5 Big Regulatory Changes Coming in 2014

As I attempt to look at what’s on the 2014 horizon for the insurance industry in terms of regulation, compliance and other best practices, I can’t overcome the feeling of déjà vu. Or perhaps I am just repeating myself.

Many of the topics here — a fiduciary standard, industry reorganization, arbitration methods — are not new. Yet, after years of effort, the months ahead might finally lead to changes in these hotly debated areas. Or not. Here are my predictions:

Sticks and stones may break my bones, but a fiduciary will never hurt me.

Acting in the best interest of the client does not have to be to the detriment of the financial advisor. A commission-based product may be in the best interest of the investor. A fee-based product may be in the best interest of the investor. Whether a financial advisor makes a fee or a commission, the financial professional is being compensated for services.

Fiduciaries can break laws and steal client money. Commissioned reps can have the highest of ethics. (And vice versa.) So it is not the label or the law that makes one honest; it is if one is actually honest that counts.

Let’s get beyond the in-fighting. The SEC should adopt a fiduciary standard for all financial services professionals, albeit with allowances for differences between investment advisor representatives and broker/dealer representatives. All financial advisors should have full disclosure of services, fees, conflicts of interest, and act in the best interest of the client. Send the lawbreakers to jail.

Brokerage and advisory services are indistinguishable to investors.

Here is my ideal futuristic shape of the industry: We will be under one regulatory regime. No longer will we have the broker/dealer and registered investment advisor industries. There will be one registration for the company, one fee, one filing. One registration for reps, one fee, one grand-slam exam. One full-disclosure document used by all to replace the Form ADV.

Wealth management, life planning, financial planning, asset management, or simple buy-and-sell securities recommendations will be done under one roof. There will be a choice of fee structures, based on client suitability. Some specialist firms will continue to exist — with wealth management on one side of the spectrum and traditional brokerages on the other — but they will all fall under one regulatory scheme. The Financial Advisory and Investment Transaction Services Act of 2023 (FAITS Act) and its rules and regulations will be streamlined. Under this imaginary FAITS Act, some rules will apply for transactional trades, and other rules will apply for services that are advisory in nature — but all under one coordinated act.

Hmmm … I actually made this prediction 10 years ago. So I am adding on another 10 years to my dream regime.

You may believe arbitration is the civil way to resolve a dispute, but it could bring on the wrath of the state regulators.

When your client wants to pick a fight with you, would you rather get your day in court in front of a jury, or face a panel of arbitrators? It is not uncommon to see mandatory pre-dispute arbitration agreements in broker/dealer and investment advisor contracts.

It is not my job, in the space of this article, to counsel you on your choice of forum. Broker/dealers utilize arbitration clauses under the good graces of FINRA. Federally covered registered investment advisors will find the SEC sitting on the fence on this matter. State registered investment advisors may find that these clauses are (or soon will be) prohibited in some states.

The North American Securities Administrators Association (NASAA) announced its strong support for the Investor Choice Act of 2013 (H.R. 2998), which would (if passed) prohibit the use of mandatory pre-dispute agreements by broker/dealers and registered investment advisors.

The Investor Choice Act would not in any way prevent investors from voluntarily electing to resolve a dispute through arbitration or mediation after the facts and circumstances of the dispute have been discovered. The Investor Choice Act may die in committee.

The SEC has authority, under the Dodd-Frank Act, to either ban arbitration clauses in advisory contracts or, at a minimum, commence a study of the use of pre-dispute arbitration. The SEC has not acted in the three years since the Dodd-Frank Act was passed, much to the dismay of NASAA.

How will you get back up and running if your office becomes uninhabitable? Your files disappear? Your staff can’t get to work? Your phone lines go down?

It has been approximately 10 years since both the SEC and FINRA adopted rules for investment advisors and broker/dealers to implement a business continuity plan (BCP). The BCP addresses events that could cause a significant business disruption and how the business will regain functionality within the shortest possible time span.

Yet, year after year, disaster after disaster (think Katrina and Sandy), financial advisors are still getting caught off guard without a viable BCP in place. The SEC, CFTC and FINRA recently issued a joint advisory to suggest effective practices. The SEC Office of Compliance Inspections and Examinations issued a separate risk alert for investment advisors.

Can you spot the red flags for identity theft and prevent losses from your client accounts?

The Federal Trade Commission’s (FTC) Red Flags Rule implemented obligations imposed by the Fair and Accurate Credit Transactions Act of 2003 (FACT Act). Many firms are already in compliance based on this original FTC rule; others firms hesitated to adopt policies, believing the FTC rule did not apply to them.

SEC Regulation S-ID recently implemented provisions in the Dodd-Frank Act, which amended the FACT Act and directed the SEC (and the CFTC) to adopt rules for identity theft red flags. For those firms that now need to come into compliance with the SEC rule, it was effective May 20, 2013, with a final compliance date of Nov. 20, 2013.

The Red Flags Rule requires specified firms to create a written identity theft prevention program (ITPP) that is designed to identify, detect and respond to red flags — patterns, practices or specific activities — that could indicate identity theft.

The Red Flags Rule requires firms to prepare an ITPP if they are either a “financial institution” or a “creditor” and offer “covered accounts.” It’s important to look closely at how the rule defines “financial institution” and “creditor” because the terms apply to groups that might not typically use those words to describe themselves.

Top 10 Blue Chip Stocks To Watch Right Now

An investment advisor who directly or indirectly holds transaction accounts and is permitted to direct payments or transfers out of those accounts to third parties is an example of an SEC-regulated entity that could fall within the meaning of the term “financial institution.”

Investment advisors who have the ability to direct transfers or payments from accounts belonging to individuals to third parties upon the individuals’ instructions — or who act as agents on behalf of the individuals — are susceptible to the same types of risks of fraud as other financial institutions. And individuals who hold transaction accounts with these investment advisors bear the same types of risks of identity theft and loss of assets as consumers holding accounts with other financial institutions. If such an advisor does not have a program in place to verify investors’ identities and detect identity theft red flags, another individual may deceive the advisor by posing as an investor.

Check out these Top 10 lists on ThinkAdvisor:

Advisers skeptical about Obama's “myRA” proposal

Bloomberg News

Some investment advisers are skeptical about whether President Barack Obama's proposal to help low-income Americans build a retirement nest egg will work.

In his State of the Union address on Tuesday night, he proposed a so-called “myRA” retirement savings account that would invest in government bonds and be offered by employers through Roth individual retirement accounts.

The White House on Wednesday will direct the Treasury Department to start developing the mechanism. Workers could open the account with $25, make automatic contributions in amounts as small as $5 per month and carry it with them from job to job.

Enrollment would be voluntary, and tax-free withdrawals could be made at any time, according to senior administration officials who briefed reporters on Wednesday.

Once a myRA builds to $15,000, or after 30 years, it would have to be rolled over into a private-sector Roth IRA. A pilot program will begin with several employers by the end of the year.

"It's not going to go anywhere. It adds to the alphabet soup of all the different kinds of IRAs."George Papadopoulos, owner of an eponymous investment advisory firm.

Although encouraging more retirement savings is “noble,” the opt-in feature will undermine myRAs' effectiveness, said George Papadopoulos, owner of an eponymous investment advisory firm.

“People will procrastinate, and they won't sign up,” he said.

“It's not going to go anywhere. It adds to the alphabet soup of all the different kinds of IRAs,” Mr. Papadopoulos said.

It is ironic that Mr. Obama touted the growth of the stock market over the past five years just before introducing a retirement plan based on government bonds, said John Hauserman, president of RetirementQuest Wealth Management.

“'Silly' is the word that came to me when he presented it last night,” Mr. Hauserman said.

“It's not a good long-term portfolio prescription for the majority of people, particularly those who are low- and middle-income and need long-term growth,” he said. “He proposes a retirement plan that won't let people be in the stock market.”

But another financial adviser embraced the idea, praising it as a “starter plan” that gets people into a savings habit and allows them to transition to private-sector plans.

“Any time we can bring solutions to the middle market and below to help our consumers save and take on personal responsibility for retirement, we would be in favor of that,” said John Nichols, president of the Disability Resource Group and president of the National Association of ! Insurance and Financial Advisors.

In his speech, Mr. Obama also took a swipe at tax incentives for retirement savings contributions.

He encouraged Congress to “work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save but does little or nothing for middle-class Americans.”

That characterization drew the ire of Brian Graff, chief executive and executive director of the American Society of Pension Professionals and Actuaries. An ASPPA study last year showed that 80% of 401(k) plan participants make less than $100,000 annually and that households making more than $200,000 get just 17% of the tax benefits.

“The 401(k) is a Main Street savings plan,” Mr. Graff said.

“It's completely wrong to suggest they only benefit the wealthy,” he said. “It's just ridiculous.”

The ASPPA is conducting a lobbying effort called Save My 401(k) that has focused on generating congressional support. Now it also will target the White House.

Mr. Graff wants to change Mr. Obama's rhetoric, which he said could help put retirement savings tax deferrals in jeopardy.

“It's this sort of war on the wealthy or war on the successful that he can't seem to get away from,” Mr. Graff said. “Everyone in the whole country benefits when everyone saves.”

Five Stocks For A New Russia

Prepare to become familiar with this term: New Russia. You are going to hear a lot more about it.

Russia has been avoided by investors but offers selected opportunities (Photo credit: Ed Yourdon)

Generally, Russia has been on the avoid list for many emerging market investors in recent years. In addition to all the other problems facing emerging market assets today – such as a risk-off attitude in the world investment community that is favouring US and European holdings rather than those in the high-growth emerging world – Russia has an impressive assortment of ailments all of its own. Top of the pile is corruption: it ranks 113rd out of 174 in Transparency International's Corruption Perceptions Index. Then there are corporate governance worries, a history of state involvement and intrusion, and a decline in the commodities sector of which so many of Russia's major credits are a part.

