BUSINESS

World Market Overview 15/2/2011

U.S. stocks traded in a tight range Monday, as Wal-Mart weighed on the Dow Jones Industrial Average, but materials gained in the wake of a surge of Chinese exports and imports last month.

Australian Stock Market Report - Morning 15/2/2011

US President Obama has unveiled his fiscal 2012 budget proposal. The aim is to reduce the budget deficit by US$1.1 trillion over the next decade and cut the deficit from 10.9pct of GDP to 3.2pct of GDP by 2015.

The Overnight Report: Wall Street Doubles Up

By Greg PeelThe Dow fell 5 points while the S&P closed up 0.2% to 1332 and the Nasdaq added 0.3%.The news out of China yesterday, if accurate, was well received in all quarters. China's trade surplus fell to US$6.5bn in January from US$13.1bn in December to mark its lowest level since April last year. Chinese exports rose 38% over the previous January which is healthy for the Chinese economy but it was nicely balanced by a 51% increase in imports.Last decade, China's economy was all about exporting undervalued goods to the world supported by a pegged currency and lending back the receipts mostly to the US, thus exacerbating global imbalance. But now China's domestic economy is on the move, providing receipts to China's trading partners and correcting that imbalance.The two biggest imports were petroleum and iron ore, with copper not far behind. Rising commodity prices are clearly serving to bring down the Chinese surplus but Beijing will still be happy given the extent of surplus already held and the apparent strength in the domestic economy. America will be happy because it is selling goods to China – from fast foods to iThings and cars – while Australia is selling raw materials. Everybody wins.The news was not so pleasing in Europe overnight, however. Eurozone finance ministers again met in Brussels in their ongoing attempts to nut out a more formal plan for addressing financial crises in the zone both current and future. Unsurprisingly there are ongoing disagreements amongst members who are split over calls for further injections of funds and more severe reductions in debt.The feeling is that Europe is sliding inevitably towards its first default if debt restructuring in the likes of Greece and Portugal is not quickly forced. This is exactly what we were all worrying about this time last year. Portuguese debt continues to blow out in yield and over in Ireland the opposition party – which is all but guaranteed to assume government shortly – has pledged to force haircuts on the creditors of troubled Irish banks. Meanwhile in Germany, the distressed West LB Bank which required government support soon after the GFC, has announced another round of asset sales in order to stay afloat.None of which engenders much confidence in an improving Europe at a time when North Africa and the Middle East continue to see rolling protests which suggest an uneasy transition into who knows what. Bahrain has now joined in with Algeria and Yemen in mounting Egyptian style people power movements.Concern over Europe sent the euro lower last night and pushed the US dollar index slightly higher to 78.60. But commodity prices are no longer tethered to the greenback (conversely) and base metal prices shot up on the solid Chinese import numbers. Increases of around 2% across the spectrum saw copper easily reclaim the US$10,000/t mark.Growing Middle Eastern tension has seen oil rising steadily, and last night Brent crude jumped US$2.14 to US$103.08/bbl. West Texas actually fell US77c to US$84.81/bbl but the world is no longer looking at the parochial WTI as a relevant global indicator*. It was strength in the oil and material stocks on Wall Street which saved the indices from earlier weakness, on a day when President Obama tabled his new austerity budget, and ensured a relatively flat close.The S&P 500 may have only risen three points last night, but it crossed 1332. We recall that the GFC low marked in March 2009 was 666. Yes – the US stock market has doubled.The Aussie is still hovering above parity at US$1.0031 while gold continues its consolidation, rising US$6.20 to US$1362.50/oz.The SPI Overnight was up 7 points following on from yesterday's surge on Mubarak's departure and the Chinese data.Chinese inflation data is due to be released today which will keep the world on edge over Beijing's tightening efforts. In Australia the minutes of the last RBA meeting will be released.On the local result season front today's report highlights include AXA Asia-Pac ((AXA)), Brambles ((BXB)) and Foster's ((FGL)) along with a quarterly update from Westpac ((WBC)).* Look out today for our story “Death in West Texas” which explains the reasons behind WTI's fall into global irrelevance. The FNArena website will shortly publish overnight Brent crude prices in the price table.[Note: All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.]FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.
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Talison Lithium - The World?s Only Pure Lithium Producer

