The Mission Report

The MissionIR Report - Mid-July 2012

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Company Updates


Euro Turns Up from 2-Year Low

The euro turned up sharply on Friday, which analysts attributed to a big shift in traders betting against the currency after it touched technical levels near the lowest in two years.

Earlier, the U.S. dollar gained ground after a report showed U.S. wholesale prices unexpectedly rose last month, frustrating hopes that central bankers can ease policy further.

Still, the euro remained near a two-year low after Moody's Investors Service cut Italy's government bond ratings by two notches and the country's Treasury sold new three-year bonds.

The sampled EURUSD +0.27% fell as low as $1.2161, before rebounding to $1.2232, up from $1.2197 in North American trade late Thursday.

For the week, it's still down 0.5%, having fallen for the past seven sessions, according to FactSet.

The dollar index, which measures the greenback's performance against a basket of major currencies, turned down to 83.395, from 83.666 Thursday. The move in the euro erased the index's gain for the week, which was already weighed by a decline versus the Japanese yen.

Traders who are short the euro sometimes have to reverse those bets as certain levels are hit, analysts said.

"It looks to be a technically driven move," said Eric Viloria, senior currency strategist at European bonds are performing better, "equities are higher, and U.S. yields are higher, which all correlates to a higher euro-dollar."

The Dow Jones Industrial Index jumped 1.3%, after falling for the prior six sessions — its longest losing streak since May.

Analysts also noted that Goldman Sachs analysts, led by Thomas Stolper, said in a note Friday that they were sticking with their 12-month forecast for the euro to rise to $1.40 – quite a far cry from the $1.20 or so that many others see being reached over a much shorter horizon.

Even Goldman itself lowered its three-month forecast to $1.25, from $1.33 previously, according to Dow Jones Newswires.

Goldman saying the euro's 12-month forecast was part of what triggered the euro's gains, said Dean Popplewell, chief currency strategist at trading platform Oanda.

Earlier, the dollar rose after the U.S. Labor Department said its Producer Price Index rose 0.1% in June, while analysts had expected a decline of as much as 0.5%. Excluding food and energy, prices rose 0.2%, in line with forecasts.

In recent days, the dollar has gained ground as hopes (by investors in riskier assets like stocks and commodities) have faded that the Federal Reserve may launch a third round of quantitative easing. That kind of policy typically involves buying assets to pump money into the financial system, and is seen by many as devaluing a currency.

Global Stocks Up as China Growth Slows

Global stock markets were higher Friday after China said its economy grew in the second quarter at its slowest pace since 2009, numbers in line with analyst expectations. In early trading in Europe, Britain's FTSE 100 was up 0.4 percent at 5,633.02. France's CAC-40 gained 0.2 percent to 3,140.46, while Germany's DAX advanced 0.5 percent to 6,449.15.

China's gross domestic product expanded 7.6 percent in the April to June period from the same period a year earlier, down from 8.1 percent growth in the first quarter. China also reported that retail sales and factory output growth slowed in June. Equities in Asia had mostly fallen the previous few days amid speculation that China's growth may have slowed more than the consensus 7.6 percent forecast. Some analysts say expected interest rate cuts and fiscal stimulus spending by China should spur lending, investment and stronger economic growth in the second half of the year.

"All this should be positive for GDP growth in the next few quarters," said Mark Williams, chief Asian economist with Capital Economics. "Much of the impact of stronger lending over the next few months will be felt in 2013." Williams said he expects China's economy to grow 8 percent this year and next. Japan's Nikkei 225 index was up 0.1 percent to 8,724.11 while Hong Kong's Hang Seng rose 0.4 percent at 19,094.40.

South Korea's Kospi gained 1.5 percent to 1,812.89. Australia's S&P/ASX 200 advanced 0.4 percent to 4,082.20 and China's Shanghai Composite was steady at 2,185.90.

Other analysts expect Chinese growth to continue to slow as consumer demand fails to keep up with industrial production capacity. China's GDP will likely average about 6 percent growth a year during the next five to 10 years, said Anil Gupta, a professor at the Smith School of Business at the University of Maryland.

"The days of 8 percent GDP growth in China are over," said Gupta, who is a visiting professor at the INSEAD business school in Singapore. "There is massive overcapacity in a lot of industries such as cement, steel and autos because the government kept providing cheap capital and everybody assumed that the 8 plus percent growth rate will go on forever."

On Thursday, the Dow Jones industrial average closed down 0.3 percent at 12,573.27. The Standard & Poor's 500 fell 0.5 percent at 1,334.76. The Nasdaq composite was down 0.8 percent at 2,866.19.

Benchmark oil for August delivery was up 35 cents at $86.43 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 27 cents to settle at $86.08 on Thursday in New York.

In currencies, the euro was little changed at $1.2199 from $1.2195 late Thursday in New York. The dollar was steady at 79.27 yen from 79.31 yen.

