Who Benefits from Pennsylvania’s Medicaid Expansion?

Yesterday afternoon, Pennsylvania announced that it would use federal dollars to pay private insurers to cover eligible Pennsylvanians. UBS analysts A.J. Rice and Jailendra Singh think Community Health Systems (CYH), Tenet Healthcare (THC) and LifePoint Hospitals (LPNT) stand to benefit the most from the deal:

AP Pennsylvania Gov. Tom Corbett

Community Health Systems would be the biggest winner with 11% of its beds in PA (12% of revenues). Community Health Systems currently has roughly 23% of its beds in Medicaid expanding states (would go to 34%
with PA coming in), and the company is guiding for $100-$160 mln of ACA related benefit in 2014. Tenet Healthcare also has roughly 4% of its beds in the state. Tenet Healthcare has roughly 34% of its beds in Medicaid expansion states and expects $75-$125 mln of health reform EBITDA benefit in 2014. Finally, LifePoint Hospitals, which has not historically been in PA, is expected to close its pending acquisition of Conemaugh Health System in early September. The health system includes three hospitals (total 474 beds) generating roughly $500 mln in annual revenue (or roughly 10% of our estimated 2015 revenues).

Rice and Singh also expect Indiana to make a similar move:

Similar to models pursued by Pennsylvania and Arkansas, Republican Governor Mike Pence is pursuing Medicaid expansion through his version of the state-run Healthy Indiana Plan (“Healthy Indiana Plan 2.0″). In early August, CMS returned the Pence administration to include input from a tribe in the state and resubmit its proposal. Our understanding is that the state is coordinating with CMS and remains on track to launch its Medicaid expansion alternative plan effective January 1, 2015. Community Health Systems is most exposed to the state (10% of its revenues) among the five public hospital companies.

Shares of Community Health Systems have gained 3.4% to $55.27 at 12:02 p.m., while LifePoint Hospitals has risen 2.9% to $61.73 and Tenet Healthcare has advanced 1.9% to $75.58.

OSI Chairman Arrives In Shanghai, Will Meet Press Amid Meat Scandal -- Report

Sheldon Lavin, the chairman of the Aurora, Illinois meat producer at the center of a reported safety scandal that has dragged in McDonald's in mainland China, Hong Kong and Japan, has arrived in Shanghai and is due to join a press conference with other senior company officials this afternoon, government-published Shanghai Daily said today.

The officials will meet with the Shanghai Food and Drug Administration this morning, the newspaper said.

An undercover Shanghai TV reporter posing as a worker at Shanghai Husi, the OSI unit involved in the alleged scandal, filmed colleagues combining expired meat with fresh cuts and then lying to McDonald's inspectors, Chinese media reported earlier this month. 

Five senior Husi executives are said to have been detained. Sales of out-of-date meat were reported to have gone on for years.    OSI, which is privately held, said in a statement on Saturday it had recalled all meat processed at the facility.

McDonald's is facing an investigation in Hong Kong linked to Shanghai Husi products, Hong Kong media have reported.

– Follow me on Twitter @rflannerychina

 

 

3 Stocks Under $10 Moving Higher

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Read More: Warren Buffett's Top 10 Dividend Stocks

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Read More: 10 Stocks George Soros Is Buying

Paragon Shipping

Paragon Shipping (PRGN) provides shipping transportation services worldwide. This stock closed up 2.6% to $5.43 a share in Thursday's trading session.

Thursday's Range: $5.17-$5.49

52-Week Range: $4.52-$9.40

Thursday's Volume: 213,000

Three-Month Average Volume: 139,217

From a technical perspective, PRGN jumped higher here and moved back above its 50-day moving average of $5.35 with above-average volume. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $4.57 to its recent high of $5.50. During that uptrend, shares of PRGN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PRGN within range of triggering a near-term breakout trade. That trade will hit if PRGN manages to take out some near-term overhead resistance at $5.50 with high volume.

