Speculators Scoop Up Call Options On Illinois Tool Works

Speculators scoop up call options on Illinois Tool Works

Today’s tickers: ITW, ACGL, DELL & HES

Illinois Tool Works, Inc. (NYSE:ITW) – Demand for out-of-the-money call options on the industrial products manufacturer jumped today after Illinois Tool Works was included in a list compiled by Reuters Insider of more than 80 companies that meet Warren Buffet’s criteria for an acquisition. Shares in the multinational manufacturer are up 1.1% at $54.16 in early-afternoon trade. Speculative call buying exploded at the May $57.5 strike where more than 7,160 calls changed hands on open interest of just 448 contracts. Investors purchased at least 5,380 of the calls for an average premium of $0.41 apiece. Call buyers profit if shares in Illinois Tool Works rally 6.9% over the current price of $54.16 to exceed the average breakeven point on the calls at $57.91 by May expiration day. Finally, all 214 of the call options exchanged at the higher May $60 strike were purchased at a premium of $0.15 each. The rise in demand for calls on ITW helped lift options implied volatility on the stock 5.7% to 21.56% by 1:00pm. Continued speculation that ITW may be the apple of Buffet’s eye, or rather, the elephant in the crosshairs, will likely send volatility higher along with the price in ITW shares. Premium on the calls will, in such a climate, continue to appreciate and may allow for short-term profit-taking in the absence of any significant revision to the current story. Of course, a far larger pot of gold awaits call buyers in the event of an ITW-acquisition ahead of May expiration. The calls will expire worthless, however, in the absence of any catalyst to drive the stock up over $57.50. Illinois Tool Works also has earnings on the horizon, reporting first-quarter results before the opening bell on April 26.

Arch Capital Group, Ltd. (NASDAQ:ACGL) – Shares in Arch Capital Group, an insurance and reinsurance underwriting company, increased as much 1.7% this morning to secure an intraday and new all-time high of $99.55. The stock popped up on our scanners at the start of the session due to heavier than usual trading traffic in its call options. It looks like one strategist is rolling a long call position up to a higher strike price in the April contract, booking profits on the one hand, and extending bullish sentiment on Arch Capital Group on the other. The investor appears to have originally purchased 500 calls at the April $90 strike at a premium of $2.00 each back on March 16, 2011, when shares in ACGL were hovering around $90.04. The sharp 10.5% rally in the price of the underlying since the initial transaction pumped up premium on the contracts, allowing the trader to sell all 500 deep in-the-money calls for a hefty premium of $9.10 each today. Net profits on that leg of the trade amount to $7.10 per contract. Next, the investor purchased a fresh batch of 500 in-the-money calls at the April $95 strike for a premium of $4.45 apiece. The bullish player starts making money on the new position in the event that Arch Capital Group’s shares exceed the effective breakeven price of $99.45 at expiration next month. The April contract calls expire before ACGL reports first-quarter earnings ahead of the opening bell on April 25, 2011.

Dell, Inc. (NASDAQ:DELL) – A three-legged bearish play pushed the PC maker onto our ‘most active by options volume’ market scanner today. It looks like one strategist is selling call options to partially finance the purchase of a bear put spread to position for a further pull back in the price of the underlying in the next couple of months. Dell’s shares are currently down 1.15% to stand at $14.47 just before 12:30pm in New York. Put buying was observed on Wednesday, as well. The stock was cut to ‘Hold’ from ‘Buy’ at Needham yesterday. The bearish player populating Dell options this morning appears to have sold roughly 5,000 calls at the May $16 strike at an average premium of $0.16 each, purchased around 5,000 puts at the May $14 strike for an average premium of $0.47 apiece, and sold some 5,000 puts at the lower May $12 strike at an average premium of $0.08 a-pop. Net premium paid to initiate the three-way spread amounts to $0.23 per contract. The investor responsible for the transaction starts making money if DELL’s shares fall another 4.8% from the current price of $14.47 to breach the average breakeven point on the downside at $13.77. Maximum potential profits of $1.77 per contract are available to the bearish player should shares in the computer manufacturer plunge 17.0% to trade below $12.00 at expiration in May. Dell, Inc. is scheduled to report first-quarter earnings after the closing bell on May 17, 2011, just a few days before the May-contract call and put options expire.

Hess Corp. (NYSE:HES) – The energy company’s shares rallied 2.6% in the first half of the session to as high as $86.00 after analysts at Credit Suisse upped their target price on neutral-rated Hess Corp. shares to $105.00 from $95.00. Bullish trading in the oil and natural gas producer’s options followed, with the majority of trading traffic centered in May contract calls. It looks like the majority of the calls are tied up in the purchase of the May $90/$95 call spread, wherein traders paid an average net premium of $1.19 per contract to position for the stock to rise sharply ahead of May expiration. Roughly 2,100 calls changed hands at the May $90 strike, while some 1,800 contracts traded at the higher May $95 strike. Investors employing debit call spreads stand prepared to profit should Hess Corp.’s shares surge 6.0% over today’s high of $86.00 to surpass the average breakeven price of $91.19 by expiration day. Maximum potential profits of $3.81 per contract, on average, are available to call-spreaders should shares jump 10.5% to trade above $95.00 at expiration in May. Hess Corp. reports first-quarter earnings before the market opens on April 27, 2011.

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Alnylam Inks Deal With NYU

Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY) recently announced that it has received an exclusive license from the New York University (NYU) for intellectual property covering therapeutic uses of miR-33a and miR-33b to treat diseases such as atherosclerosis and metabolic syndrome.

The license was obtained by Regulus Therapeutics Inc., a joint venture company formed by Alnylam in collaboration with Isis Pharmaceuticals (NASDAQ:ISIS). In addition to the latest license, Regulus also owns fundamental patent rights related to miR-33a and miR-33b.

Atherosclerosis refers to a condition in which the build-up of fatty substances like cholesterol results in the thickening of artery walls. The build-up results in the formation of atherosclerotic lesions or plaques that can slow down or stop the blood flow, ultimately causing myocardial infarction or stroke.

Scientist at Regulus and NYU discovered that antagonism of miR-33a and miR-33b leads to a reduction of atherosclerotic plaque. Furthermore, it leads to a rise in the level of good cholesterol (HDL) in blood. In preclinical studies, miR-33a and miR-33b have shown to reduce arterial lesions in mice.

Alnylam has a 45% stake in Regulus. Regulus is carrying out research in microRNA and has entered into major partnerships with GlaxoSmithKline (NYSE:GSK) and Sanofi Aventis (NYSE:SNY).

Our Recommendation

We currently have a Neutral recommendation on Alnylam, which is supported by a Zacks #3 Rank (short-term “Hold” rating). We like the company’s newly launched “5X15” initiative and are pleased with the progress of the company’s pipeline.

Alnylam’s balance sheet is also very strong. However, with the end of two major deals with Novartis AG (NYSE:NVS) and Roche Holdings Ltd (RHHBY) in the recent past, we prefer to remain on the sidelines as the company could lose out on major milestone payments and royalties. We also await further visibility on the clinical progress of the pipeline as well as Alnylam’sability to enter into large partnerships.

 
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Harman Releases JBL OnBeat - Analyst Blog

Harman International Industries Inc. (HAR - Snapshot Report), a developer of audio products and electronic systems, released its new JBL OnBeat loudspeaker docking station.

The speaker system is compatible with Apple Inc. (AAPL - Analyst Report) devices such as iPhone, iPod, iPad and also iPad 2. From April, the black JBL OnBeat loudspeaker dock will be available exclusively at Apple and Best Buy Co. Inc. (BBY - Analyst Report) stores for $149.95.

Using a universal connector, the JBL OnBeat can dock the iPad or iPad 2 in portrait mode only. However, iPhones and iPods can be rotated into landscape mode, which is preferable for watching videos.

JBL Onbeat comes with an optional composite cable, which can be used to display videos on a high definition television (HDTV).

JBL OnBeat features an infrared remote (IR) that makes iPhone and iPad menu navigation possible across the room (up to 15 feet).

The system also features a USB port that can be used to charge devices, when connected to the iTunes music library. The JBL OnBeat has an auxiliary input (3.5 mm stereo), which enables audio playing from any device with a headphone jack.

Harman has a strong consumer base that spans automotive, consumer and professional markets. We believe the new JBL OnBeat will likely drive sales growth in the consumer division going forward.

The company achieved strong sales growth in the second quarter of 2011, with revenues of $956.1 million, up 3.0% year over year. The strong year-over-year growth was driven by increased penetration in the Asian and Latin American markets, further supported by the Selenium acquisition in Brazil, which was completed in the latter half of 2010.

Harman won several important contracts from Toyota Motor Corp. (TM - Analyst Report), Chrysler and Fiat that increased its backlog to $13.0 billion at the end of the fiscal second quarter.

During the second quarter, the Automotive segment saw a significant deal win from the Volkswagen Group worth $1.2 billion. During the quarter, Harman also formed a partnership with Sierra Wireless that will provide fourth-generation (4G)/LTE connectivity to automobiles.

Recommendation

We have an Outperform rating on Harman over the long term (6-12 months). Harman remains focused on achieving profitable growth, both organic and inorganic, over the long term. Harman remains optimistic on a long-term basis due to the increased demand for its products, mainly in the emerging markets of Brazil, China, Russia and India.

Moreover, strong growth from a recovering automobile and consumer sector and Harman’s record amount of backlog will fuel growth, in our view.

Currently, Harman has a Zacks #1 Rank, which implies a Strong Buy rating on a short-term basis (1-3 months).

