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CPI Up on Cars, Energy – Analyst Blog

Dirk Van Dijk — Wed, 18 Nov 2009 17:51:24 +0000

The Consumer Price Index (CPI) for October rose by 0.3%, a little bit hotter than the 0.2% that was expected. If one strips out volatile food and energy prices to get the core consumer price index, prices were up 0.2%, also one tick higher than the 0.1% expected.

A rise in energy prices was not unexpected. Heck, one only has to see what the price of crude oil and natural gas have done over the last month or so. For the month, the price of energy rose 1.5% overall. The rise was sharpest among energy commodities, like gasoline and heating oil, which rose by 1.9%. Energy services, like electricity rose a more moderate -- but still steep -- 0.9%.

The rise in core consumer prices was a bit more of a surprise. However, the rising prices were very narrow, with almost all of the increases due to higher prices for cars and trucks, both new and used. For the month, the prices of new cars were up 1.6% while the prices for used cars jumped by 3.4%. That is very good news for Ford (F) as well as indirectly for the U.S. taxpayer, since we are now major stockholders at both General Motors and Chrysler.

The increase for used cars is also beneficial for the car dealers like CarMax (KMX) and AutoNation (AN). The Cash for Clunkers program continues to reverberate through the economy, even though it ended over two months ago. Every car that was turned in under the program was destroyed (at least the engine was, other parts could be stripped and reused). This reduction in supply helped support prices of the remaining used cars. This is the third month in a row of sharply higher prices for used cars, coming on top of a 1.6% increase in September and a 1.9% increase in August. I suspect that this effect is likely to wear off in the near future.

On a year-over-year basis, the overall consumer price index is down 0.2%, while the core consumer price index is up 1.7%, both of which are historically very low. The huge decline in energy prices happened a year ago and is in the process of rolling off. Thus look for the headline consumer price index to start to outpace the core consumer price index in the months to come on a year-over-year basis.

The divergence could become very large. The reason is that a very large part of the index is for Shelter, and the biggest part of that is rent -- both the normal rent that is paid by people who do not own their own houses, and "owners equivalent rent" (OER) or what it would cost you to rent an identical house next door to where you are living now. OER is how the government measures housing prices for inflation; what happens to the actual price of houses is totally irrelevant when it comes to measuring inflation. Thus, measured inflation was very much under control, even as the price of houses were soaring during the housing bubble, and the CPI did not decline as the bubble was bursting.

Together, regular rent paid to landlords and OER make up over 30% of the total consumer price index, and almost 40% of the core consumer price index. The overall price of shelter was unchanged in October, the second month in a row it was unchanged. Regular rent fell by 0.1%, over the last three months it is down at a seasonally adjusted annual rate of 0.7%, and it is unchanged over the last six months.

Since most people own rather than rent where they live, OER has a much higher weight in the index (24.4% of the total index vs. 6.0%). It was unchanged on the month, is off by 0.3% over the last three months and up by just 0.2% over the last six months. However, if the reports from the big housing-oriented REIT’s like Apartment Investors (AIV) and Equity Residential (EQR) are to be believed, then the decline in regular rents is significantly understated.

The data on OER us always suspect, since it is collected by the government -- calling people up on the phone and asking them what they thought it would cost them to rent an equivalent home in their neighborhood. I suspect the vast majority of people really have no idea, since in many neighborhoods very few people rent, and owners are not regularly calling on rental agents to find out what the prices around them are.

The final part of the shelter component is lodging away from home, otherwise known as the price of a hotel room. It rose by 0.4% on the month, but that follows a 1.5% increase last month. Perhaps there is a glimmer of hope for the hotel chains like Marriott (MAR).

Overall, the report suggests that inflation is well under control, especially outside of Energy prices. As the first blue graph shows, we are coming off a very rare instance of actual deflation at the headline level. Even at the core level, the change in prices over the last year is near its lowest point on the graph which goes back to 1983, and I removed the earlier period from the graph since inflation was so high then that one could not make out the more recent trends. This is particularly true if I am right that the effect of Cash for Clunkers on auto prices is going to wear off soon.

This means it is clear sailing for the Fed to keep interest rates low. The problem the economy faces is high unemployment and low levels of production. There is zero danger of the economy overheating and pushing inflation into overdrive anytime soon. Yes, there is a danger that continued easy money could form a bubble in asset prices, but it does not look like we are there yet.

Think of easy money as air being pumped into a tire. When the tire is flat air simply makes the tire usable again; when the tire fills with air, you run the danger of the tire popping from being overinflated. We are nowhere close to the tire popping. (Perhaps the more interesting question is if the tire has a big hole in it, so pumping more air does nothing as it just leaks out.)

Keep in mind that the way up in an asset bubble is a lot of fun, so if that is happening, enjoy it while you can. I think it has a ways to go before it pops. Heck, the tire is still looking pretty flat.

The second green graph presents the same data, but on a continuously compounded annual rate of change basis. It shows a few things of note. The first is that the huge decline in the overall consumer price index happened a year ago as energy prices crashed. That, however, is about to roll off, which should mean that the year-over-year change in the overall CPI should be headed back up in the near future (notice on the top graph that it is already becoming far less negative). Also note that the core consumer price index is very stable from month to month, unlike the headline numbers that can really swing big time, and that it is still on a gradual secular decline path.

While we may be seeing more inflation at the gasoline pump in the near future, in part due to the weak dollar, we are seeing downward price pressures elsewhere in the economy. In other words, there is a change in the relative price level of energy (food prices are being well behaved, rising only 0.1% for the month), not a rise in the general price level. The Fed should not be tightening in response to changes in relative prices, only to changes in the overall price level. For investors, changes in relative prices are very important, and the data suggests that energy stocks are a good place to be parking your money these days.

Read the full analyst report on "F"
Read the full analyst report on "CMX"
Read the full analyst report on "AN"
Read the full analyst report on "AIV"
Read the full analyst report on "EQR"
Read the full analyst report on "MAR"
Zacks Investment Research

Donald Coxe – Investment Recommendations (November 2009)

Prieur du Plessis — Tue, 17 Nov 2009 08:51:07 +0000

The November edition of the Coxe Basic Points research report (subtitled "The Power of Zero") by Donald Coxe has just been published. His investment recommendations are listed in this post, and a link to the full report is also provided.

EIA: Fuel Supplies Fall Further – Analyst Blog

Zacks Market Commentaries — Fri, 23 Oct 2009 17:10:42 +0000

Recently, the federal government’s Energy Information Administration (EIA) issued an overall bullish report, showing a smaller-than-expected build in crude stockpiles. Further, the data showed that gasoline inventories were down as predicted, while distillate stocks also declined, though fell short of expectations.

In its release, the agency said that crude inventories rose by 1.3 million barrels for the week ending October 16, much lower than analysts' expectations. This is the second successive week in which the crude buildup has been lower than originally anticipated. A major contributing factor to the modest increase can be attributed to a fall in crude oil imports, which dropped to the lowest level in two months.

Current crude oil stocks, at 339.1 million barrels, are 8.9% above the year-earlier level and remain above the upper limit of the average for this time of the year (depicted in the first EIA chart below). The supply cover increased from 23.3 days in the previous week to 23.6 days of supply and is above the year-earlier level of 22.6 days.

Supplies of gasoline declined by 2.3 million barrels from the previous week (in-line with analyst estimates), as the refinery processing rate remained low. At 206.9 million barrels, current inventories are above year-earlier levels and are near the upper half of the historical range, as shown in the following chart from the EIA.

Distillate fuel inventories (including diesel and heating oil) dropped by 800,000 barrels last week (less than anticipated) to 169.9 million barrels, but remain above the upper boundary of the average range for this time of year. This is shown in the following chart, also from the EIA.

Refinery utilization was up a marginal 0.2% from the prior week to 81.1%, lower than analyst expectations, as refiners continued with their repairs and upgrades.

Total refined products supplied over the last four-week period -- a proxy for overall petroleum demand -- was down. It fell by 0.1% from the year-earlier period, with gasoline up 4.2%, distillates (includes diesel) down 12.1% and jet fuel down 3.2%.

The continued decline in fuel inventories (gasoline and distillates) has raised hopes that the worst of the recession-induced slump may be over and demand is picking up. Coupled with stronger equity markets and a soft dollar, this has sent oil prices to a new one-year peak, breaching the $80 per barrel level, thereby providing a big boost to energy stocks.

Though we welcome the bullish EIA data, we are not fully convinced about the sustainability of crude oil’s current gains, as the specter of a continued glut in global fuel supplies still weighs and all of the inventories remain higher compared to averages for this time of year. Moreover, the drop in petroleum stocks was triggered by weak refinery activity rather than a much awaited pick-up in oil demand.

As such, we prefer to maintain our cautious stance on oil refiners like Sunoco Inc. (SUN), Tesoro Corp. (TSO) and Western Refining Inc. (WNR), given that the overall environment for refining margins is likely to remain poor going into 2010.

The sharply lower refinery utilization (at just 81.1% of capacity) provides enough evidence that refineries are cutting back on production because the economy is still struggling on the demand side. Being the largest independent refiner, Valero Energy Corp. (VLO) remains particularly exposed to this unfavorable macro backdrop. We see little reason for investors to own Valero and have an Underperform recommendation on the company.

Companies like ConocoPhillips (COP) and ExxonMobil Corp. (XOM) -- oil majors that have significant refining operations -- are also expected to remain under pressure until pricing and demand improve.

We would also like to maintain our cautious outlook (Neutral recommendation) on integrated oil players and oilfield service firms until the demand outlook improves. Companies such as Chevron Corp. (CVX), Marathon Oil Corp. (MRO), Hess Corp. (HES), Schlumberger Ltd. (SLB), Baker Hughes Inc. (BHI) and Weatherford International (WFT) fall in this category.
Read the full analyst report on "SUN"
Read the full analyst report on "TSO"
Read the full analyst report on "WNR"
Read the full analyst report on "VLO"
Read the full analyst report on "COP"
Read the full analyst report on "XOM"
Read the full analyst report on "CVX"
Read the full analyst report on "MRO"
Read the full analyst report on "HES"
Read the full analyst report on "SLB"
Read the full analyst report on "BHI"
Read the full analyst report on "WFT"
Zacks Investment Research

EIA: Big Drop in Fuel Stocks – Analyst Blog

Zacks Market Commentaries — Fri, 16 Oct 2009 14:22:41 +0000

Yesterday, the U.S. Energy Department's weekly inventory release showed a less-than-expected build in crude stockpiles. However, the headline news was centered on a sharp drop in gasoline stocks and refinery utilization that pushed oil prices to a fresh 2009 peak and lifted energy stocks.

The federal government’s Energy Information Administration (EIA) reported a 400,000 barrels rise in crude inventories for the week ending October 9, much less than analyst expectations. The modest increase can be attributed to scaled back operations by the refiners (prompted by weak profit margins) even as imports fell. This follows last week’s report, which showed an unexpected rise in oil supply figures, against consensus forecast of a buildup.

Current crude oil stocks, at 337.8 million barrels, are 9.6% above the year-earlier level and remain above the upper limit of the average for this time of the year (depicted in the first EIA chart below). The supply cover increased from 22.9 days in the previous week to 23.3 days of supply, but it remains below the year-earlier level of 23.7 days.

Supplies of gasoline sank by a whopping 5.2 million barrels from the previous week (far exceeding estimates of a build), the biggest drop in a year, as U.S. refiners reduced processing. At 209.2 million barrels, current inventories are below year-earlier levels and are just above the upper half of the historical range, as shown in the following chart from the EIA.

Distillate fuel inventories (including diesel and heating oil) dropped by 1.1 million barrels last week (more than anticipated) to 170.7 million barrels and but remain above the upper boundary of the average range for this time of year. This is shown in the following chart from the EIA.

Refinery utilization was down 4.1% from the prior week to 80.9% (the lowest since mid-April), much higher than analyst expectations, as refiners reduced runs for repairs and upgrades.

Total refined products supplied over the last four-week period – a proxy for overall petroleum demand – went up. It was up 2.1% from the year-earlier period, with gasoline up 5.3%, distillates (includes diesel) down 10.8% and jet fuel down 3.5%.

The bigger-than-expected decline in fuel inventories (gasoline and distillates) has raised hopes that the worst of the recession-induced slump may be over and demand is picking up. Coupled with stronger equity markets and a soft dollar, this sent oil prices sharply higher to a new one-year peak of over $77 per barrel, providing a big boost to energy stocks (in particular oil refinery companies).

Though we welcome the bullish EIA data, we are not fully convinced about the sustainability of crude oil’s current gains, as the specter of a continued glut in global fuel supplies still weighs and all of the inventories remain higher compared to averages for this time of year. Moreover, the drop in petrol stocks was triggered by a big fall in refinery activity, rather than a much awaited pick-up in oil demand.

As such, we prefer to maintain our cautious stance on oil refiners like Sunoco Inc. (SUN), Tesoro Corp. (TSO) and Western Refining Inc. (WNR), given that the overall environment for refining margins is likely to remain poor going into 2010.

The sharply lower refinery utilization (at just 80.9% of capacity) provides enough evidence that refineries are cutting back on production because the economy is still struggling on the demand side. Being the largest independent refiner, Valero Energy Corp. (VLO) remains particularly exposed to this unfavorable macro backdrop. We see little reason for investors to own Valero and have an Underperform recommendation on the company.

Companies like ConocoPhillips (COP) and ExxonMobil Corp. (XOM) – oil majors that have significant refining operations – are also expected to remain under pressure until pricing and demand improve.

We would also like to maintain our cautious outlook (Neutral recommendation) for integrated oil players and oilfield service firms till the demand outlook improves. Companies such as Chevron Corp. (CVX), Marathon Oil Corp. (MRO), Hess Corp. (HES), Schlumberger Ltd. (SLB), Baker Hughes Inc. (BHI) and Weatherford International (WFT) fall in this category.
Read the full analyst report on "SUN"
Read the full analyst report on "TSO"
Read the full analyst report on "WNR"
Read the full analyst report on "VLO"
Read the full analyst report on "COP"
Read the full analyst report on "XOM"
Read the full analyst report on "CVX"
Read the full analyst report on "MRO"
Read the full analyst report on "HES"
Read the full analyst report on "SLB"
Read the full analyst report on "BHI"
Read the full analyst report on "WFT"
Zacks Investment Research

Stock Market News for October 16, 2009 – Market News

Zacks Market Commentaries — Fri, 16 Oct 2009 14:06:13 +0000

U.S. stocks stayed above the threshold reached yesterday as a late-session buying helped offset weakness in banking and technology shares. Financials dragged on stocks through the early afternoon even as Goldman Sachs and Citigroup reported better-than-expected profit reports. However, the final fifteen minutes witnessed much of the activity as higher oil prices sent energy stocks higher and, in turn, helped the broader market.

The Dow Jones industrial average closed above the 10,000 level for the second-successive day, edging up 47 points, or 0.5%. The S&P 500 index edged up 4 points, or 0.4% and the tech-heavy Nasdaq composite ended the day virtually flat. The gains in the Dow average were led by Microsoft (NASDAQ:MSFT) whose shares jumped 2.9%. The Windows 7 is slated for release on October 22.

