Forget $1 Million. To Feel Wealthy, You Need $5 Million in Assets

High-net-worth and affluent investors define wealth as being able to live life with no financial constraints, and feel $5 million is the minimum needed to be considered wealthy, according to the recent UBS Investor Watch, a quarterly survey.

The survey of 4,450 investors found that 69% of those with more than $1 million in investable assets did not consider themselves wealthy.

Half of respondents defined wealth as having no financial constraints, while only 10% said it meant never having to work again and 9% said it was being able to afford a luxurious lifestyle.

While the ability to afford healthcare and long-term care was the top personal concern for 27% of investors, 20% said their children’s and grandchildren’s financial situations were most important, 14% listed the ability to afford retirement and 14% the potential to outlive their assets.

The survey found that 82% of respondents most enjoyed financially helping their grandchildren, 76% their adult children and 59% their parents. Two-thirds of those with adult children ages 18 to 39 currently supported them financially.

Twenty-three percent of investors continued to hold high levels of cash, and used these holdings as a way to reduce their risk level.

“Investors are using significant cash holdings as a type of ‘security blanket’ to give themselves peace of mind, but also to allow them to feel comfortable getting out there and participating in the market again,” Emily Pachuta, head of investor insights at UBS Wealth Management Americas, said in a statement.

“This has translated to a greater confidence—and faith—in the economy over the long term despite investors’ expectations of continued market volatility in the near term.”

Eighty-five percent of respondents said they felt more confident when their financial plan was dedicated to long-term healthcare expenses and to providing financial support across multiple generations. Confidence dropped to 57% with a more traditional financial plan.

Investor Watch found that 80% of investors thought about their assets as different buckets, with varying risk/return profiles, based on their expected use, such as savings, necessary purchases and recreational spending. 

Respondents viewed the Fed’s ending stimulus as positive for the long term, albeit with a short-term negative effect. Fifty-nine percent said they were not changing their investment strategy as a result of the Fed’s announcement.

Other key findings include:

Accenture Wins U.S. & Scotland Deals - Analyst Blog

Accenture plc.(ACN) is seeing a steady flow of deals. "Accenture Federal Services" has secured a blanket order from the U.S. Securities Exchange Commission (SEC). The $64.0 million deal has a one-year base period and four one-year renewal options.

The deal, which ensures indefinite delivery as well as quantity, will help the U.S. SEC to include Oracle development services in its IT operations. This is an extremely customer-friendly system that would help reduce costs while improving performance. It will help clients and customers to file registrations, meet compliance norms, examination requirements and also enable them to share data efficiently.

Moreover, the Scotland Police Department has selected Accenture to maintain and develop the new i6, an operational policing system, for Police Scotland. This advanced system will standardize the national policing process and will also help to improve the efficiency of the day-to-day policing operations and investigations. The 10-year contract, with a two-year extension period, is expected to help and support the policing system of the Scotland Police Department.

The "Accenture Police Services" will provide the technology and implementation services to Police Scotland to drive operational and process efficiencies and facilitate smooth information sharing.

The increase in deal wins and order renewals is evident from Accenture's third-quarter bookings growth. Improved bookings growth coupled with good performances in insurance, banking and healthcare sectors reflect a strong demand for Accenture's services, which in turn are boosting its long-term growth prospects.

On the other hand, stiff competition from Cognizant Technology Solutions Corp and IBM Corp. (IBM), a strained spending environment and Accenture's broad European exposure (roughly 40.0%) may temper its growth prospects to some extent.

Currently, Accenture has a Zacks Rank #3 (Hold). Investors can also look at other well-performing technolog! y stocks such as Huron Consulting Group Inc. (HURN) and Towers Watson (TW). Both the companies carry a Zacks Rank #2 (Buy) and are worth buying.

Here's How Prestige Brands Holdings Is Making You So Much Cash

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Prestige Brands Holdings (NYSE: PBH  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Prestige Brands Holdings generated $127.3 million cash while it booked net income of $65.5 million. That means it turned 20.4% of its revenue into FCF. That sounds pretty impressive.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Prestige Brands Holdings look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 23.1% of operating cash flow coming from questionable sources, Prestige Brands Holdings investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 20.3% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 9.4% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

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We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Prestige Brands Holdings to My Watchlist.

Will Your Flight Arrive on Time This Summer?

As the summer travel season heats up, vacationers who are traveling by plane naturally want to know if their flights will arrive on time this summer. The last thing most travelers want to do is spend lots of extra time in the airport, rather than on the beach!

Unfortunately, the summer tends to be the worst season for air travel delays. Since demand is higher from June to August than for the rest of the year, airlines schedule more flights. If severe thunderstorms -- or worse, tropical storms -- slow departures and arrivals in some of the major hub cities, there's no slack in the system. The potential result is rippling delays and cancellations nationwide.

If you happen to be flying on a day when severe weather hits the country, brace yourself for some long delays. On the other hand, if the weather cooperates, you may have a decent chance of arriving on time this summer, as airlines have cut a lot of capacity in recent years. However, a lot will depend on where you're coming from and where you're going. The most crowded airports in the country will be as busy as ever. If you're flying to or from the likes of New York, Chicago, or Los Angeles, you should be prepared to be late.

Big is the new small
As I wrote back in April, airlines are increasingly favoring larger planes these days. Larger planes are almost always cheaper to operate on a per-seat basis, so as long as there's enough demand to fill the extra seats, it makes sense to "up-gauge." In many cases, it's more profitable to offer a few flights on large airplanes rather than many flights on small regional jets. This industry shift toward larger planes means that airlines have been cutting a lot of flights at small- and medium-sized airports.

Hubs in smaller markets such as Cincinnati, Cleveland, and Memphis have been particularly hard hit. Delta Air Lines (NYSE: DAL  ) and United Continental are two carriers that have realized they're better off directing traffic through their larger hub cities, such as Detroit, Chicago, and Atlanta. As a result, airports in medium-size cities all have many fewer flights today than they had before the Great Recession. As a result, these airports are likely to experience fewer delays than was previously the case.

The favored few
On the other hand, there are a handful of airports that continue to have chronic delays, because they're highly desirable to the airlines. The three major New York airports -- LaGuardia, JFK, and Newark -- top that list. The two major Chicago airports -- O'Hare and Midway -- also tend to be very busy, as do a few other airports, including Washington's Reagan National Airport.

A rendering of Delta's hub at JFK Airport (courtesy of Delta)

Many of these airports are slot-controlled, meaning the government has capped the number of flights that airlines are permitted to schedule, To mitigate delays. These slots are highly sought after. For example, JetBlue Airways (NASDAQ: JBLU  ) bid $40 million for eight slot-pairs (the rights to operate eight round trips) at Reagan National Airport in late 2011. On peak days, airlines will use every single slot that they own at these popular airports.

Delays ahead?
On busy summer travel days, it's very easy for minor problems (often weather-related) to cause major headaches at these airports. For example, in March of this year -- a lighter travel month -- approximately 80% of flights in the U.S. arrived on time (officially, any flight that arrives within 14 minutes of the scheduled time is considered on time). However, at New York's JFK Airport, that figure was 77%; at LaGuardia, it was 73%, and at Newark, it was just 67%.

If you have to fly through one of the busiest airports in the country this summer, your best bet is to drag yourself out of bed and fly early in the morning. When delays hit the busiest airports, they tend to "cascade," getting worse throughout the day, because there's no spare capacity to catch up once delays creep into the schedule.

For example, in April, flights scheduled to arrive before 1 p.m. at 29 of the busiest airports in the U.S. arrived on time more than 80% of the time. However, flights scheduled to arrive between 8 p.m. and 11 p.m. were on time less than 70% of the time. At Newark Airport -- one of United's largest hubs and often the most-delayed airport in the country -- morning flights were near the national average in terms of timeliness, but nearly half of all flights scheduled to arrive after 4 p.m. were late!

Bring a book (or a movie)
If you're lucky enough to be avoiding the most congested airports this summer, you have a good chance to get where you're going in a timely fashion, as airlines have been continually pruning their schedules for the past several years. This move has reduced delays in many mid-sized cities that have significantly fewer flights today than they did a few years ago.