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New Contracts For MICROS - Analyst Blog

MICROS Systems Inc.’s (MCRS - Analyst Report) MICROS 9700 Hospitality Management System (HMS) with Perpetual Inventory & Event Management was selected by Washington Nationals Baseball Club LLC to take charge of its food and beverage operations at Nationals Park in Washington, DC.

The financial details were not disclosed.

This Point-of-Service solution will be implemented from March 31, 2011, and will provide 283 MICROS Keyboard Workstation 270's throughout the 50 concession outlets, 50 MICROS Workstation 5A's throughout the 4 premium restaurants and Mobile MICROS for in-seat service for the Washington Nationals first home game of the season. Furthermore, the Nationals’ premium kitchens and in-seat pantries will apply 11 MICROS Kitchen Display Systems.

As the MICROS 9700 HMS solution enhances transaction controls and employee accountability, there will be growth in the Nationals' revenue and also a noticeable reduction in the probability of theft. In addition to onsite live support for Opening Day, MICROS will provide installation and training services.

Earlier, AC Hotels, a newly formed AC Hotels by MARRIOTT INTERNATIONAL INC. (MAR - Analyst Report) had selected the MICROS OPERA solution for its 91 properties located throughout Spain, Portugal and Italy.  

The solution will be centrally hosted at the MICROS Frankfurt Datacenter and provide Property Management and Back Office along with MICROS Simphony Enterprise Restaurant Point-of-Service. The company enables AC Hotels and the Spanish and Mediterranean markets with solutions satisfying local fiscal and legal requirements.  The preparation of the project will initiate in May 2011 and finish by the end of the calendar year.

Headquartered in Columbia, Maryland, MICROS designs, manufactures, markets and services enterprise information solutions for the hospitality and specialty retail industries.

We would like to be on the sidelines until we get more clarity on the recovery of the business, as we are concerned about the hotel business, which failed to meet the internal budget. Thus, we have a Neutral recommendation on the stock with a Zacks #4 Rank translating into a short-term rating of Sell.

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CEO Spotlight: Mike Petters, CEO Of Huntington Ingalls Industries Inc.

03/31/11 Mike Petters, CEO of Huntington Ingalls Industries, Inc., grants us exclusive interview regarding everything from the companys spin-off from Northrop Grumman, what it means for the future of shipbuilders, and overcoming future challenges.

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Accenture to Serve BBVA - Analyst Blog

Yesterday, Accenture plc (ACN - Snapshot Report) clinched a deal with Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Snapshot Report). Per the terms of the deal, Accenture will provide its Alnova Financial Solutions technology platform to help develop the core banking system (CBS) in BBVA’s U.S. banking subsidiary.

Banco Bilbao Vizcaya Argentaria provides financial services, which includes retail banking, asset management, private banking and wholesale banking businesses, across the world.

With the help of Accenture’s core banking solution, BBVA’s subsidiary, BBVA Compass will be able to establish process banking operations more quickly, which will help to retain customers and also improve the efficiency of its product marketing.

Core banking systems form the backbone of a bank's IT infrastructure. Under this system, unified banking services are provided by a group of networked bank branches. Bank customers can access their funds and make other simple transactions from any of the member branch offices.

Accenture’s Alnova Financial Solutions is a core banking solution, which is owned by its subsidiary Alnova Technologies Corp. The solution will deliver real-time bank processing capabilities and support increased transaction volumes for BBVA Compass while streamlining and enhancing the bank’s risk management functions.

Accenture’s core banking solution has already been used by BBVA in its operating units spread across nine countries. This recent agreement furthers the relationship and we believe that the need for CBS will increase the demand for Accenture’s banking solution.

Accenture has seen successes across various industrial sectors as well as geographical regions. Recently, the company won a 5-year consulting and outsourcing services contract from CEVA Logistics and a 2-year information technology services contract from Israel Electric Corporation.

Accenture also received a 5-year Procurement Transformation contract from the City of London Corporation to develop required shared service centers to reduce procurement costs. Moreover, Consip, a public company owned by the Italian Ministry of Economy and Finance awarded Accenture a four-year, $6 million contract to set up an eProcurement system to increase efficiencies and ensure value for money across suppliers.

We are positive about Accenture’s improving business trends, as evident from the healthy growth in revenue and bookings in its fiscal third quarter. However, the recent economic turmoil in Europe and competitive pressure from IBM Inc. (IBM - Analyst Report) could considerably rationalize Accenture’s growth prospects.

Accenture has a Zacks #2 Rank, implying a short-term Buy recommendation.

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GlaxoSmithKline reveals fees paid to US doctors

Britain's biggest pharma company on Thursday said it had paid $28.5m (£17.7m) in 2010 to institutions involved in 127 studies, with 595 different lead researchers.

They conducted research on areas including cancer and payments included costs to conduct research such as diagnostic tests.

The drug giant has previously given details on payments to speakers and in the latest figures, also revealed on Thursday, GSK said it paid out $56.8m last year to 5,331 US health care professionals for speaking on behalf of GSK or giving it advice.

That compared with $51m in the last nine months of 2009, when GSK started detailing such payments.

The disclosure is the latest example of pharmaceutical companies bowing to pressure for greater transparency following concerns in the US about commercial links between industry and health care professionals.

In 2009, GSK implemented a series of initiatives to increase transparency.

Deirdre Connelly, president of GSK's North America Pharmaceuticals, said: "Society expects our business to be conducted openly and transparently and in a way that does not create even a perception of inappropriate influence."

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Newmont To Acquire Fronteer Gold

Shareholders of Vancouver-based Fronteer Gold Inc. (FRG) have approved the proposed buyout by Newmont Mining Corporation (NYSE:NEM); casting 99.7% votes in favor of the deal.

The consideration of the deal is in cash and stock, valued at $2.3 billion and is expected to close by April 6, 2011, subject to the approval of the Canadian court.

According to the terms of the deal, Newmont has agreed to give Fronteer’s shareholders $14.13 in cash and one share in a new company called Pilot Gold for each share they currently hold. The new company will own some of Fronteer’s assets in Nevada, Turkey and Peru. Newmont and Fronteer will own 80.1% and 19.9%, respectively, in Pilot Gold following the buyout, which will have a capital of approximately $10.1 million.

Fronteer Gold Inc., based in Vancouver, British Columbia, currently owns as many as three projects in Nevada, which is close to Newmont’s current operations. Among these, Long-Canyon mining project is in the nascent stage and is situated about 100 miles from Newmont’s Nevada operations; the second one is in Northumberland, Nevada, and the third is a joint venture with Newmont named Sandman.

The most lucrative among the three is Long-Canyon, which is expected to create a new gold district, thus augmenting Newmont’s already growing operations in North America. Newmont will also acquire a 100% ownership of the Sandman joint venture, which is also likely to strengthen its position in the state of Nevada. Sandman has the potential capacity to produce up to $1 million ounces of gold.

Newmont produced approximately 1.7 million gold ounces in 2010, which is a third of the company’s global production. The company’s operations in Nevada extend across more than 2 million acres and include six open-pit mines, five underground mines and nine processing facilities.

Newmont recently diverted its Gold and Copper reserves of Nusa Tenggara, its Indonesian unit, to five new Japanese smelters. This diversion was necessary due to the devastating March 11, 2011, earthquake and tsunami in Japan, which terminated the operations at Onahama.

We currently have a Zacks #3 Rank (short-term ‘Hold recommendation) on the stock.

Denver, Colorado-based Newmont Mining Corporation is one of the world’s largest producers of gold with several active mines in Nevada, Peru, Australia/New Zealand, Indonesia and Ghana. The company faces stiff competition from Barrick Gold Corporation (NYSE:ABX) and AngloGold Ashanti Ltd. (NYSE:AU).

 
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US stocks slightly higher after jobless claims data

U.S. stocks slightly advanced in early trade on Thursday after official data showed that applications for jobless benefits fell last week.

The S&P 500 Index gained 1.07 points, or 0.08 percent, to trade at 1,329.06 at 9:40 a.m. EDT. The Dow Jones Industrial Average advanced 8.86 points, or 0.07 percent, to trade at 12,359.47. The Nasdaq Composite Index gained 0.11 percent.

The Department of Labor reported that initial jobless claims declined by 6,000 to 388,000 for the week ended March 26 from the previous week's revised figure of 394,000, while economists expected 380,000. The 4-week moving average of initial claims increased 3,250 to 394,250 from the previous week's revised average of 391,000.

The weekly jobless claims data comes a day ahead of the government's monthly nonfarm payrolls report, which is the most closely-watched economic data pertaining to the jobs market and is a key gauge for the direction and pace of the economic recovery.

On the corporate front, Berkshire Hathaway Inc. (NYSE:BRK.B) shares declined 1.71 percent to $84.00 following the surprise resignation of David Sokol, one of Warren Buffett's top lieutenants. David Sokol purchased shares of Lubrizol for about $9 million before urging Buffett to buy the firm.

U.S. stocks ended higher on Wednesday as positive speculation about US private sector jobs growth and deal news buoyed sentiment.

The euro advanced 0.53 percent to 1.3939 against the dollar and the yen declined 0.49 percent against the greenback.

Crude oil futures gained 1.87 percent to $106.22/barrel and gold futures advanced 0.91 percent.

European stock markets are currently trading lower with FTSE 100 down by 10.88 points, DAX30 down by 5.15 points and CAC 40 down by 24.46 points.

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The Overnight Report: Best March Quarter Since 1998

By Greg Peel

The Dow closed down 30 points or 0.3% while the S&P lost 0.2% to 1325 and the Nasdaq ticked up 0.2%.

