Year-End News and Views

As I read article headlines and selected articles this morning, I again observed the wide diversity of opinions and views as to where the world is headed economically in 2011 and beyond.  I for one see that diversity of opinion at one level ‘as healthy’ for those who take the time to think about what they read and form their own opinions, at another level ‘scary’ for those who don’t read broadly and hence don’t expose themselves to (and/or think about) those diverse opinions, and at a third level ‘worrisome’ as we go into 2011 there is not more consensus among commentators than there appears to me to be.

From my perspective, I see 2011 shaping up to be both ‘interesting’ and, from the point of view of equity investors and traders an ‘ever more “think for yourself” environment’.  Some forecasters are ‘for sure’ getting things wrong.  So here are some of the things (largely consistent with what I have been saying in my e-mails over the past many months) I think are either likely to occur, or may occur, in 2011 on the economic front:

·        I don’t see China taking steps to meaningfully alter its currency exchange rate unless that is clearly in China’s best economic interest – and I don’t see how it can be until the Chinese economy becomes more self-sufficient;

·        I see China continue (in 2011 and beyond) with its strategic acquisition program – particularly in the resources area (read Oil & Gas, Base Metals, and Agricultural related commodities in particular);

·        I don’t see the U.S. unemployment situation improving in 2011 in a meaningful way;

·        I don’t expect to see U.S. housing prices or markets improve in meaningful way in 2011, unless there are further U.S. Federal subsidies thrown at this sector – which I doubt will happen given the recent new Republican strength in Washington.  If such subsidies were legislated, I would see that as a ‘sign of desperation’;

·        I see the potential of increased ‘residential housing foreclosure’ problems in 2011;

·        following from all the recent media coverage on U.S. State and Municipal debt problems, I can’t help but think that ‘where there is smoke there is fire’, and that while this might not prove in calendar 2011 to be as great a problem as forecast by Meredith Whitney (see commentary in my recent e-mails), I can’t help but think it may prove to be a problem of some significance.  For some time I have been saying in these e-mails that the Municipal and State income and sales tax bases have had to have been eroding after 2007, and that has led to or will lead to obvious financial problems;

·        in 2011 I see the U.S. continue to run substantial monthly net trade deficits, a large budget deficit, and suffer a substantially increased cumulative National Debt – while Washington politics suffers from partisan gridlock.  In particular, with the Republicans having a greater say in things after October, I am not expecting to see further Quantitative Easing measures – which I don’t see as having been particularly effective in any event;

·        I expect to see an ever increasing gap between the wealthy in America and America ‘Main Streeters’.  I don’t see that as a good thing;

·        I expect to see a continuation of what I see as U.S. economic weakening as measured against the economies of China in particular, and perhaps when measured against resource rich and ‘stable’ political Australia and Canada;

·        I expect to see further, and perhaps more exacerbated ‘Sovereign Debt’ issues rear their heads in the Eurozone in 2011;

·        it will not surprise me if we see an increasing number of social unrest ‘hotspots’ as 2011 progresses, as people in the developed economies in particular come to an increasing realization that the standard of living they enjoyed (at whatever level that was) is eroding, and likely will continue to erode, for a great number of them – and as youth unemployment becomes a greater and greater problem in some of those ‘developed economy’ countries;

·        although I don’t want to go there, whether it happens in 2011 or beyond, I see an ever increasing change of meaningful ‘terrorism incidents’ in the developed countries – particularly in the U.S. – and, heaven forbid, I also see what I see to be an increasing possibility of country confrontation as the world population continues to increase, and as economic power shifts increasing to the emerging market countries;

·        with respect to the equity markets, I have for some months seen them as over-reacting on the high side.  So far I have been proven to be wrong in this regard.  I continue to think the equity markets are not factoring in all of the economic issues I see out there, and expect those markets to reflect those things in 2011 in a way they haven’t in 2010.  Having said that, I am highly aware that this is one area I have ‘failed to get right’ so far.  My biggest concern as an equity investor in the resource sectors is, as I have said many times in these e-mails, ‘a rising tide raises all boats, and a falling tide lowers all boats’.  Not a day goes by that I don’t reflect on this adage in the context of my own resource investments, and I suggest you do likewise; and,

·        in the uncertain economic environment we all live in, I expect to see the price of physical gold to continue to trend upward in 2001 – but as I have said in many of these e-mails (1) I don’t believe anyone is smart enough to forecast a target price for physical gold in a meaningful way, and (2) right or wrong, I see physical gold as a ‘save haven’ protector of ‘purchasing power’.  As a result I suspect I have less interest than most its price, other than for the fact the price of physical gold is highly relevant to equity prices in the gold exploration and gold production sectors, which I do care about.