JPMorgan's Bad Trade has Ballooned to $5.8B

JPMorgan Chase said Friday that a bad trade had cost the bank $5.8 billion this year, almost triple its original estimate, and raised the prospect that traders had improperly tried to conceal the blunder.

"This has shaken our company to the core," CEO Jamie Dimon said.

The bank said managers tied to the bad trade had been dismissed without severance pay and that it planned to revoke two years' worth of pay from each of those executives.

JPMorgan said it had lost $4.4 billion because of the trade from April through June, and its chief financial officer said the bank had lost an additional $1.4 billion in the first three months of the year.

Dimon's original estimate of the loss from the bad trade, disclosed in a surprise conference call with Wall Street analysts in May, was $2 billion.

On Friday, Dimon said he believed the loss was mostly contained. In the worst case, if financial markets deterioriate severely, the bank could lose an additional $1.7 billion, he said. That would bring the total loss to $7.5 billion.

Investors appeared relieved that the mess was mostly behind the bank. They sent JPMorgan's stock price up $1.50, or more than 4 percent, to $35.54. That made it the best-performing stock in the Dow Jones industrial average.

The bank said an internal investigation, including emails and voice messages, had called into question the values that traders placed on certain bets, and that the traders may have been seeking to mask losses. Speaking broadly about the trading loss on Friday, Dimon told analysts: "We don't take it lightly." He added: "We're not making light of this error, but we do think it's an isolated event."

Dimon said the bank had closed the trading division responsible for the bad trade and moved the remainder of the trading position under its investment banking division.

Overall, JPMorgan said it earned $5 billion, or $1.21 per share, for the second quarter, which covers April through June and includes the bank's disclosure of the trading loss on May 10.

New York Fed Knew of Libor Cheating

An unidentified employee of U.K. bank Barclays PLC told the New York Federal Reserve Bank more than four years ago that the bank was filing false reports on a key interest rate, according to documents released by the regional central bank on Friday.

The documents show that a summary of this admission was quickly circulated throughout the U.S. government, including the Federal Reserve and the Treasury Department, in 2008. The Libor rate is now at the center of a sweeping industry-wide, cross-border investigation into the setting of interbank lending rates.

The U.K. bank Barclays PLC was fined roughly $450 million for fixing Libor. Other banks across the world including Citigroup, J.P. Morgan Chase, the Royal Bank of Scotland and Deutsche Bank have said they also are being probed.

Morgan Stanley analysts say the Libor scandal hits banks three ways – through fines, like the one Barclays paid; litigation risk; and less certainty on future earnings as regulators and politicians demand Libor and broader industry structure change. In a note published Thursday, they said they expect fines equaling about 9% of 2012 earnings per share and litigation risk of roughly $400 million per bank.

Libor is based on rate submissions from a relatively small and select panel of major banks, including Barclays, and is calculated and published daily for several different currencies by the British Bankers' Association.

The New York Fed released the documents in response to inquiries from members of Congress about the role of Treasury Secretary Timothy Geithner, then the head of the New York Fed, and its questions about Libor.

According to a New York Fed, information that there were problems with Libor started in the fall of 2007, but were mainly anecdotal reports and "mass-distribution emails."

In December 2007, Barclays told the New York Fed in a phone call that, in general, Libor submissions appeared unrealistically low.

On April 11, 2008, a New York Fed analyst asked a Barclays employee in detail about the extent of problems with Libor.

"The Barclays employee explained that Barclays was underreporting its rate to avoid the stigma associated with being an outlier with respect to its Libor submissions, relative to other participating banks," the New York Fed statement said.

The analyst — Fabiola Ravazzolo, according to one transcript released — reported the comment to senior New York Fed management and the comment was mentioned in a weekly briefing prepared by the New York Fed staff for the Fed Board of Governors in Washington and the Treasury Department.

On May 1, Geithner raised the subject of Libor with the President's Working Group on Financial Markets, consisting of the heads of U.S. regulatory agencies. The New York Fed gave a detailed briefing to Treasury officials on May 6.

Geithner then approached U.K. regulators with their concerns about Libor.

In a June 1, 2008 memo to Bank of England Governor Mervyn King, released by the BOE, Geithner proposed six reforms of Libor, including steps to establish a "credible" reporting procedure and eliminating incentives to misreport.

King responded on June 3 that Geithner's recommendations for improvements to the calculation Libor "seem sensible."

The emails show that the BOE passed the recommendations on to the British Bankers' Association.

In a statement, the BOE said that "no evidence of deliberate wrongdoing had been cited" at the time of the correspondence between King and Geithner.

Year-End 1500 for S&P 500?

