The Mission Report

The MissionIR Report - August 2012

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Strategist Predicts Dow 20K by 2022

The Federal Reserve's policy-making arm is meeting this week and an announcement (or hint) of more stimulus, or quantitative easing, could lift major indexes higher. Investors are widely expecting Fed officials to take more action to boost the sluggish economy. The European Central Bank and the Bank of England will also publish their decisions on interest rates and ECB President Mario Draghi will be expected to give more clarity to statements he made last week when he said the central bank is prepared to do "whatever it takes to preserve the euro zone."

More corporate earnings reports, North American July auto sales, the S&P/Case-Shiller Home Price Index, and same-store retail sales will also give investors additional data to chew this week and could determine how the markets will end the month. The Dow Jones Industrial Average and S&P 500 Index both ended last week in positive territory after a shaky trading start and each index is up more than 1.5 percent in July. Year to date, the Dow has gained 7.02 percent and the S&P has risen 10.21 percent.

With six months left until the end of the year, there are still significant headwinds that could reverse the markets' upward trajectory. A resolution to the 3-year European debt crisis may not happen until next year and the looming fiscal cliff in the U.S. and the November presidential election have investors and corporations on edge. Money from around the globe has poured into U.S. Treasuries, cementing the U.S. as a safe-haven but sending Treasury yields to all-time lows.

Investors, many of who are still reluctant to buy stocks after the 2008 financial crisis, have become risk-averse and continue to choose cash and bonds over equities. This behavior will cause many investors to miss out on big returns that will be coming over the next decade, according to Bernstein Global Wealth Management's Seth Masters.

"We're in the middle of a huge safety bubble where people are so interested in short-term safety that they're eager to buy 10-year government bonds that yield 1.5 percent in the U.S. and that is extraordinarily strange and unusual," Masters says in a recent Yahoo Finance video. "What's happened is that people have become so fearful in the present about the risk of loss from equities but they're forgetting about the other risk of investing: they might run out of money."

Masters says market volatility will persist in the near future but it won't be enough stop the Dow from hitting 20,000 in 10 years (or the S&P 500 touching 2,000 in the same time frame), which Masters argues is not an overly optimistic position. He projects global and U.S. stock markets will return about 8 percent over the next decade, a conservative rate but one that would still push the Dow above 20,000.

Masters emphasizes that his projections are well below the long-term average for U.S. and global equities. As for valuations, Masters says stocks are "very very cheap" relative to long-term and current interest rates and therefore "it doesn't take that much for stocks to deliver good returns."

Masters tells his clients to tune out the financial and economic headlines and resist the urge to pour all their money into bonds.

"The key problem today is that fear has become so preeminent that it's trumping really common sense — and the common sense is the world is not going to end tomorrow," Masters emphasized.

The Web Goes to Washington

A collection of Internet firms — rumored to include heavyweights like Google (GOOG), Facebook (FB), Amazon (AMZN), and eBay (EBAY) — are reportedly coming together to create a new Web industry trade group called The Internet Association that will keep tabs on the sector's political and regulatory concerns in Washington.

Set to start work in September, the group has tapped Michael Beckerman, the former deputy staff director of the U.S. House Energy and Commerce Committee, as its first president, although details about its exact plans and membership are still unclear at this point.

"The Internet isn't just Silicon Valley anymore," Beckerman said in a statement following his announcement as president. "The Internet has moved to Main Street. Our top priority is to ensure that elected leaders in Washington understand the profound impacts of the Internet and Internet companies on jobs, economic growth and freedom."

The development likely won't move the needle too much for the average Internet user, but that isn't to say a Web-focused lobbying body won't have a profound impact on our virtual lives. As the Internet becomes more integral to our work and leisure time, issues like data security, privacy, and communications standards will become increasingly political and the subject of much debate on Capitol Hill.

"Will this have a direct impact on the consumer? No," says Alan Webber, managing partner of the Altimeter Group. "But will it influence their experiences online? Oh, yeah."

Many of the big Internet players have been active in Washington for some time. Google already has a large presence in the nation's capital, as do Facebook and others, and the companies themselves have been working on regulatory issues and shaping policy on their own for years. The change now, Webber says, is that the industry is coming together to address shared concerns like digital security, visa requirements for overseas engineers, online sales taxes, and revenue repatriation on a larger, more organized scale.

In the words of one analyst, the Internet has finally "grown up."

"These companies already swing some fairly big-sized bats here in D.C.," Webber says, "and they have some of the best lobbyists on K Street. That being said, they've never really come together and said, 'this is an issue for all of us,' like what you see from the pharmaceutical companies and the automakers. Honestly, I'm surprised it took this long."

