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Posts Tagged ‘fuel’

What Is Money When The System Collapses?

November 17th, 2012

Dr. Thorium or: How I Learned to Stop Worrying by Killing the Bomb

May 27th, 2011

An Interview with Patrick Cox by WYPR’s Midday with Dan Rodricks

Dan Rodricks, Host, Midday: I’m Dan Rodricks, and you’re listening to a special edition of Midday we call Power Ahead: The Energy Future. We continue our discussion about nuclear power with a specific look at something of international public concern since the tsunami hit Japan. Can even an advanced economy master nuclear power safely? Can nuclear power be safely harnessed?

I’d like now to introduce Patrick Cox to our program. Patrick Cox is an editor with Baltimore-based Agora Financial, our lead collaborator for Power Ahead. Patrick Cox is the editor of Breakthrough Technology Alert, keeping an eye on transformational technologies for investors…

We want to talk to Patrick Cox about thorium nuclear power… Please tell us about thorium nuclear power and the big picture of nuclear renaissance.

Cox: It’s interesting because in the early days of nuclear power, there were two schools. One was the current technology of light water reactors that produce plutonium, which is weaponizable. As a matter of fact, that’s why that technology was chosen, because the military wanted this plutonium in order to build the nuclear stockpile that we all know about. On the other hand, we had people like Edward Teller, who was slandered in Dr. Strangelove, and his friend Alvin Radkowsky, who was the world’s leading reactor designer, who very much were opposed to plutonium-producing nuclear power and wanted to go the direction of thorium.

And thorium has numerous innate advantages. One is that it doesn’t produce weaponizable byproducts, but it’s also true that the nature of the metal is such that it produces safer reactors. It burns at a lower temperature, and there’s also a great deal of it. As a matter of fact, there’s more energy available easily in thorium than there is in uranium, petroleum and coal combined. There’s just an enormous amount of this stuff.

Rodricks: Why isn’t it used now if it’s safer?

Cox: We have this enormous regulatory bureaucracy. If you know anything about the SEC, if you know anything about drug development and how difficult it is to get a drug into the market, that’s easy compared to nuclear reactor design. This is an international agency with huge armed tentacles everywhere, and it’s influenced by the existing players. But it’s happening outside of the United States anyway. If you go to the French, they are developing and have now signed an agreement with Lightbridge, which is the company that was founded initially by Alvin Radkowsky. They’re working on thorium.

The Red Star Russian reactor designer, which serves most of Asia, is working on thorium… There are lots of thorium reactors running, and there are lots of different strategies for bringing thorium into the mix… The thing to remember is that thorium requires an extra neutron to work. In order to create fuel, you have to add a neutron. If you stop adding the neutron, then the reaction stops.

Rodricks: So that’s what gets you to that term I heard you use a little while ago, “meltdown-proof.”

Cox: Right. And there are many different ways of doing that.

Rodricks: So the problems we’re seeing at Fukushima Daiichi, then, with those reactors, is water reactors. So you could see where maybe the world looks at that and then looks at thorium and says maybe we ought to go with thorium?

Cox: It’s inevitable.

Rodricks: Could you put thorium in 104 US nuclear power plants and make them all safer? I mean, could you transition to that?

Cox: Yes. As a matter of fact, Lightbridge (NASDAQ:LTBR) is the leader in this technology. It is consulting with the Gulf states, with the French, the Russians, and probably will end up consulting with the Indians and the Chinese, as well. There are many different strategies for getting thorium into the fuel stream. Some of them are as simple as dropping a different fuel rod into the existing light water reactors, which would somewhat improve safety, though in the long run – I think the thing we should realize is these reactors in Japan were 40 years old.

I mean, you don’t drive a car that’s 40 years old. They had made some serious mistakes. Seth Grae, the CEO of Lightbridge, points out that the backup systems on these reactors were all on one circuit, which is absurd. It’s mind-boggling that people who are known for their technical competence had done something that stupid. I mean, the problem of what we really need to do in terms of safety is to move to the next generation of nuclear reactors, which are going to be an order of the magnitude safer than what we have now operating in Japan, in the United States. There are thorium reactors running right now in Russia. I mean, they’re going to go online in the next two years. They’re going to be sold.

Regards,

Patrick Cox from his interview with Midday’s Dan Rodricks,
for The Daily Reckoning

Dr. Thorium or: How I Learned to Stop Worrying by Killing the Bomb originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Dr. Thorium or: How I Learned to Stop Worrying by Killing the Bomb




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

This Momentum Stock Could Gain at Least 35%

May 12th, 2011

This Momentum Stock Could Gain at Least 35%

Airlines are one of those industries that just don't get any respect from investors. These long-suffering companies have a history of losses and usually carry a lot of debt. Billionaire investor Warren Buffett took notice of these qualities and summed it all up when he wrote, “The worst sort of business is one that grows rapidly, requires significant capital to engender growth and then earns little or no money. Think airlines.” But in an overheated stock market, airlines are just the kinds of stock that actually offer some safety, since they haven't participated in the rapid run-up, and all it takes is a few positive events to send share prices higher.

History shows that after a market tops, the high-momentum winners that led the advance tend to be the ones that decline the fastest. We saw this in 2000 as tech stocks led on the way up and on the way down. Stocks that lag the general stock market advance tend to lose less or even gain during bear markets. So while the market may not be at a top, I think one airline stock in particular — Fort Worth, Texas-based AMR (NYSE: AMR), the parent company of American Airlines — is likely to make money no matter what the stock market does.

The downtrend in AMR's stock price looks like it is about to change. Technical analysis supports a much higher price and momentum indicates the time is right for establishing a position.