A handful of four primary vectors were drawn up by the chief investment strategist over at Wells Capital Management, Jim Paulsen, in an interview on his 1,500 target for the S&P 500. In an opening salvo against market crisis neuroses, Paulsen pegged Europe as no longer being a crisis in any proper sense. The argument is that Europe is basically a "chronic problem."

Europe is a problem that will be with us for decades, but not one that will derail a global recovery Paulsen argues, pointing more to emerging markets like China and India which have seen bad growth metrics recently, and arguing that the biggest substantial risk to markets at this point, especially the S&P 500, would be a recession in the emerging world. However, the caveat here is obviously last Fall's strong, accommodative policy measures (easing, etc. as opposed to the late 2010 rate hikes) and the projection that China's slowdown is already bottoming-out, with a potential nadir being around Q4.

The probability curve is pretty clear to Paulsen on such policy initiatives already getting ahead of the problems at some level, ensuring that the growth potential in emerging markets isn't something to be too worried about. So if the Euro fear flare up cycle is largely digestible and emerging markets can pull out of the dive easily enough, the other two major factors from Paulsen's point of view are an under-quantified robustness in the domestic economy coupled with exceptional earnings multiples.

Pointing to $100-level trailing 12-month earnings per share estimate for the S&P 500 in a recent research note, that gives us a price-earnings multiple of around 13 times on trailing earnings (year-end consensus-estimated earnings of around 12.3 times), Paulsen confidently characterized it as a cheap buying opportunity. In fact, he characterized Europe as such and argues generally that too much of an internationalism bent exists, where too much focus on external economies in Europe and China for instance, has upset domestic perspectives.

Paulsen made a strong case that the initial overstatement of U.S. growth data, followed by a huge failure to adequately state the realities of the problem, effectively short-circuited perceptions to a large extent, and he remains very bullish on the domestic economy. People may be selling the market based on low GDP projections but Paulsen argues the U.S. economy is doing "far better than people think," pointing to his own figure of around 2.5% growth, and underlining several elements that could push it as high as 3%. Stimulating factors cumulatively make this possible according to Paulsen, like mortgage rates under 3.75% (5% last year), money growth at around 10% since Fall (was growing at only 5% a year ago), a dollar that is still off 10% from 2010 highs, falling prices at the pump on fuel, and the recent Case-Shiller 20-city Index (Mar – April period) which shows a 1.3% jump in home prices, breaking a seven-month down trend streak.

Also noted was the inflation rate falling from 4% last Fall to 1.7%, which, alongside China being able to buck the down trend and interest rates being so low amid prime earnings multiples, gives credence to the argument that the S&P 500 could rally through March highs of 1,440 in the second half of the year. Paulsen said that the combination of low interest rates/inflation and choice earnings multiples has never been seen before in the post-War era.

The component vector is tactile to Paulsen who argues that investors aren't going to care about Europe with a modest domestic recovery and returning emergent growth, with only China's reliance on Europe as an export market raising concerns.

Looking for a momentum pickup in emerging markets next year, upward revision of GDP targets, a settling-down of financial fear in the Euro zone, and underscoring the attractiveness of the S&P 500 valuations, Paulsen held fast on his 1,500 target for year-end.

Cardium Therapeutics, Inc.

Cardium Therapeutics recently announced that it will be launching its new MedPodium Neo-Chill Nutra-App® at the National Association of Chain Drug Stores (NACDS) Marketplace 2012. MedPodium's Neo-Chill Nutra-App® contains 200 mg Suntheanine®, a 100% pure L-theanine amino acid also found in green tea, which clinical studies have shown to promote an alert state of relaxation without drowsiness, enhancing mental clarity and focus.

The company exhibited its MedPodium Nutra-Apps product line at the NACDS Marketplace (Booth 967) in Denver, Colorado. The meeting was attended by approximately 230 retail companies, representing more than 145,000 food, drug, mass, and specialty retail suppliers with $500 billion in annual buying power. Cardium also participated in the NACDS "Meet the Market" appointment program, which connects suppliers and manufacturers with retailers for personalized one-on-one meetings.

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.

Duma Energy Corp.

In most recent news, Duma Energy announced that it has entered into the final stage of negotiations to acquire a private corporation with a significant interest in an African concession totaling approximately 6 million acres (25,000 square km). This acquisition would be part of the company's intention to expand internationally and acquire highly prospective opportunities in emerging exploration regions.

"Our success in the last two years has put us in a strong position for growth. We believe it is the right time to be aggressive and continue to pursue our stated goal of seeking projects that offer huge potential returns. There are great opportunities out there," stated Jeremy G. Driver, President and Chief Executive Officer of Duma Energy Corp.

About Duma Energy Corp. (DUMA

Duma Energy Corp. is an aggressive growth company actively producing oil and gas in the domestic United States, both on and offshore. Leveraging its technical expertise, promising portfolio, and strong financial condition, the company plans to utilize domestic revenues and cash flow to fund its rapid growth through acquisition, while participating in transformational projects with the potential of providing exponential returns for shareholders.

