Yahoo's value lies on its 24% of Alibaba

Yahoo's second-quarter results, released late Tuesday, were unimpressive at best. Sales shrank 1% year over year, and the company forecasts no improvement in the third quarter. Ms. Mayer has little to show for her efforts a year after becoming CEO.

Still, Yahoo shareholders didn't seem to mind: The stock jumped 7% on Wednesday and now trades at a five-year high.

 How to solve the puzzle,easy Yahoo owns  24% of Alibaba. On Tuesday the Chinese e-commerce giant published its financial results  Its first-quarter sales jumped 71% year over year to nearly $1.4 billion. Meanwhile, thanks to high and rising margins, operating profit more than tripled to $700 million. 

So investors keep buying Yahoo stock as a proxy for as-yet unlisted Alibaba. An initial public offering is expected soon, and assuming a conservative valuation of US$ 90 billion,and the after-tax value of Yahoo's stake would still be worth $15 billion, or about $14 a share. Add in Yahoo's stake in Yahoo Japan worth around $5 a share, as well as $4 a share of cash and Yahoo's core business is today valued at less than $6 a share.

Alibaba's expected valuation provides a good foundation for Yahoo's stock, while Ms. Mayer battles to turn around the aging Internet giant. She has started with multiple "acqui-hires": buying small companies for their people, not their products. The hope is that the pricey talent can hit product home-runs at Yahoo. Meanwhile, the recent $1.1 billion deal to buy blogging service Tumblr gives Yahoo a better foothold in social media, though it will take time to get its users comfortable with seeing ads.

But these things don't happen overnight. Alibaba is buying Ms. Mayer some crucial time. 

U.S. Oil & Gas midsize producers are selling their asian oil and gas portfolios

According to the Wall Street Journal, "once captivated by Asia's untapped oil-and-gas riches, some midsize U.S. energy producers now are selling their Asian assets as the North American shale revolution offers bright prospects closer to home"
.Companies such as Anadarko Companies such as AnadarkoPetroleumCorp., Hess Corp. and Newfield  EXPLORATION Co.  recently started looking for buyers for either all or some of their Asian portfolios, together worth billions of dollars. Assets for sale include oil fields in China's Bohai Bay and natural-gas hubs in Thailand.
Pulling back from Asia may appear counterintuitive. China's energy demand alone will rise by 60% between 2010 and 2035, accounting for the largest share of growth in global energy use, according to the International Energy Agency.
But oil-and-gas producers now face more choices about where to drill. New technology that enables access to oil and natural gas trapped in dense rock formations is transforming global energy markets. The U.S. is expected to become the world's top oil producer by 2017, the IEA said last year.
With oil prices still relatively high amid declines in other commodities, the prospect of surging output in the U.S. is proving attractive to producers.

Andrew Williams, a Melbourne-based analyst at RBC Capital Markets, said a trend of U.S. companies selling assets is undoubtedly emerging. But he said factors other than shale oil's potential may be playing a part.

Anadarko, for example, has enjoyed so much exploration success in other parts of the world that it needs to sell some fringe assets to redirect capital to bigger projects.

Meanwhile, Hess is under pressure to unload assets after activist investors, frustrated by a string of dry holes and poor share-price performance, forced the ouster of former Chairman John Hess this year and called for a renewed focus on the U.S''.

International Energy Agency: Policies that improve energy efficiency and urban transport systems top priority for the future

Policies that improve the energy efficiency of urban transport systems could help save as much as USD 70 trillion in spending on vehicles, fuel and transportation infrastructure between now and 2050, according to a new report from the International Energy agency.

The report comes at a critical time: More than half of the world’s population already lives in cities, many of which suffer from traffic jams and overcrowded roads that cost hundreds of billions of dollars in lost fuel and time and that harm environmental quality, health and safety.

“As the share of the world’s population living in cities grows to nearly 70 percent by 2050 and energy consumption for transport in cities is expected to double, the need for efficient, affordable, safe and high-capacity transport solutions will become more acute,” said IEA Executive Director Maria van der Hoeven as she presented the report. “Urgent steps to improve the efficiency of urban transport systems are needed not only for energy security reasons, but also to mitigate the numerous negative climate, noise, air pollution, congestion and economic impacts of rising urban transport volumes.”

