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Monthly Archives: April 2013

The University of Wyoming Finds a Huge Lithium Deposit

“University of Wyoming researchers found the lithium while studying the idea of storing carbon dioxide underground in the Rock Springs Uplift, a geologic formation in southwest Wyoming. University of Wyoming Carbon Management Institute director Ron Surdam stated that the lithium was found in underground brine. Surdam estimated the located deposit at roughly 228,000 tons in a 25-square-mile area. Extrapolating the data, Surdam said as the uplift covered roughly 2,000 square miles, there could be up to 18 million tons of lithium there, worth up to roughly $500 billion at current market prices.

As a yardstick, the lithium reserves at Silver Peak, Nevada, the largest domestic producer of lithium total 118,000 tons in a 20-square-mile area. The University of Wyoming stated that in a best-case scenario, the Rock Springs Uplift’s 18 million tons of potential lithium reserves is equivalent to roughly 720 years of current global lithium production. UW researchers suggest that the lithium mining could be part of a carbon dioxide sequestrationoperation, since the lithium-bearing brine must be pumped to the surface from the underground rock formation to extract the lithium, creating space to store the CO2 in its place. Surdam highlighted the economic advantages to the combined lithium-CO2 storage operation, commenting, “You get paid to put the carbon in the subsurface and that’ll pay for the wells to remove the lithium.” …”

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$HLF Beats Estimates, Company Raises Guidance Below Expectations

“Herbalife on Monday delivered its 17th straight earnings beat and raised its full-year outlook, but its second-quarter guidance fell short of expectations.

Shares in the multilevel marketer of weight-loss shakes and skin lotions wavered after the report. 

Net income rose to $118.9 million, or $1.10 a share, from $108.2 million, or 88 cents a share, a year ago.

Excluding items, earnings rose to $1.27 per share from 88 cents a share in the year-earlier period, while revenue improved 14 percent to $1.10 billion from $964 million a year ago.

Analysts had expected the company to report earnings excluding items of $1.06 a share on $1.12 billion in revenue, according to a consensus estimate from Thomson Reuters.

The company raised its full-year outlook to $4.60 a share to $4.80 a share vs. the current consensus estimate of $4.66 a share….”

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Wealthy Consumers Expected to Drive Demand This Year

“The consumer economy may look weak. But the affluent and wealthy consumers are ramping up their spending – and that could help drive the broader economy this year.

Two new studies show that wealthier consumers plan to increase their spending despite higher taxes and a generally skeptical view of economic growth and government.

A study from the American Affluence Research Center looked at the top 10 percent of consumers by income who account for more than half of consumer spending. It found that the majority of them plan to spend the same or more in 2013 as they did in 2012….”

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Richard Branson’s Dream of Space Flight is One Step Closer With Inaugural Flight

“Virgin Galactic’s passenger spaceplane, which is designed to take tourists to the edge of space, flew its first rocket-powered test flight, breaking the sound barrier at high altitude.

SpaceShipTwo ignited its engine Monday after being released by WhiteKnightTwo, a plane that carried it to 47,000 feet (14,000 meters) above California’s Mojave desert, British billionaire Richard Branson‘s firm said.

The rocket burned, as planned, for 16 seconds — enough to propel the spacecraft to 55,000 feet at 1.2 times the speed of sound, the statement said.

“For the first time, we were able to prove the key components of the system, fully integrated and in flight,” said Branson, who observed from the ground.

He predicted the successful test would pave the way to “full space flight by the year’s end.”

Next time, the company plans to keep the rocket going longer, to bring SpaceShipTwo to an altitude of more than 328,000 feet (100 kilometers), on the edge of space….”

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$BP Get Snagged With More Lawsuits

“LONDON (Reuters) – BP Plc has been hit by over 2,200 new lawsuits seeking payback for the 2010Gulf of Mexico oil spill in the past few weeks as individuals, companies and government bodies rushed to stake their claim before their right to do so expired.

The British oil company, whose deepwater Macondo well ruptured on April 20, 2010, killing 11 men and spilling crude into the sea for weeks, revealed the number of new claims made since March 6 in its first-quarter results on Tuesday.

