Judge hears claims BP lied about Gulf oil spill

NEW ORLEANS (AP) — A trial over BP's 2010 oil spill in the Gulf of Mexico has resumed with a federal judge hearing claims that the company misled federal officials and withheld information about the amount of crude spewing from its blown-out well.

During opening statements Monday for the trial's second phase, plaintiffs' attorney Brian Barr said BP failed to prepare for a blowout and compounded the problem by lying about how much oil was flowing from the well.

BP attorney Mike Brock said second-guessing the company's efforts to cap the well is "Monday morning quarterbacking at its worst."

The government and BP have different estimates; establishing how much oil leaked during the 86-day struggle to cap the well will help determine the penalties the oil company must pay.

Under the Clean Water Act, a polluter can be forced to pay a maximum of either $1,100 or $4,300 per barrel of spilled oil. The higher maximum applies if the company is found grossly negligent, as the government argues BP should be. But the penalties can be assessed at amounts lower than those caps. Congress passed a law dictating that 80 percent of the Clean Water Act penalties paid by BP must be divided among the Gulf states.

U.S. District Judge Carl Barbier is scheduled to hear four weeks of testimony for the second phase, which also is designed to help the judge determine how much oil spilled into the Gulf.

The second phase is divided into two segments. The first explores methods BP employed to cap the well. The second is designed to help Barbier determine how much oil spilled into the Gulf.

The first phase ended in April after Barbier heard eight weeks of testimony about the causes of the blowout.

BP insists it was properly prepared to respond to the disaster, but plaintiffs' attorneys will argue the London-based global oil company could have capped the well much sooner if it hadn't ignored decades of warnings about the risks of a deep-water blowout.

Microsoft to Debut Next Gen Tablet (MSFT)

Keeping pace with its competition, tech giant Microsoft (MSFT) will detail its newest product on September 23rd.

The meeting is largely expected to unveil the newest Surface tablet, which is expected to feature a built-in battery as well as new processors. Unconfirmed rumors also suggest that the firm will be releasing multiple tablets, with a smaller version of its Surface tablet possibly making a debut.

Microsoft’s newest release will go head-t0-head with Apple (AAPL), which will be debuting the latest iPhone model at a meeting tomorrow. As Microsoft continues to battle to take away Apple’s market share, the unveiling and reception of its latest surface will be a key factor moving forward.

Microsoft shares were up 51 cents, or 1.61%, at Monday’s close. The stock is up more than 18% this year.

Should Netflix Stop Outsourcing Its Content Deals?

Netflix (NASDAQ: NFLX  ) airs a handful of original shows, including Emmy winner House of Cards and future awards favorite Orange Is the New Black. But the streaming video veteran doesn't actually produce these shows in-house, preferring to farm that work out to specialists in the field.

Many Netflix skeptics see this outsourcing model as a sign of weakness, doomed to long-term failure. But is that really true?

In the video below, Fool contributor Anders Bylund explains how AMC Networks (NASDAQ: AMCX  ) and Time Warner's  (NYSE: TWX  )  HBO actually follow the same model in many cases. Lions Gate (NYSE: LGF  ) and Sony (NYSE: SNE  ) may not own any American distribution networks, but they're more than happy to create high-quality content like Breaking Bad or Mad Men for others to distribute. Netflix simply follows a tried-and-true industry practice here.

Dig deeper into Netflix's secrets
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3 Strategies to Worry-Proof a Client’s Portfolio

Behavioral finance has established that even the strongest and most dedicated of investors are prone to panic when markets get rough. As such, one of the greatest challenges financial advisors face is trying to keep their clients engaged in markets at all times.

While a solid, well-thought-out and well-constructed financial plan is of the essence, getting investors to stick to it can often prove frustrating no matter how strong and close a relationship an advisor and a client may share.

That’s why advisors need to have at the ready a number of airtight investment strategies designed to keep their clients engaged while providing them with the peace of mind they need to actually stay engaged, according to John Longo, CIO at Acertus Capital Management and a finance professor at Rutgers in New Jersey.

“Advisors need to get investors to stay in the markets and feel comfortable at all times, and for that, dollar cost averaging is a good technique,” Longo said.

Based on that, Acertus Capital Management uses ETFs and options to sculpt a series of risk-return options that give the firm’s clients downside protection in turbulent markets while also giving them some upside benefit and, above all, assuage their concerns when markets go awry.

The upside is capped at a certain level, Longo said, “so there’s no free lunch, but these strategies still give our clients some peace of mind, which is extremely important for keeping them engaged in the market at all times.”

Taking the S&P 500 — which is widely used and not only represents the U.S. equities market but also offers meaningful international exposure — as a benchmark, the firm proposes three “peace of mind” strategies.  

The first is designed to consistently outperform the S&P 500 on a risk-adjusted basis in both rising and declining markets. It’s structured to deliver high single-digit to low double-digit returns in rising markets, while reducing losses in declining markets. It works well for investors who want to mitigate market volatility and buffer losses, Longo said, while increasing the probability of earning attractive returns.

The second is designed to consistently outperform the S&P 500 in most rising markets, delivering returns in the mid-teen to mid-20 percent range in rising markets, while posting returns equal to the S&P 500 price decline in falling markets. It works well for investors who want to enhance returns without increasing downside risk.

And finally, the third is designed for a “black swan” market environment, Longo said. It’s structured to allow market participation in the low- to high-teens range in rising markets with less volatility, while substantially reducing losses in markets that suffer abnormally steep declines. This is an attractive strategy for investors seeking to mitigate normal market volatility and reduce losses during severe market breaks while enjoying linear, market-like price appreciation.

All three strategies eliminate the temptation to make the emotionally flawed investment choices that all investors are prone to making, including buying at market highs and selling at market lows. Investors derive comfort from knowing that they don’t need to time the market but can stay engaged and invested in it at any time, Longo said, without suffering too many losses to their portfolio.  

Determining which strategy to use for individual clients depends largely on their risk tolerance levels.  

“We try to get to know our clients and their goals and objectives first, and then we try to understand their risk tolerance,” Longo said. “We get very rich clients, for example, who don’t want to lose money, so that makes for a more conservative investment portfolio. What’s important overall is that we have all three strategies at our disposal. Depending on each client, we turn the risk-return dial to a place where a client has peace of mind.”

Longo believes that today, more than ever, investors need to stay engaged in the market at all times. Capital preservation has become much more important in today’s markets, he said. While it’s clear that advisors still need to make sure that they work on building a strong and lasting relationship with their clients, they must have practical solutions and offerings to deal with investor behavior and give investors the peace of mind they need.

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Read more about behavioral finance on ThinkAdvisor.

Beverly Hills Wealth Management buys small money manager

Beverly Hills Wealth Management on Wednesday said that it had acquired McComsey Asset Management LLC, a small money manager with $29 million in assets.

Terms were not disclosed.

Mark McComsey, founder of McComsey Asset Management, runs six strategies with a focus on equities experiencing upside earnings surprises.

The firm will be rechristened BHWM Asset Management, a new unit of BHWM.

Clients of the wealth management firm clearly wanted to see BHWM have its own asset management offering, BHWM chief executive Margaret “Mag” Black-Scott said.

BHWM advisers will have exclusive access to the McComsey portfolios, but Ms. Black-Scott said BHWM Asset Management might consider subadvising.

“We will still have open architecture,” she added. “The in-house asset management has to be able to hold its own versus other managers.”

Mr. McComsey and Ms. Black-Scott formerly worked together at Morgan Stanley in Los Angeles.

McComsey Asset Management has marketed to institutional investors, but such small, emerging managers have a tough time landing and keeping big investors, Ms. Black-Scott said.

The money manager claims compliance with global investment performance standards and will migrate its track records to BHWM Asset Management.

The addition of McComsey pushes assets at BHWM over the $500 million mark.

Weak US Economy and Stronger Chinese Economy is Bullish for Gold (GLD, WISHY, ABX, FXI)

Like a roller coaster, the exchange traded funds for the United States Dollar (NYSE: UUP) and gold, SPDR Gold Shares (NYSE: GLD), have gone up and down in response to statements from the Federal Reserve. What is obvious by the continuation of Quantitative Easing III by Federal Reserve Chairman is that the United States economy is still weak. With that and the improving Chinese economy (NYSE: FXI), the future for gold assets such as the GLD, Barrick Gold (NYSE: ABX), and Wishbone Gold PLC (PINK: WISHY) is bullish.

China is the second largest consumer of gold. Eventually, it will surpass India. It is a "perfect storm" for gold when the American economy is weak and the Chinese economy is strong. In terms of the Chinese economy improving, the exchange traded fund for China, iShares FTSE China, is up more than 10% for the last month of market action.

By contrast, the PowerShares Dollar Bullish exchange traded fund for The Greenback is off for the last month of trading.

Growth in China is particularly bullish for Wishbone Gold PLC. With its extensive resources Australia, Wishbone Gold PLC is ideally situated to serve both Chinese Indian gold demand. China has always had a strong demand for natural resources from Australia.

The bullish future for gold has been shown by recent actions from experts.

Barron's magazine ran a very bullish piece on Barrick Gold. Now trading around $18.60, the article in Barron's stated that, based on asset value, Barrick Gold was worth $44 a share. Barrick Gold was just recommended by UBS.

Beaufort Securities just recommended Wishbone Gold PLC. Investors should look upon short term swings in the price of gold as an opportunity to buy at a discount for long term profits. With the FXI up and the UUP down, that creates the setting for the GLD, WISHY, and ABX to reward buyers for the long term.

Best Stocks to Buy Now: A Money Morning Weekly Roundup

A possible military attack on Syria and the August jobs report - the last major read on the economy before September's Federal Open Market Committee (FOMC) meeting - kept investors pegged to the sidelines last week - but we still delivered a handful of new stocks to buy for Money Morning readers...

