China Vanke investing in Huishang's Hong Kong IPO

SHANGHAI--China Vanke Co. (000002.SZ), the nation's largest property developer by revenue, has confirmed that its unit will become a cornerstone investor in Huishang Bank Corp.'s Hong Kong initial public offering, investing up to 3.43 billion Hong Kong dollars (US$442 million) in the Chinese lender.

Vanke's unit will subscribe to no more than 883,986,000 shares of Huishang, which are priced between HK$3.47 and HK$3.88, the Shenzhen-based developer said in an emailed statement late Wednesday. China Vanke will become Huishang's single largest shareholder after its IPO, and could eventually own between 8% and 8.28% of Huishang.

Vanke is taking a stake in the commercial lender "to better meet its customers' demands for financial services," Vanke President Yu Liang said in the emailed statement.

Huishang, based in Hefei, Anhui province, plans to sell 2.61 billion shares in its IPO, raising up to US$1.3 billion, the Wall Street Journal reported earlier this week. Vanke will commit about US$400 million in the IPO as a cornerstone investor, the WSJ had said, citing people familiar with the matter. Cornerstone investors are usually guaranteed large allotments in IPOs in exchange for agreeing to hold the shares for a certain length of time.

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Vanke's annual property sales have exceeded 100 billion yuan (US$16 billion) and the Huishang investment isn't considered big in comparison, Mr. Yu said.

Huishang has 199 outlets in 16 cities in Anhui province and in Nanjing, Jiangsu province. The bank reported 2012 net profit of CNY4.3 billion, a 23% increase a year earlier, research reports showed.

Vanke has a presence in more than 50 cities in China and said earlier this week that third-quarter earnings rose 18% to CNY1.60 billion. Vanke's operates mainly in the domestic market but has stakes in condominium projects in San Francisco, Hong Kong and Singapore.

--Prudence Ho contributed to the article.

Write to Esther Fung at esther.fung@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Is Rio Tinto Undervalued at These Prices?

With shares of Rio Tinto (NYSE:RIO) trading around $43, is RIO an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Rio Tinto is engaged in finding, mining, and processing mineral resources. Its products include iron ore, aluminum, copper, diamonds, coal, uranium, gold, and industrial minerals. Rio Tinto has been trying to divest itself of non-core and unprofitable assets since CEO Sam Walsh took over the company. The firm previously stated it was not interested in selling its Mozambique coal operations, but changed its mind after failing to find a buyer for its diamond businesses. Expect Rio Tinto to grow as it grabs hold of its business again, and continues to provide raw materials around the world.

Rio Tinto has achieved a record output of iron ore for the first half of the year. The mining company exceeded expectations for iron ore output, and says it's on track to expand into a remote region of Australia that could yield a significant addition of iron ore tons per year. However, Rio Tinto makes the majority of its profits from mining iron ore, and the volatile price of the metal could hurt the company's bottom line, even if they manage to mine a lot of it.

T = Technicals on the Stock Chart are Weak

Rio Tinto stock has struggled a bit in recent years. The stock is now trading at multi-year lows. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Rio Tinto is trading below its declining key averages, which signal neutral to bullish price action in the near-term.

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(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Rio Tinto options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Rio Tinto Options	36.01%	43%	41%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
August Options	Steep	Average
September Options	Steep	Average

As of today, there is average demand from call buyers or sellers, and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts, and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates, and what that means for Rio Tinto’s stock.

E = Earnings Are Mixed Year-Over-Year

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. The last four quarterly earnings announcement reactions can also help gauge investor sentiment on Rio Tinto’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Rio Tinto look like, and more importantly, how did the markets like these numbers?

	2012	2011	2010	2009
Earnings Growth (Y-O-Y)	-417.94%	-121.95%	145.73%	182.46%
Revenue Growth (Y-O-Y)	-19.58%	2.51%	33.28%	-7.35%
Earnings Reaction	N/A	N/A	N/A	N/A

Rio Tinto has seen mixed earnings and revenue figures over the last four years.

P = Weak Relative Performance Versus Peers and Sector

How has Rio Tinto stock done relative to its peers, BHP Billiton (NYSE:BHP), Freeport-McMoRan (NYSE:FCX), Vale (NYSE:VALE), and the overall sector?

	Rio Tinto	BHP Billiton	Freeport-McMoRan	Vale	Sector
Year-to-Date Return	-24.96%	-21.02%	-17.46%	-34.69%	-19.33%

In a weak sector, Rio Tinto has been a poor relative performer, year-to-date.

Conclusion

Rio Tinto is a global mining firm that provides raw products for many uses around the world. The company has achieved a record output of iron ore for the first half of the year, but it may not be enough, as raw material prices have experienced significant volatility. The stock has struggled over the last few years, and is now trading near lows not seen since 2009. Over the last four years, earnings and revenue figures have been mixed for the company. Relative to its weak peers and sector, Rio Tinto has been a poor year-to-date performer. STAY AWAY from Rio Tinto for now.

Scam-Blocking Debit Card Protects Grandma's Money from Shady Characters

Getty Images It's no news that senior citizens are a favorite target of scammers, shady salespeople and even relatively legitimate marketers, because, sadly, they can be fairly easy marks. Well, a new prepaid debit card aims to protect the elderly from such dangers by giving their adult children control over their spending. The True Link Card is a new prepaid Visa card that comes with various fraud-protection measures build in to help you prevent your older family members from blowing all their retirement money. If grandma has a bad habit of buying stuff from infomercials or telemarketers, for instance, you can set the card to automatically reject such purchases. In other cases, you can set purchases to automatically trigger a text message to the person who set up the account, giving them the option to accept or decline the charges. And it offers a growing database of what it calls "problematic merchants" -- that is, scammers. True Link's young founder, serial entrepreneur Kai Stinchcombe, tells Fast Company that he came up with the idea for the card after discovering that his grandmother was writing four checks a day to fraudulent charities. "Monitoring my grandmother's finances has required endless hours and countless difficult conversations," he says on the company's website. The TrueLink has an annual fee of $20 after the first year, which is unusual for a credit card that doesn't offer rewards points. But in this case, it's easy to see how the card pays for itself by keeping money in your elderly relatives' bank accounts -- and by saving you the time you would otherwise spend trying to keep their spending in check. And it also helps protect grandma from spending that isn't fraudulent, but is still ill-advised. Because it's a prepaid debit card and not a credit card, you don't have to worry about her racking up huge balances. You can also set limits on transaction amounts and ATM withdrawals, or set the card so it can only be used for in-person transactions. And the company is always on the lookout for companies that use shady fine print to trick unassuming shoppers into buying more than they need. If your elderly relatives are cognitively impaired, or they're simply not adept at spotting scams, then this could be a great way to protect their nest egg from being chipped away by bad purchases.

Will VF Earnings Keep Sending the Stock Higher?

VF (NYSE: VFC  ) will release its quarterly report on Friday, but shareholders have started their celebration early, with shares having consistently set new all-time highs throughout 2013. Yet the perennial question with a soaring stock is whether VF earnings can keep up with the promise that its investors see in the company.

VF isn't well known, but it's the name behind popular brands North Face, Timberland, and Vans, as well as well-known jeans lines Wrangler and Lee. As the consumer recovery has started to accelerate, smart retail operations have capitalized, and you can see from VF's share price how good a job it has done in making hay while the sun shines. Let's take an early look at what's been happening with VF over the past quarter and what we're likely to see in its quarterly report.

Stats on VF

Analyst EPS Estimate	$1.17
Change From Year-Ago EPS	5.4%
Revenue Estimate	$2.26 billion
Change From Year-Ago Revenue	5.6%
Earnings Beats in Past 4 Quarters	4

Source: Yahoo! Finance.

Can VF earnings grow faster this quarter?
In recent months, analysts have had mixed views on VF earnings, cutting their June-quarter estimates by $0.02 per share but boosting their full-year 2013 estimates by double that amount. The stock has continued its recent tear, rising almost 20% just since mid-April.

VF's most recent quarterly results were extremely impressive, as the company managed to grow its earnings per share by 25% in the first quarter. Despite only a 2% rise in overall revenue, VF managed to boost its gross margins by 2.4 percentage points, a huge boost that reflects the company's strategic moves toward emphasizing higher-margin profits. As a result, the company raised its guidance for the year's earnings by a nickel per share.