But perhaps that's not the whole story. Today Charles Robertson, global chief economist at Renaissance Capital in London and one of the most interesting voices in emerging market investment, sent a note to clients saying: "The theme that's exciting our Russia research team is 'New Russia'."

"The investor feedback we've got from the past two months is pro-Russia," Robertson says. "For all of Russia's problems (and it has a fair few), it does still have the most literate, large, IT savvy population in emerging markets." Renaissance argues that Russia is uniquely placed to both produce and consume the IT and high-tech sector. "Investors want more exposure to New Russia," it writes in a new research report today. "Underpenetrated sectors combining fast growth with world-class levels of technology, management and corporate governance; sectors the government sees as enabling Russia's growth and modernisation and thus without the regulatory, taxation and legacy burden of many of Russia's index heavyweights."

"We're not arguing that Russia is embarking on a new reform effort – in fact, we argued the opposite over the summer," Robertson says. "But asset prices can still rise without reform, for a few years at least. And New Russia is its own idiosyncratic reform story."

Boeing Projects Surge in China’s Airplane Demand (BA)

The Boeing Company (BA) reported on Thursday that it is now predicting demand for 5,580 new airplanes in China over the next 20 years.

The company now sees China’s fleet tripling in the next 20 years and expects the country to purchase approximately $780 billion worth of aircrafts during that period. The increase in demand will be caused primarily by a rise in China and Asia based tourism.

The rise in tourism will likely grow demand for single aisle airplanes. The company expects the Next-Generation 737 and the new 737 MAX to improve current capabilities, fuel efficiency and maintenance costs.

Randy Tinseth, vice president of marketing for BA, commented: “Thanks to strong economic growth and increased access to air travel, we project China traffic to grow at nearly 7 percent each year.”

“China is a key market for Boeing. Our current and future products will allow our customers to meet the growing demand with the most efficient airplanes.”

Boeing shares were mostly flat during Thursday morning trading. The stock is up 41% YTD.

Gas-Driller Rice Energy Brings Another Fracking IPO

Appalachia gas driller Rice Energy Inc.'s initial public offering will give investors yet another way to play the U.S. energy boom.

The Canonsburg, Penn.-based company and some of its insiders expect to sell 40 million shares for $19 to $21 each late Thursday , raising up to $840 million before the potential offering of additional shares by underwriters.

The deal adds to what's already been a fairly active year for IPOs tied to oil and gas drilling in U.S. shale rock formations, though investors' response to these deals has been mixed. Last Thursday, an IPO by shale oil driller EP Energy Co. raised a lower-than-expected $704 million in its IPO. Through Wednesday, the shares were down 6.5%.

A similar firm, RSP Permian Inc.(RSPP), saw its debut raise $390 million last Thursday, pricing within the range the company expected. The stock was up 4.5% as of the latest close.

Last year saw four U.S.-based energy exploration and production companies' IPOs raise a combined $2.4 billion, the highest level of proceeds since $4.5 billion was raised in 1998—largely thanks to Conoco Inc.'s $4.4 billion IPO—according to Dealogic.

Rice's holdings are concentrated in an area known as the Marcellus Shale in southwestern Pennsylvania and the Utica shale in southeastern Ohio. During the first nine months of 2013, higher gas production helped the company's revenue more than double that of the full prior year, according to a regulatory filing.

The company operates in some of the most prolific gas-producing areas of the country, but its lack of acreage in less-discovered gas plays may deter some investors, said Michael Wright, San Francisco-based manager of the Forward Global Infrastructure Fund.

"They're in the sweet spot and they've kind of shown that they're good operators," Mr. Wright said. "I think the question is, what is the multiple that you pay for a quality company with good acres that doesn't necessarily have a lot of upside from peripheral plays."

Rice Energy is run by Daniel Rice IV and his brothers, Toby and Derek. Their father, Daniel Rice III, serves as a director and managing general partner of an entity that will own about 16% of the company's shares, if the deal price at the midpoint of its expected range.

Top Consumer Stocks For 2015

Daniel Rice III previously served as a portfolio manager at BlackRock Inc.(BLK), co-managing $4.4 billion in energy assets. He departed in 2012 after The Wall Street Journal reported potential conflicts of interest between his family's private investments and natural-resource funds he managed for BlackRock clients.

The deal is slated to price after Thursday's close, with shares opening Friday on the New York Stock Exchange under the symbol "RICE."

Best Biotech Stocks For 2014

With just a quick glance at a chart of Easton Pharmaceuticals Inc. (OTCMKTS:EAPH), it may appear as if the stock was still spinning wheels, drifting listlessly between $0.005 and $0.012. The longer you look at a chart of EAPH, however, the more you have to wonder if a bullish paradigm shift is underway.

For those not familiar with the company, EAPH is a biopharma name. Its claim to fame is small but well-received library of topical treatments for everything from sexual dysfunction to stretch marks to varicose veins... creams and ointments created when the company was operating under the moniker LAM Industries. Its name was changed in 2010 to Easton Pharmaceuticals, though technically speaking, it doesn't have any actual FDA-approved, internally-administered drugs in its portfolio.... or didn't, anyway. The company is wading back into drug waters, taking the medical marijuana route.

Biotech trading veterans will know how big of a deal that could be for Easton Pharmaceuticals and EAPH shareholders. The advent of legalized marijuana - mostly for medicinal purposes, but also for recreational uses in some states - has put hemp and marijuana stocks at center stage for nearly a year now, and has been very good for those related stocks. EAPH didn't participate in most of that euphoria, as it only announced it was developing a medical marijuana product until early June, and didn't offer any real details of its plans until late August.

The timing and news are academic at this point, however. What matters most now, to us, are the bullish hints the chart is dropping... they're pointing to more upside.

Since early August when Easton Pharmaceuticals put itself back on the map by announcing it was getting into the medical marijuana race, we've seen a string of higher lows; we're also working higher highs (we've already made one higher high). At the same time, the volume the stock's been producing since the news made the company 'real' is noticeable better than the volume we were seeing before the news. Finally, Easton Pharmaceuticals is now finding support at its key long-term moving average lines like the 100-day line (gray) and the 200-day moving average line (green).



It admittedly doesn't seem like much to go on, but often, the subtle clues are the best ones. EAPH is slowly but surely on the mend. In fact, it's already mended - now it's just firming up its foundation from which it can stage an even bigger rally. It may not seem like much right now, but Easton Pharmaceuticals is setting itself up to be one of Q4's better Cinderella stories.

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Best Biotech Stocks For 2014: Celsion Corporation(CLSN)

Celsion Corporation, an oncology drug development company, develops and commercializes targeted chemotherapeutic oncology drugs based on its proprietary heat-activated liposomal technology. The company is developing its lead product, ThermoDox that is in Phase III clinical trial for primary liver cancer; and in phase II clinical trial for treatment of recurrent chest wall breast cancer. It has a license agreement with Yakult Honsha to commercialize and market ThermoDox for the Japanese market. The company also has a license agreement with Duke University under which it received exclusive rights to commercialize and use Duke's thermo-liposome technology. In addition, Celsion Corporation has a joint research agreement with Royal Phillips Electronics to evaluate the combination of Phillips' high intensity focused ultrasound with its ThermoDox to determine the potential of this combination to treat a range of cancers. The company was founded in 1982 and is based in Columbia, M aryland.

Advisors' Opinion:

• [By EquityOptionsGuru]

  The Prolieve Thermodilatation System was actually developed by the current management of Medifocus while employed at Celsion Corporation (NASDAQ:CLSN). The system was also jointly developed with Boston Scientific (NYSE:BSX) before being acquired by Medifocus in July 2012. Prolieve has already received FDA approval, is currently generating revenue, and is the only in office alternative to drug therapy. The system essentially uses microwave energy to treat Benign Prostatic Hyperplasia (BPH), which is a non-cancerous enlargement of the prostate gland that typically affects men over the age of 50. The Prolieve device works by compressing and heating prostatic tissue that may be blocking the flow of urine. This particular treatment option offers patients several benefits including the following:

• [By Paul Ausick]

  Stocks on the Move: NQ Mobile Inc. (NYSE: NQ) is up 26% at $11.09 as the company fights back against a short-seller report. Celsion Corp. (NASDAQ: CLSN) is up 339.3% at $5.14 following a reverse 1:4.5 stock split. Micron Technology Inc. (NASDAQ: MU) is up 4.7% at $17.50.

Best Biotech Stocks For 2014: Celgene Corp (CELG)

Celgene Corporation is a global biopharmaceutical company primarily engaged in the discovery, development and commercialization of therapies designed to treat cancer and immune-inflammatory related diseases. The Company is engaged in the research and development, which is designed to bring new therapies to market, and is engaged in research in several scientific areas that may deliver therapies, focusing areas, such as intracellular signaling pathways in cancer and immune cells, immunomodulation in cancer and autoimmune diseases, and therapeutic application of cell therapies. The Company�� primary commercial stage products include REVLIMID, VIDAZA, THALOMID, ABRAXANE and ISTODAX. Additional sources of revenue include a licensing agreement with Novartis, which entitles it to royalties on FOCALIN XR and the entire RITALIN family of drugs, the sale of services through its Cellular Therapeutics subsidiary and other miscellaneous licensing agreements. In March 2012, it acquired Avila Therapeutics.