Traders should now look for long-biased trades in PRGN as long as it's trending above Thursday's intraday low of $5.17 or above more support at $5 and then once it sustains a move or close above $5.50 with volume that hits near or above 139,217 shares. If that breakout materializes soon, then PRGN will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $6.05 to $6.14, or even $6.40 to $7.

Read More: 7 Stocks Warren Buffett Is Selling in 2014

Quiksilver

Quiksilver (ZQK) designs, develops, markets and distributes branded apparel, footwear, accessories and related products primarily for men, women and children. This stock closed up 5.7% to $3.29 a share in Thursday's trading session.

Thursday's Range: $3.11-$3.29

52-Week Range: $2.77-$9.29

Thursday's Volume: 1.74 million

Three-Month Average Volume: 4.01 million

From a technical perspective, ZQK ripped sharply higher here right above some near-term support at $2.96 with lighter-than-average volume. This strong move to the upside on Thursday is quickly pushing shares of ZQK within range of triggering a near-term breakout trade. That trade will hit if ZQK manages to take out some near-term overhead resistance levels at $3.30 to its 50-day moving average of $3.35 and then above more resistance at $3.46 with high volume.

Traders should now look for long-biased trades in ZQK as long as it's trending above Thursday's intraday low of $3.11 or above more near-term support at $2.96 and then once it sustains a move or close above those breakout levels with volume that hits near or above 4.01 million shares. If that breakout materializes soon, then ZQK will set up to re-test or possibly take out its next major overhead resistance levels at $3.71 to $3.91, or even $4.32. Any high-volume move above $4.32 will then give ZQK a chance to re-fill some of its previous gap-down-day zone from June that started near $6.

Read More: 10 Stocks Carl Icahn Loves in 2014

Arotech

Arotech (ARTX), together with its subsidiaries, provides defense and security products and services. This stock closed up 3.4% to $3.87 a share in Thursday's trading session.

Thursday's Range: $3.63-$3.95

52-Week Range: $1.63-$6.61

Thursday's Volume: 882,000

Three-Month Average Volume: 635,659

From a technical perspective, ARTX bounced notably higher here right off its 200-day moving average of $3.61 with above-average volume. This sharp move to the upside on Thursday is quickly pushing shares of ARTX within range of triggering a major breakout trade. That trade will hit if ARTX manages to take out its 50-day moving average of $3.94 to some more key overhead resistance at $4.10 with high volume.

Traders should now look for long-biased trades in ARTX as long as it's trending above its 200-day at $3.61 or above more near-term support levels at $3.45 to $3.25 and then once it sustains a move or close above those breakout levels with volume that hits near or above 635,659 shares. If that breakout triggers soon, then ARTX will set up to re-test or possibly take out its next major overhead resistance levels at $4.73 to $5, or even $5.23.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

3 Top Dividend Stocks of 2014

Photo: Steve Depolo.

It's always smart to seek solid dividend-paying stocks for your portfolio, as they tend to be reliable performers, and their payouts can bolster a portfolio during market downturns. When I decided to look into the top dividend stocks 2014 has had to offer, I found a bunch that not only had performed well year to date but that also still offered significant payouts.

Three of the top dividend stocks 2014 has had to offer are Intel (NASDAQ: INTC  ) , ConocoPhillips (NYSE: COP  ) , and Lorillard (NYSE: LO  ) . See if any seem like a good fit for your portfolio.

Intel

Intel stock has surged 33% year to date, and this top dividend stock of 2014 recently yielded 3%. The semiconductor giant has suffered in recent years as PC sales taper off and Intel struggles to catch up in the mobile market. Intel is gaining ground now and has some promising initiatives in place, such as aiming to supply chips for $50 smartphones in emerging markets.

Those interested in the top dividend stocks of 2014 should note that Intel's shareholders have been rewarded not only via dividends but also through aggressive share buybacks. The company has reduced its share count by roughly a fifth over the past decade, boosting earnings per share.