Fundamentals indicate that the company is well-positioned to prosper even in a declining economy. While other airline stocks have similar fundamentals, the technical position of AMR is what makes it worth buying now. The chart below shows that momentum is moving higher, and that minimizes the chances of falling for the fundamental “value trap.” Strong technicals show that other investors are already buying, so the stock price may continue to go up. (Many value stocks can languish at low prices for extended periods of time, until other investors spot the opportunity. Buying value stocks with high momentum lowers the risk of holding a stagnant position, which is the equivalent of dead money.)

Management has access to more than $17 a share in cash sitting on its books, almost three times the price of the stock. It's rare to have a chance to buy cash so cheaply. In addition, earnings for the past three quarters have exceeded analyst estimates, indicating the company has become focused on making money. (Big companies like American often seem to lose sight of this priority and pursue growth at any price rather than profits for shareholders.)

The low-earnings estimates reflect a pessimistic view of the company by analysts, and consistently beating those estimates could be showing that the analysts have developed a mistaken impression of management. Several academic studies have demonstrated that positive earnings surprises tend to be followed by stock market gains while analysts catch up to the positive changes being made by the company.

The real story with American Airlines is in that $17 per share in cash, which should help the company survive any type of downturn. The long-term debt is high, totaling about $27 per share, but the short-term debt is relatively low and AMR should be able to refinance at low rates unless rates jump higher. And with the Federal Reserve doing all it can to keep rates down, AMR seems very likely to have access to the money it needs this year.

It's also important to time your buys so you don't sit through large losses. Buying American in January, for example, would have been painful. The stock fell by almost 40% during the first four months of the year. Oil gained 20% in this timeframe, and many investors worried about the impact higher fuel costs would have on airline profits. At this point, the concerns seem to be overdone, and the airlines have shown that fewer flights, luggage fees and other changes have helped them maintain profits.

The chart below helps us see that risk is currently low. Prices have fallen since the start of the year, while the market has gone up. Right now, momentum shows the price has probably fallen too fast, and it is due to bounce higher.

Uncategorized

Are Markets Selling Off in Anticipation of More QE?

May 6th, 2011

We’re finally getting some action on Wall Street! The Dow has lost more than 200 points in the last two days. Gold is down more than $50. And oil closed below $100 yesterday.

Could this be the sell-off we’ve been waiting for? Maybe.

Why do we expect a sell-off? Because we’re still in a Great Correction. And in a correction, prices tend to go down. Deflation is the underlying trend…not inflation. Debt gets marked down…defaulted on…and written off.

By our reckoning, the beginning of the correction actually began more than 10 years ago when the NASDAQ cracked wide open in January 2000. Since then, the US economy and stock markets have gone nowhere, in real terms.

Who noticed? The feds poured on so much liquidity – beginning in ’02…with a huge flood in ’08-’09 – everything was swamped. Trash floated.

But households drowned…they were shackled to sinking incomes, while the cost of living rose with the tide.

And their costs are still rising. On the radio last night we heard about how hard $4 gasoline has hit America’s lower and middle classes. These people live on tight budgets. If their fuel costs go up $20 a week…they feel it.

The Wall Street Journal:

LONDON – Consumer prices in developed economies rose in March at the fastest pace since October 2008, driven by energy and food inflation.

A couple of reports in The Financial Times have focused on how they cope. One tells us that they aren’t driving to malls the way they used to.

“Online shopping jumps in US as cost of fuel curbs trips to malls,” says the headline.

No report from the malls yet…but online sales are said to rising at a 7% rate.

Meanwhile, “Americans ditch TV is move to save money,” says another headline.

“Lower and middle classes are giving up their televisions and unplugging their landline telephones…” it begins.

Hey, there’s some good news. The TV has probably done far more damage than drugs and alcohol. And certainly a lot more damage than terrorism. Yet, the feds spent $2 trillion fighting terrorism (according to another FT report). How much did they spend fighting TV?

But let’s think more about what happens to investors.

If we’re in a Great Correction…

…and if liquidity from the feds is the only thing that keeps the correction from dragging prices down…

…then, you’d expect prices to go down whenever the feds ease up, right?

Well, get ready. When the feds stop pouring on liquidity, the correction reasserts itself. That’s what happened last summer. QE1 ran dry. Stocks fell throughout the summer…leading Ben Bernanke to announce QE2 in August.

What’s happening now? Is the market anticipating another QE end? Are prices headed down until another QE is announced?

We’ll find out…

Bill Bonner
for The Daily Reckoning

Are Markets Selling Off in Anticipation of More QE? originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Bill Bonner, the founder of the the Daily Reckoning released his latest book Dice Have No Memory: Big Bets & Bad Economics From Paris to the Pampas in April 2011.

Read more here:
Are Markets Selling Off in Anticipation of More QE?




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

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My Favorite Investment of the Past 2 Decades — and it’s Still a "Buy"

May 5th, 2011

My Favorite Investment of the Past 2 Decades -- and it's Still a

What would you do if you had a stock that returned 20 times your initial investment over a span of two decades? Would you sell some or all and lock in the huge gain?

That would seem reasonable. After all, the stock may have run its course.

Then again, you might want to hang onto it, especially in one particular case.

In the past 20 years, Range Resources (NYSE: RRC), a Fort Worth, Texas,-based producer of oil and natural gas, has gained more than 1,900% — about 16% a year. That means $5,000 invested on May 2, 1991, would be worth about $100,000 now.

It's one reason Range Resources is my favorite investment of the past two decades. Another is that it still has room to run.

Natural gas is by far Range Resources' leading product. Range is considered by many analysts to be the best play on the premier natural gas source in North America — the Marcellus Shale region of the east coast.

Although natural gas prices have been low for years due to oversupply, they're set for a big rebound as the United States seeks alternatives to oil. Natural gas could be an excellent alternative because it's much cheaper and cleaner. There could certainly be strong demand for it domestically because more than half of U.S. homes are heated with natural gas.