Indeed, for the first time in three months, investors pulled some $226 million from U.S. equity funds, a reversal from inflows of $1 billion in the prior week.

And after a three-decade bull market run, bond holders were reminded that even these "less risky" investment vehicles aren't immune to a bear market. The 10-year Treasury note hit 3% intraday Thursday for the first time since 2011. Money is seeping from bond mutual funds and exchange-traded funds (ETFs) ($45.7 billion through the end of August), with the bulk sitting in near-zero interest-baring money market instruments.

Money Morning knows that savvy investors make money in all market scenarios. With that in mind, following is a recap of some of the best stocks to buy now that Money Morning featured last week.

Best Stocks to Buy Now The political unrest in Syria has caused an oil-price spike. Fears are growing that a prolonged conflict could spread to neighboring oil-rich countries, disrupt supplies, and send oil prices soaring some $10 to $20 a barrel. Money Morning Global Energy Strategist Dr. Kent Moors details how investors can play oil's "Syrian Premium."
September is historically the worst month for stocks, and this September could be especially rocky as we approach the U.S. Federal Reserve's crucial Sept. 17-18 FOMC meeting. Money Morning Global Investing and Income Strategist Robert Hsu says he expects stocks to remain range bound heading into the central bank gathering. But, he tells readers how to make money from this tight trading range with one simple trade that lasts 10 days and gives investors the perfect blend of low risk and high probability. The key to a successful business can be summed up simply as having high profit margins. While revenue growth for U.S. businesses has been strong so far in 2013, with steady growth expected going forward, profit margins have only showed slight improvement. In How Investors Can Unlock the Power of Profit Margins, we explain how readers can find companies with the best sustainable profit margins and share three fantastic finds. Investors on the prowl for the best stocks to buy now frequently hunt among those involved in the shale oil boom. North America is undergoing an energy revolution. One formation in the western United States was certified by the United States Geological Service (USGS) as having 3 trillion barrels of oil. New supplies of oil and gas are being discovered daily away from historical suppliers, with North Dakota now the third-largest oil-producing state and bigger than some OPEC nations. Money Morning highlighted how investors can benefit from this boom that shows no signs of slowing down and featured some of the best industry plays to buy now. Read more here. This next tech stock to buy now saw its outlook brighten this summer - Apple Inc. (Nasdaq: AAPL). The iPhone maker is set to debut two new models this week: an updated iPhone 5S and a budget model. Expectations are running high that the low-cost device will be a big hit in emerging markets like China. In Giving China What It Wants Will Spice Up Apple Stock, Money Morning enlightens readers on why the low-priced device presents a huge opportunity for Apple. Additionally, we highlight a few likely new launches that are apt to put the shine back in Apple's shares.
For stocks to buy in a fascinating niche market, we featured a piece on tidal energy - one of the oldest forms of energy. It involves using the sun and moon's gravitational forces on tides to produce electricity and other forms of power by harnessing these forces through the use of water. Money Morning Global Energy Strategist Dr. Kent Moors says several recent tidal pilot projects indicate significant potential for this kind of power generation. To be sure, the U.S. Department of Energy is providing $16 million in new funding for tidal power. Moors also shared a micro-cap stock in this niche market that has huge prospects. Get the full story. Finally, here's one of the most important outlooks on Syria that you'll read today: There's Only One Thing About Syria That Matters to Americans

5 Best Heal Care Stocks For 2014

Rather than acting as product providers, the wealth management industry is positioning itself as a source of financial solutions and advice, according to PwC's 2013 Global Private Banking and Wealth Management Survey, released late Wednesday.

PwC surveyed 200 participants from 51 countries for the report. The majority of respondents were from Europe and the Middle East, but 18% were from North and South America. This is the 20th anniversary of the biennial survey.

PwC identified five areas where wealth management firms need to enact transformative change to be successful.

1. Markets and Clients

While emerging markets are growing faster than developed markets, PwC found that even within that sector, newly emerging markets are experiencing more robust growth than more “established” emerging markets.

5 Best Heal Care Stocks For 2014: Jkx Oil & Gas Plc(JKX.L)

JKX Oil & Gas plc, through its subsidiaries, engages in the exploration, development, and production of oil and gas reserves. It holds interest in Ignatovskoye, Molchanovskoye, Novo-Nikolaevskoye, Rudenkovskoye, Elizavetovskoye, Zaplavskoye, and Chervonoyarske East fields in the Poltava region of Ukraine; and development licenses in Koshekhablskoye gas field that comprises 34.7 sq. km located in Russia. The company also owns interests in B Golitza and B1 Golitza onshore exploration permits covering 3,355sq.km in eastern Bulgaria; in Hernad, Hajdunanas, Nyirseg, Turkeve, and Veszto licenses in Hungary; in West Georgia offshore in Georgia; and 3 exploration licenses in the Carpathian Fold Belt in Slovakia. In addition, it involves in finance and holding; and land leasing activities. JKX Oil & Gas plc is based in London, the United Kingdom.

5 Best Heal Care Stocks For 2014: Ballantyne Strong Inc (BTN)

Ballantyne Strong, Inc. engages in the design, development, manufacture, and distribution of theatre and lighting systems worldwide. The company�s Theatre segment distributes digital equipment, such as cinema projectors, as well as digital cinema servers, library management systems, automation products, pedestals, 3D accessories, lenses, and lamps; motion picture projection analog equipment; cinema screens, including standard and large format 2D and 3D screens; xenon lamps; and digital projection lenses. It also provides installation and after-sale maintenance services for digital, film, and audio equipment and related peripherals; cabling, wiring, digital menu boards, and digital signage installation and maintenance services; and remote equipment monitoring services. This segment markets and sells its products directly to end users; and through dealers to theatre exhibitors in the United States and internationally. Its Lighting segment offers long-range followspots; ente rtainment and architectural lighting products; and LED lighting fixtures. This segment offers followspot products under the Strong, Super Trouper, and Gladiator trademarks; LED lighting fixtures under Solutions and Neeva trademarks; and other products under Strong Digital Systems, Radiance, and Sky-Tracker trademarks. It sells its lighting products through a combination of a small direct sales force, dealer network, and commissioned sales representatives to arenas, stadiums, theme parks, theatres, auditoriums, and equipment rental companies. Ballantyne Strong, Inc. sells its products in the United States, Canada, China, Asia, Mexico, South America, and Europe. The company was formerly known as Ballantyne of Omaha, Inc. and changed its name to Ballantyne Strong, Inc. in June 2009. Ballantyne Strong, Inc. was founded in 1932 and is headquartered in Omaha, Nebraska.

Top 5 Performing Companies To Watch For 2014: Mothercare(MTC.L)

Mothercare plc operates as a retailer and wholesaler of products and services for mothers, mothers-to-be, babies, and children. The company sells its products under the Mothercare and Early Learning Centre brands. It offers maternity and children?s clothing, furniture, and home furnishing products, as well pushchairs, nursery products, car and travel products, safety and care products, kids bedroom products, toys and gifts, clothing, feeding, and bathing and changing products. The company also operates retail franchises in Europe, the Middle East, Africa, and the Far East. Mothercare plc sells its products through retail stores, catalogues, and the Internet. As of November 14, 2011, it had 353 stores in the United Kingdom and 969 stores internationally. In addition, the company owns and operates Gurgle.com, the social networking site for parents. Mothercare plc was founded in 1961 and is based in Watford, the United Kingdom.

5 Best Heal Care Stocks For 2014: First Financial Bancorp.(FFBC)

First Financial Bancorp. operates as the holding company for First Financial Bank, National Association that provides commercial banking, and other banking and banking-related services. The company accepts various deposit products that include interest-bearing and noninterest-bearing deposit accounts, time deposits, and cash management services for commercial customers. It also offers various lending products, including residential real estate loans; commercial real estate loans; commercial loans for various business purposes; home equity lines of credit; and consumer loans, such as vehicle loans, second mortgages on residential real estate, and unsecured loans. In addition, the company provides trust services, brokerage, investment, and other related services. As of June 3, 2011, it operated 102 banking centers in Ohio, Indiana, and Kentucky. The company was founded in 1982 and is headquartered in Cincinnati, Ohio.

5 Best Heal Care Stocks For 2014: BioMarin Pharmaceutical Inc.(BMRN)

BioMarin Pharmaceutical Inc. develops and commercializes biopharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and rest of the world. The company?s commercial products include Naglazyme, a recombinant form of N-acetylgalactosamine 4-sulfatase enzyme used for the treatment of mucopolysaccharidosis (MPS) VI; Kuvan, a proprietary synthetic oral form of 6R-BH4 used to treat patients with phenylketonuria (PKU), a metabolic disease; Aldurazyme used for the treatment of mucopolysaccharidosis I, a genetic disease; and Firdapse used to treat Lambert Eaton Myasthenic Syndrome, an autoimmune disease. It develops GALNS, an enzyme replacement therapy for the treatment of MPS IVA, a lysosomal storage disorder; PEG-PAL, an enzyme substitution therapy that is under Phase II clinical trial to treat PKU; BMN-673, a Phase I/II clinical trial product for the treatment of cancer; BMN-701, an enzyme replacement therapy, which is under Phase I/II clinical trials for Pompe disease, a glycogen storage disorder; and BMN-111, a peptide therapeutic that is under Phase I clinical trial for the treatment of achondroplasia. The company sells its Naglazyme, Kuvan, and Firdapse products to specialty pharmacies and end-users, such as hospitals and foreign government agencies, which act as retailers; and Naglazyme products to distributors and pharmaceutical wholesalers. It has a collaboration agreement with Genzyme Corporation for the manufacture of Aldurazyme; and an agreement with Merck Serono S.A. for the further development and commercialization of Kuvan and other products containing 6R-BH4 and PEG-PAL for PKU. BioMarin Pharmaceutical Inc. was founded in 1996 and is headquartered in Novato, California.