By contrast, airlines are still cramming as many flights as they can into the busiest airports in the country. On the heaviest travel days, inclement weather or any other disruption can cause massive cascading delays at these airports, leading to nightmarish delays in the evenings. If you can use alternative airports to get where you're going, the extra driving time might save you a lot of aggravation. If not, your best bet is to fly early in the day.

On the other hand, if you're flying through busy airports in big cities such as New York or Chicago during the afternoon or evening this summer, my advice to you is to bring a book!

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Diagnosing Today's Dow Performance

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has been having a difficult time this morning deciding whether or not it wants to be up or down. This may stem from the continued confusion on behalf of investors as they try to decipher new economic data as a means to predict the Fed's stance on its current stimulus policy. Though the index dropped and rebounded a few times so far in trading, it's currently sitting at a 33-point gain just before 11:45 a.m. EDT.

Economic news
This morning investors were given mixed economic data regarding income and spending and consumer confidence. Both personal income and consumer spending were down 0.1% in April, which disappointed analysts and investors alike. Expectations were set for a 0.1% increase for income and flat spending for the month. Coupled with this morning's consumer confidence data, which is now back to pre-recession highs, the mixed data signals a disconnect in the economic recovery. Though confidence in the recovery may be high, the improvements have not yet reached the average household's billfold.

This mix of data provides just one more piece to the puzzle as investors try to find signs that the Fed will begin paring back its current stimulus plan. This week alone, investors have gotten news that unemployment figures are up, housing prices are rising, pending home sales are up, and now personal income and spending are down. This seemingly conflicting data leaves investors with little confidence as to how they should proceed in the markets.

Inside the Dow
Health-related component stocks are putting a drag on the Dow's forward momentum, with Merck (NYSE: MRK  ) being the only exception. Up 0.93% this morning, the drugmaker is enjoying the boost from its recently announced third-quarter dividend. Matching its previous payouts, the company will distribute $0.43 per share on July 8.

Procter & Gamble (NYSE: PG  ) is down 1.55% in trading, despite a resounding endorsement from activist investor Bill Ackman, who recently stated that P&G is one of the best companies in the world. Ackman's comments may have seemed like a backhanded compliment to some investors. He noted that the company is under-earning compared to its abilities, with a prediction that earnings per share will rise from $4 to $6 -- an encouraging upside. The return of A.G. Lafley to the role of CEO was initially well recieved, but investors may now be rethinking the return of a former CEO, bringing questions to light about his previous tenure and what it means for him to return.

Pfizer (NYSE: PFE  ) is down 0.91% this morning. The drug manufacturer is making more moves to clean up its operations with a sale of its Bristol, Tenn., manufacturing plant to Baltimore-based UPM Pharmaceuticals. Earlier this week, Pfizer issued $4 billion in new bonds to pay off other debts, a move not taken by the company since 2009.

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Pentagon Pays Millions for Training, Drones, and Dredging

The Department of Defense awarded more than $456 million worth of contracts Thursday. Publicly traded companies receiving contracts included:

Orion Marine Group (NYSE: ORN  ) , which won a firm-fixed-price contract for up to $7 million to perform dredging services for the U.S. Army Corps of Engineers in Concordia Parish, La. Boeing (NYSE: BA  ) drone-building subsidiary Insitu, awarded a $7.9 million delivery order to perform maintenance work on ScanEagle Unmanned Aerial Systems through September 2013. BAE Systems (NASDAQOTH: BAESY  ) , awarded a $15.4 million modification to a previously awarded contract to supply propulsor systems for Virginia-class nuclear fast-attack submarines. Delivery is to take place by May 2015. L-3 Communications (NYSE: LLL  ) , which won a sizable $53 million indefinite-delivery requirements contract to provide logistics support for Navy TH-57 Sea Ranger utility helicopters. L-3 will perform repairs and/or overhaul of aircraft, engines, avionics, and related components as required, through June 2014.  Cubic Corporation (NYSE: CUB  ) , winner of a $75.8 million contract modification on a previously awarded cost-plus-award-fee contract to provide Army combat training in support of the Joint Readiness Training Center at Fort Polk, La. DoD noted that the cumulative value of the underlying contract has exceeded $680 million as the result of this add-on.

Nuverra's Solid Acquisition Extends Its Bakken Dominance

In the first day of trading under its new name, Nuverra Environmental Solutions (NYSE: NES  ) proved two things. First, the company proved that its growth by acquisition strategy wasn't going away with the old name. Second, it proved that it could make good on its promise to move into solid waste disposal. Both were accomplished after the company found an ideal asset to add to its burgeoning portfolio of environmental solutions.

This latest acquisition, Ideal Oilfield Disposal, is a greenfield oil-field disposal landfill located in North Dakota. Nuverra has always said that it sees solid waste disposal as the next logical step for the company as it grows is portfolio of full-cycle environmental solutions for the oil and gas industry. While no financial terms were disclosed, the deal is expected to be accretive to earnings and add about $18 million-$20 million in annual revenue.

Currently, the site isn't operational and the company anticipates that it will need to spend an additional $6 million-$8 million in capital this year to bring the facility on line. Once it is operational, the 60-acre site has a permitted capacity of over 1.7 million cubic yards of airspace which Nuverra believes can be expanded to 5.8 million cubic yards in the future.

What you might be wondering is why Nuverra is buying a landfill. You can't think of this facility as something akin to a Waste Management residential waste facility. This is a specialized facility to be a permanent solution for the drill cuttings from drilling an oil and gas well.

You don't hear too much about drill cuttings; there are currently a variety of disposal methods such as burial pits or land farming that are used to dispose of these cuttings. However, because these cuttings can contain naturally occurring radioactive material, salt, and other harmful substances, energy companies need to handle these materials with care. Further, because of the radiation levels that can be emitted by these cuttings, a traditional landfill like those of Waste Management won't work because the levels can be high enough to trigger a landfill's radiation sensor.

Nuverra's disposal solution takes the risk of handling these cuttings out of the hands of drillers; it can offer this solution as part of its full-cycle, closed-loop, environmental solution. Further, as environmental regulations surrounding solid waste from drill sites change, Nuverra will be at the forefront of providing solutions to its customers. This first facility, which is located in the Bakken, gives Nuverra an important additional service to offer its customers in the region.

Last year Hess (NYSE: HES  ) and Whiting (NYSE: WLL  ) represented 33% and 25%, respectively, of Bakken-based Power Fuel's revenue before it merged with Nuverra. Both companies represent big future opportunities, as Hess expects to drill 175 wells this year and has plans to double its daily production by 2015, while Whiting sees the potential for more than 4,000 future wells on its Northern Rockies acreage. If Nuverra can continue to work with both companies to capture that growth and up-sell value-added services like solid waste, then it speaks to a bright future for the company. 

Those are just some of the reasons why this looks like a very solid acquisition for Nuverra. While I'd liked to have seen more financial disclosure, I'll take the company at its word that the deal is accretive to earnings. The big bonus here is that the site is located in the Bakken, a play which is likely just 10% developed, which means that there's the potential for decades of growth ahead.

Another company that will benefit from that growth is Kodiak Oil & Gas. The company is truly a dynamic growth story -- it offers great opportunities, but with those opportunities come great risks. If you don't know much about Kodiak, let us help you with your due diligence. To learn more about Kodiak and whether it is a good long term buy, you're invited to check out The Motley Fool's premium research report on the company, which comes with a full year of updates and analysis as key news breaks. To get started simply click here now.

Rosetta Stone Carves Brand Image With New Opportunities

The following video excerpt was taken from an interview with Steve Swad, CEO of Rosetta Stone (NYSE: RST  ) , in which he talks about his business philosophy, and how it is driving success both for language learners and for the company itself. In this segment, he discusses how acquisition opportunities and new customers will further Rosetta Stone's brand.

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Matt Argersinger: So you mentioned on the last call that Rosetta Stone now kind of is in position with the balance sheet that you guys have a little bit of flexibility with cash to go after maybe some acquisitions.

Steve Swad: Yes.

Matt: Any sense of what an acquisition might look like and what you guys would be looking to add capability-wise?

Swad: I mean we're in the market looking. Earlier this week I was talking to companies, and it's something that will speed this strategy that I -- something that will accelerate our brand. New products would be wonderful, that we could modify a little bit and put a Rosetta Stone touch on or expand the distribution, new geographical locations. But take those pillars that we talked about and then are there companies that can help us accelerate within those pillars?