It ended not with a bang but with a whimper. The window displays all now look very pretty and there's tonight's jobs report to worry about, so on light volume Wall Street took a breather last night. The broad market S&P 500 index closed up 5.6% for the March quarter which marks the best March quarter since 1998. The Dow was up 6.6% – best since 1999. All this and QE2.

There was a mixed bag of data out in Australia last night. February retail sales looked good at a 0.5% gain but take out Queensland's need to replace furniture, whitegoods etc and we arrive at only a 0.1% gain, consistent with the current weak retail environment. The housing market remains subdued with building approvals again down sharply and house prices flat, while business credit showed encouraging signs within the 0.5% gain in overall private sector credit. Westpac economists suggest business credit is ready now to pick up and put in a strong growth performance in 2012.

At the quarter's close of 4837 the ASX 200 was up only 2% for the March quarter by comparison. The S&P 500 is 1.3% from its February high and the ASX 200 is 2% away. Note that the largest sector in the S&P is energy (13%) with materials only 3% whereas materials dominate the ASX 200 . Oil has been the bigger mover in the March quarter.

Brent crude was up a whopping 24% for the quarter, running away from West Texas crude which is oversupplied at its delivery point. Last night oil broke out of its recent range on the news the rebels were being forced into retreat in Libya, with Brent rising US$1.97 to US$117.10/bbl and WTI up US$2.32 to US$106.39/bbl.

Oil, and subsequent inflation, will be the stories for the June quarter.

On the matter of inflation, we have now reached a rather interesting, “who'd have thunk it” point. Wall Street is looking for a jobs number over 200,000 tonight to reduce unemployment, but for the first time since the GFC Wall Street doesn't want a number that's too much bigger because then inflation becomes a factor.

Right on the death last night, another FOMC member stepped into the inflation debate. Narayana Kocherlakota from Minneapolis suggested the Fed could raise its funds rate by 0.75% by the end of the year. That now makes four declared hawks out of a voting committee of eleven – not yet a majority, but certainly enough to scupper any further talk of QE3. Kochie, as he's probably known to his mates, noted expectations that the US economy should mark 3.0% growth in 2011. There is a growing confidence the withdrawal of QE2 will not derail the stock market. Remember we will shortly be into the first quarter reporting season ahead of the QE expiry.

Yet in February US factory orders marked their first decline in four months, falling 0.1% when economists had expected a gain of 0.4%.

An estimate of March CPI for the eurozone came out last night at a 2.6% increase, higher than expected. The euro thus outpaced the US dollar but the inflation race, and subsequent monetary policy scramble, is on in earnest. The ECB will raise in April, the UK may also, but the US dollar index will now be reflecting expectations of rate rises locally as well. Don't forget that to remove QE2 is too effectively raise rates even if the funds rate stays at zero for the time being. The dollar index was slightly lower at 76.10 last night, and the invincible Aussie was up again slightly at US$1.0349.

More wobbles in MENA had gold up US$10.80 to US$1433.30/oz but the big story of the March quarter has been the silver price, which was making fresh multi-decade highs last night again, up 0.8% to US$37.66oz. Silver is up 22% for the quarter and 12% for the month.

Base metals wrapped the quarter with a slight recovery from Wednesday night's falls, while the US ten-year bond yield added three basis points to close the quarter at 3.47%. Watch out for bonds in the June quarter.

The SPI Overnight was up 2 points.

Today is manufacturing PMI day across the globe, beginning with Australia and then flowing on to China, the UK, eurozone and US. And tonight it's jobs in the US, of course.

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Forex – Euro Extends Gains Against Pound After BoE Minutes

Forex Pros – The euro extended early gains against the pound on Wednesday, after the minutes of the Bank of England’s most recent policy setting meeting showed the bank saw “merit in waiting” to examine the effect of higher oil prices, easing speculation over a rate hike.

EUR/GBP hit 0.8711 during European morning trade, the daily high; the pair subsequently consolidated at 0.8709, gaining 0.38%.

The pair was likely to find support at 0.8624, the low of March 15 and resistance at 0.8743, the high of March 21.

The minutes of the banks March 9-10 meeting showed that the bank’s Monetary Policy Committee maintained its 6-3 split in favor of keeping rates on hold this month, seeing no major change in the medium-term outlook.

Later in the day, the U.K. Chancellor of the Exchequer George Osborne was to unveil the country’s 2011 budget. The government plans to slash a deficit of 10% of national output before the 2015 election, while shoring up the uneven economic recovery.

The pound was also down against the U.S. dollar, with GBP/USD shedding 0.38% to hit 1.6300.

Elsewhere, the fate of Portugal’s government was hanging in the balance on Wednesday, after the country’s Prime Minister threatened to resign if a vote on fresh austerity measures failed to pass, fanning fears that the country was moving closer to an international bailout.

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Canadian Dollar: Caution

Update on supports and resistances.

Resistance3:

108.5

Resistance2:

104

Resistance1:

101.65

Last:

98.37

Pivot:

101.65

Support1:

96.7

Support2:

94.55

Support3:

93

Pivot: 101.65

Our preference: Short positions below 101.65 with targets @ 96.7 & 94.55 in extension.

Alternative scenario: Above 101.65 look for further upside with 104 & 108.5 as targets.

Comment: the RSI is mixed and calls for caution.

108.5

104

101.65

98.37 (last)

96.7

94.55

93

*USD/CAD Index: the ISE Exchange measures the strength and weakness of the US DOLLAR versus the CANADIAN DOLLAR. For details go to www.ise.com

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HP To Extend Health Care

Hewlett-Packard Company (NYSE:HPQ) recently signed a 5-year deal with the health care division of Nevada Department of Health and Human Services. Per the terms of the deal, HP will receive a sum of $176.0 million.

Nevada Division of Health Care Financing and Policy (DHCFP) partners with the Centers for Medicare & Medicaid Services, which is a federal agency within the U.S. Department of Health and Human Services. The combined entity provides necessary health care assistance to patients with low income and limited resources. HP will extend its Enterprise services to DHCFP to strengthen Medicaid operations, which would help bring health care reform to the State of Nevada.

HP will also act as a Medicaid fiscal agent or primary information technology provider to the DHCFP. As a fiscal agent, the tech giant will review and process all medical claims. HP’s services will also help the state to improve Medicaid programs and deliver more critical health information to a larger number of health care providers. In addition to making claim transactions smoother, HP’s services will reduce the extent of frauds with prior detection of the same, thereby eliminating risks and costs associated with the state’s Medicaid program.

HP is already serving as a fiscal agent to 21 other states’ Medicaid programs. The need for an efficient Medicaid program arises from the enactment of the U.S. Healthcare Reforms Bill. The goal of the reform is to make health care more affordable for Americans. The basic objectives of the reform were presented in the Patient Protection and Affordable Care Act. As per the Act, beneficiaries are expected to join Medicaid through a registration process requiring exchange of information regarding health. Medicaid is a joint endeavor of the states and Federal governments, designed to provide medical care to the poor, children and expectant mothers under the federal poverty level.

The U.S. government’s endeavor to expand the information technology industry to become a major player in health reform will help drive IT spending in the health care segment over the coming years. We believe that HP, with its strong position, would be able to capitalize on government initiatives.

Apart from this, we remain encouraged by HP’s leading position in both PC and Server segments, as well as its cloud exposure. But intense competition from other big technology companies, such as Cisco Systems Inc. (NASDAQ:CSCO), Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NASDAQ:MSFT), as well as smaller Asian players keeps us concerned.

Currently, HP has a Zacks Rank of #3, which translates into a short-term Hold recommendation.

 
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Dallas Fed Speech Offsets Bond Gains Yields Mixed

A rollback of some of the recent relief in response to the efforts by Japanese engineers to restore power to the crippled nuclear-power plant created pressure on equities and drove government bonds higher on Wednesday. It appears that investors are having something of a rethink in the aftermath of the drastic events that left more than 9,000 people dead. News that tap water in Tokyo is unsafe for infants and that there is unlikely to be a v-shaped recovery for the local economy unwound some of the determination displayed earlier in the week by investors hoping that the bullet train could be quickly dropped back on to the high-speed rail without the blink of an eye.

Eurodollar futures – News that the Japanese recovery is likely to be slow coupled with preparation for a ground troop assault in Libya turned investor appetite for risk lower and boosted demand for government paper. The June treasury future also rose after a 16.9% dip in new home sales in February. Sales were predicted to rise to an annual pace of 290,000 units yet managed to surprise with a drop to 250,000. Eurodollar futures responded by gaining three basis points as the yield curve softened. Comments by Dallas Fed President Richard Fisher crossing the wires during late morning trade to the effect that the market had correctly discounted an end in June to the Fed’s policy of quantitative easing saw note prices unwind earlier gains leaving yields at 3.33%.

European bond markets – Fears that the Portuguese government was likely to be dissolved in the face of a near-impossible vote to enact deficit reduction fuelled demand for German bunds. The Jun contract earlier reached 122.56 sending its yield four basis points lower to 3.21%. The euribor strip also felt the benefit of further threats arising from sovereign debt as the curve eased by up to four basis points.