Advisors' Opinion:

• [By Monica Gerson]

  BioMarin Pharmaceutical (NASDAQ: BMRN) shares moved up 1.48% to $78.64. The volume of BioMarin Pharmaceutical shares traded was 966% higher than normal. BioMarin shares jumped on Roche Holding (OTC: RHHBY) takeover report..

Nearly Impossible to Get into Top Tier of App Business

For all the hundreds of millions of apps and the billions of downloads from the Apple Inc. (NASDAQ: AAPL) App Store and Google Inc.’s (NASDAQ: GOOG) Play, the same apps dominate the top of the lists over and over. Breaking into the app business on a mammoth scale is nearly impossible, unless a company already has an extraordinary presence.

The Distimo "Top Global Apps — August 2013" report lists the top paid and free apps from each of the major stores. Free apps get many more downloads than paid ones, not surprisingly.

Ironically, two of the top five free downloads at the Apple App Store are Google Maps and YouTube, which shows that the market continues to believe Google’s map product is the best in the world. YouTube has more users that almost all other major video sites combined. Google is unlikely to give up either of these positions.

Facebook Inc. (NASDAQ: FB) and Facebook Messenger are among the top five downloaded apps at Google Play. This status speaks to the popularity of the social network and the size of its billion-plus growing membership.

But free games continue to hold a disproportionate piece of both paid and free apps, and a tiny number of game publishers are particularly powerful. King.com, Pop Candy and Play Loft have much of the top of this market. King.com’s “Candy Crush Sage” is among the top five most downloaded apps on both the Apple and Google lists. Also on the list, “Despicable Me” has its own movie and a multi-title franchise. Also there, “Plants vs. Zombies” is four years old and also has plenty of versions and sequels.

Several very well-known apps are not on either top five list, but each must get millions of downloads a month. Twitter, weather apps, Pandora Media Inc. (NYSE: P), eBay Inc. (NASDAQ: EBAY), Gmail, Pinterest, Amazon.com Inc. (NASDAQ: AMZN), Skype and Groupon Inc. (NASDAQ: GRPN) already rule across the PC, tablet and smartphone “ecosystems.” None of these is likely to lose popularity, and some probably will gain more.

There are anecdotes about three people in a garage who build an app and made millions. If they exist, it must be in very small numbers.

Hot Penny Stocks To Buy Right Now

Recent enforcement actions included charges brought by the SEC against two JPMorgan traders associated with the “London Whale” for lying about massive derivatives losses, and against a number of microcap companies, their CEOs and stock promoters in penny stock schemes. In addition, FINRA fined and censured VSR Financial and registered principal Donald Beary over sales of nonconventional investments.

SEC Charges Two in London Whale Case

Javier Martin-Artajo and Julien Grout, former traders at JPMorgan Chase & Co., were charged by the SEC with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.

The pair worked in JPMorgan’s chief investment office (CIO), which created the portfolio known as the Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches, and Martin-Artajo and Grout were required to mark the portfolio’s investments at fair value in accordance with U.S. GAAP and JPMorgan’s internal accounting policy.

Hot Penny Stocks To Buy Right Now: RF Industries Ltd.(RFIL)

RF Industries, Ltd. provides interconnect products and systems for radio frequency (RF) communications devices and wireless digital transmission systems in the United States and internationally. Its Connector and Cable Assembly division designs, manufactures, and distributes coaxial connectors and cable assemblies that are integrated with coaxial connectors. The company?s Aviel Electronics division engages in the design, manufacture, and distribution of specialty and custom RF connectors primarily for aerospace and military customers. Its Oddcables.com division primarily sells coaxial, fiberoptic, and other connectors and cable assemblies on a retail basis to local multi-media and communications customers. The company?s Bioconnect division manufactures and distributes cabling and interconnect products to the medical monitoring market. Its Neulink division engages in the design, manufacture, and sale of RF data links and wireless modems for receiving and transmitting contro l signals for remote operation and monitoring of equipment, and personnel and monitoring services. The company?s RadioMobile division provides original equipment manufacturing services of end-to-end mobile management solutions implemented over wireless networks that supplement the operations of its Neulink division. RF Industries markets and distributes its products through warehousing distributors, original equipment manufacturers, hospital suppliers, dealers, distributors, directly or manufacturers representatives, system integrators, value added resellers, and dealers, as well as through the operation of an e-commerce Website, known as OddCables.com. The company was formerly known as Celltronics, Inc. and changed its name to RF Industries, Ltd. in November 1990. RF Industries, Ltd. was founded in 1979 and is headquartered in San Diego, California.

Hot Penny Stocks To Buy Right Now: Overhill Farms Inc.(OFI)

Overhill Farms, Inc. manufactures prepared frozen food products for branded retail, private label, foodservice, and airline customers. Its product line includes entrees, plated meals, bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish specialties, and organic and vegetarian offerings. The company markets its products through its internal sales force, as well as through outside food brokers. Overhill Farms, Inc. was founded in 1968 and is headquartered in Vernon, California.

Top 10 Casino Companies To Own In Right Now: China North East Petroleum Holdings Limited(NEP)

China North East Petroleum Holdings Limited engages in the exploration and production of crude oil in northern China. As of December 31, 2010, it operated 295 producing wells with proven reserves of 5,476,200 barrels of crude oil at Qian?an 112, Hetingbao 301, Daan 34, and Gudian 31 oilfields. The company, through its subsidiary, Song Yuan Tiancheng Drilling Engineering Co., Ltd., provides contract land drilling and other oilfield services for state-owned and non-state-owned oil companies. China North East Petroleum Holdings Limited is headquartered in Song Yuan City, the People?s Republic of China.

Hot Penny Stocks To Buy Right Now: Cash America International Inc.(CSH)

Cash America International, Inc. provides specialty financial services to individuals primarily in the United States and Mexico. The company operates in three segments: Pawn Lending, Cash Advance, and Check Cashing. The Pawn Lending segment offers pawn loans through its pawn lending locations, which operate under the names Cash America Pawn and SuperPawn in the United States, and Prenda Facil in Mexico. This segment also sells previously-owned merchandise acquired from customers who do not redeem their pawned goods, as well as sells items purchased from third-parties or customers. The Cash Advance segment offers unsecured cash advances in selected lending locations that are operated under the names Cash America Payday Advance and Cashland in the United States; and short-term cash advances over the Internet under the names CashNetUSA in the United States, QuickQuid in the United Kingdom, and DollarsDirect in the Canada and Australia. This segment also involves in arranging loans for customers with independent third-party lenders through a credit services organization program; providing marketing and loan processing services for a third-party bank issued line of credit on certain stored-value debit cards that the bank issues; and purchasing a participation interest in certain line of credit receivables originated by the bank. The Check Cashing segment provides check cashing and other financial services, such as stored-value cards, money orders, and money transfers. This segment operates its check cashing locations under the Mr.Payroll name. As of December 31, 2009, it operated 676 pawn lending locations, including 667 company-owned units and 9 unconsolidated franchised units; 246 cash advance locations; and 120 unconsolidated franchised and 6 consolidated company-owned check cashing locations. The company was founded in 1984 and is headquartered in Fort Worth, Texas.

Hot Penny Stocks To Buy Right Now: (NRTLQ)

Nortel Networks Corporation does not have significant operations. Previously, it engaged in supplying end-to-end networking products and solutions, including hardware, software, and services to service providers and enterprise customers. The company was founded in 1914 and is based in Mississauga, Canada. On January 14, 2009, Nortel Networks Corporation filed for creditor protection under the Companies' Creditors Arrangement Act in Canada.

Hot Penny Stocks To Buy Right Now: American Capital Ltd.(ACAS)

American Capital, Ltd. is a private equity and venture capital firm specializing in management and employee buyouts, mezzanine, acquisition, recapitalization, middle market, and growth capital investments. The firm seeks to invest in senior debt mezzanine and equity financing for buyouts of private equity firms and direct in private and public companies. It also invests in special situations and in government. In special situations, the firm invests in troubled situations and in distressed situations. In this area, it invests in acquisitions of true turnarounds, 363 auctions, portfolio add-ons, operationally challenged companies; financings in exit, ABL loans, second lien refinance, and direct lending to distressed companies. The firm invests in manufacturing, services, and distribution companies with a special focus on energy sector. In energy production sector, the firm invests in lower risk oil and gas exploration, production and development; natural gas liquids; coal m ining and coal-fired generation; uranium mining and nuclear-fired generation; wind-powered generation; and solar-powered generation. In energy transmission sector, the firm invests in oil and gas pipelines; LNG tankers and regasification facilities; and power transmission. In energy distribution sector, it targets propane distribution; gas distribution; electricity distribution. In energy services sector, the firm invests in oil and gas services and utility services. The firm also targets investments in companies that provide services or products to federal, state or local governments. It seeks to invest in information technology, human resources/benefit administration, outsourcing, transaction processing, engineering and construction, logistics, original equipment manufacturers ? homeland security and component, after market parts and supplies, and technology. It invests as lead or participative investor. The firm and its affiliates invest from $5 million to $300 million pe r company in North America and ?5 million ($6.92520 millio! n) to ?25 million ($34.6260 million) per company in Europe. American Capital, Ltd. was founded in 1986 and is based in Bethesda, Maryland with additional offices in United States, Europe, and Asia.