The Company invests in research and development, and the drug candidates in its pipeline at various stages of preclinical and clinical development. These candidates include pomalidomide and apremilast, its oral anti-cancer and anti-inflammatory agents, PDA-001, its cellular therapy, oral azacitidine, CC-223 and CC-115 for hematological and solid tumor malignancies, CC-122, its anti-cancer pleiotropic pathway modifier, and ACE-011 and ACE-536 biological products for anemia in several clinical settings of unmet need. Celgene product candidates include Pomalidomide (CC-4047), Oral Anti-Inflammatory: Apremilast (CC-10004), CC-11050, Kinase Inhibitors:Tanzisertib (CC-930), Cellular Therapies: PDA-001, Activin Biology: Sotatercept (ACE-011) ACE-536, and Anti-tumor Agents: CC-22, CC-115, CC-122 and Oral Azacitidine. It owns and operates a manufacturing facility in Zofingen, Switzerland. The Company also owns and operates a drug product manufacturing facility in Boudry, Switzerland.

Commercial! Stage Products

REVLIMID (lenalidomide) is an oral immunomodulatory drug marketed in the United States and many international markets, in combination with dexamethasone, for treatment of patients with multiple myeloma who have received at least one prior therapy. It is also marketed in the United States and certain international markets for the treatment of transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes (MDS) associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. REVLIMID is distributed in the United States through contracted pharmacies under the RevAssist program, which is a risk-management distribution program. Internationally, REVLIMID is distributed under mandatory risk-management distribution programs.

REVLIMID continues to be evaluated in numerous clinical trials worldwide either alone or in combination with one or more other therapies in the treatment of a range of hematological malignancies, including multiple myeloma (MDS) various lymphomas, chronic lymphocytic leukemia (CLL) other cancers and other diseases. VIDAZA (azacitidine for injection) is a pyrimidine nucleoside. VIDAZA is a Category 1 recommended treatment for patients with intermediate-2 and high-risk MDS and is marketed in the United States for the treatment of all subtypes of MDS. In Europe, VIDAZA is marketed for the treatment of intermediate-2 and high-risk MDS, as well as acute myeloid leukemia (AML) with 30% blasts and has been granted orphan drug designation for the treatment of MDS and AML.

THALOMID (thalidomide) is marketed for patients with newly diagnosed multiple myeloma and for the acute treatment of the cutaneous manifestations of moderate to severe erythema nodosum leprosum (ENL) an inflammatory complication of leprosy and as maintenance therapy for prevention and suppression of the cutaneous manifestation of ENL recurrence. THALOMID is distributed in the United States under its System f! or Thalid! omide Education and Prescribing Safety (S.T.E.P.S.) program. Internationally, THALOMID is also distributed under mandatory risk-management distribution programs. ABRAXANE (paclitaxel albumin-bound particles for injectable suspension) is a solvent-free chemotherapy treatment option for metastatic breast cancer, which was developed using its nab technology platform. This protein-bound chemotherapy agent combines paclitaxel with albumin. As of December 31, 2011, ABRAXANE was in various stages of investigation for the treatment of expanded applications for metastatic breast; non-small cell lung; malignant melanoma; pancreatic; bladder and ovarian.

ISTODAX (romidepsin) has received orphan drug designation for the treatment of non-Hodgkin's T-cell lymphomas, which includes CTCL and PTCL. The Company has licensed the worldwide rights (excluding Canada) regarding certain chirally pure forms of methylphenidate for FOCALIN and FOCALIN XR to Novartis. It also licensed to Novartis the rights related to long-acting formulations of methylphenidate and dex-methylphenidate products which are used in FOCALIN XR and RITALIN LA.

Preclinical and Clinical-Stage Pipeline

The product candidates in the Company�� pipeline are at various stages of preclinical and clinical development. Pomalidomide is a small molecule that is orally available and modulates the immune system and other biologically important targets. Pomalidomide is being evaluated in a phase III clinical trial for the treatment of myelofibrosis and a phase III clinical trial evaluating pomalidomide as a treatment for patients with relapsed/refractory multiple myeloma is accruing patients.

The Company is developing a product, ORAL ANTI-INFLAMMATORY AGENTS, which is orally available small molecules that target PDE4, an intracellular enzyme that modulates the production of multiple pro-inflammatory and anti-inflammatory mediators, including interleukin-2 (IL-2), IL-10, IL-12, IL-23, INF-gamma, TNF-a, leukotrienes,! and nitr! ic oxide synthase. Its investigational drug, apremilast (CC-10004), is used for the treatment of moderate to severe psoriasis and active psoriatic arthritis and is being evaluated in a phase II trial for rheumatoid arthritis and six phase III multi-center international clinical trials. In addition, it is investigating its oral PDE4 inhibitor, CC-11050, which is an anti-inflammatory compound that treat a variety of chronic inflammatory conditions, such as Cutaneous Lupus Erythematosus (CLE).

The Company�� oral kinase inhibitor platform includes inhibitors of the c-Jun N-terminal kinase (JNK) mTOR kinase, spleen tyrosine kinase (Syk) c-fms tyrosine kinase (c-FMS) and DNA-dependent protein kinase (DNAPK). Its oral Syk, c-FMS and DNAPK kinase inhibitors are being investigated in pre-clinical studies. The Company�� new second generation JNK inhibitor, tanzisertib (CC-930), is being evaluated in a phase II trial for the treatment of idiopathic pulmonary fibrosis and a phase II trial for the treatment of discoid lupus is accruing patients. Amrubicin is a third-generation fully synthetic anthracycline molecule with potent topoisomerase II inhibition.

At Celgene Cellular Therapeutics (CCT), it is researching stem cells derived from the human placenta, as well as from the umbilical cord. CCT is the Company�� research and development division. Stem cell based therapies provide disease-modifying outcomes for serious diseases, which lack adequate therapy. It has developed technology for collecting, processing and storing placental stem cells with broad therapeutic applications in cancer, auto-immune diseases, including Crohn's disease, multiple sclerosis, neurological disorders, including stroke and amyotrophic lateral sclerosis (ALS), graft-versus-host disease, and other immunological / anti-inflammatory, rheumatologic and bone disorders.

The Company has collaborated with Acceleron Pharma, Inc. (Acceleron) to develop sotatercept. Two phase I clinical studies have been co! mpleted. ! An additional phase II clinical study has been initiated and is ongoing related to treatments for end-stage renal anemia and to evaluate effects on red blood cell mass and plasma volume.

The Company competes with Abbott Laboratories, Amgen Inc. (Amgen), AstraZeneca PLC., Biogen Idec Inc., Bristol-Myers Squibb Co., Eisai Co., Ltd., F. Hoffmann-LaRoche Ltd., Johnson and Johnson, Merck and Co., Inc., Novartis AG, Pfizer, Sanofi and Takeda Pharmaceutical Co. Ltd. (Takeda).

Advisors' Opinion:

• [By Ben Levisohn]

  Huang sees “significant upside” for Incyte, but believes it’s capped for BioMarin for the next six to 12 months. In addition to his changes on Incyte and BioMarin, Huang also boosted his price target in Alexion Pharmaceuticals (ALXN) to $141 from $127 and on Celgene (CELG) to $182 from $173, among other changes.

• [By Keith Speights]

  Celgene (NASDAQ: CELG  ) was one of several companies presenting at the American Society of Clinical Oncology, or ASCO, annual meeting in Chicago this week. Here's what the big biotech had to say.

• [By Brian Orelli]

  It's certainly harder than it sounds, but can be very profitable if you can find the next Celgene (NASDAQ: CELG  ) . A 14-bagger over 10 years? Most investors would gladly take that kind of return even if it's only a small portion of their portfolio.

• [By Stephen Quickel]

  Celgene Corp. (CELG), of Summit, New Jersey, has had quite a run the last 18 months—rising from $60 in mid-2012, and from $80 last January, to the $160-$170 range during the final weeks of 2013.

Top 5 Low Price Stocks To Buy Right Now: Exelixis Inc.(EXEL)

Exelixis, Inc., a biotechnology company, develops small molecule therapies for the treatment of cancer. It focuses on developing Cabozantinib, an inhibitor of tumor growth, metastasis, and angiogenesis that target MET, VEGFR2, and RET, which are key kinases involved in the development and progression of various cancers. The cabozantinib is in Phase III clinical trial for the treatment for medullary thyroid cancer. The company also engages in various clinical programs for cabozantinib focused on the treatment of metastatic castration-resistant prostate cancer, ovarian cancer, breast cancer, renal cell carcinoma, non-small cell lung cancer, hepatocellular cancer, and melanoma. In addition, Exelixis, Inc. involves in developing a portfolio of other novel compounds to address serious unmet medical needs through collaborations with various pharmaceutical and biotechnology companies, including Bristol-Myers Squibb Company, sanofi-aventis, Genentech, Inc., Boehringer Ingelheim Gm bH, and GlaxoSmithKline and Daiichi Sankyo Company Limited. Its products under development through collaborations include XL475, XL281, XL139, and XL413 inhibitors; ROR antagonists; therapies targeted against LXR, a nuclear hormone receptor implicated in various cardiovascular and metabolic disorders; XL147, XL765, and isoform-selective PI3K inhibitors; XL518, a small-molecule inhibitor of MEK; sphingosine-1-phosphate type 1 receptor; XL880 inhibitor; and therapies targeted against the mineralocorticoid receptor, a nuclear hormone receptor implicated in various cardiovascular and metabolic diseases. The company was formerly known as Exelixis Pharmaceuticals, Inc. and changed its name to Exelixis, Inc. in February 2000. Exelixis, Inc. was founded in 1994 and is headquartered in South San Francisco, California.

Advisors' Opinion:

• [By Selena Maranjian]

  D. E. Shaw reduced its stake in lots of companies, including Acadia Pharmaceuticals (NASDAQ: ACAD  ) and Exelixis (NASDAQ: EXEL  ) . Acadia has skyrocketed over the past year, rising more than 10-fold, on high hopes for its pimavanserin drug, which treats psychosis in patients with Parkinson's disease. If the drug gains FDA approval, it will enjoy little competition and could be a big winner for Acadia. The company thinks the drug might be effective against psychosis related to Alzheimer's disease as well and is conducting trials for that, too. Acadia is also raising about $100 million via a secondary stock offering to fund ongoing and future trials.

