The Mission Report

The MissionIR Report - October 2015

In-depth analysis, timely updates, latest market news


Market News

Company Updates


China Concerns Push Back Rate Hike

The cloud looming over the markets regarding the Federal Reserve's decision to raise the interest rate is set to endure, at least for now, as the global economic slowdown remains a major concern for decision-makers. Fed Vice Chairman Stanley Fischer highlighted China's economic slowdown – and the resulting ripple effect – as the primary hurdle pushing back the Fed's decision to raise rates. As a result, the markets remain in a precarious position as analysts attempt to decipher just how long this delay will hold out.

The Fed committee is currently split, with a 'hawkish', aggressive side led by Fischer that's generally more in favor of raising rates and a 'dove' side, led by Fed Chair Janet Yellen, continuing to play devil's advocate on the hike. Still, officials insist that the first interest rate increase in nearly a decade will likely come before the end of 2015.

"What happens abroad does matter for what happens to the United States," Fischer told CNN.

Since the September meeting, the U.S. economy hasn't performed well and inflation has remained low with the weak performance of the global economy. These results are in-line with the Fed officials' concerns about the global economic slowdown, particularly in emerging markets. Peru, for example, relies on commodities for much of its growth, and the current downturn in commodity prices – triggered in part by China's economic slowdown – is seriously hampering growth.

These low commodity prices, particularly for oil, hold U.S. inflation down. This is also a concern for the Fed, as it wants to see inflation rates near two percent before moving forward with a rate hike. At the moment, the rate is close to zero.

New inflation figures are due next week, but analysts expect to see more of the same. This performance will likely play a key role in the Fed's decision. The Fed's next meeting is scheduled to begin on October 27.

Gold Set to Extend Gains to Third Consecutive Session

Gold futures recorded moderate gains on Tuesday as continued delays to the Federal Reserve interest-rate increase, as well as looming concerns over the outlook of the U.S. stock market in the midst of earnings season, positioned prices for a third-session gain in a row.

"Gold is continuing to benefit from the weakness in U.S. dollar and safe-haven buying due to growing uncertainty about the direction of the stock markets," Fawad Razaqzada, analyst at, told MarketWatch.

With the U.S. earnings season set to kick into a higher gear, banks will begin reporting their quarterly results. The fear among investors is that these companies may fall short of already-low expectations, and preexisting concerns over the health of the Chinese economy are also undermining risk appetite.

Gold has caught the eye of momentum speculative buyers after it broke above a key resistance level and downward-sloping trend line around $1,140 last week. As a result, gold futures have picked up more than $50 over the past two weeks as investors gain confidence in the view that the Federal Reserve won't raise benchmark interest rates anytime soon.

Low interest rates make gold, which doesn't bear interest, a more appealing option. The recent weak performance of the U.S. dollar is likely having a similar effect.

"Gold tends to gain when central bankers lose credibility, and Fed members are now pretty much arguing in public over 'lift off' before year's end," Adrian Ash, head of research at BullionVault, told MarketWatch.

Student Debt isn't a Threat to U.S. Financial System, according to Bernanke

Ben Bernanke steered the United States through its worst financial crisis in modern times as the Federal Reserve chairman, and now he is weighing-in on student loans. While U.S. student loans are a risk, he insists that they do not pose the same threat to the financial system as housing loans did.

"It is not going to destabilize the financial system," he said, regarding the roughly $1.2 trillion student loan debt, at a Greater Boston Chamber of Commerce breakfast.

While many of the mortgages that sparked the 2008 financial crisis were held by publicly-traded financial institutions, student loans are mostly backed by the government. As a result, they aren't as susceptible to market panic.

Bernanke is the latest among a long line of investors, political candidates and former policymakers to consider the possible effects that increasing student loan debt could have moving forward. Some investors remain concerned that this debt may develop into the next bubble that threatens financial stability.

In many ways, this concern is justified. Many college graduates find themselves saddled with debt that can sometimes run into the hundreds of thousands of dollars, but their employment prospects are limited to low-paying jobs. As a result, repayment of this debt is difficult or impossible in many cases.

