Welcome to Wealth Daily’s new weekend review. Each week we’ll take a look at the week that was and what’s ahead, along with what you may have missed form our free sister sites, Gold World, Energy and Capital, and our free blogs. Enjoy.
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Responding to the potential for $4 gas, President Bush responded, "Wait, what did you just say? You’re predicting $4 a gallon gasoline? That’s interesting. I hadn’t heard that … I know it’s high now."
That, as the national gas price average creeps well above $3.10 on $103 bpd oil.
But it didn’t stop there.
"If you’re out there wondering… what your life is going to be like," said the President. "And you’re looking at $4 a gallon, that’s uncertain. And when you couple that with the idea that… taxes may be going up in a couple years, that’s double uncertainty."
It quickly drew comparisons to his dear old dad, who took a serious Presidential hit, when he appeared unfamiliar with food store checkout scanners. Appearing "out of touch" wasn’t a political boon, but then again, neither is a suffering economy.
Essentially flat, consumer spending trends are raising recessionary concerns. According to the Commerce Department, spending was up 0.4% in January. While it was better than forecasts, consider the gain came from a surge in inflation. Remove the effect of higher prices, and you’re left with no real gain for January 2008 or December 2007.
The last time it was this weak was November and December 2001, as we were emerging from a recession. That only fuels the fear that we’ll slip into a recession, if we’re not already in one.
While President Bush doesn’t believe we’ll suffer a recession, we’re not as optimistic. Fed efforts to prop up a dying economy are being staved by higher oil prices. And the $168 billion economic stimulus package is likely to do little, if anything, to help. A lot of that money could be used to pay off debt, or simply be saved as part of investor "under the mattress" strategies.
And it doesn’t help that Bernanke, who told Congress that rising inflation was making the Fed job harder and that the Fed stood ready to lower interest rates to boost the economy, is putting further pressure on the dollar and upping the cost of oil.
Crude is rebounding strongly, rising more than $2 a barrel to new records, as a historically weak dollar and the prospect of lower interest rates attracted even more money flow to oil markets. Instead of viewing 0.6% Q4 GDP growth, coupled with rising unemployment numbers, as a negative, investors are using it as fodder for further interest rate cut arguments.
Gold prices were higher Friday, reaching a record $971 high on an inflationary mix of oil and dollar declines. Higher oil prices, a weak dollar, and fear that the U.S. economy is in a recession have forced traders to the safe havens of gold. It’s what sent gold up 32% in 2007 and another 13% since January 1, 2008.
But even in a recession, there’s still money to be made. Small Cap Trading Pit is working on a report covering the six "must own" small cap stocks during recessions. Stay tuned.
And, hey, if you’re searching for cheaper gas, check out GasBuddy.com.
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For the week of February 25, 2008, here’s what we covered in Wealth Daily and elsewhere.
Visa IPO: Profit from the Biggest IPO in U.S. History
Two years after the MasterCard IPO, shares catapulted from $43 to more than $200. But with greater market share and reach than MasterCard, Visa and its coming record-breaking IPO may be too good to pass up. In a market virtually frozen by credit and bank woes, and tumultuous economic uncertainty, Visa could put an end to pent-up salivating investor demand for any company not suffering from credit issues.
What Boone is Buying Now: He Says It’s Bigger than Oil
"In a New York Times interview published over the weekend, Boone was quoted as saying… ‘I have the same feelings about wind as I had about the best oil field I ever found.’ He is planning to build the biggest wind farm in the world, a $10 billion behemoth that could power a small city by itself."
Gold Mining in Chile
"Over 10,000 years ago, migrating Native Americans settled in the long and narrow coastal strip of land wedged between the Andes mountains and the Pacific Ocean in South America, which is now known as the Republic of Chile (República de Chile)."
Wheat Prices Hit Record High
Wheat for May delivery climbed 90 cents to $12.145 a bushel in after-hours Monday night trading on the Chicago Board of Trade, the grain’s biggest one-day jump in five years. By the middle of Tuesday’s trading session, prices had retreated to around $11.94 a bushel.
The 3 Hard Truths Facing the World… and Where the Money Will Be in Energy
Nick Hodge explains the reality of Grid Parity… and the bright future in renewable energy. Says Hodge, "Recent developments in renewable energy mean that solar is already achieving cost parity in locations that don’t have easy access to fossil fuels… Hawaii is the perfect example. And just so you know I’m not making it up, here is a quote taken right from the BP(NYSE: BP) website: "In the USA, parity with the electricity grid at peak charging rates has already been achieved in northern California and Hawaii."
Investing in Nuclear Energy: 104 Reasons behind the Nuclear Energy Revival
Keith Kohl looks at the role nuclear energy will play in our world’s future energy demand… and the best investing angles going forward. Says Kohl, "There are approximately 104 nuclear reactors operating in the U.S., accounting for roughly 20% of the total electricity we generate. If you really want to see where this industry is headed, just look at what we have planned for the future."
The Long-Term Investment on Post-Fidel Cuba
Energy and Capital’s Sam Hopkins spoke of 4.6 billion barrels of Cuban oil, saying that even the United States Department of Energy can’t play dumb when it comes to Cuba’s oil reserves. Though, it’s not just oil that has investors drooling.
The Energy Trifecta Trades
According to Bloomberg, "U.S. natural gas is the cheapest it’s been relative to oil since the 1991 Gulf War, raising the prospect of a windfall for investors who sell crude and buy the other heating fuel. Gas prices will probably rise because inventories are at a four-year low and below-normal temperatures are stoking demand… At the same time, he said, an increased supply of oil and a slowing U.S. economy will drag crude prices lower." Here’s how to play it.
Wall of Worry: Tide of Bad News Rises
"Sometimes people ask me why I’m so negative these days. My answer, of course, is pretty simple," says Steve Christ. "When the data stops being so negative, I’ll be more than happy to turn positive. But until then I just can’t ignore it. That to me would be foolish."
That’s it for this week. For more, visit your free EnergyandCapital.com, GoldWorld.com, and WealthDaily.com.
Have a great weekend,
Ian L. Cooper
http://www.wealthdaily.com