But VF doesn't plan to stop there. The company has ambitious plans to raise its revenue by 50% to $17 billion annually by 2017, with a goal of earning $18 per share -- 67% higher than its current expectations for year-end 2013. In order to succeed, VF will need to focus on a couple of areas. Its high-priced jeans business has benefited recently from weakness from True Religion (NASDAQ: TRLG  ) , which is in the process of being acquired by a private equity firm. True Religion is vulnerable to its customers leaving for better values elsewhere, and if VF can claim its share, then it could help provide the growth the company's looking for.

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The other big prospect for high-margin sales is the action-outdoor space, where VF has a nice lead in terms of financial performance. Columbia Sportswear (NASDAQ: COLM  ) has much lower margins but also has a well-known brand presence that will pose a threat to VF in the long run. Bigger competitors such as Under Armour (NYSE: UA  ) will also bear watching, especially if Under Armour decides to do what it's done in the past with footwear and expand into new markets with particularly promising profit potential.

In VF's earnings report, take a look at whether the company provides any further guidance on which areas it plans to emphasize in its drive toward massive growth. With VF having put so much pressure on itself, investors will have to watch closely to make sure the company doesn't bite off more than it can chew.

VF is a big player in retail, but is it forward-looking and capable enough to survive the big shakeout going on in the industry today? Find out in our new special report, in which we reveal the 3 Companies Ready to Rule Retail. Uncovering these top picks is free today; just click here to read more.

Click here to add VF to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The Shine Is Off Lumber Liquidators

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Lumber Liquidators (NYSE:LL) last week made headlines after federal authorities raided the company's Virginia headquarters in connection with an investigation of the wood products the company imports. To put it mildly, it was a setback for the Virginia-based company.

The raid by agents from the U.S. Immigrations and Custom Enforcement and the Fish and Wildlife Service was related to the importation of protected wood from the habitat of the endangered Siberian Tiger, according to Bloomberg News. At issue is whether Lumber Liquidators violated the Lacey Act, which is designed among other things to curb illegal logging under a 2008 amendment. It carries penalties of as much as $500,000 per violation. Several law firms have issued press releases indicating that they may pursue class-action lawsuits in connection with the raid.

Unfortunately for shareholders some Lumber Liquidators' customers are also unhappy, which could be an issue that prevents investors on the sidelines from putting their money to work. The Better Business Bureau has received nearly 300 complaints against the hardwood flooring retailer in the past three years, most of which were related to problems with the product, according to its website. Lumber Liquidators has an A+ rating with the non-profit, which indicates that in its view the company has made a good faith effort to resolve customer complaints.

A decade or so ago, Lumber Liquidators made good products, which home improvement television host Bob Villa installed in one of his houses. Then after the company expanded, its products began to suffer and customers were treated poorly, according to HardwoodInstaller.com.

"Most (customers) were advertised product that was never available, or they were being put off time and time again, or received no calls about the orders they paid for up front," the website says. "S! ure, any company that does the kind of volume should be expected to see complaints, but they escalated too far."

The views on HardwoodInstaller were backed up by scathing comments left by some consumers on ReselllerRatings. "Their 100-million-year warranties mean nothing," said one consumer on the site. A call to the company's investor relations department was met with a message stating that company was in a pre-earnings quiet period and not able to comment.

Expectations for Lumber Liquidators remain high heading into the company's earnings report later this month. Revenue in the company's September quarter is expected to increase 18.4% and 17.8% in the sequent period. The stock, however, is expensive and trades at a price-to-earnings ratio topping 47, a premium to both Home Depot (22.4) and Lowe's (27.9). The stock is selling ahead of its 52-week price target of $104.44.

Bottom line

Given the uncertainties created by the federal raid and its customer service issue, investors should find other places to invest their money.

---Follow Jonathan Berr on Twitter@jdberr and or at Berr's World.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

Report: JPMorgan, feds in talks over Madoff scam

Federal authorities and JPMorgan Chase are in discussions, according to a published report, to forge an agreement that may help the bank avoid criminal charges related to its actions in the Ponzi scheme led by convicted swindler Bernard L. Madoff that defrauded investors billions of dollars.

Column: Time to hold JPMorgan to account, says Delamaide

It's the latest development in a series of unfolding legal woes for the bankin giant, according to a report published Thursday on the website of The New York Times and citing unnamed sources.

The report comes less than a week after several media outlets, including the Times, the Wall Street Journal and the Associated Press, among others, said JPMorgan has struck a tentative $13 billion deal with the Justice Department to settle a wide range of issue regarding its sale of bad mortgages.

Report: JPMorgan, Justice near $13 billion settlement

According to the Times report Thursday, federal authorities and bank executives have discussed a deferred prosecution agreement in which JPMorgan would pay a financial fine and make acknowledgments concerning its Madoff-related activities. The Times account, citing information from people briefed on the inquiry, reported that JPMorgan could also be required to hire an independent monitor.

It's the latest sign that the nation's largest bank isn't out of legal jeopardy for its connection to the Madoff scandal.

This month, the court-appointed trustee trying to recover billions Madoff stole in the now-infamous fraud petitioned the Supreme Court to rule whether JPMorgan should be required to pay for taking little action on suspicious financial activity in the account the disgraced financier held at the bank.

Irving Picard's petition also argues that Swiss banking giant UBS, global bank HSBC and other financial institutions should share legal liability with JPMorgan for failing to stop the fraud.

"Madoff did not sustain this unprecedented fraud for more than two decades by him! self," David Rivkin, the counsel for trustee Irving Picard, wrote in the Oct. 9 petition. "Instead, he was aided by a network of financial institutions, feeder funds and individuals who funneled investments" into Madoff's firm, provided essential financial services "and (of course) skimmed off substantial amounts for their efforts."

The petition asks the high court to review a federal appeals court decision in June that upheld lower court rulings, barring the trustee from pursuing financial recovery from the financial institutions. The high court set a Dec. 9 deadline for the banks and feeder funds to file legal responses.

The banks and feeder funds cited in the petition have until Dec. 9 to file legal responses. In earlier court filings at the appeals level, they have repeatedly argued that they could not have detected or stopped Madoff's scheme.

The Supreme Court petition, formally known as a writ of certiorari, is viewed as a legal long shot. The Supreme Court agrees to accept only a fraction of the many cases submitted for review each year. But Picard's petition argues that several federal appeals courts around the nation have issued differing rulings on similar matters. The Supreme Court at times agrees to review such cases in order to resolve legal discrepancies.

JPMorgan "was foremost among (financial institution) collaborators, standing at the very center of Madoff's fraud for over 20 years," Picard's petition argues.

Billions of dollars flowed through Madoff's retail checking account at the New York-based bank "in suspicious and repetitive round-trip transactions." Even though at the time Madoff was allegedly making investments on behalf of thousands of mom-and-pop clients, celebrities, charities and financial institutions, the account funds weren't "segregated in any fashion," the petition argues.

The bank's chief risk officer, John Hogan, warned colleagues about 18 months before the fraud collapsed in December 2008 that "there is a well-known cloud over the! head of ! Madoff and that his returns are speculated to be part of a Ponzi scheme," the petition says. At the time, JPMorgan responded by assigning a junior employee "to see what a Google search could turn up about Madoff," the petition also says.

Trial: Ex-Madoff employees argue he and aide ran scam alone

Despite its suspicions, the bank ultimately invested with several feeder funds that funneled money to Madoff. But unlike thousands of other investors who lost everything they gave to Madoff, the petition says, "JPMorgan chase redeemed more than $276 million before the scheme crumbled. At that time, the bank sent a suspicious activity report about Madoff to the United Kingdom's Serious Organized Crime Agency."

The "revelations came too late to do anyone, save JPM, any good," the petition argues.

Even if JP Morgan strikes a deal with prosecutors on Madoff, individual employees "who did business with" Madoff and JPMorgan Chase's national banking subsidiary may still face criminal charges for ignoring and failing to report suspicious activities in Madoff's account, the Times report Thursday said. An announcement by prosecutors could be made by the end of the year, it said.

A spokesman for the U.S. District Attorney's office told USA TODAY that the office had no comment on the Times report. USA TODAY has reached out to a spokesman at JP Morgan Chase for comment.

Shares of JPMorgan fell 0.8% in afternoon trading Thursday.

Crude Oil Inventories up 1.4%, Gasoline Supplies Down 0.8%

U.S. crude oil supplies increased 5.2 million barrels (1.4%) for the week ending Oct. 18, according to an Energy Information Administration report (link opens a pdf) released today.