"Ninety-seven percent of loans are made by the government, not banks. So it is a fiscal issue and an issue for student who have debt because it affects their ability to buy houses and cars," Bernanke continued.

While Bernanke, who ended his eight years as Fed chairman in 2014, said it was a good things that student loans allow individuals to finance an education that would have been out of reach in the past, he also acknowledged that some loans should not be made. Instead, he stated that better lending and counseling for students should be implemented.

OPEC Keeps Pumping Despite Slow Oil Demand Growth

Global oil demand growth is expected to slow in 2016 from a five-year high in 2015, according to the International Energy Agency's (IEA) latest report, but that isn't slowing down the Organization of Petroleum Exporting Countries (OPEC), which keeps pumping at record rates.

"World oil supply held steady near 96.6 mb/d in September, as lower non-OPEC production was offset by a slight increase in OPEC crude. Non-OPEC accounted for just under 40 percent of the 1.8 mb/d annual increase in total oil output," the IEA said.

The effect will likely be a drastic decrease to long-term non-OPEC production. IEA forecasts that lower oil prices and steep spending curbs will likely cut non-OPEC output by nearly 500,000 barrels a day in 2016.

Oil prices have been in a period of steady decline for more than a year now, with benchmark Brent crude falling from $114 a barrel in June 2014 to around $50 a barrel this week. However, producers waiting for oil prices to recover could be in for disappointment.

The world is using more oil, but high-cost supply, primarily in non-OPEC countries, is being forced out by current market conditions. Still, a projected market slowdown in demand growth next year, combined with the anticipated arrival of additional Iranian barrels, will likely keep the market oversupplied through 2016.

OPEC is expected to meet in December, but no production cuts are anticipated. Instead, OPEC's decision is widely seen as a measure to defend its market share in the face of increased competition from shale oil producers in the U.S. Because U.S. producers have higher production costs than their OPEC counterparts, slumping prices are effectively putting them out of business.

U.S. drillers cut oil rigs for the sixth straight week last week, removing nine oil rigs during the week ended October 9. In total, more than 1,600 U.S. rigs have been removed from service since October of last year. Even with this drop, consistent production from OPEC led the crude oil supply to rise by 90,000 barrels a day in September on the back of record Iraqi output.

U.S. Dollar Experiencing Rough Month

Continued uncertainty surrounding the Federal Reserve's impending hike of key interest rates has triggered a drop in value for the dollar in October. These losses follow what has been a stellar year for the U.S. currency, with the dollar having surged against most currencies for the first three-quarters of 2015.

This month, emerging market currencies have been the benefactors, staging big rallies against the dollar. Indonesia's rupiah has gained 10 percent, the Brazilian real is up just under five percent and the Turkish lira has gained 3.3 percent in the first half of October, according to FactSet. The euro and the British pound have realized similar growth, gaining more than 1.5 percent in October.

In addition to the Fed, there are a number of other factors driving the rally against the dollar. Strong performance of the Chinese stock market, in particular, has played a key role, while U.S. economic data has been disappointing and prices for commodities like oil – the engine of growth in many emerging markets – have recorded increases.

Slightly weaker economic growth in the U.S. makes the dollar weaker, which makes commodities stronger, effectively decreasing the vulnerability of emerging markets. However, this performance will also play a major role in the Fed's decision to raise rates.

For analysts, the question is whether the dollar's weakness is an anomaly, or the start of a longer trend. Most experts agree that the rally is likely a correction that will be short lived, not an outright trend reversal.

In any case, this performance has investors wary about the Fed's rate hike decision. Uncertainty is building on whether it will actually happen this year, and that has investors pulling their cash out of emerging markets at a rapid pace. The global economic slowdown, historically low commodity prices and low inflation are also long-term concerns.

"The Fed's lack of delivery on a rate hike creates uncertainty. It paralyzes investors' decisions and freezes up capital expenditure plans," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, told CNN.

