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Morning Rage 8.27.2012

The Hang Seng went the opposite direction losing 0.4% today hit by weakened non-bank financial, brokers and insurers. China Life Insurance, the largest mainland insurer, slid 3.5% today. A rival, Ping AN Insurance, lost 2.6%. Haitong Securities lost 4.4%. China Construction Bank, China’s second largest lender, slipped 0.8% today. China Petroleum and Chemical Corp was the only of 3 Chinese Oil companies to rise today gaining 3.4%.

European shares were down today with revised data that Spain’s economy has contracted more than previously estimated, 0.3% vs a previously estimated 0.1% in 2010, the Spanish IBEX was down 0.8% today. Spanish and Italian Banks were down with BancoSantandor losing 1.3% and Unicredit down 0.8%. Trading was thin today due to the UK market being closed for a public holiday. Nokia, the world’s second largest cell phone maker, jumped 11% today after rival, Samsung, lost a court case against Apple. Around Europe the Dax is up 0.2%, the CAC 0.10% and the Madrid General is down 0.4%.

Ford breaks ground on a new factory in Chongqing, China where it will produce its 2-liter ecoboost engine.

Crude and Natural gas are both set to begin up over 1%, silver up 0.5% and gold the opposite way 0.2%.

Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market. Comments can be directed to ryghcw19@uww.edu

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Apple's Billion Dollar Victory Affects Google 8.27.2012

Simply put, Apple now has the power. They can threaten other android device makers with litigation, or offer them an alternative: namely, paying a royalty on every phone they sell. Many of the other companies using the Android interface will indeed be put in a very difficult position. They can deny Apple’s request to work out a licensing deal, and likely face legal action. After what happened yesterday and witnessing a significant win for Apple, most companies won’t want to take the risk of the same thing happening to them. The alternative is to work out a licensing deal with Apple, and pay a royalty fee on every device sold. If that happens, and Apple receives a $30 royalty fee for every phone (the offer they made to Samsung prior to taking legal action), Apple would actually end up generating more revenue from Android phones than Google would.This obviously wouldn’t be good for the search giant, and Google will have to make some tough decisions regarding their next course of action.

Another possibility for companies currently using the Android interface, is for them to sever ties with Google and Android completely. If these companies don’t want to risk litigation, and want to avoid royalty fees, they may ditch Android in favor of another platform, most notably Microsoft’s Windows. No matter how you look at it, the jury’s decision yesterday doesn’t bode well for Google and Android. As Steve Jobs famously quoted, “I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank to right this wrong. I’m going to destroy Android because its a stolen product. I’m willing to go thermonuclear war on this.” Based on what we all witnessed yesterday, it looks like Steve Jobs and Apple might indeed be headed in that direction.

Brandon Kieltyka is currently an undergraduate studying Finance at Daytona State College.

Twitter: @kieltyka05


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September Seasonal Commodity Statistics

Copper prices start to fall as the construction season ends and typically remain on a downtrend through December. Silver on the other hand typically starts to rally in September as demand rises. Jewelers start to buy silver in preparation for the holiday season. Also, farmers in India are known to buy precious metals after their harvest which ends through september.

This year Soybeans and grains are very strong due to drought conditions across large parts of the United States. Historically, soybeans are in a weak period during September, reaching their seasonal lows in October when the harvest is over. Corn is typically in a downtrend, although a frost scare can cause price spikes.

Meat prices, such as live cattle tend to rise as the demand for cattle rises in the Fall. Typically people eat more meat as temperatures cool off. Government programs such as school lunches also increase demand as school is back in session.

In the past 12 years, the Euro has rallied 11 times from Labor Day through the end of the month. I am not sure if this year will go with the historical trend, however a Euro rally before the election could be expected. European uncertainties may become more apparent in the next few months during the U.S. election season.

David Cornes holds a degree in economics from the University of Montana.

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Halftime Report 8.24.2012

Gold futures slightly down at 1,670 and Silver futures stable at 30.52. Crude up a half a point to 96.86.

Eli Lilly & Co. said to phase III clinical trials of Alzheimer’s drug showed statistically significant slowing of cognitive decline, gaining 2.5%.

Madison Square Garden Co. rise over 5% as fourth-quarter earnings beat analysts’ estimates.

Autodesk Inc.’s shares fell more than 15% because of lower second-quarter profits and a plan to restructure IT.

Salesforce.com initially fell 5% after posting second-quater losses. It is not trading up 0.5%.

Alex Kalish, masters degree in economics at Suffolk University