The Mission Report

The MissionIR Report - March 2011

In-depth analysis, timely updates, latest market news


Market News

Company Updates


Geithner to Congress: Revamp Housing in 2 years

The Obama administration wants Congress to approve legislation within two years that gradually dissolves Fannie Mae and Freddie Mac, the nation's huge but financially feeble housing market giants.

In remarks prepared for delivery to the House Financial Services Committee, Geithner says failure to act by then would worsen market jitters and leave serious problems unaddressed. But in an apparent warning to some Republicans who want to quickly pull the government out of its role in supporting the mortgage system, he's also warning that acting too fast would hurt too.

"While we are confident that the steps we have laid out follow the right path, haste would be counterproductive -- possibly destabilizing the housing finance market or even disrupting the broader recovery," Geithner says.

The Treasury chief's testimony comes less than three weeks after the administration released a report proposing the dismantling of Fannie and Freddie and scaling back much of the rest of the federal role in housing, a process the administration has said should occur gradually over several years. Geithner's setting of a time frame for the overhaul legislation underscores President Barack Obama's desire to start the clock on many of those changes.

"Reforming our country's housing finance market is an essential part of our broader efforts to help ensure Americans will never again suffer the consequences of a preventable economic crisis," Geithner says.

It's unclear whether major legislation such as this could be approved during next year's presidential election campaign, when partisan divisions heighten.

Fannie and Freddie guarantee or own about half of all U.S. mortgages. Along with other federal agencies, they played a role in nearly 9 of 10 new mortgages over the past year, as private lenders have remained nervous about making new loans. The two companies nearly collapsed in 2008 as the housing market crumbled, but have been kept alive with $150 billion -- so far -- in taxpayer dollars.

Congress is trying to decide how to reshape the federal role in the housing market, which remains weak, with low prices and huge numbers of foreclosures in Florida, parts of the Southwest and other regions. While both political parties concede that changes are needed to protect taxpayers and revive private lending, Republicans tend to want to move more strongly while Democrats express more concerns about maintaining the government's role in helping lower-income families.

To wind down Fannie's and Freddie's roles in the market, the administration also wants to take steps for which it does not need congressional action, such as decreasing the size of loans the two companies may buy. Geithner also reiterated administration plans to constrict the Federal Housing Administration's role in making loans. Some Democrats and consumer advocacy groups have complained that such actions will make it harder for many families to purchase homes.

The administration's report offered three options for overhauling Fannie and Freddie. One would limit the government to helping poor and middle-class borrowers through agencies like the FHA. The second would have the government back private mortgages, but mostly during times of economic crisis. The third would have the government "reinsure" some mortgage investments that are already guaranteed by private insurers.

The two companies buy mortgages from banks and other primary lenders, package them together and sell them with a guarantee that investors would be repaid in case of default. That system helps keep interest rates lower and provides lenders with fresh cash to make additional loans.

Oil Futures Pull Back from $100-a-Barrel Mark

Oil futures surged 14% in Nymex trading last week, their biggest weekly percentage increase since January 2009; more than two years ago.

The rally came as oil-supply disruptions in Libya, where an uprising against the regime of Col. Moammar Gadhafi triggered violent unrest and spooked traders.

The international pressure for him to step down continues to grow as opposition forces have gained control of several cities in eastern Libya and are battling Gadhafi loyalists elsewhere in the country.

Protests also rattled Oman over the weekend, and according to media reports protesters on Monday closed roads leading to a port as demonstrations continued.

Oman isn't a member of the Organization of the Petroleum Exporting Countries (OPEM). But the sultanate, Saudi Arabia's neighbor to the east, "plays an important role as a benchmark for oil shipments in the Asian region," analysts at Commerzbank said in a note to clients Monday.

"Furthermore, protests are therefore knocking at Saudi Arabia's door. The largest OPEC producer has already upped its oil production to 9 million barrels a day according to industry sources, to compensate for supply outages in Libya," they added.