“Governments must think beyond individual technologies and electoral cycles, and consider how to build – and how to renew – cities that will accommodate and transport nearly 6.3 billion people by 2050. We must plan infrastructure, logistics and energy systems now that make sense today and over the coming decades,” she said.

Among the three broad categories of policies recommended in the report are those that allow travel to be avoided, those that shift travel to more efficient modes, and those that improve the efficiency of vehicle and fuel technologies. The report notes that if fully implemented across the transportation sector, this “avoid, shift and improve” approach could save up to USD 70 trillion in terms of lower spending on oil, roadway infrastructure and vehicles.

Blackrock: China's economic rebalance offer long-term gains

Though suffering a slower GDP growth, China's painful steps to achieve economic rebalance could offer long-term gains, Ewen Cameron Watt, chief strategist at the BlackRock Investment Institute, said Thursday.

"It is undoubtedly a desirable policy to reduce the dependence on fixed asset investment, and increase the share of consumption. China's government and financial regulators are doing right things in that respect, and deregulation of interest rate is also helpful," Watt said.

"I think allowing the consumers' (savings) real interest rate to return to positive is important to this (economy rebalance) shift."

Watt, who spoke with Xinhua after the release of the institute's midyear investment outlook report, said that in his opinion, "the size of the Chinese economy is understated in the official numbers.

"The services industry is particular under-measured. Looking at the share of industry of other economies in the same state of development," Watt said, "I think the economy is more balanced than you think when you look at the official data."

According to the outlook report, China's credit has been growing at an alarming pace, and the government now faces a stark choice -- either cleaning up the mess now and facing some market disruption, or waiting and confronting an even bigger problem later. Beijing smartly appears to take the first route.

Source; Xinhua

Detroit files for federal bankruptcy protection

The city of Detroit filed for federal bankruptcy protection Thursday after decades of decline, a new low for a city that once defined industrial America's might but was hollowed out by the flight of residents and businesses to the suburbs.

The filing by the automobile capital and onetime music powerhouse—which has liabilities of more than $18 billion—is the country's largest-ever municipal bankruptcy case.

Apache to sell assets for US$ 3.75 billion in cash

Apache Corp.  said it would sell its shallow-water operations in the Gulf of Mexico to Fieldwood Energy LLC, a private-equity-backed firm, for $3.75 billion in cash.

The deal marks a new direction for Apache, one of America's biggest energy explorers with a stock-market value of $32 billion, which until now has produced more oil and gas in the shallows of the Gulf than any of its competitors.

But it has begun to jettison assets to shore up its balance sheet after years of aggressive acquisitions. The sale nearly accomplishes a target Apache executives set in May, when they said the company would raise $4 billion this year from asset sales.

The oil and natural-gas wells on the nearly two million acres Apache is selling amount to about 12% of its daily production. The company has shifted its focus away from the Gulf, pinning its growth prospects on drilling in Texas and Oklahoma.

Source: WSJ

German's Trade Policy

In China the good news is that its economic rebalancing process seems to have become more determined than ever before, although as of yet there has been minimal rebalancing at the expense of a significant reduction in growth rates. This I expect will continue to be the case, but European trade policies are going to put additional pressure on China's adjustment.
Germany is currently running the largest trade surplus in the world, while the deficits of peripheral Europe are being squeezed down through unemployment – which is certain to remain high for many more years. Two weeks ago in a presentation at the EU Central Bank seminar that t the surge in European surpluses, which was largely matched before the crisis by the surge in deficits in peripheral Europe, is expected to be maintained even as surpluses in China and Japan, the other leading surplus nations, have dropped dramatically, but since these northern European surpluses can no longer be counterbalanced by deficits within peripheral Europe given how indebted and troubled are their European trade partners, the hope is simply to force them abroad. In a world with weak demand and deteriorating trade relationships, in other words, the northern Europeans have decided that rather than boost domestic demand they will resolve their domestic problems by absorbing far more than their share of global demand, to the tune of 2-3% of Europe’s GDP.
This is absurd. If they succeed it will only be temporarily and at the expense of their already-suffering trade partners, and as a consequence it will just be a question of time before global trade relationships get even nastier than they have been. Of course if trade relationships deteriorate enough, and so force the imbalances back onto Europe, the result will be a surge in German unemployment with no corresponding relief in unemployment in the periphery.