The United States Oil Pollution Act of 1990, under which most of the new lawsuits were registered, has a three year statute of limitations which could make bringing further legal action difficult after the third anniversary of the disaster.

BP said it would be applying to have the new legal challenges consolidated into a trial that is already under way in New Orleans.

The first phase of the trial of BP and its partners in the well, Transocean and Halliburton , ended earlier in April, but the judge, Carl Barbier, has yet to rule on the degree of blame that will be apportioned to each party and on the level of negligence that will be applied.

Both decisions could have a big impact on the size of BP’s final liability, already measured in tens of billions of dollars. His ruling, to be made without a jury as is traditional under U.S. maritime law, could come this summer…”

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$BBY Hits the Bid on Europe After Selling its Carphone Warehouse Unit

“NEW YORK/LONDON (Reuters) – U.S. retailer Best Buy Co Inc retreated from its ill-fated European expansion on Tuesday by selling its stake in a joint venture to Carphone Warehouse Group for less than half what it paid five years ago.

The 500 million pounds ($775 million) sale is the latest sign the world’s largest consumer electronics chain is scaling back its overseas ambitions to focus on its mainstay U.S. business, which faces cut-throat competition from the likes of Wal-Mart Stores Inc and Amazon.com Inc .

The deal will strengthen Best Buy’s balance sheet, simplify its business and improve its return on invested capital, CEO Hubert Joly said in a statement, adding that the timing and economics felt right for the deal.

But allowing for currency fluctuations, the price is less than half the roughly $2.1 billion Best Buy paid in 2008 for 50 percent of the independent mobile seller’s retail operations.

“(Best Buy) basically paid 1.1 billion (pounds) for the same half they are selling back to us today for a lot less,” Carphone Chief Executive Roger Taylor said.

“When they bought in they had aspirations to put Best Buy stores across Europe, and they probably paid a premium for that, and in the end that strategy didn’t work for many reasons.”

Europe’s economic prospects continue to worsen on the back of searing budget cutbacks to deal with a crisis of government debt in several southern countries, while the U.S. economic recovery increasingly looks firmly on track….”

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Cost Cutting Helps $AVP Post Better Than Expected Profits, Revs Rise

“(Reuters) – Avon Products Inc (AVP.N) on Tuesday reported a better-than-expected first-quarter profit in the latest sign the beauty products company’s business continues to improve, helped by higher sales in key markets Brazil and Russia and cost cuts.

Overall, revenue in the quarter fell 3.5 percent to $2.48 billion, but was flat when stripping away the impact of currency fluctuations. Avon’s growth in Latin America and Eastern Europe contrasted with a poor showing in North America, where sales again slid, falling 15 percent.

Avon reported a net loss of $13.7 million, or 3 cents per share, compared with net income of $26.5 million, or 6 cents per share a year earlier.

Excluding items such as a charge related to the recent currency devaluation in Venezuela, a big market for Avon, the company reported adjusted net income was $112 million, or 26 cents per share, helped in large part by cost cutting efforts.

That was well above the 14 cents per share Wall Street analysts were projection, according to Thomson Reuters I/B/E/S….”

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$PFE Misses Expectations and Guides Lower

Pfizer Inc. (PFE), the world’s biggest drugmaker, lowered its 2013 profit forecast after first-quarter sales and earnings missed analyst estimates.

Full-year earnings excluding one-time items may be $2.14 to $2.24 a share, New York-based Pfizer said in a statement today. The company’s gave a previous 2013 forecast of $2.20 to $2.30 in January. First-quarter profit missed analyst estimates by 1 cent, the average of 17 analysts’ estimates compiled by Bloomberg.

First-quarter sales were $13.5 billion, less than analyst estimates of $13.94 billion, as revenue for Prevnar, a vaccine for pneumococcal diseases, and erectile dysfunction drug Viagra fell short of expectations. Investors are focused on whether Pfizer will split apart after shedding two non-drug units. Chief Executive Officer Ian Read has been floating the idea of cleaving the company into a brand-name drug unit and a generics business, as a move to raise the total value of two companies….”

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Physical Demand for Gold Jumps All Over the Globe

“Surging demand for gold from Dubai to Istanbul has pushed physical premiums in the region to levels not seen in years as the biggest price slump in three decades lures consumers, according to MKS (Switzerland) SA.