Top China Companies To Watch In Right Now

The major U.S. indices extended their move lower this week, albeit at a slower pace than last week�� declines. Improvements in housing and jobs markets helped partially offset weakness caused disappointing corporate earnings and bearish Federal Reserve comments. Interesting, consumer confidence has risen to recent highs, while the same consumers continue to constrain their spending, hurting retail sales in July ahead of the key back-to-school season.

Foreign markets moved largely lower during the week, too. Britain�� FTSE 100 is down 0.9%, Germany�� DAX 30 is down 0.5%, and Japan�� Nikkei 225 is down nearly 6%. The eurozone has shown signs of improvement, thanks to Germany�� robust growth, while China�� rising inflation has sparked hopes that its slowdown won�� be as slow as many economists projected. But, with many markets still at their highs, expectations may be too lofty to justify right now.

Top China Companies To Watch In Right Now: Sina Corporation(SINA)

SINA Corporation provides online media and mobile value-added services (MVAS) in the People?s Republic of China. It provides advertising, non-advertising, and free services through SINA.com, Weibo.com, and SINA Mobile. SINA.com offers free interest-based channels that provide region-focused format and content, including news, sports, automobile-related news, finance, entertainment, luxury, technology, digital, tools, collectibles, video, music, and wireless application protocol, as well as interactive platform for fashion-conscious users to share comments and ideas on a range of topics, such as health, cosmetics, and beauty. The company's microblogging platform, Weibo.com, enables its users to follow the hottest topics being discussed online, as well as discussions related to people they know. Weibo accounts consist of celebrities, commercial enterprises, government entities, and grass root Internet users. Its SINA Mobile service allows users to receive news and informatio n, download ring tones, mobile games and pictures, and participate in dating and friendship communities. The company also offers SINA Game, which serves as an interactive platform that provides users with downloads and gateway access to popular online games; SINA eReading, a shop for book reviews; SINA.net, an enterprise solutions platform to assist businesses and government bodies; and SINA Mall, an online shopping Website. In addition, it provides a platform for Chinese bloggers; photo-sharing platform; free email, VIP mail, and corporate email for enterprise users; audio and video-based instant messaging tools; proprietary search technology; and classified advertising services, as well as hosts topic-specific discussion forums in Chinese language; and creates user-maintained and supported online communities. The company has strategic cooperation agreement with China Unicom (Hong Kong) Limited. SINA Corporation was founded in 1997 and is headquartered in Shanghai, the Peop le?s Republic of China.

Advisors' Opinion:

• [By Victor Mora]

  Sina is an online media company that aims to serve Chinese consumers in and outside of China. The stock is now resting after seeing large declines in the last few years. Over the last four quarters, earnings and revenue numbers have improved, which has pleased investors. Relative to its peers and sector, Sina has been a poor relative performer, year-to-date. WAIT AND SEE what Sina does in coming quarters.

Top China Companies To Watch In Right Now: China Security & Surveillance Technology Inc. (CSR)

China Security & Surveillance Technology, Inc., together with its subsidiaries, manufactures, installs, distributes, and services surveillance and safety products, systems, and software in the People?s Republic of China. The company?s products include standalone digital video recorders (DVRs); embedded DVRs; mobile DVRs; real-time hard-compression coding cards; DVR compression boards; digital cameras; intelligent high-speed dome cameras; intelligent control system software platforms; perimeter security alarm systems; monitors; and radio frequency identification terminals and data collectors. It serves various customers, which include governmental entities, such as customs agencies, courts, public security bureaus, and prisons; non-profit organizations, including schools, museums, sports arenas, and libraries; and commercial entities consisting of airports, hotels, real estate, banks, mines, railways, supermarkets, and entertainment venues. The company is headquartered in S henzhen, the People?s Republic of China.

10 Best Small Cap Stocks To Invest In 2014: China Mobile(Hong Kong)

China Mobile Limited, an investment holding company, provides mobile telecommunications and related services primarily in the Mainland China. It offers various services comprising local calls, domestic long distance calls, international long distance calls, domestic roaming, and international roaming. The company also provides voice value-added services, including caller identity display, caller restrictions, call waiting, call forwarding, call holding, voice mail, and conference calls; customer-to-customer messages and corporate short message services; and mobile Internet access services. In addition, it engages in other data businesses, which primarily include multimedia messaging services; color ring services that enable users to customize the answer ring tone from various selection of songs, melodies, sound effects, or voice recordings; and mobile reading, mobile gaming, mobile video, mobile payment/wallet, mobile TV, mobile market, and Internet data center services. F urther, the company offers telecommunications network planning, design, and consulting services; roaming clearance services; technology platform development and maintenance services; and mobile data solutions, and system integration and development services, as well as operates a network and business coordination center. Additionally, China Mobile Limited sells mobile phone handsets and devices. As of March 31, 2011, it served approximately 600.8 million customers. The company was formerly known as China Mobile (Hong Kong) Limited and changed its name to China Mobile Limited in May 2006. China Mobile was founded in 1997. The company is based in Central, Hong Kong, and is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange. China Mobile Limited is a subsidiary of China Mobile Hong Kong (BVI) Limited.

Top China Companies To Watch In Right Now: China Gerui Advanced Materials Group Limited(CHOP)

China Gerui Advanced Materials Group Limited engages in the manufacture and sale of cold-rolled narrow strip steel products in the People's Republic of China. The company converts steel manufactured by third parties into thin steel sheets and strips. It sells its products directly to its customers in a range of industries, including food and industrial packaging, construction and household decorations materials, electrical appliances, and telecommunications wires and cables industries. The company was formerly known as Golden Green Enterprises Limited and changed its name to China Gerui Advanced Materials Group Limited in December 2009. China Gerui Advanced Materials Group Limited is based in Zhengzhou, China.

Top China Companies To Watch In Right Now: 51job Inc.(JOBS)

51job, Inc. provides integrated human resource services primarily in the People?s Republic of China. . The company provides recruitment related advertising services, including print advertising services through 51job Weekly, which is a city-specific recruitment advertising publication that is published once a week and is distributed as an insert in local newspapers and/or on a stand-alone basis; and online recruitment services through its Website, www.51job.com. It also offers other human resource related services, such as business process outsourcing, which consist of social insurance and welfare payment processing, regulatory compliance, and payroll processing; and executive search services, as well as conducts training seminars in the areas of business management, leadership, sales and marketing, human resource, negotiation skills, financial planning and analysis, public administration, manufacturing, secretarial, and other skills for the general public and corporate cl ients. In addition, the company provides campus recruitment services; conducts salary, employee retention, and other human resource related surveys; organize and host annual human resource conferences and events, which include lectures, seminars, workshops, and networking opportunities for human resource professionals; and provides assessment tools to assist human resource departments in evaluating capabilities and dispositions of job candidates and existing employees, aiding employee placement, and allocating employee resources, as well as hiring and support services to employers on select recruitment projects. It provides recruitment and other human resource related services to employers through its sales offices, as well as through its sales and customer service call center. The company was founded in 1998 and is based in Shanghai, the People?s Republic of China.

Advisors' Opinion:

• [By Robert Hsu]

  51Job, Inc. (JOBS) reported its financial results for the second quarter of 2011 on August 4. Some highlights:

  Total revenues came in at 332.4 million yuan, an increase of 26.7% from 262.4 million yuan year-on-year. Revenues from online recruitment services climbed a whopping 49%, while print advertising revenues declined 27.8%. Gross profit for the second quarter increased 34.1%, while gross margin expanded to 71.8%, compared with 68% year-on-year. Net income for the second quarter increased 53.6% to 83.5 million yuan, representing earnings per share of 2.82 yuan.

  Looking forward, the company expects for revenue to come in at a range of 335 million yuan to 345 million yuan. Overall, the company continues to make progress on its strategic initiatives, and has strongly increased spending per employer in its online business, as well as expanding its customer base in existing and new geographic regions.

  Shares sold off slightly after the earnings report, since EPS just slightly missed analyst expectations, but investors quickly realized that the long-term growth story was still intact and shares quickly climbed back. Going forward, one day of volatility will not affect fundamentals of this company and I remain bullish on JOBS. Buy it.

Is BP a Risky Investment?

With shares of BP (NYSE:BP) trading around $43, is BP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

BP is an integrated oil and gas company. The company provides its customers with fuel for transportation, energy for heat and light, lubricants and the petrochemicals products used to make everyday items as diverse as paints, clothes, and packaging. It operates in two business segments: Exploration and Production, and Refining and Marketing. BP provides essential energy products to consumer and companies worldwide. Without the oil and gas products provided, many consumers and businesses would not be able to operate on a daily basis. As businesses and consumers continue to need oil and gas products and services, BP stands to see rising profits.

T = Technicals on the Stock Chart are Mixed

BP stock has seen a downtrend over the last several years that has taken it to multi-year lows. The stock has recently bounced off of these lows and looks like it is putting together an uptrend. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, BP is trading above its untangling key averages which signal neutral price action in the near-term.

(Source: Thinkorswim)

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Taking a look at the implied volatility (red) and implied volatility skew levels of BP options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
BP Options	16.1%	0%	0%

What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
June Options	Flat	Average
July Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on BP’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for BP look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	192.3%	-78.97%	8.03%	-124.38%
Revenue Growth (Y-O-Y)	10.06%	7.51%	-4.72%	-8.71%
Earnings Reaction	2.28%	1.35%	2.78%	-4.59%

BP has seen mixed earnings and revenue figures over the last four quarters. From these figures, the markets have had mixed feelings about BP’s recent earnings announcements.

P = Poor Relative Performance Versus Peers and Sector

How has BP stock done relative to its peers, Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDSA), and sector?

	BP	Chevron	Exxon Mobil	Royal Dutch Shell	Sector
Year-to-Date Return	4.18%	15.81%	6.60%	-1.81%	10.84%

BP has been a relative underperformer, year-to-date.