Among energy stocks, Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares climbed 1.6% and 1.5%, respectively, as crude prices jumped to their highest levels of the year. Meanwhile, the US Department of Energy said gasoline stockpiles fell 5.2 million barrels per day last week, well below expectations of 700,000 decline.

Pfizer (NYSE:PFE) rose 1.7% after it completed its acquisition of Wyeth.

Nevertheless, weakness in financial sector shares, off 0.6%, hurt sentiment even as Goldman Sachs (NYSE:GS) reported estimate-topping numbers. Citigroup's (NYSE:C) strong trading returns were overcome by increasing consumer loan losses. Citi's (NYSE:C) CEO Vikram Pandit warned, "US consumer credit remains the number one issue affecting our near-term results." JP Morgan (NYSE:JPM) CEO Jamie Dimon warned that level of loan losses are likely to remain high.

Tech shares also failed to advance, even as IBM (NYSE:IBM) raised its earnings outlook and reported numbers that were above Street projections. Advanced Micro Devices' (NYSE:AMD) narrower-than-expected loss and the return of its core chip-making operations to profitability failed to lift sentiments either. However, Google's (NASDAQ:GOOG) better-than-expected results were helped by return to sequential quarterly growth, a 5% increase in average cost-per-clicks over the second quarter, and a positive impact from the declining dollar. Shares in Google (NASDAQ:GOOG) rose 3.6% in after-hours trading as CEO Eric Schmidt noted, "While there are a lot of uncertainties about the pace of [the] economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

Today's expected results include a number of significant results from companies such as Bank of America (NYSE:BAC), Genuine Parts (NYSE:GPC), General Electric (NYSE:GE), and Mattel (NYSE:MAT). Also reporting are: Halliburton (NYSE:HAL) and First Horizon National (NYSE:FHN).

Zacks Investment Research

The No. 1 Way to Profit When Silver Upstages Gold

Contrarian Profits — Mon, 28 Sep 2009 16:36:04 +0000

pWhile prices of gold don’t necessarily affect silver prices or vice versa, history has demonstrated that when gold rises or falls, silver usually follows suit. /p pThis time around, silver has failed to match the gains that gold posted in recent months, spawning a widespread believe that silver is poised for a bull run. Such factors as a decline in supply and a weakening U.S. dollar have buttressed that bullish belief. And so has the fact that China’s government is strongly encouraging that country’s residents to buy the white metal./p pWith Beijing’s plan to inject $587 billion (4 trillion yuan) into China’s economy, and a growing desire to diversify away from the U.S. dollar as its key reserve currency, the Asian giant#8230;/p

Gold Aims to Retest Record Highs After Breaking Through the $1,000 Mark

Jason Simpkins — Wed, 09 Sep 2009 15:15:57 +0000

[Editor's Note: If you're new to the commodities-investing arena, and are uncertain about the landscape - or even if you're an "old hand" at natural-resource stocks, but want some insights into the new profit plays and new players - consider hiring a guide: Money Morning Contributing Editor Peter Krauth, a recognized expert in metals, [...]

China Sets the Tone, FDIC Falters, Fed Makes a Profit, India’s Surprise and More!

Contrarian Profits — Mon, 31 Aug 2009 20:14:37 +0000

pChinese stocks plummet, worldly markets follow… what’s behind today’s sell-off#8230; a href="http://www.contrarianprofits.com/articles/author/dan-denning/" class="alinks_links"Dan Denning/a on taking profits in the twilight of the U.S. stock rebound#8230; India reports better-than-expected GDP growth… why our Mumbai partners are still hesitant#8230; Another compelling argument against U.S. banks… Dan Amoss serves the cold, hard data#8230; Plus, signs of the times: American’s vote to throw the bums out while the free market backlash hits Hollywood#8230;/p p strongChina has once again set the tone for our Monday market forecast./strong Roll the videotape:/p p/p pChinese traders dumped shares early this morning after a popular magazine rumored that the booming Chinese loan market is cooling off. Caijing magazine guessed that the Chinese loaned about $29 billion in August, a 43% crash from July. While that number isn’t official, traders around the#8230;/p

Grandma was right and one heck of a trader

Trading School — Mon, 31 Aug 2009 11:30:34 +0000

Did you ever have your grandmother tell you not to put all of your eggs in one basket? Well it turns out grandma was right. Grandma, knew a great deal about the power of diversification and how it reduces risk both in business and in trading. IN BUSINESS … What if McDonald’s only sold hamburgers, do [...]

Stock Market News for August 24, 2009 – Market News

Zacks Market Commentaries — Mon, 24 Aug 2009 14:23:18 +0000

Federal Reserve Chairman Ben Bernanke’s encouraging words about the economy and a jump in existing home sales sent US stock surging to their highest level this year and brightened hopes that an economic recovery is imminent. Treasuries tumbled and corresponding yields rose sharply higher as investors turned away from the safety of government debt. Gains were broad based with 29 of the 30 Dow Jones industrial average components recording gains. Crude oil prices climbed on the back of economic recovery hopes, hitting a 10-month high of $73.89.

US stock futures point to a moderately higher open on Monday. Dow Jones industrial average futures rose 34, or 0.4%, to 9,523. Standard & Poor's 500 index futures rose 3.30, or 0.3%, to 1,028.50, while Nasdaq 100 index futures rose 2.00, or 0.1%, to 1,637.50.

The Dow Jones industrial average gained 156 points, or 1.7%, closing above 9,500 for the first time since November 4. The S&P 500 index added 19 points, or 1.9%, closing at the highest point since October 6. The tech-heavy NASDAQ composite index added 31.68 points, or 1.59%, to 2,020.90, its highest close since October 1. On the New York Stock Exchange about four stocks rose for every one that fell.

Speaking at an annual Fed conference, Bernanke noted that "After contracting sharply over the past year, economic activity appears to be leveling out, both in the US and abroad," adding prospects for a return to growth in the near-term “appear good." However, he sounded a note of caution, warning that lending is not back to normal, and that the difficulty consumers and businesses are having obtaining loans will be a challenge.

All ten S&P 500 industry sectors closed higher on Friday, led by gains in basic materials (+2.7%), oil and gas (+2.6%), industrials (+2.3%), and financials (+2.1%). Year-to-date technology stocks have been the best of the lot managing gains of 40.4% and are followed closely by basic material shares (+40.1%), financials (+13.2%), industrials (+11.1%), and consumer goods (10.4%). On the year only telecoms (-4.2%) have suffered declines.

A rise in energy stocks sent shares of Exxon Mobil (NYSE:XOM) up 2.5% to $69.92 and Chevron (NYSE:CVX) rose 1.6% to $69.73. Shares of healthcare companies also advanced with Pfizer (NYSE:PFE) surging 5.5% to $16.64 and Merck (NYSE:MRK) gaining 5.1% to $32.56. Among financial issues, AIG (NYSE:AIG) jumped 35% to $32.85 after the company said it will be able to pay back the government. Game Stop (NYSE:GME) plunged 13% after the company reported earnings that were below analysts’ expectations.

However, notable risks remain to the fragile economy. A Sunday Financial Times piece quoted economist Nouriel Roubini as saying there remains a "big risk" of a double-dip recession, although Roubini currently sees a "U-shaped" recovery.

Zacks Investment Research

Canadian Solar, Inc. – Momentum – Zacks Rank Buy

Michael Vodicka — Wed, 19 Aug 2009 05:00:00 +0000

Canadian Solar, Inc. (CSIQ) is up huge since bottoming out in March on surging estimates and cost cutting measures.

Company Description

Canadian Solar, Inc., together with its subsidiaries, designs, manufactures and sells solar cells and modules that convert sunlight into electricity in Canada and internationally. The company was founded in 2001 and has a market cap of $578 million.

Alternative energy is all the rage, as countries and company's search for new methods to power the next generation while protecting the environment. This dynamic helped fuel Canadian Solar's solid second-quarter results, reported on August 6.

Second-Quarter Results

Revenue was down a sharp 46% from last year to $114.2 million, but the company noted that it countered this effect by nearly cutting its cost of revenue in half to $91.1 million. Earnings came in much better than expected at 49 cents per share, blowing past the Zacks Consensus Estimate calling for a loss of 11 cents.

Canadian Solar went ahead and raised its 2009 solar power shipments guidance to between 260 and 270 megawatts, up from the previous 200 to 220.

Estimates Up Huge

Analysts like what they have seen, as estimates have made a dramatic push higher over the last 3 months. The current year is up from a loss of 9 cents to $1.03 per share. The next-year estimate is pegged at $1.28, a bullish 25% growth projection.

Valuation

Most investors are used to seeing sky-high multiples associated with alternative energy stocks, particularly in solar. Not so in this case, as shares of CSIQ are trading with a P/E multiple of 15.5X, a discount to the overall market.

The Chart

Shares of CSIQ have posted big gains since bottoming out with the market in early March just above $2.50, having since topped the $19 mark. Take a look at the nice run below.

Zacks Investment Research

Why the Obama Stimulus Has Us on a Collision Course with Inflation

William Patalon lll — Mon, 03 Aug 2009 16:59:11 +0000

Has the massive Obama stimulus plan put us on a collision course with virulent inflation? It sure looks that way. Let me explain … When the U.S. Commerce Department on Friday said the U.S. economy contracted at a 1% annual pace in the second quarter, the report was actually seen as good news: It was a slower decline [...]

Four Ways to Profit if Bernanke’s ‘Exit Strategy’ Backfires

Jason Simpkins — Fri, 24 Jul 2009 17:36:25 +0000

[Editor's Note: If it's inflation you're worried about - and commodities you want to invest in - there's no better place to look than the Global Resource Alert trading service, which ferrets out companies poised to profit from the so-called "Secular Bull Market" in commodities. If you're new to the commodities-investing arena, and are uncertain [...]

With Inflation on the Horizon, Gold Prices are Ready to Rally

Money Morning — Thu, 16 Jul 2009 21:18:57 +0000

The “Secret” Investing Strategy That’s Your Best Bet For Commodity Profits By Peter Krauth

Jim Musselwhite — Fri, 10 Jul 2009 04:23:32 +0000

Audit the Fed, China’s New No. 1, Short Canada? and More!

Contrarian Profits — Thu, 09 Jul 2009 16:00:28 +0000

pIdiocracy in action: Congress blocks bill to audit the Fed#8230; No surprise: American loan defaults hit record… Surprise: Could Canadians be next? China takes another “World’s No. 1” from U.S. #8230; a href="http://www.contrarianprofits.com/articles/author/dan-denning/" class="alinks_links"Dan Denning/a, Byron King on recent triumph and tragedy in the oil patch#8230;/p p strongGreat news: The Federal Reserve will retain its right to operate in secrecy. /strong/p tr p align="center"/p /tr p align="center"“Thank God for Rule 16!”/p pLate yesterday, the Senate majority put the kibosh on a last-hour provision in the 2010 spending bill that would audit the Fed. Not because it’s a bad idea… but because of the arcane Rule 16, which prohibits policy legislation from being added to spending bills. (The kind of “rule” that’s only evoked when the majority gets uncomfortable.)/p p“The Federal Reserve will create and disburse#8230;/p

Stock Market News for June 30, 2009 – Market News

Zacks Market Commentaries — Tue, 30 Jun 2009 14:16:26 +0000

US stocks started the holiday-shortened trading week on a positive note as energy, technology and industrial shares pulled equity markets higher. Although stocks seesawed in early trading, a gain in oil prices buoyed sentiments on the Street and investors raced to put money in the stock market.

The Down Jones industrial average advanced 91 points or 1.1% and the S&P 500 increased 0.9%. NASDAQ edged up 0.3%. Volume on the NYSE was light with only 1.07 billion shares exchanging hands and advancing issues outpacing declining stocks by a three-to-two margin. The measure of market volatility, the CBOE Vix, retreated 2.2% to 25.35%, its lowest level since mid-September. Treasury prices jumped, with the yield on the benchmark 10-year note declining to 3.48%. Crude prices jumped to more than $71 per barrel on higher demand expectations and reports that Nigerian militants partly shut down an offshore oil facility.

Trading is expected to remain volatile this week as some money managers do last minute adjustments to their portfolios, a phenomenon known as "window dressing." The week, cut short by the Independence Day holiday, also brings a spate of economic data and is likely to provide a sense of where the markets are headed. Of key importance is the monthly employment report that is due on Thursday. There are expectations that unemployment in US rose at a slower pace than projected.

The jump in crude prices boosted energy stocks, sending shares of Chevron (NYSE:CVX) up 1.4% and ExxonMobil (NYSE:XOM) up 2.2%. A WSJ report that said banking firms are expected to report higher second-quarter profits boosted financials. Moreover, SLM (NYSE:SLM) shares rallied 8.5% on pricing details of its student loan services contracts, announced yesterday by the Department of Education.

Meanwhile, Apple Inc. (NASDAQ:AAPL) announced that CEO Steve Jobs has returned to work. The iPhone maker said Jobs will work at Apple offices "a few days a week" and work from home the other days. Microsoft (NASDAQ:MSFT) rose 2.2% after Deutsche Bank (NYSE:DB) raised its price target on the software maker. General Dynamics (NYSE:GD) rose 2.8% to $57 and Eastman Chemical (NYSE:EMN) jumped 3.7% to $38.79.

Among DJIA components, all but Alcoa (NYSE:AA) advanced. Hewlett-Packard (NYSE:HPQ) led the gainers with an advance of 3.5%, followed by Bank of America (NYSE:BAC), which rose 3.5% and Merck (NYSE:MRK), which added 3.2%. The $22.4 billion Magellan Fund reported it raised its holdings of Bank of America (NYSE:BAC) in May. Merck (NYSE:MRK) rose after reporting it has returned to normalized shipments of its Zostavax shingles vaccine. However, Alcoa (NYSE:AA) declined after analysts at FBR Capital, downgraded the stock to "underperform" from "market perform", citing valuation and oversupply concerns.

All ten S&P500 industry groups recorded gains, with utilities rising 1.3%, oil and gas adding 1.2%, telecom rising 1.2%, and financials advancing 1.1%. Home builders also rose after Credit Suisse (NYSE:CS) upgraded KB Homes (NYSE:KBH), which had reported signs of moderation in certain negative housing trends. Lennar (NYSE:LEN), which reported new home sales and orders picked up during the quarter, jumped 5.8%. Morgan Stanley (NYSE:MS) upgraded JC Penney (NYSE:JCP) shares to "overweight" from "equal-weight", noting the company was "the most likely candidate" among department store chains to outperform current margin projections for the second quarter.

Zacks Investment Research

Bernanke’s Forecast, Buffett’s Green Shoots, Can’t Miss Data, Taking Oil Profits and More!