After increasing 4 million barrels the previous week, oil inventories have now been on the rise for five straight weeks. Although imports dropped off 348,000 barrels per day, refinery inputs continue to show similarly low demand to the previous week. Overall inventories have expanded 1.3% in the past 12 months. 

Source: eia.gov 

Gasoline inventories tapered off 1.8 million barrels (0.8%) after dropping 2.6 million barrels the week before. Demand for motor gasoline over the last four-week period is up a seasonally adjusted 2.3%. In the last year, supplies have expanded 8.5%. 

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In the past year, retail gasoline pump prices have dropped $0.33 per gallon.

Source: eia.gov 

Distillates supplies, which include diesel and heating oil, expanded 1.5 million barrels (1.3%) following five weeks of declines. Distillates demand for the last four weeks is down a seasonally adjusted 3.9%. In the past year, distillates inventories have increased 6.6%. 

Source: eia.gov 

link

Can Lululemon Break Out to New Highs This Year?

With shares of Lululemon (NASDAQ:LULU) trading around $75, is LULU an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Lululemon designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct to Consumer, and Other. The company''s line of apparel include fitness pants, shorts, tops, and jackets for healthy lifestyle activities such as yoga, running, and general fitness. Its fitness-related accessories comprise bags, socks, underwear, yoga mats, instructional yoga DVDs, and water bottles.

Recently, Lululemon posted earnings and revenues figures that beat Wall Street's expectations. Christine Day, Lululemon's CEO, said in a statement: "2013 continues to be the most important and most productive year in Lululemon's history. We have not only worked our way back from the black luon setback, but have also added very talented people in important functions and have taken major steps forward on a number of key fronts, including the expansion of our international and men's businesses and many logistical initiatives. In addition, our exclusive partnership with Noble announced today and additional sources for luon will help to ensure that Lululemon remains a distinct leader in quality and innovation."

T = Technicals on the Stock Chart Are Strong

Lululemon stock has struggled to make significant progress in the past couple of years. The stock is trading near the top end of a two-year range, so it may need to spend some time there. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Lululemon is trading above its rising key averages, which signals neutral to bullish price action in the near term.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of Lululemon options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Lululemon Options	32.56%	40%	39%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of Wednesday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Increasing Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Lululemon’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Lululemon look like and, more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	0.00%	0.00%	48.21%	44.44%
Revenue Growth (Y-O-Y)	21.89%	21.03%	30.68%	37.50%
Earnings Reaction	-5.40%	-17.53%	1.28%	7.26%

Lululemon has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have expected more from Lululemon’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has Lululemon stock done relative to its peers – Nike (NYSE:NKE), Under Armour (NYSE:UA), and Gap (NYSE:GPS) — and sector?

	Lululemon	Nike	Under Armour	Gap	Sector
Year-to-Date Return	-2.09%	39.67%	70.20%	31.64%	33.42%

Lululemon has been a poor relative performer, year to date.

Conclusion

Lululemon provides in-demand athletic apparel to consumers across the nation. The company recently reported strong earnings and revenue numbers. However, investors had higher expectations. The stock has not made much progress in recent years and is now trading near the top end of its two-year range. Over the last four quarters, earnings and revenues have been rising, but investors have expected more during recent earnings announcements. Relative to its peers and sector, Lululemon has been a weak year-to-date performer. WAIT AND SEE what Lululemon does this quarter.

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European stocks fell from their highest level in almost six weeks as German investor confidence unexpectedly dropped this month.

Telecom Italia SpA plunged to its lowest price since July 1997 after Italy�� biggest phone company paused a plan to spin off its fixed-line business. Invensys Plc fell the most in three weeks as optimism for a bid from General Electric Co. waned. Rio Tinto Group led commodity producers higher after posting a 7 percent increase in second-quarter iron-ore production and raising its forecast for full-year copper output.

The Stoxx Europe 600 Index dropped 0.7 percent to 295.31. The gauge rallied 5.6 percent in the past three weeks on optimism central banks around the world will continue to support economic recovery.

�� think it�� increasing political risks in the euro zone in the coming weeks that is on investors��radar,��Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Pension A/S in Copenhagen, wrote in a message. ��tocks started falling well in advance of the ZEW, but of course, the ZEW disappointment doesn�� help either.��

5 Best Stocks For 2014: Arc Wireless Solutions Inc.(ARCW)

ARC Wireless Solutions, Inc., together with its subsidiaries, provides wireless network components and solutions in the United States. It is involved in the design, development, manufacture, marketing, and sale of antennas and related wireless communication systems, including cellular base stations, mobiles, cellulars, and flat panel antennas. The company?s products also include global positioning systems; and conformal, portable, and other antennas, as well as antenna accessories. ARC Wireless Solutions, Inc. markets its commercial line of antennas directly to distributors, installers, and retailers of antenna accessories, as well as to commercial, government, and retail markets. It offers its products under the Freedom Antenna Exsite, Omnibase, Parity, Arc Vlpa, Airbase, and And Freedom Blade brand names. The company was formerly known as Antennas America, Inc. and changed its name to ARC Wireless Solutions, Inc. in October 2000. ARC Wireless Solutions, Inc. was founded in 1987 and is based in Denver, Colorado.

5 Best Stocks For 2014: Cliffs Natural Resources Inc.(CLF)

Cliffs Natural Resources Inc., a mining and natural resources company, produces iron ore pellets, lump and fines iron ore, and metallurgical coal products. The company operates six iron ore mines in Michigan, Minnesota, and eastern Canada; two iron ore mining complexes in Western Australia; five metallurgical coal mines located in West Virginia and Alabama; and one thermal coal mine located in West Virginia. It also owns a 45% economic interest in a coking and thermal coal mine located in Queensland, Australia; and a 30% interest in Amapa, a Brazilian iron ore project in Latin America, as well as chromite properties in Ontario, Canada. The company, formerly known as Cleveland-Cliffs Inc, was founded in 1847 and is headquartered in Cleveland, Ohio.

Advisors' Opinion:

• [By Taylor Muckerman]

  Coal and iron ore producers have underperformed compared to the market over the past year. Despite being two of the biggest players from either industry, Peabody Energy (NYSE: BTU  ) and Cliffs Natural Resources (NYSE: CLF  ) have lagged the S&P 500 over the past year by 54% and 85%, respectively. For at least one of these companies, the tide might be turning.

• [By Roberto Pedone]

  Another stock that's starting to move within range of triggering a near-term breakout trade is Cliffs Natural Resources (CLF), a mining and natural resources company that produces iron ore pellets, fines and lump ore, and metallurgical coal. This stock has been hammered by the sellers so far in 2013, with shares off by 47%.

  If you look at the chart for Cliffs Natural Resources, you'll notice that this stock recently formed a double bottom chart pattern at $15.50 to $15.41 a share. Following that bottom, shares of CLF have started to uptrend strong, with the stock moving higher from its low of $15.41 to its intraday high of $20.50 a share. During that uptrend, shares of CLF have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CLF within range of triggering a near-term breakout trade.

  Traders should now look for long-biased trades in CLF if it manages to break out above some near-term overhead resistance levels at $20.30 to $21.96 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 9.87 million shares. If that breakout triggers soon, then CLF will set up to re-test or possibly take out its next major overhead resistance levels at $23.59 to its 200-day moving average at $26.26 a share. Any high-volume move above its 200-day will then put $30 within range for shears of CLF.

  Traders can look to buy CLF off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $19.27 a share, or right near its 50-day at $17.93 a share. One can also buy CLF off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

  This is another name that is very popular among the bears, since the current short interest as a percentage of the

• [By John Divine]

  If you're a Cliffs Natural Resources (NYSE: CLF  ) investor, however, you may want to take a closer look at the company and its direction. Shares lost 1.9% today after the stock suffered a price target decrease at the hands of FBR Capital yesterday. A $2.5 billion company with $2.1 billion in debt on the books, Cliffs needs to start ponying up to its creditors before its shareholders can expect handsome rewards of their own.

Best Insurance Stocks To Buy Right Now: Public Storage(PSA)

Public Storage operates as a real estate investment trust (REIT). It engages in the acquisition, development, ownership, and operation of self-storage facilities in the United States and Europe. The company?s self-storage facilities offer storage spaces for lease on a month-to-month basis for personal and business use. Public Storage also has interests in commercial properties containing commercial and industrial rental space; facilities that lease storage containers; and ancillary operations, which include reinsurance of policies against losses to goods stored by its self-storage tenants, retail operations comprising merchandise sales and truck rental operations. As of December 31, 2008, the company had interests in 2,012 self-storage facilities with approximately 127 million net rentable square feet in 38 states; and 181 self-storage facilities with approximately 10 million net rentable square feet in 7 western European nations. It also had direct and indirect equity int erests in approximately 21 million net rentable square feet of commercial space located in 11 states in the U.S. As a REIT, the company would not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders. Public Storage was founded in 1971 and is based in Glendale, California.