Best Biotech Stocks For 2014: Cubist Pharmaceuticals Inc.(CBST)

Cubist Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. The company markets CUBICIN (daptomycin for injection), a once-daily, bactericidal, intravenous, antibiotic with activity against gram-positive organisms, including methicillin-resistant staphylococcus aureus. Its clinical development product pipeline consists of CXA-201, which is in the phase III clinical trial for patients with complicated urinary tract infections; and in phase II clinical trial for patients with complicated abdominal infections. The company is also developing CXA-201 for the treatment of hospital acquired pneumonia. In addition, its product under development comprises CB-183,315, an oral, bactericidal lipopeptide with in vitro bactericidal activity against C. difficile, for the treatment of clostridium difficile-associated diarrhea (CDAD). Further , the company?s pre-clinical programs include therapies to treat various bacterial infections and agents to treat acute pain. Additionally, it promotes MERREM I.V. (meropenem for injection), a carbapenem class intravenous antibiotic, in the United States under a commercial services agreement with AstraZeneca Pharmaceuticals, LP; and DIFICID as the treatment for CDAD in adults under the co-promotion agreement with Optimer Pharmaceuticals, Inc. The company also has collaborations with Forma Therapeutics, Inc. to discover and develop antibacterial compounds; an agreement with the Broad Institute to transform natural products discovery; a collaboration with Hydra Biosciences, Inc., to develop ion channel drugs; and a collaboration agreement with Alnylam Pharmaceuticals, Inc., for the development and commercialization of Alnylam's RNAi therapeutics as a therapy for the treatment of respiratory syncytial virus. The company was founded in 1992 and is headquartered in Lexington, Mas sachusetts.

Advisors' Opinion:

• [By Rich Bieglmeier]

  Cubist Pharmaceuticals Inc. (CBST) share price is the beneficiary of an upgrade yesterday. Leerink Swann analyst Marko Kozul believes the biotech is headed to $76.

• [By Jake Keator]

  Shares of Cubist Pharmaceuticals (NASDAQ: CBST  ) exploded upward on Friday, finishing up over 9%. The company reported strong second-quarter results Thursday, beating average analyst estimates for both revenue and EPS. Total net revenues were $258.8 million, up 12.2% over Q2 2012, while non-GAAP diluted EPS was $0.42. Average analyst estimates were $254.73 million for revenue and EPS of $0.38.

• [By Sean Williams]

  What: Shares of Cubist Pharmaceuticals (NASDAQ: CBST  ) , a biopharmaceutical company devoted to developing acute care therapies, added 12% following the announcement of its second-quarter earnings results.

Best Biotech Stocks For 2014: Incyte Corporation(INCY)

Incyte Corporation focuses on the discovery and development of proprietary small molecule drugs for hematologic and oncology indications, and inflammatory and autoimmune diseases. Its product pipe line includes INCB18424, which is in Phase III clinical trial for myelofibrosis; Phase III trial for polycythemia vera; Phase III trial for essential thrombocythemia; Phase I/II trial to treat solid tumors/other hematologic malignancies; and Phase IIb trail for the treatment of psoriasis. The company?s portfolio also includes INCB28050, a Phase IIb clinical trial product for rheumatoid arthritis; INCB28060, a Phase I/II product for solid tumors; INCB7839, a Phase II product for breast cancer; and INCB24360, a Phase I/II product for solid tumors. It has a collaborative research and license agreements with Novartis International Pharmaceutical Ltd.; Eli Lilly and Company; and Pfizer Inc. The company was founded in 1991 and is headquartered in Wilmington, Delaware.

Advisors' Opinion:

• [By John McCamant]

  Incyte's (INCY) crackerjack medicinal chemistry team continues to show that they can create better and differentiated drug candidates from the competition.

  The key near-term driver for INCY is Jakafi growth, and with the increased sales guidance, the company is delivering. The drug's overall profile continues to improve and the recent survival data proves that Jakafi does much more for myelofibrosis patients than just control symptoms.

• [By Ben Levisohn]

  Somaiya and team named Gilead and�Neurocrine Biosciences (NBIX) their top picks, hile putting Buy ratings on Celgene, Biogen Idec, Alexion (ALXN), Incyte (INCY), Pharmacyclics (PCYC) and Synageva (GEVA). BioMarin (BMRN), Infinity Pharmaceuticals (INFI) and Amgen (AMGN) earned Neutral ratings.

• [By Maxx Chatsko]

  Incite growth into your portfolio
  Investors looking for the next high-growth biotech company should certainly spend time researching Incyte (NASDAQ: INCY  ) . The company sports a handful of the most promising JAK inhibitors, which are garnering high level interest throughout the pharmaceutical industry. The molecules have big potential in treating various cancers and inflammatory diseases such as rheumatoid arthritis and psoriasis.

• [By Jay Silverman]

  Steve Halpern: One of your long-standing recommendations is Incyte (INCY), which recently reported some positive news and saw a huge jump in the price-up close to 30% in one day. What happened there and what's your outlook for the stock?

Best Biotech Stocks For 2014: Soligenix Inc (SNGX)

Soligenix, Inc., incorporated on January 16, 1987, is a development-stage biopharmaceutical company. The Company is focused on developing products to treat the side effects of cancer treatment and gastrointestinal diseases, as well as developing several biodefense vaccines and therapeutics. The Company operates in two business segments: BioTherapeutics and BioDefense. As of December 31, 2011, the Company�� products, which were under development, include orBec, SGX201, SGX203, LPM Leuprolide, ThermoVax, RiVax and SGX202. On September 15, 2011 the Company's Phase III clinical trial for orBec in the treatment of gastrointestinal Graft-versus-Host disease (GI GVHD). In addition, the Company is developing oral BDP in other therapeutic indications, such as pediatric Crohn's disease and radiation enteritis.

BioTherapeutics Overview

The Company's BioTherapeutics business segment focuses to develop orBec (oral beclomethasone dipropionate( oral BDP)) and other biotherapeutic products, while the Company's collaboration partner, Sigma-Tau Pharmaceuticals, Inc. (Sigma-Tau) will commercialize orBec and oral BDP in North America and Europe, if approved. orBec represents a first-of-its-kind oral, locally acting therapy tailored to treat the gastrointestinal manifestation of Graft-versus-Host disease (GVHD). orBec is formulated for oral administration as a single product consist of two tablets. SGX201 is a delayed-release formulation of beclomethasone dipropionate (BDP) specifically designed for oral use. SGX203 is a two pill delivery system of a delayed release formulation of BDP specifically designed for oral use that allows for delivery of immediate and delayed release BDP throughout the small bowel and the colon. The Company's Lipid Polymer Micelle (LPM) oral drug delivery system is a platform technology.

Vaccines/BioDefense Overview

The Company's Vaccines/BioDefense business segment includes RiVax, the Company's ricin toxin vaccine, and SGX204, its anthrax v! accine, and SGX202, its gastrointestinal acute radiation syndrome (GI ARS) program. The Company�� Thermostability technology, ThermoVax, is a method of rendering aluminum salt, Alum, adjuvanted vaccines stable at elevated temperatures. SGX204 is the Company�� acquired vaccine based on a recombinant Protective Antigen (rPA) derivative. RiVax is the Company�� vaccine developed to protect against exposure to ricin toxin. SGX202 is an oral immediate and delayed release formulation of the corticosteroid beclomethasone dipropionate (BDP) is being developed for the treatment of GI ARS.

The Company competes with Genzyme, Abgenix, and PDL BioPharma, Inc., Kiadis Pharma, Chiesi Pharmaceuticals, Bill and Melinda Gates Foundation and PATH, Kansas University Macromolecular and Vaccine Stabilization Center, Variation Biotechnologies, Inc, Emergent BioSolutions, Inc, Pharmathene, Dynavax, Panacea Biotech, Paxvax, Elusys Therapeutics, Pfenex, Compass Biotech, Endo Pharmaceuticals, Human Genome Sciences, Elusys Therapeutics, Medarex, Bavarian Nordic, the U.S. Army Medical Research Institute of Infectious Diseases, Cleveland Biolabs, Aeolus Pharmaceuticals, Boulder Biotechnology, RxBio, Inc., Exponential Biotherapies Inc., Osiris Therapeutics, Inc., ImmuneRegen BioSciences, Inc., Neumedicines, Inc., Cellerant Therapeutics, Onconova Therapeutics, Inc., Araim Pharmaceuticals, Inc., EVA Pharmaceuticals, Terapio, Cangene Corporation, Humanetics Corporation, the University of Arkansas Medical Sciences Center, Novartis, Medimmune, and Ariad.

Asset allocation key to maximizing returns, say experts

The difference between our parents' generation and ours has always been huge and on all parameters. This contrast has never been as stark as it is in today's corporate world, where the rules of the games have changed, the dynamics have entirely changed and so have the ways in which we deal with them.

Today, we are to meet a bunch of young single, smart and successful career women from the social networking website Ditto and we are going to find out how they manage to juggle all of this and still manage their money.

Raheja and Rustagi answers their questions regarding maximising and protecting wealth.

Here is the edited transcript of the interview on CNBC-TV18.

Q: When people start investing the first thing where they get confused is whether they should be doing it on a daily basis or whether they should do it, forget about it, review it on and off, what's the best advice for someone like these ladies?

Raheja: My fervent belief is that any asset class typically requires a period of time for maturing, for it to deliver returns. Equities as a vehicle has shown that if you give it time, if you take 10 years or a longer period of 15 years, the average compounded return from equities has been around 14-15%.

If you take any large corporate in India, from Reliance to any other corporate you would name, what was it 10 years ago and what is it today? We have typically seen in our research that whatever profits grow by market cap is a reflection of stock prices. It has grown by about 1.4-1.5 times the profits of the company.