Matt: And what about kind of a strategy of targeting new institutional customers? That was also brought up in the recent call. Any details on that strategy or how it's going?

Swad: That business is run by one of our newer leaders, Judy Verses, and she's doing a wonderful job. She came from Blackboard. And she's in Tokyo as we speak talking to some large potential customers. I would say there's not a week that goes by that Judy's team is not talking to large customers to try to penetrate what is an enormous market around the world.

Matt: Do you think opportunities there are bigger than they are on the retail side?

Swad: They're both big. That's a great question, actually. The market itself, the retail side or consumer side is bigger, but both are enormous. You've heard me say it's an $80 billion global market and our locations, we participate in about $40 billion. That's plenty, and we're a little, tiny $270 million company, so we've got a lot of ad room in the consumer market and in the institutional markets.

New Study on Advisor Satisfaction Invokes Chickens, Eggs

In the case of broker and customer satisfaction, which comes first, the chicken or the egg?

Do satisfied customers lead to satisfied brokers? Or are customers satisfied when their brokers are?

It's a question I asked Craig Martin, director of investment services at J.D. Power and Associates and the lead on the new 2013 U.S. Financial Advisor Satisfaction study. The study measures satisfaction among advisors who are employed directly with an investment services firm, as well as those who are affiliated with, but independently operated from, a broker-dealer. Among the findings: Overall satisfaction among advisors is up since 2010; advisors want their firms to focus more on customers than on profits, and nearly a third of all advisors are ambivalent about their firm, which could ultimately cause them to change firms.

The top firms in the employee segment were Edward Jones, Raymond James and Associates, UBS (NYSE: UBS  ) Financial Services, Merrill Lynch Financial Management , Wells Fargo (NYSE: WFC  ) , and Chase. In the independent-advisor segment, the highest-ranked firms were Commonwealth Financial Network, Cambridge Investment Research, Raymond James Financial Services, Northwestern Mutual, and LPL Financial. J.D. Power looked at factors including compensation, contact, people, job duties, work environment, products and offerings to clients, technology, and services and support offered to financial advisors.

The results of the 2013 Customer Satisfaction Survey will be released in May, but if last year's dual studies are any indication, the results of the two will dovetail very closely. That's what I found in covering last year's studies, and Martin says it's likely to be similar this year. And, he says, that's to be expected year after year. "People are generally happier when they're successful," he told me, "and for an advisor to be successful, he or she has to be able to serve their clients. The question is, how do you create a level of engagement you want with a customer, one that not just satisfies them, but truly makes them an advocate of your firm, one who tells their friends and is loyal?"

That, Martin says, only comes when advisors are supported by their firm. With 40% of advisors saying they experienced a technological or paperwork issue in the past year, how those issues are handled makes a difference in advisor satisfaction, and ultimately, customer satisfaction. "The higher-services firms prevent the challenges that prevent advisors from being in front of the client," Martin says. "Those at the top eliminate issues and limit the impact to the advisor on a daily basis."

But what does all this happiness mean for investors? Ultimately, very little. Martin says that although J.D. Power hasn't done any studies on the impacts of their reports on share prices, he suspects there aren't any dramatic changes. "This [report] isn't a surprise. It's a validation," he says. "If you're losing customers and losing advisors, that's going to have a bottom-line impact, and will show up long before our review."

So, which comes first? A happy customer or a happy advisor? Martin has the formula: "The advisor must like their firm. The customer must like the advisor. The customer then is an advocate for the firm."

More from The Motley Fool
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Pier 1 Imports shares fall 11%

Foot traffic is down at Pier 1 stores. NEW YORK (CNNMoney) Pier 1 Imports is the latest retailer to disappoint Wall Street.

Shares plunged as much as 11% in after-hours trading Wednesday after the company said profit was nearly cut in half during its most recent quarter.

Pier 1 earned less despite an increase in sales compared to the same quarter last year. CEO Alex W. Smith blamed that on an increase in promotions and the costs associated with online sales. Plus, fewer people are shopping at its stores.

"The paradigm for customer shopping behavior continues to change," Smith said.

He pointed to the jump in online sales, which now make up nearly 10% of overall sales, as a highlight. But that growth is cutting into the company's bottom line in the short-term, due to investments in marketing, staff and the opening of the company's second fulfillment center.

  Sears 'irrelevant' as losses deepen

Smith said he was hopeful that an increase in online sales can also help drive traffic at stores. About one-third of online orders are currently picked up at Pier 1 stores and about a quarter of online orders are placed at computers located in the stores.

Shares of Pier 1 Imports (PIR) are down 33% since the beginning of 2014.

Why Miller Energy Resources (MILL) Stock Is Up Today

NEW YORK (TheStreet) -- Miller Energy Resources (MILL) was gaining 15.7% to $6.33 Monday after SunTrust upgraded the stock to "buy" from "neutral."

The analyst firm raised its price target for Miller Energy to $10 from $8. SunTrust analyst Neal Dingmann sees Miller Energy's production growing by about 180% this year, and about 60% next year due to acquisitions and wells in Cook Inlet and North Slope.

Must read: Warren Buffett's 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreet Ratings team rates MILLER ENERGY RESOURCES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation: "We rate MILLER ENERGY RESOURCES INC (MILL) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows: MILLER ENERGY RESOURCES INC's earnings per share declined by 7.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MILLER ENERGY RESOURCES INC reported poor results of -$0.60 versus -$0.47 in the prior year. For the next year, the market is expecting a contraction of 1.7% in earnings (-$0.61 versus -$0.60). The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MILLER ENERGY RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500. MILL's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that MILL's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs. The gross profit margin for MILLER ENERGY RESOURCES INC is rather high; currently it is at 63.45%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -18.65% is in-line with the industry average. Net operating cash flow has significantly increased by 2001.19% to $11.10 million when compared to the same quarter last year. In addition, MILLER ENERGY RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of 17.57%. You can view the full analysis from the report here: MILL Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Fannie, Freddie ease mortgage credit in policy…

WASHINGTON — The federal agency overseeing the mortgage insurance giants Fannie Mae and Freddie Mac signaled a robust federal involvement in the mortgage markets for the foreseeable future, working to make more credit available to home buyers even as it tries to reduce the risk to taxpayers.

"Housing finance is such a critical part of the economy," Federal Housing Finance Agency Director Mel Watt said Tuesday. "To stop, or stand in place, is just not an option."

In his first major speech since taking over the agency in January, Watt did not weigh in on the various proposals in Congress to overhaul housing finance policy. His remarks came as the Senate Banking Committee considers legislation that would eventually phase out Fannie and Freddie's central role in the mortgage markets. A committee vote could come Thursday.

"Our goals are consistent with operating Fannie and Freddie in the here and the now, and we'll do that until there is legislation passed," said Watt, a former North Carolina congressman and influential member of the Financial Services committee before President Obama nominated him to the housing post.

But without waiting for Congress, Watt did announce a number of policy shifts for Fannie and Freddie, the government-run companies that help guarantee about half of all mortgage loans:

• Reversing a proposal it made last year, the agency will not reduce the size of mortgage Fannie and Freddie will back. Current rules limit those mortgages to $417,000 in most of the country and as big as $625,500 in higher-cost areas. Watt said the policy shift came after the agency heard "concerns about how such a reduction could adversely impact the health of the current housing finance market."

• Fannie and Freddie will continue to back loans even when the borrower misses two mortgage payments in the first three years after a lender acquires the loan. Under current standards, Fannie and Freddie can force lenders to repurchase those mortgages, which made those lenders ! reluctant to make the loans in the first place. That, Watt said, "undermines the goal of improving access to mortgage credit for creditworthy borrowers."

• The agency will launch a foreclosure relief pilot project in Detroit, which could give more relief to homeowners and help get foreclosed properties back on the market more quickly. "We believe this will be a win-win for hardest hit communities and for our conservatorship objectives," Watt said.

Michael Calhoun, the president of the Center for Responsible Lending, said the speech at the Brookings Institution Tuesday was "vintage Watt" — an attempt to make home ownership accessible for more people, but with an eye for stability.

"He is for broad access, but only sustainable access," he said. "I think one of the things that makes him well suited for this job was that middle-of-the-road approach you heard here today."

