BUSINESS

By Greg PeelKazakhstan has now well cemented its position as the world's dominant supplier of uranium, notes BA-Merrill Lynch, and in the second half of last year the producer began to show signs of supply discipline in keeping a lid on production. It is a lesson well understood by OPEC in the oil market and more recently Qatar in the natural gas market – when you are the world's swing supplier you want to see solid prices but not so high as to scare off demand. Careful production management is in order to ensure the most beneficial demand/supply balance.But while Kazakhstan is in the driver's seat, elsewhere in the world supply issues are abound. French producer Areva is suffering from security issues in Niger and delays in Namibia, grades are down at BHP Billiton's ((BHP)) Olympic Dam and Rio Tinto's ((RIO)) Rossing, and Rio's two-thirds owned Energy Resources of Australia ((ERA)) are having all sorts of nightmares from both low grades and the weather. ERA's profile has gone from weak to “extremely fragile”, suggests Merrills, and there is a “high degree” of uncertainty beyond.In the meantime, it is no secret that China is pushing ahead with ambitious nuclear power expansion plans and rapid progress to date sees Merrills lift its 2020 capacity assumption for China by 20%. Rising prices are not likely to stop China stockpiling U3O8, suggest the analysts, and Japan and Korea are unlikely to back off either.All of which provide the underlying fundamentals for the recent steady rise in the uranium price, along with a subdued US dollar. Industry consultant TradeTech notes the buyers and sellers began last week staring each other down across a price gap but by later in the week they came together for five transactions in the spot market totalling 1.2mlbs of U3O8 equivalent. The indicative price ticked up from the previous mark by US75c to US$73.00/lb.Merrills has upgraded its 2011 and 2012 spot price assumptions by 39% to US$79/lb and US$78/lb respectively, suggesting upward pressure remains before a peak in 2013-14. Stronger oil prices add to uranium's appeal. The biggest risk is a stronger US dollar, but the Merrills analysts have factored their dollar forecasts into their 2013-14 peak assumption.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

By Chris ShawLast week Equinox Minerals ((EQN)) announced a material resource upgrade at its Lumwana copper project in Zambia, with plans to increase resources further via an aggressive exploration program in 2011.Equinox intends to utilise eight rigs and drill 110,000 metres over the course of the year, the objective being to bring the Chimiwungo East shoot and an extension of the Chimiwungo Main shoot into the resource and reserve category.As Macquarie notes, the implication of this is the Lumwana mine looks capable of supporting a much larger scale operation than the current throughput rate of 24 million tonnes per annum. The target is now 45 million tonnes per annum, well up from a previous objective of 35 million tonnes.To achieve this expansion, DJ Carmichael estimates Equinox will require additional capital of US$450-$550 million. The broker estimates payback will be achieved inside of two years as output will nearly double to 260,000 tonnes short-term, increasing to better than 300,000 tonnes a year from 2015. Mine life is estimates to be 27-37 years at the expanded rate of production.To reflect the update, DJ Carmichael has lifted its valuation on Equinox to $7.10 from $4.85 previously. The change also reflects higher near-term copper prices and a lowering of the discount rate associated with the broker's model to 13% from 15%.Macquarie has also lifted its valuation on Equinox on the news, the increase to $6.02 from $4.59 in Canadian dollar terms. Macquarie retains its Outperform rating on the stock, noting the revised production plan at Lumwana as well as the addition of the Jabal Sayid assets via the recent acquisition of Citadel Resource Group means total output could hit 315,000 tonnes from 2016. This would be an increase of 117% from current levels.Earnings will be supported from the expansion to production, the FNArena database showing consensus earnings per share (EPS) estimates for Equinox of 40.2c for 2010 and 61.5c for 2011.On the update from management DJ Carmichael rates Equinox as Accumulate, while noting if it assumed a lower discount rate to reflect lower sovereign risk assumptions its valuation on the stock would increase to $8.70. This would be enough to upgrade to a Buy rating.The FNArena database shows a total of four Buys, two Holds and one Sell rating. UBS has the Sell rating on valuation grounds, which also underpins the Hold ratings of both Citi and Credit Suisse.The consensus price target for Equinox according to the FNArena database is $6.34, which implies downside of about 5% from current levels. It is worth noting not all brokers have updated their price targets to reflect the resource update at Lumwana. Shares in Equinox have traded in a range over the past year between $3.40 and $6.79.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