British gilts – Gilt prices remained higher following a downward revision to this year’s growth forecast in Wednesday’s budget delivered by the Chancellor, George Osbourne. The reduction from 2.1% to 1.7% lessens the likelihood of tighter monetary policy at the Bank of England. Earlier the central bank released minutes of this month’s policy meeting, which revealed little sense of urgency in dealing with runaway inflation. The Bank said that it could afford to “wait and see” given the abundant slack in the economy and impending threats to growth including sizeable public sector job cuts. Short sterling prices added up to five basis points rebounding from a drubbing after a 4.4% inflation reading earlier in the week. June gilt prices jumped to a session peak at 118.54 with the 10-year yield sliding by six basis points to read 3.53%.

Canadian bills – Government bonds turned south in sympathy with treasury prices following comments from the Fed’s Fisher. The June government bond future earlier traded to 121.55 before sliding to 121.17 lifting the yield to 3.19%.

Japanese bonds – Four-times the cost of Hurricane Katrina’s clean-up operation. That’s what the government projected today when it estimated that disruption to the Japanese cost might rise to a staggering JPY10 trillion or $309 billion. The government hinted it might set up a relief agency to coordinate a crisis response as it filtered its way through the supply-disruption left behind. There is likely to be a tremendous bond issuance for as far as the eye can see to pay for the disruption and the speed of the rebound is likely to be painfully slow as power-outages across several regions take time to carry out. The government reduced its growth forecast by 0.5% for the next fiscal year. Yields at the 10-year horizon dropped sharply by three basis points to 1.215% while the June JGB future added 46 ticks to 139.86.

Australian bills – Aussie government bond yields fell by six basis points as investors became suspicious of the lack of positive news out of Tokyo. The benchmark yield slid to 5.38% as dealers heard the caution from the Japanese government on prospects for a springboard rebound after the recent earthquake. The fact that the authorities believe the recovery may linger hampered the recent progress made by stock index benchmarks and drove up demand for the relative safety of government paper.

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British American Kenya sees slower income growth

British American Kenya, which aims to list as a publically traded company, expects its investment income growth to slow this year due to a bear run on the stock market.

British American, a holding company for two insurance firms and an asset manager, swung to a profit in 2010 due to surging investment income which jumped to 4.7 billion shillings from 196 million the previous year.

That growth came as the benchmark NSE 20 Share Index rose 36 percent last year. Since the beginning of this year, the index has fallen 13.2 percent.

"We however do not expect as high a growth in investment income in 2011 as we experienced in 2010," said British American managing director Benson Wairegi.

"We are optimistic that (profit) growth prospects will be in the region of 30-40 percent," said Wairegi.

Pretax profit in 2010 was 2.9 billion shillings from a 334 million shilling loss the year before.

"The stock market might be down but we think it would pick up," he added.

The company said it expects its asset under management to grow by 73 percent to 30 billion shillings in 2011.

British American plans to raise 6-7 billion shillings in an initial public offering (IPO) on the Nairobi Stock Exchange by June, subject to approvals by shareholders and the regulator.

"The IPO is expected to give British American an opportunity to increase the scope of its operations and widen its footprint," Wairegi said.

He said the company did not expect its new businesses in other east African countries to contribute much to its revenue this year as the subsidiaries were still being set up.

The company -- which holds an 11 percent stake in Equity bank and a 15.9 percent in mortgage firms Housing Finance -- also operates in Uganda, and has said it plans to spread to south Sudan, Tanzania and Rwanda.

Insurance is seen as a growth area due to low levels of penetration. Only about 7 percent of the 40 million people in east Africa's biggest economy are covered by any form of insurance.

Kenyan health insurer Resolution Health, majority owned by Africa Development Corporation, which reported a 47 percent growth in pretax profit to 207 million shillings on Tuesday, said it plans to acquire at least two insurance firms in east Africa this year.

Private equity funds are growing their footprint in Kenya's private healthcare sector to serve the country's growing middle class.

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A Shortage Of Entrepreneurial Energy

Two reports shine a light on at least one development that’s been weighing on the U.S. economy: a shortage of entrepreneurial energy.

As Real Time Economics reports in “Recession Caused Sharp Decline in Start-Ups,” Americans have been less willing than in the past to go for individual business gold:

The recession caused a sharp decline in new business start-ups, intensifying job market losses and potentially putting future economic growth at risk.

The Census Bureau on Wednesday said that 403,765 new firms were started in the 12 months ended March 2009, down 17.3% from a year earlier and the fewest on records that begin in 1977.

New businesses are an important source of new jobs — without them, there would be no job growth at all. Indeed, the new Census data show that one of the reasons that the job market declines were so severe in the recession was the dearth of start-ups. Firms less than a year old employed 2.3 million people in March 2009 whereas as a year earlier start-ups employed 3 million people.

In past recessions, start-ups didn’t take nearly as large a hit as they did in the downturn that began at the end of 2007, notes John Haltiwanger, a University of Maryland economist who has worked extensively with the Census start-up data. Even in the deep recession that ended in late 1982, start-up activity held up fairly well. “Start-ups weren’t immune, but the guys in the garages were going to try to do what they were going to do no matter what,” said Mr. Haltiwanger.

At the same time, the owners and managers of the businesses that have sprung up have been more than a little reluctant to beef up payrolls, as CNNMoney reports in “Job Creation Rate Hit 29-Year Low During Recession”:

Job creation was much weaker in the Great Recession than in previous downturns — partly because startups were harder hit this time around.

The rate of job creation among all types of firms hit a 29-year low from March 2008 to March 2009, according to a report released Wednesday by the Kauffman Foundation.

And at startups, the job creation rate sank a whopping 34% between 2006 and 2009, the Kauffman report found. In earlier downturns, startups saw much more modest declines.

Of course, more established firms also experienced drops in job creation, but they weren’t as dramatic as at newer firms. Among firms of all ages, the job creation rate fell 25% from 2006 to 2009, according to Kauffman.

A healthy economy needs to constantly create jobs to replace ones that are being lost. In the recent recession, the problem wasn’t just layoffs, but that not enough new jobs were being added.

While it’s hard to say for sure what has happened to the American entrepreneurial spirit, it’s a good bet that some or all of the following have played a role:

Enduring and widespread economic uncertainty (contrary to what Washington and Wall Street would like us to believe);

Diminished credit availability (especially for small businesses);

Government stimulus programs that favor big business;

Relative strength in overseas markets (which tends to favor larger firms with established export operations); and, perhaps most importantly,

An preponderance of involuntary entrepreneurialism (especially among older, more risk averse individuals).

Regardless, it all adds up to an economy that is some way away from being in a sustainable recovery.

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Inter Parfums, Inc. - Growth & Income

Inter Parfums, Inc. (IPAR - Snapshot Report) recently reported solid fourth quarter results, beating the Zacks Consensus Estimate for the third straight quarter. Analysts have been consistently raising their estimates over the last several months as the global economy recovers, sending the stock to a Zacks #2 Rank (Buy).

The company has a solid balance sheet and few capital expenditure requirements, which has allowed it to steadily raise its dividend over the last several years. It currently yields 1.8%.

Fourth Quarter Results

On March 8, Inter Parfums reported its results for the fourth quarter of 2010. Earnings per share came in at 20 cents, beating the Zacks Consensus Estimate by a penny. It was an 11% increase over the same quarter in 2010.

Net sales were up 6% on a comparable currency basis. Sales by U.S.-based operations were up 2% while European-based operations dipped slightly.

The gross margin expanded from 56.1% of sales to 59.0% in the quarter due to a favorable product mix. This was more than offset, however, by higher selling, general and administrative expenses, which rose from 42% of sales to 48%. This caused the operating margin to contract from 12.2% of sales to 11.0%.

Strong Growth Ahead

Management expects 2011 to be another year of solid growth for the company. The company gave sales guidance of $525.0 million, which equates to 14.0% growth over 2010. It also expects earnings of 98 cents per share, which represents 12.6% annual growth. The Zacks Consensus Estimate is slightly above guidance at 99 cents.

The Zacks Consensus Estimate for 2012 is currently $1.15, representing 17% growth over 2011 EPS.

Analysts have been steadily raising their estimates for 2011 and 2012 as the global economy recovers and IPAR has delivered three consecutive positive earnings surprises. This can be seen in the company's Price & Consensus chart:

It is a Zacks #2 Rank (Buy).

Solid Fundamentals

The company has approximately $87 million in cash and short-term investments on its balance sheet and just $5 million in long-term debt.

Inter Parfums is not a capital intensive business. Rather than owning its own manufacturing facilities, the company acts as a general contractor, working with various suppliers and manufacturers to finish its goods. As a result, the company generates strong free cash flow and has been rewarding its shareholders through dividend increases.

On March 8, for instance, the company announced that it was increasing its quarterly dividend by 23%. This marks the company's sixth dividend hike since 2003. It yields 1.8%.

Valuation is reasonable with shares trading at a price to book ratio of 1.8, below the industry average of 2.7.

Its forward P/E ratio of 17.8 is a premium to the peer group at 15.6, but its PEG ratio is a very reasonable 1.3.

About the Business

Inter Parfums produces and distributes perfumes and cosmetics. It distributes its prestige fragrance products primarily under license agreements with brand owners and through specialty retailers.

Under license agreements, Inter Parfums obtains the right to use the brand name, create new fragrances and packaging, determine positioning and distribution, and market and sell the licensed products, in exchange for the payment of royalties.

The company has built a portfolio of brands, but its most significant license is Burberry, which represents 53% of net sales.

Inter Parfums is a global company with 46% of sales coming from Europe, 20% from North America, 14% from Asia, 10% from the Middle East, and 9% from Central and South America.

Together, co-founders Jean Madar and Philippe Benacin own nearly 50% of the company. It is headquartered in New York City and has a market cap of $536 million.

Read the February 9 article here.

