar Bears: "First ya tree 'em, then ya kill 'em" (FSLR)

In early pre-market trade the stock is down $1.32 at $155.08.

Hunting bears with dogs is a nasty little blood sport. The dog pack attacks the bear until it is chased up a tree.
Then with the pack baying and barking the hunters take potshots at the bear, no more than 10-15 yards up the tree, point-blank with a rifle, until the bear falls out of the tree, usually still alive, and the pack sets in on it.

There seems to be a similar fate in store for the bearish short sellers of First Solar.
FSLR is the most shorted of the S&P 500 stocks with 29.4% of its float sold short. Here's Bespoke's list of the largest short interests in the S&P 1500 (incl. the midcap 400 and the smallcap 600), FSLR is 11th on the list.

Eyewitness accounts* of Pickett's charge on the third day of the Battle of Gettysburg say a moan went up from the massed Confederates when the Union troops finally fired on the advancing rebs.

There was something similar from the ranks of the FSLR shorts yesterday. When the stock hit and closed at a new 52-week high yesterday one fact was inescapable: Every short position laid on in the last year was underwater.

Optionetics

I don't know about others but for me the pain threshold is getting close when a short goes 2% against me. The buying we've seen over the last two weeks and especially the $8.99 uptick on triple average volume yesterday was just the artillery barrage, now things could get awful for the shorts, with Goldman Sachs playing the role of the Union infantry.

Gettysburg was the price the South paid for having Lee. The first day's fighting was so encouraging, and on the second day's fighting he came within an inch of doing it. And by that time Longstreet said Lee's blood was up, and Longstreet said when Lee's blood was up there was no stopping him... And that was that mistake he made, the mistake of all mistakes. 

Pickett's charge was an incredible mistake, and there was scarcely a trained soldier who didn't know it was a mistake at the time, except possibly Pickett himself, who was very happy he had a chance for glory.

...William Faulkner, in "Intruder in the Dust", said that for every southern boy, it's always within his reach to imagine it being one o'clock on an early July day in 1863, the guns are laid, the troops are lined up, the flags are out of their cases and ready to be unfurled, but it hasn't happened yet. And he can go back in his mind to the time before the war was going to be lost and he can always have that moment for himself. 

-Shelby Foote in Ken Burns' "The Civil War"

Kinda makes this stock market stuff seem a bit sordid in comparison. 

 

*"They were at once enveloped in a dense cloud of smoke and dust. Arms, heads, blankets, guns and knapsacks were thrown and tossed in to the clear air. ... A moan went up from the field, distinctly to be heard amid the storm of battle."

-Lt. Col. Franklin Sawyer, 8th Ohio

Didja Hear About Noble Energy's Big Gas Find Last Month? So Did the Israeli Tax man (NBL)

On Dec. 29 we posted "Noble Energy Has More Upside on Huge Gas Find (NBL)" with the stock at $87.50.
One week later, in a move that stunned Wall Street, it was "How Much will Noble Energy Be Taxed On Their Big Israeli Gas Find? (NBL)":

...Now the stock is trading at $83.86, down 4.16%, I forgot to post a major writeup by the Wall Street Journal, and a reader sends me some material non-positive (c'mon, you thought I'd say 'non-public' didn't you) information....

...Out at $83.86.
Now let's find a Yugoslav blackjack game! 

Yesterday the stock closed at $87.11.
Here's the latest from Upstream Online:

Israel plans gas tax hike

The Israeli government could take up to 62% of net profits from natural gas projects after the nation’s cabinet adopted recommendations from the Finance Ministry


The Finance Ministry panel, headed by economist Eytan Sheshinski, recommended keeping royalties at 12.5% while adding a progressive tax of between 20% and 50% of net profits – dependent on profitability.
In a statement, Israeli Prime Minister Benjamin Netanyahu said the cabinet had accepted all committee recommendations.

Reuters reports the bill will be submitted for parliamentary approval, and energy companies have vowed to fight the measure.