Indeed, U.S. demand may rise significantly as more households switch to gas to save money. Then the fuel may gradually become more popular for other uses, such as

Uncategorized

Crude Oil Advances as U.S. Gasoline Inventories Drop

April 13th, 2011

Weiss Research analyst, Sean Brodrick, talks with Mark Shenk of Bloomberg.com about the increase in crude oil prices following the Energy Department’s announcement that U.S. gasoline stockpiles have dropped the most in 12 years. 

Crude oil rose after a U.S. government report showed inventories of gasoline plunged the most in 12 years as demand climbed and refineries idled units.

Futures advanced 0.8 percent after the Energy Department said gasoline supplies dropped 7 million barrels to 209.7 million last week. Stockpiles were forecast to decline by 1 million barrels, according to the median of 17 analyst estimates in a Bloomberg News survey. Consumption of the fuel climbed the most in more than five months.

“The report today was very interesting because the draw in gasoline stocks was seven times bigger than what people expected,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida.  “High prices haven’t had enough of an impact on demand to end the bullish trend.”

Crude oil for May delivery increased 86 cents to settle at …

Read more on Bloomberg.com

Sean Brodrick is a natural resources expert and editor of Crisis Profit Hunter, a monthly newsletter with a primary mission to help you profit from crisis situations and other dynamic forces affecting the global economy. Commodities and dividend-paying stocks are central to his approach, and he also delivers practical advice for uncertain economic times. For more information on Crisis Profit Hunter, click here.

Sean is also the editor of Red-Hot Global Resources, a weekly newsletter that aims to help you rack up profits with commodity-focused exchange-traded funds (ETFs) and natural resource-sensitive stocks that operate around the world. For more information on Red-Hot Global Resources, click here.

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Crude Oil Advances as U.S. Gasoline Inventories Drop

Commodities, ETF, Mutual Fund, Uncategorized

3 Stocks in this Sector Could Easily Double

April 8th, 2011

3 Stocks in this Sector Could Easily Double

Between 1970 and 1975, a quarter of companies in the U.S. railroad industry were forced to file for bankruptcy protection. There were simply too many competitors and they could not handle the high levels of government regulation, volatile fuel costs and the billions of dollars it took to maintain thousands of miles of track, locomotives and freight cars.

Since that time, the remaining competitors have steadily merged and there are only seven leading players today. The leading players now have the size and scale to justify high capital expenditure costs and can effectively compete with the trucking industry. A government report stated that railroads have seen productivity gains that have far exceeded the gains seen in other industries and the economy as a whole.

In perhaps the biggest vote of confidence the industry could ever receive, Warren Buffett announced he would spend $26 billion to acquire Burlington Northern Santa Fe, one of the largest companies in the space, in late 2009. Railroads have become great investments.

But I'm not interested in railroads as an investment. I'm more interested in the next sector to follow in their footsteps: the leading U.S. airlines.

This may seem strange, given the history of bankruptcy in the airline industry. Buffett himself once famously called airlines “lousy investments.” But the same could be said about the railroad companies at one time. I think some of the major airlines have turned over a new leaf, so contrarian investors who get in early before the crowd realizes it stand to make a lot of money.

Uncategorized

One of the Planet’s Most Life-Changing Investment Trends

April 7th, 2011

One of the Planet's Most Life-Changing Investment Trends

While most energy-driven headlines today deal with $100-plus oil, dirty coal, dangerous nukes or solar dreams, one cheap, plentiful and clean fuel is usually left off stage out of the spotlight — natural gas.

That's odd, because Americans use about 62.5 billion cubic feet of natural gas a day, with some 2.1 quadrillion cubic feet in reserve. (One quadrillion is a thousand trillion.) It supplies 65 million households, 5.3 million commercial users and nearly 200,000 industrial-scale customers.

Natural gas is critical to electrical power production and its importance in this area is growing dramatically. In the past 15 years, the amount of U.S. electricity provided by natural gas has grown from 13.2% to 23.2%. The total number of kilowatt hours attributable to natural gas is up 102.3%.

And there are two reasons this trend is going to accelerate in coming years.

First, gas is super efficient; it can approach 60% efficiency, nearly twice that of coal, which makes it an easier and more cost-effective way to generate power.

Second, natural gas is far less polluting than coal, which is similarly cheap and abundant, and is often a fuel of choice for power plants.

But coal is so dirty that the government has considered limiting (or taxing) its use. Few, if any, utilities would be willing to invest billions in a new power plant if its fuel source might not be economically viable because of new regulations.

With nuclear plants difficult and notoriously expensive to site, permit and build, and hydroelectric plants only deployable in limited areas, the only alternative left on the table is natural gas.

But, as they say in the ad business… wait, there's more.

Natural gas 2.0
These deals will continue, but you need to keep another development in mind — liquefied natural gas, or LNG.

This form of natural gas is created by chilling natural gas to subzero temperatures. It then turns to liquid, taking up only 1/600th the space of the volume of the fuel in its gaseous state. That makes it far easier and safer to transport to areas unserved or underserved by pipelines.

Today, LNG accounts for 7% of worldwide gas demand — but that's growing. In fact, the business doubled in size from 1995 to 2005. And I expect that trend to continue.

The world has about 15 LNG exporters, which use special cryogenic ships to keep the gas cold, and nearly 20 importers, including Japan, Korea and Spain.

Five new receiving terminals have been built in the United States since 2005, according to the Department of Energy, with imports to total more than a trillion cubic feet by 2015. Other countries will see rapid development of this technology and of natural gas in general.