Still, when the Fed does eventually raise rate, it will likely strengthen the U.S. dollar against emerging market currencies. For countries that borrow in U.S. dollars, their debt becomes more expensive, effectively hurting spending and weighing down economic growth.

For now, the U.S. economy continues to do much better than the rest of the world, which will help the dollar maintain an appreciation bias in the coming months.

ContentChecked Holdings, Inc. (CNCK)

Migraine is the eighth most disabling illness in the world, according to the Migraine Research Foundation. ContentChecked Holdings, Inc., through its innovative mobile app, MigraineChecked, is focused on helping these individuals avoid foods that have been shown to trigger migraines, effectively minimizing their chances of experiencing painful symptoms. Earlier this month, ContentChecked took a major step toward increasing awareness of its groundbreaking app by partnering with Troy Healthcare, maker of topical migraine pain relieving gel Stopain® Migraine, to provide multi-dimensional migraine prevention and support.

"Many migraines are triggered by specific ingredients in foods and beverages, from tannins to artificial sweeteners, and our app helps raise awareness of these hidden ingredients so migraine sufferers can make more informed choices simply by scanning bar codes on grocery packaging," Kris Finstad, chief executive officer of ContentChecked, stated in a news release. "This partnership with Stopain Migraine was ideal because, as a migraine sufferer myself, I've personally grown tired of oral medications and the side effects. Having an effective, topical pain relieving gel gives me and other migraine sufferers a new, safe option."

About ContentChecked Holdings, Inc.

ContentChecked Holdings Inc. is the parent company of a family of mobile applications designed for individuals with specific dietary requirements. Since the official U.S. launch of its first app in early 2015, ContentChecked has continued to build its database of product information obtained from food manufacturers – the database now incorporates 70% of all conventional U.S. products, fully supporting the needs of ContentChecked customers.

Consumers register their food allergies or intolerances with ContentChecked, and simply scan the bar codes of whichever items they are considering purchasing. The app then provides users with information on what products fit their pre-set requirements. This connection between food producers and users is the basis of the ContentChecked business model – a highly engaged consumer, ready to buy, and in need of recommendations.

By initially focusing upon food allergies and intolerances, ContentChecked had access to a marketplace of more than 15 million people in the United States that suffer from food allergies, in addition to a demographic who develop stomach problems as a result of different foods. Though the overall market for food allergies and intolerances is valued at $13 billion in 2015, ContentChecked further expanded its market reach through the launch of MigraineChecked, SugarChecked and VeganChecked applications.

With these offerings, ContentChecked's market reach now extends to the roughly 38 million people in the United States currently diagnosed with migraines; as well as to the largest health-related cost in the country: the 97 million people at risk of developing, or have already developed, Type 2 diabetes. ContentChecked's growth is spearheaded by a talented team of professionals using their experience in entrepreneurial endeavors, sales, marketing and advisory services, nutrition, web design, social media and graphics and data management to help users better manage their food allergies, migraines, and overall health.

Lingo Media Corp. (LMDCF)

Lingo Media Corporation, through subsidiary ELL Technologies Ltd., recently increased its footprint in the pivotal Latin American market by partnering with eDistribution SAS to secure a multi-million dollar language learning software development contract with the Colombian government. Through this agreement, the company will provide a full suite of digital education resources to the National Training Service (SENA), a Colombian national public institution under the Ministry of Labor. These resources are expected to play a considerable role in increasing learning and professional opportunities for as many as seven million citizens across the country.

"SENA has taken a most progressive and innovative approach to learning English and other languages by structuring their program to fit the many different learning environments and requirements to further establish Colombia as a truly bilingual nation," Gali Bar-Ziv, president and chief executive officer of ELL Technologies, stated in a news release. "We are very excited to deliver the digital learning content and user experience to Latin America's leading educational institute, positively impacting language education and employment opportunities in Colombia and throughout Latin America."

About Lingo Media Corp.

