Bank of America Merrill Lynch lowered its oil price forecast on Wednesday, but also said that the selloff in oil stocks has opened up some attractive opportunities.
BofA cited weakening European demand and tepid economic growth in the United States and emerging markets as the catalyst for lower oil prices. It now forecasts Brent crude prices to end 2012 at $106, while WTI prices should hover at $97 per barrel — a cut of $10 for each variant compared with its previous forecast.
But BofA analysts said in a research note on Wednesday that the current reduction in oil prices is overly steep. WTI prices are currently trading in the US$85 a barrel range. That discount has hit oil stocks as well, presenting investors with attractive valuations in the energy sector.
“In some respects this resembles the fall of 2011 but this time underperformance has tracked the stronger dollar and a coincident collapse in oil prices. Now as then sector valuations have fallen to levels we view as unsustainable,” said BofA analysts in a note.
BofA has a handful of stocks it prefers in the energy sector. They include its current top pick, Hess Corp. Other favourites include Marathon Oil Corp., Chesapeake Energy Corp., Anadarko Petroleum Corp. and Occidental Petroleum Corp.
BofA views these stocks as offering the best upside potential when stocks recover from the current risk off environment. As another plus, the analysts said that many of the downside risks facing each of the above companies are already priced into the stocks, helping to minimize risk.
Financial advice? Just ask Arlington - Irish Central
Irish Central Community News is pleased to continue with our bi-weekly financial column, courtesy of Sean O’Sullivan of Arlington Financial
Irish Central Community News is pleased to continue with our bi-weekly financial column, courtesy of Sean O’Sullivan of Arlington Financial. This time around Sean tackles FHA Loans.
FHA loans have been helping people become homeowners since 1934. How do they do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.
• Low down payments
• Low closing costs
• Easy credit qualifying
No minimum credit score – FHA does not have a minimum credit score requirement. The FHA underwriter will evaluate the entire credit profile to determine the borrower’s likelihood of repayment. Past credit issues may be overlooked if new credit has been re-established. Also, other compensating factors may apply. For example in place of conventional credit, alternate credit references are accepted, normally four references for 12 months or more. Alternate credit would be for example utility references from your electric, gas, oil, home phone, cell phone, car insurance, cable TV suppliers, etc.
• Bankruptcy okay – Chapter 7 bankruptcies are allowed if discharged over 2 years ago (or 1 year with extenuating circumstances). Chapter 13 bankruptcies are allowed with a minimum of 1 year of on time plan repayment and trustee approval.
• Little Money Needed - FHA loans allow the seller to pay up to 6% of the sales price toward the closing costs. On 1 to 4 family units and Condo’s, your down-payment can be as little as 3.5% of the purchase price.
• Housing History– FHA does not require a rental or other housing history if it is not available.
• Non-occupying co-borrower allowed – FHA allows a non-occupying relative to co-sign the mortgage. The non-occupant’s income and assets can be used for qualification purposes.
• Want a fixer-upper? - FHA has a loan that allows you to buy a home that’s in poor condition, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.
• Property types – 1 to 4 family units, condos, town homes, modular homes, and manufactured homes. Unfortunately Co-op’s are not allowed.
• No cash reserves required – Unlike most conventional loans, FHA does not require you to have cash reserves on 1 to 2 family unit properties. However, having reserves can help strengthen the overall credit profile.
For any additional information, or questions regarding other subject matter, contact Sean O’Sullivan at Arlington Financial. Phone: 914-793-1122, email: Info@ArlingtonFinancial.com
Bosque Financial Supporting Allianz Women, Money, And Power - PRLog (free press release)
More than half of all women want to learn more about retirement planning and entry-level saving and investing, according to the latest "Women, Money and Power" study released by Allianz Life Insurance Company of North America. While one in three women are eager to strengthen their financial planning skills, many are not sure where to begin.
Allianz commissioned the Women, Money and Power Phase II study to examine two key questions: what women want to learn about finances and how they want to learn it. It found that while the Internet is the most consulted resource, it is the least trusted. Human contact remains "the most meaningful and effective" source of information. In fact, 50 percent of women prefer "a person telling me" versus "reading about" something.
"The financial services industry has a tremendous opportunity to make long term and lasting changes that will benefit women today and in the future," said Sherri DuMond, vice president of Marketing Solutions for Allianz. "As a result of these findings, Allianz is continuing to help financial professionals connect with women in a way that addresses their concerns and help them achieve their financial goals and objectives."
Key topics: retirement planning, entry-level saving & investing
The study identified the financial planning topics women want to learn about most. The top five subjects include:
Planning for retirement/maintaining lifestyle in retirement
54 percent
How to start saving or investing on very little income
53 percent
Basics of buying smart (savy shopping, buying vs. leasing, etc.)
46 percent
How to select the right insurance products (life, long-term care)
41 percent
Definition of basic financial terms (IRAs, annuities, mutual funds)
40 percent
Single women with children were overwhelmingly interested in planning for retirement, with 68 percent saying it was a topic of interest. In addition, 47 percent of that group was interested in how to buy or select the right insurance products, and 49 percent wanted to learn the definitions of basic financial terms. Single women were particularly interested in educating themselves. Forty-five percent of single women with children and 55 percent of single women without children expressed interest in learning about financial planning. Divorced women were also above the group average, at 42 percent.