One place where this is expected to happen: China. A mid-2010 report by the consultancy Wood Mackenzie says China's LNG demand could increase 48% by 2020. Those forecasts were based on China's already-strong imports of LNG; LNG reached a record in April 2010 and imports were up 58% in June from the year before.
The inescapable abundance of natural gas and the growing scarcity of crude oil is not lost on the petroleum industry. Royal Dutch Shell (NYSE: RDS-A) says half of its output will come from gas by 2012. Of the eight projects completed by ExxonMobil (NYSE: XOM) in 2009, seven were gas-related.

Action To Take –> The major oil companies' large capital expenditures are the single best predictor for the future of the industry. With hundreds of billions of dollars being invested in natural gas exploration, development, refining, distribution and in ancillary technologies like LNG, the “game-changing” future for this fuel — and for investors who realize its importance — is very bright.


–Andy Obermueller

If you haven't already done so, my Game-Changing Stocks videocast is a must-see for more on the best investment opportunities I've found.

From tiny power plants that can be buried in your lawn, to revolutionary pain killers made from cobra venom, I'm convinced these game-changing ideas could take off in the coming year. To get briefed on these opportunities, and several others that I think could return many times your money, please watch this video.

Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Andy Obermueller
One of the Planet's Most Life-Changing Investment Trends

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One of the Planet’s Most Life-Changing Investment Trends

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USDA Crop Report and You

April 3rd, 2011

The USDA released its planting projections for the coming spring and statistics for inventories of stored grain.   These reflect farmers planting intentions and the current picture for grains on hand. 

Planned Acreage (million acres):

  • Corn: 92.2 vs. 91.7 — Up 5% year-over-year, becoming the second highest planted acreage in the U.S., only behind the 93.5 million acres planted in 2007.

  • Soybean 76.6 vs. 76.9 — Down 1%, yet the third largest planting on record.  

  • Wheat 58.0 vs. 57.30 — Up 8%

  • Cotton: 12.6 vs. 13.2 — Up 15%

Stocks (Billion bushels):

  • Corn: 6.52 vs. 6.701 — Down 15%

  • Soybean: 1.25 vs. 1.20 — Down 2%

  • Wheat: 1.42 vs. 1.39 — Up 5%

While acres planted will increase, there is concern about the decrease in stored grain inventories. US consumption and exports to countries such as China, that are hoarding grain to meet their own consumer needs, mean there may be a squeeze between supply and demand. 

The USDA report triggered price increases as everyone from farmers to ethanol producers watched.  Without a doubt, the increase in commodity prices will be passed onto consumers who will continue to see higher food prices at the supermarket.  And, a larger portion of everyone’s budget will be going to food. Don’t just think corn and cereal, but meat and milk prices will be affected too.  Not pretty for the average person.

The impact of price increases in food may also affect the federal incentives supporting ethanol production.  Federal subsidies are set to expire at the end of 2011, and Congress is likely looking at the bio-fuel policy as they seek ways to reduce the budget deficit.

But, these numbers, especially corn, are indeed bullish for some agricultural related industries. As a drop in supply with more acreage set to be planted could be a boom for farm equipment manufacturers, fertilizer producers and food processers.

This is not only important for investors with agricultural exposure, it also must be taken in the context of what higher grain prices mean globally …

A lot of what is going on in the Middle East and North Africa started because of higher grain prices — and inflation. And in the long run higher prices could be the fuel that keeps the unrest going.  

We’ll continue to pay attention to the numbers and keep you informed.

Read more here:
USDA Crop Report and You

Commodities, ETF, Mutual Fund, Uncategorized

Theme Thinking – SPY Moving Between Round Number Levels

March 31st, 2011

I strongly advocate “thinking in themes” rather than indicators and keeping your focus as much as possible on price structure.

Namely, you want to know “what is price doing and how effectively is it doing in?”

Here – let’s look at the current SPY intraday world to pick up on a theme that you may have missed unless you were watching closely:

It’s often best to reserve at least some of your analysis for thinking in “Themes” or “Concepts” like this.

Ask:  “Is there any obvious pattern that I might be missing?

Market Character/Behavior changes from time to time, and if you’re able to pick up on these little patterns ahead of the crowd, you’ll do a better job as long as the market continues to respond to the theme.

For example, on the rally up off the mid-March low, we’ve seen a consistent pattern of the SPY (market) pausing at a round-number level for a day or so and then busting through the level to the next overhead ’round number,’ which gives intraday traders plenty of opportunity to profit from this simple “theme.”

I’m a huge advocate of chart/trading simplicity and this is about as simple as it gets – simple, but so far effective.

The $130 level (1,300 in the S&P 50o) was a VERY obvious resistance level we all watched and price had trouble overcoming this level initially.

However, once it did (with a little “Finger” or Bear Trap under $129 I might add) then the race was on for intraday traders to play for the next upside target of $131.

Price spent the better part of March 24th struggling at the overhead level and on the next session, price broke above $131 on its journey to $132 – a tradable move intraday.

The market again had similar trouble at the key $132 level as it did at $130 (1,320 and 1,300 in the SP500) and then yesterday we had a gap-up (the expectation and trade follow-through I mentioned was likely in the prior night’s Idealized Trades member report) off the gap opening 50 cents higher to the new $133 intraday target.

Yesterday and today, we’ve had similar difficulty breaking above the $133 “round number” level, though if we do soon (tomorrow’s Jobs Report could be the catalyst), then if the “Theme” continues, we can expect a similar style move to $134.

But if the immediate history repeats, at least on the cases of March 23 and March 29, we’ve had a little “Trap” or “Finger” temporary breakdown of a round number level which led to the fuel to power the market up through the next level.

A pure repeat would take the market down under $132 temporarily and then rocketing again up above $133 on its way to $134.

No one knows what is going to happen, but thinking in themes like this can help you plan out your plays/trades via IF/THEN logic (“IF a breakout happens, THEN I will trade an expected move to my new target”).