SUMMARY- Demand for lithium is projected to rise for years to come- Australia harbours the world's largest producer- Talison Lithium (TSX – TLH) is listed on the Toronto Stock Exchange- Galaxy Resources ((GXY)) also offers exposure (see "Lithium Reaches For The Stars", Sell-and-Buy-ology, published on March 17, 2009) Talison Lithium - The World’s Only Pure Lithium ProducerBy Richard (Rick) Mills, Ahead of the herdAs a general rule, the most successful man in life is the man who has the best informationThroughout our history, some elements, much more than others, have advanced technologies and driven our economic growth – from wood to coal and then to burning oil to produce steam stands out as a recent example.Today we are witnessing a revolutionary change in the way our electrical storage needs are being met.Leading the change is lithium, which until very recently, has been used primarily for the production of aluminum, tritium, ceramics, high temperature grease and glass.But lithium makes an excellent battery for use in a wide range of applications - batteries using lithium have been found to have a high energy to weight ratio, can be molded into amazing shapes and have longer lives than conventional batteries.And when used as a rechargeable battery there is no memory effect.Talison Lithium Inc. (TSX – TLH) is the world's largest primary lithium producer - production from its Australian operation fills roughly a third of the world’s lithium demand and supplies 75% of Chinese demand.Talison began trading on the Toronto Stock Exchange September 22nd 2010. The company’s initial public offering (IPO) raised $40 million. An additional bought deal financing of $80 million, including over allotment, was recently announced. This money is being used to nearly double production at their Greenbushes lithium mining operation in Australia, and exploration at their new Salares 7 project in Chile.The Greenbushes Lithium Operation has been producing lithium for over 25 years. The mine is located 250 kilometers (km) south of Perth/Fremantle - a major container shipping port - and 90 km south east of the Port of Bunbury - a major bulk handling port - in Western Australia.The Greenbushes ore body is a highly mineralized zoned pegmatite with a strike length of more than three km - Greenbushes mineral reserve is unique, it grades 50% spodumene. This makes Greenbushes the highest grade lithium mineral resource in the world at 3.9% Li2O mineral reserves and 3.5% Li2O mineral resources versus 1.0 – 2.0% Li2O for other known hard rock deposits.Talison’s Greenbushes lithium mineral resource is open along strike and at depth so there is significant potential to increase lithium mineral reserves and mineral resources extending the life of mine (LOM) while at the same time increasing production rates.Talison’s Greenbushes Lithium Operation produces two categories of lithium concentrates:• Technical-grade lithium concentrates - low iron content for use in the manufacture of glass, ceramics and heat-proof cookware• High yielding chemical-grade lithium concentrate - used to produce lithium chemicals which form the basis for manufacture lithium-ion batteries for laptop computers, mobile phones and electric carsTalison does not produce lithium chemical products, instead the company sells lithium concentrate directly to customers for processing into lithium chemicals. Presently Talison is expanding its lithium production to supply the growing need in the battery market. Talison designed its initial Stage 1 expansion to increase total production capacity to approximately 62,000 tonnes of lithium carbonate equivalent.Aggressive and continual demand caused Talison to plan for further expansion by nearly doubling the current run-rate production of 50,000t lithium carbonate equivalent to 100,000t - the Stage 2 expansion of the chemical-grade plant is being funded by the recent $80 million financing. Long lead time items for the expansion have already been ordered.Most of the world's lithium comes from a small group of producers:• Talison• Sociedad Quimica y Minera (SQM), the Chilean national mining and chemical company• Chemetall, part of Rockwood Holdings• FMC, part of FMC CorporationTalison is the only primary pure lithium producer in the group and is the only one of the four not producing from brine operations in South America.Talison’s IPO completed the merger between itself and Vancouver based Salares Lithium Inc. Talison bought Salares Lithium to get control of of their early stage Salares 7 lithium brine project in Chile.This two pronged approach – combining hard rock and brine mining in one company - towards meeting increased global demand for lithium makes a lot of sense. Lithium production from brine is dependent on