The Mission Report

The MissionIR Report - Mid-June 2011

In-depth analysis, timely updates, latest market news


Market News

Company Updates


Encouraging Data Lifts Stocks

Better-than-expected reports on home building and jobs put stock indexes on track for their first weekly gain in a month and a half.

The pace of construction of new homes quickened last month, the government said Thursday. And the number of people who applied for unemployment benefits fell last week to 414,000, more of an improvement than economists expected. Weekly applications for unemployment have been over 400,000 since April, a rate that suggests job growth is still slow.

Home Depot Inc. rose 2.3 percent, the most of the 30 stocks that make up the Dow, following the better than expected report on home construction and an upgrade by analysts. Kroger Co. rose 4.6 percent after the supermarket chain's earnings rose as shoppers paid more for groceries and gas.

Not all the economic news was positive, however. A survey by the Federal Reserve Bank of Philadelphia found that manufacturing slowed in that region, one day after a similar report found that manufacturing was slowing in the New York area. A series of weaker economic indicators over the past two months have led some analysts to trim their expectations for the year.

Investors are now starting to expect negative economic news, said Uri Landesdman, president of Platinum Partners, an investment manager in New York. That dulls the impact of each downward sign, he said.

"There's still a feeling out there that even though economic data has been incrementally terrible, businesses are still cooking," Landesman said. He also cautioned that the market could continue to slide until the next batch of corporate earnings reports, which start to come out in mid-July.

Overseas markets dipped for a second day because of fears that Greece will be forced to default on its bonds, an event that could trigger another financial crisis. The Euro Stoxx 50, an index of blue chip companies in countries that use the euro, fell 0.5 percent. Benchmark indexes in Japan and China each closed with losses of more than 1.5 percent.

U.S. stocks have fallen for six straight weeks because of rising concerns that the economy isn't as strong as previously thought. High gas prices and a recession in Japan following its earthquake and nuclear disaster have combined to slow business and consumer spending. The S&P index is down nearly 7 percent since hitting its high for the year on April 29.

The Dow and S&P 500 are both up slightly for the week, while the Nasdaq is down 0.2 percent.

Mortgage Rates Flat after Hitting Yearly Low

Fixed mortgage rates stayed roughly flat after falling for eight weeks.

The average rate on the 30-year loan ticked up from a yearly low of 4.49 percent to 4.50 percent, Freddie Mac said Thursday. The average rate on the 15-year fixed mortgage, a popular refinance option, fell to 3.67 percent from 3.68 percent. That's a low for the year.

Rates tend to track the yield on the 10-year Treasury note. The 10-year yield has been dropping as fears over that economic recovery is slowing.

Most people can't take advantage of the low mortgage rates because they can't meet tougher lending requirements. And many who could afford to refinance likely did so last year, when rates fell to their lowest levels in decades.

Sales of new and previously occupied homes rose in April. But sales are well below healthy levels as waves of foreclosures have pushed prices down. Many would-be buyers are holding off, worried that prices have yet to bottom out.

And prices are expected to keep falling until the glut of foreclosures for sale is reduced, companies start hiring in greater numbers, banks ease up on their tougher lending rules and more people think it makes sense to buy a house again. In some areas of the country, that could take years.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable rate mortgage inched down to 3.27 percent from 3.28 percent last week. It hit 3.25 percent in April, the lowest on records dating back to 2005.

The average rate on a one-year adjustable-rate loan rose to 2.97 percent from 2.95 percent, which was the lowest on records going back to 1986.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fees were 0.7 for both the 30-year and 15-year fixed loan in Freddie Mac's survey. The average fee for the five-year ARM was 0.6 and the one-year ARM was 0.5.

4 Ways to Fix the Housing Market

According to experts, a variety of factors could be key to dragging the housing market out of the doldrums: improved economic fortunes, greater assistance to indebted homeowners, and simple patience may be necessary to remove this heavy weight on the economic recovery. Here are six ways that could help speed the recovery of the U.S. housing market.

Trim the Fat

Earlier this month, Federal Reserve Vice Chairman Janet Yellen told an audience at the Cleveland Federal Reserve Bank that housing recovery would take time. She elaborated, "Even once it begins to take hold, recovery in the housing market likely will be a long, drawn-out process." Even with fixes to the rest of the economy, some economists estimate that full recovery will take as long as five years.

One reason behind that long recovery period is the excess of vacant homes on the market. Even once credit is freed up enough for would-be buyers to begin house-hunting in earnest, the market will have to be cleared of those empty properties before home-building can pick up again. Shrinking the oversized supply of housing will also better allow housing prices to increase, so current owners will be more able and willing to sell their homes.

Depend on Uncle Sam

Mark Zandi, chief economist at Moody's Analytics, believes that in the long run, less government involvement in mortgages could be a good thing, but that the already-fragile housing market is not ready for the government to substantially reduce its influence. "I don't think that [decreased loan limits are] a bad idea, longer-run. In fact, it's a good way to try to get the government out of mortgage market, at least to start extricating itself from the mortgage market," says Zandi. "But it's probably premature to do that on October 1."

Keep Bailing

Since the government gave billions of dollars to troubled financial institutions in 2008, "bailout" has become a dirty word in American politics. This fix involves bailouts not to large financial institutions, however, but rather to troubled homeowners. Zandi specifically proposes expanding home-loan modification efforts to modify the principal amounts that some homeowners owe. He explains that reducing principal amounts for homeowners who are underwater could "give them a stake in their home again so they don't default." However, he recognizes that identifying homeowners who would be good candidates for such modifications would be difficult.

