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The Zacks Analyst Blog Highlights: PowerShares DB US Dollar Index Bullish, CurrencyShares Japanese Yen Trust, CurrencyShares Euro Trust, CurrencyShares British Pound Ster. Trst and Hologic

Zacks Equity Research

For Immediate Release

Chicago, IL – May 30, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The PowerShares DB US Dollar Index Bullish (UUP), CurrencyShares Japanese Yen Trust (FXY), CurrencyShares Euro Trust (FXE), CurrencyShares British Pound Ster. Trst (FXB) and Hologic Inc. (HOLX).

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Here are highlights from Wednesday’s Analyst Blog:

The Rise and Rise of the U.S. Dollar

A currency exchange rate is one of the many factors to determine a country’s economic standing on an international level. Inflation, Gross Domestic Product (GDP), monetary policy and balance of payments affect currencies the most. The Federal Reserve’s monetary stimulus has not only helped the U.S. economy get back on its feet but has also played a major role in strengthening the U.S. dollar against major global currencies such as the Japanese yen, euro and British pound. If one observes from a macro standpoint, the export and import figures of all major economies in the world have fallen. Countries have started introducing monetary stimulus to escape from recession, inviting deflation, which in turn was affecting their currency. The economic growth of countries has started slowing as their manufacturing activities and factory outputs are declining gradually. Let us consider currencies of major economies versus the U.S. dollar.

Since the start of 2013, the Japanese yen has fallen almost 18% against the U.S. dollar. Against one U.S. dollar, Japanese yen increased from 86.16 to 101.22. Of-late, Japan recorded GDP growth at 0.9%, but export and import data played a major role in determining the currency exchange rates. For the month of April, marginal increase in the exports data of 3.9% was offset by huge imports, which increased 9.4%. Another reason, which is attributable to the fall of Japanese yen, is the introduction of the U.S. monetary stimulus. Although this improved the country’s economy, it has affected the country’s currency. On one hand, this policy has increased money circulation for higher investments. However, it has created problems for itself by increasing chances of higher deflation. Another factor that has always affected the currency is the long-term deflation and continuously increasing of budget deficit. If the country is unable to control its rising fiscal deficit and deflation soon, the Japanese yen is set to face more troubles.

Technically, the eurozone crisis started with the meltdown of Greece about three and a half years ago. The affect trickled down to major economies such as Germany, France, Italy and Spain. Eurozone’s unemployment level is at a record 17% and the GDP growth has contracted for the sixth straight quarter. Successive attempts of anchoring the eurozone out of the crisis have failed. The European Central Bank has decreased interest rates to record lows but the measure has hardly affected the economic growth. If things don’t change soon enough for the region, the group will be on the same path as Japan. Deflation and fiscal deficits will soon creep in, making things worse for the Euro currency. From Jul 2011, value of one U.S. dollar in terms of a Euro increased by 11% from 0.6988 to 0.7757 in May 2013. Rate cuts and external loans might solve the region’s problem temporarily but in the long run deflation will become a threat, affecting the region’s currency. The region needs a U.S.-like model to accelerate the economy.

The economic recovery in the United Kingdom is relatively better than the eurozone but concerns linger owing to mixed numbers. The country’s economy has increased marginally and the unemployment rate has come down from 8.0% to 7.8%. In spite of the rise in employment, the average earning has been at a record low at 0.8%. This indicates that consumer spending has not increased and thus there are chances of these figures adversely affecting the country’s inflation, which in turn will have an negative effect on the currency against the U.S. dollar. The irregularity in the numbers remains a cause of concern because consumer spending drives the country’s economy. If consumer spending continues at the prevailing rate then there is a high probability that the British pound will show weakness in the future. Since Jan 2013, the U.S. dollar when compared against a single British Pound has gained about 6.8% from 0.6183 to 0.6604 in May 2013.

The value of the Exchange-Traded Fund (ETF) of the currencies in the U.S. stock market has depreciated considerably owing to the above reasons. The PowerShares DB US Dollar Index Bullish (UUP) has increased 4.9%, while CurrencyShares Japanese Yen Trust (FXY), CurrencyShares Euro Trust (FXE) and CurrencyShares British Pound Ster. Trst (FXB) lost 18%, 6.3% and 8.1%, respectively.

The strengthening of the U.S. dollar has been on the back of monetary stimulus. There are speculations that sooner or later the quantitative easing will be slowed or ended. Without doubt, there will be repercussions with the slowing or ending of the stimulus. The employment numbers, the housing market, and consumer confidence have attained pre-recessionary levels. The only glitch that remains is the inflation rate, which is still hovering around 1% with the unemployment level at around 6.5%. The question that remains is: Will the U.S. economy and the U.S. dollar stay strong enough without the monetary stimulus?

Good News for HOLX After Weak 2Q13


Leading player in the women’s health market Hologic Inc. (HOLX) recently disclosed that it won the regulatory approval from the U.S. Food and Drug Administration (:FDA) for the use of its C-View 2D imaging software. The software is also available across Europe, few nations in Latin America and Asia that recognize the European CE Mark approval.

Following the approval, clinicians can resort to images from the company’s new C-View 2D imaging software instead of the regular 2D exposure required for Hologic’s 3D mammography (breast tomosynthesis) screening exam. Findings from large-scale study also support the efficacy of C-View imaging results.

In a parallel development, Hologic also revealed the clinical results from its first large-scale observational study in a U.S. clinical practice published in the American Journal of Roentgenology (:AJR) in June. The conclusion from the ‘Rose study’ is the same as that of the breakthrough Oslo Tomosynthesis Screening Trial.

The study examines the performance of Hologic’s 3D mammography technology (breast tomosynthesis) in contrast with the conventional 2D mammography. The findings demonstrate a lower recall rate and a considerably higher cancer detection rate, across all breast tissue densities in affected patients, even for invasive cancer.

The study enrolled 13,856 women who had taken the conventional 2D mammography screening exams. It also included a sample population of 9,499 women who were willing to receive Hologic 3D mammography screening exam. The findings suggest a 38% drop in recall rates and 11% decline in biopsy rates. On the other hand, cancer detection rates improved a massive 35% while the same for invasive cancer improved 53%.

Hologic’s breast tomosynthesis technology gained the regulatory approval in Europe in 2008. In 2011, the company won the FDA approval for breast screening and diagnosis.

We believe that publication of the peer-reviewed study should ramp up adoption rates and support Hologic’s efforts to gain reimbursement for its tomosynthesis technology. Notably, company expectations from the tomosynthesis technology are very high. Hologic’s consistent efforts to promote the technology are likely to yield positive results.

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