the weather, if the sun isn’t shining evaporation rates suffer - but brine mining lithium has the added benefit of potentially low cost production with margins as high as 50%. Meanwhile production of lithium from hard rock carries on 24/7/365.Ahead of the Herd Special ReportBrine MiningThe synergies of the two production methods, together in one company, means guaranteed delivery of lithium supplies to Talison’s customer base with potentially lower overall production costs.Talison’s “Salares 7″ project is siutated in the Atacama Desert, Chile. Drilling is expected to start in early February 2011. The potential for potash credits may very well come along with this drill program.The “Salares 7” lithium project consists of 117,904 hectares with over 39,400 hectares of exploration potential solely within actual salares/brine lakes. Historic sampling (non NI43-101 compliant) has returned lithium and potassium in all seven salares with grades up to 1,080 ppm lithium and 10,800 ppm potassium.Talison controls 100% of five of the salares.Surveys have presently been conducted on two salars:Salar de la Isla - Encompasses a total of 16,500 hectares and is approximately 22 kilometers long and 6 km wide on average. The northern area surveyed and studied comprises approximately 65% (10,750 hectares) of the areal extent of the salar.Using the results obtained from the 38.5 line km survey, Geodatos SAIC ("Geodatos") of Santiago, Chile constructed a three dimensional model of the distribution of the interpreted brine bearing horizon.Using a resistivity cut-off of 1 ohm/meter (interpreted by Geodatos as definite brine), Geodatos than calculated the brine bearing horizon within the northern portion of the salar to have a volume of 2.459 billion kilolitres (a kilolitre is equal to a cubic meter). Using a resistivity cut-off of 2 ohm/meters (interpreted by Geodatos as possible brines) the calculated volume of this horizon increases to 5.393 billion kilolitres.Salar de las Parinas – This salar is situated approximately 6.5 kilometres southeast of the Company's Salar de la Isla and encompasses a total areal extent of 5,400 hectares. The TEM survey lines for Las Parinas were extended beyond the boundaries of the salar onto areas covered by alluvial and/or volcanic material. The survey identified a continuous brine bearing horizon that extends up to 2.5 km from the salar’s edge and underneath the adjacent rocks.Using the results obtained from the 26.5 line km survey Geodatos constructed a three dimensional model of the distribution of the interpreted brine bearing horizon. This horizon extends from surface to a depth of 170 meters.Using a resistivity cut-off of 1 ohm/meter (probable brine) Geodatos has calculated the brine bearing horizon within the surveyed portion of the las Parinas salar to have a volume of 1.177 billion cubic meters. Using a resistivity cut-off of 2 ohm/meters (possible brines) the calculated volume of this horizon increases to 4.009 billion cubic metres.Share StructureShares Issued: 93,529,157Options: 6,699,915Warrants: 2,472,916Fully Diluted: 102,701,988Cash: $38,000,000 (As of December 31st.) Pre-FinancingConclusionTalison, as the only pure producing lithium play, offers potential investors many attributes:• Unique exposure to both mineral (hard rock) and brine sources of lithium• Talison is the primary lithium supplier to China – China is the largest and fastest growing consumer worldwide• Growing demand for lithium from traditional uses and new applications• Proven and experienced leadership• Highest grade lithium mineral resource in the world at its 100% owned Greenbushes operations• 25 years of lithium production and sales history• Well established and diversified global customer network• Low cost, rapid plant expansion currently in progress• Salares 7: prospective brine exploration project in Chile• Potential lithium carbonate plant in Western Australia• Talison is the largest lithium producer globally by sales since 2009Talison has been included in the Solactive Global Lithium Index. Global X Lithium is the world's first lithium based Exchange Traded Fund (ETF) and uses the Solactive Global Lithium Index to track the performance of lithium mining, refining and battery producing companies.Talison increased sales in the three months ended December - the company's second quarter - to 97,559 tonnes of lithium concentrate, 54% higher year over year (yoy). Both production and sales rose to company records in the December quarter.Talison is producing at capacity and sells 100% of its production. The companies output will continue to rise from the recently completed Stage 1 expansion and the recently initiated Stage 2 expansion will add to production levels in the future.Global lithium carbon