Contrarian Profits — Fri, 26 Jun 2009 18:00:08 +0000

pFed sees the bright side… Bernanke says worst it over, inflation not a worry#8230; Warren Buffett can’t see any green shoots… even after eye surgery#8230; Alan Knuckman on how to survive a sideways stock market#8230; Byron King says now’s a good time to book profits on this sector#8230; Housing still out of whack… one chart foreshadows the market’s next move#8230;/p p strongTake two days off and look what happens… the recession has bottomed./strong/p pAt least that’s what “they” would have you believe. While we locked ourselves in our bimonthly editorial meeting the last two days, we missed some new “the worst is over” calls. Here’s the rundown:br / strong “The pace of economic contraction is slowing,” /strongdeclared the Federal Open Market Committee yesterday after emerging from a two-day meeting of#8230;/p

Right Out of the Used-Car Sales Book

Andrew Snyder — Wed, 24 Jun 2009 20:15:36 +0000

pCapitol Hill is moving faster than ever. We will get a Cap-and-Trade vote on Friday. The market has already cast its vote, making now a great time to make some smart investments.br / The Obama administration must be getting some schooling from Dealin’ Dave’s Used Car Sales./p pCan’t you hear Nancy Pelosi saying to some farm-belt democrat, “What’s it going to take to get you into this climate bill tonight?”/p pOne of the easiest “outs” for a potential car buyer is to say, “I like it, but let me go home and talk to my wife.”/p pIt is no different with shoddy legislation. “I like it,” say our fence-sitting lawmakers, “but let me go home and talk to my constituents.”/p pKnowing if a customer leaves the#8230;/p

Stock Market News for June 22, 2009 – Market News

Zacks Market Commentaries — Mon, 22 Jun 2009 14:23:09 +0000

US stocks registered their first decline in five weeks as investors assessed the outcome of Obama Administration's plans for an overhaul of financial regulations. A fall in crude prices resulted in a sell off in energy stocks, hurting investor sentiments. The S&P 500, which jumped to a high of 946.21 the previous week, lost almost 25 points during the week to close at 921.23 on Friday. However, Nasdaq ended the day with a 1.1% gain after Microsoft (NASDAQ:MSFT) was viewed positively by some brokers. On a weekly basis, Nasdaq lost 1.7% and the Dow Jones Industrial Average, which slipped 0.2% on Friday, closed the week 2.95% lower. With the quadruple witching of options expirations on Friday, volume on the NYSE jumped to 2.1 billion shares.

Investors this week are likely to take leads from data on housing, durable orders, and final GDP numbers for the first quarter. Also, a change in FOMC directives is expected to have an impact on stock prices. The World Bank's projection that the world economy will shrink by 2.9% is likely to drive sentiments this morning. The bank had earlier forecast a 1.7% contraction.

Among S&P sector groupings, all but one recorded declines during the week. Basic materials stocks led the decliners with a 7.1% fall, followed by oil and gas, off 6.9%, and industrials, down 5.2%. Only healthcare sector finished the week higher, with a 2% advance. E*Trade Financial Corp (NASDAQ:ETFC) declined 36% to $1.26 after the online brokerage sold $478.5 million to shore up its capital base. Oil prices went below $70, hurt by expectations of seasonal declines in US gasoline prices. Exxon (NYSE:XOM) declined 3.7% to $71.05 and Freeport-McMoRan Copper & Gold Inc (NYSE:FCX) plunged 13% amid speculation that Chinese demand for copper is falling.

According to Thomson Reuters, second quarter earnings are likely to decline about 35% y/y, with declines likely to continue before a sharp 190% jump in the final quarter. The S&P forward-looking price-earnings multiple currently stands at about 15 times earnings, up from about 12 times in the first quarter, with the rise largely attributed to price gains rather than rising earnings numbers.

The two-day FOMC meeting, which starts on Tuesday, is unlikely to reveal a major policy shift and is likely to hold rates of 0-0.25% steady. The week's planned $104 billion note auctions will also place pressure on yields, raising fears on inflation as well as a crushed recovery.

Zacks Investment Research

SmallCapSentinel.com: Looking for the Next Alternative Energy Breakout

Stuart T. Smith — Wed, 17 Jun 2009 13:50:25 +0000

LAS VEGAS, June 17, 2009 (GLOBE NEWSWIRE) — Last week’s breakout in price and volume for emerging solar company GWS Technologies (OTCBB:GWSC) sent a ripple through the small cap alternative energy market with CEO’s and investors alike asking themselves, which deal is next to gain the favor of the market? In looking at the week [...]

Stock Market News for June 16, 2009 – Market News

Zacks Market Commentaries — Tue, 16 Jun 2009 14:23:58 +0000

Asian markets extended losses Tuesday as commodities took a beating and worried investors looked for fresh signs of an economic recovery. Japan's Nikkei 225 stock average declined 2.9%, its worst one-day percentage loss in more than two months, even as Bank of Japan noted that "Japan's economic conditions, after deteriorating significantly, have begun to stop worsening." The bank left its overnight lending rate unchanged at 0.1%. Hong Kong's Hang Seng dropped 1.8% and South Korea's Kospi fell 1%. China's Shanghai Composite Index however outperformed regional markets and declined 0.5%.

Dollar prices were under pressure after Russian President Dmitry Medvedev, speaking at a summit of the Shanghai Cooperation Organization, said the world needs new reserve currencies. Wall Street futures point to a flat opening.

On Monday, US stocks registered their worst slide in a month with the Dow Jones Industrial Average, which ended last week in a positive territory for 2009, went back in the red for the year. Among S&P 500 stocks, 95% registered losses. Commodities and basic material stocks declined, hurt by a rise in US dollar. The morning session saw most of the declines and stocks traded sideways as the session advanced. The NASDAQ, off 2.3%, and the S&P 500, down 2.4%, recorded their steepest declines since May 13. Volume on the NYSE was light with only 1.1 billion shares trading. Market breadth was negative with decliners outpacing advancing issues by a five-to-one margin. The market's measure of volatility, the CBOE Vix, jumped the most since April 20, rising 9.5% to 30.81.

The National Association of Home Builders reported that confidence among U.S. home builders fell after rising for two months. A prime concern was the rise in mortgage rates that followed a recent selloff in U.S. Treasurys. Meanwhile, US Treasuries moved higher for the third straight day, with the benchmark 10-year up 20/32 and the yield declining to 3.715%, falling back from their seven-month highs of last week.

A rising dollar reduced the luster of basic material and oil stocks as inflation hedges. Positive comments at the G8 summit regarding the greenback's status as world's reserve currency helped the dollar, which rose 1.2% against a basket of currencies. Copper prices declined 3.7% in New York trade and silver lost 5.7%. Among DJIA components, only Microsoft (NASDAQ:MSFT) and American Express (NYSE:AXP) recorded gains. Alcoa (NYSE:AA) led the decliners on the DJIA, dropping 6.5%. Freeport-McMoRan (NYSE:FCX) fell 5.8% and US Steel (NYSE:X) shares declined 5.7%. Among energy stocks, ExxonMobil (NYSE:XOM) fell 1.3%, and Chevron (NYSE:CVX) declined 2.2%, with Schlumberger (NYSE:SLB) shares down 2.8%. Among S&P 500 components, only 22 advanced with all ten industry groups losing ground.

The expected decline in industrial production of 1.0%, up from the drop of 0.5% prior, is largely attributed to the GM (NASDAQ:GMGMQ) and Chrysler bankruptcies. Capacity utilization rates are expected to have tightened to 68.4% from 69.1% prior, the lowest in 42 years since record-keeping began.

In overseas developments, ECB warned Eurozone banks on potential additional losses of over $283 billion this year and next. In a report, the International Monetary Fund said exiting the fiscal stimulus programs will be challenging for the US. The IMF Chief cautioned that the worst of the recession has yet to be felt.

Zacks Investment Research

Trade of the Next Decade: Sell Bonds and Buy Energy

Contrarian Profits — Fri, 12 Jun 2009 18:27:32 +0000

p“It’s not technically a new decade yet,” writes small-cap expert a href="http://www.contrarianprofits.com/articles/author/dan-denning/" class="alinks_links"Dan Denning/a at a href="http://whiskeyandgunpowder.com/"WhiskeyandGunpowder.com/a. “But if the trade of the last decade was to sell stocks and buy gold, then maybe the best trade for the next ten years is to sell bonds and buy energy. Gas, coal, oil, conventional, unconventional, renewable, alternative. You have a whole portfolio of choices.”/p pThis from Dan:/p ulIt seems pretty obvious, that for the last ten years anyway, selling stocks and buying gold would have been a good trade/strategy. Stocks ended an 18-year bull market in 2000 and gold ended a 20-year bear market. One asset class was at a cyclical low. The other was at a cyclical high. In fact, you might even say that one#8230;/ul

Thursday’s Market Recap (06/11/09)

Bullish Bankers — Fri, 12 Jun 2009 02:37:05 +0000

The markets were up today led by energy stocks as oil settled at $72.68. The Dow Jones was up 0.37% closing at 8770.92, with the S&P up 0.61% closing at 944.89. The NASDAQ was up 9.29 closing at 1862.37. Treasury prices were down as the yield closed at 3.862%. Gold settled at $962.00 as the dollar [...]

Last Decade: Buy Gold, This Decade: Buy Energy

Dan Denning — Thu, 11 Jun 2009 19:32:13 +0000

pIt#8217;s not technically a new decade yet. But if the trade of the last decade was to sell stocks and buy gold, then maybe the best trade for the next ten years is to sell bonds and buy energy. Gas, coal, oil, conventional, unconventional, renewable, alternative. You have a whole portfolio of choices./p pBy the way, last year at the Agora Wealth Symposium in Vancouver, one of our colleagues took the stage to point out that your editor was complete moron. In this particular case, it was for being bullish on gold./p pHe said that gold hadn#8217;t done much adjusted for inflation since 1980. What#8217;s more, he said, its worth less, adjusted for inflation that it was twenty years ago. How, he#8230;/p

China Leads the Way, The Trade of the Next Decade, CEO Pay and More!

Contrarian Profits — Thu, 11 Jun 2009 16:22:02 +0000

pAmerican markets at a standstill… can the Far East drive stocks forward? #8230; a href="http://www.contrarianprofits.com/articles/author/chris-mayer/" class="alinks_links"Chris Mayer/a on buying “what China needs, but can’t make for itself” #8230; a href="http://www.contrarianprofits.com/articles/author/dan-denning/" class="alinks_links"Dan Denning/a’s pair trade for the next decade #8230; a href="http://www.contrarianprofits.com/articles/author/bill-bonner/" class="alinks_links"Bill Bonner/a and Goldman Sach’s CEO on the current “bull market” #8230; Plus, a CEO pay debate fills our inbox… your letters and our response, below#8230;/p p The Dow crashed 1.4 points yesterday, wiping out Monday’s 1.3 point moonshot. Desperate for something beyond these 0.014% “swings,” strongthe market’s putting China in the driver’s seat today… and these guys still have quite a lead foot:/strong/p p strongChinese auto sales soared 34% in May/strong, year over year. According to the China Association of Automobile Manufacturers, the Red Nation scooped up 1.12 million vehicles last month, outpacing any nation#8230;/p

Stock Market News for June 5, 2009 – Market News

Zacks Market Commentaries — Fri, 05 Jun 2009 14:27:45 +0000

U.S. stocks rose for the fifth time in six days as analysts recommended buying bank stocks and oil prices rose again pushing energy stocks higher. Investors also took heart from the drop in unemployment numbers and U.S. workers filing first-time claim for jobless benefits. The Dow Jones industrial average added 75 points, or 0.9% to close at 8750 and the S&P 500 index rose 1.1% to close at 942.46. The S&P is up 39% since hitting its 12-year low on March 9. The tech-heavy Nasdaq continued its strong performance and rose 1.3%.

Among S&P industry groups, financials were the leading gainers, rising 3.4% as traders took reports of a failed Latvian bond auction in their stride. A Bernstein upgrade of Goldman Sachs (NYSE:GS) to "outperform" also helped financials and the effects of the failed bond auction were nowhere to be seen. Bernstein suggested Goldman's capital strength will allow the firm to consolidate its position further in fixed income, currency and commodity markets. Fifth Third Bancorp (NASDAQ:FITB), which has been asked by regulators to raise $1.1 billion as part of the stress tests, reported sale of $1 billion common shares and said it is on track to raise the required amount. Keycorp (NYSE:KEY) jumped 20% after RBC Capital Markets cited the stock a "top pick." Today's reports suggesting the FDIC is pushing for an executive shuffle at Citigroup (NYSE:C) may imperil CEO Pandit's tenure, and provide another reason for firms to shun government funds and rush to pay back TARP monies.

Basic material shares continued their advance, rising 2.1%, with Alcoa (NYSE:AA), up 6.2%, leading the list of gainers on the DJIA. Improved demand scenario, especially from China, helped the advance in Alcoa shares. Oil and gas sector shares gained 2.1%. Among stocks from the sector, Chevron (NYSE:XOM) and Exxon Mobil (NYSE:CVX) led the gainers as crude prices surged 4.1% to $68.81, a seven-month closing high. Bullish analysts at Goldman Sachs (NYSE:GS) upped their forecasts for crude to $85 per barrel in 2009 and $95 in 2010.

Technology stocks advanced 1.5%, helped by prospects for new product launches and analyst upgrades. Apple (NASDAQ:AAPL) rose after the iPhone-maker's profit and share-price target was increased by Oppenheimer. Some reports suggested CEO Steve Jobs was expected to return from his medical leave by month's end. Citi (NYSE:C) raised Google (NASDAQ:GOOG) price target to $580 from $450, on expectations that second quarter results will meet estimates and the company will report better results next year. Advanced Micro Devices (NYSE:AMD) said the company expects fourth quarter sales to improve from a year ago, helped by better economic conditions. Intel (NASDAQ:INTC) announced plans to purchase Wind River Systems (NASDAQ:WIND) for an all-cash deal valued at $884 million.

Dismal retail sales numbers in May, with an estimated 75% of retailers falling short of targets, posting an estimated 8.6% average drop in same-store-sales, however, could not check the rally. Costco (NASDAQ:COST) reported a 7% drop, versus estimates of a 6.4% decline; Target (NYSE:TGT) comparable-sales fell 6.1% versus expectations of a 4.3% drop; Saks (NYSE:SKS) disappointed with a 26.6% sales fall versus an anticipated 14% drop; Macy's (NYSE:M), however, was slightly ahead of expectations with its 9.1% decline, less than the 9.3% anticipated.

Zacks Investment Research

Thursday’s Market Recap (06/04/09)

Bullish Bankers — Fri, 05 Jun 2009 01:18:34 +0000

The markets rebounded from yesterday’s lag in a rally led by financials and energy, as the Dow Jones was up 0.86% to close at 8750.24. The NASDAQ was up 1.32%, closing at 1850.02, while the S&P 500 closed at 942.46, up 1.15% for the day. The 10-year yield rose 3.076% as prices for the treasury [...]