Israel currently takes 30% of net profits from the country's single existing gas field -- one of the world's lowest rates -- through a combination of taxes and royalties....MORE

I'm usually a devotee of Satchel Paige's dictum "Don't look back.... Something might be gaining on you." but in this case, if anyone missed the second post, here's another chance.

Talkin' Trash and makin' Cash: Casella Wast Systems (CWST)

From Waste Age:
Casella Waste Agrees To Sell Certain Recycling Assets for $130.4 Million

Rutland, Vt.-based Casella Waste Systems has reached an agreement to sell some recycling assets to a new company formed by Pegasus Capital Advisors LP and Intersection LLC for $130.4 million.

The assets include 17 material recovery facilities, a transfer station and “certain related intellectual property assets,” according to a press release issued by Casella Waste. The release doesn’t identify the exact location of the properties but does say the assets are located outside of Casella’s “core operating region of New York, Massachusetts, Vermont, New Hampshire, Maine and northern Pennsylvania.”...MORE

The stock was up 20.45% today, on almost six times normal volume.

Insta-Charity: $4Billion from Mosaic Deal Moves Margaret Cargill Foundation into Top 15 Philanthropies(MOS)

Well, insta if you don't count the wait while the family sorted things out.
From the Minneapolis StarTribune:
Cargill Foundation to get big-bucks boost

The $8 billion deal will give the Margaret A. Cargill Foundation instant clout to attack global problems.

After years of waiting, a stock deal is finally freeing up the money that will make the local Margaret A. Cargill Foundation one of the nation's biggest philanthropies, the donor of millions of dollars in Minnesota and across the globe.

A business move announced by Cargill Inc. last week means the foundation and a sister philanthropy -- Anne Ray Charitable Trust -- could split an estimated $8 billion.

That transforms the Margaret A. Cargill Foundation into one of the nation's 15 biggest foundations by assets and makes it at least twice the size of Minnesota's next-largest foundation, the McKnight Foundation.
The foundation finally can ramp up its grant-making for environmental programs, arts and culture, and "relief, recovery and development" -- top priorities as it flings open its doors. Although its vision is global, Minnesota will usually get a slice of program funding, staff said.

"Since 2006 [when Margaret Cargill died at age 85] it's been --'When can we actually start making grants?'" said Sallie Gaines, foundation spokesperson. "Just knowing we will be able to burst forth from the starting line is really exciting."

The Cargill heiress' fortune had been tied up in stock in the private company founded by her grandfather, and it could not be publicly traded. But the Cargill company's decision last week to divest its stake in local fertilizer giant Mosaic Co. was designed to free up cash for Margaret Cargill's trusts.
Her Cargill stock will be swapped for Mosaic shares, which are publicly traded and therefore easily converted to cash. At today's market prices, those shares are worth about $8 billion, of which $4 billion will go to the foundation.
"We will finally have the cash to fulfill Margaret's vision," Gaines said.

To put those assets in perspective, only eight foundations in the nation have $5 billion or more in assets.

While Minnesota nonprofits are likely to benefit from the foundation's stepped-up grantmaking, one stands out in particular. The American Swedish Institute in Minneapolis is particularly well-placed. It is one of about a dozen nonprofits funded by the Anne Ray Charitable Trust, a separate philanthropy founded by Margaret Cargill in 1996 that is slated to receive $4 billion....MORE

And That's a New 52-Week High for First Solar (FSLR)

The stock closed at $156.40 up $8.99 on the day. It cleared a lot of congestion today on heavy volume, $165 looks like the next resistance.

As foretold by the prophesy:

Jan. 13, 2011
First Solar Continues Breakout (FSLR)

Today it's up another buck at $140.83.
I'd expect the stock to consolidate in this area until next weeks option expiration before moving higher.
FSLR has a history of getting pinned at strike prices, but there is serious "pick off the offer" coming into the stock.
The fifty-two week high of $153.30 seems like the target. 