Premiums paid by wholesalers and bulk buyers in Dubai to secure a 1 kilogram bar of bullion are being quoted between $6 an ounce and $9 an ounce over the London cash price, said Frederic Panizzutti, global head of marketing and sales at the Swiss-based bullion refiner. That compares with about 50 cents before the rout, Panizzutti, also chief executive officer of MKS Precious Metals DMCC, said in an interview from Dubai.

Gold fell to the lowest in more than two years this month on speculation that the global economy is recovering, unleashing a purchasing frenzy among coin and jewelry buyers from China to the U.S. Consumer demand for jewelry, bars and coins inTurkey and the Middle East represented about 9.4 percent of the global total last year, according to the World Gold Council. Bars have been cleared from display in the souks, according to Gerry Schubert, head of precious metals at Emirates NBD PJSC.

“Physical demand has been tremendous in a way I haven’t seen for a number of years,” said Jeffrey Rhodes, global head of precious metals at INTL FCStone Inc., who’s worked in the industry for more than three decades. “The price collapse prompted a physical gold rush and the evidence of the extent of that is the prolonged period of high premiums that we’ve seen. Reports from the gold souks are that business is good,” Rhodes said from Dubai.

Bear Market….”

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Unemployment Climbs in Germany for a Second Month

“German unemployment rose for a second month in April, adding to signs that Europe’s largest economy is struggling to recover from a slump at the end of last year.

The number of people out of work climbed a seasonally adjusted 4,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 2,000, according to the median of 29 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, just above a two-decade low of 6.8 percent.

The International Monetary Fund predicts the German economy will expand 0.6 percent this year, even as its biggest export market, the euro area, remains mired in recession. German business and investor confidence dropped in April as Europe’s debt crisis and an unusually long winter delayed the first- quarter rebound predicted by the Bundesbank.

“Uncertainty in the euro area is back and it has taken its toll on the German labor market,” said David Milleker, chief economist at Union Investment GmbH in Frankfurt. “I wouldn’t expect a reduction of unemployment anytime soon.”

The euro was little changed after the report, trading at $1.3086 at 10:30 a.m. in Frankfurt. European stocks rose, with theStoxx Europe 600 Index (SXXP) up 0.1 percent.

Long Winter…”

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$DB Announces a $6.5 Billion Share Offering

Deutsche Bank AG (DBK) (DBK), continental Europe’s biggest bank, is raising 5 billion euros ($6.5 billion) in capital, three months after co-Chief Executive Officer Anshu Jain said a share sale wasn’t in investors’ interests.

The company issued 2.96 billion euros of stock at 32.90 euros apiece, exceeding an initial goal of 2.8 billion euros, as part of the capital increase, the Frankfurt-based lender said in a statement today. Deutsche Bank’s shares surged as much as 7.9 percent, the biggest rise since August.

Jain timed the capital increase to coincide with a report showing first-quarter earnings rose 19 percent, beating estimates. He’s boosting reserves after Standard & Poor’ (SPY)s warned of a possible credit rating downgrade. Jain said in January he was willing to take losses on asset sales rather than issue new stock, citing the level of the share price.

“We are now among the best capitalized banks in our global peer group,” Jain said on a conference call with analysts and investors today. “These measures allow us to take advantage of organic growth opportunities in a changing competitive landscape.”

Deutsche Bank’s shares climbed 6.3 percent to 34.98 euros at 9:32 a.m. in Frankfurt trading, valuing the firm at 33 billion euros. The Bloomberg Europe Banks and Financial Services Indexrose 1.3 percent.

The bank will also sell 2 billion euros of subordinated debt, Jain said on the conference call.


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Eurozone Inflation Falls to 1.2%

“Euro-area inflation at a three-year low and record unemployment increased pressure on theEuropean Central Bank to cut interest rates later this week to spur lending and growth.

The annual inflation rate dipped to 1.2 percent in April, thelowest since February 2010, from 1.7 percent a month earlier, the European Union’s statistics office in Luxembourg said today. The rate has been below the ECB’s 2 percent ceiling since February. The March jobless rate advanced to 12.1 percent, the highest since the data series began in 1995.