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Conclusion

BP provides essential oil and gas products and services to consumers and companies participating in growing industries worldwide. The stock has been in a long-term downtrend but may be currently positioning for a move higher. Over the last four quarters, BP has seen mixed earnings and revenue figures which has produced mixed feelings among investors. Relative to its peers and sector, BP has trailed significantly in year-to-date performance. WAIT AND SEE what BP does in coming quarters.

Can AOL Survive Without Dial-Up?

With the use of dial-up Internet access long since past, AOL (NYSE:AOL) has endeavored to reinvent itself as a digital publisher. The company's transformation seems to be popular with investors, as the stock has climbed almost 30 percent in the past year. However, is AOL's impressive rise fueled by real business growth or by speculative hot air? Let's use our CHEAT SHEET investing framework to decide if AOL is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalysts for the Stock's Movement

AOL shares fell 8.9 percent — from $41.42 to $37.74 — after its first-quarter earnings report on May 8. The selloff was mainly a result of its rapidly growing third-party ad operations failing to meet analysts' expectations. AOL's Ebitda did beat estimates, mainly due to cost-cutting initiatives across the board. The most notable of these cost-cutting initiatives was the divestiture of its AOL Music pages. A bright spot in the earnings report was total advertising, which gained 8.8 percent year-over-year. AOL's long-suffering community news site, Patch, failed to deliver this quarter, posting a $4.9-million loss.

As AOL transitions from a dial-up Internet portal to an ad-driven digital publisher, its success hinges on increasing its Internet presence through Huffington Post, TechCrunch, and Patch. CEO Tim Armstrong has touted Patch, which supplies extremely personalized local news content to around 1,000 different regions, as the next big thing in digital publishing. While Patch has failed to produce revenues in the black, Armstrong says he is fully confident that the division will become profitable by the end of FY 2013. To do this, Patch would have to double sales growth for the coming year and cut operating expenses in half. While the premise of Patch is promising — a hub for local news and community announcements — its success is unproven on a large scale. Doubling its sales growth in less than a year seems highly optimistic.

E = Earnings, Revenue, and Profit Margin Growth is Mixed

While the stock price has experienced strong upward momentum over the past year, its quarter-over-quarter EPS growth has moved wildly sideways. The swings in EPS growth are due partially to AOL's ongoing cost-cutting initiative. It is impressive to note, however, that AOL has beat analysts' estimates in six consecutive quarters prior to Q1 2013. AOL's revenue growth shows a much more stable outlook. Year-over-year revenue growth hit an inflection point in Q3 2012 and has been positive in the past two quarters. For the first time since 2008, advertising revenues were up across the board.

	2013 Q1	2012 Q4	2012 Q3	2012 Q2	2012 Q1
Qtrly. EPS	$0.32	$0.4038	$0.22	$10.17	$0.22
EPS Growth QoQ	-20.75%	83.55%	-97.84%	4522.73%	N/A
Qtrly. Revenue	$538.30M	$599.50M	$531.70M	$531.1M	$529.4M
Revenue Growth YoY	1.68%	3.94%	0.00%	-2.05%	-3.99%
Gross Profit Margin	26.97%	29.26%	28.10%	25.40%	27.35%

*Data sourced from YCharts

T = Technicals Are Strong

AOL is currently trading at around $36.50, above both its 200-day moving average of $35.40 and its 50-day moving average of $35.76. AOL has been experiencing an unmistakable uptrend in the past year. The stock has increased almost 30 percent, but its growth has been volatile. Additionally, a relatively high 8.5 percent of outstanding shares are short sales, suggesting that there's a somewhat bearish outlook on AOL's stock.

Conclusion

AOL is dealing with death of dial-up the best that it can. It has made several key acquisitions to increase its Internet presence as it embarks on its return to relevance. However, its ad revenues pale in comparison to giants Google (NASDAQ:GOOG), Facebook (NASDAQ:FB), and Yahoo (NASDAQ:YHOO).

It's a Horse Race for Profits in Ohio's Utica Shale Region

Prolific U.S. shale regions have delivered some of the best investments in energy over the past few years - and now there's another state set to join the Frackers' Club.

Ohio finds itself sitting atop the deep Utica Shale formation, a source of unconventionally derived oil and natural gas.

In fact, roughly the entire eastern half of the state lies on top of the formation. According to the U.S. Geological Survey (USGS), that portion holds most of the Utica Shale's oil resources.

The natural gas assessment units - land where the USGS believes there to be energy resources - run farther to the north, south, and east of Ohio, going down into West Virginia and Kentucky, across into Maryland, Pennsylvania, and New York and up across the Canadian border into Ontario and Quebec - much of the immense, ancient Appalachian Basin.

Chesapeake Energy Corp. (NYSE: CHK) Chief Executive Officer (CEO) Doug Lawler has said that that he is "encouraged" by what he's seen in the Utica Shale and that "the Utica is outstanding."

Here's why the Utica Shale can make investors - and Ohio, and producing companies that flock to the formation - lots of money.

Just How Much Oil and Gas Is Down There?

Initial reports, compiled by the Akron Beacon Journal, indicate that a "slow start, but great promise" situation is developing, with a far, far heavier emphasis on natural gas than oil - despite the USGS assessments.

In 2012, the last year for which comprehensive figures are available, the Akron Beacon Journalreported that there were 87 wells - mostly exploratory - drilled by 11 different companies. These efforts have yielded 12.8 billion cubic feet of natural gas and natural gas liquids and 635,896 barrels of oil - so far. It's important to keep in mind that things are still very much in the exploratory phase, although results are promising.

Estimates of oil reserves vary widely. The Ohio Geological Survey says there may be as much as 1.96 billion to 8.2 billion barrels of oil, equivalent, still in the ground.

While these numbers are a promising start, now there's another reason Utica Shale is a hot spot for the next best energy investments...

Night of the Wildcatter

The Utica Shale has brought out wildcatter and energy industry gadfly Aubrey McClendon, the quintessential oil wildcatter...

McClendon is virtually on fire for the Utica Shale. He has come out swinging with American Energy Partners, bringing more than $1.2 billion to invest throughout the formation.

The Wall Street Journal reported late last month that McClendon and AEP have raised $1.2 billion to buy up between 50,000 to 70,000 acres in the shale. McClendon has already purchased 22,000 acres of shale country from EnerVest Ltd., where Chairman Ralph Eads is one of McClendon's former fraternity brothers from Duke University. EnerVest has paired off with McClendon's old company, Chesapeake, in the rush to explore Ohio's portion of the Utica shale.

Aubrey McClendon told CNBCthat there may be 25 billion barrels there. He has further called for 25,000 additional wells to be drilled, making for an investment of roughly $200 billion.

Forbes has also speculated that McClendon may be trying to get the old band back together, as Chesapeake's CEO Doug Lawler announced the departures of operating chief Steve Miller and human resources honcho Martha Burger. Chesapeake's General Counsel, Henry Hood, left in May with public affairs chief Tom Price. Of the key defectors, so far only Tom Price has announced his intention to go work for McClendon.

Perhaps the most interesting part about McClendon's involvement in the Utica Shale race is his complete denial of involvement in the Utica Shale race.

In an August email to Forbes, he denied everything, saying that he was "just a small businessman and private citizen these days!"

Indeed. Perhaps he thinks no one else has noticed the billions of barrels of oil beneath Ohio.

McClendon's arrival and subsequent bizarre behavior on the hilly landscape of eastern Ohio completes the stage setting. Watching McClendon dance to and fro while denying all possible details of his midnight deals has been entertaining.

In other words, once McClendon appears on the scene, you know it's going to get interesting - and profitable for those eyeing up these new energy investments...

A Fracking Fight Forms

A big question remains in trying to gauge just how profitable the Utica Shale will be, and that's when Ohio will move forward with fracking.

On the surface, fracking in Ohio appears to be a slam-dunk proposition, perhaps even a no-brainer. Ohio sports a commanding Republican majority in both houses of the state legislature, and Republican John Kasich is governor. Ohio's powerful Chamber of Commerce has thrown its full support behind fracking's entrée into the Buckeye State, with its Ohio Shale Coalition initiative. The Chamber's position is that there is huge economic potential in the shale, and a state with more than 7% unemployment can ill afford to turn up its collective nose at the jobs - and money - that fracking will generate.

But there are some powerful forces lining up against exploration of Ohio's portion of the Utica Shale.

Environment Ohio, the state's biggest, most powerful, and best-funded environmental advocacy group, has roundly condemned efforts at exploration and extraction. Condemnation or harsh language may be little deterrent to the likes of Aubrey McClendon, but Environment Ohio can - and will - sue to stop the efforts of oil and gas companies wherever it can, however it can.

Activists have been successful in the fight against fracking in a few key areas, obtaining at least temporary injunctions against drilling in Ohio's Blue Rock State Forest. This came after several state officials claimed they weren't consulted about the sale of the land. Activists are also lobbying Governor Kasich regarding the potential of radioactive waste that may be created by fracking.

For now, there is a significant amount of drilling in the Buckeye State. Just how much more will be done is still up in the air.

Best Investments in Energy: The Utica Shale Players

There is a long and colorful list of companies and individuals set to profit from developments on the Utica Shale.

McClendon's American Energy Partners and his old outfit Chesapeake Energy Corp. have set up a horse race of sorts between the two of them, each buying up tens of thousands of acres where they - reasonably or not - believe there may be black gold...

On the supply side, Gulfport Energy Corp. (Nasdaq: GPOR) has contracted with Dominion Resources Inc. (NYSE: D) subsidiaries Dominion East Ohio and Dominion Transmission to transport the Utica natural gas from the Markwest Energy Partners LP (NYSE: MWE) gas-processing facility in Cadiz, Ohio, out to the wider American Midwest. And, like Chesapeake and American Energy Partners, Gulfport owns land, which it is exploring as well.