Caveat with respect to all the foregoing ‘predictions’: But then again Casey Stengel (New York Yankee baseball team manager circa 1950′s), known for his bizarre statements, famously said “Never make predictions, especially about the future”, and Yogi Berra (New York Yankee catcher same circa) famously said “It ain’t over ’til it’s over”.  Like me, neither Casey nor Yogi were economists.  All that said, I sincerely hope my prognostications largely prove to be wrong.

I will be sending my next e-mail on Tuesday, January 3.  We have spent time reformatting that e-mail, and think the result will be more useful and user-friendly for readers.  You may recall that a few weeks ago we did a survey of our readers.  Many of you made helpful and constructive suggestions as to how we could improve our e-mails.  We have worked to incorporate many of them in our new e-mail format and content.  I take this opportunity to wish all readers a Happy and Prosperous New Year.

Yesterday’s Press Release Highlights

The following table summarizes the companies in Stock Research Portal’s Company Universe who yesterday issued Press Releases and whose shares increased in price from the previous day’s close by more than Cdn$0.05, more than 10%, and whose share volumes yesterday exceeded their trailing 3 month average trading volume.  Review research data on each of these companies here

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Yesterday’‘s Insider Trade Highlights

The following table summarizes the companies in Stock Research Portal’s Company Universe for who our system yesterday reported insiders who filed reports indicating they had acquired shares through ‘purchase’ transactions.  Review research data on each of these companies here.

Additions to Stock Research Portal’s ‘Company Universe’

Today we added the following Companies to our Company Universe:

Minera IRL Limited (TSX:IRL).  We currently categorize Minera IRL Limted as a gold producer operating principally in South America (Argentina, Peru).  Minera IRL Limted’ s current market capitalization is approximately Cdn$180 million.  Review research data on Minera IRL Limted.

Tahoe Resources Inc. (TSX:THO).  We currently categorize Tahoe Resources Inc. as a silver explorer operating principally in the Caribbean/Central America Region (Guatamala).  Tahoe Resources Inc.’ s current market capitalization is approximately Cdn$1.66 billion.  Review research data on Tahoe Resources Inc.

Trinidad Drilling Ltd. (TSX:TDG).  We currently categorize Trinidad Drilling Ltd. as an Oil & Gas Services business operating principally in Canada (Alberta), Mexico and the U.S.  Trinidad Drilling Ltd.’ s current market capitalization is approximately Cdn$770 million.  Review research data on Trinidad Drilling Ltd.

Disclaimer:  I currently own no shares in these companies, have done little or no research on any of those companies, and am not recommending you either buy or sell their stock.  None currently are paid advertisers on StockResearchPortal.com.

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As always, please forward ideas to me as to how we can improve StockResearchPortal.com at info@stockresearchportal.com.

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Commodities, Energy Prices, Press Release Highlights, Insider Trade Highlights, Company Additions

Commodities

I suggest an article this morning titled ‘Beware of Underestimating China‘ is a worthwhile read – reading time 5 minutes.  The author discusses:

·        what he calls the ‘real problem’ that he says is resource depletion, which he says China’s recent economic success has “brought to the open so much quicker”;

·        what he sees as China’s desire to keep its own inflation under control because he believes (and I assume he believes ‘China believes’) the world “will certainly experience higher commodity prices in the near future”;

·        his view, consistent with mine as I have expressed many times in these e-mails, that China will control its currency’s exchange rate on China’s terms and not on terms pressured by the U.S.; and,

·        his view that China has been the first to “recognize the danger of resource shortages down the road”, and that China “understands its need to segue into alternative energy (wind, solar, and uranium) as it urbanizes 400 million people”.

The author quotes Paul Krugman (whose views I don’t always agree with, but in this case think have merit) as saying “What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices” – all in aid of supporting the author’s conclusions the “commodities are in a real, secular bull market, not a bubble”.

