Israel's Iron Dome missile defense system

Israeli military companies are ranked among the 100 largest defense contractors in the world, according to weekly American magazine "Defense News". The magazine, that covers security industries around the world, recently published a report of the largest defense companies globally in 2015. There are four Israeli companies among them: Elbit Systems, Israel Aerospace Industries (IAI), Rafael and Israel Military Industries (IMI).

Both Elbit and IAI are public companies traded on the Tel Aviv Stock Exchange in Israeli shekels. Reflecting its technology exporting success, Elbit Systems's stock has gained 51% in the past 12 months.

Unfortunately, Israel has many enemies set on its destruction. So Israel was forced to innovative and develop cutting-edge technologies in the defense and cyber security industries. The world's militaries continue to be impressed by Israel's prowess in defense technology, as recently demonstrated by Israel's Iron Dome missile defense system successfully defending Israeli cities. While some of these technology and defense companies are government-run, some are publicly-held companies with a long list of prestigious military clients around the world, including the United States.

Elbit Hermes 450 unmanned aerial vehicle

Israeli firm Elbit Systems was ranked in 29th place, IAI at 32, Rafael at 45 and IMI ranked 99. Having so many highly ranked defense contractors is unusual for a nation the size of New Jersey,  with only 8 million inhabitants (about a tenth of 1% of the world's population). The ranking was based on 2014 corporate income. Topping the list were American companies Lockheed Martin and Boeing, and arms manufacturer and aviation firm BAE Systems from the U.K.

Defense Minister Moshe Ayalon (left), IAI CEO Joseph Weiss

Israel Aerospace Industries (IAI) makes components, parts, and systems for military and commercial operations worldwide. It has three AA rated shekel-denominated bond series that can be purchased and held in an Israeli brokerage account. The state-owned company consists of BEDEK Aviation Group (commercial and military aircraft support), ELTA Systems (defense electronics), Military Aircraft Group (maintenance and manufacture), Commercial Aircraft Group (executive jets, engineering and hydraulics), and Systems Missile and Space Group. Its defense-related products are sold to about 70 countries, while commercial sales include such diverse customers as British Airways, General Electric, Lockheed Martin, and United Parcel Service.

Amos-4 Satellite

Last month, IAI Israel Aerospace Industries, in its first satellite export contract, sold a high-resolution optical imaging spacecraft to an unnamed government, IAI officials said. IAI developed the successful Amos line of communications satellites, used over the Middle East, Europe and the U.S.

Tel Aviv-based IAI is also introducing an all-electric version of its Amos telecommunications satellite line, Amos-E, which the company said is aimed at a market of customers needing 10-20 transponders to maintain an orbital slot. Amos-E, which IAI Space Division General Manager Opher Doron said could be built in three years, is already being bid in one of several satellite competitions IAI has entered.  Several companies are building all-electric satellites, which offer up to 50-percent weight savings over conventional chemical propellant, allowing customers to add more payload or use the weight savings to secure a less-expensive launch service.

Amos-E, an all-electric version of Israel Aerospace Industries' Amos telecommunications satellite line

Lockheed invested this year for the first time in Israel when it participated in the capital raising stage of Israeli start-up company Cybereason, investing $ 25 million. The American weapons giant seldom invests in start-ups, and this investment was due to the Lockheed's high sensitivity to cyber threats to its systems.

Sources: Calcalist, Tel Aviv Stock Exchange, Space News, Google, Wikipedia

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U.S. Economy

The U.S. economy has been recovering since the worldwide Great Recession of 2008-2009, albeit at a growth rate that is considered at best tepid by economists. The reason the Federal Reserve has kept interest rates historically low (0%-0.25%) for a record seven years is that the growth we’ve seen is close to “stall speed” (not quite enough to “take off”, borrowing an aviation analogy).

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I explain to clients that the Israeli economy did not undergo recession during the Great Recession, but kept growing during that trying time. Also, Israel has considerably outpaced the growth of U.S. and Europe in the years since. According to Tel Aviv-based Meitav Dash Investment House Chief Economist, “The economy is certainly not in slowdown or recession, but growing at a quite high rate of 3% [annually] - that rate would arouse the envy of many countries in the world.”