By Greg PeelThe Dow rose 69 points or 0.6% while the S&P gained 0.6% to 1319 and the Nasdaq was up 0.5%.Australia's economic bifurcation was on display again yesterday in a round of data releases. While the ANZ job ads series sails merrily onwards ever upwards, up 2.5% in January to further imply falling unemployment, specific industries are not looking quite so flash.The construction PMI for January was down sharply from 43.8 in December to a dismal 40.2 to indicate an industry in sharp contraction. That's eight months of below 50 numbers, and each of manufacturing, services and construction are now wallowing in the forties. There have been far healthier numbers posted by China, the UK, eurozone and US.And December retail sales were up only 0.2% compared to 0.5% expectation. Myer ((MYR)) fell 12% after a profit warning based on a 3.5% fall in Christmas sales year-on-year. Myer CEO Bernie Brookes called it the worst trading period he had ever experienced. FNArena wrote extensively on the retail sector in mid to late 2010 and the suggestion remains intact. Australian consumers are not bouncing back to pre-GFC spending patterns, and may not for a generation.Just of well we've got lots of stuff in the ground!By contrast, US consumer credit rose over US$6bn in December compared to expectations of US$2.4bn. The total out on credit cards of US$2.41 trillion compares to the record of US$2.58 trillion posted in July 2008. Great for the US economy today, but tomorrow?Money continues to flow out of the safety of bonds in the US and into stocks, commodities and other risk trades. But not emerging markets. The Fed is pumping money into the system and Wall Street is surging. The PBoC is taking money out of the system and the Shanghai index has been steadily falling over the last few months. Bonds and commodities took a breather last night as attention focused on more consolidation in the corporate sector.Corporate executives seem to like to do their most important deals on the weekend when the phone's not ringing. Hence we often have a Merger Monday, when several deals are announced at once. That was the case last night on Wall Street as sizeable deals were announced in the media, medical, energy and financial sectors. There was little else going on in the world and Egypt is still in limbo, so currencies were all flat last night. The dollar index is sitting at 78.05 and the Aussie at US$1.0138.Gold hardly moved at US$1349.80/oz and base metals took a breather in London. Oil remains volatile nevertheless, largely fluctuating at present on Egyptian developments or lack thereof. Crude fell US$1.55 to US$87.48/bbl last night as relevant players in Egypt began talks.Notably the VIX volatility index on the S&P 500 is back at 16 after having pushed a bit higher on Egyptian tensions. Wall Street is just quietly ticking along in up-mode these past few days and becoming a lot more parochial as solid economic readings and corporate results bring confidence. Who needs China?Well Australia obviously does because the ex-resources economy is gasping.The SPI Overnight was up 19 points or 0.4%. [Note: All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.]FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

Today George Weston Foods Limited (GWF), a division of Associated British Foods (ABF), announced Andrew Reeves as its new Chief Executive, to lead the company's future growth.Andrew starts his new role with GWF in April 2011, following the departure of the company's previous Chief Executive, Geoff Starr. Over the past five years, Geoff led significant change at GWF and the broader industry through his board membership of the Australian Food and Grocery Council and Foodbank Australia.Andrew...

St.George Bank says customers who are suffering financial hardship as a result of the current bushfires near Perth, should contact the bank as soon as possible to discuss their individual circumstances and seek assistance.

Australia’s office market is showing signs of recovering from the setbacks brought on by the global financial crisis but the recovery will still be hinged on improved economic fundamentals.

The Queensland Reconstruction Authority is also establishing an office in North Queensland to help residents affected by the recent Tropical Cyclone Yasi.

The Docklands in Melbourne has maintained the lowest office vacancy rates in the central business district contributing about 38,278 square meters to the city's net absorption.

Although the popularity of fixed rate home loans remains higher than the last couple of years, it barely rose as 2011 began.

JB Hi-Fi Ltd (ASX:JBH) has booked a record half-year net profit of $87.9 million, up 15.6 per cent on the first-half of 2009/10.

A 11.73 hectare parcel of land located in Officer and part of the VicUrban landholdings is now accepting expressions of interest.

Myer Holdings Ltd (ASX:MYR) says it will acquire a 65 percent stake in Australia’s women’s fashion brand sass & bide for $42.25 million.

