The Mission Report

The MissionIR Report - August 2011

In-depth analysis, timely updates, latest market news


Market News

Company Updates


4 ETFs to Watch This Week

Market Vectors Solar Energy ETF (KWT)

Major players from the solar energy industry are on tap for earnings this week. Though not the largest ETF designed to target this corner of the alternative energy sector, KWT will likely be the most heavily influenced given the calendar.

First Solar, MEMC Electronic Materials, and GT Solar International are KWT's three largest positions and together represent close to a third of its assets.

iPath S&P 500 VIX Short Term Futures ETN (VXX)

The debt-ceiling negotiations in Washington have injected a strong dose of uncertainty into the marketplace. Such a scenario is ideal for the fear-tracking volatility index. Bloomberg noted late last week that the VIX has ascended to levels last seen in March following the earthquake in Japan.

VIX-backed ETNs have flourished in this shaky environment, and VXX witnessed gains throughout the past week and is once again trading above its 50-day moving average. Looking to the days ahead, it will be interesting to see if the ETN can sustain these levels.

iShares Cohen & Steers Realty Majors Index Fund (ICF)

The real estate sector continues to be a particularly vulnerable region of the marketplace. Despite estimate-beating earnings from industry bellwether D.R. Horton and an unexpected rise in home sales during June, homebuilder ETFs like iShares Dow Jones U.S. Home Construction Index Fund struggled to find support. By the close of last week, ITB was trading at new 2011 lows.

The past week was challenging for REITs as well. However, this corner of the real estate industry continues to show welcomed stability. Shares of iShares Cohen & Steers Realty Majors Index Fund has stuck to a strong upward path throughout the year.

In the upcoming days, investors can expect to learn more about the current state and future prospects for REITs and ICF. Public Storage, General Growth Properties and Boston Properties are slated to report quarterly earnings numbers.

iShares MSCI Italy Index Fund

The next few days should prove interesting for the Italy's markets as the nation struggles against the ongoing euro crisis and digests the earnings results from a number of the largest Italian firms. Among the companies slated to release their performance information are Enel, Intesa Sanpaolo, and Generali Assicurazioni, Unicredit, Telecom Italia, and Tenaris. These companies comprise over 40% of EWI's index.

Construction Spending Increases Marginally

Builders began work on more office buildings, shopping centers and hotels in June, pushing construction spending higher for a third straight month. But even with the gains, activity remains at depressed levels.

Construction spending rose 0.2 percent in June to a seasonally adjusted annual rate of $772.3 billion, the Commerce Department reported Monday. Residential construction declined, reflecting a big drop in apartment construction, and spending on government building projects also fell, but private nonresidential activity rose to the highest level since late 2010.

Analysts believe it could be another four years before construction returns to healthy levels as the effects of a severe recession and collapse in home building linger.

In June, private residential construction dropped 0.3 percent to a seasonally adjusted $235.8 billion with a 0.3 percent rise in single-family home building offset by a 2.8 percent drop in the apartment sector.

The 1.8 percent rise nonresidential construction pushed this sector to $257.7 billion, the highest level since December 2010 with a number of commercial projects including hotels, office building and shopping centers all showing gains.

Government building projects fell 0.7 percent to an annual rate of $278.9 billion, the lowest level since March 2007. Budget cuts at the state and local levels have led to a sharp drop in government spending. Analysts are concerned that the new deficit-cutting agreement that President Barack Obama reached on Sunday with House and Senate leaders will result in drops in federal spending that will further slow the overall economy.

Homes are now the most affordable they've been in years. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could take several years before the housing market recovers.

Sales of previously owned homes fell for a third month in June and are lagging behind last year's sales pace when 4.91 million homes were sold, the fewest since 1997. In a healthy economy, people buy about 6 million existing homes annually.

Analysts said the weakening job market and the uncertainty over foreclosures could lead to deeper price declines in the second half of the year. They estimate that prices will fall another 5 to 10 percent by year's end.

China Manufacturing Activity Declines

According to data released this week by HSBC, China's manufacturing activity contracted slightly in July, signaling a deterioration in the operating environment at the nation's factories, as tighter monetary conditions weighed further on the sector.

The monthly purchasing managers index fell to 49.3, its lowest reading since March 2009, compared with 50.1 in June, HSBC said in its monthly statement. The final outcome was better than the 48.9 print recorded in a preliminary reading that HSBC released a few days earlier.

The data, based on the results of a survey compiled by Markit, confirmed a slowing growth momentum in the manufacturing sector "against the backdrop of sustained tightening and lackluster external demand," Hongbin Qu, HSBC's chief economist for China, said in a statement accompanying the data.

"That said, the current level of the PMI is still consistent with a 12%-13% growth rate of industrial production, which leaves room for Beijing to keep tightening policy through [the third quarter] to check inflation," Qu said.

The contraction came after policy makers in China raised interest rates and the proportion of deposits banks must keep in reserve several times over the last few quarters, to control price increases.

HSBC's PMI release followed an official PMI gauge published earlier Monday by the China Federation of Logistics and Purchasing, which also showed a further slowdown in activity at Chinese factories in July.

The CFLP data showed China's PMI slipped to 50.7 in July from 50.9 in June, but remained above the expansion/contraction boundary of 50.

Credit Suisse's China economist Dong Tao said the CFLP PMI data should ease concerns about a "hard landing" for the nation's economy, though it still signals that growth is moderating.