U.S. Debt

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Only six years ago, the U.S. national debt was “only” $11.8 trillion, but now is close to $18.4 trillion. This represents $154,500 per U.S. taxpayer. The 56% growth in national debt, without a foreseeable plan to slow the rapidly increasing debt load, causes great concern to economists and Central Banks around the world. This of course doesn’t include the unfunded mandates, such as Social Security.

At some point, the cost of financing that debt will be overwhelming to the Federal government, and harsh measures such as dollar devaluation, high inflation, or even controlled default on certain payments may be ahead. Once the world determines that the U.S. may not have the ability to pay all their debt obligations (such as China, to whom the U.S. owes $1.26 trillion), they may either sell their U.S. investments (lowering the demand and therefore price of all U.S. bonds), or demand more yield on future government bond offerings (increasing financing costs to unsustainable levels). “A trillion here, a trillion there, pretty soon, you're talking real money.”

Israel’s debt per person is half that of the U.S., and stands at $226 billion. This is offset by the future revenues from the recently discovered natural gas fields, royalties of which to the Israeli government are estimated at $240 billion alone.

U.S. Debt to GDP

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As the U.S. debt level increases, the country’s growth rate (GDP) isn’t growing at the same pace. The U.S. is growing further in debt faster than it can grow its way out. A decade ago, the U.S. Debt-to-GDP rate was a “comfortable” 63%, but now is over 100% (unsustainable for the long-term).

Israel’s GDP-to-Debt ratio is 67%.

U.S. Dollar World Reserve Currency Status Threatened

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 In October, 2015, the International Monetary Fund (IMF) is scheduled to hold its twice-a-decade meeting on global currencies. The largest (or second largest) economy in the world, China has been strongly lobbying the IMF during the past decade to be considered one of the world’s reserve currencies. With that status, nations may transact using the Chinese Yuan in addition (or in place of) the other official seven currencies.

Click to enlarge (source: Spitzl)

For decades the only world reserve currency, the U.S. had enjoyed a built-in demand for its currency. With the addition of other world currencies in the recent decades, the U.S. Dollar is still used in 64% of those billion-dollar international transactions. The Euro is used in 20.7% of those transactions.

Assuming the IMF introduces this new world reserve currency and reduces Dollar dependency (in 2015 or 2016), there may be a reduction by half of the Dollar's importance. The currency foreign exchange market is the largest market in the world, 200 times larger than the New York Stock Exchange and 28 times larger than all stock markets combined. So its influence on world economies and currency values cannot be ignored.

According to Juan Zarate, who served as Assistant Secretary of the Treasury during George W. Bush’s administration, “once the [other currency] becomes and alternative to the Dollar, rules of the game begin to change”.

Dr. Steve Sjuggerud (a currency expert recently featured on CNBC and Bloomberg, PhD in Finance), says, “I’ve been active in the market for over two decades now, but I’ve never seen anything that could move so much money so quickly.” Experts say this announcement, whenever it happens, may trigger one of the most profound transfers of wealth in our lifetime.

This is why I have been encouraging American investors to consider linking some of their invests to the strong Israeli shekel, while each U.S. Dollar can still buy 3.9 shekels. Additionally, 70% of Israeli government and corporate bonds are inflation-linked to prevent inflation from eroding investors’ buying power. This is virtually impossible to obtain in the U.S. capital market.

Wall Street growth topping out in 2015?

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Having risen 89% in the past 6 years, Wall Street stocks seems to have stalled in 2015. The widely-followed S&P 500 stock index has lost 6% Year to Date (as of August 26), causing investors to wonder if this is the beginning of a major correction (following the 7-year business and correction cycles seen in 2001 and 2008).

I then inform clients that the Tel Aviv 25 stock index has returned 8.6% so far in 2015. I also inform them that Israeli corporate bonds were much less volatile than Israeli stocks during that world crisis (and even during last week's major correction).

Moral Decline

Some of my U.S. readers point to the decline of the U.S. moral standard as a major cause behind economy decline. They point to the recent Supreme Court decision to allow gay and lesbian marriages in all 50 states, government-sponsored Planned Parenthood activities, increasing Godless education system, and increasing violence and domestic terrorism as evidence that the U.S. no longer leads the world with high moral standards.