Gulfport has some of the most diversified sources in Ohio, with 43% of its land atop dry gas, 27% atop condensates, 22% in the wet gas zone, and just 8% atop oil. Gulfport has started 24 wells in 2013 so far.

There are more energy investments in the United States than just the Utica Shale. We're in the throes of a full-fledged shale boom from sea to shining sea. Here's how to invest in the rest of it.

Related Articles:

Forbes:
The Two Sides of Aubrey McClendon, America's Most Reckless Billionaire The Wall Street Journal:
Wildcatter McClendon Bets Big on Ohio Shale Energy

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Top 10 Companies To Own For 2014

When it comes to great investors, they don't get much better than Warren Buffett. Through shrewd investments in stocks and entire companies that he bought, Buffett has grown his Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) company's per-share book value by an annual average of 19.7% between 1965 and 2012. That's a total gain of more than 586,000%. The company's stock has grown by about about million percent since 1965, enough to turn a $10,000 investment into roughly $100 million. So we can agree that the guy knows a thing or two about investing, right? Thus, it would be smart to heed his investment advice. Let's a look at some of his nuggets of wisdom.

Be optimistic
"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts, the Depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."

Top 10 Companies To Own For 2014: Quetzal Energy Ltd (QEI.V)

Santa Maria Petroleum Inc. engages in the exploration and production of oil and gas properties with a focus on the Llanos Basin in Colombia. It holds participating interests in four blocks in the Llanos Basin, Colombia. The company was formerly known as Quetzal Energy Ltd. and changed its name to Santa Maria Petroleum Inc. in June 2012. Santa Maria Petroleum Inc. is headquartered in Calgary, Canada.

Top 10 Companies To Own For 2014: Jacks International Limited (J11.SI)

Jacks International Limited, an investment holding company, engages in the distribution and retail of health foods and supplements in Singapore and Brunei. It also provides various engineering services, including bending and fabrication of copper, steel, and stainless steel piping; installation of ducts, tubing machinery, and other capital equipment; and machinery and grinding of tools, dies, castings, and other equipment in Australia. In addition, Jacks International Limited engages in property holding business. The company was incorporated in 1979 and is based in Singapore, Singapore. Jacks International Limited is a subsidiary of Abacus Pacific N.V.

Top Gold Stocks To Invest In 2014: PIMCO California Municipal Income Fund III(PZC)

PIMCO California Municipal Income Fund III is a close ended fixed income mutual fund launched and managed by Allianz Global Investors Fund Management LLC. It is co-managed by Pacific Investment Management Company LLC. The fund invests in fixed income markets. Its investment portfolio include California municipal bonds, and other municipal bonds and notes; California variable rate notes and other variable rate notes; California variable rate demand notes and other variable rate demand notes; U.S. treasury bills; and call options written and put options written. Allianz Global Investors Fund Management LLC serves as an investment Manager to the fund. PIMCO California Municipal Income Fund III was formed in 2002 and is based in New York City.

Top 10 Companies To Own For 2014: Trina Solar Limited(TSL)

Trina Solar Limited, through its subsidiaries, designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. The company offers monocrystalline PV modules ranging from 165 watts to 185 watts in power output; and multicrystalline PV modules ranging from 215 watts to 240 watts in power output that provide electric power for residential, commercial, industrial, and other applications. It also involves in the design and production of various PV modules, such as colored modules for architectural applications and larger sized modules for utility grid applications based on customers? and end-users? specifications. Trina Solar Limited sells and markets its products primarily to distributors, wholesalers, power plant developers and operators, and PV system integrators. The company was founded in 1997 and is based in Changzhou, the People?s Republic of China.

Advisors' Opinion:

• [By Hawkinvest]

  Trina Solar Ltd. (TSL) is one of the most respected solar companies in China. It has a strong balance sheet, especially when compared to many other Chinese solar companies. Trina Solar recently reported financial results for fourth quarter and full year of 2011. The loss for 2011 was $37.8 million, or 54 cents per share. Trina Solar is working to reduce non-silicon manufacturing cost to less than 60 cents per watt by the end of 2012, which will give the company a competitive advantage. This company is one of China's "blue chip" solar stocks, and it is likely to lead an industry rebound when it comes. With the recent financial report out of the way, and the stock below $8 per share, it appears be the right time to start buying in stages.

Top 10 Companies To Own For 2014: Pretium Resources Inc (PVG)

Pretium Resources Inc. is an exploration and development company. The Company is engaged in the acquisition, exploration and development of precious metal resource properties in the Americas. Its projects include the Brucejack Project and the Snowfield Project, which are advanced-stage exploration projects located in northwestern British Columbia. The Brucejack Project is a gold-silver exploration project consisted of six mineral claims totaling 3,199.28 hectares in area. As of December 31, 2011, the Brucejack Report was consisted of eight different zones on the West Zone, Bridge Zone, Low Grade Halo Zone, Shore Zone, Galena Hill Zone, Gossan Hill Zone, SG Zone and Valley of Kings (VOK) Zone. As of December 31, 2011, the Company had 100% interest in the Snowfield Project. The Snowfield Project also contains molybdenum and rhenium. The Company�� subsidiaries include Pretium Exploration Inc. and 0890696 B.C. Ltd. Advisors' Opinion:

• [By Christopher Barker]

  Under the extremely capable leadership of President and CEO Robert Quartermain, Pretium Resources has already tackled the same challenge that Colossus now faces to produce a reliable and conservative estimate of a resource that is -- particularly in Pretium's case -- characterized by some of the richest pockets of bonanza mineralization this Fool has ever seen! Going out of its way to adjust for the potential data-skewing impact of those world-class bonanza zones, Pretium delivered meaningful shareholder value during 2012 by adhering to very conservative estimation parameters that lend a truly uncommon degree of confidence to the 8.5 million ounces in indicated resources within the Brucejack deposit's Valley of the Kings. When Pretium releases its pending feasibility study for the project by mid-2013, I anticipate pristine project economics that will leapfrog the project toward a fast-tracked construction phase with strongly bullish implications for the stock.

Top 10 Companies To Own For 2014: Skystar Bio-Pharmaceutical Company(SKBI)

Skystar Bio-Pharmaceutical Company engages in the research, development, production, marketing, and sale of veterinary healthcare and medical care products in the People?s Republic of China. Its products include veterinary medicine for poultry and livestock; micro-organism products; bio-pharmaceutical veterinary vaccines; and feed additives. The company offers its products through distributors and directly to customers. Skystar Bio-Pharmaceutical Company is headquartered in Xi?an, the People?s Republic of China.

Top 10 Companies To Own For 2014: Dollar/Yen (YY)

YY Inc., through its subsidiaries, operates an online social platform in the People�s Republic of China. It provides YY Client, a personal computer based user software that offers real-time access to user-created online social activities groups. The company also offers Web-based YY that enables users to conduct real-time interactions on the Web without any downloads or installations; and Mobile YY, a smartphone application. In addition, it operates Duowan.com, a game media Website that provides information on online games and other resources for users and online game players. The company was founded in 2005 and is based in Guangzhou, the People�s Republic of China.

Top 10 Companies To Own For 2014: Riverview Bancorp Inc(RVSB)

Riverview Bancorp, Inc. operates as the holding company for Riverview Community Bank that provides various banking products and services to commercial and retail customers in Washington and Oregon. Its deposit products include demand deposits, negotiable order of withdrawal accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plans. The company also offers commercial loans; real estate mortgage loans; real estate construction loans; and consumer loans, such as one-to-four family mortgage loans, home equity lines of credit, land loans to consumers for the future construction of one-to-four family homes, and other secured and unsecured consumer loans, as well as various installment loans, including loans for debt consolidation and other purposes, automobile loans, boat loans, and savings account loans. In addition, it originates mortgage loans for various mortgage companies; provides automated teller machines, debit cards , and Internet banking services; and asset management services, such as trust, estate planning, and investment management services. As of October 27, 2011, the company had 17 branches, including 12 in the Portland-Vancouver area and 3 lending centers. Riverview Bancorp, Inc. was founded in 1997 and is headquartered in Vancouver, Washington.

Top 10 Companies To Own For 2014: Conquest Resources Limited (CQR.V)

Conquest Resources Limited, a development stage junior exploration company, engages in the acquisition, exploration, development, and operation of mineral properties primarily in Canada. It explores for gold properties in Ontario, Canada. The company holds interest in the Alexander gold project located in the northwestern Ontario's Red Lake gold mining district. The company, through its joint venture with Detour Gold Corporation, also holds interests in the Sunday Lake property comprising 13 square kilometers of prospective mineral leases situated at Detour Lake, Ontario. In addition, it has interest in the Smith Lake Gold project located at Missanabie. The company was formerly known as Conquest Yellowknife Resources Ltd. and changed its name to Conquest Resources Limited in January 2000. Conquest Resources Limited was incorporated in 1945 and is headquartered in Toronto, Canada.

Top 10 Companies To Own For 2014: Avanir Pharmaceuticals Inc(AVNR)

Avanir Pharmaceuticals, Inc., together with its subsidiaries, engages in acquiring, developing, and commercializing novel therapeutic products for the treatment of central nervous system disorders primarily in the United States. The company primarily offers NUEDEXTA, a unique proprietary combination of dextromethorphan and low-dose quinidine for the treatment of pseudobulbar affect. Its product line also comprises AVP-923 in Phase II clinical trial for the treatment of central neuropathic pain in patients with multiple sclerosis; and in Phase III trial for the treatment of patients with diabetic peripheral neuropathic pain. In addition, the company provides Docosanol 10% cream, an over-the-counter product for cold sores treatment. Avanir Pharmaceuticals, Inc. was founded in 1988 and is headquartered in Aliso Viejo, California.