In addition to the obvious key players, Webber expects to see Internet start-ups and even some venture-capital firms getting involved at some point, as regulatory issues will likely have a direct impact on their businesses and investments as well.

Part of the reason that this is happening now, many feel, is the sheer size of the modern Internet and the real-world dollars that now rely on its success. Google and eBay aren't fledgling start-ups anymore. They are now multibillion-dollar global corporations that are facing many of the same regulatory hurdles that GM, Wells Fargo, and Procter & Gamble did in their early days.

"Suffice it to say, if the reports of the companies involved are correct, than we're looking at close to half a trillion in market value here," says Colin Gillis, senior technology analyst and director of research at BGC Financial. "These guys have an incentive to have some cohesion in their efforts. I think the real story behind this is that the industry has grown up enough that it needs to have some cohesive voices."

Going forward, Gillis believes that data privacy and targeting are going to be big issues for the industry, and he expects that trend may well play a role in how the Web titans focus their lobbying efforts.

"We're about to have another whole wave of identification and privacy issues," he says. "Like when Google glasses come out and you're being tagged and identified without even knowing it. And Facebook. Why did they buy It wasn't for the domain name."

Interestingly enough, Beckerman's selection as president came as more of a surprise to many than the formation of the group itself, despite his long resume in Washington.

"You know, I pinged a lot of my lobbyist friends after the announcement came out and nobody seems to know him," Webber says. "He was never a big player."

New to the scene or not, Beckerman and his backers now have the attention of millions of Internet users and their moves over the next few months could shape the Internet for years to come.

US Consumers More Confident in July

Americans breathed a bit easier about the economy in July, as a better outlook on short-term hiring and lower gas prices offset lingering worries about poor income growth.

The Conference Board said Tuesday that its Consumer Confidence Index increased to 65.9, from 62.7 in June, the first increase in five months. That's the highest reading since April and better than the reading of 62 that economists had forecast.

"Consumers had a much improved view of job prospects, not immediately, but six months from now," said John Lonski, chief economist at Moody's Capital. "They're extrapolating from the dip in energy prices and recent firming of equity prices."

Still, the index remains well below 90, which indicates a healthy economy. It hasn't been near that level since the Great Recession began in December 2007. The index fell to an all-time low of 25.3 in February 2009 — four months before the recession officially ended.

Consumer confidence is widely watched because consumer spending drives 70 percent of U.S. economic activity. A separate Commerce Department report Tuesday showed Americans spent no more in June than May, even though their income grew by 0.5 percent.

The consumer confidence report is based on a poll conducted from July 1 through July 19 of about 500 randomly selected people nationwide.

Lynn Franco, director of economic indicators at The Conference Board, said consumers attitudes toward current conditions were little changed in July, and the overall index remains at historically low levels.

"While consumers expressed greater optimism about short-term business and employment prospects, they have grown more pessimistic about their earnings," she said in a statement. "Given the current environment — in particular the weak labor market — consumer confidence is not likely to gain any significant momentum in the coming months."

The amount of consumers expecting business conditions to improve over the next six months rose slightly, according to the survey. Those expecting more jobs in the months ahead increased as well. But fewer people in July expected that their incomes would increase.

"People are not only fearful of losing their jobs; they think that if you do lose your job, your next position may indeed be at a lower salary," said Lonski.

Consumer confidence has fluctuated over the past year. It rose during the first quarter and then retreated over the past four months.

"We believe consumer confidence will remain choppy until we have a resolution of the situation in Europe, or better yet, until the November elections," Lonski said.

Cardium Therapeutics, Inc.

Cardium Therapeutics recently announced the publication of preclinical findings demonstrating that cardiac ischemia is an important part of adenovector gene delivery (transfection) in mammalian hearts. The new findings were published in the peer-reviewed journal Human Gene Therapy Methods in an article titled "Ischemia-Reperfusion Increases Transfection Efficiency of Intracoronary Adenovirus type 5 in Pig Heart in Situ."

The published findings demonstrate Cardium's innovative technique to employ transient cardiac ischemia to dramatically enhance gene delivery and transfection efficiency after one-time intracoronary administration of adenovector in mammalian hearts. Two consecutive but brief periods of coronary artery occlusion combined with co-administration of nitroglycerin increased both adenovector presence (measured by PCR) and transgene expression (assessed by luciferase activity) by over two orders of magnitude (>100 fold) in the heart, as compared to prior intracoronary artery delivery methods.

About Cardium Therapeutics, Inc. (CXM)

Cardium Therapeutics, Inc. is a health sciences and regenerative medicine company focused on acquiring and strategically developing new and innovative products and businesses to address significant unmet medical needs. Comprised of large-market opportunities with definable pathways to commercialization, partnering, and other economic monetizations, Cardium's current portfolio includes the Tissue Repair Company, Cardium Biologics, and the company's in-house MedPodium Health Sciences healthy lifestyle product platform.