Waning Support for Israel

Many clients point out that U.S.-Israel relations have never been lower. While the U.S. used to vigorously support the only democracy in the Middle East, it no longer does so. The U.S. threatens to cut off financial aid to its “closest ally and friend”, doesn’t support Israel in the United Nations, pushes Israel to adopt security and political agreements not in Israel’s best interest, and lashes out at Israel for not supporting the pending Iran nuclear agreement.

Conclusion

Is the United States headed for a financial collapse? Only time will tell. But the writing may be on the wall, and this may an ideal time to consider placing some of your money abroad, invested in foreign markets and in foreign currency. As you diversify your global holdings, consider not only U.S. stocks, but stocks abroad, or even shorter-term government or corporate bonds outside of the U.S. market, while the Dollar is still strong.

Disclaimer: The above is the opinion of the writer and should not be taken as financial advice, nor is it a commitment to achieve any future returns. Past performance does not ensure similar future returns. This publication does not constitute an offer to purchase, sell or hold securities or units in a fund, and is not a substitute for investment and/or tax advice that takes into account the special needs of each person. Please consult a professional investment advisor concerning your specific situation before making personal financial decisions.

The post U.S. Financial Collapse Ahead? appeared first on Wise Money Israel.

In an interview with Newsmax.TV, Trump, who considers himself a "big fan of Israel", said  “if oil prices are allowed to inflate and keep inflating, if the dollar keeps going down in value, I think there’s a very distinct possibility that things could get worse.”

A weak dollar “is not good because you’re going to pay $25 for a loaf of bread pretty soon. Look at what’s happening with our food prices. They’re going through the roof. We could end up being another Egypt. You could have riots in our streets also.”

Trump also was asked about his fellow billionaire George Soros’ warning that economic conditions in the United States are likely to deteriorate. “I would say that he possibly is right,” Trump says.

Currency and trade manipulation has drained the United States of its jobs, so it’s no surprise that the Federal Reserve Chairman Ben Bernanke believes it will take years for full employment to return after the recent recession, Trump said.

“The federal government has no money,” states Trump in no uncertain terms.

So if Trump doesn't like President Obama, who does Donald Trump, creator of the TV show "The Apprentice" actually admire? Benjamin Netanyahu, Israel's Prime Minister. “Frankly, a strong prime minister is a strong Israel,” Trump says, “and you truly have a great prime minister in Benjamin Netanyahu – there’s nobody like him! He’s a winner; he’s highly respected; he’s highly thought of by all. Terrific guy, terrific leader, great for Israel.”

See the full interview here:

Source: Newsmax, International Business Times 

The post Donald Trump to U.S. – “You’re fired!” appeared first on Wise Money Israel.

The credit rating agency said the central bank's plan, announced last week, to buy mortgage bonds will likely hurt the economy more than help it.

Egan-Jones is a smaller but well-known competitor to the big three rating agencies: Moody's Investors Service, Fitch Ratings and Standard & Poor's.

Egan-Jones said the Fed's plan to issue more currency and depressing interest rates through purchasing mortgage-backed securities will weaken the value of the dollar and push up prices for oil and other commodities, while doing little to raise the U.S.'s real GDP. This increase in commodities prices will pressure the profitability of businesses and increase the costs of consumers, thereby reducing consumer purchasing power, the firm said. This would leave less for consumers to spend on other things.

At the same time, the agency warned that the federal government's borrowing costs are likely to slowly rise as the global economy recovers.

QE Infinity?

In September, the Fed said it would buy $40 billion of mortgage bonds a month to help the economic recovery until it saw a sustained upturn in the weak jobs market. No limit was set for the amount of time this bond purchase program would be in effect, leading some economists to call this round of quantitative easing [money-printing] "QE Infinity".

In April, Egan-Jones lowered its rating on the U.S. to AA from AA, with a negative watch, citing a lack of progress in cutting the mounting federal debt. It stripped the U.S. of the top AAA rating in July 2011.

Big Three Rating Agencies' Ratings

The post Egan-Jones Cuts U.S. Debt Rating to AA- appeared first on Wise Money Israel.