Microsoft Deal for Nokia Cannot Hurt Apple

The primary speculation about Microsoft Corp.’s (NASDAQ: MSFT) deal to buy Nokia Corp.’s (NYSE: NOK) handset business is that it gives the huge software company a building block to catch, or at least replicate, the success of Apple Inc. (NASDAQ: AAPL). Apple’s rise has been led by the launch and upgrades of its spectacularly successful iPhone and iPad. Apple churns out new versions of these products at least once a year. The latest will be released in just a few days. The Apple iOS has been successful as well, heralded as easy to use and nearly bug-free. Microsoft faces the problem that, even if it can build attractive smartphones with wonderful features and functions, it has to enter a market that Apple and Samsung have dominated for years.

Microsoft and Nokia are up against the same barriers that have halted the advance of HTC, Motorola, Sony Corp. (NYSE: SNE) and LG, the largest competitors to Samsung and Apple. Each loses large sums of money attacking the market. Another group of companies that include PC giant Lenovo also try to grab share. Apple and Samsung have portions of many markets that are well above two-thirds. In the United States, according to research firm comScore, Apple and Samsung had nearly 64% of the market in June. Those figures for both firms are rising. Additionally, Samsung products run Google Inc.’s (NASDAQ: GOOG) Android OS, which comScore shows with a 52% market share among operating systems used in smartphones sold in America.

Apple and Samsung are among the best examples of what business school professors call the “first mover” advantage. However, not only were they early to market. Their products remain the best in the market, as far as consumers are concerned.

The success of Apple and Samsung help them in several areas. First, the sales of each support huge marketing budgets, as if they needed that to afford advertising campaigns, given the strength of their balance sheets. Each also dominates shelf space in telecom wireless stores and consumer electronic retail outlets. There is no reason for AT&T Inc. (NYSE: T) or Best Buy Co. Inc. (NYSE: BBY) to move other brands into their places. Apple and Samsung drive sales. The promotion of new products is risky.

Apple pressed into the smartphone and tablet markets when there were no competitors. In essence, they created a market that did not exist when the first iPhone was released in mid-2007. Six years later, Microsoft has no chance of pushing into a sector that already is crowded with competition.

Top Financial Companies To Watch For 2014

It�� another bad day for teen retail. Late last night, clothing retailer Aeropostale (ARO) reported a bigger-than-expected fiscal second-quarter loss, a 15% drop in same-store sales and unveiled disappointing third-quarter financial forecasts. So it�� little wonder investors are dropping the stock like last year�� fashion.

But there�� more to worry about — namely the cash burn.

Aeropostale’s cash balance fell 40% to�$100 million�as�mounting operating losses burned�cash. Cowen & Co. analyst John Kernan predicts the company may need to issue debt or draw on a revolving credit facility to fund working capital late in fiscal 2014 unless sales and margin trends improve. But rising interest rates could make it even more difficult for Aeropostale to return to profitability. Kernan writes:

Top Financial Companies To Watch For 2014: Aviva plc (AV)

Aviva plc provides insurance, savings, and fund management products and services worldwide. It offers life insurance and savings products, which comprise pensions products, such as personal and group pensions, stakeholder pensions, and income drawdown; annuities; protection products, including term assurance, mortgage life insurance, flexible whole life, and critical illness cover; bonds and savings comprising single premium investment bonds, regular premium savings plans, mortgage endowment products, and funding agreements; and investment products consisting of unit trusts, individual savings accounts, and open ended investment companies, as well as equity release and structured settlements. The company also provides general and health insurance products that include personal lines of insurance products, such as motor, household, travel, and creditor insurance; commercial lines of insurance products consisting of fleet, liability, and commercial property insurance; health insurance products comprising private health, income protection, personal accident, and corporate healthcare insurance products; and insurance for corporate and specialty risks. In addition, it offers fund management products and services for institutional, pension fund, and retail clients. Aviva plc sells its products through various distribution channels, including direct sales forces, intermediaries, corporate partnerships, bancassurance, and joint ventures, as well as through the telephone and Internet. The company was formerly known as CGNU plc and changed its name to Aviva plc in July 2002. Aviva plc is headquartered in London, the United Kingdom.

Top Financial Companies To Watch For 2014: Lakeland Bancorp Inc.(LBAI)

Lakeland Bancorp, Inc. operates as the bank holding company of Lakeland Bank, which provides various commercial and consumer banking products and services to small and medium-sized businesses, professionals, and individuals primarily in northern New Jersey. The company's depository products include checking accounts, savings accounts, demand deposits, time deposits, NOW accounts, money market accounts, and certificates of deposit. It also offers short and medium term loans, lines of credit, letters of credit, inventory and accounts receivable financing, real estate construction loans, mortgage loans, merchant credit card services, secured and unsecured loans, consumer installment loans, and commercial and industrial loans. In addition, the company provides wire transfer, Internet banking, night depository services, and safe deposit services; cash management services, such as remote capture of deposits and overnight sweep repurchase agreements; and investment and advisory s ervices. It operates 47 banking offices in Bergen, Essex, Morris, Passaic, Sussex, and Warren counties in New Jersey. The company was founded in 1969 and is headquartered in Oak Ridge, New Jersey.

5 Best Penny Stocks To Buy Right Now: Peoples Bancorp Inc.(PEBO)

Peoples Bancorp Inc. operates as a holding company for Peoples Bank, National Association that provides financial products and services. It offers commercial and retail banking, insurance, brokerage, and trust services. The company accepts various deposit products, including demand deposit accounts, savings accounts, money market accounts, and certificates of deposit; and provides commercial, consumer, and real estate mortgage loans, as well as lines of credit. It also offers debit and automated teller machine (ATM) cards; corporate and personal trust services; safe deposit rental facilities; travelers checks, money orders, and cashier?s checks; and telephone and Internet-based banking services. In addition, the company provides a range of life, health, and property and casualty insurance products; and fiduciary and wealth management services. Further, it offers brokerage services through an unaffiliated registered broker-dealer; and credit cards to consumers and business es, as well as provides merchant credit card processing services through joint marketing arrangements with third parties. The company offers its financial products and services through 47 financial service locations and 40 ATMs in southeastern Ohio, northwestern West Virginia, and northeastern Kentucky. Peoples Bancorp Inc. was founded in 1902 and is based in Marietta, Ohio.

Top Financial Companies To Watch For 2014: SP Bancorp Inc.(SPBC)

SP Bancorp, Inc. operates as the holding company for SharePlus Federal Bank that provides community banking products and services to individuals, families, and businesses in the United States. The company offers various deposit products, including noninterest-bearing and interest-bearing demand accounts, savings accounts, money market accounts, and certificates of deposit. Its loan portfolio includes residential mortgage loans secured by residential real estate; commercial real estate and home equity loans, including lines of credit and home improvement loans; consumer loans consisting primarily of automobile loans; and commercial business loans. The company also provides brokerage services for the purchase and sale of non-deposit investment and insurance products through a third-party brokerage arrangement. It provides its services through seven branches, four of which are located near the Bank's headquarters in Plano, Texas; two branches are located in Louisville, Kentuc ky; and one branch is located in Irvine, California. The company was founded in 2010 and is headquartered in Plano, Texas.

Hearsay Social Gets New Round of Funding, More Financial Services Clients

Hearsay Social, the social media platform provider whose mission is to help advisors and financial services firms embrace “social selling” to grow their businesses, just received a new round of funding and recently signed up a bevy of new financial services firms as clients.

The San Francisco-based social media firm, launched in 2009, announced Thursday that it has raised an additional $30 million in Series C funding led by existing investors, Sequoia Capital and NEA, bringing its total funding to $51 million.

New companies have also signed on in the past six months as clients, with the most recent being Raymond James and LIMRA. Raymond James, which partnered with Hearsay in July, is now offering Hearsay’s platform to its 6,000 advisors, while LIMRA announced recently that Hearsay is its exclusive Elite Strategic Partner, becoming the endorsed social media solution for LIMRA member companies.

Companies that signed on to use Hearsay’s platform in the last six months are Mutual of Omaha, Bank of the West, Nationwide Insurance, Allianz Global Investors, Wunderlich Securities, Modern Woodmen of America, SWBC, RPM Mortgage, Mortgage Master and two Canadian Chartered banks.

Gary Liu, recently hired as VP of marketing as part of Hearsay’s executive push, says the companies are now in “various stages” of rolling out Hearsay Social as part of their social sales programs.

“The way that today’s customer — retail and institutional — makes buying decisions is increasingly influenced by online and social media sources,” Clara Shih, Hearsay Social’s CEO, and a ThinkAdvisor blogger, told ThinkAdvisor in an interview Wednesday. Clients’ “buying decisions have fundamentally shifted," so the way that an advisor ‘sells’ must shift as well. Hearsay’s “role is to help advisors hone the right ‘trigger events’” that their clients tell them about via Facebook, Twitter or LinkedIn, such as the birth of a child, marriage, or pending retirement — all “life events that push people to get financial help,” Shih says.

“Clients are sharing these life events, or buying signals, on social media,” Shih continues, which creates the perfect “opportunity for advisors to personalize their message based on what’s happening in people’s lives.” Emails, she says, have become an “impersonal” way to reach clients, and “most emails don’t get opened.”

What do advisors get from Hearsay’s platform? The Hearsay Social platform, as Liu explains, is “a SaaS application that advisors can access via any device to hear and respond to the most relevant things that their customers and prospects are ‘saying’ on top social networks, including Facebook, LinkedIn, Twitter and Google+.”