REPEAT Rudi's View: Life Beyond QE2

(This story was originally written and published on Wednesday, 9 February, 2011. It has now been re-published to make it available to non-paying members at FNArena and to readers elsewhere).By Rudi Filapek-Vandyck, Editor FNArenaThe Australian share market is up every day now. For most investors this marks a pleasant reward for being in the market. Everybody's "making" money, so everybody's happy. To others, however, this is the time when one starts preparing for what lies inevitably around the corner: weaker prices.As far as my personal gauge for investor exuberance is concerned, I note this month's newfound interest for undervalued banking stocks has now pushed Commonwealth Bank ((CBA)) shares well past consensus price target while Westpac ((WBC)) shares are about to do the same thing. Both National ((NAB)) and ANZ Bank ((ANZ)) have moved within 5% of their respective consensus targets. It's getting "bubbly" again. Consider this an official warning.For those readers who are new to my personal market indicator, for years I have observed that banking stocks in Australia act as a near perfect indicator for investor sentiment. In short: when share prices for major banks in Australia move beyond price targets, investors have become too bullish and a correction shall follow. Maybe not immediately, as in tomorrow or the next day, but I would expect the share market to start showing signs of rally fatigue pretty soon.It thus comes as no surprise that I picked up earlier this week that some hedge funds have started preparations for market weakness. The motivations are wide and diverse, but they all have one element in common: this rally is getting long in the tooth. Investors have started to ignore negative developments (Egypt, interest rates in China, labour data in the US, et cetera) and are simply piling up, day after day after day. Certainly, it feels good when and for as long as it lasts.Time to reconsider.Some market experts anticipate slower economic data from here onwards. This could potentially put a dent into investors' optimism. The past few years have shown developments in emerging markets precede those in developed markets, or so the theory goes. Most emerging economies started to decelerate in the final quarter of last year. If historic relationships remain intact then data in the US - but above all in Europe - should take a few steps back in the weeks ahead. Also note that some market watchers have observed the Chinese share market often leads the rest of the world by approximately three months. The Chinese share market sold off in late 2010 while Wall Street marched on merrily and we'll have to wait and see what local investors' response will be to another interest rate hike by the PBoC.I don't have a personal view on any of these two subjects, but I have observed this year's opening rally for the new calendar year has once again been supported by a sharply lower US dollar. Up to the point that stronger US economic data, or at least "anticipation of", became another reason for more USD selling. If European data start disappointing this could well reverse the euro's strength and thus allow USD to stage somewhat of a come-back. Remember: FX markets have been leading other risk assets since late 2007 and they will likely continuing doing so.The most important factor in today's markets, however, is without any doubt the monetary stimulus by the Federal Reserve in the US. To put it simply: the Zimbabwean Stock Exchange has been by far the best performing market since 1999 (in local currency), but last calendar year the share market moved sideways (up by less than 1% over the year). Previously, the central bank in the country couldn't find enough printing presses, but since the government adopted a multi-currency system, and effectively put a stop to blunt currency devaluation, there's no more hyper-inflation in Zimbabwe. Companies can now repair balance sheets and grow "normal" profits again, but the stockmarket has stopped running as well.Will the same thing happen in the US? Nobody knows the exact answer, but there's a whole army of sceptics out there and the outperformance for the US market ever since the Fed announced it would move to QE2 has been profound and there for everyone to see. Central banks in countries such as Brazil, India and China have been tightening instead. Even if the story is not quite as simple (because China is at the same time stimulating as well) the difference between rallying markets in the US and lower markets in these tightening countries has been remarkable, to say the least.While the Federal Reserve is by no means ready to cease its stimulus program, some experts correctly point out it could be merely investors anticipating the end of QE that could put the brakes on this market. Just as the anticipation of QE1 and 2 led to share markets rallying well before the Fed moved into action. This could become "interesting".It hasn't gone unnoticed that several members of the FOMC seem to have started spreading hints in US media that US monetary policymakers are now contemplating life beyond QE2. Even if it turns out these hints are premature and maybe even wrong at a later date, this will become an issue that will attract everyone's attention.Craig Ferguson, Director at Antipodean Capital Management, represents one of the hedge funds I talked about earlier. He believes equity markets are poised for a correction, precise date unknown. Ferguson also believes the outlook for equities will become ever so tougher as the market will prepare, and then have to adjust, to life without Fed stimulus.Here are a few of his thoughts on the subject:- For equities, it means that the stimulus plank that kick started the rally last year will slowly be removed by mid year. Stocks may continue grinding higher, but they will have to do so via better data, earnings and the M&A cycle alone, rather than with extra stimuli. It will be a challenge.- For fixed income markets, QE removal will mean a few things. First given that Treasury purchases were concentrated in the short end of the curve under 7 years duration, Ferguson would expect 2 and 5 yr yields to be less supported. Second, because there was no long end buying of note, and markets feared QE to be inflationary, the long end sold off more than the short end. QE removal and tighter policy will encourage long end investors to buy bonds as inflation may not be let out of the bottle. In short, the US curve 2-10 and 2-30 will bear flatten sharply.- For FX markets, a flattening US curve with higher short yields will be USD supportive. Indeed, it could be quite an earthquake for FX investors, given that USD shorts on the IMM have been sharply rebuilt in the last 6 weeks. It also should be bad news for AUD and NZD.- For commodity markets, a higher USD will make gains tough, at a time when base metals stockpiles are rising, and when tighter potential policy in the developing world will complement tighter emerging world policy. This should favour precious over base metals.For better or for worse, this is going to be the all-overpowering theme that will come to dominate this year's outlook, and trading and investment returns. Note Fed Chairman Bernanke is testifying tonight before the Congressional House Budget Committee. P.S.: A paid subsciption to FNArena now comes with an e-booklet (in pdf) "Five Observations (That Matter)" - for paying subscribers only. If you are such a subscriber, and you haven't received your copy yet, send us an email at info@fnarena.com and we'll make sure you too will receive your copy. Technical limitationsIf you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