Those policy changes come as Congress debates whether to revoke the charters for the two government-sponsored mortgage giants. The government forced Fannie and Freddie into conservatorship during the depths of the housing crisis in 2008, putting taxpayers behind the mortgages they guarantee. Fannie and Freddie are now earning record profits for the U.S. Treasury.

The Senate Banking Committee will vote Thursday on a bill that would phase out Fannie and Freddie, replacing them with a system in which private lenders would assume most of the risk of bad loans.

The bill appears to have enough bipartisan support to pass the committee. But some more liberal Democratic senators — including Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio — have withheld their support, seeking assurances that low-income borrowers would still have access to credit and that smaller community banks wouldn't be shut out of the market.

Without the support of more Democrats, Senate Majority Leader Harry Reid, D-Nev., said he will not bring the bill to the floor for a vote, putting the fate of Fannie and Fredd! ie in the! hands of the next Congress.

Follow @gregorykorte on Twitter.

Lawsuit: CME aided high-frequency traders

Three traders have accused the world's largest futures market of letting high-frequency traders get an improper advance look at price and market data and execute trades using the data before other market participants.

In a federal lawsuit seeking class-action status, the traders alleged that the CME Group secretly maintained the practice from 2007 through this month and financially victimized an untold number of market participants by engaging in "a fraud on the marketplace."

The traders charged that CME, owner of the Chicago Mercantile Exchange and Chicago Board of Trade, falsely assured all market participants that their exchange fees and data-fees gave them access to financial data "in real time."

But high-frequency traders, equipped with powerful computing equipment that can receive and execute trades on financial data in tiny fractions of a second, got the market information before anyone else, according to the April 11 lawsuit filed in the Northern District of Illinois.

By allowing the procedure and failing to disclose it to all traders, the CME "institutionalized market manipulation and created an opaque and hidden marketplace for financial futures," the lawsuit charged.

The case was filed amid government and regulatory probes examining whether high-frequency traders have an unfair edge over competitors. The investigations have gained increased public focus with last month's publication of "Flash Boys," a critical examination of high-frequency trading by author Michael Lewis.

In response, the CME Group said the lawsuit was "devoid of any facts supporting the allegations" and demonstrated "a fundamental misunderstanding of how our markets operate."

"It is sad when plaintiffs' lawyers bring a suit based on a desire for publicity, and in the rush to file a suit fail to undertake even the most basic effort to determine if there is any basis for their allegations," said the CME Group, calling the case "without merit."

The lawsuit was filed on behalf of fu! tures traders William Braman, Mark Mendelson and John Simms, but seeks class-action status to represent other market participants allegedly damaged by preferential treatment of high-frequency trading.

The action accuses the CME Group of fraud, fraudulent concealment, market manipulation and disseminating false information. It seeks unspecified compensation for financial damages.

Hedge Fund Billionaire Mario Gabelli´s Latest Positions

Mario Gabelli (Trades, Portfolio) is chairman, and CEO of Gabelli Asset Management Company Investors (GAMCO Investors). In recent days he bought three new stocks, and holds 824 in total, in a portfolio valued at $18.7 billion.

NuPathe Inc. (PATH)

Gabelli revealed owning a stake of 1,313,500 NuPathe Inc. shares, worth 0.01% of his portfolio. NuPathe Inc. has a market cap of $142 million; its shares are trading currently at around $4.3 with a P/B ratio of 18.4.

NuPathe is a specialty pharmaceutical company, focusing on the development and commercialization of branded therapeutics for neurological and psychiatric disorders. Teva Pharmaceutical Industries Ltd. (TEVA) announced a tender offer for all of the outstanding shares of common stock at a price of $3.65 per share in cash, and NuPathe stockholders will receive rights to receive additional cash payments of up to $3.15 per share The firm will become a wholly owned subsidiary of Teva, and common stock will cease to be traded on the Nasdaq following completion of the merger.

Hedge fund gurus have also been active in the company: Jim Simons (Trades, Portfolio) and Ronald Muhlenkamp (Trades, Portfolio) have invested in it.

ATMI Inc. (ATMI)

Gabelli reported a stake of 1,193,900 shares of ATMI Inc., sized at 0.22% of his portfolio, and 3.75% of the company. It has a market cap of $1.08 billion; its shares are trading at $34.04 with a P/E ratio of 28.6 and P/S ratio of 2.77.

ATMI supplies high performance materials, materials packaging and materials delivery systems for use in the manufacture of microelectronics devices worldwide. ATMI agreed to be acquired by Entegris (ENTG) for $1.15 billion, or $34 per share. The deal will provide a lot more of product offerings. The acquisition is expected to close during the second calendar quarter of 2014.

Hedge fund gurus have also been active in the company. Jim Simons (Trades, Portfolio), Arnold Schneider (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have divested in it in the last quarter.

Nobility Homes Inc. (NOBH)

Finally, Gabelli reported owning 234.950 shares of Nobility Homes, sized at 5.97% of the company's shares outstanding and 0.01% of Gabelli's portfolio. The company has a market cap of $44.63 million, with a P/E of 59.6 and P/S of 2.41.

The firm designs, manufactures and sells a line of manufactured and modular homes in Florida. Like most other builders in the U.S. market, the company had difficulties in the past years. However, it has a strong financial position, with no debt in its balance sheet, which we think is a good way to face the probable next scenario of rising interest rates.

Final Comment

I always like to see one of the most important financial ratios applying to stockholders, the best measure of performance for a firm's management: the return on equity. Let´s compare each company with the industry mean in the next table:

Ticker	ROE (%)	Industry Mean (%)
PATH	-814	-24
ATMI	8,3	2,2
NOBH	2,1	4,2

As we can see, ATMI has a higher ROE than its peers, which is considered good. On the other hand, Nobility has a weak ROE, but it is still positive and is really amazing compared to NuPathe's negative ROE.

Disclosure: Vanina Egea holds no position in any stocks mentioned.

Also check out: Mario Gabelli Undervalued Stocks Mario Gabelli Top Growth Companies Mario Gabelli High Yield stocks, and Stocks that Mario Gabelli keeps buying
About the author:Vanina EgeaA fundamental analyst at Lone Tree Analytics

Visit Vanina Egea's Website

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Real Time Picks	Buffett-Munger Screener
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Q&A: HVAC firm's logon used in Target breach

SEATTLE – In his latest scoop, investigative blogger Brian Krebs makes the case that the Target vendor whose network credentials were used to tap into 110 million customer accounts may have been a heating, ventilation and air conditioning (HVAC) contractor.

More: Target breach timeline of disclosures

CyberTruth asked Boatner Blankenstein, Sr., director of solutions engineering at enterprise software vendor Bomgar; Jeff Swearingen, CEO of SecureLink, and Dr. Lance Larson, information systems professor at San Diego State University to outline the implications.

CT: Is it surprising that an HVAC vendor had credentials that could get someone into Target's point-of-sale systems?

Swearingen: It's surprising but understandable. A large data center environment may have thousands of applications that work together, so enabling access to one application server may accidentally open a door to another.

Larson: Access control and environmental monitoring systems now routinely integrate air conditioning, door access control systems, and fire and police alarm systems into one, so-called, smart system.

CT: What are other examples of this sort of access routinely given to partners and contractors?

Blankenstein: Software manufacturers that support their applications need access. This could include vendors who sell time card systems, multi-functions printers and copiers, or medical records software. A big retailer needs vendors to regularly monitor, patch and update their software.

Swearingen: Software vendors, contractors and other third parties are frequently given access to privileged, or administrative accounts. This type of access is very different than the access you give to your employees, but all too frequently managed the same way. Your employee can view a sales report. Your vendor can copy a database.

CT: Will companies have to tighten down?

Blankenstein: There are things companies should do to prevent this type of event. Require vendors to use a! remote access solution that limits access to individual applications or servers, rather than giving them open VPN access. Use two-factor authentication to access your network. And capture a secure audit trail of any activity that vendor conducts.

Larson: Network Segmentation would only give network users access to the network areas they need to do their job. And least privileged access is the understanding that a network administrator only give a user the permissions required to do their job.

Citigroup Divides Analysts

NEW YORK (TheStreet) -- Citigroup (C) is shaping up to be one of the more polarizing stocks going into the fourth quarter earnings season, which gets under way next week.