Meanwhile, prices for Brent crude, the European benchmark, also turned lower. Brent oil was most recently down 40 cents, or 0.4%, to $111.77 a barrel on ICE Futures in London.

In Libya, opponents of Gadhafi took control of a key city near the capital, Tripoli, on Sunday, declaring a provisional government, and also saying they would allow oil shipments to resume from territory under their control, The Wall Street Journal reported on its Web site.

"Although the [Libyan] Sirte Basin infrastructure is relatively self-contained, with fields and ports now 'liberated' from Gadhafi's forces, the likelihood remains of the country's oil remaining virtually offline for the near term, although sporadic cargoes may be exported," analysts at IHS World Markets Energy Perspective said.

"A great deal of uncertainty hovers over any wholesale restart while the political impasse continues," they said.

Workers' Income Climbs 1.0% in January

Personal income jumped a seasonally adjusted 1.0% in the first month of 2011, while consumer spending rose a smaller 0.2%, the Commerce Department reported yesterday.

Excluding the tax cut, personal income rose a much smaller 0.3% in January. And adjusted for inflation, personal consumption fell 0.1% last month, marking the first decline in a year.

"The personal income and spending report for January showed a slow start to the year for consumers," said chief economist Julia Coronado of BNP Paribas.

Late last year, U.S. lawmakers passed a one-year reduction in worker contributions to Social Security, giving them more money in each weekly paycheck. In January, most of the tax cut appeared to end up in savings.

Since income rose more than spending in January, the individual savings rate rose to 5.8% of disposable income — money leftover after paying for food, fuel, housing costs and other necessities. That was up from 5.4% in December.

Inflation, meanwhile, rose slightly, based on the latest reading from the personal consumption expenditure price index. The index increased 0.3% in January — the same as in December — and it's up 1.2% over the past 12 months.

The core PCE, which excludes volatile food and energy costs, rose 0.1%. Over the past year, core inflation has risen 0.8%.

Economists surveyed by MarketWatch had forecast a 0.9% gain in personal income and a 0.4% increase in consumer spending. The core PCE index was expected to rise 0.1%.

The government also revised consumer spending in December to an increase of 0.5%.

Looking ahead, some economists say first-quarter growth could end up lower than expected unless consumer spending rebounds in February and March. The spending increase in January was the lowest since last summer.

For the first quarter, economists surveyed by MarketWatch forecast the U.S. will grow 4.0%.

Consumer spending is the single largest contributor to U.S. growth, accounting for as much as two-thirds of economic activity. Consumer spending rose 4.1% in the fourth quarter, helping to generate a 2.8% increase in gross domestic product.

Midway Gold Corp. (MDW)

Midway Gold Corp. announced that exploration drilling conducted in the fourth quarter of last year resulted in an extension of the mineralized strike length by about 1.8 km to the south-southwest of the previously known gold resource at Spring Valley. Mr. Brunk commented, "It will be exciting to watch the development of this potentially world-class gold system."

According to the press release, Midway has commissioned an independently prepared NI 43-101 compliant resource update to estimate how much the resource may have expanded due to Barrick's drill programs since 2009. As of March, 2009, the Inferred Resource was 1.8 million ounces of gold contained within 80 million tonnes grading 0.72 g/t gold.

About Midway Gold Corp. (MDW)

Midway Gold is a precious metals company focused on exploring, designing, building and operating mines in an accountable manner while producing an acceptable return to its shareholders. The company controls mineral rights along three major gold trends in Nevada and in the Republic district of Washington.

Midway's technical staff has extensive exploration and mining experience, acquiring and finding five new deposits in five years, and holding an overall discovery record of over 30 million ounces of gold. The team is led by President, COO and Director Kenneth A. Brunk who has conducted numerous feasibility studies and been responsible for designing, constructing, staffing and operating multiple mining operations around the world.