Properties initially assessed as damaged by the Queensland floods have been reduced by up to 70 percent, according to the latest estimates released on Monday by the Insurance Council of Australia.

Forty one properties were destroyed in Perth Hills and 19 other damaged on Sunday.

AGL Energy Ltd (ASX:AGK) has sliced its earnings forecast for the 2011 financial year as a result of recent extreme weather events in Queensland, New South Wales, Victoria and South Australia.

The Queensland floods notwithstanding, job availabilities flashed in newspapers and online ads surged in the month of January, according to the latest ANZ Job Advertisements Series survey published on Monday.

Department store David Jones Ltd (ASX:DJS) will end its supply arrangement with Australian brand sass & bide following its decision not to acquire a stake in the brand.

By Chris ShawFor Goldman Sachs, aluminium is the least preferred of the base metals on a 12-month view. But even allowing for this, the broker suggests there are some emerging signs the longer-term outlook for the metal is beginning to improve.Global aluminium consumption was better than Goldman Sachs had forecast in 2010, which has positive implications for the demand side of its model in coming years. Some producer constraint is needed, but the broker is now forecasting market deficits from 2013 onwards.Also supportive is China's growing focus on energy efficiency, which could mean domestic aluminium production in that country lags the expected increase in demand. Goldman Sachs is forecasting Chinese demand growth of 8.2% through 2015, a figure it suggests may prove conservative.The release of substantial inventories may hold back the rate of price appreciation in Goldman Sachs's view, so for that reason the broker suggests it remains too early for all but long-term investors to look for direct exposure to aluminium.Goldman Sachs is forecasting average annual aluminium prices of US103c per pound this year, US106c per pound in 2012 and US110c per pound in 2013.Over in copper, Credit Suisse suggests for prices to commence a further leg up LME stocks need to fall. A key indicator behind this dynamic, according to the broker, is the SHFE-LME spread. The current Shanghai discount relative to LME prices suggests China is not experiencing the copper squeeze that many have expected.One explanation is China is currently de-stocking, but Credit Suisse argues current price activity could also be explained by an acceleration in substitution for the metal. Either way, the broker's view is China is unlikely to be able to support exports for long, so there should be an acceleration of the tightening of the Shanghai market in coming weeks and months.To reflect this the broker has revised up its estimates, Credit Suisse now forecasting average annual copper prices of US$4.70 per pound this year, US$4.50 per pound in 2012 and US$3.80 per pound in 2013. This compares to previous forecasts of US$3.95 per pound this year and US$3.90 per pound in 2012.Citi has updated on the bulk commodities sector, noting the recent floods in Queensland are likely to keep Australian coal exports constrained for several months given waterlogged mines, low inventories and some damage to infrastructure.On Citi's best case estimates the coking coal market will see a shortfall of 18 million tonnes, something that has already pushed prices higher given gains of nearly 50% to US$324 per tonne since the flooding began around the start of the year. Given monsoon season is still some way from being over and with inventories at critical lows, Citi's view is coal prices have yet to peak. In steel, industry consultant MEPS is forecasting global crude stainless steel output for 2010 will have hit an all-time high of 30.45 million tonnes. If the group's forecast is correct this would be 7.4% above the previous record recorded in 2006 and 24% above 2009 levels.The record is unlikely to last long, as MEPS is forecasting total output of more than 31 million tonnes in 2011. Most regions will contribute to this, with Japanese production likely to be up 27% from 2009 levels, while Chinese production is forecast to have more than doubled since 2006. EU activity also picked up in the final quarter of 2010, while MEPS notes US production has also risen strongly from 2009 levels. In steel generally, MEPS expects total global output for 2010 of just over 1.4 billion tonnes, an increase of 16% or 190 million tonnes from 2009's output. Accounting for about 50% of the increase will be stronger production in China, the US and Japan, while German and South Korean output has also improved.MEPS sees the economic outlook for 2011 as cautiously optimistic, with certain sections of Western economies performing well but construction markets still experiencing depressed activity levels. This will keep a lid on steel output in the coming years, with MEPS forecasting total global steel production in 2011 of 1,485 million tonnes.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

Retail sales in Australia rose a seasonally adjusted 0.2 percent in December, the Australian Bureau of Statistics said on Monday, coming in timidy at A$20.358 billion.