The company's last quarterly report was strong, topping revenue and earnings estimates and reflecting some growth in PC sales. Intel's mobile division posted a significant loss, but data centers and the Internet of Things posted year-over-year growth of 19% and 24%, respectively. While the mobile performance is disappointing, it's partly due to hefty investments in chip development that could pay off handsomely in the future. Meanwhile, Intel's cash flow remains prodigious, topping $9 billion annually. Given Intel's deep pockets and dominant position, it's hard to bet against it.

ConocoPhillips

ConocoPhillips stock has gained 16.5% year to date, and this top dividend stock of 2014 recently yielded 3.2%. It has made smart moves in recent years, capitalizing on the boom in domestic oil and gas by shedding some foreign assets (in locations such as Nigeria, Kazakhstan, and Algeria) in order to invest more heavily in U.S. operations.

This member of the top dividend stocks of 2014 has investors excited because of its plans to deliver double-digit shareholder returns in coming years. That will be done by volume growth in the neighborhood of 3% to 5% annually, in addition to cost-cutting, profit-margin expansion, and, of course, its dividend.

ConocoPhillips' second-quarter results were solid, featuring adjusted earnings rising 14% year over year and production in the Eagle Ford and Bakken shale regions surging 38%. Those regions offer the highest margins, and ConocoPhillips is focusing its investments on its higher-margin operations. It's also exploring for more finds in shale and deepwater regions around the world. With the company likely to grow its free cash flow via these plans, it stands a solid chance of remaining among the top dividend stocks of 2014  by year-end.

Lorillard

Lorillard stock has popped 22% year to date, and this member of the top dividend stocks of 2014 recently yielded 3.8%. You may not be very familiar with it, but Lorillard is the country's third-largest tobacco company, and in these days of burgeoning e-cigarette sales, it's the owner of the blu eCig business, which recently boasted market share of 41% (although that's down from its peak share of 50%). Perhaps most important at the moment, though, is that Lorillard is being acquired by Reynolds American (NYSE: RAI  ) in a $27 billion deal.

Since Reynolds has its own e-cig brand, Vuse, blu eCig is being sold to Imperial Tobacco Group. That may seem to have been a wise move, as Lorillard's last quarter featured electronic device sales plunging 35% due to price decreases and growing competition. But the deal is worth questioning, too, as Lorillard, known for its strength in menthol smokes (think Newport menthol cigarettes), is giving up a major growth engine in its e-cigs and is placing a lot of hope in Reynolds' Vuse. To some, it looks like Imperial Tobacco is the big winner in the merger. (To be clear, a key driver of the deal is that the two combined companies can compete more effectively against Marlboro's Altria Group.)

Lorillard's last quarter also featured a drop in cigarette volume but also a 1% uptick in revenue thanks to price hikes. The new combined company may deliver solid growth in the future, but the tobacco industry faces many headwinds in the U.S., such as regulations, rising taxes, and a decrease in smokers.

Of these three top dividend stocks that 2014 has had to offer, Intel and ConocoPhillips seem the most promising.

Top dividend stocks for the next decade
If you're looking for even more promising dividend-paying stocks, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

3 Big-Volume Stocks to Trade for Breakouts

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Hated Earnings Stocks You Should Love

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Rocket Stocks to Buy for Summer Gains

With that in mind, let's take a look at several stocks rising on unusual volume recently.

AeroVironment

AeroVironment (AVAV) designs, develops, produces, supports and operates unmanned aircraft systems, tactical missile systems, and efficient energy systems in the U.S. and internationally. This stock closed up 5.6% to $35.33 in Monday's trading session.