Advisors' Opinion:

• [By Stoyan Bojinov]

  Jefferies reported on Thursday that it was maintaining a “Hold” rating on the California-based self-storage REIT, Public Storage (PSA), but went on to lower its price target for the company.Omotayo Okusanya, an analyst with the firm, cited that because the company’s portfolio of storage locations was virtually full, there was limited growth potential. Furthermore, Okusanya went on to comment about how Public Storage will have a hard time growing earnings even via acquisitions given its current size. As such, Jefferies reiterated a “Hold” rating on the stock and lowered its price target from $165 to $160 a share.

  Public Storage shares inched lower on Thursday, shedding .85% on the day. The stock is up over 4.4% YTD.

• [By Amanda Alix]

  Is it risky to be putting so much money into an as-yet unproven business model? Some may think so, including investors. Noting the tumble in stock price that newbies like Silver Bay and American Residential have suffered recently, Colony Capital (NYSE: CLNY  ) chief Thomas Barrack postponed�the IPO of his new single-family rental company, Colony American Homes. Similarly, Public Storage (NYSE: PSA  ) has filed for an IPO, too, hoping to take its American Homes 4 Rent unit public -- at some unannounced, future date. In the meantime, American Homes can rely on its $500 million credit facility�with Wells Fargo, which may be bumped up to $1 billion if necessary.

5 Best Stocks For 2014: Mastercard Incorporated(MA)

MasterCard Incorporated, together with its subsidiaries, provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers? cheque programs. Its payment solutions include payment programs, marketing, product development, technology, processing, and consulting and information services. The company provides transaction processing services comprising transaction switching, which include authorization, clearing, and settlement; connectivity services, such as network access, equipment, and the transmission of authorization and settlement messages; and other payment-related services consisting of products used to prevent or detect fraudulent transactions, cardholder services, professional consulting and research services, compliance and penalty, account and transaction enhancement services, holograms, and publication services. MasterCard Incor porated manages and licenses payment card brands, including MasterCard, MasterCard Electronic, Maestro, and Cirrus. The company?s payment programs, which are facilitated through its brands, include consumer credit, debit and prepaid programs, commercial payment solutions, and contactless payment solutions. It serves approximately 22,000 financial institutions. The company was founded in 1966 and is headquartered in Purchase, New York.

Advisors' Opinion:

• [By Jae Jun]

  Having missed out on Visa (V) and MasterCard (MA), stumbling upon FleetCor is a pleasant surprise. FleetCor Technologies is a company that provides fuel cards and payment products used by employees. The company also has lodging cards, but since the overall concept is the same, I will focus most of the discussion on fuel cards.

• [By Amanda Alix]

  A long-standing dispute between credit card issuers Visa (NYSE: V  ) and MasterCard (NYSE: MA  ) and the businesses that accept consumer payments via those instruments is heating up again, as a flurry of lawsuits filed on both sides over a prior settlement regarding interchange fees jump-start the hostilities all over again.

5 Best Stocks For 2014: Carmike Cinemas Inc.(CKEC)

Carmike Cinemas, Inc. operates as a digital cinema and 3D motion picture exhibitor in the United States. It operates theatres that show films on a first-run basis; and discount theatres. The company serves small to mid-size non-urban markets. As of December 31, 2011, it owned, operated, or had an interest in 237 theatres with 2,254 screens located in 35 states. The company was founded in 1982 and is headquartered in Columbus, Georgia.

Advisors' Opinion:

• [By John Udovich]

  The shares of small cap IMAX Corporation (NYSE: IMAX) have slipped more than 10% this week on growth concerns - meaning it might be a good idea to take a closer look at the stock plus its performance�verses other cinema stocks like Carmike Cinemas, Inc (NASDAQ: CKEC), Cinemark Holdings, Inc (NYSE: CNK) and Regal Entertainment Group (NYSE: RGC) along with the PowerShares Dynamic Leisure & Entertainment ETF�(NYSEARCA: PEJ).

• [By Jon Friedman]

  Wible's analysis determines that the beneficiaries are likely going to be Viacom (NASDAQ: VIAB  ) , Lions Gate, Carmike Cinemas (NASDAQ: CKEC  ) , and DIRECTV (NASDAQ: DTV  ) .

• [By Michael Lewis]

  With the $175 million Iron Man 3 opening weekend just passed, it may be hard to remember that the first quarter of this year was a rough one for the movie business. Weak theater attendance and a lack of big-draw films made it an ugly quarter for studios and theaters alike. Carmike Cinemas (NASDAQ: CKEC  ) was no exception. Especially frustrating was that this year's weak quarter follows Carmike's record first quarter from 2012. Long term, though, this is a growing company that is well managed and holds a lucrative niche spot in the competitive, low-margin theater business. Here's what you need to know about Carmike Cinemas.

Signet Sets $350 Million Buyback Plan and Dividend

Specialty jeweler Signet Jewelers  (NYSE: SIG  ) announced today its third-quarter dividend of $0.15 per share, the same rate it paid last quarter after raising the payout 25% from $0.12 per share.

The board of directors said the quarterly dividend is payable on Aug. 28 to the holders of record at the close of business on Aug. 2. The jeweler has made quarterly payouts to investors since 2011. 

The regular dividend payment equates to a $0.60-per-share annual dividend, yielding 0.9% based on the closing price today of Signet Jewelers' stock.

SIG Dividend data by YCharts.

The board also announced it was authorizing up to $350 million to repurchase company shares. The stock that's bought back -- which may be achieved through open-market transactions, block trades, or other means -- may be used for company purposes rather than being retired. 

Signet CEO Mike Barnes was quoted as saying: "The share repurchase authorization reflects our ongoing commitment to build long-term value for our shareholders, the continued confidence we have in the strength of our business, and our ability to generate free cash flow after investment in our growth initiatives." The jeweler said the program can be started, suspended, or cancelled at anytime.

link

Dodge offers 2014 Durango for police, fire use

Ford Motor's move is symbolic: Discontinuing the venerable Crown Victoria used by so many police agencies that it's an icon.

Now, though, the Detroit Three offer police and fire departments an array of models, from high-speed sedans to SUVs and pickups.

Once a dusty corner of the car business, automakers now hype the police models heavily with media announcements and flashy photos, as if they're new mainstream products.

Illustrating how hip cop cars have become, a customized Ford Taurus tabbed the Ultimate Stealth Police Interceptor Concept was among the stars at the Specialty Equipment Market Association show in 2010, looking more like a drug-dealer's ride than a cop car.

Lately, Ford's found traction with the EcoBoost V-6 Taurus Interceptor. Police haven't taken the old front-drive Chevrolet Impala very seriously, so Chevy's now selling them an Australian rear-drive big sedan it markets as the Caprice.

Chrysler Group's successful with the rear-drive Dodge Charger Pursuit sedan with Hemi V-8, and a non-pursuit but beefed-up Ram pickup.

Newest is the 2014 Dodge Durango Special Service Vehicle. Police and fire departments, and other fleet buyers, can order now and get the beefed-up Durango late this year or early next. The special-service Durango is not, however, "pursuit rated," so won't be the main ride in most police departments.

"It would need further chassis tuning" to be certified as a high-speed pursuit vehicle, says Durango spokesman Patrick Hespen.

SUVs aren't inherently unsuited to high-speed pursuit and interceptor work. Ford has managed a pursuit-rated Explorer SUV and Chevy, a pursuit-rated Tahoe SUV.

So, the Durango wouldn't pass the full test elaborated by Elwood Blues (Dan Akroyd) in the 1980 film classic, 'Blues Brothers,' when he described his band's latest Bluesmobile: "It's got a cop motor…it's got cop tires, cop suspensions, cop shocks."

Still, the Durango Special Service Vehicle hardly is weak in the knees, equipped with h! eavy-duty brakes, battery, alternator, water pump and engine oil cooler. Fleet use often involves the opposite of pursuit – long sittings idling to keep the communications gear powered up and, in foul weather, give the user a temperature-controlled haven.

Not a "cop motor" indeed. Standard: 3.6-liter Pentastar V-6 rated 290 horsepower, 260 pounds-feet of torque. But it's rated up to 25 miles per gallon on the highway, meaning it's able to go up to 600 miles between fill-ups. That's key in cases where a vehicle's well away from service stations on assignment.