Stock Market News for June 4, 2009 – Market News

Zacks Market Commentaries — Thu, 04 Jun 2009 14:24:54 +0000

U.S. stocks slumped for the first time in five sessions after a report showed U.S. employers cut more jobs than expected. A government report showing factory orders grew less than expected also dragged shares lower. Meanwhile, Fed Chairman Ben Bernanke cautioned that the government cannot borrow indefinitely to finance the shortfall and urged lawmakers to work towards reducing the fiscal deficit. The DJIA declined more than 65 points to 8675, and the S&P, while holding above a key technical level of 928, closed the day 1.4% down. Technology focused NASDAQ was off 0.6%. Trading continued to remain light with only 1.3 billion shares exchanging hands. Market breadth was negative as declining stocks outpaced advancing issues by a seven-to-three margin. The US dollar gained versus other major currencies, closing up 1.1% against a basket of currencies.

Stock futures point to a higher opening on the Wall Street, amid ECB and BoE interest rate decisions and weekly employment numbers and retailers' May same-store-sales figures, which is expected to have dropped 3.6%, according to Thomson Reuters (NYSE:TRI).

All ten industry groups on the S&P 500 lost ground Wednesday, with basic material and oil and gas shares, down 4.2% and 3.6%, respectively, leading the decliners. A sharp decline in oil prices also hurt energy stocks. Crude prices dropped 3.5% on an unexpected rise in weekly US inventory. Valero Energy (NYSE:VLO), which said it expects to report a second quarter loss, plunged 18%; Alcoa (NYSE:AA) retreated 4.3%; Freeport-McMoRan (NYSE:FCX) shares dropped 5.7%. Among oil companies, Exxon Mobil (NYSE:XOM) declined 1.2% and Chevron (NYSE:CVX) declined 1.6%; Marathon Oil (NYSE:MRO) plunged 7.2% and ConocoPhillips stocks (NYSE:COP) registered a 4.8% decline.

In his prepared testimony to the House Budget Committee, Bernanke urged lawmakers that they should commit to control the nearly $2 trillion budget deficit. The Fed Chairman also reiterated that the pace of economic contraction appears to be slowing. The White House estimates that the budget deficit will reach around $1.8 trillion this year and decline to about $900 billion by 2011.

On Wednesday, ADP Employer Services reported US employers shed 532,000 jobs in May, more than the 525,000 expected. The numbers, nevertheless, were fewer than last months' downward-revised 545,000. Factory orders improved in 0.7% in April, versus expectations of a 0.9% gain, and up from the downward-revised 1.9% drop in March.

Credit Suisse's (NYSE:CS) equity analyst also cautioned against the current valuation levels given the recent spate of stock offerings and weak economic conditions. Nevertheless, the analyst maintained a 920 S&P projection for 2009. According to Bloomberg data, the S&P currently is priced at 15.5 times earnings, its most expensive since last October, although below the 19.8 times monthly average of the past decade.

Zacks Investment Research

Stock Market News for June 1, 2009 – Market News

Zacks Market Commentaries — Mon, 01 Jun 2009 14:15:12 +0000

Asian markets jumped to eight-month highs Monday on expectations of a global economic recovery even as General Motors prepared to file for a historic bankruptcy protection. A third successive rise in Chinese manufacturing also raised hopes that the worst of the economic crisis is over. The Shanghai Composite Index in Mainland China jumped 3.4% as the country's official purchasing managers' index for May fell to 53.1 from 53.5 in April. Hong Kong's Hang Seng surged 4% and the Nikkei added 1.6%.

Following the overseas gains, US stock futures suggest Wall Street is headed for a higher open. Dow Jones industrial average futures rose 1.2% to 8,586. Standard & Poor's 500 index futures jumped 1.4% to 930.50, while Nasdaq 100 index futures gained 1.1% to 1,451.50.

On Friday, a late-session rally pushed U.S. stocks to their biggest three-month run since 2007, as commodities recorded their highest monthly advance since 2007 and energy stocks rose, helped by a spike in oil prices. The S&P 500 index, which recorded its steepest weekly loss since March during the prior week, rose 3.6% during the holiday-shortened week. Sustained expectations that the economy is turning a corner have pushed global benchmarks higher and resulted in increased buying activity. The Dow Jones Industrial Average jumped 223.01 points, 2.7% to 8500.33, capping an upbeat week for Wall Street. Since hitting their 12-year lows in early March the indices have jumped nearly 30% on the DJIA, 36% on the S&P, and almost 40% on the NASDAQ.

All ten S&P industry groups recorded gains on Friday. Since the beginning of the year, basic material shares have recorded the sharpest gains, up 23.8%, followed by a 20.5% jump in technology stocks. The Reuters/Jefferies CRB Index of 19 raw materials increased over 14% in May for its biggest monthly rise in 35 years. U.S. Steel Corp. (NYSE:X) jumped 16% to $34.08 and Freeport-McMoRan Copper & Gold Inc., (NYSE:FCX) surged 13% to $54.43., leading gains among raw- materials companies. Oil prices climbed above $66 to a six-month high. Year-to-date, five sectors remain in negative territory, including: utilities, off 8.4%, telecom, down 6.7%, financials, off 4.1%, and industrials and health care, down 2.1%.

Shares of General Motors (NYSE:GM) plunged 48% to $0.75, the lowest since great depression, as the automaker appeared set to file for Chapter 11 bankruptcy protection. Some media reports suggested the company will sell most of its assets to a new entity. Late Sunday, a federal bankruptcy court cleared Chrysler to come out of bankruptcy and sell most of its assets to Italian car maker Fiat.

Treasury Secretary Geithner travels to China for two-day talks with Chinese leaders, even as the weakness in US dollar keeps the focus on US economic health relative to its global partners. Traders, nevertheless, are expected to remain glued to developments on that front. Geithner, on his part, has tried to remain optimistic, noting, "The global recession seems to be losing some force; and "The financial system is starting to heal." Last week's OPEC meeting also revealed its members optimistic on the outlook for the economy and crude prices with Saudi oil minister Naimi asserted the world economy can withstand $75-$80 per barrel oil.

However, an increased appetite for risk has sent commodity prices higher, heightening fears of inflation. According to Barclay Capital's (NYSE:BCS) quarterly FX investor sentiment survey only 17.5% of the 605 central bankers, asset managers, hedge funds and international corporate clients interviewed expect the rally to continue, with six out of ten believing the rally is a bear market trap, and 69% describing a recovery as most likely to prove either u-shaped or w-shaped.

Zacks Investment Research

Why the Sunshine in Solar Stocks?

ETF Daily News — Fri, 29 May 2009 14:31:43 +0000

The answer lies in the rise in oil prices. Crude prices have risen above $64/barrel, US Oil Fund ETF (NYSE:USO) is up more than 5%, and solar stocks are following along for the ride. The sentiment seems to be that demand for oil will translate into demand for energy from all sources. Even coal miner [...]

Stock Market News for May 27, 2009 – Market News

Zacks Market Commentaries — Wed, 27 May 2009 14:22:07 +0000

Asian benchmarks followed the big advance on Wall Street Tuesday after a jump in U.S. consumer confidence boosted confidence and reassured investors that the turnaround is imminent. Japan's benchmark Nikkei 225 stock average rose 1.4% to 9,438.77 while Hong Kong's Hang Seng jumped 5.3%, to 17,885.27.

On Tuesday, U.S. stocks shot higher for the first time in five sessions as the Conference Board's consumer confidence index rose sharply in May, refueling hopes that the consumers are getting more optimistic about the economy. The surprise rise in consumer confidence, which vaulted to 54.9 from 40.8 in April, offset dismal housing news and put investors back on buying track. Traders, back after a long weekend, bought enthusiastically pushing every industry group on the S&P 500 stock index higher. Nevertheless, declining home prices served a reminder that the economic outlook is yet to show signs of stabilization. The consumer confidence index jumped to an eight-month high and marked its third rise in as many months. Volume on the NYSE was light as only 1.4 billion shares exchanged hands and advancing shares outpaced declining issues by a five to one margin.

The broad-based rally saw 28 of the 30 Dow components ending the day higher, with JP Morgan Chase (NYSE:JPM) leading the list of gainers, followed by a 5% rise in American Express (NYSE:AXP) shares. Technology-focused Nasdaq surged 3.4%, helped by gains in computer manufacturers, Internet firms and search engines. Apple (NASDAQ:AAPL) surged 6.7% after it was upgraded by Morgan Stanley (NYSE:MS) to "overweight." Morgan Stanley (NYSE:MS) said analysts are underestimating demand for iPhones. Qualcomm Inc. (NASDAQ:QCOM) jumped 4.8% to $43.29, after Barclays Plc raised its 2010 earnings estimates on the company. Energy stocks also advanced as crude prices jumped to a six-month high, fueled by comments from Saudi Arabian Oil Minister Ali al-Naimi, who expects oil to hit as much as $75 per barrel between the third and fourth quarter on higher China consumption. Exxon Mobil Corp. (NYSE:XOM) added 1.4% to $69.81. Reuters expects crude inventory levels fell 1.1 million barrels over the past week, while gasoline levels dropped 1.8 million barrels. Tomorrow's OPEC meeting is generally expected to result in members maintaining current production levels.

Gains on the S&P 500 were led by financials and consumer-related stocks. Financials were the leading gainers, up 4.1%. Technology stocks rose 3.3%. Industrials gained 3.3%. Defensive areas of health care and consumer goods rose 1.6% and 1.2%, respectively.

J.C. Penny Co. (NYSE:JCP) rose 6.5% to $26.76 and Best Buy (NYSE:BBY) added 5.3% to $37.05. Among financial shares, Wells Fargo (NYSE:WFC) added 5.5% to $25.65 and PNC Financial (NYSE:PNC) rose 5% to $43.25. Restaurant chains and home builders also advanced. Darden Restaurants Inc. (NYSE:DRI) rose 7.9% to $35.64. CKE Restaurants (NYSE:CKR) jumped 13.8% to $8.80. Home builder KB Home (NYSE:KBH) rose 5.9% to $15.50, and DR Horton Inc. (NYSE:DHI) rose 5.1% to $9.47.

One of the bones of contentions of the past week had been the overhanging Treasury auctions scheduled for this week amid a ballooning budget deficit necessitating further sales to meet the $2 trillion in extra debt needs expected this year. However, the record-tying $40 billion in 2-years auctioned yesterday met with bids 2.94 times the offered amount and the 2-year note sale received strong response, with $117.5 billion in bids coming in for $40 billion in debt. The US dollar edged up 0.1% against a basket of currencies.

Today's data includes the expected turndown by General Motors' (NYSE:GM) bondholders of its offer to convert their holdings into company shares, making bankruptcy the foregone conclusion it has been for a while.

Zacks Investment Research

JA Solar Loses Earnings Power – Analyst Blog

Zacks Market Commentaries — Tue, 26 May 2009 18:41:55 +0000

China-based JA Solar Holdings Co., Ltd. (JASO) announced disappointing financial results for its 1st quarter of 2009 ended March 31, 2009.

Revenue in the reported quarter was $33.9 million, a decrease of 79.4% from $164.2 million in the comparable prior year 1st quarter of 2008, and a decrease of 76.3% from $143.3 million reported for the sequential 4th quarter of 2008.

Likewise, total gross loss in the reported quarter was $20.9 million, significantly down compared to a gross profit of $34.5 million in the year ago 1st quarter of 2008, and gross profit of $1.4 million in the sequential 4th quarter of 2008.

Total operating expenses in the 1st quarter of 2009 were $7.4 million, compared with $10.6 million in the 1st quarter of 2008 and $19.1 million in the 4th quarter of 2008. Stock-based compensation charged to the income statement amounted to $7.9 million and $4.7 million for the 1st quarter of 2008 and the 4th quarter of 2008, respectively.

Operating loss in the 1st quarter of 2009 was $28.3 million, compared with operating income of $23.9 million in the 1st quarter of 2008 and operating loss of $17.7 million in the 4th quarter of 2008.

The net loss per diluted ADS in the 1st quarter of 2009 was $0.18, compared with net income per diluted ADS of $0.15 in the year-ago period and a net loss per diluted ADS of $0.10 in the sequential 4th quarter of 2008.

The company's inventory at the end of the 1st quarter of 2009 was $20.3 million, an increase of $8.8 million, or 77%, compared with the balance at the end of the 4th quarter of 2008. The dramatic year-over-year increase in inventory was primarily due to the loss of customers in the increasingly competitive solar power market.

Although JA Solar is one of the most cost-efficient solar producers, with an increasingly geographically diversified customer base as well as silicon wafer supply agreements in place to cater to its production, it is recently experiencing increased competition.

Furthermore, on the downside, tepid module demand in Europe, rising inventory levels, falling ASPs, a shrinking customer base and the company's high R&D expenses may adversely affect performance over the near-term.

However, on the upside, fast ramp-up of new solar cell manufacturing lines, a decline in polysilicon prices, continued production process improvements and a burgeoning committed supply of raw materials may help drive long-term top-line growth.

JASO currently trades at a premium P/E multiple of 61.7x our current-year 2009 EPS estimate; yet only 12.8x our forward-year 2010 earnings per share estimate. With the strong focus of the Obama Administration on alternative energy, there is ample opportunity for the share price to appreciate significantly with forward P/E multiple expansions. Meanwhile, JASO trades in-line with the median industry sales and book value multiples.

Looking ahead, successful execution in the high-growth potential solar panel market may warrant premium multiples to industry peers, and JASO is well positioned to take advantage of this opportunity. Moreover, we note that despite the company's position in a strong growth industry, many other alternative energy stocks, including JASO, significantly underperformed the broader market over extended periods in 2006-08. Especially in the second half of fiscal 2008, JASO, like its solar peers, witnessed a steep decline due to ongoing worldwide financial crisis and declining crude oil prices.

With such a mixed outlook in the alternative energy industry, we downgrade our recommendation on JASO common stock to HOLD with a six-month target price of $4.00. Price appreciation to our near-term valuation target represents 8.1% upside potential.

JA Solar Holdings, based in Ningjin of the Hebei province in the People's Republic of China, manufactures high-performance, monocrystalline solar cells using processing technologies. The company has an annual installed capacity of approximately 600MW. JA Solar is a recent start up entity, established in May 2005, and commenced manufacturing operations in April 2006. JA Solar was incorporated in July 2006 with its initial public offering on February 7, 2007.
Read the full analyst report on "JASO"
Zacks Investment Research

Three Ways to Short Stocks

Contrarian Profits — Mon, 11 May 2009 21:13:08 +0000

p style="text-align: left;"On Wednesday, leading stocks started to sell off, but you wouldn’t know it from the action in the indexes. The selling continued Thursday, and it hit the indexes as well. And then on Friday, the indexes were up (led by financial and energy stocks) while leading stocks were down again. It was pretty much a carbon copy of Wednesday — while the indexes were up, the big money was selling the leaders./p pAt All About Trends, the action in leading stocks — stocks that have delivered solid returns during this rally — is what we use to gauge the health of the market. That’s because in order for the market to continue to advance, the leaders must lead the market higher.#8230;/p

Green Star Alternative Energy, Inc. Added to Ludlow Alternative Energy Index

Stuart T. Smith — Wed, 29 Apr 2009 00:45:09 +0000

SAN DIEGO, CA — (Marketwire) — 04/28/09 — Green Star Alternative Energy, Inc. (PINKSHEETS: GSAE) (http://www.greenstarae.com), a green electricity and sustainable energy programs developer, today announced that the company has been added to the Ludlow Energy Alternative Index. Tom Bustamante, Managing Director of Ludlow Energy Ventures, Inc. commented, “We are pleased to have Green Star Alternative [...]