Monday's Volume: 841,000

Three-Month Average Volume: 327,116

Volume % Change: 149%

From a technical perspective, AVAV ripped sharply higher here right above its 50-day moving average of $32.76 with strong upside volume flows. This sharp spike higher on Tuesday is quickly pushing shares of AVAV within range of triggering a big breakout trade. That trade will hit if AVAV manages to take out some near-term overhead resistance levels at $36.45 to $36.50 and then once it clears some past resistance levels at $36.97 to $37.90 with high volume.

Traders should now look for long-biased trades in AVAV as long as it's trending above Monday's intraday low of $33.43 or above its 50-day at $32.76 and then once it sustains a move or close above those breakout levels with volume that hits near or above 327,116 shares. If that breakout gets underway soon, then AVAV will set up to re-test or possibly take out its next major overhead resistance level at it 52-week high of $41.67.

Pacific Ethanol

Pacific Ethanol (PEIX) produces and markets low-carbon renewable fuels in the U.S. This stock closed up 8.2% to $16.98 in Monday's trading session.

Monday's Volume: 2.51 million

Three-Month Average Volume: 1.21 million

Volume % Change: 144%

From a technical perspective, PEIX ripped sharply to the upside here and broke out above some key overhead resistance levels at $16.08 to $16.29 with high volume. This big move to the upside on Monday is now starting to push shares of PEIX within range of triggering another big breakout trade. That trade will hit if PEIX manages to take out Monday's intraday high of $17.35 to its 52-week high at $18.65 with high volume.

Traders should now look for long-biased trades in PEIX as long as it' trending above Monday's intraday low of $15.85 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.21 million shares. If that breakout materializes soon, then PEIX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $20 to $25.

Imperial Oil

Imperial (IMO) is engaged in the exploration for and the production and sale of crude oil and natural gas in Canada. This stock closed up 0.97% at $53.21 in Monday's trading session.

Monday's Volume: 629,000

Three-Month Average Volume: 182,885

Volume % Change: 206%

From a technical perspective, IMO rose modestly higher here right around some near-term support at $52.84 to $52 with above-average volume. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $39.98 to its recent high of $54.09. During that uptrend, shares of IMO have been consistently making higher lows and higher highs, which is bullish technical price action. This move higher on Monday is starting to push shares of IMO within range of triggering a near-term breakout trade. That trade will hit if IMO manages to take out some near-term overhead resistance levels at $53.50 to its 52-week high at $54.09 with high volume.

Traders should now look for long-biased trades in IMO as long as it's trending above some near-term support levels at $51.61 or at its 50-day at $50.70 and then once it sustains a move or close above those breakout levels with volume that hits near or above 182,885 shares. If that breakout kicks off soon, then IMO will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Huge Stocks on Traders' Radars

>>5 Toxic Stocks You Need to Sell in July

>>3 Stocks Under $10 Making Big Moves Higher

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

5 Reasons To Dump Cisco Stock

Cisco Systems Cisco Systems, the $48 billion (12 months revenues) network equipment maker in which I have no financial interest, has been dead money since it peaked at $82 in March 2000. While he drove the stock's phenomenal rise during the 1990s, I am a little surprised that the 65-year-old John Chambers has held onto his job since then. And if he survives Cisco's latest earnings report — instead of being offered a chance to retire early — it will be one more reason to give up on Cisco's stock.

Cisco has lost the ability to adapt effectively to changing technology. For my first book, The Technology Leaders, I interviewed former Cisco chairman, John Morgridge. He articulated the logic behind the acquisition strategy that helped keep Cisco from falling behind new technology that its customers wanted.

Morgridge had worked as a sales person for Honeywell and he saw that sales people were loyal to their customers. So if a new company came out with a product that their customers liked better, the sales people would leave Honeywell and sell the rival's product.

Morgridge decided that to keep the best sales people, Cisco would need to acquire the upstarts whose products customers were buying.

Cisco's latest earnings report features weak results, a lame forecast and significant job cuts that suggest it has lost that ability.