This Week's Growth & Income Zacks Rank Buy Stocks:

TransAlta Corporation (TAC - Snapshot Report) is a great choice for investors looking for both growth and income. Analysts project the company will grow earnings per share by 17% in 2011 and 12% in 2012, and the stock yields a juicy 5.7%. Read the full article.

Interpublic Group of Companies, Inc. (IPG - Analyst Report) recently initiated a regular quarterly dividend and a $300 million share repurchase program. Analysts have also been raising their estimates for the company after it delivered strong Q4 results in late February. Read the full article.

C.R. Bard, Inc. (BCR - Analyst Report) is well diversified with a reasonably strong pipeline, which has helped it put together a string of positive quarterly EPS surprises. Furthermore, earnings estimates for this year and next have been moving higher in recent weeks, moving the stock to a Zacks #2 Rank ('Buy'). Read the full article.

Monro Muffler Brake, Inc. (MNRO - Snapshot Report) reported record fiscal third quarter results in January. It is expected to grow earnings by the double digits in fiscal 2011 and fiscal 2012. It has also raised its dividend 5 times in the last 5 years. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

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Japanese Waves Reach Walt's Floor - Analyst Blog

The tremor of the Japanese earthquake and tsunami reached the coasts of the U.S. as The Walt Disney Company (DIS - Analyst Report) discontinued its organizational operations in Japan, Bloomberg reported.

The company suspended its theme park and Tokyo DisneySea operations as a safety measure taken to protect its employees and their families.

Though it is unkind to worry about the revenue losses in the middle of catastrophic human affliction, it does incite a need to assess the impact of the temporary closures on the balance sheet of the company.

Japan’s Disneyland is an integral part of the Disney’s parks & resorts segment as it derives a healthy amount of profit in the form of royalty as per the licensing conformity between Disney and OLC group of Japan. Thus, the amount of revenue loss is expected to be high and is likely to weigh upon the financial results of the company.

In a separate story, the company announced the appointment of Mark L. Walker as the senior vice president of Disney.com in the Disney Interactive Media Group (DIMG). Walker, the ex-head of the Yahoo! News and Information properties, will report to James Pitaro, Co-President, DIMG.

Walker, who has enormous proficiency in the online market, will supervise product promotion, programming and functions of Disney’s websites. Moreover, the new vice president is a boon for the company as he is also well versed in spotting new business opportunities and adding different revenue streams to the company.

Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, such as Walt Disney, ABC, ESPN, Marvel Entertainment, and Touchstone Pictures, which provides it a strong competitive advantage and strengthens its position in the market against key players like News Corporation (NWS - Snapshot Report) and Time Warner Inc. (TWX - Analyst Report).

Disney offloaded Miramax Film Studio to concentrate on the development of motion pictures under its other brands, such as Disney, Pixar and Marvel, the characters of which can be used for the development of video games. Miramax does not produce such type of films.

Disney intends to increase its investments in the video games industry, which has been generating higher sales compared to box-office sales in the United States. This is quite evident from the company’s acquisition of Tapulous, a software and video game developer and Playdom, one of the biggest makers of social games on the internet.

Followed by a broad evaluation, we prefer to maintain a long-term ‘Outperform’ recommendation on the stock. Disney also holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating.

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Edwards Reaffirmed At Neutral

Recently, we reaffirmed our Neutral recommendation on Edwards Lifesciences (NYSE:EW) with a target price of $91.00.

Edwards in one of the leading players in the field of heart valve therapy which accounted for 59% of total revenues in the fourth quarter of fiscal 2010. Contribution from this segment has increased steadily over the past; from 47% in 2007 to 54% in 2009.

The company has a strong product portfolio with many of them having been launched in the recent past. Increased acceptance of these products and greater market penetration would lead to higher sales in the forthcoming period.

In addition, the company is quite bullish about higher sales potential of the transcatheter heart valve (THV) portfolio. Cardiovascular disease is the most widespread disease that presently threatens humanity today. With increase in ageing population, the number of people with cardiovascular disease is likely to grow manifold.

The development of Sapien products holds immense potential for Edwards as it provides surgeons the option to eliminate the possibility of open heart procedures. The successful launch of Sapien XT in Europe led to an 87.2% rise in THV sales to $65.3 million during the quarter. Edwards is expecting greater contribution from THV in the forthcoming period.

Although Edwards has witnessed strong growth in the THV banking on the successful launch of Sapien products in Europe, the product is yet to receive approval in the US. However, Edwards is working towards getting the Sapien products approved in the US and Japan.The company expects to launch Sapien THV in the US during the fourth quarter of 2011 and expects sales of approximately $20-$25 million.

In addition to the Heart Valve Therapy segment, new product launches in the Critical Care segment are contributing to the growth. Although sales from the recently launched VolumeView and EV1000 were negligible during the quarter, these products have the potential to drive share gains going forward. The company expects to receive US approval for these products in the third quarter.

Moreover, the company is also making progress with respect to second generation product of its glucose monitoring program and expects to receive CE Mark approval by the end of 2011. Successful commercialization of these products should further contribute to the growth.

The market for THV is highly competitive with Medtronic (NYSE:MDT) trying to get its CoreValve approved in the US, although it is approved in Europe. Moreover, Boston Scientific (NYSE:BSX) will also emerge as a competitor in the Percutaneous Aortic Valves segment with its decision to acquire Sadra Medical.

 
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NYSE to Launch NYPC - Analyst Blog

With the commencement of U.S. Treasury and Eurodollar futures products, NYSE Euronext (NYX - Analyst Report)’s futures exchange NYSE Liffe U.S. also launched an innovative joint venture of the New York Portfolio Clearing (NYPC) and the The Depository Trust & Clearing Corporation (DTCC).

NYPC is the derivatives clearinghouse that will deliver “one-pot” margining of interest futures positions cleared by NYPC with fixed income cash positions cleared by DTCC’s Fixed Income Clearing Corporation (FICC).

Soon after the launch, NYSE Liffe U.S. will start its trading of Eurodollar futures from March 21, 2011. Further, NYSE will begin its trading of 2-year, 5-year and 10-year U.S. Treasury futures along with U.S. Bond and Ultra Bond futures products on March 28, 2011.

Further, the Commodity Futures Trading Commission (CFTC) and the Securities Exchange Commission (SEC) have given their consent to NYPC for clearing products.

NYPC’s board has also approved its clearing members. However, other major firms are awaiting NYPC board approval in the process of becoming clearing members, including Bank of America Merrill Lynch, a unit of Bank of America Corporation (BAC - Analyst Report), Citigroup Global Markets Inc., a wing of Citigroup, Inc (C - Analyst Report) and Deutsche Bank Securities Inc., an arm of Deutsche Bank AG (DB - Snapshot Report).

We believe that the interest-rate products trading on NYSE Liffe U.S. and the clearing efficiencies of NYPC will create an entirely new transaction and risk management standard.

Moreover, interest-rate futures traded on NYSE Liffe U.S. will benefit from the powerful capital efficiencies of NYPC’s ‘one-pot’ margining which, for the first time ever, will assess margin across fixed income securities, repos and interest rate futures to more accurately capture the actual risk of a clearing member’s portfolio.

Additionally, all U.S. Treasury Futures traded on NYSE Liffe U.S. will benefit from an innovative, streamlined delivery process allowing for the seamless netting of futures and cash securities.

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Value Addition By Research In Motion

Research In Motion Ltd. (NASDAQ:RIMM) plans to upgrade its service offerings by introducing another value-added service to its portfolio.

The new service will enable the company’s business clients to perform  back-office management of email traffic and other BlackBerry services while abroad. This improved service will allow its consumers to save money and time. Additionally, it will provide a solution to the security concern as smartphone usage ramps up among employees.  

Research In Motion, the manufacturer of the Blackberry smartphones, plans to launch its first tablet/netbook called “BlackBerry PlayBook” in the first quarter of 2011. This new device will run on user-friendly operating system called QNX software, which the company had acquired in early 2010. PlayBook netbook will not only help the company to diversify its offerings but also protect the company from serious competitive threats posed by Google Inc’s (NASDAQ:GOOG) Android-based smartphones and Apple Inc’s (NASDAQ:AAPL) iPhones.

The company reported an excellent third quarter fiscal 2011 financial results with revenue increasing 40% year over year while earnings per share (EPS) increased 58.2% year over year. The company added around 5.1 million net new BlackBerry subscribers during the same quarter.

At the end of the third quarter of 2011, more than 50% of the company’s total BlackBerry subscriber base was from the non-enterprise segment, which signifies that it is also getting popular among non-business class people. This diversification has reduced the company’s dependence on the corporate customer segment.

Booming foreign markets and strong fundamentals coupled with Research In Motion’s new PlayBook and QNX-based smartphone line up will act as positive catalysts for growth. Despite these positive factors, we remain concerned regarding the company’s net subscriber addition, which is directly related to its Service segment revenue and precipitous decline in Average Selling Price (ASP), reflecting a product mix in favor of low-end BlackBerry.

We, thus, maintain our long-term Neutral recommendation for Research In Motion. Currently, Research In Motion has a Zacks#3 Rank, implying a short-term  Hold rating on the stock.

 
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Oil Forecast For March 21, 2011

By CommoditiesMansion.com

 

Light Sweet Crude (CL)

The CL had a lackluster performance today, after what was originally looking to be very bullish action. We have formed a shooting star on the daily chart at roughly the $102 area, which could be seen as minor resistance.

It appears that after yesterday’s extremely bullish action, this market needs to rest. A pullback to $97.50 certainly looks possible at this point as the bulls will try to collect more allies to push prices higher.