On Monday, Citi got a pair of price target hikes from two veteran analysts. Sandler O'Neill's Jeff Harte and Barclays Capital's Jason Goldberg. Goldberg also hiked target prices on other big banks, including Wells Fargo (WFC), US Bancorp (USB), Bank of America (BAC), JPMorgan Chase (JPM), while lifting both his recommendation and price target on Huntington Bancshares (HBAN). Harte, on the other hand, just focused on Citi.

Harte raised his target on Citigroup to $60 from $56, while Goldberg upped his target to $60 from $58, according to Bloomberg data. The accompanying reports could not be obtained. Citigroup shares were up by 0.75% to $53.80 in early trading on Monday, while shares of other big banks, including JPMorgan and Bank of America showed similar gains.

But Deutsche Bank analyst Matt O'Connor came out with a report on Monday citing Citi, along with JPMorgan and Morgan Stanley (MS), as the bank stock where he was furthest below consensus in his fourth quarter earnings projections. In all three cases, O'Connor predicts litigation costs and weak trading in the fixed income currencies and commodities divisions will cause a bigger drag on earnings than analysts are already expecting. O'Connor sees Citi earning just $0.92 per share, vs. a Bloomberg consensus of $1.05 and a Thomson Reuters consensus of $1.06. Citigroup will report earnings ahead of the bell on Jan. 16.
^SPX data by YCharts -- Written by Dan Freed in New York. Follow @dan_freed

Stock quotes in this article: C, JPM 

Apple reaches iPhone deal with China Mobile

Apple has reached a long-awaited deal to bring iPhone to China Mobile, world's biggest phone carrier.

The companies announced a multi-year deal, to begin selling the iPhone 5s and iPhone 5c in China on Jan. 17. Pricing was not announced.

Apple shares will likely rise based on the deal and could help drive earnings per share through 2014, says Brian Marshall, an analyst with International Strategy & Investment Group. "The deal is long-anticipated but finally announced," he says. "We think it's a big deal."

That's because analysts have estimated that the Apple could sell perhaps an additional 20 million iPhones in China in 2014 once it's working with China Mobile. But Creative Strategies analyst Ben Bajarin said the deal, while "huge for Apple ... is underestimated by most analysts. It could very well ramp faster than any of us can imagine."

Apple has sold about 23 million iPhones in China over the past year. China Mobile, which is roughly twice the size of the other two carriers combined that already sell the iPhone, is building out the world's largest 4G network. "There's pretty big pent-up demand on China Mobile for the iPhone," Bajarin says.

Apple CEO Tim Cook said as much in a statement announcing the deal. "China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world's largest network."

China Mobile, which has 760 million subscribers, has been seen as a crucial market for Apple."We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile's leading network," China Mobile Chairman Xi Guohua said in a statement.

Both Apple and China Mobile will sell the phones in their stores. Potential buyers can pre-register as of Dec. 25 on China Mobile's site.

Several published reports earlier had said pricing was a hangup in deal because gray-market prices made the phones ! significantly more costly than in other markets.

Regardless, "the China Mobile deal allows Apple to cast a wide net in one of the world's fastest growing smartphone markets," says IDC mobile tech analyst Kevin Restivo.

Contributing: The Associated Press

New Microsoft tablets reach beyond Surface appeal

NEW YORK -- Microsoft took a colossal $900 million inventory adjustment on Surface RT in July that left people questioning the very future of Microsoft-branded tablets.

Surface RT was the first personal computer that Microsoft produced itself and it ran the flavor of Windows designed mainly for the tablet user. Its pricier Surface Pro sibling ran a full version of Windows 8, and unlike RT, was compatible with older "legacy" Windows PC software making it more of the true laptop replacement Microsoft positions it to be.

Either way, Microsoft didn't exactly have a hit on its hands.

Microsoft isn't surrendering to the iPad (which is expected to be refreshed Tuesday) or for that matter the company's various hardware partners-turned-rivals that also have a stake in Windows 8. Nokia, which is soon to be under Microsoft, is also expected to unveil a new tablet this week.

I've had a chance to check out the two new machines Microsoft hopes will turn around its tablet business, ahead of their Tuesday launch. There's Surface 2 that runs Windows RT 8.1 and ranges from $449 to $549, and Surface Pro 2 that runs Windows 8.1 Pro and fetches between $899 and $1,799.

Make no mistake, Microsoft has made more than surface improvements to its tablets, and the move to Windows 8.1 software, which addresses prior shortcomings, is also significant. But challenges remain. As a tablet neither Surface can outduel the iPad. And I'm not fully sold on the Pro model as the ideal full-time laptop substitute.

I say that liking a lot of what Microsoft has done here. The latest hardware sports amped up processing power, longer battery life, improved cameras, and in the case of Surface 2 a step up in screen quality to a 10.6-inch Full HD 1080p multi-touch display. (Surface Pro was already delivering Full HD in a 10.6-inch screen.).

Surface 2 also gets a single USB 3.0 port — it was a 2.0 port last time. Both slates have memory card readers.

At 1.5 pounds, Surface 2 is a shade thinner and ligh! ter than its predecessor. The biggest cosmetic change is Surface 2 now comes in an Apple-like magnesium silver color compared to the dark titanium hue of the original.

Meantime, the 2-pound Pro 2, pretty heavy and bulky for a tablet, weighs the same and is practically a dead ringer for the first Pro.

Changes from the original Surface

The original Surface models were noted for a kickstand attached to the back that propped it up on a tabletop as you took in a video. But some folks complained it was hard to use on your lap, so Microsoft added a second kickstand position that simplifies usability on your lap.

In its first iteration, Surface RT included Word, PowerPoint, Excel and OneNote from the Microsoft Office suite. But Outlook was missing in action. That unfortunate oversight has been remedied with Surface 2. (You'll have to pay to use Office on the Pro model.)

Last time around, Microsoft did a lot right with clever keyboard covers that bring real Qwerty typing to these contraptions — these really were must-have accessories if you wanted to get productive work done. Microsoft has improved those optional accessories. So now, we have a back-lit thinner and lighter Touch Cover 2 (about $120) that Microsoft claims you can type up to two times faster than using an onscreen keyboard.

I actually prefer using the Type Cover 2 (about $130) because it provides some of the "travel" on the keys that I'm accustomed to on a regular laptop, though it still won't make you forget, say, a good ThinkPad keyboard. Type Cover 2 is backlit and available in different colors, with a touchpad you can use for gestures. As before, you hear a distinctive click sound when you magnetically snap these accessories onto the tablet.

Early next year, Microsoft is planning to bring out a $200 keyboard cover with a built in battery that it says will bolster battery life on the tablet up to 50%.

The battery life on the latest slates is improved but nothing to write home about. In my very ha! rsh test ! in which I crank the brightness all the way up and stream video over Wi-Fi, Surface 2 approached seven hours of juice, while Pro exceeded five hours. That's better than the six hours and three-and-a-half hours of battery life I got with their predecessors on similar tests.

Surface 2 costs $449 for 32GB, $549 for 64GB. Surface Pro 2, which comes with a digitizer pen, costs $899, $999, $1,299 or $1,799, for 64GB, 128GB, 256GB and 512GB, respectively.

Buy either tablet, and Microsoft has throws in a nice bonus: a year of free Skype calling to landlines in more than 60 countries, unlimited Skype Wi-Fi, 200GB of free storage on Microsoft's SkyDrive online locker for two years.

I mostly appreciate what Microsoft has done with the hardware but I'm not betting on a major surge in sales either. Consider the drawbacks: the Pro device is pricey (especially when you lop on the cost of the keyboard covers.) Surface 2 still doesn't run your older software.

And then there's Windows 8 (now 8.1) itself. I happen to like the operating system more than some, but understand the confusion its bipolar characteristics brings to the table. Microsoft has been trying to have it all, an operating system that appeals equally well to tablet users who have come to rely on multi-touch screens, but also those who prefer a more traditional mouse/keyboard /PC approach.

So you have a Windows that in its touch environment is built around a fresh live-tile based interface yet one that doesn't totally abandon a desktop view more reminiscent of of Windows from yesteryear.

Microsoft took some heat for doing away with the Start button and menu inherent in the old Windows, and with Windows 8.1, the Start button has been restored. But it's only a half-step back. Tapping Start in the desktop environment only brings you back to the tile interface.