Its weak results were slightly better than expected. Its fiscal fourth quarter revenue of $12.4 billion was down 0.5% from the year before but $300 million higher than analysts expected, according to Thomson Reuters Thomson Reuters I/B/E/S. While its earnings of $2.8 billion were flat compared to the year before, its adjusted earnings per share of 55 cents beat the consensus forecast by two cents.

No relief is in sight for growth-hungry investors. Cisco forecast current quarter EPS between 51 cents and 53 cents and predicted flat to 1% growth for the period.

John Chambers (Photo credit: Wikipedia)

And Cisco is continuing its annual string of job cuts. In the last three years, Cisco has announced 21,000 firings — 11,000 in 2011; 4,000 a year ago, and 6,000 announced on August 13 (the latest job cut amounts to 7% of its 74,000 person workforce and will result in restructuring charges of $700 million).

On its conference call, Chambers told analysts, "The market doesn't wait for anyone. We are going to lead it, period. The ability to do that requires some tough decisions. We will manage our costs aggressively and drive efficiencies."

Here are five reasons to dump Cisco stock:

1. Bad geographic bets

Cisco has placed its geographic chips on countries that used to be hot but now are not. In emerging markets, Cisco revenue plunged — down 23% in China and 13% in Brazil. And Chambers is pessimistic: "We don't see emerging markets growth returning for several quarters and believe it could get worse," he said in the conference call.

2. Poor product line mix

Moreover, its biggest product lines are declining while its smaller ones are growing faster. High-end routers fell 7% and switches were down 4% while data center revenues soared 30% and security sector revenues climbed 29%.

In Big M&A Year, More Transactions Flop

An increase in mergers & acquisitions has been one of the leading investment themes so far this year. This week, 2014 became known for failed transactions, too. The week also brought potential trouble for tax inversions, which have been a growing part of the M&A boom. 

Some $2.5 trillion of deals have been announced in 2014, according to Thomson Reuters. And $428 billion of deals have been withdrawn. Both numbers represent the briskest pace since 2007.

On Tuesday, $126 billion worth of proposed mergers were cancelled. First, 21st Century Fox dropped its $94 billion offer for Time Warner. Then Sprint abandoned its pursuit of T-Mobile in what would have been a $32 billion transaction.

Next, Walgreen Co. announced it will spend $15 billion to acquire the 55% of Switzerland-based pharmacy chain Alliance Boots that it doesn’t already own. But Walgreen won’t move its tax base overseas in a tax inversion deal.

In a tax inversion, a company buys a foreign enterprise and then changes its tax domicile to that of the acquired company in order to take advantage of lower tax rates. This has been an increasingly popular tactic for U.S. companies in recent years because our high corporate tax rate.

Walgreen’s announcement came after the Obama administration said it’s considering ways to block inversion deals without awaiting congressional action to change the tax laws.

Walgreen said that its option to buy the rest of Alliance Boots wouldn’t have qualified for inversion treatment. And the company was unable to find another structure it was confident could withstand IRS review.

Walgreen also noted that it was "mindful of the ongoing public reaction to a potential inversion … with a major portion of its revenues derived from government-funded reimbursement programs." By one estimate, Walgreen derives $17 billion a year in revenue from Medicar! e and Medicaid.

Three of the biggest withdrawn merger & acquisitions deals ever have occurred in just the last four months: AstraZeneca by Pfizer ($122 billion), Time Warner by Fox and Time Warner Cable by Charter Communications ($62 billion). All three were hostile takeover attempts, and Pfizer’s pursuit of Britain-based AstraZeneca would have been a tax inversion.

This week’s inversion developments have led to declines in the share prices of Shire PLC and Covidien. Both are foreign companies that have agreed to be bought by U.S. companies—AbbVie and Medtronic, respectively. Neither deal has closed yet, making each potentially vulnerable to any inversion rule changes. AstraZeneca shares also weakened because an inversion crackdown would make another Pfizer attempt less likely.