Brent

Brent has an almost exact carbon copy of a day as well. The bar formed at the $115 mark, the very beginning of the resistance area towards the upper pricing of recent trading. A pullback for this market is probably a welcome sign, as the bulls have driven prices up rather quickly this time around. The market should find support at $107.50, and would be a great opportunity to buy again at that level. New highs at $118 or so would be needed to get bullish again at this point.

 

More March 21, 2011 Technical Analysis:

Natural Gas Forecast for March 21, 2011

Gold Forecast for March 21, 2011

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Sportingbet planning fresh move on Unibet

The firm is thought to have asked broker Daniel Stewart to look at putting together a fresh approach, though the Swedish company is said to be frosty over further talks.

Sportingbet has been keen to expand through mergers and acquisition since agreeing a $33m (£20m) settlement last year with American authorities over alleged illegal internet gambling.

Still to deliver a full-blown merger, it has in the meantime sought international partnerships.

It recently announced a joint venture with Russia's second largest betting firm, First International Bookmakers.

The move on Unibet comes amid a period of intense consolidation in the gambling industry.

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Forex – EUR/USD Up As Risk Aversion Eases, Spain Bond Auction Eyed

Forex Pros – The euro climbed to a daily high against the U.S. dollar on Thursday, as a wave of risk aversion gripping markets subsided, while investors awaited the first euro zone debt auction since an agreement to enlarge the regions bailout fund.

EUR/USD hit 1.3995 during early European trade, the daily high; the pair subsequently consolidated at 1.3992, gaining 0.66%.

The pair was likely to find support at 1.3854, the low of March 15 and resistance at 1.4035, the high of March 7 and a four-month high.

Later Thursday, Spain was to auction as much as EUR4.5 billion of 30-year debt and 10-year securities, the first bond auction since European Union leaders agreed week to increase the lending capacity of the European Financial Stability Facility to the full EUR 440 billion.

Spain, whose credit rating was cut to Aa2 by Moody’s last week, is implementing the deepest austerity measures in at least three decades.

Meanwhile, the euro was lower against the yen, with EUR/JPY dipping 0.08% to hit 110.53.

Earlier in the day, Japanese authorities said they were stepping up efforts to cool reactors at the stricken Fukushima Daiichi nuclear plant, 155 miles north east of Tokyo. Army helicopters dropped sea water on the plant, in a desperate attempt to keep spent fuel rods from over-heating and causing further radiation leaks.

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Forex – EUR/USD Trims Losses As Radiation Levels In Japan Fall

Forex Pros – The euro trimmed losses against the U.S. dollar on Tuesday, but remained under pressure after Japanese officials said radiation levels around the earthquake-stricken Fukushima Daiichi nuclear plant had fallen.

EUR/USD clawed back up from 1.3856, the pair’s lowest since Friday, to hit 1.3945 during early U.S. trade, shedding 0.32%.

The pair was likely to find support at 1.3751, Friday’s low and resistance at 1.4035, the high of March 7 and a four-month high.

The announcement was made after a fire was extinguished at the plant. Earlier Tuesday, an explosion at the No. 2 reactor at the nuclear power plant, located 155 miles northeast of Tokyo, sent low levels of radiation floating towards the city.

Meanwhile, in the U.S., the New York Federal Reserve Bank reported that its manufacturing index topped expectations in March, climbing to 17.5 from 15.4 the previous month. Analysts had expected the index to rise to 16.5 this month.
 
A separate report showed that U.S. import prices rose more than expected in February as costs increased for energy, industrial supplies and food.

Later in the day, the U.S. Fed’s Federal Open Market Committee was to announce its federal funds rate.
The euro was sharply lower against the yen, with EUR/JPY tumbling 1.23% to hit 112.78.

Also Tuesday, a worse-than-expected reading for German economic sentiment in March weighed on the single currency.

The Munich based ZEW Centre for Economic Research reported that its index of German economic expectations fell to 14.1 points in March from 15.7 points in February, saying the Japanese earthquake “could slow down the dynamics of German economic growth at least in the short run.”

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Altera Reiterates Guidance

Altera Corporation (NASDAQ:ALTR) recently reiterated its sales guidance for the first quarter of 2011. Altera continues to estimate a sequential decline of 1% to 5% in the first quarter. The decline in sales implies a sales guidance of $527.8 million – $549.9 million.

Management expects that the Industrial, Automation, Military and Automotive vertical market will be up sequentially driven by an increase in demand from military and automotive markets. Sales in other vertical markets are estimated to be flat to down.

Revenues from Telecom & Wireless are expected to decline as few customers rebalance inventory as the fourth round of TD-SCDMA deployment was completed in the fourth quarter. This should be partially offset by growth in WCDMA and LTE. Computer and Storage Networking is projected to be flat or down slightly.

The industry-leading 40-nanometer product execution and the company’s ongoing efforts to improve operating efficiency remain the keys to long-term revenue growth. Altera stated that design wins in 40-nanometer are well ahead of any previous generation products. Altera continues to benefit from the growth in 65-nm and 40-nm FPGAs as customer designs move from prototyping to production.

Altera’s lead at the 40 nm technology node can bring about a market loss for rival Xilinx, Inc. (NASDAQ:XLNX) in the coming years. The company seems to have gained market share as Xilinx continues to be plagued with supply constraints in its 40 nm products.

In 2010, Altera focused on 28-nm development and it will introduce more products in 28-nm than any previous process node in the coming years. Altera taped out its first Stratix V 28-nm family member in December and plans the sample in the first quarter.

Altera will announce its first quarter results on April 26, 2011.

We maintain a Neutral recommendation on Altera supported by a Zacks #3 Rank which implies a short-term rating of Hold.

 
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Small Businesses to Benefit from Increased Grant and Loan Access

Small businesses across the United States are set to benefit from Government Stimulus as the country continues its steady crawl out of the recent recession. The additional help toward successfully attaining small business loans is geared toward easing operational expenses and promoting expansion, known to be essential in the journey toward economic recovery.

The increased ability to access capital is intended to allow small businesses to further their operations and create new jobs as millions of Americans continue to face unemployment. Encouraging investment is thought to be key in once again restoring stability and faith in the American economy, as both lenders and borrowers continue to operate with reluctance and caution in light of recent events.

Knock-on effect from the recession are still being felt hard across the world, with unemployment and debt levels at record highs. Economist have advised that the only way to once again build a successful economic system is to encourage careful spending and investment at a time when most are intent on keeping their cash and capital firmly in their pockets.

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Rising Costs Is A Minor Setback For ConAgra Foods

03/24/11 Higher ingredient costs led the way for a fiscal 3Q net income drop for ConAgra Foods. However, revenue still improved for the period.

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EZCORP Inc. - Value

With unemployment still high and consumers struggling for cash, the pawn shop operators have stepped into the void left by traditional lenders. EZCORP Inc. (EZPW - Snapshot Report) is trading at just 12.5x forward estimates even as shares hit new 5-year highs.

This Zacks #2 Rank (buy) operates pawnshops where it provides loans and credit services to customers who have short-term cash needs.

The company offers non-recourse loans collateralized by personal property in its stores, known as pawn loans. It also offers payday loans, installment loans and auto title loans.

EZCORP operates 1000 stores in North America, including 500 pawn stores in the U.S. and Mexico and 500 short-term consumer loan stores in the U.S. and Canada.

Partnering With Rev Worldwide

On Mar 10, the company announced it was partnering with Rev Worldwide, which develops prepaid debit card and mobile payment programs, to bring new products to its customers.

"We want to be less centered on the short-term cash needs of the cash and credit constrained customer and more focused on serving a variety of financial needs for a broader range of consumers," said Mark Kuchenrither, EZCORP's Senior Vice President of Strategic Development.

The company is testing several products that it hopes to launch in stores later in the year.

Shares Soar to New 5-Year Highs

After the news of the partnership with Rev Worldwide, shares have broken out to the upside. You can see the recent breakout in the 6-month chart.

Still a Value Stock

Despite soaring, shares still have value.

In addition to a low P/E ratio, the company has a price-to-book of 2.5, which is under the 3.0 value cut-off.

The company also has a stellar 1-year return on equity (ROE) of 20.8%.

Revenue Jumped 18% in the Fiscal First Quarter

On Jan 20, EZCORP reported its fiscal first quarter results and beat on the Zacks Consensus Estimate by 11.3%. Earnings per share were 69 cents compared with the consensus of 62 cents. It was the third earnings surprise in the last four quarters.

Revenue climbed to $218.8 million with same store revenue rising 13%. The company opened 29 new stores in Mexico, Canada and states outside of Texas.

In a continuation of its strategy to diversify its product offerings, U.S. payday lending represented only 16% of total revenue in the quarter, down from 20% in the year ago quarter.

EZCORP is expected to report fiscal second quarter results on Apr 21.

This Week's Value Zacks Rank Buy Stocks

While the luxury retailers make a serious comeback, what about those catering to the other end of the shopping spectrum? Stage Stores Inc. (SSI - Snapshot Report) recently reported fiscal 2010 earnings that rose 32% from 2009. This Zacks #1 Rank (strong buy) has an attractive price-to-sales ratio of just 0.4. Read the full article.

As stocks and other financial assets climb, investment management firms are back to making big bucks. BlackRock, Inc. (BLK - Snapshot Report) is giving back the cash to shareholders as it recently announced it was increasing its dividend by 37.5%. This Zacks #1 Rank (strong buy) trades at just 14.8x forward estimates. Read the full article.