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More relevant for such special-use vehicles and the kind of driving they do, the 3.6-liter Durango has government ratings of 18 mpg in the city, 20 in combined city/highway use with rear-wheel drive, and 17/24/19 with all-wheel drive.

There is s version with the "cop motor." Optional 5.7-liter Hemi V-8 rated 360 hp, 390 lbs.-ft. and able to tow up to 7,400 lbs. Dodge notes that it's rated 23 mpg on the highway. City and combined ratings are 14 and 17 mpg for rear-drive models, 14/22/16 for all-wheel drive.

RBC's Analysis Of Nokia Is Questionnable

I do feel sorry for analysts. It's a difficult profession to predict the future. After reading RBC's (RY) opinion on Nokia's (NOK) current quarter, I was not pleased. As a Nokia shareholder, I was interested in poking some holes into the piece written by Mark Sue. Since the analysis is only available to RBC investment account holders, I cannot provide a link that would enable you to read the whole document, but I will quote from some passages.

Mr. Sue says in his opening paragraph: "A glimpse into Nokia's new product line for the fall leaves us uninspired."

While you cannot discuss personal tastes, many people believe the current flagship Lumias are the best handsets in the world. The 928 improves on the 920 with a xenon flash and three high amplitude microphones for recording distortion free sound in very loud environments. It is thinner and lighter for those who had to get a gym membership to hold the 920 for longer than 30 seconds at a time. The newer 925 uses an aluminum frame, and is also thinner and lighter than the 920.

Feature Phones

Mr. Sue goes on to say: "Worryingly, Nokia's historically profitable feature-phone business is eroding as well."

While this is a legitimate concern, it is certainly not new. The decline of the feature phone has been ongoing for years , well before it was highlighted in this analysis. As a shareholder, I can easily tell that Nokia is well aware of the shift that more people are aspiring to smarter phones. That is why the Asha full touch line was created. It provides a smartphone experience that can be purchased outright for less than US $100. It is also the least expensive to operate with a longer lasting battery and data compression available in its browser and several social apps. In the best scenario, the Asha full touch would have been produced earlier on to help Nokia stay ahead of low cost Android producers. Using 2012 as a reference, while sales decreased in the Mobile phones division in Q1 from the previous ! quarter, the trend was reversed in Q2, as was pointed out in Nokia's latest quarterly teleconference. Nokia needs to keep innovating in mobile phones to squeeze as much revenue as possible while the trend continues towards smarter phones.

Carrier support

"Carrier support may further dwindle for Nokia, which has been donating market share…", says Mr. Sue.

When speaking of market share the analyst is well aware that a new line of phones with a new operating system (OS) cannot jump past market leaders from a standing stop. Microsoft's (MSFT) Windows Phone 8 is the first version of the OS in which Nokia has been involved with from the beginning, and its products only started selling six months ago, in November 2012. As far as the previous version, Windows Phone 7.x, the OS was already designed before Nokia produced its first phone. It was too late for the phonemaker to put its footprint on it. Therefore WP8 has to gather momentum, as it is currently doing, before it can take share back from its competitors.

As far as carrier support is concerned, it is increasing, at least in the US, as Verizon (VZ) added the Lumia 928 to its portfolio after having sales success with the 822. T-Mobile (TMUS) has also added the Lumia 925, after selling out numerous times with the 521. The International Business Times has proclaimed that a Windows Phone will appear on Sprint in early 2014, without confirmation on the choice of manufacture, although it predicts it will be from HTC.

If Mr. Sue is referring to carriers elsewhere in the world, he does not mention any. In fact his whole analysis is void of any reference. His entire analysis seems to be based on personal opinion only, including his prediction that Nokia will warn investors that it will not meet its Q2 guidance.

Having the choice of believing either Mark Sue of RBC or guidance from Nokia, I will put my money on the people that I believe should know the pulse of sales of their own products around the world.! During t! he Q1 earnings teleconference, Nokia called for a larger than 27% increase in smartphone sales for Q2.

Higher rates of return

Mr. Sue says: "After an initial spurt, Nokia's 920, 720, and 520 may now be fading, and we're noticing a higher than normal rate of return."

It is my opinion that if you are going to provide an analysis that will influence some shareholders to buy and sell stocks, you should at least give some kind of idea to readers how you arrived at a conclusion of "higher than normal rates of return." I believe that a respected bank such as RBC should require its analysts to divulge their research methodology for arriving as such impactful conclusions. I cannot think of any reason for not doing so unless the research is so highly inadequate that it risks being a source of embarrassment for the bank.

One Finnish smartphone retailer has taken it upon itself to publish stats that contradict Mr. Sue's opinion on Lumia's rates of return. In that article it is said that the Lumia 920 has a rate of return of one tenth of the iPhone 5 and half of the Galaxy S4.

Perhaps this is why RBC does not go out on a limb to lend any credence to Mr. Sue's report when it says "the rating assigned to a particular stock represents solely the analyst's view". And "All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s)." To me this is not an endorsement.

Smartphone Design

"Feedback on the upgraded Lumia 925 and Lumia 928 remains mixed, with consumers pointing to the devices' derivative design", goes on to say Mr. Sue.

If the Lumia 925 and 928 have a derivative design, the same can be said for the complete line of Galaxy Series by Samsung (SSNLF.PK) and iPhones by Apple (AAPL). If there is one quality Nokia is still renowned for, it is for its beautiful and sturdy designs. I have even criticized them in an earlier article entitled Nokia's Challenger Checklist for spen! ding too ! much on quality in their handsets while it does not seem to be such a high priority for their competitors. In any event, the Lumia 925 has not yet been released, so it's too soon to obtain real feedback. The 928 has only been available for three weeks now. To date the average rating on Amazon is 4.5 stars out of 5.

The most damning element included in the analysis written by Mark Sue is a graph illustrating his rating for Nokia from 06/03/10 to 04/18/13. An Outperform rating was given from 09/10/10 until 04/19/12. Then a Sector Perform rating was given from 04/30/12 to 04/18/13. In other words, while the share price was diving down from $9 to $3, in a two year period, he gave it one notch below its highest rating. From April 30, 2012 to April 18, 2013, while the price continued down to its lowest point in Nokia history at $1.63 and then back up to $4.60, he brought its rating down one notch to Sector Perform.

Conclusion

No one can predict the future. In no circumstance should any investor rely solely on a report from an analyst to decide whether to buy or sell a stock. Conduct your own research. Reading transcripts of quarterly teleconferences provided free of charge by Seeking Alpha is a good starting place.

In conducting my own research on Nokia, I conclude that sales momentum seems to be increasing in its Lumia range of phones if you examine performance in past quarters and company guidance for the current quarter. Nokia Siemens Network has also put together several profitable quarters in a row. As far as sales in mobile phones and HERE maps, they are unpredictable from one quarter to the next. Revenue for mobile phones depends largely on the timing and marketing of new products by Nokia versus offerings from competitors. HERE maps depends on making the product more and more attractive and the ability of sales personnel to get long term commitments from clients.

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Most reports have recently indicated that Windows Phone is increasing its market share, thanks in large part to its least expensive smartphone, the Lumia 520 and its variants. If company guidance is correct for Q2 and the Lumia 928 and 925 sell well in Q3, the share price should increase from its present level. If future product launches in the coming months are successful in Q4, typically the highest sales quarter for smartphones, perhaps the share could finally surpass that elusive $5 mark by reporting time in mid-January, 2014.

Source: RBC's Analysis Of Nokia Is Questionable

Disclosure: I am long NOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Additional disclosure: Long since mid 2011.

Ford: Tests show it has the quickest police car

Ford says new tests prove it has the quickest police car.

The new turbocharged Ford Taurus modified into its Police Interceptor sedan proved faster than Chevrolet Caprice V-8 and Dodge Charger with a Hemi V-8 in tests by the Michigan State Police, according to Ford.

Ford's turbocharged police version of the Explorer crossover SUV was faster than a Chevrolet Tahoe.

"Agencies tell us if the bad guys see the police vehicle quickly close in pursuit, they're less likely to try to run,"

says Bill Gubing, a Ford chief engineer, in a statement. "If this can help reduce the number of high-speed chases, then we could improve public safety on our nation's roads."