Jan. 19 
First Solar: Setting up for a new 52-Week High (FSLR)

Previously:
Jan. 10, 2011:
"...Solar stocks are poised to rebound sharply in 2011..." (FSLR; SOL; TSL)

You don't have to hit me upside the head more than a couple times.
When First Solar was up $3.00 earlier this morning I thought " Say.... Something may be happening".
Currently up $1.70 at $135.28....

Jan. 18, 2011
First Solar "Holy Uptick Batman" (FSLR)

...Today the stock is up $7.11 to $147.95, so much for that $140 strike price.
That is some serious "pick off the offer" buying. and I have no idea why....

Jan. 24, 2011
Aha! "Goldman Sachs added First Solar to its Conviction Buy List" (FSLR)

In early pre-market action the stock is up $3.67 at $151.08. Our target for this go-round was the 52-week high of $153.30.

21 points in 14 days, all because of that Jan. 10 observation: "Say...something may be happening".  

"Italian scientists claim to have demonstrated cold fusion"

From PhysOrg: 

Few areas of science are more controversial than cold fusion, the hypothetical near-room-temperature reaction in which two smaller nuclei join together to form a single larger nucleus while releasing large amounts of energy. In the 1980s, Stanley Pons and Martin Fleishmann claimed to have demonstrated cold fusion - which could potentially provide the world with a cheap, clean energy source - but their experiment could not be reproduced. Since then, all other claims of cold fusion have been illegitimate, and studies have shown that cold fusion is theoretically implausible, causing mainstream science to become highly speculative of the field in general.

Despite the intense skepticism, a small community of scientists is still investigating near-room-temperature fusion reactions. The latest news occurred last week, when Italian scientists Andrea Rossi and Sergio Focardi of the University of Bologna announced that they developed a cold fusion device capable of producing 12,400 W of heat power with an input of just 400 W. Last Friday, the scientists held a private invitation press conference in Bologna, attended by about 50 people, where they demonstrated what they claim is a nickel-hydrogen fusion reactor. Further, the scientists say that the reactor is well beyond the research phase; they plan to start shipping commercial devices within the next three months and start mass production by the end of 2011.

The claim
Rossi and Focardi say that, when the atomic nuclei of nickel and hydrogen are fused in their reactor, the reaction produces copper and a large amount of energy. The reactor uses less than 1 gram of hydrogen and starts with about 1,000 W of electricity, which is reduced to 400 W after a few minutes. Every minute, the reaction can convert 292 grams of 20°C water into dry steam at about 101°C. Since raising the temperature of water by 80°C and converting it to steam requires about 12,400 W of power, the experiment provides a power gain of 12,400/400 = 31. As for costs, the scientists estimate that electricity can be generated at a cost of less than 1 cent/kWh, which is significantly less than coal or natural gas plants....MORE

HT: ZeroHedge whose intro. is:

According to PhysOrg.com, two Italian scientists from the University of Bologna have taken on one of physics' historically most discredited concepts, cold fusion, and have actually succeeded in creating a sustainable reaction. Aside from the major implications of the energy market should this be validated and recreated (an issue that buried the original Cold Fusion discovery by Stanley Pons and Martin Fleishmann), one of the more economically important side effects of this purported rediscovery is that one of the byproducts of the reaction is none other than recently uber-bubbleicious copper....

JP Morgan Says Tesla Motors Could Double in 3 Years (TSLA)

Indeed.
The stock is up 5.8% at $24.37.
I've never cared for this one, partly because I don't understand how to value it, maybe JPM does.
From Reuters:
Tesla shares could reach $50 in 3 years-analyst

Shares of electric carmaker Tesla Motors Inc (TSLA.O) could double to $50 over the next three years, a JPMorgan analyst wrote on Monday, and the stock rose more than 7 percent.

"We continue to believe the majority of the investment community (and the majority of the automotive industry) is substantially underrating Tesla's potential," analyst Himanshu Patel wrote in a research note.

Patel said Tesla shares could reach $40 to $50 in the next three years as the company could eventually become a premium automaker with a full line of vehicles and with a lower cost structure than its rivals.

He noted that Tesla's operating margins could be on par with German luxury carmakers of as much as 9 percent....MORE