Clearly, if you are an investor and you are invested in a good company it will give you returns. However, that does not mean you do not sit and review your portfolio from time to time. Especially, if you are invested in a lot of mid and small caps which have many emerging companies and emerging managements which have not yet proven itself, you cannot stop reviewing your portfolio from time to time.

Against that, if you have proven managements who have delivered numbers over extended period of time, there is no problem in sitting with them for a longer period.

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Tags: investment, mutual fund, equities, stocks, market, Nitin Raheja, Hemant Rustagi, WiseInvest Advisors, AQF Advisors

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Crown Resorts Ltd.

Our favorite idea for 2014 for more speculative investors is a company that operates and manages gaming and entertainment facilities; it is well-placed to benefit from, not only a revival of consumer sentiment in Australia, but the emergence of a middle class in China as well, notes David Dittman, editor of Australian Edge.

Crown Resorts Ltd. ((AU:CWN), (OP:CWLDF), (ADR:CWLDY)) holds assets in Melbourne and Perth that continue to deliver solid and relatively defensive earnings.

Crown's two established casinos—the Crown Melbourne in Victoria and the Crown Perth in Western Australia—have long histories of stable cash generation, with demonstrated resilience during economic downturns. These assets are the company's main cash flow generators, and there is some concentration risk.

This ability to endure global macro volatility is, in part, a reflection of relatively stable and predictable local markets. Stable cash generation also reflects Crown's position as the sole licensed casino operator in the respective regions.

Macau, meanwhile, is the largest gaming market in the world, in terms of revenue, and it continues to grow at a solid clip. Crown's 33.7% stake in Macau-based Melco Crown Entertainment Ltd. (MPEL) represents a growth opportunity, and future dividend flows from Melco Crown will bring some diversification.

Over 100,000 Mainland Chinese gamble every day in 44 Macau casinos, and the number of visits is growing 10% to 20% per year. China's broadening affluence and improved infrastructure allow people who've never before had, either the money, or the access, go to Macau via high-speed rail links.

Crown's Australian properties also stand to benefit from China's rising prosperity, as 110,100 Chinese visited the Land Down Under in February 2013, more than double the 42,600 who arrived in all of 1995. And China is now the Number One source of tourism revenue for Australia.

Top Safest Stocks For 2014

Crown Resorts is a buy all the way up to USD16.50 on the Australian Securities Exchange (ASX) using the symbol CWN and on the US over-the-counter (OTC) market using the symbol CWLDF.

Crown Resorts also trades on the US OTC market as an American Depositary Receipt (ADR) under the symbol CWLDY. Crown Resorts' ADR, which is worth two ordinary, ASX-listed shares, is also a buy under USD33.

Subscribe to Australian Edge here...

For More 2014 Top Stock Picks

Hudson Pacific Leases to Uber - Analyst Blog

Top Growth Companies To Watch In Right Now

Hudson Pacific Properties, Inc. (HPP) recently penned a new lease agreement with Uber Technologies, Inc. for an 88,134 square feet of space at its Class A office property, 1455 Market Street. The 10-year lease deal is slated to commence in first-quarter 2014.

As per the deal, Uber will occupy the entire fourth floor and backfills space of 1455 Market Streetbuilding. This space is occupied by property's largest tenant, whose lease term was scheduled to expire in 2017.

Spanning around 1.02 million square feet, this 1455 Market Street is a 22-story building and data center facility. The property is located on a 3.01-acre plot and already houses Square Inc., a leading electronic payment service provider. It is advantageously placed in the vibrant Civic Center / Van Ness submarket of San Francisco, which is one of the best technology and business hubs of the city. Moreover, it is close to the city's largest government and cultural firms such as City Hall, the Supreme Court of California and the corporate

The ideal location of 1455 Market Street makes it a desirable asset for firms catering to both national and local governmental agencies. The deal will help improve occupancy levels and boost rental revenue growth going forward.

Lately, Hudson Pacific has been inking lease deals to strengthen its tenant base. In May 2013, the company entered into a lease expansion and extension deal with NFL Media for 2 properties in South Calif., namely 10900 and 10950 Washington. The move enhanced Hudson Pacific's relationship with its existing media and entertainment tenants.

However, the demand for office space remains moderate amid a dismal environment with elevated unemployment levels and sufficient availability of space. This creates a pressure on rent and occupancies.

Hudson Pacific currently carries a Zacks Rank #5 (Sell)! . REITs that are performing better than Hudson Pacific include DCT Industrial Trust Inc. (DCT), Host Hotels & Resorts Inc. (HST) and CubeSmart (CUBE). All these stocks have a Zacks Rank #2 (Buy).

Ford Dividend Contagion: GM Gets Its Dividend Back!

General Motors Co. (NYSE: GM) just couldn’t take being a serious dividend laggard any longer. Now that rival Ford Motor Co. (NYSE: F) raised its dividend by 25%, GM decided that it was time to get back in the dividend game.

GM’s board of directors declared a quarterly dividend of $0.30 per common share, giving GM’s common stock a dividend yield of right at 3.0% based upon GM’s closing price of $40.02. Ford’s dividend yield clocks in at about 3.1%.

GG showed that the dividend is payable March 28, 2014 to all common stockholders of record as of March 18, 2014. GM’s CFO now claims to have a fortress balance sheet, substantial liquidity, consistent earnings and strong cash flow all offering the foundation for an ongoing dividend payout with a hint for a “continuing profitable future.”

GM further showed that it has seen 15 straight profitable quarters as of the third quarter of 2013, and also that it has generated $16.3 billion in adjusted automotive free cash flow over the same period. The company had total automotive liquidity of $37.3 billion and $8.4 billion of automotive debt.

This is quite a different day from when GM went under before the bailout. GM shares were up close to 2.5% at $41.05 in the after-hours. Sometimes good things do just keep happening.

Second Take – Was Labor Department Just Wrong About Payrolls and Unemployment?

Last Friday’s bomb of a report from the U.S. Labor Department has not exactly gone away. This took up perhaps more than it  should have of weekend conversation time. In fact, the report seemed so far off base that we cannot help but ask if the Labor Department’s computers simply just botched all of the numbers. The report was even worse than what the bears were expecting to see during the government shutdown.

For an unemployment rate to sink to 6.7% from 7.0%, with that same 7.0% being expected, in a single month means that maybe there was more than mere retirement and people who have given up looking for work coming into play. And for the ADP payrolls to have come out well above the 200,000 at the same time that the non-farm and private payrolls both grew at less than half of expectations and well under 100,000 we cannot think that this was “normalized” order inside the Labor Department’s computers. The whisper numbers had moved to well above 200,000 when the formal reports came in well under 100,000.

Then on Monday came a Conference Board report via its Employment Trends Index, also for December, showing gains were made yet again for the fifth month in the last six months. This index rose to 115.76 in December from a higher revision of 115.72 in November. The figure is 5.2 percentage points higher than a year ago.

The Conference Board did try to clarify what was happening in the workforce participation coming in at only 68.2%. After all, this was the lowest reading in about 35 years. The statement said, “"Despite the disappointing job numbers for December, the improvement in the Employment Trends Index is signaling solid employment growth in the months ahead. With the labor force barely growing, partly due to the massive wave of baby boomers retiring, this job growth will continue to rapidly bring down the unemployment rate."

Another tell that the report may have been better than Friday’s numbers may have telegraphed was that six of the eight components from the Conference Board showed growth. This is the order, from the largest positive contributor to the smallest:

Number of Temporary Employees (at 2.816 million, highest reading of 2013) Consumer Confidence Survey Percentage of Respondents Who Say They Find "Jobs Hard to Get" (32.5% -lowest reading of 2013 by over 4.5%) Job Openings at BLS (4.03 million, the highest in 2013) Industrial Production (101.445, the highest of 2013) Real Manufacturing and Trade Sales (1.158436 trillion, highest of 2013) Percentage of Firms With Positions Not Able to Fill Right Now (23%, a tie for high of 2013)

Maybe Baby Boomers are retiring in droves, but the Labor Department has suffered from poor tabulation skills for years and years now. Its flaw is not even localized under any one regime, because it seems to be consistent regardless of who is President.

Another issue to consider here is that if there was an error it was not one of those errors that would have been accused of being intentional errors like we have heard in the past. After all, this was a negative report, and one that did not look favorable upon the real recovery in the economy. That at least pertains to payrolls, while the formal unemployment rate is another issue.

Top 10 Performing Stocks To Invest In 2014

So, what issues would have kept last Friday’s report from being an error? Well, healthcare concerns could easily be a culprit. Another issue is that employers can keep milking out more productivity from the pool of employees. Lastly, companies are just simply not eager to fill vacancies immediately – because maybe they can get the existing employees to pick up the slack from a vacancy.

We cannot say with any certainty that the Labor Department’s report was simply full of errors last Friday. Whether or not we doubt the credibility of the report is a completely different matter.

Will ArcelorMittal Earnings Finally Start Recovering?

ArcelorMittal (NYSE: MT  ) will release its quarterly report on Thursday, and given how dire conditions have been in the steel industry in recent years, it's no surprise to see the stock continue to tread water near decade-lows. Increasingly, impatient investors are wondering what it will take to get ArcelorMittal earnings to move substantially higher, and thus far, the company hasn't discovered any secrets to bolstering the hard-hit market.

ArcelorMittal certainly isn't alone in its woes, as steel producers and the suppliers of materials like iron ore and metallurgical coal have all suffered from the drop in infrastructure building and construction activity, especially from slowing emerging-market economies. The question is how long the global slowdown will last and whether the next up-cycle will make up for all the pain that investors have endured. Let's take an early look at what's been happening with ArcelorMittal over the past quarter and what we're likely to see in its quarterly report.