The Ford Taurus for police, with an EcoBoost turbocharged engine and all-wheel drive, rocketed from zero to 60 miles per hour in 5.66 seconds. That compares to 6.04 seconds for the 5.7-liter Hemi-equipped Dodge Charger and 6.01 seconds in the Chevrolet Caprice with a 6-liter V-8.

The Ford EcoBoost-powered sedan also topped the 6.0-liter V8-equipped Chevrolet Caprice, which clocked a 6.01-second 0-60 mph time. In acceleration to 100 mph, the Ford was 1.2 seconds faster than Charger and 0.8 seconds faster than Caprice.

The tests are important to the three automakers because the substantial market for police cars still remains, basically, up for grabs. It had been previously dominated by Ford's Crown Victoria, but that model is now out of production. Each of the three replacement models from the three makers each has their advantages and drawbacks.

Ford has staked a lot on its turbocharged engines for police, making the case they are economical in everyday use, but powerful in emergency situations.

Schwab Q3 Results Surprise Analysts; Citi Fails to Hit Estimates

Charles Schwab (SCHW) reported a 17% jump in third-quarter profits to $290 million on Tuesday, while its earnings of $0.22 per share topped Wall Street estimates by $0.02.

Its revenue jump of 15% to nearly $1.4 billion represented a 13-year record for the firm. Plus, the firm says it anticipates sales growth to outpace costs by 3%-5% next year.

The company’s client results “supported double-digit percentage increases in all three of our main revenue sources and 15% overall revenue growth versus the year-ago quarter,” according to CEO Walt Bettinger.

“Even with the continued headwind created by an interest rate environment that remains at historic lows, our third-quarter revenues surpassed all our prior quarterly results save the extraordinary spike we experienced at the height of the Internet bubble,” Bettinger said in a statement.

In the second quarter, the brokerage group saw its sales rise just 4% to $1.34 billion, while expenses jumped 9% in the period.

Schwab has more than $2 trillion in client assets, the CEO notes, and they have been growing at a compound annual rate of 10% over the past five years. Clients that own about half of these assets are enrolled in Schwab programs that include “some form of ongoing advice, reflecting a decades-long evolution at Schwab beyond our discount-brokerage roots,” he added.

Of the $1 trillion, some $890 billion are client assets tied to accounts with independent advisors. The rest are enrolled in one of Schwab’s eight retail advisory offerings.

These two groups of assets each had 17% year-over-year increases.

“Our work on this front continues, as we provide an alternative to the traditional Wall Street model by offering sophisticated, needs-based approaches designed to enable today’s investors to get the help that’s right for them,” the CEO said.

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Net new assets in Q3 were close to $43 billion, up 97% from the year-ago period and, Bettinger says, “the highest in Schwab history for a summer quarter.”

The number of active brokerage and banking accounts improved in the latest period, though the figure for corporate retirement plan participants dropped as expected due to Schwab’s consolidation of its plan recordkeeping technology platforms.

 

Citi's Conundrum

Citigroup (C) said Tuesday that it had a third-quarter profit of $3.23 billion profit in the third quarter, missing analysts’ estimates, but handily topping last year’s net income of $468 million with a nearly 600% increase.

It blamed a 26% decline in bond trading and fallback in U.S. mortgage activity. (In last year’s third quarter, the bank recorded a $2.9 billion loss on its Morgan Stanley Smith Barney joint venture.)

"We performed relatively well in this challenging, uneven macro environment," said CEO Michael Corbat, in a press release. "While many of the factors which influence our revenues are not within our full control, we certainly can control our costs, and I am pleased with our expense discipline and improved efficiency year-to-date.”

Overall, securities and banking sales dropped 2% from the prior-year period to $4.7 billion, while the unit’s net income shrank 16% from last year to $989 million. Private bank revenues, however, improved 1% to $614 million.

“With the environment remaining challenging, we will continue to focus on all aspects of our business to improve client satisfaction and shareholder results consistent with our strategy," Corbat said.

---

Check out JPMorgan Reports First Loss Under Dimon; Analysts Say Not to Fear on ThinkAdvisor.

Trial of Madoff employees set to open

NEW YORK — Disgraced financier Bernard Madoff infamously claimed that he, and he alone, ran one of the largest financial frauds in world history.

Aiming to prove that was another of his many lies, federal prosecutors are preparing to try five former Madoff employees this week on a 10-count criminal conspiracy and fraud indictment.

The case, the product of five years of government investigation, is expected to offer the first detailed look inside the Ponzi scheme that fleeced an estimated $17 billion to $20 billion from charities, financial firms, retirees and small investors worldwide.

Who's Who: A look at the former employees and their charges

Four hundred potential jurors were summoned for Manhattan federal court screening early this month, but 163 were excused based on their answers to questionnaires prepared by prosecutors and defense lawyers.

Both sides questioned many of the remaining potential jurors last week, then prepared to resume the process Tuesday in hopes of moving to opening statements on Wednesday. The selection process has been slow because many potential jurors said it would be a hardship to serve on a trial forecast to last as long as five months.

Once empaneled, the jury will decide the legal fate of longtime Madoff secretary Annette Bongiorno, 64; Daniel Bonventre, 66, the former director of operations for Madoff's financial firm; and JoAnn Crupi, 52, who monitored the bank account through which billions of customer dollars flowed.

Sex: Feds allege Madoff was in love 'triangle'

Two former computer programmers for Madoff's firm, Jerome O'Hara, 50, and George Perez, 47, round out the defendant list.

Attorneys for the five argue that the former employees did nothing wrong and were among the thousands of Madoff's victims.

Many of Madoff's client victims were lulled into a false sense of security by eerily regular returns on their investments — only to be shocked later that the former Nasdaq chairman used some customers' ! money to pay others while he led a life that included luxury homes, expensive cars and almost unimaginable stolen wealth.

Madoff, who revealed the scam in December 2008 as the fraud teetered toward collapse, likely won't be in court to repeat any of his claims. He pleaded guilty in 2009 without standing trial. Now 75, he's serving a 150-year federal prison sentence at a medium-security federal prison in Butner, N.C.

But the defendants are expected to see someone familiar testify as federal prosecutors' key witness: Frank DiPascali, 57, Madoff's former chief financial officer. The Queens, N.Y., native waived indictment by a grand jury and pleaded guilty to 10 counts of conspiracy, fraud and other charges in August 2009.

"I'm standing here to say that from the early 1990s until December 2008, I helped Bernie Madoff and other people carry out a fraud," DiPascali said at his plea hearing.

DiPascali is expected to provide incriminating testimony against the five former employees, explaining in detail what he says each did and how the scam worked. In return, DiPascali hopes for leniency to spare him from much of the potential 125-year maximum prison term he faces for his guilty plea. Two other former Madoff employees and his firm's former outside accountant, all of whom have pleaded guilty, are also expected to testify for the prosecution.

U.S. District Judge Laura Taylor Swain, who is presiding at the case, has barred evidence of the expensive homes, shopping sprees and other luxuries the defendants funded with the millions of dollars they collectively received from Madoff. But the judge indicated last month that she may permit evidence about sexual liaisons some of the defendants and witnesses carried out during the Ponzi scheme if prosecutors and defense lawyers are unable to reach an expected agreement to limit that information.

Regardless of the trial outcome, the world hasn't heard the final legal word on Madoff's scam. Late last month, investigators arrested and ch! arged Pau! l Konigsberg, 77, a long-time Madoff accountant from Connecticut, who allegedly helped hide the fraud scheme. He pleaded not guilty at a Sept. 26 hearing.

Time to Trade This Stock for That One (STSI, KUTV)

There's little doubt that merely suggesting it will enflame some traders, but truth is truth - Ku6 Media Co Ltd (NASDAQ:KUTV) is overbought and ripe for a pullback, soon. Anyone worried about not having a place to park those proceeds, however, need not fret. There's a brand new breakout finally underway that still has plenty of proverbial meat on the bone... Star Scientific, Inc. (NASDAQ:STSI), which just blasted past a key resistance line around $2.11 today. In so doing, it became free to rally without restraint.

KUTV shares are up 96% since the end of September, and have rallied 56% over the past two days alone. The prod for the big move? That's just it - there wasn't one. Ku6 Media Co Ltd has captured the hearts and minds of enough traders to bid it up in an unusually large way over the past couple of weeks.

Granted, sometimes a stock's rally becomes to big and well-publicized that the rally itself becomes the stock's story (as has been the case with Ku6 Media of late), but a red-hot runup isn't a long-lived reason to buy a stock. Eventually, the euphoria fades, and shares reverse course just as quickly. The fact that we've now seen two very high-volume, big-gain days in a row with this stock may well imply all the buyers who wanted in are pretty much in, leaving nobody behind but the sellers (active or potential). Point being, there's far more risk than reward with KUTV at its current price and in its current condition.

