All Eyes On Europe...

Investors eye Europe bond auctions
The chase by Marty Cej:

European stocks are mixed and U.S. index futures are pointing to a modest decline at the start of trading today as investors try to decide whether two bond auctions, in Spain and France, were indicative of growing confidence or pessimism. Sure, the two governments sold all the bonds on auction, but the yield demanded by investors to take on the risk of Spanish debt rose.

As far as financial markets are concerned, there are three key risks: the uneven U.S. economic recovery; resurgent sovereign debt pressures in the euro area; and the tricky balance in China between slowing growth and policy-easing. Today's European bond auctions offered no solution to the European question nor are the prospects for clarity in the other two risks any better. Stock investors will look to earnings for direction today.

Among the companies investors will be talking about today is Nokia. The Finnish phone maker reported a first-quarter operating loss of 1.3 billion euros, or $1.8 billion, after a host of one-time charges. Analysts were expecting a loss of about 313 million euros. What makes the story so interesting is not the fact that some Canadian investors may own the ADRs in one ETF or another, but the parallels between Nokia and Research In Motion.

Both were global industry leaders, both boasted soaring share prices and the admiration of analysts and investors around the world and both have been caught fatally flat-footed in a market that demands constant movement and agility. Both companies are cutting thousands of jobs, putting whole communities in peril and their futures are in question. What Nokia has going for it, however, is a history of change -- big, sweeping, whiplash-inducing change.

Nokia got its start as a paper and pulp company more than 100 years ago, turned to making rubber boots and car and bike tires. It took on a cable company in the early 1900s, moved into technology and became a world leader in cell phones through the 80s and 90s. Who knows what the company is capable of next? RIM, on the other hand, now has a reputation for stagnation. We'll take a closer look at these two companies today and see whether my comparison has any merit.

I will also note that Bloomberg is reporting RIM is closer to choosing a financial adviser. Unnamed sources tell Bloomberg the winning name could be JPMorgan. I mention this only because Tenille Kennedy, a RIM spokeswoman, has declined to comment and today happens to be the day that The Captain and Tenille scored their first No. 1. hit with "Love Will Keep Us Together" in 1975. They are still together, by the way. Now try to get that tune out of your head. No need to thank me, really.

Bank of America topped expectations, as did Morgan Stanley. Profit at American Express rose but fell at Stanley Black & Decker. Solid growth in China helped drive Yum Brands profit higher while eBay saw earnings jump 20 percent. In fact, so far, about 73 percent of S&P 500 companies have topped expectations. The question is whether beating lowered expectations is enough to drive share prices higher from here.

We're also watching earnings from BB&T, KeyCorp, UnitedHealth, Southwest Airlines, Verizon, DuPont, Union Pacific, Travelers, New York Times, Freeport-McMoran and Philip Morris. Microsoft reports after the close.

President Obama says he is going to crack down on oil market manipulation. CFTC commissioner Bart Chilton joins us at 11:30 a.m. ET to tell us exactly what the president means and how things might change.
The Chase - BNN

TD Target For Bankers $9.00

TD's action list has been like a reverse barometer lately. It has underperformed the s&p 500 more than 50% ytd.TD's comments:Investment ConclusionBankers Petroleum’s announcement that its first exploration well in Albania was unsuccessful is at leastslightly negative. We are reducing our target to C$9.00 (from C$10.00) due to a decision to reduce ourvaluation of the company’s potential to develop contingent heavy oil resources with thermal stimulation.

The10% reduction in target definitely overstates the impact of this particular update, but we are forced torecognize that a gradual trickle of updates with minor negatives is frustrating investors and driving share priceweakness to levels we had previously not thought possible. However, mainly due to continued share priceweakness over recent weeks, our reduced target still implies a 136% potential return to target, based uponwhich we maintain our ACTION LIST BUY rating.

Bankers is trading at the lowest multiple of Base NAVPS in our coverage of International E&Ps (68% discountto the average for other producers in the group). The company’s assets and management should continue theirlong-term trend of value-creating reserve additions in the coming years, with a strong balance sheet and cashflows supported by relatively high Brent oil prices and improving differentials.