(This story was originally published on Wednesday, 2nd February, 2011. It has now been re-published to make it available to non-paying members at FNArena and readers elsewhere).By Rudi Filapek-Vandyck, Editor FNArenaIt's one of the world's oldest cliches, but true nevertheless: nothing lasts forever. In share market terms this means: be careful when you continue jumping on yesterday's trend. History shows trends do reverse and gaps do narrow, even as the exact timing remains uncertain. As a matter of fact, a few trends from 2010 may have already come to an end in January. Time to reconsider a few truths from last year?Let's start with the Australian share market in general.In what has been a perfect example of "be careful what you wish for", the Australian share market partially decoupled from US equities in 2010. This has translated into a significant outperformance for US equities over the Australian market. Alas, the first month of 2011 has simply brought more of the same. So what's bugging investors and keeping them away from Australian shares?Firstly, from an international perspective, a currency at parity with the USD represents elevated risk. If a correction follows, and most experts seem to think it will at some point, the weaker AUD can instantly sweep away all profits made in the share market. Not something many international fund managers are happy to take on board. Secondly, house prices in Australia are amongst the highest in the world, and looking wobbly. Even if local experts don't see any catalyst for a sharp retreat in Australian property prices, international investors prefer to play it safe, having experienced collapses in Spain, the UK and the US, to name but a few.In addition, the US economy seems to offer much better upside potential, given the depth it has fallen since late 2007. Australia weathered the storms of the international credit crunch well, because of peak immigration not because of commodities, but two years down the track this has merely become a case of "less pain, less gain". There's not as much upside for the Australian economy as there is elsewhere and this should, all things being equal, limit profit growth potential for Australian companies. Add the fact the RBA has an ongoing tightening bias, plus some weather disasters and it should be clear Australia is no longer top of priority lists internationally.But no other factor makes it as clear as to why Australia's underperformance has been justified as do analysts' earnings expectations. Earnings forecasts for Australian companies have been in decline since May last year. They have been on the rise internationally since August. It can thus hardly be a coincidence that the gap between Australia and the rest of the world really started opening up from September. This downward trend has ceased in late 2010, but only because analysts have been upgrading their commodity prices forecasts for the new calendar year. Excluding commodities, earnings forecasts in Australia are still in decline.This easily explains Australia's underperformance. Resources and energy stocks, plus their pick and shovel providers, represent an estimated 33% of the ASX200. This means 67% is still suffering from downward adjustments in growth forecasts. Plus BHP Billiton ((BHP)), today's largest stock in Australia, hasn't exactly performed splendidly over the past twelve months (more on BHP further down).The gap between resources and the rest has consistently widened throughout 2010. Market strategists at UBS predict resources companies will report some 40% in earnings growth this year, while "industrials" will only report growth to the tune of 4.5%. This is, give or take, a factor of 10 to 1. ANZ Bank economists recently calculated resources account for 6% of Australia's GDP, but also for 40% of all corporate profits in the country. These are truly amazing numbers, but could it be that they also signal we are currently at or near the peak for the gap between resources companies and the rest?If so, than we will, at some stage, witness a reversal in the relative de-valuation of 67% of Australian companies vis-a-vis the resources industry.Similarly, while it appears the same factors that were dogging corporate profits in 2010 will largely remain in place this year (even though the RBA might allow for more breathing space at first post the natural disasters in Queensland), history shows the Australian share market has been the best performer overall since 1900. Every period of relative underperformance (1970s, 1990s) has ultimately been followed by relative outperformance. Within this framework, I note AMP's Head of Investment Strategy and Chief Economist Shane Oliver, suggested in January:"On a five-year basis, the combination of higher dividends, better growth prospects, fewer structural constraints and franking credits for Australian-based investors suggest investors should maintain a bias towards Australian shares."Rule number one from investment legend Bob Farrell: "Markets tend to return to the mean over time".Here are a few more trends that come to mind:- Banks outperformed in the initial phase of the post March 2009-rally, but they turned into significant underperformers towards the end of 2009, and have been since. Price-Earnings ratios for banks are now historically low, and prospective dividend yields historically high, while EPS growth projections are as low as I have seen them over the past decade. Commonwealth Bank ((CBA)) has held a stiff premium versus the rest of the sector over the past two years.- Small and medium sized companies have significantly outperformed their larger peers since March 2009 and within that group smaller mining stocks have significantly outperformed their peers in industrial sectors. Smaller companies are now trading on equal valuations with large caps, which doesn't make sense from a longer term risk perspective.- BHP Billiton shares may have performed slightly better than the market overall in the year past, the shares underperformed many other stocks, including Rio Tinto ((RIO)). BHP is cash rich but the market doesn't want Marius Kloppers to chase the next big company-changing, milestone acquisition. Analysts are convinced that if BHP decides to stick with what works best and returns its surplus cash to shareholders, the shares would enjoy a premium compared to the present discount. Are Marius and others on the board listening?