World Market Overview 14/02/2011

U.S. stocks climbed Friday, concluding a second-straight week of gains at fresh 21/2 year closing highs after Egyptian President Hosni Mubarak stepped down.

Daily Forex Forecast 14/02/2011

The Australian Dollar fell below parity for the first time since the start of month following comments from RBA Governor Glenn Stevens who suggested interest rates may remain stationary for most of the year.

Daily forex forecast 14/02/2011

The Australian Dollar fell below parity for the first time since the start of month following comments from RBA Governor Glenn Stevens who suggested interest rates may remain stationary for most of the year.

World Market Overview 14/02/2011

U.S. stocks climbed Friday, concluding a second-straight week of gains at fresh 21/2 year closing highs after Egyptian President Hosni Mubarak stepped down.

The Economy: January Jobs Figures OK

Australia's jobs boom continued in January, but the floods in Queensland make it hard to work out the real strength of employment in the month.After December surprised with just 2,300 jobs created, but a fall to 5% for the unemployment rate, there were some analysts who saw another weak month, and others looking for an extra 15,000 to 20,000 jobs.Because of the floods it seems we got all three from the Australian Bureau of Statistics report and a bit more.The unemployment rate remained steady on 5%, the number of people employed rose 24,000, but 32,000 were part time, so there was a fall of 8,000 people in full time work, the number of people unemployed rose by 8,900 to 606,500, the number of hours worked fell 0.8% and the participation rate rose to a new all time high of 65.9 %(up 0.1%).Something for everyone it seems, but the ABS added a bit cautionary note to the release."Due to flooding in Queensland, operational difficulties were experienced in conducting the Labour Force Survey in January 2011. There was a larger than usual number of households in the Queensland sample which could not be interviewed."While the disruption to survey operations will have slightly reduced the quality of some Queensland estimates, the impact on the estimates is not statistically significant for most series. Due to the sample loss noted above, there will be increased volatility in the Queensland estimates, particularly in the original and seasonally adjusted estimates."Given increased volatility, the ABS continues to encourage users to focus on trend estimates in monitoring the underlying level of series."And, what did the trend show?Employment increased by 21,600 to 11,442,800Unemployment fell 5,000 to 610,300Unemployment rate was steady at 5.1%Participation rate at 66.0%, up from 65.9%

Telstra: Signs Of Progress From Revamp

Telstra, Australia's largest Telco, has reported a 36% fall in first-half profit, maintained its high 14c a share and done a deal to get the NBN underway and the cash rolling in from Canberra.The downturn in earnings was steeper than expected (by around $200 million), but the combination of the dividend comment and the NBN deal saw the shares rise 3c in early trading to $2.91.They however eased in late trading to close down one cent at $2.88.Investors had expected a profit fall, the company has been warning of it since the 2010 profit announcement and then the AGM.Telstra has explained that it has been investing heavily in revamping itself and its processes to improve efficiency (especially in dealing with customers) and winning back lost market share as more and more fixed lines are abandoned by customers.Telstra said yesterday that it posted a profit of $1.21 billion in the six months to December 31, compared with $1.89 billion a year earlier.Telstra has been overhauling its operations in a bid to increase profit margins, cut costs and diversify away from the declining market for fixed phone lines.And there were plenty of signs that it remains a work in progress, but with some gains.The higher costs and lower margins have come from the price cuts and boost to