Keep your plans objective (non-biased) and based on price structure and always be aware that themes do change – particularly as more market participants pick up on them.

As such, early recognition is always key.  Lessons like this can help you think in terms of price-based market themes.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

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Theme Thinking – SPY Moving Between Round Number Levels

Uncategorized

4 Signs the Market may be Headed Down

February 10th, 2011

4 Signs the Market may be Headed Down

Another day, another gain. That's been the story for the S&P 500 lately, which has rallied higher in 12 of the last 15 trading sessions since January 20. As they say, “this bull has legs.” A rising market is surely enjoyable, but the higher it moves, the greater the chance that profit-taking will be just around the corner. That may happen when market strategists begin to talk about stocks becoming expensive when measured by traditional metrics. So here are four items I watch to see if the bull can keep running…

1. Money pouring into domestic stock funds — POSITIVE
The direction of the stock market is simply a function of supply and demand. When fund managers are given more money to work with, they put it into stocks, pushing share prices up. And they got plenty of firepower last quarter, bringing $45.5 billion, according to Lipper Fund Services. (90% of that went to actively-managed funds and the rest went to exchange-traded funds, or ETFs.) That was more than funds took in for the first three quarters of 2010.

And the spigot keeps flowing. In the past two weeks (ended Feb. 2), they've taken in about $6.7 billion, which works out to be roughly $40 billion on a quarterly basis. Curiously, the last two weeks have seen a major shift away from actively-managed funds and toward ETFs, though I'm not sure what that that means. Net/net, as long as money is pouring into the market at the current rate, then stocks have the fuel to keep rising higher.

2. Individual investor sentiment — MILDLY NEGATIVE
Many individual investors are quite savvy. But as a herd, they're not as clever. They tend to become bullish and bearish at precisely the wrong times, as I noted in this article.

Investors were very bearish last August, just before the market staged an impressive rally. That's no longer the case. More than 50% of investors have been bullish in eight of the last nine weeks, according to recent surveys by the American Association of Individual Investors (AAII).

The last time that reading was above 50% for a sustained two-month stretch: November, 2004. The S&P 500 has risen 14% since then — over a period of more than six years! If you really wanted to get excited about stocks, you'd prefer to see most investors acting bearishly. That said, readings closer to 60% bullishness would be really scary, and we're not quite there yet.

3. New Highs and Lows –POSITIVE
As noted over on our sister site, investinganswers.com, it's a bullish sign when the number of new highs is rising along with the market. In the past two weeks, this measure has wobbled a bit, but it has already surpassed 300 on two occasions in February. You'd have to go back to 2007 to see such bullish action. Equally impressive, new lows have been stable in the 10-20 range each day in that period.

ETF, Uncategorized

Inflation ‘Round the World

February 4th, 2011

Faithful and unfaithful readers alike will have noticed a recurring theme in our recent reckonings. We refer, of course, to inflation; that insidious, noxious tax which appears to be gushing out of every economic orifice in the land, but that, somehow, fails to register as even a drip on the government’s official inflation-o-meter. Curious, no?

Regular reckoner, Chris Mayer, identified inflation as the “wrecking ball” of 2011 in his column “Inflation’s First Phase”. Eric Fry addressed it in both “When Stock Market Rallies Validate Effective Monetary Policy” and “Tracing the Fed’s Vital Role in the Decline of the US Dollar”. And our Reckon-in-Chief, Bill Bonner, touches on it in some fashion, on most days.

In fact, most people in possession of at least one of the five basic human senses seems to see, feel, hear, taste or smell inflation’s foul presence. Which means that those trained specifically to keep an eye (ear, nose, etc.) out for it – and who so adamantly deny its existence – are either blessed with a sixth “masking” sense to which the rest of us are not privy…or that they are simply senseless morons, blinded by the light of their own academic brilliance.

Most likely, inflation will continue to be…and not to be. In other words, those manning the controls in the government’s “Ministry of Information” will continue to churn out numbers that agree with whatever qualitatively-eased, policy-of-the-month they are pursuing. Meanwhile, the rest of us will continue to weather the adverse consequences of these econo-commands as they express themselves in the form of everyday higher prices.

This time last week, we heard from some of our frontline reporters across the United States. Fellow reckoners wrote in from grocery stores and gas pumps around the country to lend some of their own boots-on-ground perspective.

Alas, this academically-defined non-inflation is also pushing up prices in other parts of the world. But fear not. We have eyes (ears, noses, etc.) in those parts, too. And so, without further ado, we present a handful of reader mail from some international Daily Reckoning reader posts…

First up, here’s what reader B.L. had to say:

“I currently live in Singapore and travel throughout Asia Pac, Central Europe, ANZ, and was back in the US over Christmas/New Year’s. I see food inflation everywhere I go. [In] Singapore the prices have risen noticeably since I’ve been living there, which was April of 2010. When I was in the US – North Carolina – I was shocked by the food prices when I bought groceries for two families for New Year’s Eve and day. Combine the food prices with the fuel price rise and I can see why so many American families are getting support for food from good ole Uncle Sam.

“In places like China or India, where food makes up a huge % of a families cost to live – over 50% versus less than 10% for the middle class in the US – they are really feeling the pinch.

“Lots of reasons, but very scary for those of us that have to eat – oh wait, that is all of us last time I checked on the human condition.

“Keep up the good work.”

Sticking in the East for a bit, here’s what another reckoner had to say:

“Here in Thailand, inflation is running high.

“On January 1st, 7/11 mini-marts, of which there are thousands across the country, increased all their prices by 10%.

“Hotel rates, mostly in the 4 and 5 stars categories, are going through the roof, 25 to 50% higher than a year ago.

“Restaurants of all kinds regularly increase their prices.