Stats on ArcelorMittal

Analyst EPS Estimate	$0.09
Change From Year-Ago EPS	(84%)
Revenue Estimate	$20.7 billion
Change From Year-Ago Revenue	(7.9%)
Earnings Beats in Past 4 Quarters	1

Source: Yahoo! Finance.

Why aren't ArcelorMittal earnings recovering?
In recent months, analysts have marked down their views on ArcelorMittal earnings, cutting $0.15 per share from their June-quarter estimates and double that amount from full-year 2013 and 2014 predictions. The stock has shown some signs of life, rising 8% since late April, although it remains sharply lower over the past year.

ArcelorMittal hasn't gotten a break from the tough conditions hitting the steel industry, as its first-quarter results reflected the continuing pressure of weak demand in the U.S. and Europe on its revenue growth. Although the company cited a potential restocking based on low inventory levels as potentially driving improvements in the second half of 2013, it also marked down its long-range, four-year growth estimates from 3% to 2%.

Another problem that ArcelorMittal and other steel companies have faced is the emerging Chinese steel industry. China subsidizes its steelmakers, and with Chinese infrastructure and construction activity being relatively weak, oversupply is spilling over and having an impact on world steel prices. Recycled scrap producer Schnitzer Steel (NASDAQ: SCHN  ) noted last month that market prices for its exports fell by $50 per ton during its most recent quarter, and given Schnitzer's exposure to Asia, those figures likely reflect China's contribution to the global weakness.

In response, ArcelorMittal has prepared itself for tough times, with spending and capacity cuts as well as asset sales. That stands in contrast to Nucor (NYSE: NUE  ) , which reported higher spending on marketing and administrative costs as part of the reason its earnings dropped by 23% in its second-quarter report earlier this month.

In looking at the ArcelorMittal earnings report, look to see how the company fares in Europe. U.S. Steel (NYSE: X  ) was able to announce a profit in its European business in its earnings announcement this morning, and if ArcelorMittal can find greater strength on its home turf, then it could lead to the turnaround investors have so desperately wanted to see. Otherwise, the recovery for ArcelorMittal could take a while longer.

Steel in China is going toward supporting what has already become the world's largest auto market -- and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

Click here to add ArcelorMittal to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Why Scholastic Shares Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Scholastic (NASDAQ: SCHL  ) were sliding again today, falling as much as 10% after the company posted another disappointing earnings report.

So what: The children's publishing house said revenue slid 25%, to $506.9 million, as sales fell off from the hit trilogy The Hunger Games, a major revenue stream since it debuted. Earnings per share from continuing operations, meanwhile, came in at $0.76 per share, down from $1.86 a year ago. Both results were below the mark set by the one analyst covering Scholastic. The company, which once had a lock on children's education and media, has been struggling to shift into the digital age, as investments in e-books and other online portals has weighed on profits.

Now what: Like the publishing industry in general, Scholastic is struggling to maintain its relevance, as the advent of electronic media has turned the industry upside down. The company can't count on blockbusters like The Hunger Games every year, but management said it expects to improve profitability in the next fiscal year with the introduction of a number of education technology products, and projects an EPS from continuing operations between $1.40 and $1.80, excluding items. Those numbers aren't terrible, but I'd wait to see consistent revenue and profits before getting on board.

Want more on Scholastic? Add the company to your Watchlist by clicking right here.

Why Infosys Earnings Are Under Siege

Infosys (NYSE: INFY  ) will release its quarterly earnings report next Monday, but investors are already skittish about how well the IT services company will be able to perform. In a sluggish environment for global economic growth generally and for IT spending in particular, the entire outsourcing and consulting industry has felt the pressure, and as a primary beneficiary of more positive trends in the industry over the years, Infosys is potentially vulnerable to a reversal in those trends.

Even under tough conditions, though, Infosys remains a leader in IT services, and the need for those services is only likely to increase in the long run. Does that make current weakness a buying opportunity? Let's take an early look at what's been happening with Infosys over the past quarter and what we're likely to see in its report.

Stats on Infosys

Analyst EPS Estimate	$0.70
Change From Year-Ago EPS	(4.1%)
Revenue Estimate	$1.93 billion
Change From Year-Ago Revenue	10%
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

How will Infosys handle earnings headwinds?
Analysts have pulled back on their earnings views for Infosys over the past few months, cutting their June-quarter estimates by $0.03 per share and slashing $0.17 to $0.18 from their estimates for both this fiscal year and next. The stock has responded quite unfavorably, falling 17% since early April.

Most of the damage for Infosys came at two important points during the quarter. After Infosys announced its previous-quarter earnings in mid-April, the stock plunged 20%, as the company missed its revenue estimates and gave guidance that led to the downgrades in earnings that we've seen. Growth of 6% to 10% in revenue might seem healthy, but for the emerging-market company, it's a severe slowdown that reflects the uncertainty in the global IT economy right now.

The second hit came late last month, when rival Accenture (NYSE: ACN  ) announced its own earnings weakness. For Accenture, IT consulting has become an increasingly important part of its overall business as it seeks to keep cashing in on the highly profitable opportunities in the space. But the company lowered its guidance for earnings by about 2% and reduced its revenue-growth guidance to the 3% to 4% range. Investors also bid down shares of Infosys in sympathy, seeing Accenture's challenges as applying to the entire industry.

One big problem that Infosys faces is that its remote location from the North American market creates some competitive disadvantages for the company. Rival consultant Cognizant Technology (NASDAQ: CTSH  ) hasn't been immune to the downdraft that has taken IT-services stocks lower, but its New Jersey location has been instrumental in drawing about 80% of its revenue from North America, whose economies have held up far better than those in other regions. By contrast, Infosys gets a greater proportion of its sales from Europe and the rest of the world, which have been challenging lately.

When Infosys announces earnings next week, look to see how the company is working to expand its North American presence while also holding off some of its fellow Indian competitors to maintain its strength in other markets. Eventually, when the tide turns in the technology economy, Infosys should be in a better position to restore its past pace of earnings growth.

Infosys and its IT services are important in supporting the massive upsurge of technological usage in recent years, but what's surprising is how just a handful of companies influence nearly all of our digital and technological lives. Find out who will win the war among the five biggest tech stocks by reading The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Click here to add Infosys to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

PC market in 2013 notches worst decline ever

SAN FRANCISCO -- The PC market continued its downward spiral in 2013, logging its worst decline since the dawn of the personal computer, as consumers continue to snap up mobile gadgets at a feverish pace.

Worldwide PC shipments slumped 6.9% in the fourth quarter of 2013 compared with a year ago, according to research firm Gartner. The downdraft marks the seventh-consecutive quarterly decline in PC shipments. Hit hard by consumer preferences for smartphones and tablets, full-year PC units plummeted 10% compared with 2012.

"Strong growth in tablets continued to negatively impact PC growth in emerging markets," says Gartner analyst Mikako Kitagawa.

PC market declines underscore the growing pressures facing Microsoft to reinvent itself in an era dominated by mobile devices, an area in which its Windows software remains a perennial laggard.

Despite declines, Lenovo continues to grow. The Beijing-based company shipped 14.9 million units worldwide in the quarter, compared with 14 million a year ago, growing 6.6% year over year.

Hewlett-Packard didn't. The Palo Alto, Calif.-based PC maker's fourth-quarter shipments fell 7.2%, to 13.6 million units from 14.6 million a year ago.

PC maker Dell, which last year completed a leveraged buyout in a bid to go private, grew 6.2% in the quarter on shipments of 9.8 million, compared with 9.2 million in the year prior.

Apple was the biggest PC gainer in the U.S. The Mac maker grew 28.5% year over year, on fourth-quarter shipments of 2.2 million units, compared with 1.7 million in the year ago period.

Still, Gartner says it believes that PC markets in the U.S. and other regions have "bottomed out."

Best Insurance Companies To Own For 2014

Alan Greenspan stood before Congress a decade ago and complained that "Children, dogs, cats and moose are getting credit cards." That's how America used to work. You didn't need a job or an income to spend money. If you had a will to spend, someone -- usually a bank -- found a way.

But things have changed. According to Bloomberg, the correlation between Americans' wages and their spending is the highest it's been in almost half a century. "This means consumers are keeping their spending more in line with their incomes," Bloomberg writes. Congratulations!

But there's another point here: The amount of money Americans are saving is still puny. The personal savings rate has averaged 3.7% over the last year, compared with a long-term average of 7% and a 30-year average of more than 5%.

Can we really say Americans are being responsible about their spending when they're saving so little money?

Yes, actually.

Americans may be saving less money today than in the past because we have a larger safety net. And I'm not talking about unemployment insurance or Social Security. I'm talking about bankruptcy.

Best Insurance Companies To Own For 2014: American International Group Inc.(AIG)

American International Group, Inc. is an international insurance organization. The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. It also involves in commercial aircraft leasing and residential mortgage guaranty insurance businesses. The company, through Chartis Inc., provides various property and casualty insurance products under commercial and consumer categories worldwide. These products include surplus lines, executive liability/directors? and officers? liability, employment practices, excess casualty, and travel/assistance lines. American International Group, through SunAmerica Financial Group, offers a suite of life insurance and retirement products and services, including term life, universal life, accident and health, fixed and variable deferred annuities, fixed payout annuities, mutual funds, and financial planning products and services to individuals and grou ps in the United States. The company, through International Lease Finance Corporation, operates as an aircraft lessor that acquires commercial jet aircraft from various manufacturers and other parties, and leases those aircraft to airlines worldwide. It also sells aircraft from its fleet to other leasing companies, financial services companies, and airlines, as well as provides management services to third-party owners of aircraft portfolios. American International Group, through United Guaranty Corporation, issues residential mortgage guaranty insurance that covers mortgage lenders from the first loss for credit defaults on high loan-to-value conventional first-lien mortgages for the purchase or refinance of one- to four-family residences in the U.S. and internationally. The company was founded in 1967 and is based in New York, New York.