What Should You Do Before Energy Earnings?

Bullish Bankers — Thu, 23 Apr 2009 11:00:57 +0000

Energy earnings start each season with the release of Schlumberger Ltd. [SLB: 46.23, 0.00 (0.00%)] on a Friday. As every seasoned investors knows, energy stocks are one of the most volatile sectors to play when companies release their quarterly results. Often times it is a question of tracking how crude oil and natural gas preformed during the [...]

A Retail Investing Framework

Daniel Hung — Mon, 13 Apr 2009 04:30:16 +0000

Generally speaking, I see myself as a value investor. Why then, would am I so often looking towards retailers and generally consumer facing businesses for my best investment ideas (see: A Retail Reversal and Irrational Retail Valuations)? After all, many of the best retail stocks are those that rely on growth to provide shareholder return. [...]

Tuesday’s Market Recap (04/07/09)

Bullish Bankers — Tue, 07 Apr 2009 23:50:11 +0000

The markets were down for the second day in a row, as the NASDAQ dropped -2.81% to close at 1561.61. The Dow and S&P were both down over -2%, closing at 7789.56 and 815.55 respectively. The 10-year Treasury saw prices increase an ended the session with a yield of 2.898%. Oil was down settling at $49.15 [...]

Stocks Pull Back On Profit Taking

Daniel Shepard — Wed, 25 Mar 2009 02:44:15 +0000

Tuesday March 24, 2009 Navivest DJIA 7660.21 -115.65 -1.49% Nasdaq 1516.52 -39.25 -2.52% S#38;P 500 806.25 -16.67 -2.03% One day after stocks put up an incredible rally on the U.S. Treasury’s plan to clean up the toxic assets weighing down the balance sheets of the nation’s banks, traders took profits, causing the stock market to give up [...]div id='wikinvestWireDiv664'!--Wikinvest API HTML Response-- !--metadata generated='Tue, 24 Mar 2009 20:10:51 -0700'-- div class='wikinvestWireContainer' wikinvestWirePageId='279649' wikinvestWirePartnerName='Navivest' span class='wikinvestWireHeader'More on this topic/span span class='wikinvestWireWhatsThis' a href='http://www.wikinvest.com/blogger/wikinvest_wire' target='_blank'(What#39;s this?)/a /span div class='wikinvestWireItemList' !--Wikinvest Wire Related Item--div class='wikinvestWireItem' style='line-height:1.3em; margin:0pt;' a target='_blank' class='wikinvestWireItemLink' wikinvestWirePageId='278303' href='http://zerohedge.blogspot.com/2009/03/is-jp-morgan-buying-private-jet-hangar.html' onclick='Wikinvest.Wire.BloggerTracker.trackUrlClick( 279649, 278303 );' Is JP Morgan Buying A Private Jet Hangar?/a span class='wikinvestWireItemMetadata' (Zero Hedge, 3/23/09) /span /div!--/Wikinvest Wire Related Item-- !--Wikinvest Wire Related Item--div class='wikinvestWireItem' style='line-height:1.3em; margin:0pt;' a target='_blank' class='wikinvestWireItemLink' wikinvestWirePageId='278278' href='http://zerohedge.blogspot.com/2009/03/karl-will-global-head-of-jp-morgan-tech.html' onclick='Wikinvest.Wire.BloggerTracker.trackUrlClick( 279649, 278278 );' Karl Will, Global Head of JP Morgan Tech Mamp;A Quits/a span class='wikinvestWireItemMetadata' (Zero Hedge, 3/23/09) /span /div!--/Wikinvest Wire Related Item-- !--Wikinvest Wire Related Item--div class='wikinvestWireItem' style='line-height:1.3em; margin:0pt;' a target='_blank' class='wikinvestWireItemLink' wikinvestWirePageId='279124' href='http://blog.ockhamresearch.com/index.php/2009/03/cramer-jp-morgan-help-extend-the-rally' onclick='Wikinvest.Wire.BloggerTracker.trackUrlClick( 279649, 279124 );' Cramer: JP Morgan Will Help Extend the Rally/a span class='wikinvestWireItemMetadata' (The Razor#039;s Edge, 3/24/09) /span /div!--/Wikinvest Wire Related Item-- /div span class='wikinvestWireFooter' Read more on a target='_blank' class='wikinvestWireWikinvestItemLink' wikinvestWirePageId='178' href='http://www.wikinvest.com/stock/J_P_Morgan_Chase_(JPM)' wikinvesttrackingurl='http://www.wikinvest.com/stock/J_P_Morgan_Chase_(JPM)' onclick='Wikinvest.Wire.BloggerTracker.trackUrlClick( 279649, 178 );'J P Morgan Chase/a at a href='http://www.wikinvest.com' target='_blank'Wikinvest/a /span /div !--/Wikinvest API HTML Response--/div

Thursday’s Market Recap (03/19/09)

Bullish Bankers — Thu, 19 Mar 2009 21:16:38 +0000

Today the markets fell for the first time in three days. The Dow Jones and the S&P fell 1.15% and 1.30% respectively, while the NASDAQ closed down 0.52% at 1,483.48. The 10-year was down today closing at a yield of 2.597%. Oil was up 7.21% to $51.61 and gold was up 7.5% the largest gain since [...]

And Then There’s This…Thursday, February 12th, 2009

Contrarian Profits — Thu, 12 Feb 2009 20:05:39 +0000

pWell, the bottom for gold on Wednesday was about 2:00 p.m. in Hong Kong#8230;1:00 a.m. in New York. From there it rose in fits and starts until the Comex open#8230;where it got sold off for about an hour or so. Then, at precisely 9:00 a.m., away it went to the upside#8230;until it ran into some opposition at the London p.m. fix [3:00 p.m. London...10:00 a.m. New York.] The London close occurred an hour later#8230;and that was obviously it for the day. Volume was extremely heavy#8230;170,000 contracts were traded#8230;and that#8217;s net of what few switches there were./p pThe silver chart was almost a mirror image of its golden cousin#8230;with the top silver price coming at the close of London trading./p pThe open interest#8230;/p

Cold Weather Won’t Help Oil Prices – Analyst Blog

Zacks Market Commentaries — Wed, 14 Jan 2009 15:05:01 +0000

Featured here are the following stocks: ExxonMobil (XOM), Chevron (CVX), Schlumberger (SLB) and Transocean (RIG).

In its weekly inventory report released earlier today, the Energy Information Administration (EIA) reported that commercial crude oil stocks totaled 326.6 million barrels for the week ended January 9, 2008. This represents a better-than-expected inventory build of 1.2 million barrels. Current crude oil inventories, excluding the Strategic Petroleum Reserve, are now 13.8% above the year-earlier level, highlighting the imbalance between growing supplies and shrinking demand. Current stocks provide for 22.6 days of supply, significantly above the year-earlier level of 18.7 days.

As the above EIA chart shows, current inventories remain above the 5-year average (the shaded region represents the 5-year range). While the overall inventory build came in better than expected, the build at Cushing, Oklahoma -- the official delivery point for the NYMEX futures contract -- reached a new record of 33 million barrels, double the year-earlier level of 16.5 million barrels.

In refined products, gasoline inventories increased 2.1 million barrels, providing for 23.9 days of supply, up from gasoline stocks providing 23 days of supply this time last year. Distillate stocks, which includes heating oil, increased a greater than expected 6.4 million barrels, taking current inventories above the high point of the 5-year range and 11.1% above the year-earlier level. The above-average distillate stock-build dashed hopes of weather support to prices given the chilly weather in the heating oil consuming regions.

This is another addition to the growing list of negative news for crude oil prices, which have been unable to get support from OPEC's extraordinary cut of more than 2 million barrels. The growing inventory levels, both in the U.S. as well as in the other OECD markets, reflect falling demand due to the uncertain economic times. It will be hard for the commodity to stabilize and consolidate given this lack of visibility on the economic front.

Having said that, we believe that further downside risk is limited than the upside potential from current levels. We would take advantage of the weakness in energy stocks in the face of such bearish reports to make new positions or add to existing ones in such quality energy names, as ExxonMobil (XOM), Chevron (CVX), Schlumberger (SLB) and Transocean (RIG).

Read the full analyst report on XOM.

Read the full analyst report on CVX.

Read the full analyst report on SLB.

Read the full analyst report on RIG.

"SLB" Free Stock Analysis: Buy? Sell? Hold?
"XOM" Free Stock Analysis: Buy? Sell? Hold?
"CVX" Free Stock Analysis: Buy? Sell? Hold?
"" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Heebner Lost in 2008 Too

Michael E. Brisky — Mon, 05 Jan 2009 17:12:00 +0000

2008 was a brutal year for pretty much everyone, and some of the top funds were no different. Ken Heebner's CGM Focus Fund (a href="http://finance.yahoo.com/q?s=CGMFX"CGMFX/a), which returned an amazing 80% in 2007, lost 48% in 2008.br /br /span style="font-weight: bold;" class="news_story_title"a href="http://www.bloomberg.com/apps/news?pid=20601213amp;sid=a74xUQYdcxEMamp;refer=home"CGM’s Heebner, Fidelity’s Lange Falter as Markets Claim Victims/a /spanbr /br /Excerpt from Bloomberg article:br /br /span style="font-style: italic; font-weight: bold;"U.S. mutual funds suffered in the /spana style="font-style: italic; font-weight: bold;" href="http://www.blogger.com/apps/quote?ticker=SPX%3AIND" t_above="true" t_static="true" t_fontcolor="#000000" t_fontface="Verdana,sans-serif" t_bgcolor="#ddedd9" t_width="110" t_delay="50"greatest stock decline/aspan style="font-style: italic; font-weight: bold;" since 1937. The economic recession drove down shares of every industry from energy producers and automakers to technology companies and banks./spanbr /br /span style="font-style: italic; font-weight: bold;"Heebner’s fund gained 80 percent in 2007 to beat all peers, largely by buying energy stocks. He was hurt in 2008 after oil prices fell almost three-fourths from a record in July. Known for his rapid movements in and out of stocks, Heebner reversed course in the third quarter by selling energy shares and snapping up bank stocks such as /spana style="font-style: italic; font-weight: bold;" href="http://www.blogger.com/apps/quote?ticker=CGMFX%3AUS" t_above="true" t_static="true" t_fontcolor="#000000" t_fontface="Verdana,sans-serif" t_bgcolor="#ddedd9" t_width="110" t_delay="50"Citigroup Inc./aspan style="font-style: italic; font-weight: bold;" and Bank of America Corp. /spanbr /br /span style="font-style: italic; font-weight: bold;"“Heebner’s strategy has always been prone to big performance swings,” Morningstar’s Tan said. “This fund has a better chance of making up for lost ground than others.” /spanbr /br /Even though Heebner has been piling into banks, it doesn't necessarily mean we all should. These stocks will see a ton of speculation and false moves in the next year. He has the experience of being able to move quickly in and out of shares, and he needs the quick moves off the bottom to help his performance. I wouldn't be suprised if he moves out of many of these bank stocks if we see a sharp rally in 2009.

US Stocks, Wall St Falls on Dow Chemical (DOW) News

Contrarian Profits — Mon, 29 Dec 2008 18:50:49 +0000

pDow Chemical, Kuwait deal collapses#8230; Nasdaq dragged by large-cap tech companies#8230; Oil rises above $38 per barrel on Middle East tensions#8230; Dow off 1.6 pct, S#38;P off 1.6 pct, Nasdaq off 2.3 pct/p pWall Street stumbled on Monday after a joint venture between Kuwait and Dow Chemical fell through, threatening one of the larger merger deals of the year and adding to fears about a faltering global economy. /p p a href="http://finance.google.com/finance?q=NYSE%3ADOW"Dow /ashares tumbled to their lowest since 1991 after Kuwait decided to end a $17.4 billion petrochemical joint venture amid slumping petrochemical sales and the global financial crisis. /p p The news ignited worries that the largest U.S. chemical company would not be able to buy rival Rohm #38; Haas , which Dow agreed to#8230;/p

Oil Is Close To A Bottom… Time To Start Buying

Eric Roseman — Tue, 23 Dec 2008 14:10:56 +0000

pSwings in commodity prices are often exaggerated in both directions, says strongEric Roseman/strong. And that#8217;s exactly what we have seen with crude oil prices this year. But Eric says most of the destruction in demand is now priced in. But long-term supply will still be tight. That#8217;s why we should be near the bottom of the oil cycle, with potentially massive gains for investors that by now./p pThis from a href="http://www.SovereignSociety.com" class="alinks_links"Sovereign Society/a:/p blockquotepThe #8220;Elastic Rubber Band#8221; theory is a popular investment term to describe wide price swings in asset markets. Market moves are usually exaggerated on both sides of the trade and this year#8217;s volatility in oil prices is a testament to that swing./p p align="left"In a bull market, trends tend to rise far above#8230;/p/blockquote

Time To Start Buying Into ‘Busted’ Credit Markets

Eric Roseman — Mon, 15 Dec 2008 14:41:32 +0000

pIncome is vital for investors right now, says strongEric Roseman/strong. He says investors should begin to accumulate long-term positions in #8220;busted#8221; credit markets. Investment-grade corporate debt currently offers great yields and, in some cases, is government-guaranteed. These bonds may not have bottomed out yet, but now is the perfect time for value investors to test the waters./p pThis from a href="http://www.SovereignSociety.com" class="alinks_links"Sovereign Society/a:/p blockquotep#8220;emThis aging stock bull market is looking increasingly like a scarred prizefighter after winning too many championships. Indeed, the market is looking increasingly fragile, bruised and battered since the bear market low in October 2002/em.#8221;/p pIn January 2008 I made the above observation about stocks as the market was coming undone. Of course, almost a year later the stock market has collapsed#8230;/p/blockquote

Major Financial Events And Developments Of 2009

Contrarian Profits — Fri, 12 Dec 2008 14:14:38 +0000

pDollar-Euro parity? Crude at $12 a barrel? 15% unemployment? stronga href="http://www.contrarianprofits.com/articles/author/j-christoph-amberger/" class="alinks_links"J. Christoph Amberger/a /strongpresents the Today#8217;s Financial News top predictions for 2009#8230;/p blockquotepA month ago, I asked my colleagues at TFN to think about the year ahead… the events that will shape the year both politically and financially. In short, to come up with realistic “Predictions for 2009″. As history is fast-forwarding, some of these events have already taken place. Others look increasingly probable… and not half as far out as they appeared just a month ago./p pHere they are, in no particular order/p p*** Dollar hits parity against euro by June 2009./p p*** Oil bottoms at $12 per barrel by April 2009./p p*** Gold falls to $500 as Indian economy crashes and Dubai abandons spending spree./p p***#8230;/p/blockquote

US, World Markets Slump After Chinaâ€™s Excitement

Jonathan O'Shaughnessy — Tue, 11 Nov 2008 16:53:07 +0000

China announced on Sunday that is was going to put a stimulus package worth approximately $585 billion dollars into effect over the next two years. A Marketwatch article entitled â€œChina unveils stimulus package as growth slows,â€ describes the use of the funds as mostly infrastructure-related: â€œFunds from the stimulus package will be spent in [...]

