by Addison Wiggin & Ian Mathias
- Markets hold their breath… Bernanke, Geithner, Obama and Apple set to make news
- Two small-cap stocks that soared last week as other shares slumped
- Patrick Cox on how the Massachusetts Senate election will affect your portfolio
- Frank Holmes with an oft-ignored China growth story — the rise of the Eastern middle class
- Plus, one sector that’s boomed since the recession began… now could be ripe for bust
The markets have gone precisely nowhere in the last 24 hours. Traders are waiting for:
· Ben Bernanke’s confirmation hearing
· Tim Geithner’s congressional grilling
· The FOMC interest rate meeting
· The opening day at the Davos Economic Forum
· Tonight’s State of the Union address
· Something, anything important…
Apple is planning to unveil its latest slick and shiny gadget today — a tablet called the iPad.
Not unlike the MacBook Wheel, the iPad promises to release you from the crippling grasp of antiquated technologies like books, pens, paper and keyboards. For $500 and a monthly access fee, you can have them all in one fragile touch-screen… like your phone, but bigger… like a laptop, but less useful. Wow!
In the end, the iPad will probably go down as the most influential market mover of the day… while the Street might wait with bated breath, Messers. Bernanke, Geithner and Obama are masters of saying much while changing little.
“Performance counts double on bad market days,” notes our microcap man Greg Guenthner. “It’s been a downright lousy week for stocks. In the past five trading days, the Dow, S&P and Nasdaq have dropped more than 4%.
“But even on the market’s bad days (or bad weeks, in this case), some stocks buck the trend and hold their ground. Some even take off. That’s what we want to concentrate on today. Stocks that perform well while the market is struggling are trying to tell us something. They’re the strongest of the bunch — buyers are confident that the stock will outperform, even when the rest of the market shows weakness.
“Here are two strong penny performers that caught my eye on Friday, when the Dow and S&P plunged over 2%:
Trans-Lux Corp. (AMEX:TLX): Trans-Lux gapped up on heavy volume. The stock continued to rise in the afternoon, posting gains of about 37% for the day. We’re fairly interested in this penny play — especially since no news events or earnings announcements are inflating the share price. From The Wall Street Journal: ‘It wasn’t immediately clear what was driving the stock higher. The company, which isn’t covered by any Wall Street analysts, said in a release it doesn’t comment on unusual market activity, according to the New York Stock Exchange’
Enova Systems Inc. (AMEX:ENA): This watch list stock was one of the best performers on the Amex Friday, rising about 10%. We love the fact that Enova is in the power management business for hybrid vehicles. It’s a cutting-edge industry that gets plenty of attention (and hype). That’s a perfect scenario for a small company like Enova to attract new investors. Pay close attention to this one — we might want to get on board soon…”
That’s a good example of how Mr. Guenthner runs Bulletin Board Elite. His subscribers get two alerts a week, filled with “watch list” stocks and market commentary. When it’s time to pull the trigger, Greg issues a special alert with specific actions to take. If you don’t already, we think you’ll dig his approach. And right now, you can try it out for six months, free. Beware, however, spots are limited.
Following the State of the Union address, “we will now see a coalition of Republicans and moderate Democrats grow in power,” forecasts our technology analyst Patrick Cox. “This means that the most radical of the administration’s legislative goals, cap and trade and a government health care takeover, will almost certainly be shelved.
“That’s extremely good news. Cap and trade was an economy killer even in good times. Moreover, it would have had no impact on climate. I believe, as do many scientists shut out of the corrupt U.N. process, that CO2 does not drive climate change. Even if you believe it does, however, many environmentalists have pointed out that the legislation would have no appreciable effect on CO2 levels. Cap and trade was always about raising taxes and delivering control of industry to the intellectual classes.
“Incidentally, China and India have confirmed my last forecast. They will not sign even the toothless Copenhagen climate accord. This is the final nail in the U.N.’s effort to institute global governance based on climate concerns. Interestingly, the Indian media credit the vote in Massachusetts for their government’s decision to repudiate the U.N. power grab.
“Economic growth is the only solution to the enormous debt overhang that has been foisted on us by both political parties. It’s also the solution to most of the developing world’s challenges. Like it or not, all economies have been globalized to one degree or another. Growth in Asia and South America will have beneficial impacts on your portfolio.”
The Chinese are taking more steps to curb lending growth. “Several state-run Chinese banks have ordered some branches to suspend new lending for the rest of this month,” The Wall Street Journal reports today. Beijing has been ordering both lending clampdowns and reserve buildups for its state-run banks.
Whether this will slow the build out of domestic demand in China or not remains to be seen.