As a result, (given the size andgrowth potential of its core asset) the company should be viewed as a take-out target if equity markets do notvalue it closer to its Base NAVPS. Returning to production growth (the company is targeting a 30% increase inaverage production levels in 2012) is likely the key potential catalyst for Bankers to regain investor confidenceand positive share price momentum. We believe that a return to significant production growth is likely to occurin the current quarter, Q2/12.

Globe says Toriola trims Bankers Petroleum target to $5 Bankers Petroleum Ltd (2) (C:BNK) Shares Issued 250,736,320Last Close 4/16/2012 $3.71Tuesday April 17 2012 - In the NewsThe Globe and Mail reports in its Tuesday, April 17, edition that UBS Securities analyst George Toriola continues to rate Bankers Petroleum ($3.71) "buy." The Globe's Darcy Keith writes in the Eye On Equities column that Mr. Toriola downgraded his target price on Bankers Petroleum share by $2 to $5. Mr. Toriola notes that Bankers Petroleum reported disappointing results at its Ardenica exploration well on block "F" in Albania, with no hydrocarbons being found. The analyst says that while the company expects to drill another exploration well on the same block in the fourth quarter, there is now "greater risk" associated with the company's thermal steam project in the country. The Globe reported on July 20, 2011, that Bankers Petroleum was a top holding of Sentry Select manager Laura Lau. The shares were then worth $6.06. The Eye column reported on March 22, 2012, that Mr. Toriola rated Bankers Petroleum "buy." He targeted the stock at $7. The shares were then trading at $4.31. In the same item, Dundee Securities analyst Alex Klein downgraded Bankers Petroleum to "neutral, high risk" from "buy" and trimmed his price target by $1.10 to $7.60. The stock has a 52-week range of $2.95 to $8.78.

Investors focus on U.S. financials

Economic growth slows in ChinaThe chase by Marty Cej:It was a tough week for North American stocks last week, but I'm back now. European stocks are mostly higher and U.S. index futures are pointing to early gains Monday as investors look for confirmation that U.S. consumers continue to spend and corporate balance sheets -- especially the banks' -- are stronger than they were a year ago. U.S. retail sales kick off the week's economic data points while Citigroup may set the tone today for a handful of heavyweight financials' earnings from the likes of Goldman Sachs, Bank of America and Morgan Stanley through the week.Citigroup said a few moments ago that first-quarter net profit dipped 2 percent to 95 cents a share, missing the $1 US average estimate of analysts surveyed by Thomson Reuters. However, if you strip out a $1.3 billion credit valuation adjustment, or CVA, the company earned $1.11 per share. Frances says she will explain all this to me later. The headline number was enough to whittle a few points of stock index futures, however.In Canada, the focus for the week will be on tomorrow's rate announcement from the Bank of Canada. No change to the rate is expected but BoC Governor Mark Carney may try to reinforce his warning to Canadian households that debt levels are too high and that rates must rise sometime, perhaps sooner than many Canadians expect. Carney must also acknowledge that the European debt crisis continues to threaten and austerity measures abroad will weigh on growth for quarters and years to come. He is also likely to point out that China's growth is slowing and that the U.S. recovery remains tepid at best. Convincing Canadians that they should prepare for higher interest rates in the absence of economic growth robust enough to warrant higher rates will be a challenge.China has loosened its grip ever so slightly on the yuan, allowing the currency to swing 1 percent higher or lower from the government-set daily "parity" rate compared with a band of 0.5 percent that has been in place since 2007. The question is whether this is a big deal or not and currency traders and strategists appear uncertain. The fact is, trading in the yuan rarely tested the previous 0.5 percent band so why would it test the limits of the new band? Does the widening of the band signal a swifter move to a free-floating currency or is it just an easy, pain-free way to muzzle China's currency critics?We're also watching earnings from Gannett, Mattel and Charles Schwab.

Equedia: Just when you thought it was safe...

Just when you thought it was safe...

This past week, the S&P 500 posted its first back-to-back weekly drop in 2012. European stocks continued to fall for the fourth straight week - the longest streak since last August.

Crude capped its fifth weekly decline since February as China's economic growth slowed to the least in almost three years.

