Highlights of the week of February 2, 2015

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Dear PGM Capital Blog readers,

In this weekend’s blog edition we want to discuss some of the most important events that happened in the global capital markets, the world economy and the world of money in the week of February 2, 2015:

  • Oil post best week since 1998.
  • Teva Pharmaceutical Q4-2014, Net Income increased with 78%.
  • USA Jobs report of Friday, January 6, 2015.

OIL POST BEST WEEK SINCE 1998:
Crude Oil rose on Friday, February 6th 2015 for the sixth of the last seven trading days.

Brent settled up US$1.23 a barrel, or 2.2 percent, on the day at $57.80 a barrel. WIT closed up US$1.21 a barrel, or 2.4 percent, to close the week at  US$51.69 a barrel.

Crude prices have risen nearly 20 percent over the past six sessions, of which Brent futures posted a 9 percent gain on the week, their biggest since 2011, and 19 percent over two weeks, the largest since 1998.

Below chart shows the price of West Texas Intermediate Crude (WTI) over the last 7 days.

TEVA PHARMACEUTICAL Q4-2014, FINANCIAL REPORT:
Teva Pharmaceuticals Industries Ltd. (NYSE: TEVA), world’s largest generic drug maker and Israel’s biggest company, reported quarterly earnings of US$687 million, or US$0.80 an American depositary share, compared to $380 million, or $0.45 an ADS, in the year-ago period an increase of approx. 78 percent compared with the same quarter a year ago.

The company declared a quarterly dividend of 1.33 shekels (34 cents) a share, up from 1.21 shekels in the third quarter an increase of almost 10 percent!

This dividend will be paid out on March 3rd 2015, to shareholders on record on February 19, 2015, the ex-dividend date is set on February 17th, 2015.

USA JOBS REPORT OF FEBRUARY 6, 2015:
The US-Labor Department said on Friday, February 6th, that employers added a seasonally adjusted 257,000 jobs in January, but even more significant was a revision of earlier estimates showing an additional gain of 147,000 jobs in November and December.

Last month, average hourly earnings rebounded after falling in December, increasing 2.2 percent for the last 12 months and suggesting that the benefits of a tighter job market could soon begin to spread more broadly to ordinary workers.

As can be seen from below chart a negative note in the January jobs report is the increase in the unemployment rate to 5.7 percent in January from 5.6 percent in December.

Source:

PGM CAPITAL COMMENTS:

OIL PRICES BACK ABOVE US$ 50 A BARREL:
Crude futures shot higher in volatile trading as data revealed production cuts that could curb the supply glut.

The Baker Hughes North America rig count fell sharply in the week to January 30, dropping by 128 rigs to 1,937, compared with 2,393 a year ago.

Deep cuts in capital spending by major oil companies, including new announcements Tuesday by BP and BG Group, also suggested there would be tighter supplies in the future.

Oil prices plunged by about 60 percent from their June peaks to a six-year low last week, largely owing to a surge in global reserves boosted by robust US shale production.

The problem was exacerbated in November after the OPEC cartel insisted that it would maintain output levels despite plunging prices. The 12-nation group pumps about 30 percent of global crude.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in March soared to $58.08 a barrel from $49.65 one week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for March rallied to US$50.48 a barrel compared with US$45.35.

Two Canadian junior Oil and Gas producers, BAYTEK ENERGY (BTE:TO) and CANADIAN OIL SANDS (COS.TO) profited the most on the recovery of Crude Oil and Natural Gas .

As can be seen from below chart, Canadian Oil Sands shares soared with more than 60 percent after the company, reported blockbuster earnings, after the closing bell on January 29th.

With a P/E ratio of 6.2, a P/B of 1.088 and a dividend yield of 1.96% based on the company’s share closing price of last Friday, February 6th of CAD 10.57, we have a STRONG BUY rating on the stock of the company.

As can be seen from below chart the shares of Canadian BAYTEX Energy rose in the period of January 29 – February 6 with more than 30 percent to close on Friday February 6 at CAD 23.60.

Based on its Friday closing price, the shares of a company has a P/E ratio of 12.4,  a P/B of 1,4, and a dividend yield of 5.16%, for which reason we have a BUY rating on the stock.

TEVA Q4-2014 RESULTS:
In a statement, during the presentation of the company’s Q4-2014, financial results on Thursday, February 5th, the company’s Chief Executive Officer, Erez Vigodman, said;

“After a year of focusing on costs, Teva Pharmaceutical Industries is ready to return to making acquisitions”

In a statement he also said that Teva plans 7 drug launches in 2015.

Below chart shows that the shares of the company appreciated with almost 8,500 percent since it went IPO as an ADR in USA early 1990.

In the same period the company’s quarterly dividend appreciated from US$ 0.0391 a share, for Q1-1990 to US$ 0.34 a share for Q1-2015, an increase of the dividend of approx. 770 percent during the last 25 year.

Link to the company’s dividend history.

Based on the above and the company’s P/E ratio of 16.6, dividend yield of 2.20% and P/B of 2.11 we have a BUY rating on the stock.

USA JANUARY JOBS REPORT:
According to an article published by Jim Clifton, the Chairman and CEO of Gallup, the percentage of Americans that are employed full-time has been hovering near record lows since the end of the last recession.

Accordance to above mentioned article in Gallup U.S., adults that are employed for 30 or more hours per week, are currently at 44.2 percent and has been hovering between 42 percent and 45 percent since the end of 2009, which is extremely low.

Source:

Based on the official data in the USA there are 8.979 million Americans that are considered to be “officially unemployed” at this point.

But as can be seen from below chart, there are currently another 92.540 million Americans that are considered to be “not in the labor force”.

Millions upon millions of those Americans not in the labour force would work if they could.  Based on the above data, currently, there are 101.52 million U.S. adults that do not have a job right now.

Based on the total population of the country on December 31st 2014 of 320 million people, of whom – according to data from CIA world factbook – 52.5% is in the core demographic age range of 24-64 years.

Based on the above it means that 168 million Americans currently are in the core demographic, of whom 101.52 million do not have a job right now, which isn’t a pretty picture.

Below video shows an interview between Jim Clifton and Fox Business on February 5th about the USA jobs situation.

The reason why we won’t hear the above number being discussed by the mainstream media, is because most Americans just assume that the economic numbers that we are being given accurately reflect reality.

On top of this, layoffs in January 2015 were 17.6 percent higher than they were in January a year ago and businesses all over the country are shutting down following a very disappointing holiday season.

In addition, the Baltic Dry Index – which is a leading economic indicator because it predicts future economic activity- has dropped to stunningly low levels.

So don’t be fooled by all the happy talk from the mainstream media,

soon much sooner than you might think the real and naked truth will come out, and when it does, most people will not like it.

Until Next Time,

Yours sincerely,

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