Asia Times
Michael Pettis

Bernanke: The financial tightening result of higher interest rates is Unwelcome

According to an article of the Wall Street Journal of today,the financial tightening that has accompanied the recent rise in interest rates is "unwelcome"

Explaining several reasons for the increase in interest rates "Mr. Bernanke said one likely culprit is the unwinding of "leveraged and perhaps excessively risky" positions by investors lulled by the Fed's ultra-easy money policies.

"It's probably a good thing to have that happen, although the tightening that's associated with that is unwelcome," Mr. Bernanke told members of the Senate Banking Committee.

By squeezing out market excesses, Mr. Bernanke said the interest-rate increases have also helped ease concerns among some Fed officials that the central bank's policies have been contributing to building risks in the financial system. 

During his testimony Wednesday before a House panel, Mr. Bernanke stressed that the Fed would be watching for any adverse impact to the housing market from recent rate moves. He said the Fed would act if necessary to ensure the housing recovery doesn't falter.

Mr. Bernanke also cautioned that "it's way too early to make any judgment" about exactly when the first reduction to the bond program will happen. He demurred when asked about market speculation that the first reduction will happen at the Fed's Sept. 17-18 policy meeting, saying it will depend on economic data.

Source: The Wall Street Journal

Mortgage rates and Car Loans rates

   Interest Rates                         Last     Week         52-Week     Change % Pts
                                                               Ago      High    Low   52-week  3-YR

30-year mortgage, fixed	4.53	4.67	4.78	3.54	0.78	-0.17
15-year mortgage, fixed	3.63	3.69	3.84	2.80	0.50	-0.56
Jumbo mortgages, $417,000-plus	4.73	5.11	5.11	3.97	0.44	-0.91
Five-year adj mortgage (ARM)	3.79	4.06	4.06	2.80	0.83	-0.14
New-car loan, 48-month	2.65	2.61	3.72	2.42	-0.49	-3.59

 Source: WSJ

Government Bonds Quotes

 Goverment Bonds                                                            Price           Yield
                                                                                        Change             %

U.S. 5 Year			-3/32	1.329
U.S. 10 Year			-10/32	2.531
U.S. 30 Year			-26/32	3.628
Germany 2 Year			1/32	0.081
Germany 10 Year			6/32	1.525
Italy 2 Year			6/32	2.070
Italy 10 Year			20/32	4.413
Japan 2 Year			0/32	0.127
Japan 10 Year			4/32	0.804
Spain 2 Year			5/32	1.948
Spain 10 Year			21/32	4.636
U.K. 2 Year			1/32	0.288
U.K. 10 Year			9/32	2.259

 Source: WSJ

Tensions between China and Philippines over contested waters with rich oil and gas potential Reserves

"Tensions between China and the Philippines have spiked in recent weeks as the two sides jostle for control over the Second Thomas Shoal, a potentially oil and gas rich fixture in contested waters. 
Nearly one year after Chinese paramilitary forces and the Philippine Navy squared off precariously over the contested
Scarborough Shoal, the Second Thomas Shoal (known as "Ren'ai" in China and "Ayungin" in the Philippines) has emerged as a new regional flashpoint. 

The newly contested shoal is 168 kilometers off the Philippine western island of Palawan and almost 965 kilometers from the nearest Chinese port. It has been under the de facto control of Philippine forces for over a decade, with Manila arguing that the shoal is well within its 200 nautical mile exclusive economic zone (EEZ). Beijing has repeatedly referred to Manila's claims over island and reefs in the area as "illegal occupations". 

For the Philippines, maintaining control over the Second Thomas Shoal is not only a question of preserving territorial integrity. The shoal also serves as a critical gateway to the currently Philippine-controlled Reed Bank, situated 80 nautical miles from Palawan and estimated to possess among the largest reserves of untapped oil and gas in the Western Pacific. 