The ECB’s Governing Council will cut its benchmark rate to a record low 0.50 percent on May 2 from 0.75 percent, according to the median of 70 economists’ estimates in a Bloomberg News survey. The Frankfurt-based central bank sees inflation at 1.6 percent this year and 1.3 percent in 2014.

“If it weren’t for the ECB’s usual reluctance to make large changes, there would be a strong case to cut by 50 basis points, and I think the likelihood is perhaps higher than the market expects,” Frederik Ducrozet, an economist at Credit Agricole SA (ACA), said by telephone from Paris. “It’s probably around 20 percent, because with inflation that low it’s really the best time to do such things and maximize the impact on the market.”

Debt Crisis….”

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Austria Considers Bad Bank Idea to Wind Down Delinquent Loans

Austria is reconsidering plans to establish a separate “bad bank” to wind down delinquent loans at nationalized lender Hypo Alpe-Adria-Bank International AG, a move that could add to the nation’s debt.

The government is discussing whether separate wind-down units modeled on Germany’s FMS Wertmanagement AoeR or Austria’s KA Finanz AG would make sense for Hypo Alpe, Chancellor Werner Faymann told journalists in Vienna today. The Finance Ministry is also in talks with the European Union to allow more time for the bank to sell its viable assets, he said.

“There are intensive consultations about whether there could be ‘bad-bank’ parts like the German or the previous Austrian model,” Faymann said after the weekly government meeting. “The goal is to manage as many assets as possible as beneficial as possible.”

Austria is under pressure by EU Competition Commissioner Joaquin Almunia, who is reviewing state aid of as much as 2.2 billion euros ($2.9 billion) the country has provided to the lender since 2008. A firesale of the bank’s assets by the end of the year may cause as much as 14 billion euros of additional losses for Austrian taxpayers, according to a central bank document cited by Profil magazine April 27….”

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The Pound Lifts Against the Dollar and the Euro for the First Monthly Gains in a While

“The pound headed for its biggest monthly gain versus the dollar since September as a report showed British banks granted more loans for homes in March than analysts predicted, adding to signs the economy is improving.

Sterling was set for its first monthly advance against the euro since July even as a report showed U.K. consumer confidence unexpectedly declined in April. Futures traders decreased their bets that the pound will weaken against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed last week. U.K. government bonds were little changed as the Debt Management Office sold 50-year inflation-linked gilts at a record-low yield.

“If you look at speculative positions, accounts are still fairly short the pound,” said Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S (DANSKE) in Copenhagen, referring to a bet that the price of an asset will fall. “That’s been gradually scaled back and we can see potential for it to go even higher in the short term.”

The pound was little changed at $1.5479 at 12:38 p.m. London time after climbing to $1.5546 yesterday, the most since Feb. 15. The U.K. currency has gained 1.9 percent this month. Sterling traded at 84.47 pence per euro after appreciating to 83.98 pence on April 26, the strongest since Jan. 24. It has risen 2 percent against the common currency in April.

Britain’s currency may weaken to $1.43 and 88 pence per euro in six months’ time, Danske Bank’s Kirkegaard said. The median predictions in Bloomberg surveys of economists and strategists is for the British currency to end the year at $1.49 and 85 pence per euro.

Mortgage Approvals…”

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The Euro and European Bond yields Fall as Low Inflation Raises Easing Prospects

“European government bonds rose, pushing French yields to a record low, and the euro weakened as slowing inflation boosted the prospect of more central bank stimulus. Futures on the Standard & Poor’s 500 Index (SPX) were little changed after the gauge closed at an all-time high yesterday.

French 10-year bond yields fell as low as 1.70 percent as of 7:25 a.m. New York time, while the euro weakened against all but two of its 16 major peers. The MSCI All-Country World Index of shares added 0.2 percent, extending the highest level since June 2008. European stocksheaded for an 11th month of gains, and corn for July delivery advanced 0.8 percent to $6.65 a bushel in Chicago. Treasuries rose…”

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The Aussie Dollar Gains Against Most Peer Currencies

“The Australian dollar rose to the highest in almost two weeks against its U.S. counterpart before the Federal Reserve opens a two-day meeting amid speculation it will maintain bond purchases for the foreseeable future.