“China’s economic growth is often mentioned in the context of commodities prices and demand,” notes Frank Holmes, a staple of our annual Investment Symposium in Vancouver. “Less often discussed is China’s rapidly growing middle class. Estimates are that as many as 25% of Chinese — more people than the entire U.S. population — fall into this category now, with a doubling possible within the next decade. While most dramatic in China, it is also under way in India, Brazil and elsewhere…
“This trend has huge implications for commodities. Wealthier people want a better lifestyle. That means more and better housing — in addition to the structure itself (cement, steel), that means more wiring for electricity (copper), more plumbing (copper, zinc) and more basic appliances (steel, copper and other metals).
“They also want better transportation, as we’ve seen in China. In only 10 years, China has gone from being the world’s 20th largest oil consumer to No. 2, behind the United States, as a result of its accelerating shift from the bicycle to the car. Getting around also means more roads, more bridges, more airports, more and faster railroads — all of which add to commodities demand.”
That’s just one reason Frank is convinced “the secular bull market for commodities and natural resource stocks remains intact.” If you seek his specific investment advice — and a great vacation while you’re at it — he’s one of many can’t-miss speakers at this year’s Investment Symposium. Early registration discounts still apply.
Another remarkable boom to note this morning: wind power. In spite of all the global drama in 2009, American wind power capacity grew 39% last year. The U.S. added 9,900 megawatts of wind power capacity, the American Wind Energy Association said in its annual report yesterday, the largest annual addition on record.
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It’s funny… usually when we see a parabolic chart like that, we take our profits and bow out. Even though wind power is still a small part of American electricity — about 2% of capacity — we wonder if the stuff has come too far, too fast. The AWEA noted that much of last year’s growth came courtesy of various stimulus packages… yet another red flag in our book.
Either way, there is one alternative energy we prefer to wind… just as safe and green, but even more reliable and powerful. Byron King helped us write up a nice bit about it here.
You may recall, we’re also collecting data on wind at Rancho Santana. We believe because of the wind phenomenon surrounding Lake Nicaragua, we’ll be able to provide sustainable energy to the project… and get it off the grid!
If you’re a Reserve member and would like to see for yourself, there are a few spots left for you to join me March 24-28 for a “chill weekend” at the Rancho. Contact surfer Marc Brown for exact details of the trip.
New home sales in the U.S. fell to a nine-month low in December, the Commerce Department said this morning. The 7.6% plunge in new homes is, again, the result of the first-time homebuyer tax credit hangover… even though the proverbial punch bowl was never taken away.
“Your business owner’s comments were right on,” a reader writes. “I am a small contractor in one of the highest-income counties in the country (Marin County, Calif.) who does mostly kitchens, bathrooms and decks. I’m still muddling along reasonably well, but my income was down about 50% last year. I was talking to an architect yesterday who told me she has a number of colleagues who haven’t had a new project in over a year. The same with engineers and many other subs.
“What this indicates to me is that while 2009 was a pretty horrible year, there’s not an awful lot in the pipeline for improvement over the next year or two. From inquires and projects in various stages of development, I usually have a pretty good idea of what I will be doing over the next 18 months to two years. That’s now down to about six months. Another major indictor, the city of San Francisco, laid off about 40 building inspectors last year. I think the light at the end of the tunnel is a freight train heading toward us. The good news is that suppliers and subs who couldn’t be bothered with small fish like me can’t return calls fast enough now.
“I think you are right that in 1930 about half the people lived on farms,” another reader writes. “If you think anyone (over age 4) who lives on a farm isn’t working, you have never lived on a farm. The fact that the government, in its infinite stupidity, only counts the male head of the household is not really germane to the overall situation.”
Cheers,
Addison Wiggin
The 5 Min. Forecast
P.S. So it appears a little 7-year-old Brit is showing us up. Charlie Simpson from Fulham, west London, has raised some $320,000 for Haitian earthquake victims. Our efforts have produced just shy of $90,000. Even if you include the subscriptions to Outstanding Investments thrown in the pot for good measure… we’re only at about $180,000.
What? We’re going to let a little kid on a bike show us up? We now have help from our partners in Germany who are making a similar donation… but it looks like this little tyke is going to give us a run for our money. Please don’t let him embarrass your humble infotainment providers… here’s how you can pitch in now.
P.P.S. Our Trade of the Decade has raised eyebrows and puzzlement here in the U.S. and in the U.K, India and now, according to this morning’s broadcast on the BNN, in Canada. Admittedly, we’re off to a rough start. But then our trade — sell the Dow, buy gold — didn’t pan out until the last 18 months of the decade, either. It’s a bias… but we think a good one.