The company's lead commercial product Excellagen® topical gel for wound care management recently received FDA clearance for marketing and sale in the United States. In addition to plans to advance the product's commercialization in the U.S. and internationally via strategic partnerships, the company plans to develop new product extensions for additional wound healing applications and is working towards securing approval for marketing and sale in South Korea and through the CE Mark application process in the European Union.

Generx®, Cardium's lead clinical development product candidate, is a DNA-based angiogenic biologic designed to treat patients with myocardial ischemia due to coronary artery disease. Cardium recently initiated its Generx Phase 3 / registration study in Russia. Consistent with its capital-efficient business model.

Cardium is also actively evaluating new technologies and business opportunities. The company utilizes its team's skills in late-stage product development to bridge the critical gap between promising new technologies and product opportunities that are ready for commercialization. Cardium is dedicated to building on its core products and product candidates to continually create new opportunities for greater success. Leveraging the advantages of its capital-efficient, asset-based business strategy, the company provides a diversified and more balanced portfolio of risk/return opportunities with the chief objective of providing long-term shareholder value.

GlobalWise Investments, Inc.

GlobalWise Investments announced that it has been accepted as a member of Technology United, a highly esteemed office technology organization. Technology United was formed as a strategic hub alliance intended to provide the best-in-class and most aggressive solutions covering the technology needs within the office space, including IT automation, security, and document management services such as those provided by GlobalWise. Technology United members include Intel, Green Hills Software, Newfield IT, and RIM, in addition to MWAi.

GlobalWise CEO William J. Santiago, said: "I am excited our company has been accepted into this prestigious, members-only organization. Mike has done a fantastic job putting together the best of the best in the office technology space. Each member represents a specific niche within this space, such as copier hardware, security, embedded technologies, tracking, and for our company, the most cost effective cloud-based ECM solution for the SMB market. I see this membership as a great validator of our 18-year history as a software company providing the most robust ECM solutions in the industry."

About GlobalWise Investments, Inc. (GWIV)

GlobalWise Investments, via wholly-owned subsidiary Intellinetics, Inc., is a leading-edge technology company focused on Enterprise Content Management (ECM) solutions for the digital age. The ECM industry continues to grow rapidly as a result of unrestricted proliferation of digital content within today's business environment. Leveraging its proprietary cloud-based computing software, GlobalWise is poised to capture a significant market share of this burgeoning industry.

GlobalWise's ECM service is delivered to customers via five unique delivery models which cover the spectrum of business needs: Cloud/Saas (Software as a Service), Hardware Vendor Integrated Service, Software Vendor Integrated Service, Premise (Client-Server), Hybrid (Premise & Cloud/Saas).This diversity gives advanced security & privacy features with an on-demand structure needed for large Tier 3 and Tier 4 businesses that are currently underserved by the market.

The Intellinetics platform defines a new industry benchmark and game-changing approach by combining advanced virtualization & automated content management with an open and service-oriented architecture using web services. The company provides strategies, tactics, and technologies used to manage paper and digital assets from capture to long-term archive, without the need for manual processes conducted by a full time employee.

GlobalWise's management boasts a combined total of over 150 years in ECM leadership and industry experience. The ECM industry is expected to exceed $5.1 billion by 2013 with Gartner predicting a compound annual growth rate of 9.5%. IBM Market Insights predicts adoption of cloud computing to grow by 26% CAGR between 2010 through 2013. Leveraging management and key department heads, Intellinetics has a strong foundation from which to capture significant market share within the lucrative $149 billion Business Software & Services industry.


SEFE CEO Don Johnston recently issued a letter to shareholders and the investment community. In that letter, he emphasized a number of technological developments and operational changes related to the company's Harmony III system. The Harmony III utilizes the phenomena of atmospheric corona discharge by a proprietary collection element held in the air by a balloon. Patents filed for by the company include the company's strain reduction system, teather contact device, and its way for detecting the concentration of atmospheric ions. The company has also put together a unique Ballon Launch Assist system, among other engineering innovations.

Additionally, Mr. Johnston noted that the company has "stepped up" its marketing efforts by launching the Revmodo website with the help of Shea Gunther and Michael d'Estries, two award-winning green marketing veterans. SEFE believes the Revmodo site will help inspire new clean energy concepts and believes it will also enable access to a wide variety of potential business partners that will bolster SEFE's commercial possibilities. Finally, Mr. Johnston laid out the next important milestones for the Harmony III system. The letter is a must-read for anyone interested in the company and can be accessed at the following link: SEFE Issues CEO Letter to Shareholders

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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