The so-called Aussie rose against most of its major peers as Asian stocks gained and data showed private sector credit increased in March. Demand for New Zealand’s dollar was limited after the nation’s building approvals unexpectedly declined, easing pressure on the Reserve Bank to tighten monetary policy.

“There could be more reserve diversification flowing into currencies like the Australian dollar,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. (WBC) in Singapore. “The general consensus is that the Fed is going to remain fairly dovish. The question is not whether or not quantitative easing is going to be maintained, but if it’s going to be stepped up, and that’s played a part in the U.S. dollar’s recent selloff.”

The Australian dollar touched $1.0372, the highest level since April 17, before trading 0.1 percent higher than yesterday at $1.0358 as of 5:08 p.m. in Sydney, trimming its monthly slide to 0.6 percent. The currency rose 0.2 percent to NZ$1.2105. New Zealand’s dollar slid 0.1 percent to 85.57 U.S. cents.

Australian government bonds rose, with the yield on 10-year debt falling one basis point, or 0.01 percentage point, to 3.09 percent, after touching 3.077 percent, matching the lowest since Nov. 19. The three-year rate dropped as low as 2.57 percent, a level unseen since Dec. 3.

The MSCI Asia Pacific Index of stocks climbed 0.8 percent, following a 0.7 percent gain in the MSCI World Index yesterday.

FOMC Meeting…”

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Taiwan’s GDP Grows Slower Than Estimated in Q1

Taiwan’s economy expanded at a slower pace than economists estimated in the first quarter as a faltering global recovery hurt exports, increasing pressure on the central bank to extend an interest-rate pause to aid growth.

Gross domestic product rose 1.54 percent in the three months through March from a year earlier, after increasing 3.72 percent in the fourth quarter, the statistics bureau said in a preliminary report in Taipei today. The gain was less than all estimates in a Bloomberg Newssurvey of 17 economists, where the median was 3.1 percent.

The island’s growth slowdown adds to signs of a cooling global economy after China and the U.S. expanded less than analysts estimated last quarter. Taiwan’s export orders and industrial output for March unexpectedly fell, while Japanese and South Korean production missed forecasts as faltering demand limitsAsia’s recovery.

“Taiwan’s GDP is a reflection of a sluggish global recovery and the decline of global demand, notably from China (CNGDPYOY),” said Raymond Yeung, a Hong Kong-based senior economist at Australia & New Zealand Banking Group Ltd. The data suggests the monetary policy stance will be maintained, “unless there is a significant contraction of the regional economies from unforeseeable risks, including avian flu.”

The benchmark Taiex stock index gained 0.8 percent at 9:53 a.m. in Taipei. The Taiwan dollar climbed 0.3 percent to NT$29.464 against its U.S. counterpart, according to Taipei Forex Inc. It has declined about 1 percent this year.

Lowest Profit….”

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Fun With Wire Tapping

“When one conspires to violate federal law, it helps to have a government agency or two as one’s co-conspirators when law enforcement comes poking around, as telecom giant AT&T and others learned recently when the Defense Department (DOD) and theDepartment of Homeland Security (DHS) successfully pressured the Justice Department(DOJ) to agree secretly not to prosecute blatantly illegal wiretaps conducted by AT&T and other Internet service providers at the request of the agencies.

Although some press reports have termed this an authorization of activity that would otherwise be illegal, this is a misnomer. The executive branch lacks the power to retroactively declare criminal conduct to be lawful, but it can choose to ignore it by waiving prosecution pursuant to “prosecutorial discretion.”

Although the secret DOJ prosecution waiver initially applied to a cyber-security pilot project—the DIB Cyber Pilot—that allowed the military to monitor defense contractors’ Internet links, the program has since been renamed Enhanced Cybersecurity Services and is being expanded by President Obama to allow the government to snoop on the private networks of all companies operating in “critical infrastructure sectors,” including energy, healthcare, and finance starting June 12.

“The Justice Department is helping private companies evade federal wiretap laws,” warned Marc Rotenberg, executive director of the Electronic Privacy Information Center, which obtained more than 1,000 pages of government documents relating to the issue via a Freedom of Information Act request. “Alarm bells should be going off.” …”

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