Before we get to the Israel news briefs, I want to send a big congrats out to Seattle Mariners announcer Dave Niehaus, on his induction, yesterday, to the Baseball Hall of Fame. My childhood was spent listening to him do play-by-play and nobody does it better. His “Fly away”, “My o My”, and ” A very pleasant good afternoon everybody on a glorious day out for baseball, the mountain is out in all her majesty” are calls that will forever be ingrained in my memory as well as millions of baseball fans who have listened to him over the years.

Now to the news:

Elbit Systems(ESLT) looks like it will have a strong quarter. Globes reports that the company is looking to make between $8-11 million more than they had thought as short-term delivery contracts rose.

Did I mention that today is my birthday?

The Jpost is reporting that Israeli chip maker Metalink (MTLK) is about to cut a lot of jobs as they try and reduce their burn rate. The report also says that the company is reviewing ’strategic alternatives’ which sounds like a potential sale maybe in the works.

Over at Seeking Alpha, Pierre Daillie interviews well respected investor Larry Sarbit, who speaks highly of the Israeli company Ituran (ITRN). Commenting on the the company that provides location sensing devices, Sarbit says, “It’s a cash machine. Once you get this thing in the car, it just spills out cash and they probably got pricing built into this. In other words,  if they increase the price of monitoring by a buck a year, do you think a guy who can afford a Mercedes in Argentina is going to give a damn?”

Silicom (SILC) is out with earnings and they say that they were impacted both by a drop in the Shekel/USD exchange rate as well as a tough spending environment for their customers. CEO Shaike Orbach said, “On the one hand, our revenues for the quarter suffered from both the difficult market environment, which has affected the revenues of many players in the network appliance value chain, and from a significant reduction in orders from our largest customer. We have been impacted by the customer’s new appliance configurations, which reflect its decision to begin offering our copper BYPASS cards as an optional add-on rather than as a standard component, as well as by its low quarterly volume of orders for fiber cards.“

Aaron Katsman, IsraelNewsletter.com

Disclosure: Author’s fund has a position in ESLT,ITRN,SILC. He has no position in any other stock mentioned as of 7/28/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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The Israeli trade deficit continued to widen in June as a strong Shekel and the cost of fuel imports rose more than the growth in exports. As reported in the Jpost, “The deficit, excluding diamonds, ships and aircraft, increased to a seasonally adjusted $1.27 billion from $1.04b. a year ago, the Central Bureau of Statistics said in a preliminary report Sunday.” I have never thought trade balances mean a whole lot. So what if you run a trade deficit? As colleague Zack ‘check out our new website redesign‘ Miller said to me over a cup of coffee, ” Isn’t it obvious that Israel will become a net importer, as the country becomes wealthier?” Giddy up!

Microsoft (MSFT) is at it again. The Redmond based software giant has agreed to purchase another Israeli company. This time it’s data quality start-up Zoomix. According to unnamed sources in Globes, purchase price is between $20-30 million. Hey Softie, can you spare a million or two?

Hey, anyone know what’s going on at Fundtech (FNDT)? The stock has surged over the last month by more than 15% on heavy volume, in the face of strong headwinds provided by the general market. Fundtech, which provides financial transaction processing software solutions for financial institutions all over the world, has managed to continue to sign deals even as IT spending in the financial sector remains sluggish.

Part of the puzzle as to the dramatic fall in shares of BluePhoenix (BPHX) has been revealed (aside from declining revenues, foggy outlook…). It turns out that US investment group Gilder Gagnon Howe & Co. sold off most of their holdings in the company. Globes reports that according to SEC filings, GGHC held 354,000 BluePhoenix shares at the end of June down from more than 2.2 million shares held at the end of Q1 ‘08. That’s a huge amount of stock hitting the market for such a thinly traded share.

Aaron Katsman, IsraelNewsletter.com

Disclosure: Author’s fund has a position in FNDT, BPHX. He has no position in any other stock mentioned as of 7/14/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
IsraelNewsletter.com

In what has been an extremely volatile trading session, which has seen the shekel trade near the 3.21 level against the US dollar, news that Bank of Israel Governor Stanley Fischer has increased the level of BOI intervention in the currency market has sent the dollar surging by more than 2.25%. The BOI announced that it will increase it’s buy-up of the greenback to a $100 million a day.

The continued rise in the Shekel has defied all logic. Even yesterday, the shekel strengthened by more than 1%, as Iran announced the testing of missiles that have the range to hit Israel. Under normal market conditions that news would have sent the Shekel reeling, but it just didn’t happen.

Let’s see if fundamental reasoning returns to the local currency market on the heels of the BOI move, or if this move is just a knee-jerk reaction that will reverse in the next few days.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
IsraelNewsletter.com

Israel’s CPI reading for May came in  with a rise of 0.7%. This is the highest CPI for May in 7 years. While the number came in at the high end of estimates, it wasn’t much of a surprise. We have been speaking about surging inflation for about a year. I would expect the June CPI number top be strong as well, due to a strengthening US dollar. The USD has a very strong weighting in the index, and in fact over the last year, it has skewed the CPI number down, because the USD has been so weak. Now that it has started to move higher against the Shekel, something that started in June, I would look for continued higher CPI numbers looking ahead.

I look for the Bank of Israel to potentially  raise interest rates in order to try and curb the spike in inflation. With local interest rates now at 3.5% , I wouldn’t be surprised to see rates a full 1% higher by the beginning of the fall.

While this continued inflation is going to hurt local fixed rate Israeli bonds, look for Israeli hi-tech to actually benefit from this move (read our analysis).

Disclosure: Author’s fund has no position in any stock mentioned as of 6/16/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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