Some observers contend that this week’s broken deals and pressure on inversions signal a peak in the M&A wave. But history indicates that such tops occur with the completion of blockbuster deals and/or the inability to finance them. Neither is the case here.

What’s more, companies have huge amounts of cash available for acquisitions, and borrowing costs are extremely low. For example, the benchmark U.S. Treasury 10-year note yield yesterday touched a new 15-month low of 2.3 percent.

In addition, the bull market has pushed up share prices. While this boosts the cost of acquisitions, it also gives buyers a strong “currency” if they use their own shares to pay for some or all of the purchase. It’s often cheaper and always quicker to buy a business instead of launching a new one. And in a lackluster economy, acquisitions are a way to boost earnings growth through more revenues and/or increased efficiencies from economies of scale.

Improved job growth and other reports have led to projections of faster U.S. economic growth, such as a 3%-plus annual rate for the second half of this year. How long such an improvement could last is debatable. ! But at le! ast there’s little current evidence of a new recession or financial crisis on the horizon. If the economy indeed is improving, prudent acquisitions could provide a big benefit.

Either way, it’s been a positive sign that shares of companies announcing acquisitions  generally have risen, in contrast to the typical historical pattern in which the buyer’s shares decline.

Crude Oil Is the New Gold Standard

Today I want to tell you a story about energy - especially crude oil.

It involves my run in with the steak bandit...

Just stay with me here...

It begins last Saturday. On a trip to the local supermarket, I saw something you just don't see every day.

You see, I always do the grocery run. It is one of several clauses that have appeared over time in my marriage contract (no doubt about it, this is one document you need to read before signing!).

As I left the store, a crowd had formed outside. There were police all around and the parking lot had been sealed shut.

It turns out a fellow had shoved some steaks down his pants and made a dash for it.

By the time all of us had stretched our necks to see what was going on, the suspect was just sitting... in a car that wouldn't start... with the doors locked... and the windows up... in 90-degree heat.

All in all, he couldn't have been having a very good day.

Maybe he was that hungry. Or maybe he forgot his wallet at home and was late for a party. I'm not sure.

Either way, he was bound for the Allegheny County Jail.

(By the way, the jail is the impressive newer-looking building by the Monongahela River in downtown Pittsburgh. You can't miss it. It looks like an upscale Holiday Inn.)

But I digress; back to the steaks.

I must admit, for a while at least, there will be a question in the back of my mind every time I go to a barbecue. Like, "Any idea where that meat has been recently?"

However, aside from a possible commentary on the plight of some people in the current economy, the episode with the "steak bandit" brought back a memory, along with a broader implication for the energy sector.

Here's the memory and how it relates to energy...

Moving to a Better Monetary Standard

More than 40 years ago, during another bout with a sputtering economy and a declining dollar, I made a remark that drew a fair amount of attention. At the time, I had my own radio talk show in Chicago.

In response to a caller's criticism of the U.S. Federal Reserve and the declining value of the dollar, I made a suggestion (somewhat tongue in cheek) that was then embellished for several days...

"Why worry about shoring up the dollar," I said, "when what we ought to do is move to a better monetary standard."

My suggestion was we use something everybody thought was valuable - steak.

Well, the "steak standard" made the rounds, got mentioned in the local press, and landed me some interviews. There was a more serious point behind all the fun, of course, but it was lost in translation.

My point was this: Throughout history, money has had three primary functions. It serves as a form of exchange, it allows us to price very different articles and commodities, and it provides a way to store value.

By itself, a dollar or a euro or a ruble or a yuan is literally not worth the paper it is printed on.

Of course, these days, there are other ways to complete an exchange without the use of money as such. And the Bitcoin revolution indicates we may have other pricing alternatives. That leaves us with just the value storage function of money, which often turns into a discussion about whether or not we ought to return to the gold standard.

While it has provided the convenience of a common venue of measurement for centuries, the gold standard has always been a very artificial thing. There are, after all, very few real uses for gold. For example, unlike steak, you can't eat it.