Obama White House Bodes Well For Renewable Energy and Clean Tech

Small Cap Pulse — Wed, 05 Nov 2008 21:54:01 +0000

November 5, 2008 – It should be self-evident that an Obama White House bodes well for renewable energy and clean technology. His energy plan is far more aggressive in terms of its commitment to reducing our dependency on oil and coal, and increasing production and consumption of renewable, cleaner sources of energy and we think that this should buoy alternative energy stocks by mitigating perceived risk about legislative support and creating more visibility for growth over the next decade. Here are several components of Obama’s energy platform that are focused on renewables and clean tech: · Investing $150 billion over 10 years in plug-in hybrid cars to get 1 million of them on the road by 2015; · A federal Renewable Portfolio Standard (RPS). Legislation that ensures 10% of our electricity comes from renewable sources by 2012 and 25% by 2025; · Implementing an economy-wide cap-and-trade program to reduce greenhouse emissions 80% by 2050; · Providing American’s with an emergency energy rebate of $500 per individual and $1,000 per couple; · A “Green Vet” initiative to provide job training and green collar jobs to vets; · Increasing fuel economy standards 4% per year; · A $7,000 tax credit for the purchase of advanced technology vehicles as well as conversion tax credits; · $4 billion in retooling tax credits to get the U.S. auto manufacturing industry on track to build fuel-efficient cars; · Mandate for all new vehicles to be flex-fuel vehicles; · Require at least 60 billion gallons of advanced biofuels by 2030; · Establish a National Low Carbon Fuel Standard; · Setting energy efficiency goals to reduce electricity demand 15% from DOE’s projected levels by 2020; · Setting national building efficiency goals, improving new building efficiency by 50% and existing building efficiency by 25% over the next 10 years; · Overhauling federal efficiency standards; · Reducing federal energy consumption; and · Investing in the smart grid. The Bush administration paid lip-service to renewable energy, while it poured most of its resources into oil, coal and nuclear. McCain’s administration would have made only slightly more of a commitment. After all, it ended up its campaign on Tuesday in coal country telling us all that Obama didn’t get it. Well, we think we do get it. The rest of the world gets it, and that is why even countries like China, as well as regions in the Middle East, are getting far more ambitious than the U.S. in their commitments to alternative, cleaner burning fuel technologies. Obama’s energy plan, if executed, will get this country back out in front, where it should be in leading the world’s energy and climate related policies. When Congress passed the renewable tax extension, Navigant Consulting provided a report to show that it would result in more than $230 billion investment into solar alone in the next eight years. Imagine what a federal renewable portfolio standard will do. There are concerns about whether the Obama White House will have the resources to enact his energy policy. To be sure, it won’t happen overnight, and that much is articulated in the plan itself. There are near-term, and mid-to-long terms planks in the platform. And the economic realities on the ground will certainly have an influence on timing and depth to which various policies can be enacted. On the other hand, investing in clean tech infrastructure projects and in renewable energy industries will be critical to getting the economy back on track, and in creating jobs, which is the cornerstone of our economy. We have seen several studies from non-partisan economic firms which have recommended that if the government does choose to create a multi-hundred billion stimulus package, it will be much better spent by investing in projects and industry to get the wheels of commerce greased again, as opposed to straight checks to individuals. We agree, and think that this can be the initial groundwork laid for Obama’s energy plan.

Congratulations President Elect Obama

Contrarian Profits — Wed, 05 Nov 2008 12:29:07 +0000

Congratulations on a long well fought race. Now, “fasten your seat belts, it’s going to be a bumpy ride.” The classic line from Betty Davis seems appropriate. No matter who won this race, they were inheriting a hell of a mess. No need to go into detail, just the list is daunting enough.

The debt, the deficit, two wars without end, the banking crisis, the mortgage crisis, the worldwide economic slow down, Social Security, a deadlocked partisan congress, health care, a tax system that everyone thinks is unfair, collapsing US auto manufacturers, jobs being exported at light speed, the defense of our northern and southern borders, a recession, still no energy policy, and what appears to be a complete collapse of…

Congratulations President Elect Obama

Contrarian Profits — Wed, 05 Nov 2008 12:29:07 +0000

How to Ride the Post-Election Bounce

Contrarian Profits — Mon, 03 Nov 2008 19:54:30 +0000

HIDDEN VALUE

Dear Friend,

A new month brings a new batch of depressing headlines from the real economy.

U.S. factory activity fell to its lowest level for 26 years in October. Circuit City says it plans to close 155 stores and slash its workforce by 17%, all before the end of the year. And Fitch says credit card losses will likely surpass historical peaks in 2009.

Meanwhile, Jeffrey Lacker, president of Richmond’s Federal Bank, says the government’s response to problems in financial firms may have added to market turmoil.

Still, that won’t stop it from trying to ‘fix’ things.

There are rumors of a $500 billion guarantee for distressed mortgages. There could even be another economic stimulus package in the…

A Contrarian’s Guide To Post-Election Investing

Rick Pendergraft — Mon, 03 Nov 2008 17:07:11 +0000

The stock market is due a bounce after the election, regardless of who wins. But after that, the voter’s choice will have a big impact on industry winners and losers. Rick Pendergraft says biotech and alternative energy stocks should get a lift under Obama, while defense and oil will benefit from a McCain victory.

This from Investor’s Daily Edge:

It’s finally here. The long awaited and hard fought election will end tomorrow (at least I hope we don’t see a repeat of 2000 where we don’t know who won for weeks). Rather than make predictions about the election itself, I want to tell you how I think things will play out after the election.

First, I think the overall market will rally after the…

Oil to $50 … or $150?

Sean Brodrick — Wed, 29 Oct 2008 13:42:07 +0000

When people ask me if I think crude oil is going to $50 or $150, I nod sagely and say: "Yes, probably." I'm not being flip. I'm simply giving both the short-term and the long-term timeframes. Short-term, crude oil is probably heading lower, even though it's nearly 60% ...

Oil & Gas Report’s Top Stock Picks

CEO Blogger — Tue, 21 Oct 2008 21:27:48 +0000

viastockadvisors We sense a turn for the better coming in the oil sector,” says Peter Way who tracks ‘big money’ investors for his Block Trader Oil & Gas Report. Here’s his look at the “big block” traders. Track his picks at: http://trackthepros.com/stocks/category/1859 “When we use the hedging analysis employed in our stock price forecasts, there are significant differences between some adjacent [...]

A Selective Investment in Scandinavia

ETF Innovators — Sun, 19 Oct 2008 18:28:00 +0000

A Selective Investment in Scandinavia As evidence of commercial interest in developing an ETF for the Nordic region, Global X Management has recently filed for such a product, based on the FTSE Nordic 30 Index. The Global X filing specifies that, "The underlying index tracks the performance of the 30 largest [...]

Evergreen Solar Compelling – Analyst Blog

Zacks Market Commentaries — Fri, 17 Oct 2008 14:02:39 +0000

Evergreen Solar (ESLR) engages in the development, manufacturing and marketing of solar power products worldwide, including solar cells, panels and photovoltaic systems. Its modules are designed for a range of solar electric power applications, including water pumping, communications, outdoor lighting, rural electrification, recreational vehicles and stand-alone or grid-connected AC applications.

The growth potential of the solar industry as a whole, and Evergreen Solar in particular -- with a $3 billion and 1GW [gigawatt] contractual backlog -- remains a compelling story. Capacity expansion and progress toward near-term break-even earnings make it one of the fastest growing alternative energy stocks. Positive factors include the significant new multi-year sales contracts, ongoing expansion programs over the next few years, improving operating efficiencies, technological upgrades and planned new string factory.

However, continuing earnings losses due to high start-up costs, significant capital expenditures and earnings dilutive stock issuances may present risks to near-term share price upside potential. Nevertheless, we maintain our BUY recommendation on Evergreen Solar with a six-month target price of $5.00. Price appreciation to our near-term valuation target represents 29.2% upside potential.

Read the full analyst report on ESLR

"ESLR" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Early Indicators: Deep Recession

Contrarian Profits — Wed, 15 Oct 2008 12:39:12 +0000

-- "A recession, perhaps the deepest one in decades, may be unavoidable," reports the Gray Lady. One of the biggest problems facing the US is more pain in the housing market. Home mortgage rates have risen in spite of the government's bailout splurge.

-- European and Asian stock markets mostly dropped today after a two-day rally. Recession is still very much on the mind of Mr. Market, it seems.

-- In Asia, Hong Kong's Hang Seng Index nearly 5% to close at 15,998.30. Stocks in Australia, South Korea, China, India and Singapore also sank. Japan's Nikkei 225 index, however, ending up just over 1.1% at 9,547.47.

-- Meanwhile, Russia's two main stock exchanges have suspended trading again after energy stocks lead the broader markets sharply.

-- Back in the good ol' US of A, it's spend, spend, spend. The WSJ reports that "the federal government ran a deficit of almost $455 billion in fiscal 2008, the White House reported, a record that will likely be far exceeded by the red ink in the current fiscal year." The budget deficit for fiscal 2007 was $162 billion.

-- Gold is up in London. "Gold for immediate delivery rose $9.17 ... to $845.88 an ounce as of 11:07 a.m. in London," reports Bloomberg.

-- Oil prices hit a 13-month low. Crude fell to $75.62 a barrel.

Up Hill From Here?

Roger Nusbaum — Wed, 08 Oct 2008 12:26:00 +0000

Yesterday fear/concern/whatever else kicked up a big notch based unscientifically on many conversations I had with all sorts of people I know (I heard from more people phone and email than I typically do). Also regular visitors may have noticed the that the number comments left on the blog have gone way up, a phenomena that both Barry and Dr. Brett have commented on before.

The US stock market is down in the mid teens in just a few days. That is a crash. Although we may be still be crashing for a few days more (don't know, more like bracing for the possibility), taking drastic portfolio action in a market crash is a dangerous thing to do.

If you have been reading this site for a while you may be thinking easy for him to say which is a fair criticism but panic is not the answer. Violent selling always exhausts and reverses for at least a short amount of time. Lightening up into that sort of move is likely to be the better way to go. Notice I am saying lightening up not jumping out.

A couple of weeks ago I sold a couple of positions (disclosed in a video) in the interest of, no shock, a little more defense.

One stock was an energy name that is down 28% in a couple of weeks (less actually) since that sale. Mature energy stocks don't drop that much in so little time. The other name is a healthcare name down 22% since the sale.

This is not a comment on my skills, the declines listed above are very typical of many stocks from the last two weeks. That magnitude in a couple of weeks is a crash (intentionally repeated from above). In addition to a crash in stocks every part of the fixed income market is grossly distorted and or ceased up from normal functioning.

There are a lot of moving parts to the crisis, many initiatives fully or partially implemented and other ideas still on the drawing board. These will either help bring a faster end to this or they will impede progress to an end but I do believe it will end and as silly as that comment may sound to you it is an open ended issue for many people.

I wish I knew how long this will last but I don't. Someone I spoke to commented on the extent to which I have been even keel about all of this. Two things; I took my own advice about laying out a plan that would help and stuck to it and I realize that the movements of the market is beyond my control. There is zero value in getting worked up over things beyond your control.

Additionally no plan can be perfect it can only put the odds in your favor, my plan for defense is no exception.

The picture is the way in and out of the Waipi'o Valley on the big island. There are driving restrictions, we have hiked it twice. It isn't even a mile but it is very steep.

Tap Into These 3 ETFs for Wind-Energy Profits

Contrarian Profits — Wed, 01 Oct 2008 18:55:09 +0000

Clean energy ETFs became hugely popular in 2007. But they have been taking a beating since crude oil prices began their precipitous fall from their July highs.

Nevertheless, Jim Stanton says alternative energy, and the wind-energy market in particular, has a big future. Wind energy is already the second largest source of new power generation in the US. And it is backed by T. Boone Pickens' plan to wean America off foreign oil.

Jim says PBW and GEX are two clean-energy ETFs that look undervalued right now. He recommends FAN for a more specific wind ETF.

This from the Smart Profits Report:

With the steady climb of oil prices over the past few years, it’s become apparent that higher prices are here to stay.

As a result, the market has spawned dozens of new alternative energy stocks - and subsequently, ETFs devoted to the sector.

However, with alternative energy technology developing rapidly and sub-sectors like wind, solar, geothermal, bio-fuels, and bio-mass all springing into the headlines, it can be tough to know which stocks or ETFs an investor should play.

Fortunately, ETFs give you broad exposure and diversity to certain markets, with less risk than owning individual stocks.

For example, the two most widely followed alternative energy ETFs are the PowerShares WilderHill Clean Energy ETF (AMEX: PBW), which is mostly made up of American companies, and the Market Vectors Global Alternative Energy ETF Trust (NYSE:GEX), which gives you international exposure to some of the largest companies dealing in wind power.

In 2007, these ETFs turned in outstanding performances, chalking up gains of 62% and 50% respectively. And GEX may have done even better, due to the fact that it did not begin trading until May 2007.

In 2008, however, the funds haven’t been able to sustain that performance. As of September 26, PBW is down about 40% for the year, while GEX has lost 25%.

“Springing” Back To PBW

Back in the spring (March 24, to be exact), I highlighted the performance of PBW in my “Sector Watch” piece. At the time, the stock was trading around $21 and had recently tested its January lows. With the chart pattern still bearish, I said it represented a good short-selling opportunity.

Before it rebounded last week, PBW had traded below $15. But as long as oil prices remain high, ETFs like PBW should come back into favor. Moreover, after the beating they’ve taken this year, they look like good value.

That said, I don’t like trying to pick bottoms, so let’s take a look at the daily chart of PBW for more clues…

As you can see, the downtrend line drawn from the highs last December currently sits at $18.95. As time goes by, this number will go lower, but a couple of closing prices above this downtrend line will signal a change in trend - and that the stock is probably worth buying.

Profits From Thin Air

Between PBW and GEX, though, I actually prefer GEX, due to its higher exposure to the wind power segment. This fast-growing area is gaining some serious momentum and greater investment, thanks to the publicity that T. Boone Pickens is bringing. Pickens is a very smart businessman, who is investing billions towards the largest “wind farm” in the U.S. And you can see why he’s on board…

Wind power is the second largest source of new power generation in the U.S., surpassed only by natural gas.

In 2007, wind provided enough power to satisfy the residential electricity needs of 150 million people.

Capacity increased by a record-breaking 20,000 megawatts, which puts the world total at 94,100 megawatts.

According to the U.S. Department of Energy, since 1980, the cost of producing wind power has declined by as much as 90%.

Electricity from new wind power projects will be cheaper than electricity from new conventional power plants by 2010.

If you’re a fan of wind power, there is a relatively new ETF that deals strictly with the field. It’s called First Trust ISE Global Wind Energy (NYSE: FAN) and it began trading in June 2008.