“Overall, the national inflation rate is certainly in the double digits.”

Thailand? But why would prices be rising in Thailand? Another reckoner, based in that (offensively gorgeous) part of the world offers some thoughts:

“The millions of dollars flowing into Thailand form your neck of the woods is causing real problems with food prices and more noticeable is the increase in washing powder, soap etc. These too are increasing due to the raw material costs.

“Cambodia and Vietnam are feeling the winds of change also. I live here in Thailand 6 months a year then go home to shitty Britain to fish for trout. I was in Cambodia last week. My friend has just opened a small guest house there and we both went to see friends in Vietnam. Same problem; big inflows of money.

“I hope this adds a new thinking to your insight into inflation.”

But what about Japan, the leader in all things DEflationary? Reckoner Gary?

“I live in Japan, and have observed over the past year, food prices have gone down. In fact, prices have been about the same for many years. Last year flour was about Yen 230 a kilo, this year about Yen 150. Living on a fixed income, I must say, I like DEFLATION much more than INFLATION. So tell me, why is Bernanke trying to increase my food costs – doesn’t he have my interests at heart?

“The US system is broke, financially, economically, morally, education, etc. And with all the partisan fighting in government, Republican vs. Democrats, secret agendas, it isn’t going to get better. I think the best solution is to just let all those banks and zombie companies crash and burn, and we start over again.”

Hmm…but what about this… Another email from The Land of the Setting Sun? This one from Reckoner Matthew:

“One small slab of mozzarella cheese imported from Germany costs about 600 Yen, or 7.26 US doll hairs. A small pack of blueberries from Chile costs about the same. These items have become extravagances for consumers.

“How about gasoline? Just filled up my car with a tank of the stuff. Converting liters to gallons and Yen to USD, I paid 6.64 dollars/gallon (high octane, mind you) at today’s exchange rate.

“Try guessing what will happen to the USA when prices get to this point? Here in Nipponville, everyone’s numb to it all.”

And in Australia, Reckoner Ronald:

“The cost of our city-supplied water has tripled in the last ten years. In the last 29 years, the local daily newspaper has quadrupled in price and the TV weekly magazine is up 625%. But petrol (gasoline) is ‘only’ up 308%.”

How about in Europe? Reckoner Paul?

“After taking 2 weeks holiday around Christmas, I returned to my commuting routine to my office in Hamburg, Germany. Between the station and my office, I usually pick up breakfast at one of many bakeries. Between 18 Dec. 2010 & 3 Jan. 2011, my breakfast cost went up on average 3%. Oh My! 10 cents more for my apple turnover or chocolate croissant!”

And finally this observation from Buenos Aires, where your editor experiences daily the effect of government-induced non-inflation…

“Argentina is a good example of food inflation. Meat (main food for most locals) is now 100 % more expensive than a year before, as a result of government controls and policies against production, just in order to maintain local prices in line. Result: less production, less consumption and less exports of an Argentine symbol. Is this a recipe to be applied in other countries?”

A big thanks to everyone who wrote in with frontline reports on the effects of inflation that, we are told, doesn’t exist.

Joel Bowman
for The Daily Reckoning

Inflation ‘Round the World originally appeared in the Daily Reckoning. The Daily Reckoning recently published an article looking at the impact of quantitative easing.

Read more here:
Inflation ‘Round the World




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Inflation ‘Round the World

February 4th, 2011

Faithful and unfaithful readers alike will have noticed a recurring theme in our recent reckonings. We refer, of course, to inflation; that insidious, noxious tax which appears to be gushing out of every economic orifice in the land, but that, somehow, fails to register as even a drip on the government’s official inflation-o-meter. Curious, no?

Regular reckoner, Chris Mayer, identified inflation as the “wrecking ball” of 2011 in his column “Inflation’s First Phase”. Eric Fry addressed it in both “When Stock Market Rallies Validate Effective Monetary Policy” and “Tracing the Fed’s Vital Role in the Decline of the US Dollar”. And our Reckon-in-Chief, Bill Bonner, touches on it in some fashion, on most days.

In fact, most people in possession of at least one of the five basic human senses seems to see, feel, hear, taste or smell inflation’s foul presence. Which means that those trained specifically to keep an eye (ear, nose, etc.) out for it – and who so adamantly deny its existence – are either blessed with a sixth “masking” sense to which the rest of us are not privy…or that they are simply senseless morons, blinded by the light of their own academic brilliance.

Most likely, inflation will continue to be…and not to be. In other words, those manning the controls in the government’s “Ministry of Information” will continue to churn out numbers that agree with whatever qualitatively-eased, policy-of-the-month they are pursuing. Meanwhile, the rest of us will continue to weather the adverse consequences of these econo-commands as they express themselves in the form of everyday higher prices.

This time last week, we heard from some of our frontline reporters across the United States. Fellow reckoners wrote in from grocery stores and gas pumps around the country to lend some of their own boots-on-ground perspective.

Alas, this academically-defined non-inflation is also pushing up prices in other parts of the world. But fear not. We have eyes (ears, noses, etc.) in those parts, too. And so, without further ado, we present a handful of reader mail from some international Daily Reckoning reader posts…

First up, here’s what reader B.L. had to say:

“I currently live in Singapore and travel throughout Asia Pac, Central Europe, ANZ, and was back in the US over Christmas/New Year’s. I see food inflation everywhere I go. [In] Singapore the prices have risen noticeably since I’ve been living there, which was April of 2010. When I was in the US – North Carolina – I was shocked by the food prices when I bought groceries for two families for New Year’s Eve and day. Combine the food prices with the fuel price rise and I can see why so many American families are getting support for food from good ole Uncle Sam.

“In places like China or India, where food makes up a huge % of a families cost to live – over 50% versus less than 10% for the middle class in the US – they are really feeling the pinch.