Adelaide industrial market outlook positive but cautious

The forecast for Adelaide's industrial market is positive but cautious with smaller assets located in prime locations expected to show the strongest performance in the short term according to the latest CBRE Industrial MarketView report.

Stockbroker Targets On The Rise For FlexiGroup

By Chris ShawSpecialist leasing and lending services company FlexiGroup ((FXL)) delivered a better than expected interim profit yesterday, the $25 million result being an improvement of 31% on the previous corresponding period and coming in 8% above the forecast of UBS.Result highlights, according to UBS, were strong settlement and cash flow growth, something the broker suggests shows new funding and product initiatives are delivering and that conditions in the core leasing business have stabilised.The Certegy business was the star performer in the view of Macquarie, delivering 23% volume growth in the period and doubling its profit contribution. The business is now the largest in the FlexiGroup stable in terms of value of assets and offers further growth via the Lay-by market in the broker's view.Also delivering growth were the Vendor Finance operations, Macquarie noting volumes here increased to $26 million from $3 million previously thanks to some large new contracts. Flexirent is also recovering, the receivables book growing by 1% in the period on volume growth of 9%. Macquarie sees this as a sign the company is through the low volume period stemming from the Global Financial Crisis.Along with the interim result, FlexiGroup management lifted full year earnings guidance by 9% to a profit of $48-$52 million. Market forecasts have been increased to reflect the new guidance, UBS lifting its net profit numbers by 10% this year and by 9% in FY12.Macquarie has similarly lifted its numbers by 8%-10%, its new net profit estimate for FY11 standing at the top end of management's guidance range. In earnings per share terms Macquarie is now forecasting 19.1c this year and 20.3c in FY12, while UBS is at 18c and 20c respectively with its forecasts.The increases in earnings estimates mean increases in price targets, Macquarie lifting its target to $2.23 from $1.87 and UBS to $2.40 from $1.75. Both UBS and Macquarie are positive on FlexiGroup, rating the stock as Buy and Outperform respectively. The two brokers offer the only coverage of FlexiGroup in the FNArena database.For UBS, FlexiGroup deserves a Buy rating as the combination of pro-active management, new growth initiatives and a competitive advantage through diversifying its operations makes the company a key pick in the smaller financials space.There is scope for further diversification through acquisitions, as Macquarie points out FlexiGroup's underlying balance sheet is conservatively geared at around 7% and strong cash flows are being generated.Based on its revised forecasts, Macquarie estimates FlexiGroup is trading on an earnings multiple of 9.7 times this year and 9.0 times in FY12, which it sees as a 20-30% discount to the Small Industrials index. Such a discount is excessive in the broker's view given FlexiGroup's earnings growth this year, making the stock attractively priced at current levels.Shares in FlexiGroup today are stronger (in a weaker market) and as at 12.50pm the stock was up 5.5c or 3% at $1.90. This compares to a trading range over the past year of $1.11 to $1.96 and implies upside of around 21% to the consensus price target according to the FNArena database. FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