In terms of proven and probable reserves of oil and gas, the US Energy Information Administration (EIA) estimates the entire South China Sea holds as much as 11 billion barrels of oil and 190 trillion cubic feet of natural gas. Crucially, the bulk of those projected undiscovered hydrocarbon deposits lies specifically within the Reed Bank and surrounding areas. 
Citing a US Geological Survey, the EIA estimates "between 0.8 and 5.4 (mean 2.5) billion barrels of oil and between 7.6 and 55.1 (mean 25.5) trillion cubic feet (TCF) of natural gas in undiscovered resources" are in the contested northeast end of the South China Sea, encompassing areas of the contested Spratly Islands and the Reed Bank. 

In 1976, the Philippines started exploration and development activities in the Reed Bank area, complementing the nearby Shell-operated Malampaya Natural Gas Field that is responsible for 40%-50% of the power generation for the industrializing northern island of Luzon. 

With the natural gas facility set to exhaust its 2.7 trillion cubic feet of reserves in the next decade, Reed Bank is viewed by Manila as crucial to the nation's future energy security. The Philippines currently imports around 40% of its energy needs, which are fast growing with recent strong economic growth.
In 1976, the Philippines started exploration and development activities in the Reed Bank area, complementing the nearby Shell-operated Malampaya Natural Gas Field that is responsible for 40%-50% of the power generation for the industrializing northern island of Luzon. 

With the natural gas facility set to exhaust its 2.7 trillion cubic feet of reserves in the next decade, Reed Bank is viewed by Manila as crucial to the nation's future energy security. The Philippines currently imports around 40% of its energy needs, which are fast growing with recent strong economic growth

In 1976, the Philippines started exploration and development activities in the Reed Bank area, complementing the nearby Shell-operated Malampaya Natural Gas Field that is responsible for 40%-50% of the power generation for the industrializing northern island of Luzon. 

With the natural gas facility set to exhaust its 2.7 trillion cubic feet of reserves in the next decade, Reed Bank is viewed by Manila as crucial to the nation's future energy security. The Philippines currently imports around 40% of its energy needs, which are fast growing with recent strong economic growth.
For Reed Bank, Manila enlisted the support of the US-based Sterling Energy in 2002 and UK-based Forum Energy in 2005. 
The Recto Bank concession, or SC-72, has so far been composed of three drilled wells located at the southwest end of the complex, with two of the wells testing gas at rates of 3.2 million cubic feet per day (MMCF/D). and 3.6 MMCF/D. Since 2008, Forum Energy has been joined by Monte Oro Resources & Energy Inc, forming an Anglo-Filipino consortium to manage the concession. Forum Energy holds a 70% stake in SC-72. 

Forum Energy's own estimates put the gas field's gross reserves at over 11 TCF, dwarfing the size of the now semi-exhausted Malampaya. In short, the Reed Bank is a viable and potentially game-changing hydrocarbon reservoir close to both China and the Philippines in the South China Sea". 

Source: Asia Times

Deloitte & Touche Consulting:Russian Fed. Oil and Gas Sector in Russian Federation 2012

Deloitte & Touche Regional Consulting Services Ltd, Moscow, Russia;

"The oil and gas sector is the most important part of the economy in
Russia. Resources extraction is beating records. It is based on boosting
prices and on a flexible tax system. At the same time forecasts show a
production plateau may be reached in a few years. In this case the
government is interested in investments to protect current production
levels. Government regulation is significantly different between oil and
gas industries. The oil industry has a variable tax system to attract
foreign and domestic investments. The gas industry is dominated by
monopoly and is much less open for investments. However, taxes are
rising in the gas industry in order to achieve the same taxation level as
in the oil industry. A few main players with more than 90 %
market share dominate the Russian oil industry. They are mainly state-owned
or have private Russian ownership, but international oil companies can
make a successful joint venture (JV) in Russia. Today privatisation is one
of the government’s priorities, but actual decisions of authorities sometimes contradict to this statement. Resources extraction is beating records. It is based on boosting
prices and on a flexible tax system. At the same time forecasts show a
production plateau may be reached in a few years. In this case the
government is interested in investments to protect current production
levels.  They are mainly state-owned
or have private Russian ownership, but international oil companies can
make a successful joint venture (JV) in Russia. Today privatisation is one
of the government’s priorities, but actual decisions of authorities

  Government regulation is significantly different between oil and
gas industries.