- Retailers have been de-rated on the back of an increasingly toughening environment. If it isn't the currency, it's higher interest rates, or the weather, or a newfound frugality among Australian consumers, or online competition. There's always something so it seems and retailers have become the standout sector for issuing profit warnings over the past three months. However, immigration is about to pick up, the overall savings rate is back at 10% and a tight labour market should feed into upward pressures on wages. Is it safe to assume the sector is experiencing the pinnacle in its discomfort zone? If we forget about the fact that many retailers are lagging in terms of online operations, then the answer is probably yes.- Inside the retail sector, Wesfarmers ((WES)) has now consistently outperformed Woolworths ((WOW)) over the past two years. Woolworths shares are currently trading near their lowest PE ratio over the past decade. Already a few retail analysts have started mumbling "relative value".- Probably comparable to the de-rating for retailers in Australia is the preceding de-rating for bricks and mortar media companies in Australia. As has been well-established now, a few years ago when private equity jumped through all sorts of hoops to get its share of local media companies, and James Packer successfully offloaded his father's legacy, that marked the ultimate peak for the local media sector. Valuations have fallen dramatically since and a virtual non-existence of online strategies among Australia's media companies is still hurting prospects and valuations today.- Companies in the building materials space continue to do it tough, and their share prices have been significantly de-rated. No growth in Australia and negative growth in the US does not exactly make for a prosperous combination. It would appear the immediate outlook remains sombre and things in the US might well turn worse, before they can get better. At some point, however, investors will start looking at cheap valuations and at market conditions that will, inevitably, start improving. Most experts believe a recovery in US construction won't come before 2012. That may well mean investors will start casting an eye over the sector at some point before the end of the year.- Equity markets in developed countries, including Australia's, have continuously suffered from net funds outflows since sell-offs started in 2008. Stockbrokers have been predicting (hoping?) this would change at some point, but despite international equities booking solid gains in 2009 and 2010, retail investors chose not to return to equities. This might be about to change with retail stockbrokers in the US signaling January might have seen a potential reversal in trend. This could be very important for US equities in the year ahead. In Australia, retail investors still love high yielding instruments, such as cash in the bank.- Businesses worldwide have deleveraged since the proverbial hit the fan in 2007. Corporate cash levels are at much healthier levels and 2010 might have shown the first signs that company boards are increasingly leaning towards spending instead of hoarding. In Australia, one prediction is that dividend payouts will further increase this year.- Also, history shows commodities seldom outperform each other year-in, year-out. More often than not, last year's number one will revert back to the centre of the field, if not straight to the bottom of relative performances in the following year. In 2009 copper, lead and zinc clearly outperformed all others, but last year lead and zinc ended near the bottom of the performance list (zinc even put in a negative return). In 2010 palladium was the best performer, with silver second and corn third. Relative laggards were (from the bottom up) natural gas, zinc, lead, aluminium and crude oil. Something to keep in mind for this year?- To complete the above picture: in 2008 only gold put in a positive performance while lead proved the worst of the pack. As stated above, the next year lead returned the second best performance and gold fell back near the bottom of the pack. Last year gold ended in the middle.While putting an exact timing on any or all of the above remains anyone's guess, I add the following observations:- Large caps outperformed small caps in January- Australian Real Estate Investment Trusts (A-REITs) outperformed the broader market- Equities in emerging markets underperformed those in developed countries- Precious metals underperformed the broader commodity complex- The Australian dollar is no longer on top of FX performance tables- History suggests larger resources companies outperform their smaller peers in year three of the commodities boomNo doubt, I am forgetting a few. Ideal opportunity to quote one of Wall Street's legendary traders, Jesse Livermore: "The big money is made by the sittin' and the waitin', not the thinking".Below a chart (thanks to Shane Oliver at AMP) to illustrate what I have been talking about since April last year: earnings forecasts in Australia have been in decline, while the rest of the world fared much better. One does not have to seek any further about why the Australian share market has been de-rated over the past year. Remember: nothing lasts forever, even if tomorrow might still look the same as it was yesterday. And oh yes, everything has a price.(Special note: FNArena subscribers can read all ten investent rules by Bob Farrell, along others, in the Take Notes section on the website).P.S. I - All paying members at FNArena are being reminded they can set an email alert for my Rudi's View stories. Go to Portfolio and Alerts in the Cockpit and tick the box in front of 'Rudi's View'. You will receive an email alert every time a new Rudi's View story has been published on the website. P.S. II - If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame. FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