The company's primary goal for fiscal year 2012 and beyond is to drive earnings growth. The company also aims to pursue listing on major exchange(s) to provide better visibility and liquidity to shareholders and financial partners. Already producing and generating revenue from oil and gas in Texas, Illinois, and Louisiana, Duma projects domestic production to exceed 1,000 barrels of oil equivalent per day (boepd) by the end of 2012; with 2,500 boepd projected by the end of 2013.

Duma was founded in 2005 and began trading on the OTCBB in 2009 via registration. In 2006, the company began producing from its first properties in Texas and soon after added production in Louisiana. In 2009, its new CEO Jeremy G. Driver came on board. Within one year, Mr. Driver had identified and negotiated an acquisition that would fundamentally reshape the company. This acquisition was made possible by the large direct cash investment by Mr. Driver and his family, as well as other investors.

The company uses only industry standard and time-tested technologies, and avoids unproven "resource plays" and other opportunities that are heavily dependent upon high commodity prices. Not bound by any geographical location or operational strategy, Duma's management team is focused on developing its existing portfolio while pursuing additional opportunities that provide rapid growth, leveraging growing revenue, cash flow, and reserves to accelerate its growth strategy.

GlobalWise Investments, Inc.

GlobalWise Investments' IntellivueTM ECM software was named the number one ECM solution at the recent Global Transform 2012 conference by "The Week in Imaging." Global Transform 2012 is a managed print service (MPS) industry conference for providers, partners, and IT decision makers in the copier and printer industry.

The online article posted by Art Post on the "The Week in Imaging" Web page and titled "Top 7 Solutions at Photizo's Transform Conference: Intellivue Cost-Per-Page Billing for Document Management Services @ #1" provides a great overview of the IntellivueTM cloud based document management software and how it can create a new revenue model for the copier and printer dealer industry. The number one ranking by such a prestigious industry resource is a great validator of the power of a cloud delivered software from GlobalWise.

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 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.

VistaGen Therapeutics, Inc.

VistaGen Therapeutics recently offered a comprehensive update letter penned by CEO Shawn Singh. The stockholder-directed letter provides a clear view from which to survey the impressive progress of the company since going public only a year ago. Singh noted that the current time is the most momentous for commercialization in the company's distinguished 14-year history of innovation, underscoring the judicious execution of R&D objectives made possible by the amassing of over $45M to date via strategic relationships, investments, and grants for the exciting technological breakthroughs the company has made.

Singh underscored important IP protection and strategic relationships with top biotech companies, as well as academic researchers, secured during the preceding year. Pointing to a clear crystallization of the underlying technologies, IP, and competencies, Singh seemed exuberant at the potential to not only fulfill the company's mission to "put humans first" (from a tech standpoint and philosophically), but accelerate shareholder growth in the process. To read the letter in its entirety, visit the following link: VistaGen Therapeutics (VSTA) CEO Shawn Singh Issues Shareholder Update Letter.

About VistaGen Therapeutics, Inc. (VSTA)

VistaGen Therapeutics is a biotechnology company applying stem cell technology for drug rescue and cell therapy. Drug rescue combines human stem cell technology with modern medicinal chemistry to generate new chemical variants ("drug rescue variants") of once-promising drug candidates that have been discontinued during late-stage preclinical development due to heart or liver safety concerns. VistaGen also focuses on cell therapy, or regenerative medicine, which includes repairing, replacing or restoring damaged tissues or organs.

VistaGen's versatile stem cell technology platform, Human Clinical Trials in a Test Tube™, has been developed to provide clinically relevant predictions of potential heart and liver toxicity of promising new drug candidates long before they are ever tested on humans. By more closely approximating human biology than conventional animal studies and other nonclinical techniques and technologies currently used in drug development, VistaGen's human stem cell-based bioassay systems can improve the predictability of the drug development cycle and lower the cost of new drug research and development by identifying product failures earlier in the cost curve. According to the Food and Drug Administration even only a ten percent improvement in predicting failure before clinical trials could save $100 million in development costs, which savings ultimately could be passed on to patients.

Using mature human heart cells produced from stem cells, VistaGen has developed and internally validated CardioSafe 3D™, a novel three-dimensional (3D) bioassay system for predicting the in vivo cardiac effects of new drug candidates before they are tested in humans. VistaGen is now focused on using CardioSafe 3D™ to generate up to two new, safer small molecule drug rescue variants every twelve to eighteen months. VistaGen anticipates that these drug rescue variants will be modified versions of once-promising new drug candidates that have been discontinued by pharmaceutical companies and academic research institutions because of heart toxicity concerns, despite substantial prior investment and positive efficacy data demonstrating their potential therapeutic and commercial benefits.


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