You do have the option to boot up into either environment, and the 8.1-update introduces more polish and customization overall. Bing Search is neatly integrate! d, I like! how you can display (and resize) windows side by side, and even the app count is slowly but surely rising. It is up to 110,000 now, still far behind rivals.

By now the folks who jumped on the Windows 8 bus should be accustomed to the way things are done. But it seems just as many PC devotees stuck with Windows 7, because of how radically different Windows 8 proved to be.

If you are willing to consider Microsoft's latest tablets, you have some decisions to make: Go with an RT device that is far less expensive but that can't run older software. Or splurge on the pricier Pro model that can (keeping in mind you may have to connect an optical drive) handle older software but doesn't deliver as long a battery. And if you're going to go the latter route, then you're not only comparing Surface Pro to other tablets, but to a wide range of excellent laptops, a comparison Surface Pro is not always going to win.

Email: ebaig@usatoday.com. Follow @edbaig on Twitter.

The bottom line

Surface Pro 2

www.surface.com

$899 and up

Pro Runs legacy Windows software. Zippy. Impressive hardware. Keyboard covers. 200GB of SkyDrive storage for two years, plus year of Skype calling. Kickstand improved.

Con Expensive. So-so battery life. Keyboard covers cost extra.

Surface RT

$449 and up

Pro Microsoft Outlook added to included Office suite. 200GB of SkyDrive storage for two years, plus year of Skype calling. Kickstand improved.

Con Doesn't run older PC software. Keyboard covers cost extra.

JPMorgan (JPM) Dealt Blow in $4B Settlement: Report

NEW YORK (TheStreet) -- In another bruise to its balance sheet, JPMorgan Chase (JPM) has reportedly agreed to a tentative $4 billion settlement with the U.S. Federal Housing Finance Agency (FHFA), according to The Wall Street Journal. The deal would settle allegations the big bank misled Fannie Mae and Freddie Mac, government-sponsored entities, on mortgages it sold them.

The final amount to be determined will be bundled with settlements already reached in claims against the bank from the Department of Justice. The figure could reach as high as $11 billion, according to media estimates.

A JPMorgan spokesman declined to comment.

Earlier in the month, JPMorgan reported an unexpected third-quarter loss of $380 million or 17 cents a share, mainly due to $7.2 billion in legal expenses accrued during the period. Shares closed slightly higher, gaining 0.17% in Friday trading to close at $54.30. TheStreet Ratings team rates JPMORGAN CHASE & CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation: "We rate JPMORGAN CHASE & CO (JPM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, compelling growth in net income, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated." You can view the full analysis from the report here: JPM Ratings Report

Blue Calypso Expands IP Portfolio by Purchasing Mobile Gamification Technology (OTCBB:BCYP)

Blue Calypso, Inc. (BCYP)

Today, BCYP surged (+1.17%) up +0.002 at $.173 with  631,330 shares in play thus far (ref. google finance Delayed: 2:29PM EDT September 26, 2013).

Blue Calypso, Inc. previously increased its intellectual property portfolio by purchasing proprietary mobile gamification technology in an all-stock transaction for approximately $150,000.

Blue Calypso has already applied for one new patent based on the integration of this technology with its own platform. Management expects to further develop the intellectual property purchased as well as file a family of patent applications. This new family of patents combined with Blue Calypso's existing patents, creates an unprecedented IP portfolio in the social media space.

Blue Calypso, Inc. (BCYP) 5 day chart:

Will the Fed send mortgage rates higher?

NEW YORK (CNNMoney) Housing market experts are keeping a close eye on the Federal Reserve as they anxiously await word on whether the agency will start pulling back on its controversial stimulus program, known as quantitative easing.

Since September of last year, the Fed has been buying $85 billion in mortgage-backed securities and Treasury bonds a month to help support the economy. The purchases have been credited for the historically low mortgage rates seen this year, which ultimately helped stimulate home sales and boost prices.

But now the Fed is expected to announce that it will scale back on its bond-buying program -- a move that is expected to cause rates to slowly rise, said Doug Duncan, chief economist for Fannie Mae.

The mortgage market has already factored in a modest cutback in the Fed's purchases. Mortgage rates have risen 1.2 percentage points since May when Fed chairman Ben Bernanke mentioned the possibility of reducing the agency's bond-buying program. In June, he noted that the tapering could begin as early as September, if the economic recovery continued on course.

However, even if the Fed started cutting back on its bond purchases this month, many don't expect the cuts to be sizable. "The recovery has been weaker the past couple of months than what the Fed had been talking about," said Duncan. "It would be a surprise if they act aggressively."

Duncan said initial cuts to the bond-buying program likely won't exceed $10 billion a month and most of those cuts will be in Treasuries.

Those expectations were reinforced in a paper presented by Northwestern University economists Arvind Krishnamurthy and Annette Vissing-Jorgensen at an annual meeting for central bankers in Jackson Hole, Wyo., late last month. The economists found that the purchase of mortgage-backed securities served as a more effective stimulus than the purchase of Treasury bonds.

Should the Fed continue to purchase mortgage-backed securities at current rates, there is a chance mortgage rates could actually head lower, said Keith Gumbinger of HSH.com, a mortgage information provider.

Frank Nothaft, chief economist for Freddie Mac, expects the Fed to act slightly more aggressively. He anticipates that the agency will cut its purchases of Treasuries by about $10 billion a month and reduce its purchases of mortgage-backed securities by $5 billion. He expects the Fed to continu! e to scale back its purchases through mid-2014, when the program would end entirely.

As a result, Nothaft expects mortgage rates to climb to close to 5% by next June. Last week, the 30-year fixed rate averaged 4.6%.

Quiz: How much do you know about mortgages?

Despite higher mortgage rates, only a small number of potential homebuyers -- those who would have to struggle to afford a home in the first place -- would put the brakes on their purchases, said Nothaft.

Remaining buyers would probably welcome a slight cooling off in the housing market. Home prices were up 12.1% in June compared with a year earlier, according to the S&P/Case-Shiller home price index.

That kind of surge has stirred fears of a new housing bubble and many economists -- and homebuyers -- wouldn't mind seeing price gains come back to more normal levels.

PIMCO’s Gross: Fed in a Corner, Will ‘Taper’ by Year’s End

Nobody puts Bernanke in a corner.

PIMCO chief Bill Gross noted the squawks from the more hawkish members of the Fed to begin exiting the now three-year-old QE program. Fed Chairman Ben Bernanke and Vice Chairwoman Janet Yellen, however, are advocating its continuation until the national unemployment rate hits 6.5%.

“It is a conundrum,” Gross told The Daily Ticker on Monday. “He’s in a corner as are all central banks. We have sympathy.”

The website notes “sympathy” for Bernanke does not equal support; Gross has been critical of the Fed’s QE program. He writes in his latest investment outlook:

“Our global financial system at the zero-bound is beginning to resemble a leukemia patient with New Age chemotherapy, desperately attempting to cure an economy that requires structural as opposed to monetary solutions. Their near-zero-based interest rates and QEs that have lowered carry and risk premiums have stabilized real economies, but not returned them to old normal growth rates. Perhaps, in addition to a fiscally confused Washington, [the Fed’s] policies that may be now part of the problem rather than the solution.”

Bernanke’s “out,” it would seem, is to begin tapering, a term that, like “sequester” and “fiscal cliff,” will soon enter the general economic lexicon.

“Be prepared to hear the word ‘taper,’ which is all about how far and how fast the Fed will eventually unwind all the liquidity and roll back the bond buying,” T. Rowe Price Equity Series investment board member Stephon Jackson said recently.

Gross notes that the Fed’s leadership may be weary of turning off the QE spigots too soon, but that Bernanke has also “exacerbated” the negative consequences of monetary policy.

 “It’s hard to get out once you get in the quicksand,” he quipped to the Ticker.

As a result, he thinks the Fed will have to taper its bond purchases by the end of the year. Lower deficits in Washington mean the Treasury will issue less debt, he said, which could create a shortage of Treasury securities if the Fed continues QE at its current pace.

“It creates a problem … if the Fed owns all the Treasuries,” Gross said. “Then there is no market for the bonds. So I think at some point they’d taper if only to permit the rest of us to have a few.” 