"We believe that the July PMI data will not alter the policy track Beijing has set for [the second half of 2011]. In case the economy slows down more than expected, we think that it would be fiscal stimulus, rather than monetary easing, that would come to the rescue," Tao wrote in a report.

Data released by HSBC and the CFLP diverged on input price inflation.

The CFLP's survey found that a sub-index of input prices eased to 56.3 in July from 56.7 in June.

However, HSBC said its own survey showed that material costs rose slightly in July from the previous month, although the extent of the increase was "muted."

"Companies that reported an increase in cost burdens generally commented on higher raw-material prices," HSBC said in its statement.

"Meanwhile, prices charged by manufacturers for their final product rose only marginally, with the rate of inflation easing to the slowest in the current one-year period of higher average tariffs," HSBC said.

Scorpex, Inc. (SRPX)

Scorpex recently announced a $30 million agreement with International Environmental Technologies, Inc. ("IET") for the acquisition and installation of waste gasification/thermal oxidation equipment as well as a license to use the technology. IET's patented technology is capable of processing municipal waste, medical waste and hazardous waste simultaneously without presorting for maximum efficiency.

Chief Executive Officer Joseph Caywood commented, "As I said previously, we have made remarkable progress and are very excited to be moving forward so quickly with our business strategy. Signing such a major equipment contract at the dawn of establishing our first waste disposal and processing plant is yet another strong vote of confidence by others who have chosen to join our initiative to address Mexico's growing demand for industrial, hazardous and toxic waste management."

About Scorpex, Inc.

Scorpex, Inc. is focused on becoming a leader of hazardous and toxic waste disposal in the Baja Mexico/California region where demand for waste management exceeds capacity. To date, the company has constructed a 10,000 square foot storage facility, water reservoir and septic system, sprinkler system, and security fence and is in the process of developing other necessary infrastructure on its 26-acre site.

Joseph Caywood is the founder of Scorpex International and has developed the project for several years. His efforts have included overseeing construction, land acquisition, site development, permit applications, governmental relations, and submitting focused studies and reports by experts in this industry. As a result of his efforts, Scorpex will have the only industrial waste processing facility of its kind in Baja Mexico.

The Mexican economy has experienced significant growth in the manufacturing sector over the past several years. This growth has been fuelled by the NAFTA treaty and investments from foreign national companies. The growth of both new and existing industries has dramatically increased the need for the disposal of industrial waste throughout Mexico, especially in the Baja California region.

The company's future expansion plans include constructing other strategically placed, specially designed, storage, recycling and disposal facilities in various locations throughout Mexico. All facilities will be designed specifically for the purpose of processing the nation's growing industrial waste, including materials that are classified as industrial, toxic, and hazardous.


In a recent press release, SEFE, Inc. announced that it has been issued patent 7,855,476B2 for its Atmospheric Electrical Generator. The patent, filed in 2008 by SEFE Chief Technology Officer Mark Ogram but owned by SEFE, Inc., is the first of several patents that the company has submitted to the U.S. Patent and Trademark Office.

"The Atmospheric Electrical Generator is at the core of our intellectual property portfolio," stated Mr. Ogram. "Inventions such as these are what will allow us to stay at the forefront of this rapidly growing industry. The Atmospheric Generator is important because it will serve as a cornerstone. We are witnessing a shift in the scientific community toward the belief that this energy source, which we have always recognized as having prevalence in our environment, is not as impossible to utilize as has been previously thought."

About SEFE, Inc.

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.

Sky Power Solutions Corp. (SPOW)

Sky Power Solutions Corp. was recently covered by Murphy Analytics, an investment research firm providing coverage on microcap and smallcap stocks. The Initiation Report contains a detailed discussion of Sky Power's business segments, market opportunity and dynamics, industry competitors, macroeconomic data and indicators, financial results, and risks.

Analyst Patrick J. Murphy, CFA stated in the report: "SPOW is targeting opportunity in two markets with the potential for significant growth. The reality of a finite quantity of fossil fuels coupled with massive additions to the global vehicle fleet driven by the developing countries is leading to a search for economical fuel alternatives."

About Sky Power Solutions Corp.

Sky Power Solutions Corp. is focused on developing and marketing lithium-powered vehicles, products, and commercial and residential properties, in addition to its focus on the solar industry. Everything from scooters, bicycles, mopeds, motorcycles, cars and homes are being converted successfully to zero-emission, lithium-powered vehicles and facilities.

The company leverages the advantages of a hexagonal structure for the accommodation of more energy. The elements and special transition metals have been carefully selected to ensure Sky Power's products are safe, environmentally friendly and less expensive. As an emerging leader in the sector, Sky Power is positioned to benefit from the rising demand for clean energy.

Leveraging its expertise in lithium energy, Sky Power is also pursuing burgeoning opportunities within the solar industry. Electric consumption in the United States is increasing at a rate that will outpace projected capacity and Sky Power Solutions has positioned itself for expansion into the residential electric power generation market.

As consumer acceptance of all electric cars adds to rising demand for electric energy, Sky Power aims to capitalize on the growing opportunities by enabling consumers to generate and return 30-40% of their electric usage back to the grid using "Net-Metering" and the Sky Power System. Providing a total energy solution, the company is poised for exceptional growth.


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