Advisors' Opinion:

• [By Morgan Housel]

  Or consider AIG (NYSE: AIG  ) . Before it blew its top in 2008, the insurer enjoyed two decades of smooth, predictable, volatility-free profits:

Best Insurance Companies To Own For 2014: MGIC Investment Corp (MTG)

MGIC Investment Corporation (MGIC), incorporated June 21, 1984, is a holding company and through wholly owned subsidiaries is a private mortgage insurer in the United States. As of December 31, 2012, its principal mortgage insurance subsidiaries, Mortgage Guaranty Insurance Corporation (MGIC) and MGIC Indemnity Corporation (MIC), were each licensed in all 50 states of the United States, the District of Columbia and Puerto Rico. During the year ending December 31, 2012, the Company wrote new insurance in each of those jurisdictions in MGIC and/or MIC. The Company capitalized MIC to write new insurance in certain jurisdictions where MGIC no longer meets, and is unable to obtain a waiver of, those jurisdictions��minimum capital requirements. Private mortgage insurance covers losses from homeowner defaults on residential mortgage loans, reducing and, in some instances, eliminating the loss to the insured institution if the homeowner defaults.

Mortgage Insurance

Primary insurance provides mortgage default protection on individual loans and covers unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure. Primary insurance is written on first mortgage loans secured by owner occupied single-family homes, which are one-to-four family homes and condominiums. Primary insurance is also written on first liens secured by non-owner occupied single-family homes, which are referred to in the home mortgage lending industry as investor loans, and on vacation or second homes. Primary coverage can be used on any type of residential mortgage loan instrument approved by the mortgage insurer.

When a borrower refinances a mortgage loan insured by the Company by paying it off in full with the proceeds of a new mortgage that is also insured by it, the insurance on that existing mortgage is cancelled, and insurance on the new mortgage is considered to be new primary insurance written. Therefore, continuation of its coverage fr! om a refinanced loan to a new loan results in both a cancellation of insurance and new insurance written. When a lender and borrower modify a loan rather than replace it with a new one, or enter into a new loan pursuant to a loan modification program, its insurance continues without being cancelled assuming that the Company consent to the modification or new loan.

The borrower�� mortgage loan instrument requires the borrower to pay the mortgage insurance premium. There are several payment plans available to the borrower, or lender, as the case may be. Under the monthly premium plan, the borrower or lender pays it a monthly premium payment to provide only one month of coverage. Under the annual premium plan, an annual premium is paid to it in advance, and it earns and recognizes the premium over the next 12 months of coverage, with annual renewal premiums paid in advance thereafter and earned over the subsequent 12 months of coverage. Under the single premium plan, the borrower or lender pays it a single payment covering a specified term exceeding twelve months.

Pool insurance is used as an additional credit enhancement for certain secondary market mortgage transactions. Pool insurance covers the excess of the loss on a defaulted mortgage loan which exceeds the claim payment under the primary coverage, if primary insurance is required on that mortgage loan, as well as the total loss on a defaulted mortgage loan which did not require primary insurance. Pool insurance is used as an additional credit enhancement for certain secondary market mortgage transactions. Pool insurance covers the excess of the loss on a defaulted mortgage loan, which exceeds the claim payment under the primary coverage, if primary insurance is required on that mortgage loan, as well as the total loss on a defaulted mortgage loan which did not require primary insurance. In general, the loans insured by it in Wall Street bulk transactions consisted of loans with reduced underwriting documentation; cash out! refinanc! es, which exceed the standard underwriting requirements of the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively GSEs); A- loans; subprime loans, and jumbo loans.

Other Products and Services

The Company has participated in risk sharing arrangements with the GSEs and captive mortgage reinsurance arrangements with subsidiaries of certain mortgage lenders, which reinsure a portion of the risk on loans originated or serviced by the lenders, which have MGIC primary insurance. It provides information regarding captive mortgage reinsurance arrangements to the New York Department of Insurance (known as the New York Department of Financial Services), the Minnesota Department of Commerce and the Department of Housing and Urban Development, (HUD). It performs contract underwriting services for lenders, in which it judges whether the data relating to the borrower and the loan contained in the lender�� mortgage loan application file comply with the lender�� loan underwriting guidelines. It also provides an interface to submit data to the automated underwriting systems of the GSEs, which independently judge the data. These services are provided for loans, which require private mortgage insurance, as well as for loans that do not require private mortgage insurance. It provides mortgage services for the mortgage finance industry, such as portfolio retention and secondary marketing of mortgages.

The Company competes with Federal Housing Administration, Veterans Administration, PMI Mortgage Insurance Company, Genworth Mortgage Insurance Corporation, United Guaranty Residential Insurance Company, Radian Guaranty Inc., CMG Mortgage Insurance Company, and Essent Guaranty, Inc.

Advisors' Opinion:

• [By Dan Caplinger]

  MGIC Investment (NYSE: MTG  ) will release its quarterly report next Tuesday, but investors haven't waited for that report to send the stock to two-year highs. As the housing market has improved, the mortgage-insurance company's prospects have followed suit, but the slow recovery in MGIC earnings are now vulnerable to a potential drop in premium revenue if rising interest rates hurt new mortgage activity.

Top 10 Performing Stocks To Own For 2014: Citizens Inc (CIA)

Citizens, Inc. (Citizens), incorporated on November 8, 1977, is an insurance holding company serving the life insurance needs of individuals in the United States. The Company operates in three segments: Life Insurance, Home Service and Other Non-insurance Enterprises. Its core insurance operations include issuing and servicing the United States Dollar-denominated ordinary whole life insurance and endowment policies predominantly to high net worth, high income foreign residents, principally in Latin America and the Pacific Rim, through independent marketing consultants; ordinary whole life insurance policies to middle income households concentrated in the midwest and southern United States through independent marketing consultants, and final expense and limited liability property policies to middle and lower income households in Louisiana, Arkansas, and Mississippi through employee and independent agents in its home service distribution channel.

Life Insurance

The Company�� Life Insurance segment issues ordinary whole life insurance domestically and in United States Dollar-denominated amounts to foreign residents. These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured. Additionally, endowment contracts are issued by the Company, which are principally accumulation contracts that incorporate an element of life insurance protection. The Company operates the segment through its subsidiaries: CICA Life Insurance Company of America (CICA) and Citizens National Life Insurance Company (CNLIC).

The Company offers several ordinary whole life insurance and endowment products designed to meet the needs of its non-United States policy owners. Its domestic life insurance products focus primarily on living needs and provide benefits focused toward accumulating money for the policyowner. The Company�� life insurance products are principally designed to address the insured�� concern about outliving his or her monthly income,! while at the same time providing death benefits. The primary purpose of its product portfolio is to help the insured create capital for needs, such as retirement income, children's higher education funds, business opportunities, emergencies and health care needs.

Home Service Insurance

The Company operates in the Home Service market through its subsidiaries Security Plan Life Insurance Company (SPLIC) and Security Plan Fire Insurance Company (SPFIC), and focus on the life insurance needs of the middle and lower income markets, primarily in Louisiana, Mississippi and Arkansas. Its home service insurance products consist primarily of small face amount ordinary whole life and pre-need policies, which are designed to fund final expenses for the insured, primarily consisting of funeral and burial costs.

Other Non-Insurance Enterprises

Other Non-insurance Enterprises includes Computing Technology, Inc., which provides data processing services to the Company, and Insurance Investors, Inc., which provides aviation transportation to the Company. This segment also includes the results of Citizens, Inc., the parent Company.

Best Insurance Companies To Own For 2014: Unum Group(UNM)

Unum Group, together with its subsidiaries, provides group and individual disability insurance products primarily in the United States and the United Kingdom. It also provides a portfolio of other insurance products, including employer-and employee-paid group benefits, life insurance, long-term care insurance, and related services. Its products include group long-term and short-term disability; group life and accidental death, and dismemberment; individual disability; group long-term care; voluntary benefits; group life; accident, sickness, and disability; and cancer and critical illness insurance products. The company also provides individual life and corporate-owned life insurance, reinsurance pools and management operations, group pension, health insurance, and individual annuities. Unum Group markets its products primarily to employers interested in providing benefits to their employees. The company sells its products through field sales personnel, independent brokers, consultants, and agency sales force. Unum Group was founded in 1848 and is based in Chattanooga, Tennessee.

Advisors' Opinion:

• [By Ben Levisohn]

  Among the biggest losers in the S&P 500: Air Products and Chemicals (APD), which dropped 3.3% to $103.20 as its Bill Ackman bounce fades, Charles Schwab (SCHW), which fell 2.4% to $21.76 as it became the 165th most popular short in the S&P 500, and Unum Group (UNM), which finished off 2.3% at $29.63 after Barron’s Sandra Ward recommended investors take profits on the insurance company.

• [By Rich Duprey]

  Specialty insurance provider�Unum (NYSE: UNM  ) announced yesterday its third-quarter dividend of $0.145 per share, an 11% increase to the payout made last quarter of $0.13 per share.

Best Insurance Companies To Own For 2014: W.R. Berkley Corporation(WRB)

W. R. Berkley Corporation, an insurance holding company, operates as commercial lines writers in the property casualty insurance business primarily in the United States. The company operates in five segments: Specialty, Regional, Alternative Markets, Reinsurance, and International. The Specialty segment underwrites third-party liability risks, primarily excess, and surplus lines, including premises operations, professional liability, commercial automobile, products liability, and property lines. The Regional segments provide commercial insurance products to small-to-mid-sized businesses, and state and local governmental entities primarily in the 45 states of the United States. The Alternative Markets segment develops, insures, reinsures, and administers self-insurance programs and other alternative risk transfer mechanisms. This segment offers its services to employers, employer groups, insurers, and alternative market funds, as well as provides a range of fee-based servic es, including consulting and administrative services. The Reinsurance segment engages in the underwriting property casualty reinsurance on a treaty and a facultative basis, including individual certificates and program facultative business; and specialty and standard reinsurance lines, and property and casualty reinsurance. The International segment offers personal and commercial property casualty insurance in South America; commercial property casualty insurance in the United Kingdom and continental Europe; and reinsurance in Australia, Southeast Asia, and Canada. The company was founded in 1967 and is based in Greenwich, Connecticut.