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The various benefits of your Employee Provident Fund

Here are some of these which every subscriber should know-

PF Entitles for Pension Too

There are two elements in EPF- Provident Fund and EPS or Employee Pension Scheme introduced in 1995. The entire contribution of subscriber (12% of basic +DA) goes towards provident fund but from the employer contribution of 12%, 8.33% goes towards EPS (subject to max. Rs 541) and rest added to your provident fund account. The pension on retirement is linked to the number of years in service and the average salary drawn in the year before retirement. This contribution in EPS helps in building a corpus for your pension. Although the maximum pension has been limited to Rs 3500 p.m., it is possible to get a higher pension if employer contributes on basis of employee actual pay and not mandated amount of Rs 6500 p.m. There is also provision in the law where you can receive your EPS money as a lump sum along with your PF. The benefit will be linked to your last year's average salary and number of years in service.  For receiving pension benefits one should be 58 years of age and should have completed 10 years of service without any withdrawal. But there are provisions where if you retire before 58 you will still receive the pension but a reduced amount. Lastly, your family is entitled to the pension if you do not survive the required period, provided they meet some specified conditions.

Insurance Benefit

As per EDLI (Employee Deposit Linked Insurance) scheme, in any organization where group insurance scheme is not available to the employees, the organization has to contribute .5% of monthly basic pay (capped at Maximum Rs 6500) as premium for the life insurance cover. Now, the insurance cover amount is higher of the two: 20 times the average wages of the past 12 months (up to Rs 6,500 per month), i.e. Rs 1,30,000, or the full amount in your PF account up to Rs 50,000 and 40% of the balance amount. For some this may be peanuts but people who work in small enterprises, this amount is good enough to help their family survival.

Special Occasions- EPF at help

There are special occasions in your family or some emergency arises. In case of need of funds and no recourse, EPF comes handy as it gives option to withdraw from the corpus but within a certain limit and by meeting some specified conditions.

1. Goals- Marriage, Education need for self, child or any sibling

In case you have to arrange funds for any of the above need then from your EPF corpus you can withdraw up to 50% of your contribution. Not only this, you can take this benefit three times in your life. However, do remember that for availing this facility you should be in services for at least 7 years. You will have to provide valid documents like marriage card or proof of fee payable to the organization.

2. Your Dream House

You can withdraw from your EPF account for house construction, repair or maintenance or for housing loan repayment. For all of these benefits, there are conditions specified by the organization. If you availed a housing loan and wish to make any repayment, then you can utilize up to 36 months wages from your EPF balance provided you have completed 10 years of service. Similarly, you can also withdraw up to 12 months wages (only once) if you wish to do some alteration or repairing in your existing house. For this you should have completed 5 years of service (10 years for repairing). The number of years of service reduces to five years if wish to purchase/construct a  new plot/house. The maximum you can withdraw is 36 month wages (24 month for plot) but only once. The best part here is that the house can be in name of your spouse or in joint ownership.

3. Medical Emergency

EPF gives benefit for major surgical operations in a hospital or by those suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailment. You can withdraw up to six times of your salary or the entire contribution made till date, whichever is less. The funds can be utilized for self or family (spouse, children, dependent parents) treatment.

There are other benefits available in EPF like utilizing funds for equipment purchase by physically handicapped, in cases of damage due to natural calamities etc. which one can avail in need. You also have a facility of nominating family members to receive funds after your demise and should be aware that withdrawing EPF after job change is legal only when you are jobless for at least two months. However, with all these benefits do remember that it's a retirement tool and should be utilized only when it is the last option available.

Bank Of England Follows Bernanke And Adopts Explicit ...

Early Wednesday, the Bank of England, led by Governor Mark Carney, formally adopted forward rate guidance. The BoE became just the second major central bank to adopt such policies, following Ben Bernanke of the Federal Reserve in tying rate hikes and other policy initiatives explicitly to economic data.

"Explicit Rate Guidance"

Governor Carney sent the British pound on a whipsaw as he adopted what he termed "explicit rate guidance." The Bank of England has now tied any future rate hikes to the unemployment rate, noting that rates will not rise until at least the unemployment rate reaches 7.0 percent from the current 7.8 percent; the Bank of England does not see this until 2016 in its current forecasts.

"The [Monetary Policy Committee] intends not to raise Bank Rate above its current level of 0.5% at least until the Labour Force Survey headline measure of unemployment has fallen to a threshold of 7%" said Carney in his opening remarks. "While the unemployment rate remains above 7%, the MPC stands ready to undertake further asset purchases if further stimulus is warranted."

Carney also noted that the MPC, the policy making committee of the BoE akin to the FOMC, would not look to sell any of its bond holdings until at least this threshold is reached. "But until the unemployment threshold is reached the MPC intends not to reduce the stock of asset purchases from the current £375 billion."

Carney did note that the BoE would not stick to these thresholds indefinitely if risks to either the bank's inflation forecast or financial stability were to arise. "The Bank of England's unwavering commitment to price stability and financial stability is such that this threshold guidance will cease to apply if material risks to either are judged to have arisen," said Carney. "In that event, the unemployment threshold would be 'knocked out'."

The Anti-Taper

The Bank of England has not increased the size of its asset purchase program since July of last year, when the BoE bo! osted its purchase program by an additional 50 billion pounds to 375 billion pounds. However, the BoE did launch the FLS program since then aimed at lowering market interest rates for borrowers.

The guidance issued by Carney appears to be an anti-taper, as it opens the door to additional purchases in the future. Also, Carney noted that short term market rates appear to be pricing in rate hikes sooner than the third quarter of 2016, when the BoE forecasts the unemployment rate will drop to its 7.0 percent threshold, and thus sees downside for yields in the U.K. bond market.

Real Improvements Across the Nation

Carney noted that the forward guidance thresholds were chosen as the BoE fears taking its foot off of the proverbial pedal too soon. "There is understandable relief that the UK economy has begun growing again," he said. "But there should be little satisfaction. Much is at stake as we seek to secure this recovery and return inflation to the target."

"A fall in unemployment from 7.8% now to the 7% threshold would, given the normal growth of the labour force, mean well over three quarters of a million new jobs over the three-year forecast period. A recovery in productivity driven by a recovery in demand would mean faster growth of real incomes. Such outcomes would represent real improvements in the lives of people across the nation."

Cable Gains Nearly 300 Pips

After dropping initially on the headlines that the BoE will keep easy-money policy for longer to a session low of 1.5204, the pound rallied nearly 300 pips against the dollar to a high of 1.54918 before consolidating gains around 1.5475. Meanwhile, British stocks sold off as the FTSE 100 Index dropped 0.88 percent.

ForexLive's Ryan Littlestone tried to makes sense of the quick and strong reversal in the pound this morning, noting that hopes may have been too high for the forward guidance. "So forward guidance isn't a definitively set path for monetary policy but just an adjustment of previous targ! ets," he ! wrote. "Yes it's narrowed them down somewhat and painted crosshairs on things like unemployment but it's still all 'wait and see' stuff and that's what the market doesn't like."

"Without sounding like I'm beating my own drum, it went pretty much as I expected. Rates stay low, the QE gun is still loaded but it's locked in the draw for now. The recovery is fragile and still faces risks but the emphasis is now on taking up the slack and improving productivity."

"Inflation has become an even bigger part of the equation today and they will need to monitor any home grown inflationary risk as that could affect the threshold that forward guidance is built on."