Having hit a high of $31.50 in June, FAN has sold off, along with the other alternative energy ETFs. Earlier this month, it traded as low as $20, so let’s take a look at the chart to see what the next move might be…

With only a few months of data to go on, projecting the stock’s next move is a little trickier, but we have enough information to draw a regression channel from the June highs. The upper band of the channel is currently around $24.15 and a couple of closes above that level should lead to higher prices for the stock. We’ll keep an eye on this one, as wind power continues to gain traction.

PS. Yesterday, Oxford Club's David Fessler described how the quiet passing of an $18 billion clean energy bill could mean 'big moves' for FAN and two other clean energy ETFs.

Source: Forget Washington's Hot Air... Here's How to Really Profit from Wind

Is Russia Just Another Emerging Economy, Or Is There Something Special About The Present Bout Of Financial Turmoil?

Edward Hugh — Thu, 18 Sep 2008 18:43:00 +0000

Russia's President Dmitry Medvedev today pledged $20 billion in financial support for the Russian stock market and cut oil taxes in an attempt to bring a halt to what has now become Russia's worst financial crisis in a decade. Medvedev took this action in order to try to lay the basis for a reopening of Russia's bourses tomorrow, following three days of irregular operation on the back of a 25% drop in the Micex Index. Following the announcement Russian shares traded in London surged and the interbank lending rate plunged.

The announcement followed a meeting between Medvedev, the central bank Chairman Sergey Ignatiev and Russia's Finance Minister Alexei Kudrin. Ignatiev also announced that central bank reserve requirements for Russia's banks would be eased in an attempt to provide more liquidity.

The tax cut for oil exports will come into effect on Oct. 1 and save producers and refiners $5.5 billion, Kudrin said. OAO Rosneft, the country's biggest oil company, climbed 23 percent to $5.76 in London trading at 3:40 p.m., while smaller rival OAO Lukoil advanced 8 percent to $56.20. Moscow's stock exchanges will open tomorrow after being halted by the market regulator.

The central bank cut reserve requirements for banks by 4 percentage points with effect from today, and this should free up an estimated 300 billion rubles for all lenders. The move is in addition to a Finance Ministry decision yesterday to make $60 billion of funds available to banks, including a three month injection of $44 billion into Russia's three largest banks - OAO Sberbank, OAO Gazprombank, VTB Group. VTB, the only one of the three that trades in London, had jumped 15 percent to $3.40 by late afternoon trading.

Russian sovereign bonds also dropped to the lowest in four years today, with the yield on the government's 30-year dollar bonds 32 basis points higher this afternoon at 7.3 percent at 1:23 p.m. in Moscow. The cost to of protecting this debt against default jumped 17 basis points to 300, the highest since May 2004, according to BNP Paribas prices for credit-default swaps.

The crisis seems to have been sparked by the default of brokerage Kit Finance on a number of repurchase agreements. This rather small scale incident in and of itself seems to have produced something approaching panic across Russia's financial markets. Evidently investors have become increasingly nervous about holding Russian assets amid the mounting global financial turmoil. In fact Russia seems to be facing something of a "trifecta" at the moment, which the normal nervous about holding riskier emerging market assets adding to the perceived vulnerability of the Russia economy in the face offalling oil prices and (added to both of these) are the concerns that have been provoked by Moscow's decision to "go it alone" in recognising Georgia's two separatist regions. All of this has coalesced to produce an especially toxic cocktail which despite Russia's substantial oil fund safety net, and the very large quantity of foreign exchange reserves parked at the central bank, seems to be proving very hard for the Russian financial system to simply brush aside.

The real point I would like to stress right however, is that while Russia's financial markets are currently taking a pounding for relatively fortuitous reasons, the underlying macroeconomic issues were always going to raise their head, as I have tried to spell out in my two extensive recent reviews of the Russian economy, Russian Inflation, Too Much Money Chasing Too Few People? and Russia's Consumption-Driven Inflation: Will It All End In Tears?. Basically Russia is suffering from some sort of modern variant of "Dutch disease", whereby the revenue generated by the sharp oil boom has accelerated the rest of the economy way beyond its short term capacity level (especially given the underlying demographic issues Russia faces) and this has simply produced a very pronounced spike in short term inflation, coupled with deteriorating competitiveness in Russia's domestic industrial sector. So even though it is obvious that we are not about to witness meltdown or anything approaching it in Russia at the present time, what has happened over the last week is an early warning sign. Things are not all for the best in the best of all possible worlds here, and even if a resurgence in oil prices during 2009 will once more paper over the multitude of seismic cracks which are emerging, the deep and endemic problems will in fact only worsen if what we are treated to is simply more and more of the same on the policy front.

Industrial Output Weak Again In August

In many ways the achilles heel in Russia's current development process is not to be found in the financial system - $550 billion or so in foreign exchange reserves and another $160 billion in the SWF should certainly serve to protect the economy from all but the most severe of shocks - rather the achilles heel is Russia's nascent industrial sector, which is being steadily choked into quiesence by a combination of high domestic inflation and long term labour shortages produced by Russia rather special demographic profile. Russian industrial production expanded at a slower pace than most observers were hoping yet one more time in August according this week's data from the Federal Statistics Service. Industrial output was up 4.7 percent, compared with 3.2 percent in July and 0.9 percent in June. Even the apparent acceleration over July is really only a mirage based on base effect variations from 2007, since output actually fell 0.9 percent on the month, as foreseen in the VTB Manufacuring PMI survey.

I think it is important to bear in mind here that Russia's economy actually grew at an annual 7.5% in the second quarter, while manufacturing growth was nearer 5%. Which means that in a "newly industrialising country" the weight of industry in the economy is declining. This is obviously unsustainable, since however resource rich Russia maybe, you cannot live from oil alone, especially when your oil output has a ceiling. Basically the more living standards in Russia rise, the less important oil will become as a percentage of GDP, and the more dependent the Russian economy will become on other sectors. This is why the current consumer price and wage inflation levels are no mere trifle.

Obviously the Russian authorities have deperately needed to get a grip on the inflation problem, and this is just what the central bank has clearly failed to do, with the annual rate rising again to 15 percent in August, up from 14.7 percent in July. So one part of the present financial crisis is clearly an institutional crisis of confidence. With the benchmark interest rate at the central bank currently at 11%, Russia has negative interest rates of 4% which obviously make it very easy to fuel a lending driven consumer and construction boom, but very much more difficult to communicate to observers that you actually know what you are doing. So while the fx muscle that the central bank can put to work in the short term to stamp out the present will in all probability work, they are clearly not able to prevent such forest fires breaking out in the first place, and we should, of course, expect more. Brazil's central bank which currently has interest rates at 13.75% while inflation is just over 6% (ie 7.5% positive interest rates) is currently justifiably earning for itself a reputation as Latin America's new Bundesbank, a way in which it would never ocur to anyone to refer to the Russian equivalent. And the comparison I would make with Brazil is not meant idly, since Brazil is, of course, also an oil and resource rich emerging economy.

So it is clear that Russia has special problems, which set what is happening in Russia rather apart from what is currently happening in a lot of emerging market economies.

Rout On The Bourses

Both Russia's MICEX and RTS exchanges remained effectively closed first thing this morning following trading being suspended again yesterday (Wednesday) - they were in fact open for less than two hours - in order to prevent a further sell-off on top Monday's record-breaking falls. The ruble-denominated Micex Stock Exchange did resume some very limited trading at 11:00 this morning, but only limited operations were authorsied - the decision was effectively simply to allow participants to close repurchase deals still outstanding from Sept. 16 and Sept. 17.

Russian stocks have now plunged around 60 percent since their May peak, and while the Micex did initially gain 7.6 percent in initial trading yesterday, this gains were very rapidly erased and then turned negative, as the index plunged as much as 10 percent before a halt was called. Russia's dollar-denominated RTS index stood at 1,058 points when trading was halted, nearly 58 percent down from its peak of 2,498 points reached in May.

Emerging Market Woes

In part Russia's problems only reflect more general "risk aversion" issues which are facing all emerging market economies. Emerging-market stocks have fallen the most in 11 years this week, their currencies have been falling, and the cost of insuring emerging market bonds has rocketed as rising lending rates and tumbling commodities have prompted investors to sell riskier assets.

Every emerging stock market in MSCI indexes has been retreating this month, and the MSCI Emerging Markets Index fell 2 percent yesterday to 768.92 a time, its lowest level since October 2006. The index is now down 19.59% since the start of the month, and 29.27% over the past 3 months.

The Russian MSCI index, in comparison, is down 36.1% on the month, and 54.2% over the past three months.

Of course, to put the recent fall in perspective, this recent fall follows several years of rising stock values, and thus is to some extent cyclical, as can be seen from the 4 year MSCI index chart (below).

Falling Oil Prices

In the forefront of the fall in Russia share prices have been energy stocks, including Russian oil producers like OAO Gazprom and OAO Rosneft, who have declined substantially following the sharp drop in crude prices. Gazprom, the world's biggest natural-gas producer, lost 18 percent to 158.41 rubles in the latest turmoil, while Rosneft, Russia's largest oil company, sank 22 percent to 132.20 rubbles.

Oil prices were down again this morning, after bouncing back somewhat yesterday. Light, sweet crude for October delivery fell 97 cents to $96.19 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. Overnight, the contract rose $6.01 to settle at $97.16, after having dropped $10.03 the previous two trading sessions. But the trend is decidedly down, and crude has now fallen more than $50 — or over 35 percent — from its all-time trading record of $147.27 reached July 11.

Urals crude peaked at $140.80 a barrel on July 3, and has fallen about 36 percent to $90.01 since then. Still, the oil price averaged $108.65 a barrel so far this year, compared with $63.54 a barrel January 02 through Sept. 18 last year.

Foreign Exchange Reserves

Evidently the Russian economy is in no evident danger of short term default, and foreign exchange reserves, which stood at $560.3 billion on September 12 (according to data from the Russian central bank) - the third largest globally, after China and Japan - are evidently ample. In addition Russia has a $163 billion SWF (the National Welfare Fund), which is split into two parts, $130 billion in a reserve fund, and $33 billion in the National Wealth Fund (the SWF proper).

Nonetheless, the reserves have dropped quite sharply since early August, and are now down some $37 billion since their August 8 peak, and reserves declined by $13.3 billion to $560.30 billion in the week ended Sept. 12, after falling $8.9 billion in the previous week. About 47 percent of Russia's reserves are held in U.S. dollars, 42 percent in euros, 10 percent in pounds and 1 percent in yen, according to the most recent figures released by the central bank (June 30, 2007.

Part of this reduction in reserves is a result of central bank intervention in support of the ruble, since Russia operates a policy of trying to maintain the currency steady within a trading band set against a basket of euros and dollars. Evgeniy Nadorhsin, a senior economist at Trust Investment Bank in Moscow, estimates that the central bank sold approximately $3 billion in fx reserves last week.

So Where Do We Go Now?

This is very hard to say. Clearly we should expect the economy to slow substantially in the last quarter of 2008 and the first quarter of 2009, as credit conditions tighten for households, and the decline in oil prices restricts revenue flows. As just one indication of the worsening credit conditions we could note that Russian 5-year credit default swaps are trading with a spread of around 253-255 basis points, little changed this week but more than double the level seen before the start of the conflict with Georgia.

On the other hand Russia is hardly the Baltics, so we should not expect the economy to go into a nosedive. A lot depends on the view you take about the future of energy prices. Since my own view is that the global economy will slow down considerably - in addition to the reduction in growth rates we have seen so far this year -following the most recent bout of financial turmoil, and this will serve top bring oil prices down even further, but we should see a floor, at around $80 perhaps.

More importantly I am not expecting a long and deep global recession. Many of those developed economies who are significantly affected by the bursting of their construction booms (and the banking issues which have gone with it) will probably have weak domestic consumer demand for some time, but a solid core of emerging economies may well take off again quite rapidly as we move into 2009.

As we can see in the JP Morgan EMBI+ index (see below), bonds from these economies have taken one hell of a battering in September. Looked at the other way round, the extra yield investors demand to own developing nations' bonds instead of U.S. Treasuries has been going up, and today rose 2 basis points to 4.24 percentage points, the widest spread since September 2004, according to the EMBI+ index. So EM bonds have been taking a battering but they have taken a battering because of nervousness about the implications of a financial crisis in the developed economies, rather that as the result of any inherent problems in their own ones. That is what sets this crisis apart from the 1998 one, and that is what means that the financial markets in these economies will in all probablilty bounce back again quite substantially once all the nervousness dies down. Basically most of these markets are neither "oversold" nor are they "maxed out".

What is interesting about the above chart is the way in which things seem to have really taken a decisive turn for the worst in late August, and it is curious to note on the chart below that the Russian MSCI index also started to deteriorate further starting on or around 2 September (see chart below which is from May 2008 to date). So while the Georgia factor may have made people nervous, other, deeper, structural factors are obviously at work.

And while I am on deep structural factors, and the MSCI Emerging Markets index, I would like to conclude by pointing out that the decline since mid May has been pretty generalised, and in some sense is obviously cyclical. The point is that this fall will at some point hit bottom, after which time we should be ready to see a rebound, as investors move in and snap up what will obviously be seen as very attractive buying opportunities.

Russia’s Politics of Isolation Leave it Economically Stranded in a Time of Crisis

Money Morning — Thu, 18 Sep 2008 00:13:01 +0000

By Jason Simpkins Associate Editor While U.S. financial turmoil has seeped into virtually every global market, Russia has been devastated, as the country’s largest stock exchanges, the... Money Morning is here to help investors profit hands...

Fed Steps in and Bails Out AIG to the Tune of $85 Billion in Taxpayer Funds

Money Morning — Thu, 18 Sep 2008 00:07:52 +0000

By Jennifer Yousfi Managing Editor In a stunning reversal, the U.S. Federal Reserve offered American International Group Inc. (AIG) access to $85 billion in exchange for a 79.9% stake in the... Money Morning is here to help investors profit hand...

Commodity Trend Alert Recommends 3 BUYS

CEO Blogger — Tue, 16 Sep 2008 16:34:18 +0000

track Eric’s picks at: http://trackthepros.com/stocks/category/549 “Prices for energy stocks, including the drillers, are bombed-out and should be aggressively accumulated now,” says resource expert Eric Roseman. Here, the editor of The Commodity Trend Alert explains, “The absolute worst thing we can do is sell now.” Here’s his outlook on energy and drilling and a trio of buys The pain [...]

Most National Banks Lose Ground

QualityStocks — Thu, 11 Sep 2008 00:38:56 +0000

The percieved instability of Lehman Brothers Holdings, the fourth largest investment bank in the US, has contributed to drops in share price for the majority of national banks this mid-week. These included Washington Mutual, Inc. and Wachovia Corp., falling 22 and 6 percent respectively. Financial securities remain on shaky ground, despite a healthy surge in [...]