Whatever storage value gold has comes from what governments, central banks, and traders give it. There is little utility in the metal itself.

Which finally brings us back to energy and its role in the economy...

Crude Oil Is the New Gold Standard

As I have discussed several times in Oil & Energy Investor before, crude oil is replacing gold as a more accurate storage of value in the economy as a whole.

Unlike gold, the value of oil is essentially measured by what we use it for. Oil, and by extension natural gas and electricity, comprises an essential and inescapable underpinning for every economic function.

Energy generally increases in price as economies improve because demand for it increases. On the other hand, in an economic downturn, energy prices tend to suffer a contraction.

But unlike a gold standard, which represents an official value declared by fiat, energy prices actually tell us something about the economic undercurrents.

For this reason, I continue to argue that the price of crude oil futures contracts are a better gauge of value stored than gold. Meanwhile, futures contracts for both natural gas and electricity are coming to occupy similar positions.

That doesn't mean we should start printing "In drilling rigs we trust" on our currency. But it does mean that energy has become the better barometer against which to value genuine assets.

Energy also has another advantage, unlike the opinions expressed by certain Middle America talk show hosts years ago.

You can't just shove it down your pants and make a beeline to the parking lot.

Here's Why Pandora's Dip Is a Buying Opportunity

Pandora Media (P) posted solid quarterly results. Though the company came up with good results, yet it failed to maintain its market share. The stock crashed 16%, leaving the company in a soup. The reason behind the fall of the company's market share can be seen in the weak guidance. Let us find out whether Pandora still has room to improve or if it is a stock to stay away from?

Quarterly performance

Pandora's quarterly revenue came in at $194.3 million, which was more than $177.7 million analysts' estimates. On the earnings front, Pandora posted a net loss of $0.13 per share, which was a penny better than what analysts expected. However, strong results by Pandora failed to impress investors, and as a result, the stock fell 16% on the stock market.

However, Pandora's active users' increased 8% year-over-year from 69.5 million to 75.3 million in the first quarter of 2014. Also, the company is seeing a solid response from listeners as it saw a 12% growth in listening hours. This clearly indicates that Pandora is growing and gaining traction.

Impressive strategies

To be competitive with its peers and to attract more listeners, Pandora has made some impressive moves. It has introduced many exciting features such as alarm clock, sleep timer, and a station recommendations platform.

In addition, the company is also focusing on expanding Pandora's availability. Under this, Pandora is extending its access and usage in autos and consumer electronic devices. For example, Pandora is now available in 10 out of 10 of the best selling passenger vehicles, and there are now more than 5 million unique users active in Pandora through all of its native automotive integration.

Moving ahead, according to some sources, Pandora's total U.S. radio listening increased from 8.1% to 9.1% in the last one year. This is a concrete sign for Pandora's growth, and with growing internet users, Pandora expects this percentage to increase further in the future.

Risks

Pandora is currently embroiled in a copyright infringement lawsuit brought by several major record labels, including Sony Music, Universal Music, and Warner Music accusing the company of failing to pay for content produced before 1972. This might hurt Pandora's image. The company also posted a weak outlook for the second quarter, and this is another concern.

Trying to improve

Moving ahead, Pandora is focusing on providing variety to users. So, Pandora is introducing listeners to music they love and is reintroducing favorites. So, it is expecting more listeners to engage with Pandora. This might help the company regain its market share.

To further engage listeners and to provide new opportunities to advertisers, Pandora is hosting a series of live personalized concerts designed to connect fans with artists they love in a live setting. Pandora has the unique ability to determine the optimal artist for each city by analyzing the musical preferences of local listeners. To further enhance its existence, Pandora recently announced a new partnership with Peet's Coffee & Tea. This is the first time that it has entered into a featured partnership in the brick and mortar environment.