Look to the Future

Avoiding similar crises in the future means ensuring that neither individuals nor banks are so exposed to real estate risk as they were during the housing boom. One measure advocated is to have "preplanned workouts" built into mortgages, providing homeowners with an agreed-upon way to modify their terms. This is one lesson that the United States can learn from the government's HAMP. The solution is to allow banks to make these modifications a part of their business models.

CAMAC Energy, Inc. (CAK)

In recent news, CAMAC Energy announced a gas discovery on its China asset. The first well in the planned three well program for this year confirmed the presence of gas in several intervals ranging in depth from 1489 to 1515 meters. The electric logs and cores obtained during the drilling are currently being evaluated by third party contractors for full assessment of the size of this discovery.

About CAMAC Energy, Inc.

CAMAC Energy, Inc. is a dynamic, independent energy company that targets high return, early cash flow global energy projects. Maintaining a balanced portfolio which includes upstream operations and downstream opportunities in Asia and West Africa, the company is committed to building success through strategic vision, extensive experience, and responsible corporate governance.

Through a comprehensive business strategy, CAMAC Energy utilizes internal experience and its unique positioning to identify and target high-return investments in the global energy industry. The company actively manages investments and on-going operations by limiting capital exposure and forming strategic partnerships and alliances.

CAMAC Energy's principal assets include interests in the Oyo Oilfield, an offshore oil asset in deepwater Nigeria that started production in December 2009, and a 100% interest in the Zijinshan CBM gas asset located in the Shanxi Province, China. The company also operates an Enhanced Oil Recovery and Production (EORP) business in Northern China.

The senior management team has extensive experience in the fields of international business development, geology, petroleum engineering, strategy, government relations, and finance. Members of the company's management team previously held positions in oil and gas development and screening roles with domestic and international energy companies.

Canadian Solar Inc. (CSIQ)

Canadian Solar recently announced that it has signed an agreement with two other companies to build a 600 MW photovoltaic (PV) cell production factory in Suzhou, Jiangsu Province. The new factory will fully enable the Company's state-of-the-art, proprietary ELPS and ESE high-efficiency solar cells as well as allow the company to reach approximately 2 GW of internal solar cell capacity during the first quarter of 2012.

About Canadian Solar Inc.

Canadian Solar Inc., one of the world's largest solar companies, is a leading vertically integrated provider of ingots, wafers, solar cells, solar modules and other solar applications. The company designs, manufactures and delivers solar products and solar system solutions for on-grid and off-grid use to customers worldwide.

Customers include solar project developers, solar power system integrators and installers, commercial property owners, independent power producers and utility leaders. Understanding the different priorities of these various customers, Canadian Solar delivers the specific solutions they demand while offering a business partnership with the long-term strength they can rely on.

The company's production facilities are structured for vertically-integrated manufacturing of ingots, wafers, solar cells, solar PV modules, solar power systems and specialized solar products. Canadian Solar currently has seven successfully established wholly-owned manufacturing subsidiaries across China with some of the lowest manufacturing cost structures in the industry.

The solar products manufactured adhere to the strictest international quality standards, backed by IEC, TUV, UL, certifications. The company was actually the first solar PV manufacturer to achieve registration with ISO: TS16949, an automotive quality management system much stricter than ISO 9001. Canadian Solar even operates its own ISO 17025 accredited testing lab to ensure uncompromising quality, durability and performance.


SEFE is looking to roll-out 200 systems within two years domestically, pursuing strategic partnerships in the US and abroad in order to maximize market momentum. With virtually no carbon footprint and the capacity to generate current at a given site directly from the continually charged energy in the atmosphere, the company's easily deployable and highly robust platform requires little maintenance and is remotely administrable.

About SEFE, Inc. (SEFE)

SEFE, Inc. is focused on developing and deploying a promising solution to our world's energy problems. It is now more obvious than ever before that fossil fuels are increasingly more difficult to find and harvest. It is also well known by now that alternative energy, such as solar, wind and nuclear, has its own list of unsolvable issues. SEFE's unique technology, in comparison, harvests unadulterated, carbon-free, always-on and problem-free energy from a never ending source.

The company calls it True Energy because it's not an alternative to anything and it certainly isn't petroleum based. SEFE's solution works by capturing and converting naturally occurring static electricity in the atmosphere into a constant, abundant and decidedly green source of renewable energy. The patented technology has been designed to be robust, easy to implement and user-configurable from the start so that these systems can be deployed anywhere and generate current usable by any localized source.

Because the cost of deploying and maintaining SEFE systems is relatively low, the company believes it can sell a kWh of electricity at $0.03 per unit. In comparison, nuclear energy costs approximately $0.14 per kWh and wind energy costs approximately $0.07 per kWh. SEFE is currently prosecuting four pending United States Patent Applications to protect their core intellectual property. Once issued, these patents will provide barriers to entry and fortify their foundational business construct.

The company has grown from a national company to an international concern with planned partnerships in China, India, Australia and the EU. SEFE is also well supported by a highly capable management team that has accumulated more than 30 years of experience in corporate management and governance. The company also employs a host of associates who are experts in fabrication and product development, FAA regulations, engineering and utility consultation, among others.


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