Will Danoff in Kiplinger Magazine

Trader Mark — Tue, 09 Sep 2008 09:22:00 +0000

Will Danoff is one of those "best of breed" fund managers I follow, he runs Fidelity Contrafund (FCNTX) - he does not run a concentrated fund strategy but considering the size of his fund (now I believe the 7th or 9th biggest in America) he has had a very good [...]

ETF Update: Back to the Home Builders

Jeffrey Miller — Mon, 08 Sep 2008 01:22:57 +0000

ETF Update: Back to the Home Builders Sometimes the news moves faster than the system. The announcement this weekend of the Fannie/Freddie bailout will change prospects for the overall market as well as specific sectors. The Street has been anticipating a plan, and that may have influenced some "bottom fishing" in the home builder [...]

Whiting Petroleum Corp. – Momentum – Zacks Rank Buy

Michael Vodicka — Fri, 05 Sep 2008 00:00:00 +0000

Whiting Petroleum Corp. (WLL) continues to reap big profits from higher energy prices. The company's recently reported second-quarter results were awesome, analysts are projecting strong earnings growth into the next-year period and its share price is trading at a big discount to the overall market.

Whiting Petroleum Corp. engages in the exploration and production of oil and gas in the United States. The company was founded in 1983, has a market cap of $3.57 billion and is headquartered in Denver, Colorado.

Industry Trend

Energy stocks have traded lower over the last 2 months in reaction to oil prices dropping from $147 a barrel to current prices around $110 a barrel. This has provided some much desired relief to consumers, but on a historical basis, oil prices are still incredibly high, and that continues to produce big-time earnings for oil companies. This dynamic was evident when Whiting reported record-setting second-quarter results on July 31.

Second-Quarter Results

Revenue was up 84% from the same period last year to $354.8 million. Net income totaled $80.4 million, an amazing increase of more than 200% from last year. This produced earnings of $1.90 per share, slightly below analyst estimates but still very impressive none-the-less.

In spite of the recent small miss, Whiting does have a strong history of surprising and beating analyst estimates. Over the last four quarters, Whiting has beaten by an average of 6 cents, or 7%.

Whiting noted that its impressive results were driven by increased production and higher selling prices.

Analyst Estimates

In response to a bullish energy environment, analysts have continued to raise their earnings projections for Whiting. The current-year estimate has advanced to $8.25 per share from $7.93 per share 30 days ago. The next-year estimate is bullish as well, pegged at $9.33 per share, a 13% earnings growth projection.

Based upon the current-year estimate, this stock looks seriously undervalued, carrying a forward P/E multiple of just 10X, a steep discount to the overall market.

The Chart

In spite of its recent pullback, this stock is still deep in the green on the year. A long-term trend line is currently being pressured and looks well positioned to provide support. Take a look at the chart below.

"WLL" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Russian Stocks Rebound, Ruble Continues To Fall, and International Reserves Rise Despite Capital Outflows

Edward Hugh — Thu, 28 Aug 2008 14:22:00 +0000

Russian stocks rose the most in two weeks today as investors bought into an equity market that now has the cheapest valuations in two years. In particular OAO Rosneft, Russia's biggest oil producer, surged as crude oil prices rose for a fourth day. Bank Vozrozhdenie and AFI Development Plc gained after reporting earnings. Crude for October delivery rose as much as $1.74, or 1.5 percent, to $119.89 a barrel in New York as meteorologists forecast Tropical Storm Gustav will be the most damaging since Hurricane Katrina.

The ruble-denominated Micex Index climbed 2.6 percent to 1,337.02 at 4:05 p.m. in Moscow, its biggest gain since Aug. 11. The dollar-denominated RTS Index rose 2.4 percent to 1,626.65, a second day of gains.

The RTS has retreated more than any other major stock market so far this quarter as Russia sent troops into Georgia, falling oil prices weighed on energy stocks and the government probed steel and coal producer OAO Mechel.

The events of July and August pushed the price-to-earnings ratio for the 50-stock RTS to 8.7, the lowest in two years.

Ruble Set For Monthly Decline

The ruble is set for its biggest monthly decline against the dollar-euro basket since its introduction in 2005 as rising tensions with the U.S. and European Union prompt investors to reduce holdings of Russian assets. The currency looks likely to lose around 0.7 percent versus the basket this week. Despite the rise of the last 24 hours Russia's dollar-denominated RTS Index is stilll very near its lowest level in almost two years and the benchmark 30-year government bond slipped for a third day today.

The currency - whose value is controlled by Bank Rossii via what is known as a "managed float" - was at 24.5675 per dollar by 1:26 p.m. in Moscow, from 24.6125 yesterday, when it gained 0.2 percent. The ruble was at 36.3379 per euro, from 36.2475.

Those movements left the currency steady at 29.8540 against the basket, from 29.8483 yesterday. It seems set to lose around 1.8 percent against the basket in August, the biggest monthly fall since the basket was introduced in February 2005. The weighting in the basket is 55% USD and 45% euro.

Capital Outflows Continue

As much as $25 billion in capital has flowed out of Russia since the start of the Georgia crisis, according to BNP Paribas today. However Russia's international reserves, the world's third biggest, rose by $400 million last week according to the latest data from the central bank. Finance Minister Alexei Kudrin told the press on Aug. 17 that investors pulled $7 billion out of the country between Aug. 8-11 alone.

However the value of the reserves of the world's largest energy supplier increased to $581.5 billion in the week ended Aug. 22. The reserves had fallen $16.4 billion in the previous week as the central bank bought rubles to support the currency. Thus there is little likelihood in the short term of the present crisis producing a run on reserves of sufficient magnitude to have any noticeable impact on Russian government policy. The economic issues are likely to arise elsewhere.

UniCredit SpA analyst Vladimir Osakovsky estimates that the central bank spent about $6 billion to support the ruble as a similar amount left the country in the week to Aug. 22, damping the impact of inflows from oil revenue on the reserves. Bank Rossii has yet to release official figures on net capital flows for the period.

The central bank last month started reporting the amount of reserves based on the market value of securities it keeps, rather than on the historical value as was done previously. It has restated the size of the reserves since the beginning of 2008 to bring Russian reporting in line with international standards. The reserves were previously referred to as foreign currency and gold reserves.

Russia's reserves have climbed steadily from their $12.3 billion low in 1998. China has the world's largest currency reserves, which were ruuning at around $1.7 trillion at the end of March, followed by Japan with $970 billion at the end of May.

Hodges Capital Management’s Top Stocks

CEO Blogger — Tue, 19 Aug 2008 18:57:29 +0000

Energy and energy service stocks are the plays where Donald Hodges of Hodges Capital Management sees opportunity. “We particularly think energy stocks are good buys here,” he said on CNBC. “That doesn’t mean they might not go a little lower, but when you look at them from a price-earnings multiple and look at them in terms [...]

Dow Theory Forecasts Two Oil-Related Stock Picks

CEO Blogger — Tue, 19 Aug 2008 18:52:22 +0000

viastockadvisors “Our Forecasts Focus List contains only two energy stocks, both of which are in the oil services sector: Oceeaneering International and Transocean,” says blue chip advisor Richard Mooney. The editor of Dow Theory Forecasts says, “While stocks in this group tend to move with oil prices in the near term, their proﬁts depend more on exploration spending [...]

Value Stocks

Charles Rotblut — Tue, 19 Aug 2008 00:00:00 +0000

After the close of trading yesterday, Genco Shipping and Trading (GNK) announced a new $320 million loan facility. The financing will be used to fund the previously announced acquisition of six drybulk newbuildings.

GNK is trading at about 8x projected earnings, making it one of the cheapest stocks in the Focus List. Despite this low valuation, the company is expected to growth strongly with earnings reaching $7.48 this year and $10.28 next year.

The low valuation and strong growth provides a margin of safety against the stock's volatility. Our expectation that is that the market will eventually reward GNK with a higher share price as earnings continue to exceed forecasts.

ConocoPhillips (COP) is currently trading at less than 6x projected earnings for this year.

Like many energy stocks, COP has been adversely affected by falling oil prices. Earnings estimates have also been trimmed over the past few weeks, but remain sharply above the levels of two months ago.

COP has exposure to the upstream and downstream side of the business. Therefore, we view the stock as a conservative way to maintain exposure to the energy sector. Since the crude bubble began deflating last month, shares of COP have fared better than many other energy stocks.

We are continuing to monitor the price performance of COP and will move to contain the losses if necessary.

Company	Ticker	P/E	P/S
ConocoPhillips	COP	5.81	0.53
Telenorte	TNE	6.86	0.65
CF Industries	CF	7.30	2.23
Bunge Ltd	BG	7.73	0.21
Genco Shipping & Trading	GNK	8.03	5.68

"GSTL" Free Stock Analysis: Buy? Sell? Hold?
"P" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

China Tech Strikes Olympic Gold!

Tony Sagami — Tue, 12 Aug 2008 05:57:02 +0000

About 840 million people from around the globe tuned in to watch the opening ceremony for the Beijing Olympics, making it the most watched sporting event in history. I hope you were one of them because it was an amazing $300 million spectacle that condensed 5,000 years of Chinese history into the [...]

Red Star enjoys happy third anniversary

Jason Corcoran — Wed, 09 Jul 2008 10:42:00 +0000

Business New Europe

Jason Corcoran in Moscow

July 9, 2008

A detsky sad, or kindergarten, is an unlikely neighbour for a Russian hedge fund, but James Fenkner is not fazed by a little background noise.

The founder and chief investment officer of Red Star Asset Management runs a friendly and informal investment shop on an unassuming residential street situated between Moscow's boulevard and garden ring roads. Red Star's team of seven have their heads buried in work as two-dozen two-year-olds run about shrieking seven floors below. It's also a family affair - Fenkner's sister Elizabeth plays a key role as the head of marketing.

The firm was set up in 2005 after Fenkner quit Troika Dialog where he had served seven years as head of research and initially as chief strategist. "The market was just coming out of deep crisis and there were just four funds in Moscow," recalls Fenkner. "I had gotten one of the best deals from Troika because that's where I met my wife. I left because brokerages are a young's man game."

The firm launched the Red Star Double Alpha Fund, a long/short relative-value vehicle targeting equities in Russia, Eastern Europe and the former Soviet Union. Its investment objective has an absolute return target of 18% to 22%, with volatility less than that of the region's equity markets.

The fund's main backer - Erste Bank, an Austrian retail bank with a network throughout Central and Eastern Europe - came on board after Red Star's US partners pulled out. Red Star's investors are mainly institutions and the firm has a few high net-worth clients.

Happy anniversary

May marked the third anniversary of the fund, which has registered a total return of 77%. The annualised return is 21% and volatility has been 12.6%. Fenkner is keen to make a marketing push for more clients now that funds under management have reached $100m and the firm has post the all-important three-year performance numbers under its belt. May also proved to be fund's best so far, with it's net asset value up 9% due mainly to the rally in Russia's energy stocks. Most of Russia's oil majors rose by over 20% due to record high oil prices and an expectation of a cut in taxation.

Fenkner feels the upswing to Russia's oil sector could be short-lived unless the modest $5bn tax relief amount being offered by the government is increased dramatically. "For the winning streak in oils to continue, the government must play for big money rather than tokens. Discussions with a number of analysts have convinced us that the ante must be upped to $20-25bn for oil production growth to pick up materially."

Red Star's preferred bets for greater taxation relief are oil field service providers and Surgutneftegaz, which has one of the worst production growth track records. Gazprom, the world's third largest company by market cap, is the fund's biggest holding.

With the restructuring of the electricity grid UES almost complete, Red Star is betting that hydro-electricity company RusHydro will become the new proxy for the sector. "RusHydro has been a drag on performance recently, but should be the biggest beneficiary from the break-up of UES on June 6," says Fenkner. " It should be the most profitable of the utilities and it currently trades at a 40% discount to its EM hydro peers."

Fenkner, who is 42. first arrived in Moscow over 13 years ago along a circuitous route taking in the Baltics and the Czech Republic. Back in the US, he had been a fixed income analyst at US mutual fund giant Fidelity after graduating with a degree in economics from California State University, Sacramento and a masters from Tufts University. His original plan in 1993 was to come to Lithuania for a year to work as a Soros Foundation lecturer in economics at Vilnius University. "I was teaching 18- to 20-year-olds at the time and they used to tell me that the Russians had two heads and ate their own children. The level of disinformation was enormous," recalls Fenkner.

The adventure continued when he took up an offer to help set up a brokerage in Prague call Atlantik Financial Markets. Then in 1995, Fenkner came to Moscow and had stints as head of research at AIOC Capital and Robert Flemings.

Bernie Sucher, a fellow American, lured him to work as chief strategist at Troika Dialog, which Sucher had co-founded. Under his direction, Troika's research focused on corporate governance and the opportunities and risks which any change in corporate governance provides to investors. "For a brokerage to be involved in corporate governance was rare. As the environment has matured, the interests of corporate clients has become a more important component of the brokerage business," says Fenkner.

Troika took up some unpopular causes, including backing former Yukos oil tycoon Mikhail Khodorkovsky, who ended up in prison after falling foul of the Kremlin. Fenkner believes the "heady days of corporate governance" are long over with the expulsion of shareholder activist Bill Browder of Hermitage Capital and because Russian corporates have made efforts to reform and evolved to more classical valuations.

Red Star's fund employs market-based activism in its investments. If the firm doesn't like a stock and it's expensive, they tend to short it instead. The fund uses a disciplined approach to invest long in securities that they believe to be fundamentally undervalued and to short securities which they believe to be fundamentally overvalued. He currently has seven short positions, including four in Russia.

Fenkner intends to continue at helm, because it is what he likes to do. He also has his own money invested in the fund, which, he says, "helps keep the mind focused" on performance.

www.businessneweurope.eu

Trends say play Companhia Paranaense de Energia

Ted Gottsegen — Tue, 01 Jul 2008 15:24:23 +0000

Forget what you think you know, this Bear market isÂ killing everything.Â What isn't it killing?Â Brazil and Energy stocks.Â Â For aÂ combo of both,Â turn toÂ Companhia Paranaense de Energia (ADR)Â (NYSE:ELP), better known as Copel.

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Tony Sagami — Wed, 04 Jun 2008 00:12:12 +0000

Here is a rare piece of dis-inflationary commodity news. China Aluminum Corporation (also known as Chalco) cuts its wholesale spot price of aluminum by 16.7%. I don't own Chalco and I sold my energy stocks 2 weeks ago and this is another piece of confirmation that tells me commodity prices are overdue for a pullback.Temporary...but a pullback nonetheless.

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Faisal Laljee — Mon, 23 Jul 2007 18:53:37 +0000

Back in May, I posted a piece on the Top 10 China plays. While I am happy to report that within 2 months, that portfolio of 10 stocks is up almost 14%, I believe its time for some changes. Since the post, FXI – the default China 25 index is up 21% primarily due to the [...]

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Roger Nusbaum — Wed, 11 Jul 2007 17:47:28 +0000

Part of constructing and then managing your own portfolio is understanding how it will react to certain types of market events, when it will lag and when it will outperform. On one level, if you are really overweight energy and oil goes down 10% in a week you know your portfolio will have a very bad [...]