Stock trading monitor (black and white)

Prestigious financial magazine Forbes last week detailed contributing editor George Gilder's best investment ideas for 2012, which focus on Israeli technology companies. Among his picks are leading Israeli semiconductor manufacturers EZChip, Broadcom, TowerJazz and Mellanox, biotech company Evogene and drug-discovery company Compugen. He notes EZChip's leading fiberspeed video internet paradigm, and reports that Evogene has just persuaded Monsanto, the world leader in agricultural science, to move its key R&D to Israel and make a further investment of $35M.  According to Forbes contributing editor, all these innovative companies are Israeli stocks worth investigating and investing in.

Another top investing idea Forbes shares is Israeli Voice-Over-IP technology company Audocodes, which holds important intellectual property in high definition voice. Each of these company's stocks can be purchased directly on the Tel Aviv Stock Exchange by opening an Israeli investment account while gaining currency diversification.

Mr. Gilder is obviously not alone in cherry-picking promising Israeli companies. Warren Buffett's (successful investment billionaire and one of the world's three richest men) company Bershire Hathaway owns Iscar Metalworking, a giant toolmaking company founded by Israel’s Stef Wertheimer and based in the Galilee region of Israel.

Gilder also notes the Wall Street-traded stock Wave, which recently purchased the Israeli security firm Safend, as another promising stock pick. George Gilder is a contributing editor of Forbes and a frequent writer for The Economist, The American Spectator, Harvard Business Review, and The Wall Street Journal. The author of the nine books, he was President Reagan's most frequently quoted living author.

Other Israel Technology News

Intel has already had success with its huge R&D and manufacturing facilities in Israel. In September, Israel's Globes newspaper noted that Intel is considering Israeli EVP David Perlmutter as a possible successor to Intel's Paul Ottelini as Intel's CEO.

Also, technology giant Apple recently purchased Israeli flash-memory technology company Anobit for a reported $500 million, making it one of Apple's most expensive acquisitions. Apple is reported planning it's first R&D center outside of the U.S. in Israel based on the purchase.

The post Forbes Best Investment Ideas For 2012: Israel appeared first on Wise Money Israel.

Teva's defensive call options provide a way to make 25% a year even if the stock price moves sideways going forward. Contact us for more information on this strategy.

Teva stock prices: 1 year

About Teva's Acquisition

Teva Pharmaceutical Industries Ltd. and biopharmaceutical company Cephalon announced that their boards of directors have unanimously approved an agreement by which Teva will acquire all of Cephalon's shares for $81.50 per share in cash, or a total value of $6.8 billion. This was a 5% premium on Cephalon's closing share price on NASDAQ the day before. The transaction is not conditional on financing and is expected to be completed in the third quarter of 2011. Cephalon had revenue of $2.76 billion and net profit of $657 million in 2010 mainly from brand drugs treating cancer, central nervous system disorders and pain. The company has a market capitalization of $5.8 billion. Teva stock can be purchased with an Israeli investment account or on Wall Street.

FDA Approves MCS Thrombosis Treatment

Israeli biomedical company MCS Medical Compression Systems' stock has gained 92% in the past two years. The company develops the only device on the market that combines simultaneous diagnostics with treatment during preventative care. Marketing will begin in 2012. MSC has obtained U.S. Food and Drug Administration (FDA) marketing approval for its ActiveCare + DT non-invasive device for treating deep vein thrombosis and preventing embolisms. The company's stock is traded on the Tel Aviv Stock Exchange.

Source: Globes

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The company

For years, Teva (ticker symbol: TEVA) has been one of Israel's flagship health care companies and is a world leader in the generic and branded drug manufacturing industry. The company employs 35,000 workers, a fifth of whom work in Teva's facilities in Israel. In August 2010, Teva acquired Germany's second largest generic drug maker, ratiopharm. Standard and Poor's sees Teva as well positioned to benefit from anticipated legislation in the U.S. mandating a new regulatory pathway for generic biologics, giving a price target of $62. Teva supplies the world's leading multiple sclerosis drug (Copaxone, sales ~$3 billion) , a drug for Parkinson's disease (Agilect/Azilect), and also supplies bulk pharmaceutical chemicals. The company markets 400 individual products and sells them around the world.

The stock

Teva's stock price has greatly outperformed the general market over the past 20 years, returning almost 6,900% vs. the S&P 500, which returned 281% during the same period.