“Lots of reasons, but very scary for those of us that have to eat – oh wait, that is all of us last time I checked on the human condition.

“Keep up the good work.”

Sticking in the East for a bit, here’s what another reckoner had to say:

“Here in Thailand, inflation is running high.

“On January 1st, 7/11 mini-marts, of which there are thousands across the country, increased all their prices by 10%.

“Hotel rates, mostly in the 4 and 5 stars categories, are going through the roof, 25 to 50% higher than a year ago.

“Restaurants of all kinds regularly increase their prices.

“Overall, the national inflation rate is certainly in the double digits.”

Thailand? But why would prices be rising in Thailand? Another reckoner, based in that (offensively gorgeous) part of the world offers some thoughts:

“The millions of dollars flowing into Thailand form your neck of the woods is causing real problems with food prices and more noticeable is the increase in washing powder, soap etc. These too are increasing due to the raw material costs.

“Cambodia and Vietnam are feeling the winds of change also. I live here in Thailand 6 months a year then go home to shitty Britain to fish for trout. I was in Cambodia last week. My friend has just opened a small guest house there and we both went to see friends in Vietnam. Same problem; big inflows of money.

“I hope this adds a new thinking to your insight into inflation.”

But what about Japan, the leader in all things DEflationary? Reckoner Gary?

“I live in Japan, and have observed over the past year, food prices have gone down. In fact, prices have been about the same for many years. Last year flour was about Yen 230 a kilo, this year about Yen 150. Living on a fixed income, I must say, I like DEFLATION much more than INFLATION. So tell me, why is Bernanke trying to increase my food costs – doesn’t he have my interests at heart?

“The US system is broke, financially, economically, morally, education, etc. And with all the partisan fighting in government, Republican vs. Democrats, secret agendas, it isn’t going to get better. I think the best solution is to just let all those banks and zombie companies crash and burn, and we start over again.”

Hmm…but what about this… Another email from The Land of the Setting Sun? This one from Reckoner Matthew:

“One small slab of mozzarella cheese imported from Germany costs about 600 Yen, or 7.26 US doll hairs. A small pack of blueberries from Chile costs about the same. These items have become extravagances for consumers.

“How about gasoline? Just filled up my car with a tank of the stuff. Converting liters to gallons and Yen to USD, I paid 6.64 dollars/gallon (high octane, mind you) at today’s exchange rate.

“Try guessing what will happen to the USA when prices get to this point? Here in Nipponville, everyone’s numb to it all.”

And in Australia, Reckoner Ronald:

“The cost of our city-supplied water has tripled in the last ten years. In the last 29 years, the local daily newspaper has quadrupled in price and the TV weekly magazine is up 625%. But petrol (gasoline) is ‘only’ up 308%.”

How about in Europe? Reckoner Paul?

“After taking 2 weeks holiday around Christmas, I returned to my commuting routine to my office in Hamburg, Germany. Between the station and my office, I usually pick up breakfast at one of many bakeries. Between 18 Dec. 2010 & 3 Jan. 2011, my breakfast cost went up on average 3%. Oh My! 10 cents more for my apple turnover or chocolate croissant!”

And finally this observation from Buenos Aires, where your editor experiences daily the effect of government-induced non-inflation…

“Argentina is a good example of food inflation. Meat (main food for most locals) is now 100 % more expensive than a year before, as a result of government controls and policies against production, just in order to maintain local prices in line. Result: less production, less consumption and less exports of an Argentine symbol. Is this a recipe to be applied in other countries?”

A big thanks to everyone who wrote in with frontline reports on the effects of inflation that, we are told, doesn’t exist.

Joel Bowman
for The Daily Reckoning

Inflation ‘Round the World originally appeared in the Daily Reckoning. The Daily Reckoning recently published an article looking at the impact of quantitative easing.

Read more here:
Inflation ‘Round the World




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

The Biggest Energy Story in Decades… And It’s Not Solar, Wind, or Hydro

January 18th, 2011

The Biggest Energy Story in Decades... And It's Not Solar, Wind, or Hydro

It's not your imagination… it is getting more expensive to fill up at the gas pump.

We had a reprieve for several months. Following the crash in oil, gas plunged well below $2 a gallon. Now it's knocking down the $3 mark.

As a car driver, you might be sweating the increase. As an investor, you should be welcoming it with open arms.

The logic is simple, yet solid. As prices at the pump inch higher, the United States will again begin to look seriously at alternative fuels. For some, this will mean electric vehicles, but for most, the question will be: How can we get cheaper gasoline?

The answer is biofuel — but not the biofuel that's been rehashed time and time again in the mainstream press.

No, the real story comes from a little-discussed piece of legislation that dates back to the Bush era. And it has “game-changer” written all over it.

When Congress passed and President Bush signed the bill that codifies a federal biofuel production quota into law, it called for a range of biofuel, not only the corn-based ethanol we've all heard about before.

Also included in the legislation was a call for sugar-based fuel that the government calls “advanced biofuel.” This is code for cellulosic ethanol, which isn't made from traditional sugar sources like cane, but from a non-traditional source called cellulose, a type of sugar that's found in all plant life.

This sugar is hard to get to. For much of recorded history, only animals, notably cows, have been able to get energy from this type of sugar, which is locked tightly in the cell walls of plants. Now, using specially designed enzymes, producers can tease out the sugar, ferment it into ethanol and make biofuel from agricultural waste like wheat straw or corn stovers, from special grasses or even scrap wood and paper.

There's actually a company that collects wastepaper from Congress and turns it into fuel — one of the few ways I know of to extract something useful from Washington!