Energy Prices

An article this morning titled ‘2011 Energy Prices and Speculator’s Role in Oil Trade‘ discusses the U.S.$ as the continuing World Reserve Currency (the author’s conclusion: it is unlikely to be replaced but ‘currency baskets’ and International Monetary Fund ‘Special Drawing Rights’ may play a bigger role in future currency markets), U.S. demand for oil and gas (the author’s conclusion: current U.S. economic circumstances already have reduced U.S. demand, but emerging markets growth has more than offset this decrease in circumstances where OPEC just increased is global demand forecast for the third time in nine months).  The author also comments on what he sees as the need for speculative trading in oil and gas futures as assisting in ‘stabilizing the market’.  You might want to read this article – reading time 4 minutes.

I have no opinion on the author’s conclusion on the important to the oil & gas markets of as a ‘market stabilizer, but do think he is right for the time being with respect to his views on the U.S.$ as the World Reserve Currency and the likely increasing overall world demand for oil & gas.  My view on the U.S.$ continuing as a World Reserve Currency beyond the near term is conditioned by an assumption that while world currency markets may continue to further discount the U.S.$ as U.S. National Debt/GDP increases and U.S. annual federal budget deficits/GDP continue at high levels, no consensus will be reached by world economic players (countries) that there is a better alternative.

Friday’s Press Release Highlights

The following table summarizes the companies in Stock Research Portal’s Company Universe who last Friday (being the latest TSX/TSXV trading day) issued Press Releases and whose shares increased in price from the previous day’s close by more than Cdn$0.05, more than 10%, and whose share volumes yesterday exceeded their trailing 3 month average trading volume.  Review research data on each of these companies here.

Note:  No table – no companies met our selection criteria on Friday, December 24.

Friday’s Insider Trade Highlights

The following table summarizes the companies in Stock Research Portal’s Company Universe for who our system last Friday (being the latest TSX/TSXV trading day)  reported insiders who filed reports indicating they had acquired shares through ‘purchase’ transactions.  Review research data on each of these companies here.

Additions to Stock Research Portal’s ‘Company Universe’

Today we added the following Companies to our Company Universe:

Athabasca Oil Sands Corp. (TSX:ATH).  We currently categorize Athabasca Oil Sands Corp. as an oil sands company operating in Canada (Alberta).  Athabasca Oil Sands Corp.’s current market capitalization is approximately Cdn$6.2 billion.  Review research data on Athabasca Oil Sands Corp.

Capital Gold Corp. (TSX:CGC).  We currently categorize Capital Gold Corp. as a gold producer operating principally in Mexico (Sonora).  Capital Gold Corp.’ s current market capitalization is approximately Cdn$310 million.  Review research data on Capital Gold Corp.

Geomark Exploration Ltd. (TSXV:GME).  We currently categorize Geomark Exploration Ltd. as a gold explorer operating principally in Canada (Alberta, Northwest Territories, Nunavut, Ontario). Geomark Exploration Ltd.’ s current market capitalization is approximately Cdn$60 million.  Review research data on Geomark Exploration Ltd.

Disclaimer:  I currently own no shares in these companies, have done little or no research on any of those companies, and am not recommending you either buy or sell their stock.  None currently are paid advertisers on StockResearchPortal.com.

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As always, please forward ideas to me as to how we can improve StockResearchPortal.com at info@stockresearchportal.com.

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• More On Greece!
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An article has been posted on The Oil Drum blog I think is worth taking the time to read.  Headed ‘Some Thoughts on the Obama Energy Agenda from the Perspective of Net Energy’ it says the Obama-Biden comprehensive ‘New Energy for America Plan’ is designed to:

•    help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future;

•    within 10 years save more oil than we currently import from the Middle East and Venezuela combined;

•    put 1 million Plug-In Hybrid cars — cars that can get up to 150 miles per gallon — on the road by 2015, cars that we will work to make sure are built here in America;

•    ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025; and,

•    implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.

The author says the Plan “focuses on – and these are not mutually exclusive – efficiency, electrification, and the promotion of alternative energy resources. Its five main goals are set up in a way so that success in any one of the five individual areas will reinforce the other 4, helping the overall agenda achieve success”, and then discusses each of the aforementioned five main goals of the Plan and its possible shortcomings from the perspective of net energy.

Read the article by clicking here.

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Possibly Related Posts:

• Year-End News and Views
• Commodities, Energy Prices