Lingo Media Corp. is an EdTech company that's changing the way the world learns English through an innovative combination of proven educational techniques and accessible technology. The company provides both online and print-based solutions through its two distinct business units: ELL Technologies and Lingo Learning. Through ELL Technologies, Lingo has made considerable progress in English-learning markets throughout Latin America. Through print-based publisher Lingo Learning, the company has built a significant presence in the Chinese education market, which includes more than 300 million students.

The company's groundbreaking English programs are developed and marketed for students at every stage of development – from the classroom to the boardroom. This versatility has allowed Lingo to secure contracts and build relationships with clients in a variety of markets around the globe. In Mexico, a subsidiary of the company has partnered with a recognized university that allows it to offer its courses along with certification. In Peru, the company's subsidiary provides its groundbreaking Scholar program to a branch of the country's armed forces.

Through ELL Technologies, Lingo also markets electronic learning solutions that are suitable for pre-readers. Lingo's Kids program – which features cross-platform, multi-browser compatibility – requires no prior knowledge of the English language, allowing the company to address the entire student life cycle in blended learning environments, traditional classroom settings and the home with one cutting-edge solution. The Kids program addresses the critically underserved pre-school market, which includes roughly 181.4 million children across Asia and 30.1 million throughout Latin America and the Caribbean, according to UNESCO.

Although Lingo has traditionally leaned on its print-based offerings as a primary source of revenue, the company's recent efforts to shift into the thriving eLearning market have highlighted the immense potential of a more heavily digital approach. In the second quarter of 2015, Lingo recorded more revenue from digital products than print-based solutions for the first time in its history. With the global eLearning market set to reach $107 billion in 2015, according to a report by Global Industry Analysts, the company's performance and growing foothold in some of the world's most rapidly expanding markets place it in a favorable position.

Star Mountain Resources, Inc. (SMRS)

Star Mountain Resources, Inc. is continuing its active pursuit of merger and acquisition opportunities for mines, advanced projects and immature projects that are available at a value because of the current mining cycle downturn. The company is currently progressing toward the acquisition of an underground base metal mine in North America, subject to completion of financing. Following completion of this acquisition, SMRS intends to upgrade and modernize certain infrastructure systems, develop additional access to existing mining areas and restart production within six to nine months.

"Based on data provided to us during our due diligence on this proposed acquisition, we believe that the base metal mine opportunity presents to us the possibility of outstanding cash flows in the near term, showing a viable net present value and an attractive internal rate of return," Joseph Marchal, chief executive officer of SMRS, stated in a news release. "By completing this acquisition and raising the capital needed to complete it, we expect to meet the listing requirements for a national stock exchange. We believe that an up-listing to a national stock exchange will further enhance our efforts to raise additional capital needed to identify and complete the acquisition of other quality properties and projects."

About Star Mountain Resources, Inc.

Star Mountain Resources, Inc., a minerals exploration company, is focused on acquiring and consolidating mining claims, mineral leases, producing mines, and historic mines with production and future growth potential identified through exploration efforts. The company's operations are currently focused on the initiation, production and expansion of acquired mineral resources in the Star Mountain Mining District, Beaver County, Utah and turning them into producing assets.

Comprised of 2,320 acres, the company's Star Mountain/Chopar Mine project consists of 116 lode-mining claims and four metalliferous mineral lease sections located in the Star Mountain range, Star Mining District, in Beaver County, Utah, approximately five miles west of Milford, Utah. Exploration activities to date include geological analysis, and a limited reverse circulation & core drilling program.

The Star Mountain Mining District, which is dotted with historic mines dating back to the late 1800s, has a long and storied history within the mining industry. The company believes that the application of modern exploration tools will reveal additional resources that were previously unattainable. Leveraging the region's mild climate and accessibility to nearby rail lines and roads, management will look to translate this potential into sustainable returns in the years to come.

Star Mountain Resources has adopted a discovery-based business model to grow its industry presence in the future. The company plans to thoroughly explore and initially develop its leasehold before seeking senior industry partners to assist in the capital-intensive development and operation phases. Building on this strategy, Star Mountain Resources will also continue to seek quality projects that can be evaluated on their own technical and financial merit.


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