The macroeconomic environment, including a weakening dollar, the sovereign debt crisis in the Euro-zone, increased liquidity and loose fiscal policies, are supporting higher gold prices. Since 2001, gold prices have quadrupled, rising to all-time highs of over $1,400 an ounce. According to industry estimates, gold prices are expected to near $2,000 per ounce by the end of 2011.

NIVS IntelliMedia Technology Group (NIV)

NIVS IntelliMedia Technology Group announced that it has been awarded its first purchase order from China Mobile Limited, the largest mobile phone carrier in China. According to Morningstar, China Mobile controls the vast majority of China's domestic mobile services market, with 70% market share. With a subscriber base of over 500 million customers, China Mobile is believed to represent sizable potential business opportunities for NIVS.

"We have diligently pursued this relationship with China Mobile over the last six months, so we would like to recognize the dedication of the many NIVS employees that made this a reality," said Tianfu Li, NIVS' Chairman and CEO. "We believe that this first contract with China Mobile successfully gets our foot in the door as we look to expand the number of branded phones we offer through China's largest carrier, while simultaneously demonstrating NIVS' growing presence in China's rapidly expanding cell phone market."

About NIVS IntelliMedia Technology Group (NIV)

NIVS IntelliMedia Technology Group is an integrated consumer electronics company focused on designing, manufacturing, marketing and selling intelligent audio and video products and mobile phones in China, Greater Asia, Europe, and North America. The NIVS brand has received "Most Popular Brand" distinction in China's acoustic industry for three years in a row, among numerous other awards.

The company has a 2.7 million square foot factory, which includes a large-scale, 1.1 million square-foot production area, and more than 1,400 full-time employees. Its modernized production lines include automated processing equipment and procedures that can be easily modified to accommodate new customer requests, designs and specifications.

As of last report, the company had a very strong balance sheet with $75.9 million in total assets and $9.5 million in total liabilities. The management team has also shown great strength in efficiency, returning 28.1% on equity, 24.1% on assets and 28.1% on capital.

To enhance product quality, reduce cost, and keep pace with technological advances and evolving market trends, NIVS has established an advanced research and development center to conduct substantially all of its research and development with an in-house staff. The company has approximately six senior technology researchers, with many holding doctorate degrees, and 15 core researchers.

ONE Bio Corp. (ONBI)

ONE Bio, Corp. announced its preliminary financial results for the fiscal year ended December 31, 2010. Revenues were reported at $51 million, an increase of $132% or $22 million from the previous year. The increase in sales was primarily due to acquisitions the Company completed during 2009 and new products the Company launched in 2010.

ONE's CEO, Marius Silvasan, commented, "Products launched during the fiscal year also yielded a gross margin above 54%, which is higher than the gross margin yielded by our core products. This was made possible by our strong R&D team, which consistently examines market trends and market data to develop innovative products."

About ONE Bio Corp. (ONBI)

ONE Bio Corp. is an agritech company that utilizes green process manufacturing to produce raw chemicals and herbal extracts, natural supplements, and organic products. The company focuses on the research and development, production, and sale of various extracts from tobacco leaf residues and various plants for health supplements and organic agricultural products.

Offering a range of bio-ecological products, which include raw chemical materials such as organic fertilizers and pesticides, ONE Bio also produces health and energy drinks, organic food products, and fertilizers derived primarily from bamboo. The company's products are sold through a network of independent third party distributors, as well as directly to supermarket chains, hotels, hospitals, and restaurants.

It has been estimated that the Chinese market for functional foods and beverages and dietary supplements stands at $25B-30B, creating a huge potential market for ONE Bio's products. The company's team in China works in unison with North American management to insure prudent, organized growth of the core business, with an emphasis on risk management and internal controls.


For more frequent updates, follow us on Twitter!

Home     About Us     IR Services     Investors     Partners     Market Research     Blog     Contact     Disclaimer

© 2011 Mission Investor Relations. All rights reserved.
3645 Marketplace Blvd.   Suite 130-280   Atlanta, GA 30344   404-941-8975