The Triggers for Egypt’s Political Unrest… And the Investment Opportunities That Spring From itBy Steve McDonald, Investment Analyst Host of The Oxford Club’s Market Wake-Up Call Friday, February 4, 2011Editor’s Note: In this edition of the Investment U Weekend Update, Steve tackles… How the unrest in Egypt could turn into an investment opportunity… How the political cauldron in Egypt could affect oil prices… The Russians’ gold-buying spree… and the point at which you should buy gold on the dip… Broken index funds… The “Slap in the Face” Award* * * * * * * * * *Take a Long-Term Approach on EgyptThere’s no question that the unrest in Egypt is the world’s primary focus at the moment. But for investors, it could turn out to be a big opportunity. Opinions vary about how this situation will work out, but many analysts think this situation could actually have a very positive outcome for Egypt and investors.Graham Stock, Chief Investment Strategist at Insparo, described Egypt’s call for change as very similar to what took place in Poland during the Solidarity movement. According to Stock, Egypt is the biggest player in North Africa and says its focus on liquefied natural gas (LNG) and as a pipeline player makes the current selloff a huge buying opportunity for long-term investors. Both LNG and pipelines aren’t going anywhere – and will remain profitable after this situation settles down.Jim Licata, Chief Investment Strategist at Blue Phoenix, calls Egypt the “Jewel of the Nile” and also sees this selloff as a huge buying opportunity. Licata especially likes Apache Corp (NYSE: APA ) as an Egypt play. It has 20% to 30% of its assets in Egypt and says if the stock retreats to the US$100 range (it’s currently at US$118), it’s a buy.Nobody is recommending a short-term trade in anything related to Egypt. This situation will take time to improve and requires a long-term outlook. Almost every analyst sees Egypt as being a better investment opportunity after the power transition is complete.Two Triggers for the Egyptian UnrestEdward Yardeni of Yardeni Resources stated in an interview this week that the unrest in Egypt is the result of the evolution of globalization and the wealth it’s generated. Specifically, he sees two problems… The wealth generation is concentrated in too small a percentage of the emerging world population. He says we could see Egypt’s situation replicated in parts of Asia. The recent spike in global food prices is the spark that’s driving the unrest – and is exacerbated by the fact that emerging markets are hoarding grains.As I said last week, food is one of the biggest plays in the world right now and can only get bigger.How Egypt’s Woes Could Affect the Oil MarketSo what impact will the Egyptian situation have on the price of oil? Beyond the incredibly complex political effect it could have in the Middle East, the immediate concern for investors is the Suez Canal. Why? Because 20% of the world’s oil travels through the canal – and if that flow is compromised, we could see big price increases in crude.Arjuna Mahendran, head of Asian investment strategy at HSBC, said this week that oil is on everyone’s mind. The good news is that there is little to no anti-Western sentiment in the protests and no threat to the flow of oil so far. However, everyone – especially the traders in the NYMEX oil pits – will be watching this situation very closely.On a positive note, a Wall Street Journal article this week stated that gold is a better hedge against Egyptian unrest than oil. It doesn’t see much threat to the price of oil and there’s a better case for gold to run higher on the uncertainty. And let’s face it… the last thing we need right now is a major spike in energy prices.From Russia With GoldThe Russian government announced this week that it will buy another 100 tons of gold per year to replenish its gold reserves. This comes after a 23% increase in its gold reserves last year and has some observers wondering if the recent gold selloff is a new buying opportunity. After all, 100 tons per year is nothing to sneeze at and most central banks and governments have increased their gold holdings for some time now.Jonathan Barrat, Managing Director of Commodity Broking Services, says that commodity-driven inflation and deficits in the developed world will continue to put upward pressure on the price of metals. He sees US$1,320 per ounce as a good chance to buy gold on the dip. Cynthia Carroll, CEO of Anglo American ( AAL.L ), see worldwide demand growth for metals extending beyond 2030 and that mining is the sweet spot in the growth of both China and India.Remember, as the value of metals increase, it increases the net worth of mining companies that have reserves in the ground. It’s what mining analysts call the “multiplier effect” of the mining industry – and is why many analysts feel that miners are a better investment than metals themselves.The Changing Nature of Index FundsFor two decades, the S&P 500 and other index funds have been gems for investors who won’t venture into the area of stock picking. But there are big changes afoot in this huge investment area. The most popular index fund type – the S&P 500 and Russell 2000 – weight their indexes by the stocks’ market caps.But in its latest issue, the Journal of Indexes mentioned that alternatives are available now that are outperforming the cap-weighted funds by a significant amount. One alternative is to weight companies equally and ignore their market value. Another is called minimum volatility, which favors the most stable stocks available in the index.But the best returns have come from Risk-Efficient index funds that do the opposite, or weight an index by the most volatile stocks in that index. The results are very surprising. The high-volatility-weighted funds have far outperformed the market-value-weighted index funds. Even the stable and equal-weighted funds have fared much better than the traditional market-value-weighting.Conclusion? Cap-weighting index funds could very well be out of touch. During the first 25 years of index investing, the S&P 500 turned a single dollar invested in 1975 to nearly US$17 by 2000, net of inflation. But over the next 10 years they lost US$0.29 per dollar invested, turning US$1 into US$0.71. That stinks!It might be time to take a look at your choice of index funds.The “Slap in the Face” AwardThis week, it goes to Greece… again. My apologies to the cradle of civilization! Despite the fact that there’s a revolution happening on the streets of Egypt, it still costs about half as much for Egyptians to insure their debt as it does for the Greeks. That’s how bad Greece’s money situation is.For example, it currently costs about US$835,000 to insure US$10 million dollars of Greek debt. But even with the political instability the Egyptians have at the moment, they’re only paying about US$440,000 to insure the same amount of their debt. At the World Economic Forum in Davos this week, a chairman of a major bank (he remained anonymous for obvious reasons) said the Greeks must be smoking dope if they think they’re going to pay back their debt. It looks like the Greek mess is far from over. And I’m concerned about what that says about the rest of the PIIGS.That’s all for now. Catch you next week.Steve McDonaldReprinted with permission of the publisher. The above story can be read on the website www.investmentU.com. The direct link is: http://www.investmentu.com/2011/February/a-positive-outcome-for-egypt.html#more-18232Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.Views expressed are not FNArena's (see our disclaimer).FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