The consultants are always among the first to see real growth as they are brought in when the animal spirits are revived. CGI Group Inc. (GIB - Snapshot Report) has surprised on the Zacks Consensus Estimate 3 out of the last 4 quarters. The Zacks #1 Rank (strong buy) is also a value stock, trading at just 12.9x forward estimates. Read the full article.

Companies are spending on technology again. Ness Technologies (NSTC - Snapshot Report) recently announced record quarterly revenue. This Zacks #1 Rank (strong buy) also has attractive valuations, with a price-to-sales ratio of just 0.4. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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Mylan Buys Rights from Humeca - Analyst Blog

Mylan Inc. (MYL - Analyst Report) recently obtained exclusive US rights for the distribution of plastic surgery and burn treatment products of Humeca. Humeca is a Netherlands-based company manufacturing products that repair skin defects.

Humeca’s modified MEEK micro grafting system is an extremely effective technique for skin transplantation compared to the commonly-used mesh graft technique. It is particularly used for treating patients with large burns for whom donor tissue is not easily available.

Humeca’s products will be distributed by Mylan’s subsidiary UDL Laboratories which is a part of the Mylan Institutional Business. UDL already possesses a portfolio of advanced wound and burn care products. The addition of Humeca’s products to Mylan’s portfolio will boost growth in this sector.

Mylan Institutional was formed by the combination of Bioniche Pharma Holdings Ltd. (acquired by Mylan in September 2010) and UDL Laboratories. Its product portfolio includes the specialty injectables of Bioniche Pharma and the unit dose capabilities of UDL Laboratories. Mylan Institutional is a part of the company’s North American Generics segment.

Mylan is one of the leading players in the US generics market with its Generics business consistently performing well. We believe this business will continue its growth trajectory on the back of a robust generic pipeline.

Mylan has over 1,500 products filed around the globe with the company expecting to launch 500 products globally in 2011. Mylan expects to launch 90 new products in North America, including 15 limited competition products of which 3 have already been launched with 180 days of exclusivity. These are generic versions of Pfizer’s (PFE - Analyst Report) Vfend, Shionogi Pharma’s Sular and Bayer’s (BAYRY - Analyst Report) Precose.

Key upcoming date-certain launches in the US include generic versions of Novartis’ (NVS - Snapshot Report) Femara (second quarter of 2011), Pfizer’s Effexor ER (June 2011) and Caduet (November 2011). We believe these drugs will augur well for Mylan’s revenues going forward.

Our Recommendation

We currently have a Neutral recommendation on Mylan, which is supported by a Zacks #3 Rank (short-term Hold rating). Mylan is one of the leading players in the US generics market. The company holds immense potential as many blockbuster drugs are slated to lose patent exclusivity in the forthcoming period. We are encouraged by the detailed pipeline disclosure provided by the company. However, we remain concerned about the lack of growth in the European generics business. We maintain our Neutral stance until we get better visibility on top-line growth prospects in Europe.

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Forex – EUR/USD Up At The End Of U.S. Session

Forex Pros – The Euro was higher against the U.S. Dollar on Thursday.

EUR/USD was trading at 1.4175, up 0.62% at time of writing.

The pair was likely to find support at 1.4054, today’s low, and resistance at 1.4248, Tuesday’s high.

Meanwhile, the Euro was up against the British Pound and the Japanese Yen, with EUR/GBP gaining 1.35% to hit 0.8796 and EUR/JPY rising 0.70% to hit 114.79.

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Fossil Downgraded To Neutral

We recently downgraded our long-term recommendation on Fossil, Inc. (NASDAQ:FOSL), a global design, marketing and distribution company that specializes in consumer fashion accessories, to Neutral with a price target of $85.00. Fossil also holds a Zacks #3 Rank, which translates into a short-term Hold rating, and correlates with our long-term recommendation.

We remain concerned about the company’s customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels, which may negatively impact their discretionary spending, and in turn the company’s growth and profitability.

Fossil, competes with numerous manufacturers, importers and distributors who may have significantly greater financial, distribution, advertising and marketing resources. Primary competitors include distributors that import watches, accessories and apparel from abroad, U.S. companies that have established foreign manufacturing relationships and companies that produce accessories and apparel domestically.

We believe Fossil’s in-house team of dedicated designers and product specialists enable the company to stay ahead of the emerging lifestyle and fashion trends to bring its customers innovative and unique products.

The objectives of its designers and brand specialists are to immerse themselves in their assigned brands and product areas, identify their customers’ preferences, interpret global fashion trends and develop style-right offerings to generate volume purchasing.

However, due to high exposure to international markets, Fosil remains prone to currency fluctuations. The weakening of foreign currencies against the U.S. dollar may require the company to either raise prices or contract profit margins in locations outside of the U.S. A rise in price may have a direct impact on the demand.

Given the pros and cons, we prefer to be Neutral at this stage.

 
FOSSIL INC (FOSL): Free Stock Analysis Report
 

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Boeing Builds Order Book

The Boeing Company (NYSE:BA) said the national Israeli carrier EL AL Airlines ordered four Next-Generation 737-900ERs (extended range) and reserve options for future aircraft.

Boeing will receive roughly $343.2 million for the four-airplane order.

The Boeing 737-900ER is the most recent member of the Next-Generation 737 airplane family. The new airplane has the capacity to seat up to 215 passengers in a single-class configuration and can fly up to 3,265 nautical miles (6,045 km). The 737-900ER offers 6% lower operating costs per trip and 4% lower operating costs per seat mile than other competing models.  

Boeing said that the planes delivered to EL AL will be the new Next-Generation 737-900ER which has the all-new 737 Boeing Sky Interior. This is the latest in a series of enhancements designed to improve the Next-Generation 737 for both airlines and passengers.

Boeing said that EL AL’s 737-900ERs will also be 7% more efficient than the first Next-Generation 737s delivered, incorporating performance improvement packages capable of reducing fuel consumption and carbon emissions by 2%.

EL AL has a longstanding partnership with Boeing and has a tradition of flying an all-Boeing fleet. EL AL operates 41 routes to 27 countries with its current fleet of 40 Boeing aircraft.

EL AL Airlines plans to replace its current fleet of Boeing 757-200s with the new Boeing 737-900ERs to expand its fleet in order to meet growing demand. The 737 family of aircraft provide outstanding performance and is the lowest in the industry in terms of operating costs per seat mile. The decision to add 737-900ERs to EL AL’s fleet will also help solidify its position as a leading airline.

Chicago-based Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and the second largest aerospace and defense contractor. Also its revenue exposure is spread across more than 90 countries around the globe.

Demand for Boeing’s Commercial Airplanes, due to the continuing recovery of the global economy, emanates from a steady improvement in passenger and freight traffic.

Boeing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock. This is in sync with other aerospace and defense behemoths like General Dynamics Corporation (NYSE:GD), Lockheed Martin Corporation (NYSE:LMT) and Northrop Grumman Corporation (NYSE:NOC).

 
BOEING CO (BA): Free Stock Analysis Report
 

 

 

 

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Canadian National Lags Estimates - Analyst Blog

The largest rail network in Canada, Canadian National Railway Company (CNI - Analyst Report) reported adjusted earnings per share of C$1.08 ($1.07) in the fourth quarter of 2010, slightly below the Zacks Consensus Estimate of $1.08.

Adjusted earnings climbed 20% from the year-ago earnings of 90 Canadian cents (89 cents) driven by solid revenue growth, operating efficiencies and volume expansion. Adjusted earnings for fiscal 2010 shot up 30% year over year to C$4.20 ($4.08) per share.

Total revenue for the reported quarter increased 12% year over year to C$2,117 million ($2,090 million) but below the Zacks Consensus Estimate of $2,109 million. For full year 2010, revenue increased 13% to C$8,297 million ($8,057 million), primarily driven by higher volumes across all commodity segments.

Growth across all commodity segments can be attributable to improving economic conditions in North America and internationally, a higher fuel surcharge as well as an increase in freight rate. These factors were partly offset by a negative currency translation.

On a year-over-year basis, quarterly revenues increased 22% for Coal, 17% for Intermodal, 13% for Metals and Minerals, 13% for Grain and Fertilizers, 10% for Automotive, 10% for Petroleum and Chemicals and 8% for Forest Products.

Carloads (volume) rose 10% year over year and revenue ton miles, which measure the relative weight and distance of rail freight transported by Canadian National, grew 11% from the year-ago quarter. For fiscal 2010, carloads and revenue ton miles increased 18% and 12%, respectively.

Operating expenses grew 9% year over year to C$1,343 million ($1,326 million) in the reported quarter due to higher fuel costs, increased labor and fringe benefit expenses as well as higher casualty and other expenses. Operating ratio (defined as operating expenses as a percentage of revenue) improved 190 bps year over year to 63.4% from 65.3% in the year-ago quarter.

For 2010, operating expenses increased 6% to C$5,273 million ($5,120 million) and operating ratio improved 310 bps to 63.6%.

Liquidity

The company generated free cash flow of C$1,122 million at the end of fourth quarter 2010 compared to C$790 million in the year-ago quarter.

Cash and cash equivalents increased to C$490 million in 2010 from C$352 million in 2009. Long-term debt decreased to C$5.5 billion from the year-ago level of C$6.4 billion. Debt-to-total capitalization ratio was 35.0%, down from 36.5% in 2009. The low debt-to-total capitalization ratio implies that the company has enough liquidity and is favorably positioned for long-term opportunities.

Dividend

Canadian National will pay a quarterly dividend of 32.5 Canadian cents per share on March 31, 2011, to shareholders of record on March 10.