0 (c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

4 Tips to Help 30-Somethings Handle Student Loan Debt

Mark Bowden, Getty Images By the time most college graduates reach their 30s, they've been dealing with student loans for years. Yet increasingly, even 30-somethings still face big challenges from their outstanding college debts, and those challenges are affecting the way they manage the rest of their financial lives. Homeownership rates among 30-year-olds have fallen much more dramatically since 2008 for those with student loan debt than for those without it, according to a recent Federal Reserve Bank of New York study. Yet many people in their early 30s have either already started a family or plan to do so in the near future. That raises the question of how to balance your own financial needs against those of your children in order to reduce the odds that your kids will suffer under the crippling weight of excessive student loans of their own. Let's look at some tips for getting your own debt paid down and for preparing for potential family educational costs down the road. 1. Put Student Loans in Their Place. Many borrowers assume that they should always pay down their student loans as quickly as possible. Yet even though paying off those loans can give you a psychological boost, it's not necessarily the smartest move if you have other debt with less generous terms and higher finance charges. By understanding the terms of your student loans as well as credit-card agreements, car loans, mortgages, and other debt you might have, you can identify the highest-cost debt you have and prioritize getting that paid off first. Even if that means waiting longer to retire your student loans, doing so will still save you money in the long run. 2. Don't Skimp on Savings. Whether to put money toward savings and investing when you have outstanding student loan debt is a subject of debate, with good arguments on both sides. But to take advantage of the tax deductions and free employer-matching contributions you get from contributing to a retirement account, it's worth diverting extra money away from paying down student loans, especially those with low interest rates in the 3 percent to 4 percent range. As your income increases, you'll be able both to stay current on your loan obligations to set money aside for other important financial goals. 3. Make Your Employer Pay for More School. As you advance in your career, getting more education and boosting your skills might be a lucrative move. But once you're in the workforce, you don't necessarily have to pay for those classes yourself anymore. Many employers have recognized the value of investing in their employees through tuition reimbursement programs, which will pay you back for all or part of your costs. Availability and conditions differ from company to company, and typically, the education has to be connected to your job. But they're a great way to avoid adding to your student loan debt. 4. Don't Let Student Loan Debt Hit You Twice. As heavy a burden as today's young graduates carry, educational debt among their parents is also reaching epidemic levels. In 2011, parents received $10.6 billion in Parent PLUS loans, a 145 percent increase since 2000, even adjusted for inflation, according to a study from The Chronicle of Higher Education and ProPublica. And the size of average individual loan is up as well, by about a third to nearly $12,000 in constant dollars. If you have kids or plan to, you'll want to take steps to ensure you don't end up facing a huge loan burden a second time around. Put time on your side by setting up savings programs for their college educations now. As your income grows and you rise into higher tax brackets, the advantages of using a tax-favored college savings strategy such as a 529 plan increase in value. As with any market-based investment and saving strategy, 529 plans work best when you give them as much time as possible to produce strong returns. Moreover, 529 plans have very small minimum starting investments, so you can start a account without placing too big a burden on your finances.

Stock Price Targets: What Analysts Won't Tell You

Analysts use a series of calculations to determine the price target of a stock over a certain period of time, however, says John Heinzl, of the Globe and Mail, sometimes these price determinations are met with skepticism.

How much attention do you pay to analysts' stock price targets?

As a financial journalist, I'm exposed to analyst price targets on a daily basis. I've seen enough targets that were wildly off the mark (RIM (RIM), anyone?) that I don't make investing decisions based on them, but I don't entirely ignore them, either.

When an analyst issues a price target, it indicates that the brokerage expects (at least ostensibly) that the stock will reach the target within a certain time period, usually a year or 18 months. Targets aren't arbitrary; they're usually calculated by estimating a company's future per-share earnings, and then applying a price-to-earnings multiple to that number.

For example, BMO Nesbitt Burns analyst Bert Powell recently raised his price target on Wajax (WJX) to $41.50 from $35.50 because, as he explained in a note, he believes the company is poised for a recovery. The new target reflects his expectation that the stock will trade at 11 times his 2015 earnings per share estimate of $3.77—its average P/E multiple historically.

Another measure sometimes used to calculate price targets is the EV/EBITDA ratio—the company's enterprise value (market value of debt plus equity, minus cash) divided by earnings before interest, taxes, depreciation, and amortization. A third method involves discounted cash flow analysis, in which the sum of a company's estimated future cash flows are discounted back to a present value.

Whatever method is used, price targets are often met with skepticism. Some investors see them mainly as marketing tools for brokerages that want to drum up interest in a stock. Indeed, research has shown that price targets tell you little about where a company's share price is actually heading.

In a 2006 paper, Mark Bradshaw of Harvard Business School and Lawrence Brown of Georgia State University examined nearly 100,000 12-month price targets issued by analysts from 1997 to 2002.

The study found that the stock was at or above the target at the end of 12 months just one-quarter of the time, and had exceeded the target at some point during those 12 months less than half of the time.

"Target price forecasts are overly optimistic on average, and...analysts demonstrate no abilities to persistently forecast target prices," the authors concluded. "This evidence is consistent with prior findings of low abilities of various experts to forecast interest rates, GDP, recessions, and business cycles, and the infrequency with which actively managed funds beat the market index."

Sometimes, target prices vary so widely that it borders on comical.

Consider Netflix (NFLX), the video-streaming company whose stock has risen more than five-fold in the past year, and which closed Friday at $328.03 (US). The most pessimistic analyst on Wall Street has a 12-month target of $72; the most optimistic has a target of $460. Such wide dispersion indicates that analysts don't really know how to value the company; there are too many variables at play.

Contrast that with a company such as Canadian Utilities (CDUAF), whose eight price targets range from $40 to $42. (The stock closed Friday at $38.08 [Canadian]). Such tight clustering of targets indicates that analysts have a high degree of conviction about the company's future earnings, which isn't surprising for a utility that throws off predictable cash flows.

That doesn't necessarily mean the stock will hit the targets, of course. Factors such as interest rates, the economy, and market sentiment can all come into play, which is why you need to treat price targets—with their penchant for overestimating a stock's performance—with a healthy degree of skepticism.

Read more from the Globe and Mail here…

Mid-Morning Market Update: Markets Mixed; Wendy's Adjusted Profit Beats Estimates

Following the market opening Thursday, the Dow traded up 0.16 percent to 15,771.96 while the NASDAQ declined 0.25 percent to 3,922.25. The S&P also rose, gaining 0.01 percent to 1,770.60.

Top Headline
The Wendy's Co (NASDAQ: WEN) reported better-than-expected third-quarter adjusted earnings.

Wendy's posted a quarterly loss of $1.9 million, or $0.00 per share, versus a year-ago loss of $26.2 million, or $0.07 per share. Its adjusted earnings per share climbed to $0.08 from $0.02.

Its revenue climbed to $640.8 million from $636.3 million. However, analysts were projecting earnings of $0.06 per share on revenue of $640 million. Wendy's lifted its full-year earnings view to $0.25 per share.

Equities Trading UP
HomeAway (NASDAQ: AWAY) shot up 18.62 percent to $34.51 after the company reported a 63 percent rise in its Q3 profit. Raymond James upgraded the stock from Outperform to Strong Buy.

Shares of American Eagle Outfitters (NYSE: AEO) got a boost, shooting up 8.33 percent to $15.87 after the company updated its Q3 earnings forecast. Brean Capital upgraded the stock from Hold to Buy.

RDA Microelectronics (NASDAQ: RDA) was also up, gaining 11.12 percent to $17.28 after the company announced the receipt of $18.00/ADS acquisition proposal from Tsinghua Unigroup.

Equities Trading DOWN
Shares of Nationstar Mortgage Holdings (NYSE: NSM) were down 17.33 percent to $40.69 after the company reported Q3 results. Stonegate Mortgage announced its plans to acquire Nationstar's wholesale lending channel.

Whole Foods Market (NASDAQ: WFM) shares tumbled 9.76 percent to $58.18 after the company reported downbeat fiscal fourth-quarter revenue and lowered its FY14 forecast.

The Wendy's Company (NASDAQ: WEN) was down, falling 9.57 percent to $8.22 on Q3 results.

Commodities
In commodity news, oil traded down 0.57 percent to $94.26, while gold traded down 0.76 percent to $1,307.80.

Silver traded down 0.79 percent Thursday to $21.60, while copper rose 0.08 percent to $3.24.

Eurozone
European shares were higher today. The Spanish Ibex Index rose 0.77 percent, while Italy's FTSE MIB Index climbed 0.21 percent. Meanwhile, the German DAX gained 1.24 percent and the French CAC 40 surged 0.99 percent while U.K. shares rose 0.14 percent.

Economics
US jobless claims declined by 9,000 to 336,000 in the week ending November 2. However, economists were projecting claims to drop to 335,000.

The US economy expanded by 2.8 percent in the third quarter. However, economists were expecting a 2.3 percent growth.

The Bloomberg Consumer Comfort Index fell to minus 37.9 in the week ending November 3, versus minus 37.6.

The Treasury is set to auction 3-and 6-month bills.

Data on consumer credit for September will be released at 3:00 p.m. ET, while money supply data will be released at 4:30 p.m. ET.

Posted-In: Earnings News Guidance Eurozone Futures Forex Global Econ #s Economics Hot Intraday Update Markets Movers Tech

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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