Teva even performed well during the recent global economic crisis: as the general market (S&P 500) fell between Oct, 2008 - Feb, 2009 by 38%, Teva fell only 3%. The stock price is generally very stable (beta 0.2, which make it one-fifth as volatile as the overall market). The stock has a Price-Earnings (P/E) ratio of 15 (the lowest in three years), which in-line with the general market. Paying a dividend since 1997, Teva stock currently yields 1.4%, with annual revenues of over $16 billion. Gross margins rose to 62.5% in Q3/2010 from 59% the previous quarter, and higher than the 57-60% normal long-term margins.

What's driving the price down?

Is this a good time to buy Teva stock? With all the great data points listed above, why do we see that the company's share price has fallen 18% since March, 2010?

Firstly, Teva has increasingly intense competition in the generic drug market from other generic drug manufacturers and brand-name drug companies.

Eric Barden, President and Chief Investment Officer at Texas-based Barden Capital Management ,says, "current analyst and investor sentiment is positive, but not euphoric. Investors widely recognize the exceptionally high quality of Teva’s growth but they appear unwilling to pay a premium relative to Teva’s slower growth competitors. Perhaps the assumption is that at [$49] billion in market cap, growth will inevitably slow."

Another catalyst for Teva's lagging stock price likely started with the early 2010 legal verdict against Teva. In May, 2010, a Las Vegas jury awarded $356M in punitive damages against Teva Parenteral Medicines. The company was sued for not fully labeling its propofol product for single patient use only: the jury believed the plaintiff contracted hepatitis as a result of the poorly labeled product. Teva claimed the product was clearly labeled as single patient and was blatantly misused at the clinic in question. Teva believes that there are numerous grounds for appeal, and plans to contest the verdict vigorously.

There was also some concern that the acquisition of European drug company ratiopharm wouldn't be effective. It made Teva the largest European generic drug company at a time of European economic slowdown, curtailing Teva's sales and add pricing pressures, leading to lower profits. However Teva recently indicated that the integration of ratiopharm was "making excellent progress, and is likely to be completed ahead of schedule." Also, 55% of Teva's Q3/2010 sales growth was attributable to this acquisition. Teva has compensated for pricing pressure by expanding European sales volumes.

Another answer may also be that sales of Teva’s leading branded product Copaxone will eventually face increased competition from generic competitors. Some investors also wonder if Teva can continue its growth rate given the fierce generic competition and questions about when the FDA will clear its newest drugs.

What do analysts think?

Teva has a 4 out of 5 star rating at Morningstar. Standard and Poor's has rated Teva a "Strong Buy" for the past 3 years, recently downgrading it to a "Buy" from "Strong Buy".

Natali Gotlieb, analyst at the leading Israeli brokerage firm IBI, has a "Buy" rating with a $73 per share price target (41% above its current price), reiterating that the current share price presents a buying opportunity. IBI believes Teva delivered solid Q3/2010 results, and that the company has taken a commanding position in European sales despite pricing pressure. Its two flagship branded drugs, Copaxone and Azilect posted strong sales. She believes that the potential alternate MS therapy "fears and risks are now priced into the share" price, and that Teva is poised to continue to outgrow and outsell its competition.

Teva has a "Strong Buy" or "Buy" rating by 23 of 28 analysts following the stock, with a $66.52 average target price (28% above its current price).

Technical indicators

Since October, 2010, the technical indicators have been mostly bearish (avoid).  In December share prices started to see improvement with a 6.8% jump December 9, 2010 on good Phase III trial news. MarketEdge indicates Teva is a not yet a buy candidate, but shows "mildly improving conditions".

Bottom line

Teva has historically been a great company, and a good investment choice. It's not a short-term investment proposition, though. Those that make money in this stock generally are in it for the long haul. If you want to invest in a solid Israeli pharmaceuticals company with strong earnings and sales growth, low historical volatility, while earning a small dividend, this stock is currently at a relatively low price point.

Teva stock can be purchased on the NASDAQ as an American Depository Receipts stock (ADR) or directly on the Tel Aviv Stock Exchange in Shekels through an Israeli investment account.

Disclosure: The author does not currently own Teva shares, but may purchase in the future.

The post Good Time to Buy TEVA Stock? appeared first on Wise Money Israel.

Why is this a good idea?