China is the second largest consumers of oil - second only to the United States.

During this sideways market, investing becomes a chore. You can clean up, but the dust keeps piling up. Regardless of fundamentals, the prices of stocks may not be a direct correlation to the performance of its company. As I watch the news, be it CNBC or Bloomberg, all I hear are these so-called experts telling investors which way the market is going.

If the news is positive, they tell us the market is going up. If the news is negative, they tell us its going down. But the truth is, they have no idea. No one does. The market still hasn't decided which way it's going.

One week it's up. The next week it's down.
With the political drama that's about to unfold in the US and the European debt woes continuing to plague the global markets, making short term bets on the market is simply just that - a bet. You're better off heading to the casino.

Profits in the market are becoming tough and the only reason we still have a market to play is because hedge funds and algo-traders are desperate to make a return. They are churning the market for whatever they can get. Volume continues to be light on all markets and positive retail buying sentiment just isn't there.

Overall, I am sitting on the sidelines. But that doesn't mean I am not playing it. My portfolio is shrinking but I am accumulating and looking for bargains on many of the junior to mid-cap precious metal stocks. Many of them are bottoming or have already bottomed, which means a lot of them could easily double before the year is over.

I will once again be looking at purchases in the Market Vectors Junior Gold Miners ETF (GDXJ) - perhaps as early as next week. (I also continue to like silver and expect a breakout and much higher prices within the next few months. iShares Silver Trust ETF (SLV) would be worth looking into.)

Both of our featured companies this year are up, while most of its peers are down.

MAG Silver (TSX: MAG) (NYSE: MVG) has become one of the strongest silver performers in N. American markets this year, up over 40% since early January. It's up more than 23% since our initial coverage back in February.

Abzu Gold (TSX-V: ABS) (OTCQX: ABZUF) is now up 62.5% since our report last week (click to see). However, it still remains undervalued and extremely cheap ($C0.26) relative to where they have been since they started trading (C$1.20 at its peak, with a 52-week high of C$0.80). Even with the recent climb, sellers in Abzu's market remain minimal and that means minimal buying in the market could force Abzu higher - as it has just done this past week. We never know who might show up to sell, but so far it seems there are some bigger hands willing to take shares at these prices.

All warrants in Abzu are above C$0.40. There are 10 million warrants at C$0.40 which just expired last week and management has never exercised or sold any warrants.

(Other warrants include 2.88 million at $0.90 due Aug. 15th, 2012, 200K at $0.60 due Nov. 30, 2014)

I am seeing a lot more precious metal juniors bottoming out, but I don't expect this to last much longer. I don't see any other sector with a better discount and that means there's an opportunity to pick up cheap shares. You can bet I'll be looking for them.

What About Gold Prices?

The S&P 500 had its best Q1 gain since 1998 sending U.S. stocks above gold by the most in more than a decade. The S&P 500 climbed 12 percent, 5.3 percentage points more than gold for the widest gap to start a year since 1999, according to data compiled by Bloomberg. While gold has not performed nearly as well as the S&P this year, that is about to change.

As the stock market moves up, it gives the ultimate illusion that everything is better and people begin to accept that the economy is recovering. While I believe the market will eventually tell the tale, I don't believe that everything is better. And the market is once again showing us the future, as stocks fell in back-to-back weeks.

With the volatility of the stock market back and a negative sentiment brewing, we should soon see gold move up again - as it did last week.

Those forcing the price of gold down are beginning to lose the battle and we're seeing the bulls overpower them once again. If this continue, gold could easily bounce back to US$1800 in a short period of time.

My target hasn't changed. Gold at US$2000/oz is achievable - especially if we get QE3.

Further monetization of debt is inevitable. That means the fiat system will slowly breakdown and real assets such as real estate, gold, silver, diamonds, commodities, and collectibles will be the only true form of wealth preservation.

Those hanging onto too much cash in the long haul will see their purchasing power deplete and much of their wealth destroyed. For now, cash is king as it allows you to profit from undervalued stocks in the precious metals sector. So make your gains now and prepare for a long period of currency consolidation.

Ivan LoEquedia Weekly