Advisors' Opinion:

• [By Laura Brodbeck]

  Earnings reports expected on Monday include:

  Netflix, Inc. (NASDAQ: NFLX) is expected to report third quarter EPS of $0.48 on revenue of $1.10 billion, compared to last year�� EPS of $0.13 on revenue of $905.09 million. Discover Financial Services (NYSE: DFS) is expected to report third quarter EPS of $1.19 on revenue of $2.07 billion, compared to last year�� EPS of $1.21. W.R. Berkley Corporation (NYSE: WRB) is expected to report third quarter EPS of $0.71 on revenue of $1.57 billion, compared to last year�� EPS of $0.61 on revenue of $1.42 billion. Gannett Co., Inc. (NYSE: GCI) is expected to report third quarter EPS of $0.44 on revenue of $1.27 billion, compared to last year�� EPS of $0.56 on revenue of $1.31 billion.

  Economics

• [By Monica Gerson]

  W.R. Berkley (NYSE: WRB)is estimated to report its Q3 earnings at $0.74 per share on revenue of $1.57 billion.

  V.F. Corp (NYSE: VFC) is projected to report its Q3 earnings at $3.78 per share on revenue of $3.34 billion.

• [By Rich Duprey]

  Insurance holding company�W.R. Berkley� (NYSE: WRB  ) �announced yesterday�its second-quarter dividend of $0.10 per share, an 11% increase over the $0.09 per share it paid last quarter.

Moneygram: Stiff Competition + Margin Pressures = Big Drop

It’s not easy to operate in a business where competition is fierce and pricing power is nonexistent. Just ask Moneygram International (MGI), whose shares are in freefall this morning after it was downgraded by Piper Jaffray.

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Why did Piper Jaffray’s Michael Grondahl and Dain Haukos downgrade Moneygram to Neutral from Overweight? Let them count the ways:

We are downgrading [Moneygram] as we believe it will struggle to perform in an increasingly competitive marketplace where price cuts and compliance requirements could suppress revenues and increase expenses. As such, margins remain under pressure. Recall, [Moneygram's] biggest competitor, Western Union (WU), has cut its prices. Next, during the September quarter [Moneygram] saw its commission expense increase [1.7 percentage points year-over-year] to 47% of total revenues as it had to pay more to retain/acquire agents. Additionally, [Moneygram's] compensation and benefits expense increased by 20% (~$11.4M) Y/Y partially as a result of increased headcount required to meet increased regulatory requirements. Lastly, we worry about a potential [Wal-Mart (WMT)] white label offering. We note [Wal-Mart] represented 27%
of MGI’s September quarter revenues.

Top Growth Companies For 2014

Ouch.

Shares of Moneygram have gained 5.5% to $18.65 today at 1:54 p.m., while Western Union has gained 2.6% to $17.51. Wal-Mart has risen 0.4% to $78.52.

The Power Of Sanctions Between Countries

Top Blue Chip Companies To Buy Right Now

A sanction is a penalty levied on another country. It is an instrument of foreign policy and economic pressure that can be described as a sort of carrot-and-stick approach to dealing with international trade and politics.

A country has a number of different types of sanctions at its disposal. While some are more widely used than others, the general goal of each is to force a change in behavior.

A sanction can be exercised in several ways. These include:

Tariffs – Taxes imposed on goods imported from another country. Quotas – A limit on how many goods can be either imported from another country or sent to that country. Embargoes – A trade restriction that prevents a country from trading with another. For example, a government can prevent its citizens or businesses from providing goods or services to another country. Non-Tariff Barriers (NTBs) – These are non-tariff restrictions on imported goods and can include licensing and packaging requirements, product standards and other requirements that are not specifically a tax. Types of Sanctions
Sanctions are categorized in several ways. One way to describe them is by the number of parties issuing the sanction. A "unilateral" sanction means that a single country is enacting the sanction, while a "bilateral" sanction means that a group or block of countries is supporting its use. Since bilateral sanctions are enacted by groups of countries, they can be considered less risky because no one country is on the line for the sanction's result. Unilateral sanctions are more risky, but are more likely to be effective if enacted by an economically powerful country.

The second way sanctions can be described is by the types of trade they limit. Export sanctions block goods flowing into a country, while import sanctions block goods leaving the country. The two options are not equal and will result in different economic ramifications. Blocking goods and services from entering a country (an export sanction) generally has a lighter impact than blocking goods or services from that country (an import sanction). Export sanctions can create an incentive to substitute the blocked goods for something else. A case in which an export sanction could work is the blocking of sensitive technological know-how from entering the target country (think advanced weapons). It is harder for the target country to create this sort of good in-house.

Blocking a country's exports through an import sanction increases the possibility that the target country will experience a substantial economic burden. For example, on July 31, 2013 the U.S. passed the bill H.R. 850 that basically blocked Iran from selling any oil abroad because of its nuclear program. This bill followed a year in which Iran's oil exports had already been cut in half by international sanctions. If countries don't import the target country's products, the target economy can face industry collapse and unemployment, which can put significant political pressure on the government.

A Military Threat Alternative
While countries have used sanctions to coerce or influence the trade policies of others for centuries, trade policy is rarely the sole strategy employed in foreign policy. It can be accompanied by both diplomatic and military actions. A sanction, however, might be a more attractive tool because it imposes an economic cost for a country's actions rather than a military one. Military conflicts are expensive, resource-intensive, cost lives and can illicit the ire of other nations due to the human suffering caused by the violence.

In addition, it is not feasible that a country can react to every political problem with military force: armies are simply not large enough. In fact, some problems are simply not well-suited for armed intervention. Sanctions are generally used when diplomatic efforts have failed.

Why Sanctions?
Sanctions may be enacted for several reasons, such as a retaliatory measure for another country's economic activities. For example, a steel-producing country might use a sanction if another country tries to protect a nascent steel industry by putting an import quota on foreign steel. Sanctions may also be used as a softer tool, especially as a deterrent to human rights abuses. The United Nations might condone the use of bilateral sanctions against a country if it perpetrates human rights abuses, or if it breaks resolutions regarding nuclear weapons.

Sometimes the threat of a sanction is enough to alter the target country's policies. A threat signals that a country does not approve of the target country's policies, and implies that the country issuing the threat is willing to go through economic hardship to punish the target country if change does not occur. The cost of the threat is less than military intervention, but it still carries economic weight. For example, in 2013 Zimbabwe's President Robert Mugabe and his inner circle were sanctioned by the U.S. because of alleged rights abuses.

The domestic politics of the country looking to use a sanction play a big role. International trade and international politics can take the back seat when nationalism comes into play, and a government can use a sanction as a way to demonstrate resolve or to create a distraction from domestic trouble. Because of this problem, international organizations such as the World Trade Organization (WTO) have been created to relieve some of the pressure and create arbitrary panels to objectively review disputes between countries. This is especially helpful, because sanctions can lead to economically damaging trade wars that can spill over into countries uninvolved in the original dispute.

The extent of economic suffering caused by a sanction and who feels it the most is often not immediately known. Research has shown that the severity of the economic impact on the target country increases as the level of international cooperation and coordination in its creation increases. It also will be more pronounced if the countries involved in the sanction previously had close relations, since trading ties are more likely to be significant if the countries have a rapport.

Impact of a Sanction
The immediate impact of an import sanction on the target country is that the country's exports are not purchased abroad. Depending on the target country's economic reliance on the exported good or service, this could have a crippling effect. The sanction might cause the sort of political and economic instability that results in a more totalitarian regime, or it can create a failed state due to a power vacuum. The target country's suffering is ultimately borne by its citizens, who in times of crisis may solidify the regime in charge rather than overthrow it. A crippled country can be a breeding ground for extremism, which is a scenario that the initiating country would probably prefer not to deal with.

Sanctions may follow the law of unintended consequences. For example, the Organization of Arab Petroleum-Exporting Countries (OAPEC) issued an embargo on oil shipments to the United States in 1973 as a punishment for re-supplying Israel with arms. OAPEC was using the embargo as a tool of foreign policy, but the effects spilled over and exacerbated the worldwide stock market crash of 1973-74. The inflow of capital from higher oil prices resulted in an arms race in Middle Eastern countries - a destabilizing problem - and did not result in the policy change envisioned by the OAPEC. In addition, many embargoed countries cut back on oil consumption and required more efficient use of petroleum products, further cutting demand.

Sanctions can increase costs to consumers and businesses in the countries that issue them, because the target country is unable to purchase goods, resulting in economic loss through unemployment and production loss. In addition, the issuing country will reduce the choice of goods and services that domestic consumers have, and may increase the cost of doing business for companies that must look elsewhere for supplies. If a sanction is made unilaterally, the effect of blocked imports or exports can be circumvented by the target country trading with third-party countries.

The Bottom Line
The success of sanctions varies in accordance with how many parties are involved. Bilateral sanctions are more effective than unilateral sanctions, but the success rate in general is fairly low. In many circumstances the sanctions caused economic harm without changing the target country's policies.

Sanctions are ultimately blunt tools of foreign policy, because their deployment is rarely precise enough to affect only the target economy, and because they presuppose that economic harm will lead to the sort of political pressure that will benefit the instigating country. By using a sanction, a country assumes that it is truly able to influence the leadership of the target country, a highly implausible assumption suggesting that other governments are pliable. Sanctions ultimately are a battle of political wills, with the loser being the country whose economy cannot withstand the pressure.