By investing in one of these ETFs, you diversify your Israel investment over multiple stocks, reducing price fluctuations due to any one stock’s volatile performance. This is by far the easiest way to invest in Israeli stocks, because:

1. Unlike mutual funds, ETFs can be bought and sold immediately just like a single-company stock
2. There is a single brokerage commission to own multiple stocks
3. You gain automatically diversification among many Israeli companies without requiring you to open an Israeli brokerage account
4. As an added bonus, all company dividends and special distributions are paid to you, the shareholder

Here is a quick look at the two funds:

EIS

EIS earned an 81% return in 2009, compared to the 28% return of the general market (S&P 500) in the same period.

This fund is the iShares MSCI Israel Capped Investable Market Index Fund (ticker: EIS). The fund holds fixed percentages of shares of the largest Israeli company from all sectors, including Teva Pharmaceutical (TEVA), Israel Chemicals, Bank Leumi, Bezek, Bank Hapoalim, NICE Systems (NICE), Partner-Orange (PTNR), Elbit Systems (ESLT), Cellcom (CEL) and others. Additionally, EIS paid a 3.04% 12-month dividend yield (as of 7/30/2010). The fund seeks investment results that correspond generally to the price and yield performance of the MSCI Israel Capped Investable Market Index.

ISL

ISL earned a 89% return in 2009, compared to the 28% return of the S&P 500 during the same period.

Aberdeen First Israel fund (ticker: ISL) holds varying percentages of shares of large Israeli companies from eight sectors such as Teva Pharmaceutical (TEVA), Bezek, Check Point Software Technologies (CHKP), Israel Chemicals, Perrigo (PRGO), Bank Leumi, Bank Hapoalim and others. The fund seeks long-term capital appreciation by investing primarily in equity securities of Israeli companies.

If you are deciding between the two funds, the market cap of ISL is one quarter that of EIS’s, and the daily volume is much lower than EIS, so if you’re looking for liquidity, EIS is the fund that will deliver that to a much greater degree.

Bottom line

Both of these funds are a great way to get in on investing in Israeli companies directly on Wall Street without having to open an Israeli brokerage account. You'll be invested in Israeli top performing companies, diversified across sectors and industries, and if you are already are an investor in the U.S. stock market, this is a simple step you can take to participate in Israeli company growth and Israeli innovation. To purchase one of these ETFs, just use your current broker or online brokerage account and specify EIS or ISL as the ticker symbol.

Do you invest in ETFs? What percentage of your portfolio should you invested in ETFs? Share your thoughts with us or comment below.

The post Little Known Profitable Secret for Investors appeared first on Wise Money Israel.

There over 130 Israeli company stocks traded on U.S. stock exchanges. These Israeli stocks are a great way to participate in Israel's growth without the need for an Israeli brokerage account. Another good reason to invest in these stocks, is that by doing this, you can increase your international allocation and create currency diversification in your portfolio. These Israeli stocks can be bought and sold just like any other U.S. stocks. Some are dual-listed in Tel Aviv and New York, yet most are singularly listed on Wall Street.

For regular updates on which Israeli stocks to invest in, read our article on "Top Performing Israeli Stocks on Wall Street."

Also, remember to sign up for updates from us here.

The post Israeli Stocks on Wall Street appeared first on Wise Money Israel.

Israel is an amazing nation that has contributed much to the world:

• In its 62 years, Israel has won more Nobel Prizes per capita than any other country other than Switzerland.
• Israel leads the world in the number of scientists and technicians in the workforce, 63% more than the U.S.
• It also has the most physicians and engineers per capita.
• There are more Israeli patents registered in the United States than Russian, Indian and China patents combined.
• It leads the world in patents for medical equipment.
• Israel has attracted the most venture capital investment per capita in the world, 30 times more than Europe.
• Ranked in the top five Cleantech countries of the world
• Operator of the world’s largest desalinization plant.
• Israeli companies invented the drip irrigation system
• Inventor of the world’s most used drug for multiple sclerosis
• Intel's R&D center is located in Israel and is responsible for the design of the Pentium MMX Chip, the Pentium 4 and Centrino microprocessors
• Israel pioneered instant messaging services like ICQ, invented in Israel

Continue reading why you should consider investing in Israel here.

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