Human contact most preferred source -
When asked where women first turn for financial information, the Internet was most frequently cited (46 percent) compared to family members (34 percent), financial advisors (30 percent), banks (26 percent) and friends (22) percent. But when asked to rank effectiveness, the Internet plummets to number twelve, behind sources such as advisors, family members, friends, seminars, magazines, and television.
"This study is significant because it offers solutions to concerns women have with financial planning," said Arika Larson, the owner of Women Be Wise, a San Jose company dedicated to teaching women financial planning. "Women and men think about money and savings in completely different ways, so it is helpful to better understand these customers, who are poised to control 60 percent of the nation's wealth by 2010." Larson is an independent agent with Allianz.
Women Feel Overwhelmed By Materials and Language -
Difficulty in understanding financial information is a critical barrier for many women, the Allianz study found. When asked about their financial planning concerns, women responded:
Information is overwhelming/
44 percent
Information is complicated or hard to understand
36 percent
Materials are really boring and dry
32 percent
Don't understand terminology/
26 percent
Despite their reservations, more than one in three respondents – 35 percent – said they were very or quite a bit interested in learning about financial planning, retirement planning and investment decisions.
Allianz takes next steps-
Based on the study findings, Allianz is taking several steps to help financial professionals connect with women and help them to meet their financial goals. These steps include:
Expansion of educational efforts targeted at women
Delivering content through human contact whenever possible
Addressing the need for early education, helping young women and mothers to freely discuss finance with each other or their children
Designing highly relevant seminars and materials that utilize real-life success stories
Creation of breakthrough materials that are clear
"I'm excited about this opportunity to really take a look at what women need from a financial services company," said Tom Burns, senior vice president and chief distribution officer. "This study represents a clear opportunity for Allianz and the financial services industry as a whole to break the cycle of women's hesitance to be involved in financial planning."
About the study-
Larson Research conducted a telephone study among a national probability sample of 1,443 women between the ages of 25-75 with an annual household income above 30,000 US dollars. In addition, 21 focus groups in five large U.S. markets were conducted. The sampling was based on the most recent U.S. Census data.
As with all content published on this site, these statements are subject to our Forward-Looking Statement disclaimer, provided on the right.
For further information›
Stocks Rallied Back Today - 9&10 News
Stocks surged in their biggest rally in months and the Dow is now back in positive territory for the year.
In the best day of trading so far in 2012, bargain hunters scooped up stocks after weeks of selling.
Investors shrugged off news that the European Central Bank left interest rates unchanged.
The Dow rocketed up 286 points to close at 12,414.
The NASDAQ gained 66 to 2,844.
German Stocks Rise as ECB Extends Refinancing - Bloomberg
German stocks advanced the most in seven weeks as the European Central Bank extended its short-term refinancing facility and said officials stand ready to act as the euro-area’s economic outlook worsens.
Deutsche Lufthansa AG, Germany’s largest airline, gained 2.6 percent after a report said its catering business may receive acquisition interest. Centrotherm Photovoltaics AG (CTN), the German maker of machines for the solar industry, fell 1 percent to 5.57 euros.
The DAX Index (DAX) rose 2.1 percent to 6,093.99 at the close in Frankfurt, after ECB President Mario Draghi refrained from cutting the benchmark interest rate or announcing a fresh round of three-year loans. The DAX has still tumbled 15 percent from its 2012 high on March 16 on growing concern that Greece may be forced to leave the euro currency union. The broader HDAX Index climbed 2.2 percent.
“Markets are fixated on the ECB’s response to dealing with the market environment,” said Jeremy Batstone-Carr, head of research at Charles Stanley & Co. in London. “There has also been speculation of further unconventional policy measures from the Federal Reserve.”
Draghi said officials will extend their offerings of unlimited cash until the start of 2013 for periods of up to three months.
“We have decided to continue our main refinancing at fixed rate, full allotment for as long as necessary” and at least until January, Draghi told reporters in Frankfurt today.
Debt Sharing Plan
German Chancellor Angela Merkel’s council of economic advisers is reworking proposals on debt sharing in the euro region in a bid to address government concerns over the plan, said council member Lars Feld.
“I see some movement in the government” favorable to the council’s proposal for a European redemption fund since the proposed amendments were aired, said Feld, a professor of economics at Freiburg University. The five-member council, backed by opposition parties, is now canvassing government ministries on the proposals for the fund, he said.
The ECB today left its benchmark interest rate at 1 percent. Draghi also said today that the economy faces “increased downside risks.”
The Group of Seven nations yesterday agreed to coordinate their response to the euro-area crisis.
Germany sold 3.98 billion euros of five-year government notes at a yield of 0.41 percent, the lowest on record, the Bundesbank said today. The government received bids for 6.2 billion euros, compared with a maximum sales target of 5 billion euros.