Guidance

For 2011, Canadian National projected double-digit adjusted earnings growth as compared with C$4.20 per share in 2010.

The company expects free cash flow of approximately C$850 million for 2011.

Our Analysis

Canadian National expects continued recovery in the North American economy in 2011, albeit at a slower rate compared to 2010. It also expects the global economic conditions to improve. Based on solid growth prospects for 2011, we believe the company will benefit from expansion in overseas container traffic, metal products and iron ore in the domestic markets, pulp and paper in international markets, Canadian metallurgical coal, U.S. thermal coal, increased shipments of petroleum and chemicals, and growth in domestic intermodal segments.

However, the company is expected to encounter headwinds from increased depreciation expenses and negative currency translation. Additionally, Canadian National faces significant competition from rail carriers and other modes of transportation, particularly from companies like Canadian Pacific Railway Limited (CP - Analyst Report), which operates in almost the same areas as Canadian National.

We are currently recommending our long-term Neutral rating on Canadian National, which corroborates with a Zacks #3 (Hold) Rank.  

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Ryder Opens Used Vehicle Center - Analyst Blog

The world's largest provider of integrated logistics and transportation solutions, Ryder System Inc. (R - Analyst Report) announced the opening of its new used vehicle sales center in Orlando, Florida.

The centre is located on approximately three acres of land to display an array of over 75 commercial vehicles, including light-duty and heavy-duty straight trucks, tractors and trailers. The new facility is well positioned near Ryder’s full service lease and maintenance centre.

Management believes that the value proposition for used vehicles is at record high and therefore, the company expects to capitalize on this lucrative opportunity. Ryder is looking forward to invest in the marketplace and provide its customers with affordable and well maintained used vehicles to support their business needs.

Ryder is currently concentrating its used vehicle business in the Orlando market as it believes the target market there is growing. It will display a host of high quality used vehicles for sale including a complete maintenance history and a 30-day Powertrain Warranty. Additionally, the company is also planning to provide customers at this new facility with flexible financing options for business solutions.

Ryder's Full Service Lease product line is a customized transportation solution that provides commercial vehicles for lease and a various ancillary services, including emergency roadside assistance, preventive maintenance services, fueling, equipment evaluations and specification, fleet management reporting tools, administrative support as well as driver safety programs.

Ryder's Commercial Rental product line provides customers with rental trucks on a short-term basis to meet their needs for supplemental capacity, while Ryder's Contract Maintenance product line provides maintenance to both Ryder's Full Service Lease customers as well as other customers who use Ryder's network of facilities and technicians to maintain owned trucks.

Over the long term, Ryder plans to invest strategically in commercial rental vehicles, maintenance technology, rental fleets, sales and information technology initiatives. These investments are expected to propel revenue and earnings growth in future years.

Additionally, a sound balance sheet would facilitate the company to expand its footprint through more acquisitions and gain more market share than competitors like Con-Way Inc. (CNW - Snapshot Report).

Currently, we maintain our long-term Outperform recommendation on Ryder with a Zacks #3 Rank (Hold).

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Lloyds Banking Group, RBS and HSBC share price up on FTSE 100 despite Moody's downgrade threat

Shares in British banks were broadly up on the FTSE 100 in morning trading after Moody's hinted that Britain could lose its AAA credit rating.

On Wednesday the Chancellor of the Exchequer, George Osborne, delivered the annual Budget, but in the process said that growth forecasts for the year had been downgraded.

Growth for 2011/12 was downgraded from 2.1 per cent to 1.7 per cent, while for 2012/13 predicted growth was cut from 2.6 per cent to 2.5 per cent.

In response rating's agency Moody's said that Britain may have its AAA rating downgraded, should weak growth hamper the government's ability to balance the nation's books.

By 10:15 shares in Lloyds Banking Group were up 0.65 per cent to 60.74 pence per share, RBS shares rose 0.81 per cent to 42.22 pence per share and HSBC shares increased 0.96 per cent to 652.80 pence per share.

Barclays however saw its shares fall 0.14 per cent to 290.50 pence per share.

Overall the FTSE 100 was up 0.62 per cent to 5,917.34.

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Bayer Inks Deal - Analyst Blog

Recently, Bayer (BAYRY - Analyst Report) announced that it has inked a deal to purchase the privately-held Hornbeck Seed Company Inc., a reputed seed supplier.

Through this deal, whose financial terms were not disclosed, Germany-based Bayer will gain access to the seed businesses of the private entity. The purchase will also give Bayer access to high yielding soybean varieties. Hornbeck Seed Company supplies seeds of the highest quality to customers across Alabama, Arkansas, Georgia, Louisiana, Mississippi and Texas.

The deal, signed by the Crop Science segment at Bayer, will bolster Bayer’s position as a provider of value-added seeds. The Crop Science segment is one of the world's leading crop-science players in the areas of crop protection, non agricultural pest-control, seeds and plant biotechnology.

The acquisition of Hornbeck Seed Company will enhance Bayer’s expertise in the fields of soybean breeding and licensing coupled with the production of soybean, rice and wheat seeds.

We believe that the acquisition will strengthen Bayer’s top line significantly since soybean is globally the most important oilseed crop with US being one of the premiere producers. The other top producers of the crop are Brazil, Argentina, China and India.

We note that the Crop Science segment at Bayer is leaving no stone unturned to improve its offerings and services. In December 2010, the Crop Science segment of Bayer inked a five-year deal with the privately held biotechnology company Evogene Ltd to improve wheat seeds.

The deal focuses on improvements regarding wheat yield, tolerance against drought, efficiencies pertaining to the use of fertilizers in addition to utilizing advanced methods for breeding and genetic modification.

Even though the expansion efforts at Bayer are very encouraging, we believe investor focus going forward will remain on the US approval of Bayer’s blood-thinner Xarelto, which has been co-developed with Johnson & Johnson (JNJ - Analyst Report).

 

 

 

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Trump builds 'world's greatest golf course'?

The Donald likes to keep busy.

One of the latest projects for Donald Trump, the billionaire real estate developer, reality show host and putative presidential candidate, is a new resort he's building in Scotland. He's, well, trumpeting it as the "world's greatest golf course."

There's no denying that the setting is world class, a wild, windswept seacoast where frigid, stormy waters beat against the shifting sands of Aberdeenshire, on Scotland's eastern edge.

"It has the perfect location," said Trump, "fronting for three miles on the North Sea, acres of sand dunes of immense proportions, and with 1,400 acres of unspoiled land, it all adds up to being spectacular."

Trump said he feels a special affinity for the Scottish countryside: His mother, Mary Macleod Trump, was born on the Isle of Lewis, off the west coast of Scotland. She was raised in a small village there before relocating to the United States in the 1930s after meeting Trump's father on a visit to New York.

"This has been a labor of love for me," said Trump.

Like much of what he has accomplished in his career, this project has not gone without controversy. Most locals support it because of the many jobs being created, both as a result of the £1 billion-plus being spent in construction and the permanent employment luxury golf resorts often provide.

8 traits of millionaires

At least two local landowners, however, don't want to part with their properties to make way for the future, Trump style. One opponent, a salmon fisher and quarry worker named Michael Forbes, helped form an organization called "Tripping Up Trump."

Forbes sold members of the organization a small part of his land to make it less likely, politically and legally, that he could be forced to sell.

"Trump lost the battle for public opinion long ago," Forbes told The Guardian, the British daily, "and he's now lost any chance of bulldozing our homes."

Trump shrugged off the controversy. The holdouts can be left in place, he said. And after four years of planning, ground was broken last summer and the course is expected to be completed some time in 2012.

0:00 /3:08Trump opens Scotland golf course

When completed, the facility will include two courses, a driving range, and a short-game practice area. There will also be a five-star hotel of 450 rooms, a mixed-use residential community of 950 condos, 500 single-family homes, 36 villas and staff accommodations.

One big factor in the project's favor is that it preserves much of the landscape as open space, leaving vegetation and wildlife habitat in place, while reshaping and re-purposing the rest for the great game of golf. Most local residents were left undisturbed.

"The community realizes that it will enhance the area and will also provide many jobs," said Trump. "There are no negatives. Sir Sean Connery came out in support of the development and we're moving ahead rapidly."

The course will be of the "links" type, like St. Andrews, the 500 year-old course lying about 80 miles southwest and celebrated as the birthplace of the sport. Links is a Scottish word referring to open lands, usually of coastal sand dunes.

Links courses, at least in Scotland, are especially challenging because of the harsh weather: The whipping winds can play havoc with approach shots. Links also have few trees or water hazards but often deep sand traps or bunkers.

The Open Championship, sometimes called the British Open, is always played on a links course, and you can be sure the Donald is savoring the idea of his new course hosting a major tournament.

"It will deserve to, and I'm certain that will happen," he said.

The architect for the course is Dr. Martin Hawtree, whose works include Royal Birkdale and Sunningdale in England, Portmarnock in Ireland and Tarandowah Golfers Club in Canada. Trump said Hawtree's design, like that of St. Andrews, will incorporate many natural features.

The main course will be a Par 72, 7,400 yards long with fairways meandering through the dunes, rolling down into little valleys and running alongside the shoreline. There will be fine views of the waves and sky, and the luxuriant shore grasses and shrubs, which change colors with the seasons.

It's tempting to try to get Trump to compare his baby to the ancient course at St Andrews, but the Donald does not rise to the bait.

"Trump International Golf Links Scotland will be a destination for golfers from all around the world," he said. "It will be incomparable." 

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