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Instead, any so-far-unrealized gains from Ku6 Media Co Ltd may be better allocated to Star Scientific.

If the name rings a bell, it may be because yours truly pointed out STSI was approaching a breakout effort back on October 8th. In all fairness, I said the same thing back in mid-August when Star Scientific, Inc. was first knocking on the door of - and had even surpassed - a horizontal ceiling at $2.11. The effort sputtered out the very next day, and many traders mentally shelved the stock and the idea by mid-September. Great trading ideas and setups rarely go away though ... they just bide their time. Its time appears to have come today, with a decisive break above that ceiling, on a huge volume surge.

And what prompted the rally from STSI? Like the Ku6 Media rally, nothing ... at least nothing from the company, and really nothing from the market simply about Star Scientific. The majority of traders just decided today was the day to unleash all the pent-up potential here, and off she went. For the same reason the KUTV rally couldn't last indefinitely based on nothing but a whim, STSI can't keep going forever either. But, there's a lot of room left to run - this is just the beginning of a trade-worthy move for the diet supplement and smoking-cessation outfit.

If you'd like to get more trading ideas and insights like this one, sign up for the free SmallCap Network daily e-newsletter. It's full of stock picks, market calls, and more.

Young readers’ news appetite not growing

Today's younger and middle-aged audience isn't as interested in consuming daily news as older people and exhibits little evidence that its interest levels would rise with age, according to new data from the Pew Research Center.

In 2012, Gen-Xers -- those ages 33 to 47 -- watched, read or listen to 66 minutes of news, on average, the day before they were queried by Pew, relatively unchanged from eight years ago. The survey is conducted every two years, and Gen-Xers said in 2004 that they consumed 63 minutes of news per day.

Millennials -- ages 18 to 31 -- reported 46 minutes of news last year vs. 43 in 2004.

"News organizations have been confronting the problem of a shrinking audience for more than a decade, but trends strongly suggest that these difficulties may only worsen over time," wrote Andrew Kohut, founding director of the Pew Research Center in its survey results released Friday.

That older readers are more interested in news is hardly surprising. But the results undermine the news industry's general assumption that consumers' appetite for news grows as they start families, buy homes and enroll their children in local schools.

More distractions - streaming video, cable TV, tablets and other forms of digital media - are partly to blame, Kohut said. And "the older generations grew up during the Cold War and World War II, when people were more engaged with what's going on in the world," he said. "We saw a spike in interest in foreign news after 9-11 but it was short lived."

In 2012, members of the Silent generation, ages 67 to 84, spent 84 minutes a day consuming the news, according to the survey. Boomers, ages 48 to 66, averaged 77 minutes.

Less than half of Xers and Millennials -- 45% and 29%, respectively -- said they enjoy following the news. But 58% of Silents and Boomers said they do. "This generational difference has been consistently apparent in the surveys over the years," Kohut said. "Older people simply enjoy the news more than the young do."

Other findings:

* Not surprisingly, the Internet as a news source jumped dramatically in the 8-year period between 2004 and 2012. The percentage of Xers who said they consumed news on the Internet the day before the survey query jumped to 49% from 29% in 2004, roughly equaling the 2012 total for TV news audience (52%).

* Xers who read a newspaper fell to 21% vs. 30% in 2002. Only 14% of Millennials read newspapers, down from 20% in 2002.

* Radio was more popular than newspapers among the younger audience, with 38% of Xers saying they listened to news from radio the day before the survey. And 27% of Millennials said the same. Both measures are little changed since the middle of the last decade, the survey said.

Is Lions Gate Entertainment a Buy At All Time Highs?

With shares of Lions Gate Entertainment (NYSE:LGF) trading around $36, is LGF an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Lions Gate Entertainment is an entertainment company that engages in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, new channel platforms, and international distribution and sales activities. The company operates through two segments: Motion Pictures and Television Production.

It's always been a given that Lionsgate's second installment of the Hunger Games franchise, The Hunger Games: Catching Fire, would be a huge box office smash, but a new report from a Variety sheds some light on just how popular the film might be. Advanced tickets for the film went on sale at 9 a.m. PDT on Tuesday, and within an hour, Lionsgate's Catching Fire represented 23 percent of advance tickets sold within a 24-hour span.

T = Technicals on the Stock Chart Are Strong

Lions Gate Entertainment stock has been exploding higher in the last several quarters. The stock is currently trading near all-time highs and looks ready to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Lions Gate Entertainment is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Lions Gate Entertainment options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Lions Gate Entertainment Options	37.80%	96%	95%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Lions Gate Entertainment’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Lions Gate Entertainment look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	139.39%	453.21%	2800.00%	378.95%
Revenue Growth (Y-O-Y)	-26.92%	N/A	130.20%	97.43%
Earnings Reaction	-0.87%	2.74%	-0.60%	14.24%

Lions Gate Entertainment has seen increasing earnings and and mixed revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Lions Gate Entertainment’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Lions Gate Entertainment stock done relative to its peers, Disney (NYSE:DIS), Twenty-First Century Fox (NASDAQ:FOXA), Viacom (NASDAQ:VIAB), and sector?

	Lions Gate Entertainment	Disney	Twenty-First Century Fox	Viacom	Sector
Year-to-Date Return	124.50%	30.71%	52.56%	56.64%	37.29%

Lions Gate Entertainment has been a relative performance leader, year-to-date.

Conclusion

Lions Gate Entertainment is involved in motion picture production and distribution as well as television programming and syndication. The next installment of its Hunger Games series seems to be generating positive buzz as presales are breaking records. The stock has been surging higher in recent years and is now trading near all time highs. Over the last four quarters, earnings have been rising while revenues have been mixed, which has produced conflicting feelings about recent earnings releases among investors in the company. Relative to its peers and sector, Lions Gate Entertainment has been a year-to-date performance leader. Look for Lions Gate Entertainment to OUTPERFORM.

Growth Wins at the German Ballot Box

While Angela Merkel’s junior coalition partner was pushed out of Parliament in Germany’s elections last Sunday, as predicted she and her Christian Democratic Union (CDU) won a third four-year term at the head of the country’s government.

CDU fell just short of an absolute majority, claiming 311 of the 630 seats in the German Bundestag, but it enjoyed one of its strongest showings, with 41.5 percent of the popular vote compared to 33.8 percent in 2009.

Since the Free Democrats—Merkel’s leading allies over the past four years—lost their place in parliament for the first time since World War II after failing to secure at least five percent of the vote, the CDU will be forced to form a new governing coalition. The most likely partner is the Social Democrats (SD), who had an uneasy alliance with Merkel and her party during her first term.

As I’ve written several times, I expect Merkel to shift towards more accommodative economic policies with Europe; the odds that the CDU will be forced to partner with the left-of-center SD solidifies that argument.

The SD has a history of backing Merkel’s policies, helping to pass aid packages crucial to the stabilization of the European economy. But the SD has an agenda of its own, campaigning on a platform of pension reforms, the introduction of a bank bailout scheme funded by the banks themselves and the introduction of a minimum wage.

The SD also favors the formation of a pan-European banking union to help reduce the possibility of a future banking crisis and a more stimulative tack to foster a strong return to growth in both Germany and the euro zone at large.

While none of those positions are necessarily antithetical to the CDU, they don’t enjoy a great deal of popular support within the party. But after getting relegated to more of a background player during its first coalition government with! Merkel and the CDU, the SDs are likely to extract a higher price for their support this time around. And with the rise of harder left- and right-leaning parties in the German parliament, the CDU will find it much more difficult to do an end run around the SD and pick up votes elsewhere if needed.

So the SD will have a great deal more leverage to pressure the CDU to give ground on its desire to speed the pace of action on euro zone decisions already made and adopt more expansionary policies across the region, while lessening the focus on acting only in what are perceived to be the best interests of Germany alone.

That would be a critical shift considering that Germany has the largest current account surplus in the world at more than 6 percent of gross domestic product, or about $250 billion. As a result, in years past much of that German savings was invested in the more peripheral euro zone economies. But that capital fled those more marginal regions with the onset of the European economic crisis, creating a double whammy on top of the austerity measures forced on many European nations.

For the Germans to begin earning a real return on their savings, it’s vital that the region as a whole returns to growth. For that to occur, the German government has to release its death grip on the country’s savings passbook by taking a more accommodative stance, a core SD principal.