Manufacturing Slides
A report showed German industrial output fell more than economists forecast in April. Production declined 2.2 percent from March, when it rose a revised 2.2 percent, the Economy Ministry in Berlin said today. Economists in a Bloomberg survey forecast a drop of 1 percent.
Deutsche Lufthansa AG (LHA) gained 2.6 percent to 8.27 euros. Do & Co Restaurants & Catering AG may look at Lufthansa’s catering unit LSG Sky Chefs if it’s invited, Austrian daily Der Standard reported, citing Chief Executive Officer Attila Dogudan.
HeidelbergCement, which derives almost a fourth of its revenue from North America, rose 4.8 percent to 33.92 euros.
Deutsche Boerse AG (DB1) advanced 4.4 percent to 38.18 euros.
Centrotherm Photovoltaics fell 1 percent to 5.57 euros, after Deutsche Boerse said the stock will be removed from the TecDax Index, to be replaced by Cancom, an IT services provider.
To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
Financial Markets Buoyant Ahead of ECB Meeting - NASDAQ
Financial markets were in a buoyant mood early Wednesday with the euro rising strongly against the dollar, stocks strongly up in positive territory and euro-zone "peripheral" yields steady ahead of the European Central Bank's rate setting meeting later in the day.
Investors are hoping for some action from the central bank after the crisis in the euro zone has worsened in recent weeks.
Spain's borrowing costs have risen sharply with its banking sector looking increasingly vulnerable and there is still a big question mark over the political situation in Greece as the June 17 general election looms.
In addition, traders say the U.S. Federal Reserve may also introduce a round of fresh stimulus measures. A report in The Wall Street Journal said that disappointing economic data, weak financial markets and the ongoing European crisis have made policy action at the central bank a possibility once again. However the Fed's next meeting on June 19 and 20 could be too soon for decisive action.
But most economists have maintained their forecasts that the ECB will not change its policy response or key rate.
"The ECB is unlikely to see a rate cut as an effective response to the problems of the periphery, with any rate cut in future likely to be triggered by weakness in Germany and the rest of the "core" countries," said Lloyds Bank. Nor does it see another long-term refinancing operation as likely at this stage.
But investors are thinking otherwise and at 0815 GMT, the benchmark Stoxx 600 index was up 1.4% at 237.81. Germany's DAX increased 1.4% to 6053.48 and France's CAC-40 gained 1.4% to 3028.85. The U.K.'sFTSE 100, which re-opened after the Jubilee public holiday, was 1.2% higher at 5321.98.
In foreign exchanges, the euro gained against the dollar as investors hoped the ECB would take fresh easing action later to calm recent market jitters. At 0815 GMT the euro was $1.2518 compared with $1.2452 late Tuesday in New York.
Bank stocks were up in Europe with the Stoxx 600 index 2.4% higher at 124.62. Even German banks made some solid gains despite Moody's Investors Service lowering its investment-grade ratings on six German banks by one notch. The ratings firm pointed to increased risk of further shocks from the euro-zone sovereign crisis for the change. Moody's also lowered its investment grade ratings on Austria's three largest banks. However, Commerzbank--one of the banks that was downgraded--was up 2.0%.
The move by Moody's is part of its ongoing review of over 100 European banks so it was anticipated by the markets.
Amongst individual stocks, Lloyds Banking Group gained 4.4% after selling an GBP809 million package of Australian corporate real-estate loans. The package was sold to AET SPV Management Pty Limited, a joint venture comprised of funds sponsored by a Morgan Stanley real-estate investment fund and Blackstone Group.
Elsewhere, Dutch retailer Royal Ahold NV fell 3.1% after it posted a slight fall in its first-quarter net profit as intense price competition weighed on margins. Royal Ahold gets most of its revenue from the U.S. where it operates the Stop & Shop and Giant chains.
Asian equity markets rose Wednesday. Japan's Nikkei gained 1.8%, helped by a weakening yen, Hong Kong's Hang Seng Index increased 1.3% while Australia's S&P ASX 200 ticked up 0.3%.
Earlier, data showed that Australia's average measure of gross domestic product in the first quarter rose 1.3% on the quarter and 4.3% on the year. Economists on average had expected GDP to rise 0.7% on the quarter and 3.4% on the year.
The China Shanghai Composite slipped 0.1%. South Korea is closed for a holiday.
In other asset classes, the July Nymex crude futures contract was up $1.00 at $85.29 and the July Brent futures contract was up $0.90 at $99.74. Spot gold was $7.30 higher at $1,635.10. The September bund was down 0.57 points at 144.29.
The Spanish 10-year Spanish government bond yield was down two basis points at 6.324% and the Italian 10-year bond yield was down one point at 5.61%, reflecting the more positive mood in the financial markets.
The second release of euro-zone first-quarter GDP is at 0900 GMT and German industrial production at 1000 GMT. The ECB's rate announcement is at 1145 GMT and a press conference hosted by the ECB's president Mario Draghi follows at 1230 GMT.
Write to Andrea Tryphonides at andrea.tryphonides@dowjones.com
(END) Dow Jones Newswires 06-06-120305ET Copyright (c) 2012 Dow Jones & Company, Inc.
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