The Australian Dollar touched 1.0200 onFriday evening before the US non-farm payroll data forJanuary was released.

U.S. stocks rose slightly Friday, contributing to the market's biggest weekly gain in two months, as strong earnings boosted the technology sector and traders largely chalked up a disappointing January jobs report to stormy weather.

The Aussie rallied half-a-US-cent during local trade on Friday hitting a high of 1.0199 after The Reserve Bank of Australia (RBA) signalled in its quarterly monetary policy statement that further rate rises are on the cards.

S non-farm payrolls (employment) rose by just 36,000 in January. While the report was well short of expectations of job gains near 148,000, weakness was attributed to harsh snow storms in the month.

The Aussie market finished higher for the third straight day today with the All Ordinaries index (XAO) rising 0.8 pct or 39.5 pts to 4958.8.

The general insurance industry in Australia has expressed its determination to set a standard definition for a flood to be able to offer improved flood cover through the National Flood Information Database.

Small businesses in Queensland, Victoria, New South Wales, Western Australia and Tasmania are expected to benefit from a $1 billion lending package set aside by the Commonwealth Bank (ASX: CBA) to support businesses across flood and cyclone affected areas.

Xstrata North Queensland is recommencing its Mount Isa Mines operations and is focusing on getting its North Queensland operations back online following Cyclone Yasi.