That said, I don’t look for a radical shift in German economic policies. The German electorate has proven itself fairly conservative judging by the ballot box returns and doesn’t care for precipitous actions.

But the CDU is in a position where it either has to partner with the more known quantity of the SD or some of the more radical fringe parties that have been emerging in German politics, such as the Alternative for Germany Party which wants to exit the euro and change the way parliamentary seats are allocated.

Consequently, the CDU has little choice but to form a governi! ng coalit! ion with the emboldened SD, which guarantees at least a subtle shift towards more accommodative policies. Ultimately, that will be good for both the euro zone and its German core, which have always had a highly symbiotic relationship.

Goldman Sachs Reiterates “Sell” Rating on Hasbro; Lowers PT (HAS)

Goldman Sachs reported on Monday that it has maintained a “Sell” rating on Hasbro, Inc. (HAS).

The firm has reiterated a “Sell” rating on HAS, and has cut the company’s price target from $44 to $43. This price target suggests an 8% decline from the stock’s current price of $46.69.

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An analyst from the firm noted: "We lower our 2013-15 EPS estimates to $2.72/$3.01/$3.24 ($2.82/$3.10/$3.35) to reflect continued softness in US sales trends, offset in part by the weaker USD. This suggests an EPS decline in 2013 and sales declines for 3 of 4 years. We lower our P/E and DCF-based 12-month price target by $1 to $43 to reflect our lower estimates. We retain our Sell rating."

Hasbro shares were down 90 cents, or 1.90%, during Monday morning trading. The stock is up 29% YTD.

Petmed Express (PETS) Upcoming Earnings News Obscures a More Important Reality

The two-year soft patch for Petmed Express Inc. (NASDAQ:PETS) may well be over; we'll know for sure on Monday. The two-year dry spell for faithful PETS shareholders may also be over. In fact, the chart says the stock's already in a new uptrend, and the company has a chance to cement that budding move into place when earnings are unveiled early next week.

First things first - the chart. Though PETS has been in a broad uptrend since late 2011, it's been an erratic and unreliable uptrend. The falling resistance line that kept that pullback going for so long was snapped in early 2013. And, thanks to some serious buying interest that's materialized in the past two weeks, Petmed Express shares have finally broken above a key resistance zone between $11.50 and $13.00.

That in itself is a great bullish clue, and were earnings not on the agenda for Monday (the 22nd), that may be enough to step in. Earnings are often a stock-moving catalyst though, and it's mot likely PETM is going to be an exception to that rule of thumb. The good news is, the company is very, very likely to post good news.

To call a spade a spade, Petmed Express probably deserved to see its shares pull back in 2011... not to the degree they did, but to pull back nonetheless. Per-share earnings slumped from 2010's peak of $1.14 (when pet-mania was still growing but few had learned how to compete with the online pet pharmacy company) to what would be a multi-year low of $0.80 by fiscal 2012. The tide started to turn last year though, with the company booking a bottom line of $0.86 per share, and putting itself on pace to earn a projected $0.87 this year. No, it's not much, but it does explain the stock's recovery. Take a look at the long-term chart of annual per-share earnings for PETM, which roughly mirrors the stock's chart.

A step in the right direction? Sure, but critics will be quick to point out that the growth rebound has been tepid so far (7% in fiscal 2013), and is projected to be even less impressive this fiscal year (+1%). Before coming to that conclusion, however, interested parties may want to take a detailed look at the last several quarterly per-share reports from Petmed Express Inc. In six of the last eight quarter, PETM has topped estimates... by more than a little. In its most recent three quarters, it's grown the bottom line.

Point being, analysts may be underestimating how well the company's going to do not just in fiscal Q1 of 2014 (which it just completed), but for the next three quarters as well.

Just in the interest of complete reporting, fiscal Q1 has historically been a tough one for the company; PETM missed in both of its most recent first quarters. The bigger picture is still showing improvement though, and there's a great chance the company could be on the verge of posting a surprising earnings beat. There's an even better chance it'll top earnings estimates for the next three quarters.

The chart says traders are starting to agree, and though the runup right in front of earnings has to leave one wondering if this is a "buy the rumor, sell the news" situation, even a post-earnings dip would be a buying opportunity.

Bottom line? Though probably not worth getting into right now, barring anything but a skyrocketing stock after Monday's earnings announcement, Petmed Express Inc. should be a great longer-term buy.

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Mobile Platform Updates And The Rate Of Innovation

Apple (AAPL), obviously, blew the doors off with opening weekend iPhone sales - 9m units in 3 days, up from 5m last year. Having day one launch in China and adding DoCoMo to distribution obviously helped, but there's clearly still strong underlying organic growth. And it appears that this is without substantial demand for the 5C (which is not an early-adopter/queue overnight sort of product).

However, the really interesting thing is that there are now 200m people using iOS7, where last year "only" 100m people upgraded to iOS6 in the opening weekend. The chart below shows what this means, as compared to Android, the other platform.

(click to enlarge)

Google (GOOG), of course, is trying to address the fragmentation embodied in these charts with a shift to Google Play services, as neatly explained by Ars Technica here. But though this means Google itself is less subject to fragmentation, it isn't much help to a developer wondering whether to use APIs that are only in Android 4.2 or later - let alone one wondering why the app crashes on one Android 4.2 phone but not another.

This issue makes it hard for Google to drive the agenda for new mobile technologies within Android: it will take at least a year after announcement before a meaningful part of the base has access to anything new. Hence the focus on Google Play services and on the cloud with things like Google Now - moving everything several layers up the stack from the intractable fragmentation problem, and making the hardware OS less relevant. But of course, this reduces further the reasons to upgrade your OS, and makes it much less likely that third party apps will do anything on Android that they don't do on iOS (system utilities and other minority interests aside).

Conversely, a developer can use anything that Apple announced in iOS7 and be confident it will work on all their users! ' devices. So anything innovative Apple does takes effect right now. Apple does have some fragmentation issues - some of the coolest features in iOS, such as Airdrop or iBeacon, have chipset dependencies that rule out older hardware. But Apple's integration means that it can drive innovation on the device much faster than Google. It can do Airdrop - putting that in the next version of Android and expecting it to work predictable for a meaningful proportion of the base any time soon would be much harder.

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Hence the paradox: the open platform is actually slower-moving in some ways than the closed one.

Incidentally, the fact that Google seems to be moving more and more innovation away from the OS poses interesting questions about future roadmaps. Will Android still be the main platform in the future, or will it be Chrome, or something else, with Android buried underneath?

Source: Mobile Platform Updates And The Rate Of Innovation

Candy Crush game creator preps for IPO

King's Candy Crush Saga is among the top grossing mobile games in the world.

LONDON (CNNMoney) The U.K. company behind the wildly popular online game Candy Crush Saga is preparing for a stock market listing.

London-based King has filed for an initial public offering in New York, said a source familiar with the deal.

According to media reports, King plans to list on the Nasdaq and has made a confidential filing with the Securities and Exchange Commission. The IPO is reported to be worth roughly $5 billion.

Filing in secret with the SEC is becoming increasingly popular as it allows small companies to keep their financial data private for longer while they prepare the ground with investors. Twitter revealed last month that it had opted to file in this way.

King declined to comment on its plans.

The company's games are played more than one billion times each day and its signature game -- Candy Crush Saga -- currently ranks among the most popular and lucrative mobile games in the world.

According to an estimate from online gaming consultant Think Gaming, Candy Crush rakes in roughly $850,000 per day and has 7.5 million active daily users on Apple's (AAPL, Fortune 500) iOS platform.

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But investors may pause before snapping up the shares after watching the rise and precipitous fall of Zynga (ZNGA), another gaming company that went public in late 2011 only for its most popular game -- Farmville -- to fall out of favor.

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King's success so far has hinged on its ability to get people to play games for free, and then convince players to pay for additional in-game perks once they're hooked.

"King has really focused on monetizing the core game experience very successfully," said Ian Fogg, director of mobile research at IHS. "The challenge with mobile games is, it's a hit-based business."

The risk is that King may not be able to keep its audience interested as other games and applications vie for audience attention.

The preparations for an IPO come as the firm hires a new chief financial officer, Hope Cochran, who previously worked at Clearwire, which was acquired by Sprint (S, Fortune 500).

Bank of America (BAC, Fortune 500), JP Morgan (JPM, Fortune 500) and Credit Suisse (CS) are reported to be working with King on the listing. All three banks declined to comment.