With this partnership, Pandora will be played in around 300 stores across the U.S. Also, the inclusion of Pandora measurements via Triton Webcast Metrics locally in Telmar is yet another positive indication that the demand for online radio is growing among the broadcast buying community.

Conclusion

Though the stock crashed, yet there is much room for Pandora to grow. So, Pandora might be struggling now, but strong growth in the end market and the growing adoption of its radio service will lead to long-term growth, making it a good buy on the pullback.

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10 Ways to Retire on Less Money

Getty ImagesYour retirement savings will stretch further if you take steps to reduce housing and entertainment costs. Don't let the financial experts scare you. Remember, it's in their interest for you to save more than you really need and then let them handle it so they can profit from your fears and anxieties. Retiring on 100 percent of your pre-retirement income may be an option for one percenters who leave work with golden parachutes, but it's not realistic for the rest of us. Most of us will get by on a combination of some retirement savings in addition to Social Security and a pension if you still have one. Whether your nest egg is large or small, here are 10 ways to make it last: 1. Pay off debt before you retire. The first thing to do is count up your assets and debts. Hopefully, by the time you retire you have more assets than debts. You should no longer have student loans, and your mortgage might even be paid off. Now is not the time to take on new debt. If you have to float a big loan to buy a new car, it's probably better to keep the old one and fix it up. 2. Downsize your housing. Once your kids are grown you don't need three or four bedrooms anymore. A lot of retirees hang on to the old place in case the kids want to move back in. But this is a "what if," while the expense of carrying a home is a certainty. If your budget is limited, then move to a smaller place in a less expensive neighborhood with lower taxes and smaller utility bills. 3. Get a part-time job. Many people choose to work in retirement because they need the money, a place to go in the morning or some new friends. Retirees are no longer concerned about a career, so they don't need to stress out over promotions or workplace politics. Think of your retirement job like the summer job you had as a kid -- have fun, make a few bucks and then go live your life. 4. Share your home. If you're single, consider sharing a home with a friend or relative. Many older houses feature mother-in-law suites, and some newer construction offers two master bedrooms. Two can live cheaper than one, and this setup can offer companionship as well. 5. Rely on friends. Don't be afraid to ask for a favor and then offer to reciprocate. You can save a lot of money driving each other to the airport or the store instead of calling a cab. Exchange yard work for housework or financial expertise for culinary skills. Don't think you have to pay someone to do everything for you. Help each other out. 6. Search for free entertainment. If you want to cruise the Mediterranean, you may need 100 percent of your pre-retirement income. But most people don't do that. Your community likely offers free summer concerts and fall festivals. Check out your library for free seminars, book clubs, movies and lectures. Your church, veteran's association or social club can provide rewarding activities, all at little or no cost. 7. Eat out early in the day. We all like to splurge a bit and skip a turn in the kitchen. If you're going out for a meal, go early in the day. Breakfast is cheaper than lunch. Lunch is cheaper than dinner. If you insist on dinner, go early for the senior citizen discount. Or consider trying a place that serves breakfast anytime. Eggs and sausage are definitely less expensive than steak and potatoes. 8. Stop subsidizing your kids' lifestyles. The old saying goes: Give your children roots and wings. You've already given them roots. Now it's time for wings. It doesn't really help anyone to let them settle into their old bedroom. They need to find their own apartment, prepare their own meals and learn to live on their own. 9. Take advantage of discounts. Join AARP for discounts as well as supplemental medical insurance. Take a trip to town hall and find out about real estate tax breaks and other senior citizen discounts. Check out programs for free transportation, low-cost meals and subsidized health services. 10. Go international. Some people retire to the land of their grandparents, where they enjoy the support of family members. There are retirement enclaves in Mexico, Costa Rica and other Latin American countries. And a new trend points toward Asia and countries like Malaysia and Thailand, where the cost of living is low and people respect the elderly. Retiring overseas requires a lot of research, but it's an option more budget-minded people are considering. .