Key features, Liu says, include: “Social Signals,” a feature that alerts advisors about important events in the lives of the people in their network, as well as a content library that allows advisors to easily share compliance-approved content and links across their social networks with just a few clicks.

Shih says Hearsay has broken social selling into four steps: First is to “be findable,” she says. “It’s not acceptable when a client searches for you and you’re not there” on Facebook, Twitter or LinkedIn, for instance. “You have to be there.”

Second is to grow your firm and network. Third is to “listen/hear what’s going on in your clients’ lives, [understand] their life events.” Fourth, establish credibility and build your brand. “We view our role as helping [firms] operationalize” that, Shih says.

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Check out Go Social, Stay Compliant: 3 Tips for Advisors on ThinkAdvisor.

OmniVision Technologies – The Beat(ing) Goes On

I've followed OmniVision Technologies (Nasdaq:OVTI) for quite a while now, but I've never owned the shares. In a nutshell, OmniVision seems to fit into that "it's more trouble than it's worth" category of stocks where severe operational volatility (that I don't believe the company really can or could do much to control) leads to big swings in the price. That may be fine for investors/traders who like active names that produce multiple trading opportunities for buy/sell moves within a year, but it is much less attractive to those of us who pursue an investment path of "enlightened torpor".

With that, OmniVision's fiscal first quarter (and guidance for the second quarter) was really just more of what I've learned to expect from this company. While I do believe OmniVision has good technology and a solid market position relative to the likes of Sony (NYSE:SNE) and Samsung, it's just such a difficult market to prosper in, particularly with the turbulence in the handset market right now.

Fiscal Q1 Comes In Light
Although it's hard to say that weakness in CMOS sensor demand tied to weaker handset shipments is a surprise, the fact remains that OmniVision came in a little light with first quarter results.

Revenue rose 45% this quarter (and 11% sequentially), coming in just above the midpoint of management's guidance for the quarter, but a just a touch shy of Wall Street's figure. Unit shipments were up 25% from last year (and up 11% sequentially), but ASPs were flat after five straight quarters of improvements. OmniVision's percentage of revenue from mobile devices didn't change much, but it was weaker than expected for this quarter. Also, it's worth noting that the company saw a smaller percentage of shipments in the 2 megapixel and above range (47% versus 50%).

Due at least in part to mix, OmniVision disappointed on margins. Gross margin dropped almost two points from last year and ticked down slightly on a sequential basis. Although operating income was up sharply from last year and up strongly on a sequential basis, it looks OmniVision missed on margins by about half a point.

Demand And Competition Still Loom Large
OmniVision wouldn't be the only handset-sensitive company to see an impact from slowing sales of high-end phones – it has appeared as a meaningful concern for others like Broadcom (Nasdaq:BRCM), Qualcomm (Nasdaq:QCOM), Atmel (Nasdaq:ATML), and Avago (Nasdaq:AVGO). As has been the case with others in the handset chip space, OmniVision is not only facing the prospect of slower sales of high-end phones (which typically include more advanced and lucrative components), but increasing competition from lower-cost suppliers in the low- and mid-range handset markets.

That leaves OmniVision in a tough position – Sony can pressure the company on the high end (and has done so at clients like Apple (Nasdaq:AAPL), while a variety of Asian suppliers are driving prices much lower for components going into lower-priced phones where "good enough is good enough" is more the order of the day.

To that end, management's guidance reflects a lot of those uncertainties. Although OmniVision's revenue guidance range for the next quarter did include the prior Street average, the new midpoint is about 4% below the Street. Likewise, while the wide EPS range includes the prior average estimate, the midpoint is about 10% lower than where the Street was looking.

The Bottom Line
There is certainly a chance that high-end handset demand could recover, but I think investors need to brace themselves for at least the possibility that that market is close to saturation. Likewise, while it is possible that ultrabook demand will eventually materialize and boost the potential addressable market for OmniVision (and Atmel in touch), I'm not sure I'd bet on that … and certainly not in the next couple of quarters.

I hate to say that valuation doesn't matter with OmniVision shares, but the reality is that this stock is wildly sensitive to quarter-to-quarter results and guidance, as the discounted fair value can swing wildly with just a few small adjustments to long-term revenue growth or margin assumptions. With all of that uncertainty, I'm not interested in these shares at this price, but those with more of an inclination towards trading should probably have this stock on their watchlist as it does tend to produce some pretty wide swings.

Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.

Italy Is The Weak Link In Europe

The capital outflow from the emerging markets is proving as destabilizing as the previous inflows. Pundits can talk about currency wars all they want, but the real issue is the ability to cope with volatile capital flows, which is the price of integration in the global economy.

In fact, the real surprise is the limited resort to outright protectionism and surely nothing on the scale of Smoot-Hawley et.al. That fact that the World Trade Organization has been busy hearing cases is not as much a sign of insipid beggar-thy-neighbor policies as it is the functioning of a conflict-resolution mechanism to prevent a tit-for-tat escalation of a genuine trade war.

The pressure on capital markets in the emerging markets - currencies, equities and interest rates - may be eclipsing other developments at the moment. One of our key interpretive points has been that the European crisis may have enjoyed a respite, but come next month it will resurface and once again be a key element of the investment climate.

There are, after all, several unresolved issues, including Greece's funding gap, Portugal's status and whether a new program is necessary, and more developments toward a banking union. It is debatable how much the proximity of the Germany election is stalling progress and how much is owed to the summer holidays and high level meeting schedules.

In any event, it appears that Italy is moving into position to be the most immediate challenge in Europe. Italy chafes under the Teutonic ordo-liberalism (that Draghi has said is enshrined in the ECB). Its problems are set to resurface prior to the German election.

Investors will receive a small taste of what is to come as early as tomorrow. The Italian cabinet will debate the controversial property tax and VAT under a cloud of tensions spurred by Berlusconi's conviction of tax fraud and pending a vote in the Senate to enforce the court ruling that the former prime minister should be barred from public office for several years.

The more the center-right succeeds in its push to abolish the controversial property tax on primary residence and resist the VAT increase, the greater the fight promises to be over filling the funding gap that will be evident when attention turns to the 2014 budget.

Tactically, the Letta government has little choice. It is better to postpone implementation of taxes that to repeal them, which was what the center-right pushes. This a congenital defect inherited from the Monti government, whose legislative agenda relied on ruling by decrees. Abolishing the taxes altogether now would likely not only this government, but likely future governments as well, from re-instituting such increases, leaving Italy fiscally vulnerable.

That said, remember, Italy has a primary budget surplus. That means that excluding debt servicing, Italy is running a budget surplus. Another way of saying this is that tax revenues are sufficient to cover current expenses. Given the recessionary conditions, raising taxes for the sole purpose of reducing the debt inherited from past mistakes does seem foolhardy.

The Letta government is terribly circumscribed by the fragile grand coalition that was ultimately foisted on the political system by the threat of a presidential resignation that could have triggered a constitutional crisis. This means that it is too weak to address any serious problem, including the kind of electoral reform needed to prevent continued weak governments. It has focused instead on largely small measures that are not very controversial. Yesterday, for example, it moved to cut the funding of official autos by 20%. It moved to reduce the number of short-term employment contracts given to civil servants. It also is focusing on accessing EU structural funds.

Many members of Berlusconi's center-right party have threatened to resign from government if the center-left votes to strip Berlusconi from office. That debate is set to begin on September 9 and reports suggest it could take a few weeks befo! re the wh! ole chamber votes on the measure. To be clear, not outcome is good for Italy.

If the court decision is enforced by the Senate and Berlusconi is banned from political office, the Letta government could very well collapse. This would put Italy in a precarious position to draft the 2014 budget. And without electoral reform, a strong government is almost impossible to envision. Of note, Grillo's 5-Star movement has waned a bit in the polls. However, despite sectarian infighting and being arguably marginalized in recent months, it may still be a potent political force.

On the other hand, if the center-left does not muster the strength and courage to enforce the ban, Berlusconi has the Letta government over the proverbial barrel. It will confirm that the center-left does not want to go to the polls and this will allow Berlusconi to dictate the terms and drive the 2014 budget.

It would demonstrate one of Berlusconi's supporters main claims - that the center-left cannot defeat the former prime minister at the polls - and looks for other means to do so. It would not simply be a victory for Berlusconi, but it would represent a demoralizing defeat for the center-left and its leaders that emerged since the Clean Hands investigations.

The re-emergence of simmering political problems in Italy will have clear implications for investors. Italian assets, both bonds and stocks, have already begun under-performing. The 10-year yield is up about 40 bp over the past three months, a third of which has taken place over the past week.

The premium over Germany has widened nearly 30 bp since hitting a 2-year low earlier this month. The discount to Spain has been reduced to its smallest since March 2012 when Italy's benchmark yield fell below Spain's. Italy's 2-year yield has pierced the 2% threshold for the first time in a couple of months.

Rising bond yields has coincided with the under-performance of Italian equities. Over the past five sessions, the Italian bourse is the worst performing G1! 0 equity,! losing about 2.25%. Banks are among the worst performing sectors. It is Italy's banks that are the real Achilles Heel, not so much government finances.

This in turn may help explain the fact that the sovereign credit default swaps have risen in price more than one would expect given the magnitude of the rise in sovereign yields. It appears that the CDS market is being used to hedge not only sovereign exposure but Italian banks as well. Rising bad loan books have already contributed to a weak outlook, but banks seems ill-prepared for an increase in interest rates. Moreover, Italian banks have generally lagged other banks in repaying the long-term repo money borrowed from the ECB.

Italy's challenges are threatening to bust the seams of the fragile calm of the euro area over the past couple of months. The combination of Fed tapering and an Italian crisis will have negative knock on effects on other peripheral markets and could be the spark that reignites the European crisis.

Source: Italy Is The Weak Link In Europe

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)