RBA flags changes on consumer behaviour

Reserve Bank of Australia (RBA) governor Glenn Stevens believes that the current cash rates were at their appropriate levels and they only appear tight because most Australians have become wiser in handling their cash flow.

Solar Panels To Support Demand For Silver

By Chris ShawTrading in the silver market in 2010 was volatile, with prices struggling to break US$19.00 per ounce for much of the year but racing higher in the final months to push above US$30.00 per ounce on the back of strong investment demand. The actions of investors are continuing to drive the price trajectory of silver according to Barclays Capital, but the group notes when this interest wanes trading in the metal will again be driven by industrial demand.This is important, as on the view of Barclays the current risks presented by silver's fundamentals are likely to outweigh the potential upside drivers. While fabrication demand is likely to increase, Barclays expects the market will continue to remain in surplus as mine supply should also grow.On its numbers, Barclays estimates a surplus for silver in 2011 of 2,804 tonnes, up from its forecast surplus for 2010 of about 2,500 tonnes. Credit Suisse is less bearish, expecting silver to be in a slight deficit this year and through 2014.One part of the silver market that could deliver long-term growth in demand is from an increase in the uptake of solar energy, as Barclays points out silver is used in crystalline silicon photovoltaic (PV) cells, which require highly conductive material on their surface.A cheaper alternative to PV cells are thin-film cells, which are not made of wafers and contain little if any silver. Thin-film cells are also less efficient, delivering 8-12% efficiency against 14-20% for silicon cells.While thin-film cells are gaining some traction in the market, Barclays notes PV cells still represent about 90% of all solar cells produced. If it is assumed around 0.1 grams of silver are used for each watt generated and each panel has the capacity to generate 200 watts, this suggests an average solar panel could contain as much as 20 grams of silver.Barclays estimates this equates to more than 800 tonnes of silver being employed in cells in 2009, which translates to about 8% of silver industrial demand and 4% of global silver supply. On the group's numbers this had the capacity to double in 2010, while Barclays estimates silver usage in solar panels could hit 2,000 tonnes by 2012. This would equate to about 7% of global silver output.At present solar power contributes only around 1% of global electricity generation, this a reflection of relatively high costs. This leads Barclays to suggest that, short-term at least, solar panels are unlikely to drive the demand story for silver.Longer-term the view is more positive, as Barclays suggests the pledges of both China and India to increase solar capacity to 30GW and 20GW respectively by 2020 implies the solar industry could generate some industrial support for silver prices as investment demand takes more of a back seat.In terms of price forecasts for silver, Barclays expects prices will average US$29.10 per ounce in 2011, which would be up from an average of closer to US$20 per ounce in 2010. Citi is a little less bullish in forecasting an average price this year of US$24.90 per ounce, easing to US$23.03 per ounce in 2012 and US$20.53 per ounce in 2013.Macquarie is not far off the Citi forecasts with its estimates of average annual prices for silver this year of US$26.50 per ounce, US$22.50 per ounce in 2012 and US$19.90 per ounce in 2013, while Credit Suisse has forecasts of US$22.00 per ounce, US$21.00 per ounce and US$21.00 per ounce respectively for 2011-2013.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