Oil is produced all over the Russian Federation. The oil fields in the Ural
and Volga Federal Districts account for the majority of oil production
(61 and 21 % in 2010, respectively). Russia has 77.4 billion barrels (bbl)
of proven oil reserves (see Table 1). However, large parts of the country
are underexplored and there may be significant reserves potential in its
share of the Caspian Sea and in the Arctic waters. Lower reserves
increasing rate rather than production increasing rate is the aim for
oil companies in Russia . Top management of 73 % of oil
companies indicated an increase in the volume for geological exploration.
The main reasons are the gradual decline in already discovered
hydrocarbon sources and the necessity to fulfil license obligations.
Relatively high oil prices and support initiatives from the State also provide
incentives for companies to expand exploration activities.

Natural Gas
By the end of 2011 Russia had produced 660 billion cubic meters (bcm)
of gas, which is 3 % higher than the 2010 results. Russia holds the world's
largest natural gas reserves (it is the second largest producer of natural
gas) and the eighth largest crude oil reserves.
Natural gas reserves in
Russia are estimated to be more than 50,000 bcm.
In 2011, oil production of an estimated 10.5 mn b/d accounted for
around 11.5 % of the world’s total. Russia meets 22 % of the world’s
gas demand with supply estimated at 630 bcm. With a total processing
capacity of around 5.4 mn b/d, Russia is the world’s third largest refiner
after the US and China. On 1 January 2010, the Russian Federation State
balance included 895 free gas fields; 619 of them were in a specified
subsurface resources fund, while those not allocated to the fund had low
resources or were located in hard-to-reach regions with severe climatic
conditions. Russian waters in the arctic are expected to contain
100,000,000,000 tons of oil and gas".

FROM WSJ Fed Chairman Gold isn´t a great hedge against inflation but...

Federal Reserve Chairman Ben Bernanke Thursday said falling gold prices may reflect less concern among investors about “extreme outcomes” for the economy.

“Gold is an unusual asset. It’s an asset that people hold as a sort of disaster insurance,” Mr. Bernanke said in response to a question at a Senate Banking Committee hearing.

Gold prices have dropped near three-year lows in recent weeks as the economy shows signs of improving and the Fed has clarified its plans to eventually roll back its bond-buying program.

Mr. Bernanke said those lower prices may reflect greater confidence about the economy and less concern that Fed programs will cause inflation to spike.

Still, the Fed chairman said gold isn’t such a great hedge against inflation. “Movements of gold prices don’t predict inflation very well,” 

“Nobody really understands gold prices and I don’t pretend to understand them either,” he said.

BlackRock Investors pulled out US$ 1.5 billion from fixed-income ETF´s

According to the Wall Street Journal, the world's largest money-manager isn't immune to fear in the bond market.

Investors pulled a net $1.5 billion from BlackRock  Inc.'s  fixed-income exchange-traded funds during the second quarter of the year through June 30, the company reported as part of its earnings release Thursday. The ETF business, branded iShares, saw total net outflows of $963 million, including outflows from bond funds, according to the company. BlackRock is the country's largest provider of ETFs, which typically track an index and trade on an exchange.

Institutional investors—pension funds and endowments—pulled a net $1.3 billion from fixed-income products during the quarter. BlackRock has total fixed-income assets of about $1.2 trillion.

BlackRock's chief executive and chairman Laurence D. Fink said in an interview with The Wall Street Journal Thursday morning he wouldn't be surprised if 10-year Treasurys closed the year at a 3% yield, although he said rates would likely be tethered around 2.5% "for awhile." Bond yields rise when their prices fall.

Rather than a "great rotation" out of bonds, Mr. Fink said in his investor call that BlackRock is seeing its fixed-income investors move into bond funds that aren't tethered to an index, also known as unconstrained bond funds.

NEC Failure of Japan´s tech industry

Sadly enough, NEC's share price rose 2.6% on the news that it is going to shutter its mobile phone unit. It's a tragic epitaph for what was once a genuinely exciting brand. It's also a sad reminder of the profound failure of Japan's technology industry.