The federal output table for biofuel calls for billions of gallons of corn-based ethanol, up to a maximum of 15 billion gallons in 2015 — but that's a little more than a quarter more than we're currently using. The real growth in this fuel will be from cellulosic ethanol, of which the United States produces only a few hundred million gallons a year.

In the coming years, however, that output will raise exponentially, to a mandated 16 billion gallons by 2022. This represents the best hope to not only decrease our national dependence on imported oil but also to lower the cost of gasoline.

Here's the best news for aggressive investors: The companies in this space have been much maligned.

For years, cellulosic ethanol and the idea of growing our fuel have been dismissed as pie-in-the-sky dreams. But the science has caught up, lawmakers have embraced it, and now a lot of major oil companies are bowing to the inevitable future of biofuel.

There's no other industry that has as much growth potential in the next decade, and it's my prediction that cellulosic ethanol will gain currency as an investment trend beginning this year. I think you'll begin to see the media report on this topic when the price of oil returns to the $100 a barrel level. ["Why $100 Oil Could Make or Break Your Portfolio in 2010"]

Until then, though, companies like Verenium (Nasdaq: VRNM) and their fabulous potential are ripe for the picking — at a fraction of their intrinsic value. My wisecrack about the effectiveness of Congress notwithstanding, Washington is on the case and is dispensing significant funds for research into how to advance cellulosic ethanol on the infrastructure side — how to get it from the fields to your gas tank.

Action to Take –> There's no doubt companies like Verenium are aggressive plays, but you can't simply invest solely in blue-chips and expect your portfolio to rake in profits. (Or sometimes any profits for that matter — $10,000 invested in General Electric (NYSE: GE) five years ago would be worth about $6,500 today).

As other companies begin to invest in ethanol plant construction, the price of oil will help create a perfect storm. And the earliest investors stand the profit most.

[Note: If you're interested in the game-changing future in cellulosic ethanol, I think you'll enjoy my new Game-Changing Stocks videocast. From tiny nuclear power plants that can be buried in your lawn, to revolutionary pain killers made from cobra venom, I'm convinced these game-changing ideas could take off in the coming year. To get briefed on these opportunities, and several others, please watch this video.


–Andy Obermueller

Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Andy Obermueller
The Biggest Energy Story in Decades… And It's Not Solar, Wind, or Hydro

Read more here:
The Biggest Energy Story in Decades… And It’s Not Solar, Wind, or Hydro

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Why $100 Oil Could Make or Break Your Portfolio in 2011

January 11th, 2011

Why $100 Oil Could Make or Break Your Portfolio in 2011

As we move into 2011, economists increasingly believe that the United States and Europe will start to see an economic rebound, joining China, Brazil, India and other emerging economies in a full-fledged global economic upturn. A closer look at recent price action in the crude oil markets underscores a risk that rising economic activity brings — and an opportunity for investors…

Just as when oil prices moved below $40 a barrel when the economy hit the skids a few years ago, the price reflected a sense that demand for oil would collapse in the face of an even deeper economic meltdown. But it also created some clear winners and losers.

When it became apparent that no such cataclysm would emerge, oil prices rebounded back to the $50-75 range, reflecting a global economy that was lukewarm. That set the stage for a reversal of winners and losers as oil approaches $100 a barrel (more on that in a bit).

Like the proverbial frog in the boiling pot of water, rising oil prices are already starting to impact the economy in various subtle ways.
For example:

  • Consumers are paying more to fill up at the pump, and that leaves fewer dollars to spend at retailers. Consumers that use oil to heat their homes are also being hit.
  • Airlines are boosting ticket prices to maintain profit spreads, increasing the cost of business travel.
  • Cash-strapped state and local governments are spending more to fuel up their vehicle fleets.
  • Industrial firms that make various forms of plastic are seeing rising input prices.
  • Global shipping costs are rising as it becomes more expensive to operate freighters.

In the last six months, economists have regularly suggested that rising oil prices should be no cause for concern. When oil was at $50, they figured that $70 oil was tolerable. And at $70, they figured that $90 oil could still be tolerated. But an increasing number of economists predict we'll see $100 oil this winter and $110 oil later this year, and that argument can last only so long in the face of rising prices.

The concern came home to roost this weekend when it was announced that a leaking pipeline would lead to sharply diminished flows of oil coming from Alaska, which may push prices up to that $100 mark fairly quickly. How long the pipeline remains off-line will determine how much oil prices will be affected.

The impact of $100 oil: The losers
Airline stocks have been great investments for the last two years. The AMEX Airline Index (AMEX: XAL) has surged from $14 to $48 in just 20 months. That rally now appears to be ending, with oil prices rising. The index has tried to push past the $50 mark twice, only to be rebuffed. The index was off for the third straight session on Monday and could drop well lower as we head into earnings season.

The major carriers are set to update their fuel cost projections for 2011, and sadly, most carriers neglected to hedge oil prices when they were lower. Look for analysts to start gradually cutting profit forecasts as they start to question whether ever higher ticket prices (to offset those fuel cost spikes) will start to crimp demand for air travel.

I remain a fan of United Continental (NYSE: UAL), thanks to ongoing cost cuts after the two carriers merged. I'm most bearish on the prospects for AMR (NYSE: AMR), parent of American Airlines, as that carrier operates the most dated and inefficient fleet.

I'm also increasingly concerned about chemical manufacturers that consume a great deal of petroleum in their industrial processes. Dow Chemical (NYSE: DOW), for example, has been in the midst of a profit boom, thanks to benign oil prices. As that tailwind becomes a headwind, profits may approach a cyclical peak. Shares trade for roughly 20 times likely 2010 profits and 15 times likely 2011 profits. Those are fairly rich multiples for a cyclical stock if we are indeed reaching a peak.

The impact of $100 oil: The winners
Oil producers are the obvious beneficiary of a spike in prices.

I recently suggested

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