The Overnight Report: Let Them Eat Cake

By Greg PeelThe Dow closed down 10 points or 01% while the S&P added less than 0.1% to 1321 and the Nasdaq was steady.Wall Street posted its most significant fall for a while last night on the open as the situation in Egypt boiled over once more. But while the 83 point early drop in the Dow suggested the winning streak on the Street might be well and truly broken this time, such a move a year or two ago would have brought reports of “Wall Street little changed”. And once again the weakness was brief as the US shrugged off problems in the rest of the world and returned to looking inward.The end result was a slight positive for the S&P 500 while the crisis centre du jour hung in the balance waiting to hear wether President Mubarak would this time actually depart. As we speak he remains resolute with some sort of announcement pending.But just as Egypt was erupting once more, the ghosts of 2010 came back to haunt bond markets as Portuguese debt suddenly took a turn for the worse and traded at historically high yields. Traders were stuck for a specific explanation but were reminded that Europe's debt problems are very much still with us.The end result of both ex-US developments was a 0.8% bounce in the US dollar index to 78.23. Yet Wall Street otherwise appeared to stay quite calm, and movements in other markets were equally timid.Gold had barely moved on the close at US$1361.40/oz after initially dipping on the dollar's jump. Base metals were similarly little changed with copper stronger but still sitting just under 10,000/t. Oil rose US2c to US$86.73/bbl. The Aussie slipped 0.7 of a cent to US$1.0044.Were it not for another profit warning from Dow component Cisco, which saw the stock down 14% in the session to almost match the unprecedented 16% drop marked in November on an earlier profit warning, Wall Street would have posted yet another modest but healthy gain. Perhaps the most telling figure was the VIX volatility index. Egypt is in turmoil, Portugal is back to haunt us, yet the VIX ticked up only very slightly and still reads 16.No one on Wall Street seems to care anymore what happens elsewhere. America is strong again, apparently, and that's all that matters.Earlier the Bank of England decided to leave its cash rate at the longstanding 0.5% level despite many in the market assuming maybe a hike was due. Commentators suggest it was a close run thing nevertheless, with policy-makers tossing up between strict austerity measures on the one hand and rising inflation on the other. The lack of change helped the US dollar surge ahead.The SPI Overnight was down 12 points or 0.2%.The highlight today of the local result season will be Newcrest ((NCM)) and RBA governor Glenn Stevens is also due to make a regular testimony to parliament. China is also due to release its monthly round of economic data today, although economic calendar collators are not 100% sure. Beijing is not one for sticking religiously to schedules.Your editor Rudi Filapek-Vandyck will feature on BoardRoomRadio's Friday Afternoon Round Table later today (3pm live).[Note: All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.]FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

Results: OZ Minerals Rewards Shareholders

Shareholders who stuck with OZ Minerals through the dark days of 2008-09, or who bought the shares in 2009 amid considerable scepticism about whether it would survive, will get a nice fat payoff after the boom 2010 financial year result.A huge profit, higher dividend, capital return, consolidation of shares to boost the share price and a buyback.All up more than $900 million in dividends, the capital return and share buyback will have been delivered to shareholders by mid-year.There's the $123 million already paid in the interim dividend and the $223 million to be paid in the final in the next month.The capital return will absorb nearly $390 million and the consolidation will be done in the ratio of ten for one (which should boost the share price considerably.After that is completed the company will run a $200 million share buyback.With the

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