The global smartphone market is currently shaken by a cluster of vital, hungry challenger vendors of China and India, including Huawei, ZTE, Micromax, Karbonn and Spice. Japanese mobile phone powerhouses like Sharp, Toshiba, Matsushita and NEC have been left in the dust. Only Sony still soldiers on, grimly and joylessly.

In the end, NEC fizzled out as a global phone brand despite having pioneered key technologies like color displays, 3G support, dual screens and camera modules. Just like its Japanese peers, NEC was too focused on Japan's domestic market and its idiosyncratic nature to ever really anticipate global trends accurately.

Chinese automakers have demonstrated their ambitions to tap into overseas markets at an ongoing auto show in northeast China.

A large number of automakers, from privately-owned firms to state-owned enterprises, have been making greater efforts to sell their vehicles outside of China, where sales growth has slowed after a decade-long boom.

Geely Motor, a privately-owned automaker that purchased Volvo Car Corp. in 2010, exported 50,438 vehicles in the first half of the year, up 30 percent year on year.

Sales in overseas markets account for about one-fifth of the company's total sales, according to Zhang Lin, vice president of Geely Motor.

Zhang said Geely's earlier efforts to foster overseas sales have matured and the company's international business is on the right track.

Apart from the opening of an assembly plant and the launch of its EC7 sedan in Egypt last year, Geely has completed another project in Uruguay, where the EC7 sedan, a medium- to high-end luxury vehicle launched in 2009, will be put into production with an annual single-shift capacity of about 10,000 units, according to Zhang.

According to a plan previously announced by the company, Geely will expand its overseas production to countries like Russia, Brazil, India and Iran.

Figures from the China Association of Automobile Manufacturers (CAAM) show that China exported 486,800 vehicles in the first six months of the year, down 0.6 percent from the same period last year

Zhang said emerging markets were prioritized in the industry's initial stages of growth. "But we do have plans to enter the European and American markets gradually," he said. Expertise built up in emerging markets will help Chinese automakers gain a foothold in more developed areas.

"Chinese automakers will definitely enter the European and American markets. It is simply a question of time," Zhang said.

Source Xinhua

Global Crisis has given BRICS economies greater prominence on the WTO

The global financial crisis since 2008 has given BRICS economies greater prominence on the world stage, World Trade Organization (WTO) Director General-elect Roberto Azevedo said Wednesday.

BRICS countries need to make their participation in multilateral fora and organizations a state policy as the crisis has also brought greater responsibilities in relation to development and cooperation policies, he told a seminar on development in Brazil's capital Brasilia.

Emerging countries are "one of the main focal points of the global scenario," he said, adding that their development policies are being watched carefully.

Source  Xinhua

Chinese new and existing homes reported higher prices in June

Prices of both new and existing homes continued to rise in most Chinese cities in June, according to official data released on Thursday.

Of a 70-city statistical pool, 63 Chinese cities saw month-on-month home price rises, whereas the number was down from 65 cities that reported higher prices in May, the National Bureau of Statistics (NBS) said in a statement on its website.

According to the NBS, 55 cities reported month-on-month price gains in existing homes in June compared to the previous month. The figure also dropped from 64 cities that saw price rises in May.

The data was in line with market expectations that the trend of price rises would be sustained even though the amount of increases would be tempered.

Liu Jianwei, a senior statistician with the NBS, said that around half the cities saw narrower new home price increases in June from a month ago.

The nation's second and third-tier cities, such as Guilin and Baotou, saw new home price increases narrow by 1.3 and 1.2 percentage points, respectively, Liu said.

The tempered tone in analyzing the June data met criticism online, with many complaining home prices had still increased across a broad range and the current prices remained unaffordable for common people.

In first-tier cities, home prices all witnessed sharp rises last month both on a monthly and yearly basis.

Property prices started to rebound in the second half of 2012. Runaway prices led the government to issue a guideline in March to tighten control on the real estate sector, including higher transaction taxes, restrictions on purchases of multiple homes, and higher down payments.

However, that guideline failed to stop the upsurge of property prices.

Source    Xinhua

Precious Metals Quotes

Gold Price        3months Futures       US$ 1,284.99

Silver Prices     3months Futures       US$     19.43